S-4

As filed with the Securities and Exchange Commission on July 21, 2005

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

SPACEHAB, Incorporated

(Exact name of registrant as specified in its charter)

Washington	3760	91-1273737
(State or other jurisdiction of incorporation or organization)	(Primary standard industrial classification code number)	(I.R.S. Employer Identification No.)

12130 State Highway 3, Building 1

Webster, Texas 77598-1504

(713) 558-5000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Michael E. Kearney

12130 State Highway 3, Building 1

Webster, TX 77598

(713) 558-5000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Arthur S. Berner Haynes and Boone, LLP 1221 McKinney Street, Suite 2100 Houston, Texas 77010 Telephone: (713) 547-2526 Facsimile: (713) 236-5652 Rick C. Madden Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071 Telephone: (213) 687-5000

Approximate date of commencement of proposed sale of the securities to the public:    As soon as practicable after the Registration Statement becomes effective.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Unit	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee
5.5% Senior Convertible Notes due 2010	$63,250,000	100%	$63,250,000	$7,445(1)
Common Stock, no par value	29,834,906(2)	(3)	(3)	(3)

(1) Calculated in accordance with Rule 457(f)(2) under the Securities Act of 1933.

(2) Represents the total number of shares of common stock, and associated rights, if any, of SPACEHAB, Incorporated that are initially issuable upon conversion of the new 5.5% Senior Convertible Notes due 2010 registered hereby at the initial conversion price of $2.12 per share. The conversion price is subject to adjustment upon the occurrence of stock dividends, stock splits and other events described in the indenture for the new 5.5% Senior Convertible Notes. In addition to the shares set forth in the table, pursuant to Rule 416 under the Securities Act of 1933, the amount to be registered includes an indeterminate number of shares of common stock that may become issuable upon conversion of the new 5.5% Senior Convertible Notes as a result of any such adjustments.

(3) No separate fee is payable pursuant to Rule 457(i) under the Securities Act of 1933.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not complete the exchange offer and issue theses securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to completion, dated July 21, 2005

SPACEHAB, Incorporated

Offer to Exchange and Consent Solicitation

in Respect of 5.5% Senior Convertible Notes due 2010

for

Any and All Outstanding 8% Convertible Subordinated Notes due 2007

($63,250,000 in principal amount outstanding)

The Exchange Offer and Consent Solicitation

Expiration Date. The exchange offer and consent solicitation expires at 5:00 p.m., New York City time, on [·], 2005, unless extended.

Exchange Offer and Consent Solicitation. If you decide to participate in the exchange offer, for each $1,000 principal amount of our outstanding 8% Convertible Subordinated Notes due 2007 that you validly tender in accordance with the procedures in this prospectus before the exchange offer expires, you will receive $1,000 principal amount of our new 5.5% Senior Convertible Notes due 2010, plus accrued and unpaid interest on the tendered outstanding notes. The exchange offer is open to all holders of our outstanding notes. Concurrently with this exchange offer, we are also soliciting consents to amend the indenture that governs the outstanding notes.

Conditions. The exchange offer is conditioned upon the satisfaction of several conditions, including, but not limited to, a minimum of $60,087,500 aggregate principal amount of outstanding notes being tendered and the approval by the holders of our common stock of an increase in the number of authorized shares of our common stock and the issuance of our common stock upon exercise of the exchange notes. SMH Capital Advisors, Inc., the investment advisor to holders of $40,259,000 in principal amount of the outstanding notes, has expressed its intent to tender the outstanding notes held by its clients in the exchange offer. SMH is not obligated to tender the outstanding notes under its management and its ability to tender such notes is subject to certain limitations, including any specific directions of any beneficial owner relating to those outstanding notes or the transfer of such outstanding notes out of the account managed by SMH. If you tender your outstanding notes before the consent solicitation expires, you are obligated to consent to the proposed amendments to the indenture governing the outstanding notes. You may not consent to the proposed amendments without tendering your outstanding notes.

Withdrawal. You may validly withdraw outstanding notes that you tender at any time until the exchange offer and consent solicitation expires.

Effect of Not Tendering. If you do not exchange your outstanding notes and the proposed amendments are adopted, you will continue to hold those notes, but the indenture governing those outstanding notes will be amended to remove the occurrence of a default on our other indebtedness as an event of default under the outstanding notes. In addition, the exchange notes being issued pursuant to this exchange offer will be senior in right of payment to any outstanding notes that you continue to hold.

The Exchange Notes

Maturity. The exchange notes will mature on October 15, 2010.

Interest. Interest on the exchange notes will accrue from the issue date at the rate of 5.5% per year. We will pay interest on the exchange notes semi-annually on each April 15 and October 15, commencing October 15, 2005.

Ranking. The exchange notes will be our general senior unsecured obligations ranking equally with our other senior unsecured debt, but will be effectively subordinated to all our secured debt, to the extent of the value of the assets securing such debt, and to all debt incurred by our subsidiaries.

Conversion. The exchange notes are convertible into shares of our common stock at a conversion price ranging from $2.12 to $2.44 from the date of issuance until October 14, 2008. On and after October 15, 2008, the conversion price for the exchange notes will be $2.50 per share. The exchange notes will be automatically converted into shares of our common stock at a conversion price of $2.50 per share if the closing price of our common stock exceeds $3.25 per share for 20 consecutive trading days at any time prior to the maturity date of the exchange notes. Our common stock is traded on The NASDAQ National Market under the symbol “SPAB.” On July 20, 2005, the last reported sale price of our common stock on The NASDAQ National Market was $1.63.

Redemption and Repurchase. We may redeem some or all of the exchange notes at any time at 100% of the principal amount of the exchange notes being redeemed, plus accrued interest to the date of redemption and, if redeemed prior to [·], 2008, the payment of the premium described in this prospectus. If we experience a change of control, we must offer to purchase the exchange notes for 100% of their aggregate principal amount, plus accrued interest, payable, at our option, in cash or in shares of our common stock.

See “ Risk Factors” beginning on page 13 for a discussion of certain risks that you

should consider before participating in the exchange offer and consent solicitation.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The Co-Dealer Managers for the Exchange Offer and the Solicitation Agents for the Consent Solicitation are:

Jefferies & Company, Inc. Sanders Morris Harris Inc.

The date of this prospectus is [·], 2005

TABLE OF CONTENTS

	Page
Where You Can Find More Information	ii
Forward-Looking Statements	iii
Prospectus Summary	1
Risk Factors	13
Use of Proceeds	28
Capitalization	28
Ratio of Earnings to Fixed Charges	29
Industry Overview	30
Business	31
Selected Consolidated Financial Data	41
Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Market for Our Common Stock and Related Stockholder Matters	65
Security Ownership of Certain Beneficial Owners and Management	66
Description of Other Indebtedness and Financing Arrangements	69
The Exchange Offer and Consent Solicitation	70
Certain U.S. Federal Income Tax Considerations	81
Description of the Exchange Notes	89
Description of Our Capital Stock	115
Legal Matters	118
Independent Registered Public Accountants	118
Index to Financial Statements	F-1

This exchange offer and consent solicitation is not being made to, nor will we accept tenders of outstanding notes from, holders of outstanding notes in any jurisdiction in which this exchange offer or the acceptance of outstanding notes would not be in compliance with the securities or blue sky laws of such jurisdiction.

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WHERE YOU CAN FIND MORE INFORMATION

This prospectus is part of a registration statement that we have filed with the SEC. You should read this prospectus and the information incorporated by reference, including the exhibits to the registration statement.

We file annual, quarterly, and current reports; proxy statements; and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s web site at http://www.sec.gov. Our filings are located in the EDGAR database on that website. You may also read and copy any document we file at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the SEC’s public reference room in Washington, D.C. by calling the SEC at 1-800-SEC-0330.

All of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports as well as other filings we make pursuant to Section 13(a) and 15(d) of the Securities Exchange Act of 1934 are also available free of charge through our Internet website. The address of our Internet website is www.spacehab.com. Our SEC filings are available through our website as soon as reasonably practicable after they are electronically filed or furnished to the SEC. However, information on our website is not incorporated by reference.

We “incorporate by reference” the information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus. Information that was filed prior to the date of this prospectus that is updated or superceded by information contained in this prospectus is considered a part of this prospectus only as so updated or superceded. Information that we later file with the SEC will automatically update and supersede the information contained in this prospectus and the documents incorporated by reference. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until we terminate this offering:

• Our Annual Report on Form 10-K for the fiscal year ended June 30, 2004, as amended by our Form 10-K/A filed on July 20, 2005;

• Our Quarterly Reports on Form 10-Q for the periods ended September 30, 2004, December 31, 2004, and March 31, 2005, as amended by our Form 10-Q/A filed on July 20, 2005;

• Our Current Reports on Form 8-K filed on September 10, 2004, October 12, 2004, May 3, 2005, May 19, 2005, May 26, 2005, June 2, 2005, July 1, 2005, July 14, 2005 and July 20, 2005 (to the extent these items were “filed” with the SEC and not “furnished”);

• Our Proxy Statement on Schedule 14A for our 2004 Annual Meeting filed on October 28, 2004; and

• The description of our common stock, no par value per share, contained in our Registration Statement on Form S-1 filed on October 5, 1995.

This prospectus incorporates important business and financial information about us that is not included in or delivered with this document. You may request a copy of this information at no cost by writing or telephoning us at the following address and telephone number: Attention: Investor Relations, SPACEHAB, Incorporated, 12130 State Highway 3, Building 1, Webster, Texas 77598, telephone: (713) 558-5000.

The exchange offer and consent solicitation is expected to expire at 5:00 p.m., New York City time, on [·], 2005 and you must make your exchange decision by this expiration date. To obtain timely delivery of the requested information, you must request this information by [·], 2005 or the date that is no later than five business days before the expiration date.

In making your decision regarding participation in the exchange offer and consent solicitation, you should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with any other information. We are not making an offer of these securities in places where offers and sales are not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front cover of this prospectus, or that information incorporated by reference into this prospectus is accurate as of any date other than the date such information was filed with the SEC. Our business, financial condition, results of operations, and prospectus may have changed since that date.

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FORWARD-LOOKING STATEMENTS

This prospectus contains “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. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws. Forward-looking statements may include the words “may,” “will,” “plans,” “believes,” “estimates,” “expects,” “intends” and other similar expressions. Such statements are subject to risks and uncertainties that could cause our actual results to differ materially from those projected in the statements. Such risks and uncertainties include, but are not limited to:

• whether we will fully realize the economic benefits under our NASA and other customer contracts;

• continued utilization by NASA and others of our habitat and logistics modules and related commercial space assets and services;

• completion of the International Space Station, and the continued availability and use of the U.S. space shuttle;

• technological difficulties and potential legal claims arising from any technological difficulties;

• product demand and market acceptance risks, including our ability to develop and sell products and services to be used by the manned and unmanned space programs that replace the space shuttle program;

• the effect of economic conditions in the U.S. or other space faring nations that could impact our ability to support or gain customers;

• uncertainty in government funding and support for key space programs;

• the impact of competition on our ability to win new contracts;

• delays and uncertainties in future space shuttle and International Space Station programs;

• the U.S. Government’s commitment to President Bush’s Vision for Space Exploration;

• delays in the timing of performance of other contracts;

• resolution of our claims against NASA relating to the loss of our research double module on the Columbia orbiter; and

• risks described in the “Risk Factors” section of this prospectus.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate, and, therefore, we cannot assure you that the forward-looking statements included in this prospectus will prove to be accurate. In light of the significant uncertainties inherent in our forward-looking statements, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. Some of these and other risks and uncertainties that could cause actual results to differ materially from such forward-looking statements are more fully described under the heading “Risk Factors” beginning on page 13 of this prospectus and elsewhere in this prospectus, or in the documents incorporated by reference herein. Except as may be required by applicable law, we undertake no obligation to publicly update or advise of any change in any forward-looking statement, whether as a result of new information, future events or otherwise. In making these statements, we disclaim any obligation to address or update each factor in future filings with the SEC or communications regarding our business or results, and we do not undertake to address how any of these factors may have caused changes to discussions or information contained in previous filings or communications. In addition, any of the matters discussed above may have affected our past results and may affect future results, so that our actual results may differ materially from those expressed in this prospectus and in prior or subsequent communications.

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PROSPECTUS SUMMARY

This summary highlights information from this prospectus, but does not contain a complete description of our business or all material features of the exchange offer and consent solicitation. To understand all of the terms of the exchange offer and consent solicitation and for a more complete understanding of our business, you should carefully read the entire prospectus, particularly the section entitled “Risk Factors,” and the materials to which we have referred you. You should also consult with your own legal and tax advisors.

In this prospectus, “SPACEHAB,” “the Company,” “we,” “us,” “our” and “ours” refer to SPACEHAB, Incorporated and its subsidiaries, unless the context otherwise requires. In this prospectus, we use the term “outstanding notes” to refer to the 8% Convertible Subordinated Notes due 2007 that we issued in October 1997 and the term “exchange notes” to refer to the 5.5% Senior Convertible Notes due 2010 that we have registered under the Securities Act of 1933 and are offering in exchange for the outstanding notes as described in this prospectus.

Our Company

Overview

We provide services that focus on the needs of organizations requiring access to the unique environment of space for commercial, scientific and other reasons. We are a leading provider of services that facilitate commercial access to space, and were the first company to commercially develop, own and operate pressurized space habitat modules. Serving the international community, we have experience supporting both manned and unmanned missions to space. We offer many levels of products and services by providing:

• access to space through the use of our research and logistics modules and unpressurized integrated cargo carriers;

• expertise on the habitability and occupational challenges of space;

• facilities and support services needed to prepare satellites and payloads for launch;

• engineering, analysis, and payload operations services;

• program integration and control;

• product design and development; and

• space media, education, and retail goods.

As an enabler of access to space, we provide these products and services to the space industry through the following three primary business units:

• SPACEHAB Flight Services. Our Flight Services business unit provides research and logistics expertise and hardware, including a habitat module and unpressurized integrated cargo carriers provided to NASA for use on the U.S. space shuttle fleet.

• Astrotech Space Operations. Our Astrotech spacecraft processing business unit provides facilities and support for the preparation of satellites and payloads for launch on expendable launch vehicles.

• SPACEHAB Government Services. Our Government Services business unit provides project management and specialized engineering analysis, products, and services to NASA and other customers.

SPACEHAB Flight Services. The primary goal of our Flight Services business unit is to enable government and commercial enterprises to overcome the habitability and occupational challenges of space. Through the provision of experts, specialized hardware, and established processes, we help our customers access the resources of space. We offer a range of engineering, integration, operations, and ground support services that we tailor to

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meet our clients’ specific requirements. Our Flight Services business unit provides a habitat module and unpressurized integrated cargo carriers to NASA for use on the U.S. space shuttle fleet and the International Space Station. We sell research and logistics services to NASA and commercial customers who want to use our modules and unpressurized carriers for specific space applications. Our modules provide space-based research facilities and pressurized cargo services for use aboard the space shuttle. Our single module, when installed in the payload bay of a space shuttle, more than doubles the space available to astronauts for research, habitation, and storage, while still leaving space in the shuttle bay for unpressurized cargo. We also have a second module that can be attached to our single module and used in the space shuttle in a double configuration. We outfit each module for research, logistics, or a combination of both depending on customer needs. Our unpressurized integrated cargo carrier systems are used to ferry equipment, supplies, and tools to the International Space Station onboard the space shuttle. As of June 30, 2005, our modules and integrated cargo carriers have flown on 18 missions on the space shuttle, including 12 logistics missions (five to the International Space Station and seven to the Russian space station Mir). We are currently under contract to provide an integrated cargo carrier that will be permanently attached to the International Space Station on the space shuttle’s return-to-flight mission, which was delayed on July 13, 2005. In addition to our flight assets, we offer a full range of ground-based pre- and post-flight experiment and payload processing services and in-flight operations support.

Astrotech Space Operations. Our Astrotech spacecraft processing business unit provides government and commercial customers with a commercial alternative to using government-owned facilities to prepare their satellites for launch in the United States. We believe that growing wireless telecommunication demands, such as direct-broadcast radio and television, cellular telephones, and broadband internet services, as well as the continued need for video and long-distance telephone transmissions, will provide us with opportunities to expand our customer base. Our modern facilities are used by payload customers launching on a wide range of expendable launch vehicles, including Atlas, Delta, Pegasus, Sea Launch, and Taurus, as well as secondary payloads flown on the space shuttle. Our largest facility, which we own, supports spacecraft processing for launches in Cape Canaveral and is capable of processing larger five meter class satellites and payload fairings for Lockheed Martin’s and Boeing’s Evolved Expandable Launch Vehicle Programs. The satellite and payload fairings for the Evolved Expandable Launch Vehicle Programs are significantly larger than other launch vehicles currently in use and require larger facilities for processing. We also lease facilities located on Vandenberg Air Force Base to support launches on the west coast. In addition, we manage the facilities at the Port of Long Beach that are used to process satellites and payloads being launched from an equatorial sea-based platform by Sea Launch Company, LLC. As of June 30, 2005, we had supported the processing of more than 225 satellites and payloads.

SPACEHAB Government Services. Our Government Services business unit has provided specialized engineering support services for the U.S. Government, including NASA, and various commercial industries for over 30 years. Specifically, we have supported the Government in the areas of:

• large-scale configuration and data management programs, including for the construction of the International Space Station;

• specialized design, development, and fabrication of flight hardware;

• low- to high-fidelity mockup design and construction; and

• safety and quality support services.

Space Media, Inc. In addition to our three primary business units, we also have a majority-owned subsidiary that creates proprietary space-themed content for education and commerce. By leveraging our access to engineers, marketing and industry professionals, and aerospace subcontractors, we are able to provide the space enthusiast with a variety of services and products. These services range from outfitting a comprehensive space exhibit to providing astronaut appearances and product endorsements. This business unit owns and operates an online retailing outlet, TheSpaceStore.com, and a retail store adjacent to NASA’s Johnson Space Center in Houston. Our website and retail store offer hundreds of products, providing distinctive and personalized gifts, clothing, mission patches, space

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collectibles, and more. Through the STARS Program, we provide educational and outreach services to schools around the globe through which we help students develop and fly their own experiments in space.

Strategy

Our strategic vision is to be a recognized market leader in providing services to support space operations and utilization with consistent growth, high employee morale, and a realistic shareholder return on investment. Extracted from that vision, our strategies encompass the following:

• deliver excellence on current work;

• leverage our mission/program support expertise;

• provide technical support on space programs;

• expand and enhance existing payload-processing facilities;

• design solutions that encourage private commercial investment in space;

• develop space-related hardware;

• support alignment of domestic and foreign resource sharing; and

• identify new applications for our technology and expertise.

We believe that our business units are tactically aligned with our overriding corporate strategy in a manner that is poised to achieve our operational and financial goals. Our units are focused on three areas in the near term:

• utilizing the expertise of our Flight Services business unit to provide support for the space shuttle’s return-to-flight and subsequent missions, assembly and utilization of the International Space Station, and the evolution of NASA’s exploration initiatives;

• expanding our Astrotech spacecraft processing business unit’s revenue base through new markets and services in an effort to increase utilization of our modern, commercially-operated facilities and extensive payload processing expertise; and

• supporting the International Space Station Program Office through our Government Services business unit under cost reimbursable government contracts, further defining ourselves as a principal in configuration and data management services.

We are continuing to identify new business opportunities within our core competencies to maintain and expand our role as a NASA team member and commercial space access facilitator. For example, we recently completed a six-month NASA study contract valued at approximately $1.0 million to support the space agency’s new exploration initiatives. The purpose of this contract was to design a technical solution to accomplish the agency’s objectives for lunar exploration and to identify systems that could also be used on missions to Mars and other destinations. Our winning proposal documented our approach for designing an architecture that takes advantage of commercial efficiencies; specifically, how private industry can benefit from investing in transporting people to the moon and elsewhere. We believe that our approach results in lower program costs and provides the additional benefit of applying existing capabilities and mature technology. Following our initial six-month effort, NASA awarded us an additional six-month contract, also valued at approximately $1.0 million, to continue and expand upon our initial work.

Our NASA study contract involves us in President Bush’s space exploration vision at the onset, allowing us to promote the value of commercial solutions and private enterprise in NASA’s growing initiatives. NASA is now in the process of defining the next steps for the national vision and will be issuing multiple proposals for the development of a crew exploration vehicle and a lunar vehicle, and the use of mature technologies that will assist in the process of exploring the moon and beyond. We believe that our expertise in the areas of logistics services, crew habitability, payload integration, and ground processing positions us to benefit from NASA’s new initiatives.

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In order to meet the evolving needs of NASA’s exploration program and potential commercial customers, we are in the process of developing a commercial payload service. We believe that retirement of the shuttle eliminates a significant payload transport capability both to and from space for which NASA has not identified a replacement. Additionally, the retirement of the shuttle results in the loss of an orbiting platform that can host short duration technology maturation experiments. Our goal is to enable the smooth transition of a portion of space shuttle based International Space Station payload transport capabilities to commercial payload transport services. We are designing our proposed commercial payload service so that it can evolve with minimal redesign efforts as NASA migrates from International Space Station operations in low Earth orbit to lunar operations and beyond. Our proposed commercial payload service would consist of a variety of spacecraft that could be launched using existing expendable, unmanned launch vehicles, from smaller rockets to Boeing’s Delta IV and Lockheed Martin’s Atlas V Evolved Expendable Launch Vehicle Programs. We believe that we will have a payload transport carrier by 2008.

Recent Developments

In April 2005, we consummated the sale and lease back of our 58,000 square-foot payload processing facility in Cape Canaveral, Florida in a transaction with Tamir Silvers LLC for $4.8 million. This payload processing facility hosts payload integration activities for our modules and integrated cargo carriers. This lease offers the flexibility to respond to new opportunities and re-evaluate our facility requirements for both our nearby Cape Canaveral and Titusville, Florida locations upon the proposed retirement of the space shuttle in 2010. The contract terms provide for a lease by us of 100% of the facility for an initial period of five years, with an option period for an additional five years. Currently, we have subleases in place that occupy approximately 20% of the available space with another 20% available for prospective tenants.

On May 26, 2005, we exercised a right of first refusal contained in the lease for our 90,000 square foot corporate administrative facility and an adjacent three acres of land in Webster, Texas. We purchased the building and the adjacent three acres of land from American National Insurance Corporation for $2.0 million. We sold the building, excluding the three acres of adjacent undeveloped land for $3.25 million pursuant to a sale-leaseback arrangement. We have leased back 100% of the facility for an initial period of ten years, with two five-year options. We retained the adjacent three acres parcel for future development or sale.

In January 2004, Lloyd’s of London, our insurer for the research double module, filed a complaint in the United States District Court for the Western District of Washington seeking the return of the $17.7 million Lloyd’s had paid to us under the research double module insurance policy. On May 12, 2005 we and Lloyd’s agreed to jointly pursue recovery against NASA with us in full control of the appeals process. Lloyd’s will participate in any recovery both pursuant to our administrative claim and our tort claim against NASA, net of legal costs, in accordance with a pre-agreed schedule under which our liability to Lloyd’s ranges from a minimum of $500,000 if we do not recover any additional amounts to approximately $17.7 million if we recover over $70.0 million from NASA. Also in accordance with the agreement, Lloyd’s dismissed its complaint against us with prejudice. We will record a charge in our fourth quarter financial statements of $500,000 pending a final resolution of our actions against NASA. For a discussion of our claims against NASA see “Business—Legal Proceedings.”

On July 20, 2005, we restated our statements of cash flows for the year ended June 30, 2003 and the nine months ended March 31, 2005 to revise the classification of insurance and contractual indemnification proceeds that we received in connection with the loss of our research double module. We originally classified these proceeds, which totaled $17.7 million in insurance proceeds and $8.2 million in indemnification proceeds, as cash flows from operating activities; however, such proceeds should have been classified as cash flows from investing activities. Our restatement properly classifies such amounts.

The address of our principal executive offices is 12130 State Highway 3, Building 1, Webster, Texas 77598. Our telephone number is (713) 558-5000. Our Internet website address is www.spacehab.com. Information contained in or connected to our Internet website is not a part of this prospectus.

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The Exchange Offer and Consent Solicitation

The material terms of this exchange offer and consent solicitation are summarized below. However, in addition, we encourage you to read the detailed descriptions in the sections entitled “The Exchange Offer and Consent Solicitation” and “Summary Comparison of Key Differences Between the Outstanding Notes and the Exchange Notes” for further information about the exchange offer and the consent solicitation.

We are making this exchange offer and consent solicitation in order to increase our liquidity by reducing our interest expense, extend the maturity of the outstanding notes since we do not believe that we would be able to make the required principal payment on the outstanding notes in 2007, and modify the terms of the notes, including the conversion price, so that they more closely resemble current market terms for convertible notes.

The Exchange Offer We are making this exchange offer for all of our outstanding 8% Convertible Subordinated Notes due 2007. For every $1,000 in principal amount of outstanding notes that you validly tender prior to the expiration of the exchange offer, you will receive $1,000 in principal amount of 5.5% Senior Convertible Notes due 2010, plus accrued and unpaid interest on the outstanding notes that you tender. The exchange notes will bear a different CUSIP number from the outstanding notes.

Consent Solicitation In addition to the exchange offer, we are soliciting consents to amend provisions of the indenture governing the outstanding notes. If you tender your outstanding notes in the exchange offer and they are accepted before the consent solicitation expires, you will be consenting to amend the indenture that governs the outstanding notes to remove the occurrence of a default on our other indebtedness as an event of default under the outstanding notes. Duly executed consents to the proposed amendment from holders representing at least a majority of the principal amount of the outstanding notes are required to amend the indenture governing the outstanding notes.

Exchange Offer and Consent Solicitation Expiration Date The “expiration date” for the exchange offer and consent solicitation is 5:00 p.m., New York City time, on [·], 2005, unless we extend the expiration date. It is possible that we will extend the exchange offer. See “The Exchange Offer and Consent Solicitation—Expiration Date; Extensions; Amendments.”

Withdrawal Rights You may withdraw outstanding notes you tendered by furnishing a notice of withdrawal to the exchange agent or by complying with applicable ATOP procedures at any time before 5:00 p.m. New York City time on the expiration date. See “The Exchange Offer and Consent Solicitation—Withdrawal of Tenders.”

Accrued Interest on the Exchange Notes and the Outstanding Notes You will receive accrued and unpaid interest on any outstanding notes accepted in the exchange offer, calculated from the last interest payment date up to but excluding the issue date of the exchange notes. The exchange notes will bear interest from the issue date at a rate of 5.5% per year. We will pay interest on the exchange notes in cash semi-annually on each April 15 and October 15, commencing October 15, 2005.

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Conditions to the Exchange Offer The exchange offer is conditioned upon the satisfaction of several conditions, including, but not limited to, a minimum of $60,087,500 aggregate principal amount of outstanding notes being tendered and the approval by the holders of our common stock of an increase in the number of authorized shares of our common stock and the issuance of common stock upon exercise of the exchange notes. See “The Exchange Offer and Consent Solicitation—Conditions.” SMH Capital Advisors, Inc. is a registered investment advisor who has been granted discretionary authority to sell, tender, or exchange an aggregate principal amount of $40,259,000 of the outstanding notes by the beneficial owners of those outstanding notes. While SMH Capital Advisors’ ability to tender the outstanding notes under its management is subject to certain limitations, including any specific directions of any beneficial owner relating to those outstanding notes or the transfer of such outstanding notes out of the account managed by SMH Capital Advisors, SMH Capital Advisors has expressed its intent to tender all outstanding notes under its management at the time of the closing of the exchange offer. SMH Capital Advisors is under no obligation to tender any of the outstanding notes under its management and we cannot make any assurances that it will tender the outstanding notes that it holds. In addition, an affiliate of SMH Capital Advisors, Sanders Morris Harris Inc., is acting as a co-dealer manager in connection with this transaction and will receive compensation for serving in such capacity. See “The Exchange Offer and Consent Solicitation—Co-Dealer Managers” and “—Soliciting Dealer Fees.”

Consent to Amendments If you tender your outstanding notes before the consent solicitation expires, you are obligated to consent to the proposed amendments. You may not consent to the proposed amendments without tendering your outstanding notes.

Dissenter’s Rights Holders of the outstanding notes do not have any appraisal or dissenters’ rights under the Washington Business Corporation Act or the indenture in connection with the exchange offer and consent solicitation.

Governmental Approvals No governmental approvals or consents must be received to consummate the exchange offer and consent solicitation.

Procedures for Tendering Outstanding Notes Held in the Form of Book-Entry Interests The outstanding notes were issued as global securities and were deposited with Wachovia Bank, National Association who holds the outstanding notes as the custodian for the Depository Trust Company (DTC). Beneficial interests in the outstanding notes are held by participants in DTC on behalf of the beneficial owners of the outstanding notes. We refer to beneficial interests in notes held by participants in DTC as notes held in book-entry form. Beneficial interests in notes held in book-entry form are shown on, and transfers of the notes can be made only through, records maintained in book-entry form by DTC and its participants.

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If you are a holder of an outstanding note held in the form of a book-entry interest and you wish to tender your book-entry interest for exchange in the exchange offer, you must transmit to Wachovia Bank, National Association, as exchange agent, on or prior to the expiration date of the exchange offer, the following:

• a computer-generated message transmitted by means of DTC’s Automated Tender Offer Program (ATOP) system that, when received by the exchange agent will form a part of a confirmation of book-entry transfer in which you acknowledge and agree to be bound by the terms of the letter of transmittal; and

• a timely confirmation of book-entry transfer of your outstanding notes into the exchange agent’s account at DTC, according to the procedure for book-entry transfers described in this prospectus under the heading “The Exchange Offer—Procedures for Tendering—Outstanding Notes Held in Book-Entry Form.”

Procedures for Tendering Outstanding Notes Held in Certificated Form If you hold your outstanding notes in certificated form and wish to accept the exchange offer, sign and date the letter of transmittal, and deliver the letter of transmittal, along with certificates for the outstanding notes and any other required documentation, to the exchange agent on or before the expiration date in accordance with the instructions contained in this prospectus and the letter of transmittal.

Special Procedures for Beneficial Owners If you are a beneficial owner whose outstanding notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and wish to tender those outstanding notes in the exchange offer, please contact the registered holder as soon as possible and instruct them to tender on your behalf and comply with the instructions in this prospectus and the letter of transmittal.

Guaranteed Delivery Procedures If you are unable to deliver the outstanding notes, the letter of transmittal or any other required documents to the exchange agent or comply with the applicable ATOP procedures prior to the expiration date, you may tender your outstanding notes according to the guaranteed delivery procedures described in this prospectus under the heading “The Exchange Offer and Consent Solicitation—Guaranteed Delivery Procedures.”

Acceptance of Outstanding Notes and Delivery of Exchange Notes If the conditions described under “The Exchange Offer and Consent Solicitation—Conditions” are satisfied, we will accept for exchange any and all outstanding notes that are properly tendered and not withdrawn before the expiration date. See “The Exchange Offer and Consent Solicitation—Procedures for Tendering.” If we close the exchange offer, the exchange notes will be delivered promptly following the expiration date. Otherwise, we will promptly return any outstanding notes that are not accepted.

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Consequences of Failure to Exchange If you do not exchange your outstanding notes and the proposed amendments are adopted, you will continue to hold those notes, but the indenture governing those outstanding notes will have been amended to remove the occurrence of a default on our other indebtedness as an event of default under the outstanding notes. In addition, the exchange notes being issued pursuant to this exchange offer will be senior in right of payment to any outstanding notes that you continue to hold. See “Certain U.S. Federal Income Tax Considerations” for a discussion of U.S. federal income tax considerations of the failure to exchange your outstanding notes.

Federal Income Tax Considerations We intend to take the position that the exchange of outstanding notes for exchange notes as a tax-free recapitalization for purposes of United States federal income taxation. If the exchange qualifies as a recapitalization, you generally will not recognize taxable gain or loss as a result of the exchange. See “Certain U.S. Federal Income Tax Considerations” for a discussion of U.S. federal income tax considerations you should consider before tendering outstanding notes in the exchange offer. You should also consult your own tax advisor as to the consequences to you of participating in the exchange offer or your decision not to participate in the exchange offer.

Co-Dealer Managers Jefferies & Company, Inc. and Sanders Morris Harris Inc.

Soliciting Dealer Fees If you validly tender, and we accept from you, $500,000 or less in aggregate principal amount of the outstanding notes, we will pay your broker a soliciting dealer fee of an amount equal to 1.5% of those tendered and accepted outstanding notes. For more information, please see “The Exchange Offer and Consent Solicitation—Soliciting Dealer Fees.”

Information Agent CapitalBridge is serving as information agent for the exchange offer and consent solicitation. The address for the information agent is listed under “The Exchange Offer and Consent Solicitation—Information Agent.” If you would like more information about the exchange offer and consent solicitation, you should call the information agent at (877) 746-3583 (toll-free). The facsimile number for the information agent is (201) 499-3600.

Exchange Agent Wachovia Bank, National Association is serving as exchange agent for the exchange offer and consent solicitation. The address for the exchange agent is listed under “The Exchange Offer and Consent Solicitation—Exchange Agent.” If you would like more information about the exchange offer, you should call the exchange agent at (704) 590-7413. The facsimile number for the exchange agent is (704) 590-7628.

See “The Exchange Offer and Consent Solicitation” for more detailed information concerning the terms of the exchange offer and consent solicitation.

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Summary Comparison of Key Differences Between the Outstanding Notes and the Exchange Notes

The following is a summary of the key differences between the provisions of our outstanding 8% Convertible Subordinated Notes due 2007 and our new 5.5% Senior Convertible Notes due 2010 that are being offered in exchange for the outstanding notes and the reasons we believe these changes will help us to implement our strategic restructuring plan. This summary only describes the material differences between the indenture governing the outstanding notes and the indenture governing the exchange notes. We urge you to review each of these indentures to review additional changes that may be important to you.

Outstanding 8% Convertible Subordinated Notes due 2007 Indenture	New 5.5% Senior Convertible Notes due 2010 Indenture
Interest Rate. The outstanding notes bear interest at 8% per year.	Interest Rate. The exchange notes bear interest at 5.5% per year.
Maturity Date. The maturity date for the outstanding notes is October 15, 2007.	Maturity Date. The maturity date for the exchange notes is October 15, 2010.
Ranking. The outstanding notes are subordinated to all of our senior indebtedness.	Ranking. The exchange notes will be senior indebtedness.
Conversion Price. The conversion price for the outstanding notes is $13.625 per share of common stock.	Conversion Price. The conversion price for the exchange notes will initially be $2.12 and will increase semi-annually until October 15, 2008, when the conversion price will be set at $2.50.
Mandatory Conversion. The outstanding notes do not have any mandatory conversion provisions.	Mandatory Conversion. If our stock price exceeds $3.25 for 20 consecutive trading days, the exchange notes will be automatically converted into shares of our common stock.
Redemption. The outstanding notes can currently be redeemed at a redemption price equal to 101.7778% of the principal amount. From October 15, 2005 until October 14, 2006 the outstanding notes will be redeemable at a price equal to 100.8889% of the principal amount. On and after October 15, 2006, the outstanding notes are redeemable at a redemption price equal to 100% of the principal amount. In connection with any redemption, accrued and unpaid interest to the redemption date is also payable to the holders of the outstanding notes.	Redemption. The exchange notes can be redeemed at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest to the date of redemption. In addition, if the exchange notes are redeemed prior to [·], 2008 we will be required to pay a make-whole premium equal to the present value of interest payments remaining from the date of redemption until [·], 2008, discounted using the treasury rate on the date of redemption plus 1%.
Limitation on Senior Secured Indebtedness and Acquired Indebtedness. The indenture governing the outstanding notes does not limit the incurrence of additional indebtedness.	Limitation on Senior Secured Indebtedness and Acquired Indebtedness. The indenture governing the exchange notes prohibits us from incurring more than $20 million in additional senior secured indebtedness and, unless a leverage ratio test is met, from assuming or incurring indebtedness in connection with acquisitions. For a description of this covenant see “Description of the Exchange Notes—Certain Covenants—Limitation on Incurrence of Senior Secured Indebtedness and Assumption of Acquired Indebtedness”

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Outstanding 8% Convertible Subordinated Notes due 2007 Indenture	New 5.5% Senior Convertible Notes due 2010 Indenture
Limitation on Dividends. The indenture governing the outstanding notes does not limit the payment of dividends.	Limitation on Dividends. The indenture governing the exchange notes prohibits us from paying dividends on our common stock unless the dividends are paid in shares of our non-redeemable capital stock or common stock of any of our subsidiaries. The indenture governing the exchange notes will not limit our ability to repurchase or redeem our common stock.
Change of Control. In the event of a change of control, holders of the outstanding notes have the right to require us to repurchase their outstanding notes at a price equal to 100% of the principal amount of such notes, plus accrued and unpaid interest. The provisions in the indenture governing the outstanding notes regarding a change of control can not be amended without the consent of all affected holders.	Change of Control. The indenture governing the exchange notes contains provisions substantially similar to the provisions in the indenture for the outstanding notes that permits holders of the exchange notes to require us to repurchase their exchange notes at a price equal to 100% of the principal amount of such notes, plus accrued and unpaid interest. Unlike the indenture for the outstanding notes, we are permitted to repurchase exchange notes upon a change of control in cash or in shares of our common stock, valued at the average closing price of our common stock for the 15 trading days immediately preceding the second trading day before we give notice of a change of control. The provisions in the indenture governing the exchange notes regarding a change of control can be amended with the approval of the holders of at least a majority in principal amount of the outstanding exchange notes.

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The Exchange Notes

The following is a summary of the terms of the exchange notes. For a more complete description of the differences between the outstanding notes and the exchange notes, see “Summary Comparison of Key Differences Between the Outstanding Notes and the Exchange Notes.”

Issuer SPACEHAB, Incorporated.

Title 5.5% Senior Convertible Notes due 2010.

Maturity Date October 15, 2010

Interest Payment Dates Interest will be payable semi-annually on April 15^th and October 15^th, commencing October 15, 2005.

Ranking The exchange notes will be the unsecured and unsubordinated debt of SPACEHAB, Incorporated. Accordingly, they will rank:

• equally with all of our existing and future unsecured and unsubordinated debt;

• effectively subordinated to any future secured debt to the extent of the assets securing such debt, including our senior credit facility;

• effectively subordinated to all debt of our subsidiaries, including the $3.7 million term loan of Astrotech Florida Holdings, which we have also guaranteed; and

• ahead of any of our future subordinated debt.

As of June 30, 2005, we and our subsidiaries had $67.0 million in principal amount of indebtedness outstanding, which consists of $63.3 million in aggregate principal amount of the outstanding notes and $3.7 million in aggregate principal amount of indebtedness of our subsidiary Astrotech Florida Holdings.

Guarantees The exchange notes will not be guaranteed by any of our current or future subsidiaries.

Optional Conversion The exchange notes are convertible into shares of our common stock at a conversion price that increases semi-annually as follows:

Period	Conversion Price Per Share
Issue Date – April 14, 2006	$	2.12
April 15, 2006 – October 14, 2006	$	2.19
October 15, 2006 – April 14, 2007	$	2.25
April 15, 2007 – October 14, 2007	$	2.32
October 15, 2007 – April 14, 2008	$	2.38
April 15, 2008 – October 14, 2008	$	2.44
October 15, 2008 and thereafter	$	2.50

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Mandatory Conversion The exchange notes will be automatically converted into shares of our common stock at a conversion price of $2.50 per share if the closing price of our common stock exceeds $3.25 per share for 20 consecutive trading days at any time prior to the maturity date of the exchange notes.

Optional Redemption We may redeem some or all of the exchange notes at any time at 100% of the principal amount of the exchange notes being redeemed, plus accrued interest to the date of redemption. If we redeem the exchange notes prior to October 15, 2008, we will be required to pay a make-whole premium equal to the present value of the interest payments due on the exchange notes being redeemed to October 15, 2008, computed using a discount rate equal to the treasury rate on such date plus 1%.

Change of Control Upon the occurrence of a change of control (as described under “Description of the Exchange Notes—Repurchase at the Option of Holders upon Change of Control”), we must offer to repurchase the exchange notes at 100% of the principal amount of the exchange notes, plus accrued interest to the date of repurchase. At our option, we may pay this amount in cash or in shares of our common stock valued at the average closing price of our common stock for the 15 trading days immediately preceding the second trading day before we give notice of a change of control. We may not be able to repurchase the exchange notes upon a change of control. See “Risk Factors—Risks Related to the Exchange Notes—We may be unable to make a change of control offer required by the indenture governing the exchange notes, which would cause defaults under the indenture governing the exchange notes, our revolving credit facility and other financing arrangements.”

Certain Covenants The indenture under which the exchange notes will be issued contains covenants that will, among other things, limit our ability to incur additional senior secured indebtedness, assume or incur indebtedness in connection with acquisitions, and sell assets or merge with other companies. These covenants are subject to a number of important qualifications and exceptions as described in this prospectus under the caption “Description of the Exchange Notes—Certain Covenants.”

See “Description of the Exchange Notes” for more detailed information about the terms of exchange notes.

Risk Factors

See “Risk Factors” for a discussion of factors you should carefully consider before deciding to participate in the exchange offer and consent solicitation and invest in the exchange notes.

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RISK FACTORS

You should carefully consider the following risks and other information contained or incorporated by reference in this prospectus before deciding to participate in the exchange offer and consent solicitation. The risks and uncertainties described below are not the only risks facing us or applicable to your investment in our exchange notes. Additional risks not presently known to us or which we consider immaterial based on information currently available to us may also materially adversely affect us. If any of the following risks or uncertainties actually occur, our business, financial condition and results of operations could be materially adversely affected.

Risks Related to Our Business

In 2004, our Flight Services business unit derived over 80% of its revenues, which represented approximately 50% of our fiscal year 2004 consolidated revenues, from the use of our modules and integrated cargo carriers by the space shuttle fleet, which is currently expected to be retired by 2010.

Our modules and integrated cargo carriers have been specifically designed to enhance the capabilities of the space shuttle and, therefore, our current Flight Services business is highly dependent on the availability of the space shuttle fleet. President Bush’s vision for U.S. space exploration envisions that the United States will fulfill its commitments to international partners and complete its work on the International Space Station by 2010. The shuttle is currently scheduled to be retired after its work on the station is complete. Our single module is currently scheduled to fly on two space shuttle missions. Since the shuttle’s chief purpose is anticipated to be assisting in the completion of the assembly of the station, our modules may not be used for many additional missions, if any. We currently own one single module and a second module that can be added to our single module in order for it to be configured as a double module. We invested approximately $72.5 million in the design and construction of these two modules. We do not anticipate being able to sell or use these two modules or use our integrated cargo carriers following the retirement of the space shuttle fleet. If our Flight Services business is unable to develop projects or services that will be used by the crew exploration vehicle and other spacecraft that will replace the shuttle fleet, our financial condition and results of operations will be materially adversely affected.

Our Flight Services business unit depends on regular space shuttle flights.

In addition to the scheduled retirement of the space shuttle fleet, the space shuttle fleet has been grounded for extended periods numerous times. The space shuttle’s expected return to flight for the first time since the Space Shuttle Columbia was lost on re-entry in February 2003 was delayed on July 13, 2005. All missions aboard the space shuttle were previously suspended from January 1986 to September 1988, pending the redesign of certain of its subcomponents which had caused the loss of the Space Shuttle Challenger. The space shuttle fleet has also been temporarily grounded for shorter periods of time on several occasions. No assurances can be made that the space shuttle will not be grounded, that future missions of the space shuttle will not be delayed, or that NASA will launch the number of space shuttle missions currently scheduled. There are three space shuttles in operation. Failure to have access to the space shuttle, either through technical difficulties affecting the entire fleet or the loss of an individual space shuttle, would have a material adverse effect on our financial condition and results of operations.

We have incurred, and expect in the future to incur, significant legal costs related to the loss of our research double module in the Columbia tragedy.

On February 1, 2003 we lost our research double module in the Columbia tragedy. We sought indemnification from NASA in the amount of $87.7 million for the value of our research double module and related equipment that was destroyed. We received insurance proceeds of $17.7 million and $8.0 million in indemnification from NASA in connection with the loss of this module. We have filed an appeal of NASA’s decision to deny our claim for indemnification in excess of $8.0 million with the Armed Services Board of

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Contract Appeals and a tort claim against NASA seeking damages of $79.7 million for the loss of the research double module. In pursuing our appeal and tort claims, we will be required to expend material amounts on legal fees, but may not recover any additional amounts from NASA. Lloyd’s, our insurer, is entitled to participate in a recovery against NASA, if any, net of legal costs, in an amount of up to $500,000.

Since we do not intend to build any more modules, if our single module is lost, our net income from operations associated with space shuttle missions would be materially reduced and our insurance coverages may not be adequate.

Our second module is designed to convert our single module into a double module configuration. It can only be used in connection with our remaining single module. If our single module is lost as a result of another shuttle accident, we will not have any modules available for future shuttle missions. If we only lost our single module, we could not recover insurance proceeds for the second module, which is not usable without the single module. Although our modules are insured for replacement value if they are lost, we currently do not intend to build any additional modules due to the planned retirement of the space shuttle fleet in 2010 and the inability of our modules to be used on other spacecraft. As a result, the loss of one or both of our modules would materially reduce the amount of income we could potentially generate from the remaining shuttle missions. In addition, the loss of another space shuttle could result in the termination of the shuttle program earlier than is currently expected. In the event of another catastrophic space tragedy in which our modules or carriers cause damage to third parties, our liability may exceed the limits of our liability coverage. The loss of one or both of our modules will materially reduce our net income from operations associated with shuttle missions and will have a material adverse affect on our financial condition and results of operations.

Since we are dependent on NASA as a customer, if the products and services we are currently developing for use by NASA’s successor to the space shuttle program are not used, our financial condition and results of operations will be materially adversely affected.

Approximately 54% of our fiscal 2004 revenue was generated from seven contracts supporting NASA. We anticipate that revenue from NASA-related projects will continue to account for a material amount of our revenue in the future. We currently are providing services supporting NASA under five primary contracts. There are no assurances, however, that NASA will require our module or integrated cargo carrier services in the future. We currently anticipate that NASA will not use our modules as much as they have in the past. Even if NASA continues to use our modules and integrated cargo carriers to the same extent that it did prior to the suspension of shuttle flights following the Columbia disaster, these products will become obsolete when the space shuttle is retired. See “—In 2004, our Flight Services business unit derived over 80% of its revenues, which represented approximately 50% of our fiscal year 2004 consolidated revenues, from the use of our modules and integrated cargo carriers by the space shuttle fleet, which is currently expected to be retired by 2010.” Our failure to execute new contracts supporting NASA for use of our modules and integrated cargo carriers could have a material adverse effect on our financial condition and results of operations.

In the past, we have developed products without any firm commitments from NASA. Although we may invest substantial amounts developing products for the shuttle’s replacement program without any contracts with NASA, we cannot provide any assurances that such products will be used. Since the final program that will be chosen by NASA is not currently known, we can not provide any assurances that the products and services we may develop will be suitable for such replacement programs. If NASA or its contractors do not purchase the products and services we are developing for the shuttle’s replacement programs, our financial condition and results of operations will be adversely affected.

Termination of our backlog of orders could negatively impact our revenues.

As of March 31, 2005, we had a firm backlog of approximately $17 million and total backlog of approximately $81.9 million. Firm backlog consists of aggregate contract values, excluding the portion previously

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recognized as revenues, and our estimate of potential award fees. Total backlog includes firm backlog in addition to unexercised options under existing contracts, expected indefinite-quantity indefinite delivery task orders under existing contracts and undefinitized orders under existing contracts, which may not result in definitized contracts or orders. Backlog as of March 31, 2005 does not give effect to new orders received or any terminations or cancellations since that date. Approximately 86% of our contract backlog as of March 31, 2005 was derived from contracts with the U.S. Government and its agencies or from subcontracts with the U.S. Government’s prime contractors. Since our government contracts are contingent upon Congressional appropriations and are terminable “for convenience,” we cannot assure you that our backlog will ultimately result in revenues.

Our existing NASA contracts are subject to continued appropriations by Congress and may be terminated if future funding is not made available, which would have a material adverse effect on our business.

Our financial performance is substantially dependent on the revenue generated from our contracts supporting NASA which, similar to contracts with other agencies of the U.S. government, are conditioned upon the continuing availability of Congressional appropriations. The U.S. Congress usually appropriates funds for a given program on a fiscal year basis even though contract performance may extend over many years. Failure to receive sufficient funds from Congress or a withdrawal by Congress of prior appropriations would permit NASA to terminate its contracts with us “for convenience.” Therefore, no assurances can be made that Congress will continue to fund NASA at levels which will permit space shuttle missions to continue on their current schedules or that Congress will appropriate the funds necessary for NASA to fulfill its obligations under its contracts with us. Any substantial reduction in Congressional funding for space shuttle missions or annual appropriations to NASA to fulfill, among other things, NASA’s contracts with us or the U.S. commitment to the International Space Station, would have a material adverse effect on our financial condition and results of operations. In addition, termination of large programs or multiple contracts affecting our Flight Services business unit could require us to evaluate the continued viability of operating that business.

As a U.S. Government contractor, we are subject to a number of rules and regulations the violation of which could result in us being barred from future NASA contracts.

We must comply with and are affected by laws and regulations relating to the award, administration and performance of U.S. Government contracts. These laws and regulations, among other things:

• require certification and disclosure of all cost or pricing data in connection with certain contract negotiations;

• impose acquisition regulations that define allowable and unallowable costs and otherwise govern our right to reimbursement under certain cost-based U.S. Government contracts; and

• restrict the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.

A violation of specific laws and regulations could result in the imposition of fines and penalties, the termination of our contracts or debarment from bidding on U.S. Government contracts. In some instances, these laws and regulations impose terms or rights that are more favorable to the government than those typically available to commercial parties in negotiated transactions. For example, the U.S. Government may terminate any of our government contracts for convenience, as well as for default based on performance. In addition, U.S. Government contracts generally contain provisions that allow the U.S. Government to unilaterally suspend us from receiving new contracts pending resolution of alleged violations of certain federal laws or regulations, reduce the value of existing contracts, issue modifications to a contract and control and potentially prohibit the export of our services and associated materials. Since a majority of our revenues are currently, and a material portion of future revenues are expected to be, derived from contracts supporting NASA, material modifications to our existing contracts or a prohibition against bidding on future U.S. Government contracts would have a material adverse affect on our financial condition and results of operations.

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Our business could be adversely affected by a negative audit by the U.S. Government.

U.S. Government agencies, including NASA, routinely audit and investigate government contractors. These agencies review a contractor’s performance under its contracts, cost structure and compliance with applicable laws, regulations and standards. The U.S. Government also may review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems. Any costs found to be improperly allocated to a specific contract will not be reimbursed, while such costs already reimbursed must be refunded. If an audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines, and suspension or prohibition from doing business with the U.S. Government. In addition, we could suffer serious reputational harm that affects our non-governmental business if allegations of impropriety were made against us.

Most of our competitors, including NASA which is also our largest customer, have much greater financial resources than we do.

The U.S. Government, the governments of other countries, and private companies participate in the highly competitive space industry often as both suppliers and end-users of space services. Our 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 and for the manned and unmanned programs that will replace the space shuttle program. This strategy could require us to compete with commercial companies such as Boeing, Lockheed Martin and other large aerospace companies, many of which have existing NASA support contracts, substantially greater financial resources and manufacturing capabilities, more established and larger marketing and sales organizations, and larger technical staffs than we have.

Pursuant to a treaty between the United States and Italian governments, the Italian government has provided three multi-purpose logistics modules to NASA for use in the construction and operation of the International Space Station. These NASA-owned and operated modules are capable of carrying pressurized logistics and other payloads in the cargo bay of the space shuttle to and from the International Space Station. These NASA owned modules are our most direct competitor for pressurized logistics resupply to the International Space Station. Russia also operates Progress unmanned, expendable logistics resupply vehicles, which were the sole means of re-supplying the International Space Station while shuttle flights were suspended. Japan and certain European countries are also currently working on their own expendable, automated docking modules for logistics resupply missions. The NASA owned modules might, and successful implementation of the proposed expendable docking modules could further, reduce the demand for our modules, which would have a material adverse effect on our future financial performance.

Prior to January 2004, Boeing was our subcontractor for processing payloads for our modules. We now perform all of our payload processing services using our employees. Boeing and United Space Alliance currently perform payload processing services for NASA’s multi-purpose logistics modules. In addition, there are several other space shuttle payload processing contractors currently performing flight and ground operations work for NASA, including but not limited to: United Space Alliance, The Boeing Company, Lockheed Martin Corporation, and Teledyne Technologies Incorporated. All of these companies are larger and have greater resources than us in space shuttle payload processing.

United Space Alliance, which is equally owned by The Boeing Company and Lockheed Martin Corporation, is the prime contractor for NASA’s space shuttle program. United Space Alliance is responsible for the day-to-day operation and management of the U.S. space shuttle fleet. United Space Alliance is currently the primary contractor in the market for civil ground operations and payload processing services. We believe that the privatization of space station operations and successor programs will continue to result in intense competitive pressure among contractors to retain their current contracts and/or capture new payload processing work from other contractors. To the extent that these contractors are able to retain or enlarge their roles in payload

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processing operations, our ability to successfully compete for a share in this market could be impeded, which could have a material adverse effect on our future financial performance.

At present, competition in the United States for our Astrotech spacecraft launch processing services is limited to the California (Vandenberg) launch site, where a competing company called California Commercial Spaceport Systems International is located. California Commercial Spaceport Systems International does not have payload processing facilities in Florida, where the majority of U.S. commercial satellite launches occur. However, if California Commercial Spaceport Systems International or another satellite launch processing service provider were to build, or NASA were to expand its facilities in Florida, our financial performance could be adversely affected.

Our earnings and margins may vary based on the mix of our cost reimbursable and fixed-price contracts.

As of June 30, 2005, we had one significant cost reimbursable and five significant fixed-price contracts. Cost reimbursable contracts generally have lower profit margins than fixed-price contracts. Our Flight Services and Astrotech spacecraft processing business units’ contracts are mainly fixed-price contracts, while our Government Services business unit contracts are generally cost reimbursable contracts. Our earnings and margins may vary materially depending on the types of contracts undertaken, the costs incurred in their performance, the achievement of other performance objectives and the stage of performance at which the right to receive fees, particularly under incentive and award fee contracts, is finally determined.

Under fixed-price contracts, we receive a fixed price irrespective of the actual costs we incur and, consequently, any costs in excess of the fixed price are absorbed by us. Under cost reimbursable contracts, subject to a contract-ceiling amount in certain cases, we are reimbursed for allowable costs and paid a fee, which may be fixed or performance based. However, if our costs exceed the contract ceiling or are not allowable under the provisions of the contract or applicable regulations, we may not be able to obtain reimbursement for all such costs and may have our fees reduced or eliminated. The failure to perform to customer expectations and contract requirements can result in reduced fees and may affect our financial performance for the affected period. Cost over-runs also may adversely affect our ability to sustain existing programs and obtain future contract awards. Under each type of contract, if we are unable to control costs we incur in performing under the contract, our financial condition and operating results could be materially adversely affected.

Our financial results could be affected if the estimates that we use in accounting for contracts are incorrect and need to be changed.

Contract accounting requires judgment relative to assessing risks, estimating contract revenues and costs and making assumptions for schedule and technical issues. The estimation of total revenues and cost at completion for many of our contracts is complicated and subject to many variables. Assumptions have to be made regarding the length of time to complete the contract because costs also include expected increases in wages and prices for materials. Incentives or penalties related to performance on contracts are considered in estimating revenue and profit rates, and are recorded when there is sufficient information for us to assess anticipated performance. Estimates of award and incentive fees are also used in billing customers and estimating revenue and profit rates based on actual and anticipated awards. If our performance under a cost reimbursable contract results in an award fee that is lower than we have estimated, we would be required to refund previously billed fee amounts and would have to adjust our revenue recognition accordingly. If our performance was determined to be significantly deficient, we may be required to reimburse our customer for the entire amount of previously billed awards.

Because of the significance of the judgments and estimation processes described above, it is likely that materially different amounts could be recorded if we used different assumptions or if the underlying circumstances were to change. Changes in underlying assumptions, circumstances or estimates may adversely affect future period financial performance.

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Most of the costs for our Astrotech business unit are fixed regardless of the number of satellites that are processed at our facility.

The primary costs related to our Astrotech business unit are associated with operating and running our three satellite launch processing facilities and our Flight Services facility for our modules. These costs remain relatively unchanged regardless of whether or not customers are using the facilities. As a result, if we do not properly estimate the number of satellites that will be processed when calculating our price structure for our satellite launch processing services, our financial results could be adversely affected.

In developing the products we will offer in connection with the manned and unmanned programs that will replace the space shuttle, we will depend heavily on our relationships with our partners and subcontractors.

We depended significantly on other companies for the development and manufacture of our modules and integrated cargo carriers that are material to our business. Boeing designed our modules and integrated cargo carriers, Alenia Spazio constructed the shell for our modules, and RSC Energia built the pallets and the European Aeronautic Defense and Space Company (EADS) built the keel yokes for our integrated cargo carriers. EADS also performs the integration work on our integrated cargo carriers as a subcontractor. Future products that we develop to be offered to NASA for use in the space program, including the successors to the space shuttle program, will probably be designed and manufactured by other companies and future services that we offer may include the use by us of subcontractors to provide some or all of these services. In addition, we may partner with other companies to provide future product and service offerings to NASA. These arrangements with other companies may involve us acting as a subcontractor to other companies that are the prime contractor with NASA. These companies may also compete with us to offer their own products and services to our target market, which could place us at a competitive disadvantage.

There is a risk that we may have disputes with our current or future subcontractors, including disputes regarding the ownership of the intellectual property underlying the deliverables produced under the contract, the quality and timeliness of work performed by the subcontractor, customer concerns about the subcontractor, our failure to extend existing task orders or issue new task orders under a subcontract or our hiring of personnel of a subcontractor. In addition, a prime contractor may have similar disputes with us in situations where we are serving as a subcontractor. A failure by one or more of our subcontractors to satisfactorily provide on a timely basis the agreed-upon products or perform the agreed-upon services may materially and adversely impact our ability to perform our obligations as the prime contractor. Subcontractor performance deficiencies could result in a customer terminating our contract for default which could have a material adverse effect on our financial condition and results of operations.

If we do not receive additional contracts to use our modules or cargo carriers, or if we are unable to find users of future products we develop without a contract for such product, we will have to write off the value of such assets.

We have in the past, and expect to continue in the future, to fund development of certain projects prior to being awarded a contract for such projects. No assurances can be made that any funds we may spend in the future in connection with the development of new products will lead to the award of a contract or that any such contract will be awarded on terms that are economically favorable to us. In addition, we depreciate space hardware, and intend to depreciate our modules and cargo carriers and other future capital assets that are dedicated to supporting the space shuttle over a period that approximates the useful life of the space shuttles. In the event we are not awarded additional contracts for the use of our modules, cargo carriers, or future products or services, we could be required to write-off the remaining value of our modules, cargo carriers and any future capital assets, and/or costs of prepaid services performed, which could have a material adverse effect on our financial condition and results of operations.

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Our spacecraft payload processing facilities that are specifically designed to process satellite and other payloads and our modules and integrated cargo carriers would lose a substantial portion of their value if we no longer provided these services.

Our Astrotech spacecraft processing facilities and the payload processing facilities for our Flight Services business unit were built specifically to process satellites and our modules and integrated cargo carriers. These facilities are not well suited for other uses. Currently, our Astrotech facilities in Titusville, Florida are depreciated using the straight-line method over their estimated useful lives which range from 16 to 30 years. If we were required to terminate our satellite or module processing businesses, the value of these facilities would be significantly impaired. In addition to having to take a substantial write-down of the value of our Titusville, Florida facility on our books, if we attempted to sell this facility we do not think that we would be able to recover the amounts we have invested. If we were able to sublease our leased facilities, we do not think such subleases would be sufficient to cover our current rental payments. Due to our substantial capital expenditures for our spacecraft processing facilities and the limited uses of these facilities, the termination of operations at our Titusville, Florida facility that we own or one or more of our other leased facilities could have a material adverse effect on our financial condition and results of operations.

We incur substantial costs in preparing proposals to bid on contracts that we may not be awarded.

Preparing a proposal to bid on a contract competition is generally a three to six month process. This process is time consuming and results in the incurrence of substantial costs that are generally not reimbursable even if the contract is awarded. We have prepared proposals for and bid on contracts that were not awarded to us in the past and anticipate that we could incur substantial costs related to contracts that are not ultimately awarded to us in the future. In addition, even if we are awarded a contract, we generally do not begin performing work for several months after the bidding process is complete. If funding problems by the party awarding the contract or other matters further delay our commencement of work on the contract, these delays may sufficiently lower the value of the contract to us, even rendering it unprofitable.

Because our operating results are highly dependent on the timing of space shuttle missions and satellite launches, they may fluctuate significantly from quarter to quarter.

For contracts for which the capability to successfully complete the contract can be demonstrated at contract inception, we recognize revenue using the percentage-of-completion method based on costs incurred over the period of the contract. The timing of space shuttle missions which carry our modules, the number and types of missions flown, the number and timing of satellite launches that use our Astrotech spacecraft processing facilities, and other factors can cause our results of operations to fluctuate significantly from quarter to quarter. Revenue recognition on cost reimbursable contracts that our Government Services business unit enters into is based on reimbursable costs incurred plus an award fee.

Most obligations under our contracts, including contract-related engineering, research and development, and selling, general and administrative expenses, are recorded in the periods in which they are incurred. Accordingly, we may report routine operating losses in quarters in which no space shuttle missions are in process.

Although we achieved profitability in fiscal year 2004, our profitability was primarily attributable to our receipt of extraordinary income relating to Boeing’s termination of their spacecraft processing contract with us. In addition, we have incurred significant losses in the past and, as such, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indications of future performance.

If we are unable to anticipate technological advances and customer requirements, including NASA’s requirements for products and services following the retirement of the space shuttle fleet, our business and financial condition will be adversely affected.

Our growth and future financial performance depend in part upon our ability to anticipate technological advances and customer requirements, particularly NASA’s post-shuttle needs. There can be no assurance that we

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will be able to achieve the technological advances that may be necessary for us to remain competitive. Our failure to anticipate or respond adequately to changes in technology and NASA requirements, or delays in additional product development or introduction, could have a material adverse effect on our business and financial performance.

Compliance with environmental and other government regulations could be costly and could negatively affect our financial condition.

Our business, particularly our Astrotech spacecraft processing business unit, is subject to numerous laws and regulations governing the operation and maintenance of our facilities and the release or discharge of hazardous or toxic substances, including spacecraft fuels and oxidizers, into the environment or otherwise relating to environmental protection. Under these laws and regulations, we could be liable for personal injury and clean-up costs and other environmental and property damages, as well as administrative, civil and criminal penalties in the event of a violation of these laws, or a release of a hazardous substances at or from our facilities, and such liabilities could have a material adverse effect on our business, financial condition and results of operations.

Our failure to comply with U.S. export control laws and regulations could adversely affect our business.

We are obligated by law and under our NASA contracts to comply, and to ensure that our subcontractors comply, with all U.S. export control laws and regulations, including the International Traffic in Arms Regulations and the Export Administration Regulations. We are responsible for obtaining all necessary licenses or other approvals, if required, for exports of hardware, technical data, and software, or for the provision of technical assistance. We are also required to obtain export licenses, if required, before utilizing foreign persons in the performance of our NASA contracts if the foreign person will have access to export-controlled technical data or software. The violation of any of the applicable export control laws and regulations, whether by us or any of our subcontractors, could subject us to administrative, civil and criminal penalties.

Our facilities located in Florida and California are particularly susceptible to damage caused by hurricanes, earthquakes or other natural disasters.

Our largest Astrotech satellite launch processing facility, which we own, and our leased Flight Services facility on the east coast of Florida are particularly susceptible to damage caused by hurricanes or other natural disasters. In addition, our leased launch processing facilities at Vandenberg Air Force Base and the facilities we operate at the Port of Long Beach are subject to damage caused by earthquakes. The extent to which the buildings located at these facilities are designed to sustain natural disasters varies. Although we insure our properties and maintain business interruption insurance, there can be no assurance that such insurance would be sufficient. If a severe hurricane, earthquake or other natural disaster materially affected any of these facilities, our financial condition and results of operations could be adversely affected.

The loss of key management and other employees could have a material adverse effect on our business.

We are dependent on the personal efforts and abilities of our senior management and our success will also depend on our ability to attract and retain additional qualified employees. We do not maintain key man insurance with any of these employees. Failure to attract personnel sufficiently qualified to execute our strategy, or to retain existing key personnel, could have a material adverse effect on our business.

If we fail to comply with Section 404 of the Sarbanes-Oxley Act of 2002, our reputation, financial condition and the value of our notes and common stock may be adversely affected.

Beginning with our report for the fiscal year ending June 30, 2006, Section 404 of the Sarbanes-Oxley Act of 2002 will require us to include an internal control report of management with our annual report on Form 10-K, which is to include management’s assessment of the effectiveness of our internal control over financial reporting

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as of the end of the fiscal year. The report will also be required to include a statement that our independent auditors have issued an attestation report on management’s assessment of our internal control over financial reporting.

In order to achieve compliance with Section 404 within the prescribed period, management is interviewing outside consultants to aid us in the adoption of a detailed project work plan that assesses the adequacy of our internal control over financial reporting, remediate any control weaknesses that may be identified, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. However, we may not be able to complete the work necessary for our management to issue its management report in a timely manner, or any work that will be required for our management to be able to report that our internal control over financial reporting is effective. In addition, our independent auditors may not be able to issue an attestation report on management’s assessment. Our failure to comply with Section 404, including issuing the management report and obtaining the attestation report, may materially adversely affect our reputation, our financial condition and the value of our securities, including our outstanding notes, exchange notes and common stock. Furthermore, our costs of compliance with Section 404, including the cost of remedying any identified weaknesses, could be material and could adversely affect our financial condition and results of operations.

We may face risks related to our recent restatement of our financial statements.

We recently restated our statements of cash flows for the fiscal year ended June 30, 2003 and the nine months ended March 31, 2005 to revise the classification of insurance and indemnification proceeds that we received in connection with the loss of our research double module. We originally classified these proceeds, which totaled $17.7 million in insurance proceeds and $8.2 million in indemnification proceeds, as cash flows from operating activities; however, such proceeds should have been classified as cash flows from investing activities. Our restatement properly classifies such amounts. In the past, some companies that have restated their financial statements have been subject to securities class action lawsuits and shareholder derivative actions and have experienced a decline in the value of their securities. Either of these events could adversely affect the value of your exchange notes or the common stock into which they are convertible.

Risks Related to Retaining the Outstanding Notes

If you do not elect to exchange the outstanding notes that you hold in this exchange offer, and the consent solicitation described in this prospectus is successful, your rights as a holder of those notes will be adversely affected.

If this exchange offer and consent solicitation is completed, the indenture governing the outstanding notes will be amended to eliminate the occurrence of a default on our other indebtedness as an event of default on the outstanding notes, and the remaining holders of the outstanding notes who do not tender their notes for exchange will no longer benefit from the protection to their credit interest afforded by that event of default. See “The Exchange Offer and Consent Solicitation—Proposed Amendments to Indenture for the Outstanding Notes.” In addition, any of our outstanding notes that are not tendered and therefore remain outstanding after this exchange offer will be subordinated to all of our senior indebtedness, including the exchange notes.

If you do not exchange the outstanding notes that you hold in this exchange offer, the liquidity of the outstanding notes in the secondary market may be significantly reduced.

Any outstanding notes tendered and exchanged in this exchange offer will significantly reduce the aggregate principal amount of the outstanding notes. As a result, the trading market for outstanding notes that remain outstanding after the exchange offer is likely to be significantly more limited than it is at present. A debt security with a smaller outstanding principal amount available for trading may command a lower price than would a comparable debt security with a larger principle amount available for trading. A reduced principle amount available for trading may also make the trading price of outstanding notes that are not exchanged in the exchange offer and consent solicitation more volatile.

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Risks Related to the Exchange Notes

Our substantial levels of debt, even following the exchange offer, will limit our operations and could have a material adverse effect on our business and prevent us from fulfilling our obligations under the exchange notes.

As of June 30, 2005, we had approximately $67.0 million in total debt, including capital leases. We may incur additional indebtedness after the exchange offer as we execute our business strategy. Our ability to make payments on our debt, operate our business, and to fund capital expenditures will depend on our ability to generate cash in the future. The level of our outstanding indebtedness has several important consequences for our future operations, including the following:

• a substantial portion of our cash flow from operations will be dedicated to the payment of interest on, and principal of, our indebtedness and will not be available for other purposes;

• our revolving credit facility contains financial tests that we must satisfy in order to continue to borrow funds under the facility, and a failure to meet these tests may also be a default under our facility;

• covenants contained in the indenture limiting the amount of additional senior secured indebtedness that we may incur or additional indebtedness that we may assume or incur in connection with acquisitions may have the effect of limiting our flexibility in reacting to changes in our business and our ability to fund future operations and acquisitions;

• our ability to refinance existing debt or obtain additional financing in the future for capital expenditures, acquisitions, general corporate purposes or other purposes may be impaired; and

• our ability to withstand competitive pressures, adverse economic conditions and adverse changes in governmental regulations, and to make acquisitions, react to changes in our industry or take advantage of significant business opportunities that may arise could be negatively impacted.

These consequences could make us more vulnerable to a downturn in our business or general economic conditions than a less leveraged competitor.

To service our debt, we will require a significant amount of cash, which may not be available to us.

Our ability to make payments on, or repay or refinance, our debt, including the debt under the outstanding notes and exchange notes, and to fund capital expenditures will depend largely upon our future operating performance. Our future performance, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. In particular, a substantial portion of our revenues are derived from services that we provide to support space shuttle missions. If the space shuttle fleet is retired as expected in 2010, which is the same year in which the exchange notes mature, and we have not successfully diversified our business, then our ability to repay the exchange notes may be materially adversely affected.

In addition, our ability to borrow funds in the future will depend on the satisfaction of the covenants in our revolving credit facility and other debt agreements, including the indenture governing the exchange notes and other agreements we may enter into in the future. Specifically, we will need to maintain certain financial ratios. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our revolving credit facility or from other sources in an amount sufficient to enable us to pay our debt, including the exchange notes, or to fund our other liquidity needs.

The indenture governing the exchange notes permits us to use funds that would otherwise be available to make interest and principal payments on the exchange notes to repurchase shares of our common stock.

The indenture governing the exchange notes contains a restrictive covenant prohibiting us from paying dividends on shares of our common stock. One of the reasons for this covenant is to provide additional liquidity

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to make interest payments on, and repay the principal amount of, the exchange notes. The indenture does not contain any prohibitions against us repurchasing shares of our common stock. Subject to compliance with the restrictive covenants contained in our revolving credit facility, we would be able to use funds that would otherwise be available to make principal and interest payments on the exchange notes to repurchase shares of our common stock. Accordingly, there may not be sufficient funds remaining to pay interest and principal due on the exchange notes.

Despite the restrictive covenants in the new indenture that will govern the exchange notes, we and our subsidiaries may still incur substantial additional indebtedness, which could further exacerbate the risks associated with our substantial leverage.

The covenant in the indenture for the exchange notes that restricts our incurrence of senior secured indebtedness and assumption or incurrence of indebtedness in connection with acquisitions does not place any limits on our ability in incur additional debt that would be equal in right of payment or subordinate to the exchange notes. In addition, the covenant does not place any restrictions on the ability of our subsidiaries to incur any additional debt. The exchange notes are effectively subordinated to the debt of our subsidiaries. If we, or our subsidiaries incur additional indebtedness, the leverage-related risks that we face would be exacerbated. In addition, if our subsidiaries incur any new indebtedness and that indebtedness restricts the ability of our subsidiaries to distribute funds to us, then our ability to meet our other obligations, including our obligations with respect to the exchange notes, could be materially adversely affected.

Although the exchange notes are referred to as senior convertible notes, they are effectively subordinated to our secured debt to the extent of the value of the collateral securing such debt, and are effectively subordinated to the debt and other liabilities of our subsidiaries.

The exchange notes are unsecured and therefore will be effectively subordinated to any secured debt we may incur to the extent of the assets securing such debt. In the event of a bankruptcy or similar proceeding involving us, the assets which serve as collateral for any secured debt will be available to satisfy the obligations under the secured debt before any payments are made on the exchange notes. As of March 31, 2005, we had $65.5 million of total debt outstanding, $2.2 million of which was secured debt, effectively senior to the exchange notes, and up to $5.0 million of additional availability under our revolving credit facility, all of which would be effectively senior to the exchange notes. The terms of the indenture governing the exchange notes allows us to incur up to $20.0 million of additional senior secured debt.

In addition, the exchange notes are effectively subordinated to the debt and other liabilities of our subsidiaries. The creditors of our subsidiaries are entitled to be paid what is due to them before the assets of our subsidiaries become available to our creditors, including holders of the exchange notes. Further, certain revenues of our Astrotech business unit under our payload processing contract with Lockheed Martin are paid into a “lock box” for the benefit of the lender for our mortgage loan and therefore are not available to repay any other indebtedness. See “Description of Other Indebtedness and Financing Arrangements—Mortgage Loan Agreement.” As of June 30, 2005, our subsidiaries had approximately $3.7 million of indebtedness, all of which we have guaranteed and which is effectively senior in right of payment to the exchange notes.

Borrowings under our revolving credit facility are secured by a security interest in substantially all of our and our subsidiaries accounts receivable, and borrowings under our 5.5% term loan due 2007 are secured by our payload processing contract with Lockheed Martin and our spacecraft processing facility. In the event of a liquidation, dissolution, reorganization, bankruptcy or any similar proceeding, or if our debt under our revolving credit facility is accelerated, the lenders under such facility and the term loan would be entitled to exercise the remedies available to secured lenders under applicable law. In such event, our assets will be available to pay obligations on the exchange notes only after holders of our secured indebtedness have been paid the value of the assets securing such debt. Accordingly, there may not be sufficient funds remaining to pay amounts due on all or any of the exchange notes.

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Our debt instruments include restrictive and financial covenants that limit our operating flexibility.

Our revolving credit facility requires us to maintain certain financial ratios, and our credit facility and the indenture governing the exchange notes contain covenants that, among other things, restrict our ability to take specific actions, even if we believe such actions are in our best interest. The indenture governing the exchange notes contains restrictions on our ability to incur additional senior secured indebtedness, assume or incur indebtedness in connection with acquisitions, and sell assets or merge with other companies. The covenants in our revolving credit facility contain, among other things, restrictions on our ability to:

• incur additional debt;

• create liens or pledges with respect to our assets;

• merge, consolidate or sell our assets;

• pay dividends or distributions on, or redeem or repurchase, our capital stock;

• make investments, loans or advances or other purchases of securities;

• enter into transactions with affiliates;

• enter into sale and leaseback agreements;

• prepay or defease specified indebtedness, including the exchange notes; or

• enter new lines of business.

Any failure to comply with the restrictions of our revolving credit facility or the indenture governing the exchange notes or existing and any subsequent financing agreements may result in an event of default. Such default may allow our creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, these creditors may be able to terminate any commitments they had made to provide us with further funds. See “Description of the Exchange Notes—Certain Covenants” for more information on the restrictive and financial covenants of the exchange notes.

A single beneficial owner will own more than a majority of the exchange notes. The exchange notes controlled by this owner will be convertible into greater than 50% of our common stock.

SMH Capital Advisors, Inc., is a registered investment advisor who has been granted discretionary authority to sell, tender, or exchange an aggregate principal amount of $40,259,000 of the outstanding notes by the beneficial owners of those outstanding notes. While SMH Capital Advisors’ ability to control the outstanding notes under its management is subject to certain limitations, including any specific directions of any beneficial owner relating to those outstanding notes or the transfer of such outstanding notes out of the account managed by SMH Capital Advisors, SMH Capital Advisors has expressed its intent to tender all outstanding notes under its management at the time of the closing of the exchange offer. If all outstanding notes are tendered and validly accepted, then SMH Capital Advisors will beneficially own, on behalf of its clients, approximately 64% of the then outstanding exchange notes and, as such, would be able to control the outcome of matters submitted to the holders of exchange notes for approval that do not require the approval of all holders, including certain amendments to the terms of the notes or waivers of certain defaults.

Furthermore, if all of the exchange notes were converted into our common stock at a conversion price of $2.50 per share, including those under management by SMH Capital Advisors, then SMH Capital Advisors would have the ability, on behalf of its clients and subject to certain limitations, to vote approximately 42% of our shares of common stock and, as such, would have the ability, to a significant extent, to affect the outcome of all matters required to be submitted to our shareholders for approval, including decisions relating to the election of directors and our ability to be acquired and other significant corporate transactions.

We cannot assure you that the value of the exchange notes that you will receive will be equal to or greater than the outstanding notes that you tender for exchange.

We have not undertaken a valuation with respect to the exchange ratios for the exchange offer of the outstanding notes. Our board of directors has made no determination that the exchange ratios represent a fair

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valuation of either series of the outstanding notes. We have not obtained a fairness opinion from any financial advisor about the fairness of the exchange ratios to you or to us. We cannot assure you that if you tender your outstanding notes you will receive the same or greater value than if you choose to keep them.

We may be unable to make a change of control offer required by the indenture governing the exchange notes, which would cause defaults under the indenture governing the exchange notes, our revolving credit facility and other financing arrangements.

The terms of the exchange notes require us to make an offer to repurchase the exchange notes upon the occurrence of a change of control at a purchase price equal to 100% of the principal amount of the exchange notes, plus accrued and unpaid interest, if any, to the date of the purchase. Accrued and unpaid interest is payable, at our option, in cash or shares of our common stock. The terms of our revolving credit facility require, and future financing and other arrangements may require, repayment of amounts outstanding in the event of a change of control and prohibit us from repurchasing your exchange notes while commitments or amounts are outstanding under the revolving credit facility. It is possible that we will not have sufficient funds at the time of the change of control to make any required repurchase of exchange notes or that restrictions in our revolving credit facility, and other financing agreements will not allow the repurchases. In the event that we do not have sufficient funds, we may elect to offer to repurchase your notes in exchange for shares of our common stock, or shares of such other person into which our common stock is converted. See “Description of the Exchange Notes—Repurchase at the Option of Holders upon Change of Control.”

In addition, it is not certain whether we would be required to make a change in control offer to repurchase the exchange notes upon certain asset sales, because the meaning of “substantially all” assets, the sale of which would constitute a change of control, is not established under applicable law. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of exchange notes to require us to repurchase such exchange notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of our and our subsidiaries’ assets taken as a whole to another person or group may be uncertain. See “Description of the Exchange Notes—Certain Covenants—Asset Sales.”

If a change in control occurs and we do not offer to repurchase the exchange notes or if we do not repurchase the exchange notes when we are required to do so, an event of default will occur under the indenture governing the exchange notes, which would also be a default under our revolving credit facility. Each of these defaults could have a material adverse effect on us and our ability to repay the exchange notes.

Holders of our exchange notes will not be entitled to any rights with respect to our common stock, but will be subject to all changes made with respect to our common stock.

Holders of exchange notes, which are convertible into our common stock, will not be entitled to any rights with respect to our common stock, including voting rights and rights to receive any dividends or other distributions on our common stock, but will be subject to all changes affecting our common stock. Holders of exchange notes will have rights with respect to our common stock only if and when we deliver shares of common stock upon conversion of such exchange notes and, in limited cases, under the conversion rate adjustments applicable to the exchange notes. For example, in the event that an amendment is proposed to our certificate of incorporation or by-laws requiring stockholder approval and the record date for determining the stockholders of record entitled to vote on the amendment occurs prior to delivery of common stock to a holder of exchange notes following conversion, such holder will not be entitled to vote on the amendment, although the holder will nevertheless be subject to any changes in the powers, preferences or special rights of our common stock.

There is no public market for the exchange notes.

The exchange notes are new securities for which there currently is no market. A market for the exchange notes may not develop, and any market that develops may not last. In addition, SMH Capital Advisors currently

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has over $40 million of our outstanding notes under its management. As long as SMH Capital Advisors continues to control such a substantial amount of our notes, we believe that it will be difficult for an active market in our notes to form. We do not intend to apply for listing of the exchange notes on any securities exchange or other stock market. Historically, the market for non-investment grade debt has been subject to disruptions that have caused volatility in prices. It is possible that any market for the exchange notes will be subject to disruptions. Any such disruptions may have a negative effect on you, as a holder of the exchange notes, regardless of our prospects and financial performance.

The trading prices for the exchange notes could be directly affected by the trading prices for our common stock, which are impossible to predict.

The price of our common stock could be affected by possible sales of our common stock by investors who view the exchange notes as a more attractive means of equity participation in our company and by hedging or arbitrage trading activity that may develop involving our common stock. The hedging or arbitrage could, in turn, affect the trading prices of the exchange notes to the extent the exchange notes are traded.

The price at which our common stock trades has fluctuated significantly and may continue to be highly volatile. Since July 1, 2002 through June 30, 2005, the sale price of our common stock, as reported on the NASDAQ National Market, has ranged from a low of $0.54 to a high of $4.81 per share. In addition, the stock market in general has from time to time experienced significant price and volume fluctuations that have affected the market prices for companies like ours.

Conversion of the exchange notes will dilute the ownership interest of existing shareholders.

The conversion of the exchange notes into common stock will dilute the ownership interests of existing shareholders. As of June 30, 2005, we had 12,655,179 shares of our common stock outstanding while, as of the issue date, the exchange notes would be convertible into approximately 29,834,906 shares of our common stock. Any sales in the public market of the common stock issuable upon conversion of the exchange notes could adversely affect prevailing market prices of our common stock. The mandatory conversion feature of the exchange notes could limit the ability of our common stock to achieve the mandatory conversion price due to the fact that a mandatory conversion would cause substantial dilution of existing shareholders. In addition, the existence of the exchange notes may encourage short selling by market participants due to this dilution or facilitate trading strategies involving the exchange notes and our common stock, all of which could have an adverse impact on the market price of the exchange notes and the shares of common stock issuable upon conversion of the exchange notes.

The conversion rate of the exchange notes may not be adjusted for all dilutive events.

The conversion rate of the exchange notes is subject to adjustment for certain events, including, but not limited to, the issuance of stock dividends on our common stock, the issuance of certain rights or warrants, subdivisions or combinations of our common stock, certain distributions of assets, debt securities, capital stock or cash to holders of our common stock and certain issuer tender or exchange offers as described under “Description of the Exchange Notes—Conversion Rights—Conversion Procedures.” The conversion rate will not be adjusted for other events, such as an issuance of common stock for cash, that may adversely affect the trading price of the exchange notes or our common stock. We cannot assure you that an event that adversely affects the value of the exchange notes or our common stock, but does not result in an adjustment to the conversion rate, will not occur.

Future sales of our common stock in the public market or the issuance of securities senior to our common stock could adversely affect the trading price of our common stock, the value of the exchange notes and our ability to raise funds in new stock offerings.

We are not restricted from issuing additional common stock during the life of the notes and have no obligation to consider your interests for any reason. Future sales of substantial amounts of our common stock or

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equity-related securities in the public market, or the perception that such sales could occur, could adversely affect prevailing trading prices of our common stock and the value of the exchange notes and could impair our ability to raise capital through future offerings of equity or equity-related securities. No prediction can be made as to the effect, if any, that future sales of shares of common stock or the availability of shares of common stock for future sale will have on the trading price of our common stock or the value of the exchange notes.

We may incur an income tax liability as a result of the exchange offer.

If the outstanding notes or the exchange notes are publicly traded for U.S. income tax purposes, we may recognize cancellation of indebtedness income for tax purposes which may be subject to reduction, including by offset against available net operating loss deductions. No assurances can be given, however, that net operating losses will be available to us, and, we may incur a U.S. federal and/or state income or alternative minimum tax liability arising from cancellation of indebtedness income, if any, recognized in the exchange. In addition, to the extent that available net operating losses are used to offset cancellation of indebtedness income, if any, such net operating losses will be unavailable as a potential offset to future income. See “Certain U.S. Federal Income Tax Considerations—Tax Consequences to the Company—Cancellation of Indebtedness Income.”

We may be unable to deduct for tax purposes the interest or original issue discount, if any, paid or accrued on the exchange notes.

No deduction is allowed for U.S. federal income tax purposes for interest paid on a disqualified debt instrument. A disqualified debt instrument generally includes any indebtedness of a corporation which is payable in equity of the issuer. Although we believe and intend to take the position that the exchange notes are not disqualified debt instruments, the exchange notes may be treated as disqualified debt instruments, and we may be prohibited from deducting the interest due on the exchange notes. Consequently, we may have less cash available with which to satisfy our obligations.

The conversion, including a mandatory conversion, of the exchange notes into our common stock may limit our ability to use our net operating losses to offset future taxable income.

An “ownership change” occurs for purposes of Section 382 of the Internal Revenue Code of 1986 if, under certain circumstances, there is a cumulative change of more than 50% of our common stock, as determined under tax rules, within a three year period. If we undergo an ownership change, we believe that the amount of net operating losses that will be able to use to offset our taxable income for taxable periods, or portions thereof, beginning after the ownership change will be limited under Section 382 of the Internal Revenue Code of 1986. The conversion, including a mandatory conversion, of the exchange notes, future equity issuances or transactions among shareholders may trigger an ownership change for U.S. federal income tax purposes. If we undergo an ownership change, we may have less cash available with which to satisfy our obligations.

Holders of the exchange notes may be required to include interest income or original issue discount in an amount greater than the actual cash interest payments.

We believe and intend to take the position that the exchange notes will not be subject to the contingent payment debt instruments rules for U.S. federal income tax purposes. However, it is possible that the exchange notes will be subject to these rules. If the exchange notes are treated as contingent payment debt instruments under such regulations, you will be required to include interest income in taxable income in each year significantly in excess of the amounts of stated interest on the exchange notes actually received by you in that year. Any gain that you recognize upon a sale, exchange, conversion, redemption, or retirement of the exchange notes would generally be treated as ordinary income and any loss will be ordinary loss to the extent of interest on the exchange notes previously included in income and, thereafter, as capital loss. For a summary of these potential adverse tax consequences, see “Certain U.S. Federal Income Tax Considerations—U.S. Holders—Original Issue Discount on Exchange Notes.”

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USE OF PROCEEDS

We will not receive any cash proceeds from the issuance of the exchange notes in this exchange offer and consent solicitation.

CAPITALIZATION

The following table sets forth our unaudited historical consolidated indebtedness and capitalization as of March 31, 2005 and our pro forma consolidated indebtedness and capitalization as of March 31, 2005 assuming the exchange of all outstanding notes for exchange notes. You should read this information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and notes thereto included in this prospectus.

	As of March 31, 2005
	Actual			As Adjusted
	(in thousands)
Cash, cash equivalents and restricted cash	$	5,994		$	5,994
Indebtedness
Mortgage loan payable, current		1,946			1,946
Mortgage loan payable, net of current portion		2,244			2,244
8% Convertible Subordinated Notes due 2007		63,250			—
5.5% Senior Convertible Notes due 2010		—			63,250
Total indebtedness		67,440			67,440
Stockholders’ equity:
Preferred stock, no par value, convertible, 2,500,000 shares authorized, 1,333,334 shares issued and outstanding, (liquidation preference of $9.00 per share)		11,892			11,892
Common stock, no par value, 30,000,000 shares authorized, 12,760,227 shares issued		83,857			83,857
Treasury stock, 116,100 shares, at cost		(117	)		(117	)
Additional paid-in capital		16			16
Accumulated deficit		(80,963	)		(80,963	)
Total stockholders’ equity		14,685			14,685
Total capitalization	$	82,125		$	82,125

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RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth our consolidated ratio of earnings to fixed charges for each of the periods indicated. For purposes of computing the ratio of earnings to fixed charges, earnings consist of the sum of our pre-tax income from continuing operations, amortization of capitalized interest and fixed charges minus capitalized interest. Fixed charges consist of interest expense, including amounts capitalized, amortization of capitalized expenses related to indebtedness, and one third of rent expense, which we estimate represents the interest associated with rental expense.

	Years Ended June 30,					Nine Month Period Ended March 31, 2005
	2000	2001	2002	2003	2004
Ratio of Earnings to Fixed Charges (1)	—	—	—	—	1.27	2.12

(1) Earnings did not cover fixed charges by $5.6 million, $13.6 million, $4.4 million, and $82.6 million for the years ended June 30, 2000, 2001, 2002 and 2003, respectively.

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INDUSTRY OVERVIEW

With the space shuttle fleet’s two-and-a-half year hiatus and a NASA budget that had previously seen only inflationary adjustment annually over the past several fiscal years, the aerospace industry has experienced some significant challenges. Additionally, the 54 orbital launches recorded in 2004 were the lowest total since 1961.

In January 2004, President George W. Bush announced an initiative for space exploration, not only declaring his support of the United States’ space program but setting a goal for further exploration. The President committed the United States to a long-term human and robotic program to explore the solar system, starting with a return to the Moon that is intended to enable future exploration of Mars and other destinations. This initiative is expected to provide rewards for many of the leading aerospace companies and reverse the steady or shrinking NASA budget.

The President’s fiscal year 2006 budget request of $16.5 billion identifies what is needed to continue transforming the U.S. civil space program. The request, which represents a 2.4% increase from 2005, supports critical national needs and technologies, including investments in next generation earth observing satellites, vehicle systems and educational programs for the next generation of explorers. The budget assumes an ongoing effort to retool NASA’s institution based on best achieving its priorities for the Vision for Space Exploration. This will require adjustments to work-force skill distribution, physical capital, facilities and innovations in management structure.

The main beneficiary of the 2006 budget is NASA’s Exploration Systems, with funding up from $2.7 billion to $3.2 billion, representing a 17.9% increase. The role of Exploration Systems is to develop a set of new capabilities, supporting technologies and foundational research that enables sustained and affordable human and robotic exploration. The budget proposal also maintains the return-to-flight of the space shuttle fleet as a top priority and includes $1.9 billion for the International Space Station with funding support for an enhanced crew size of up to six prior to completion of assembly. This level of funding should allow NASA to meet obligations for international partners as well. We believe that the 2006 budget reaffirms the President’s commitment and provides NASA the next step in implementing its strategic vision. Based on NASA’s estimates, the budget is expected to increase to over $18 billion by fiscal year 2010.

In June 2004 the President’s Commission on Implementation of United States Space Exploration Policy issued its final report of conclusions and recommendations gathered from public testimony of 96 individuals and over 6,000 written inputs. The commission’s objective was to “examine and make recommendations on implementing” the new national vision. The commission found overwhelming public support (public comments supporting the vision compared to those against the program by 7 to 1) for this new National Vision for Space Exploration. Throughout the report, the commission found and emphasized the need for a greater role of commercial enterprise in the space exploration program.

Futron study statistics for the global space industry reflect strong government spending and consumer demand for satellite services, producing growing revenues of $78.6 billion in 2001, $86.1 billion for 2002 and $91.0 billion in 2003. Global space industry revenues have continued to increase, growing at a rate of approximately 7.6% annually over the two years from 2001 to 2003, even though some markets, such as the commercial satellite sector, have experienced a significant decline in recent years. Satellite services and ground equipment manufacturing have shown the greatest growth, while satellite manufacturing and the launch industry have shown the greatest declines. Government spending and strong consumer demands for satellite video services were responsible for almost all of this growth. Although industry revenues have been positive, other indicators, such as prices, profit margins, stock prices and new orders, have experienced negative trends and reflect significant financial stress in the industry.

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BUSINESS

We were incorporated as a Washington corporation in 1984 and made our initial public offering of our common stock in 1995. We flew our first module on a space shuttle mission in 1993 and have continued to grow our customer base and services offerings since then. With approximately $75 million in annual revenue and over $100 million in flight and payload processing assets in 2004, we are a leading provider of commercial space services.

After the completion of several space shuttle science missions using our research module, we expanded our services into the logistics arena, developing new flight assets to support the growing transportation needs of space station users. The logistics module, which is attached to the research module in order to transform our module into a double module configuration, enables delivery of up to 4,500 kilograms (10,000 pounds) of supplies while our unpressurized integrated cargo carriers permit delivery of 2,700 kilograms (6,000 pounds) of cargo.

In February 1997 we acquired Astrotech Space Operations, the leading commercial supplier of launch processing services in the United States. Expanding our core business of supporting people living and working in space, we acquired Johnson Engineering, now named SPACEHAB Government Services, in 1998 to include specialized engineering support services for the U.S. Government. Space Media, Inc. was formed in 2000 to develop space-related media and education and entertainment services to space enthusiasts around the world.

Core Business Operations

Our business segments provide a range of products and services to the aerospace and commercial markets. Our four business units consist of:

• SPACEHAB Flight Services. Our Flight Services business unit provides research and logistics expertise and hardware.

• Astrotech Spacecraft Operations. Our Astrotech spacecraft processing business unit provides facilities and support for the preparation of satellites and payloads for launch on expendable launch vehicles.

• SPACEHAB Government Services. Our Government Services business unit provides project management and specialized engineering analysis, products and services to NASA and other customers.

• Space Media, Inc. Our Space Media business unit provides space-themed educational and retail products and services.

SPACEHAB Flight Services

The primary goal of our Flight Services business unit is to enable government and commercial enterprise to overcome the habitability and occupational challenges of space. Through the provision of experts, specialized hardware and established processes, we help provide access to the resources of space. We offer a range of engineering, integration, operations and ground support services that we tailor to meet our clients’ specific requirements. Our Flight Services business unit also provides habitat and logistics modules and unpressurized integrated cargo carriers to NASA for use on the U.S. space shuttle fleet and the International Space Station. We sell research and logistics services to NASA and commercial customers who want to use our modules and unpressurized carriers for specific space applications.

Modules. Our modules provide space-based research facilities and pressurized cargo services for use aboard the space shuttle. Our single module is an aluminum cylinder, measuring 10 feet in length by 13.5 feet in diameter, that provides resources such as power, data management, thermal control, and vacuum venting. Our single module, which has a payload capacity of 5,400 pounds, is employed primarily for research and logistics missions. We also have a second logistics module that cannot be used alone but can be attached to our single module and used in the space shuttle in a double configuration. When used in a doubled configuration the payload capacity of our modules increases to 10,000 pounds and optimizes the resupply capability for NASA by

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carrying vital supplies to cosmonauts and astronauts onboard the International Space Station. Our single and double module configuration, when installed in the payload bay of a space shuttle, doubles or quadruples the space available to astronauts for research, habitation, and storage, while still leaving space in the shuttle bay for unpressurized cargo. As of June 30, 2005 NASA had utilized our modules, including our research double module that we lost in the Columbia tragedy, on 16 space shuttle missions for research and logistics purposes in both single and double module configurations.

In April 2004 we successfully completed the transition of our module systems integration and operations work from our subcontractor, The Boeing Company, to an in-house capability. Our personnel now perform mission integration, hardware development, and sustaining engineering required to support the flight of our two modules. This move reduced operating costs, increased flexibility in responding quickly to changing customer requirements, and built upon our existing core capabilities needed to support future logistics and research missions to the International Space Station.

Unpressurized Carriers. In addition to our two modules, we have developed with RSC Energia an integrated cargo carrier system of unpressurized payload carriers to transport cargo that does not require a pressurized environment in space. Cargo suitable for transport on our integrated cargo carriers includes International Space Station assembly components and spares, astronaut tools, and unpressurized experiments. Our integrated cargo carriers fly in what is ordinarily unused volume in the front or rear of the space shuttle’s cargo bay. Integrated cargo carriers can be used alone or in combination with our single or double module to provide the optimum mix of pressurized and unpressurized cargo capacity on a single mission to the International Space Station. In addition, depending upon NASA’s mission requirements, our integrated cargo carriers can be removed from the shuttle bay and attached to the International Space Station. By expanding the capabilities of the space shuttle and offering flexibility in the mix of pressurized and unpressurized cargo carried on each mission, the integrated cargo carrier is a cost-effective solution for International Space Station logistics.

Our integrated cargo carrier initially flew on NASA’s first supply mission to the International Space Station, space shuttle flight STS-96 in May 1999, and has flown on four subsequent missions with more flights scheduled on the NASA manifest. In fiscal year 2001, we sold our integrated cargo carriers to EADS and entered into an agreement with them to lease back these assets for a period of four years with two additional four-year options.

To meet particular NASA requirements for unpressurized cargo transport, we also developed a vertical integrated cargo carrier, designed and built for us by RSC Energia. In fiscal year 2002, we received the vertical integrated cargo carrier and also sold this asset to EADS for inclusion in the lease back arrangements discussed above. The integrated cargo carrier system, including the vertical integrated cargo carrier, is a flexible and adaptable payload transport option.

Other Services. In addition to our flight assets, we offer a full range of ground-based pre- and post-flight experiment and payload processing services and in-flight operations support. NASA and other users of the space shuttle and International Space Station must follow a complex set of procedures to prepare payloads for launch, operate them in space, and process them upon return. Our carrier development and operations team offers these users turn-key, fixed-price payload services using our modules and unpressurized integrated cargo carriers. These services include payload scheduling, mission planning, safety analysis and certification, physical integration with a module or integrated cargo carrier, integration of these carriers with the space shuttle, flight operations, data gathering and synthesis, and launch and landing site activities.

We are also providing research access on the International Space Station to the Japan Aerospace Exploration Agency (JAXA) through RSC Energia. We contracted with V.J.F. Russian Consulting Inc. for the construction of certain space research equipment, access to launch vehicles, and research space aboard the Russian Progress carrier when the originally-scheduled services on the space shuttle were suspended due to the Columbia tragedy.

We also have an advanced programs team chartered to investigate and develop new technologies and concepts that support the vision of the President’s stated “Moon, Mars, and Beyond” goals. See “Industry

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Overview” for a discussion of this initiative. We recently completed a six-month NASA study contract valued at approximately $1.0 million to support the space agency’s new exploration initiatives. The purpose of this contract was to design a technical solution to accomplish the agency’s objectives for lunar exploration and to identify systems that could also be used on missions to Mars and other destinations. Our winning proposal documented our approach for designing an architecture that takes advantage of commercial efficiencies; specifically, how private industry can contribute to the investment in getting people to the moon and elsewhere. We believe that our approach results in lower program costs and provides the additional benefit of applying existing capabilities and mature technology. Following the six-month effort, NASA awarded us an additional six-month contract, also valued at approximately $1.0 million, to continue and expand upon our initial work.

Astrotech Space Operations

Our spacecraft processing services business unit provides government and commercial customers with a commercial alternative to using government-owned facilities to prepare their satellites for launch in the United States. This business unit began operations at our Titusville, Florida facility in 1985. We believe that growing wireless telecommunication demands, such as direct-broadcast radio and television, cellular telephones, and broadband internet services, as well as the continued need for video and long-distance telephone transmissions, will provide us with opportunities to expand our customer base. As of June 30, 2005, we had supported the processing of more than 225 spacecraft. Our standard package of services provides all support necessary for the customer to successfully process its spaceflight hardware for launch, including:

• cleanroom facilities for hardware processing and encapsulation operations;

• communications network for spacecraft command/control through launch;

• storage and transportation of liquid propellants;

• facilities for solid-rocket motor preparation;

• life safety support for propellant loading operations;

• program security to include convoy escorts to and from launch facilities;

• sampling and analysis of propellants and gases;

• emergency fire and medical assistance;

• coordination with NASA and the Air Force for government-supplied support; and

• safety oversight of all hazardous operations.

Astrotech-processed payloads have launched from Florida’s NASA Kennedy Space Center/Cape Canaveral Air Force Station, Vandenberg Air Force Base, California, and via the equatorial platform of Sea Launch. Customers have used our facilities to prepare payloads for launch on a wide range of expendable launch vehicles including Atlas, Delta, Pegasus, Sea Launch, and Taurus, as well as secondary payloads flown on the space shuttle. Our modern facilities are specifically sized and outfitted to accommodate a wide range of customer payloads as well as the payload fairings and payload adapter assemblies of the launch service providers. We believe that this approach allows for maximum flexibility in the processing of parallel missions and accommodating schedule changes. Our goal is to make our facilities a seamless extension of the customer’s factory environment.

Our largest facility in Titusville, Florida, which we own, supports spacecraft processing for launches in Cape Canaveral and is capable of processing larger five meter class satellites and payload fairings for Lockheed Martin’s and Boeing’s Evolved Expandable Launch Vehicle Programs. The satellite and payload fairings for the Evolved Expandable Launch Vehicle Programs are significantly bigger than other launch vehicles currently in use, with weights in excess of 25,000 pounds and payload fairings up to 75 feet long, and require larger facilities for processing. Our facility is the only satellite processing facility at Florida’s Kennedy Space Center/ Cape Canaveral Air Force Station launch complex with the capability to accommodate these larger five meter class

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satellite and payload fairings. Our Titusville, Florida spacecraft processing facility supports all planned configurations of the Boeing Delta IV and Lockheed Martin Atlas V Evolved Expendable Launch Vehicle systems. We also lease facilities located on Vandenberg Air Force Base to support launches on the west coast. In addition, we manage the facilities at the Port of Long Beach that are used to process satellites and payloads being launched by Sea Launch Company, LLC.

SPACEHAB Government Services

Our Government Services business unit has provided specialized engineering support services for the U.S. Government, including NASA, and various commercial industries for over 30 years. Specifically, we have supported the U.S. Government in the areas of:

• large-scale configuration and data management programs such as the International Space Station;

• specialized design, development, and fabrication of flight hardware;

• low- to high-fidelity mockup design and construction; and

• safety and quality support services.

We offer a wide array of products and services in these varied fields and bring advanced ideas and solid execution of these innovations to our customers.

Currently, our Government Services business unit derives most of its revenue from our contract to provide configuration and data management services within NASA’s Program Integration & Control contract for the International Space Station as a subcontractor to ARES Corporation. This contract expires in 2008. Using our skill and expertise, we are an integral part of the total NASA team responsible for final acceptance of International Space Station hardware and software that includes both the development contractors and the 16 international partners. Configuration management focuses on the approved design and the configuration of the thousands of hardware and software parts and components for the International Space Station by constant review of development processes and the status of progressing and constantly-changing activities. Specifically, the configuration management functions we currently provide to the customer include:

• planning and management of International Space Station Partners configuration management policies, procedures and requirements;

• identification of configurations and processes;

• change management;

• status accounting; and

• verifications and audits.

Our Government Services business unit also has the ability to support customer data management requirements by:

• ensuring data validity;

• providing deliverables tracking support;

• creating data management programs;

• providing data directories; and

• developing documentation trees.

Space Media

Space Media, Inc., a majority-owned subsidiary, creates proprietary space-themed content for education and commerce. By leveraging our access to engineers, marketing and industry professionals, and aerospace

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subcontractors, we are able to provide the space enthusiast with a variety of services and products. These services range from outfitting a comprehensive space exhibit to providing astronaut appearances and product endorsements. Two of the most successful ventures within Space Media are the STARS Program and The Space Store, both of which we believe are unique in their focus on inspiring our youth through space exploration.

The STARS Program is our commercial education initiative developed as a hands-on, interactive, scientific and cultural exchange lesson primarily designed for students aged 11-21 to promote interest in engineering, mathematical, and scientific careers. Through the STARS Program, which is funded by participating schools, students design an actual experiment for flight on the space shuttle or International Space Station. During the design and flight of their experiments, students worldwide work directly with space scientists, engineers, and managers to gain comprehensive knowledge of the flight and scientific method process. Three STARS Program missions have been flown to date, with experiments launched on NASA’s STS-93 mission, an International Space Station mission via a Russian Soyuz rocket, and on STS-107.

We believe The SpaceStore.com is the largest on-line retailer of space-themed merchandise. Started in May 1997, we believe this outlet has been in operation longer than any other space e-commerce website, including NASA’s on-line store. The Space Store also maintains a physical storefront located directly across the street from NASA’s Johnson Space Center and Space Center Houston. The store is frequented by NASA employees, numerous astronauts, and tourists visiting Houston’s official visitor’s center at Johnson Space Center. Our website and retail store offer a large variety of specialized space toys, clothes, and memorabilia and host astronaut book signings and children’s story time, space collector appraisals, and media events geared towards spreading the excitement of space.

Competition

Our competition and the barriers to entry vary amongst our business units. We believe that, generally, barriers to entry for new competitors for our Flight Services and Astrotech business units remain high. The modules, facilities, and other assets that we own represent a capital investment that many new entrants into the market would have difficulty matching. We estimate that it would take another organization three to five years to develop, and certify for use by NASA, a module service similar to that operated by our Flight Services business unit. We are not aware of any company that is currently making such an effort and, given the proposed retirement of the space shuttle fleet in 2010, would not expect any company to commence such an effort. For our logistics module and unpressurized integrated cargo carriers there are similar assets currently owned and periodically used by NASA (i.e. the Italian Space Agency-built Multi Purpose Logistics Module, the Multi Purpose Experiment Support Structure carrier, and the Spacelab pallet). However, we believe our assets provide more utility in supporting powered experiments and are able to carry more weight and volume than the other solutions available to NASA.

Our Astrotech spacecraft and payload processing facilities are located in Florida and California and serves satellites constructed in the United States. Due to the costs of transporting internationally, our Astrotech business unit generally does not complete with launch services based in other countries. At present, our Astrotech business unit’s commercial U.S. competition is limited to the California launch site at Vandenberg Air Force Base where California Commercial Spaceport Systems International is located. California Commercial Spaceport Systems International acquired surplus United States Air Force (USAF) facilities through a lease agreement with the USAF at Vandenberg Air Force Base before we established our facilities there. California Commercial Spaceport Systems International does not have payload processing facilities in Florida, where the majority of U.S. commercial satellite launches occur. In addition, as the commercial space industry continues to evolve, we expect to face increasing competition from new companies.

Our Government Services business unit competes with companies that provide operations support, configuration management, and engineering and fabrication services to NASA. These competitors include aerospace contractors such as Boeing, Lockheed Martin, United Space Alliance, ARES Corporation, Barrios Technologies Inc., Hernandez Engineering Inc., Cimarron, and Oceaneering Space Systems. However, for this business unit’s primary source of revenue, we are currently operating under a subcontract through at least 2008.

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Space Media competes with various suppliers of space education and retail goods. This includes internet sites and retailers with space-related toys, food, games, clothing, and patches; builders of space museum exhibits, mockups, and displays; and some providers of space-based education curriculum.

Dependence on a Single Customer

Approximately half of our revenue in fiscal year 2004 was generated by various NASA contracts or subcontracts. While other contracts with commercial customers provide revenue from varying sources, we anticipate that contracts servicing NASA will continue to account for a significant amount of our revenue in the near future. Although we cannot make any assurances that NASA will require our services in the future, we are under firm contracts with NASA to support a variety of activities for the next several years. We continue to work on diversifying our customer base to include foreign space agencies, aerospace partners, and private companies.

Similar to contracts with other agencies of the U.S. Government, our contracts servicing NASA contain provisions pursuant to which NASA or the prime contractor may terminate the contract “for convenience.” Our contracts servicing NASA depend upon NASA’s receipt of adequate annual appropriations from the U.S. Congress, and failure to receive adequate funds could prompt NASA to terminate its contracts with us or the prime contractor “for convenience.” There is no assurance that future funding will be adequate for NASA to complete all of its initiatives including those relating to contracts with us. We anticipate that a portion of our revenue for our next fiscal year will be derived from contracts with entities other than agencies of the U.S. Government that will not be subject to federal contract regulations such as termination “for convenience” or government funding restrictions.

Our Astrotech business unit serves the satellite launch industry, which is dominated domestically by Lockheed Martin and Boeing. We have a contract in place with Lockheed Martin to support payload processing for the Atlas launch vehicle program and we also provide payload processing services for Boeing’s Delta launch vehicle program. Our Lockheed Martin contract guarantees us a minimum of four launches annually through December 2006. Certain launches on Boeing’s launch vehicles count towards this minimum. We have other current contracts in place with NASA, Boeing, and Orbital Sciences Corp. for support of spacecraft processing activities in both Florida and California. Our Astrotech business unit manages the Sea Launch facility under a long-term contract with Sea Launch Company, LLC which expires in 2011.

Backlog

As of March 31, 2005, our contract backlog was approximately $81.9 million, of which $70.3 million represented U.S. Government backlog and $11.6 million, represented non-U.S. Government contracts. We estimate that $13.5 million of our current contract backlog will not be filled during fiscal 2006. Our contract backlog was approximately $107.2 million as of March 31, 2004, of which $91.9 million represented U.S. Government backlog. See “Risk Factors—Termination of our backlog orders could negatively impact our revenues” for additional discussion of our backlog.

Contract History

Our business strategy focuses on anticipating customer requirements, investing capital to develop space flight assets, contracting with established aerospace companies for engineering and asset production, and retaining control of these assets.

For our Flight Services business unit, we have obtained four significant space Flight Services contracts with NASA to date that utilize our privately-developed modules and unpressurized integrated cargo carriers. This includes the original Commercial Middeck Augmentation Module contract for four space shuttle research missions, which we completed in May, 1996; a contract for four logistics missions and three option missions (all of which were exercised) to the Russian space station Mir, which we completed in June, 1998; a Research and Logistics Mission Support contract initially for four missions, followed by six additional missions in support of the International Space Station and microgravity science requirements; and the current Cargo Mission Contract subcontract in support of NASA’s International Space Station logistics requirements served through Lockheed Martin.

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For the first half of fiscal 2004, the Research and Logistics Mission Support contract was the vehicle used by NASA to obtain the use of our modules and unpressurized integrated cargo carriers. Upon the restructuring of NASA’s various International Space Station contracts, Lockheed Martin became the Cargo Mission Contract prime contractor, and we now provide our logistics services and assets as a subcontractor. The new contract calls for our single and double modules as well as integrated cargo carriers to support research payloads and outfitting of the International Space Station. We are currently supporting three missions under this contract, STS-121, STS-116, and STS-118. Additionally, we have a $19.9 million contract with Boeing for integrated cargo carrier services on the STS-114 mission. Currently, STS-114 is the return-to-flight mission scheduled to be flown no earlier than July 2005. We are paid an equitable adjustment for delays in launching this mission, and other missions under contract, due to the Columbia accident. The equitable adjustment is a cost-based contract price adjustment to cover the period until the space shuttle returns to flight.

Our Astrotech spacecraft processing business unit has successfully supported the processing of over 225 spacecraft since beginning operations in 1985. In fiscal year 2000, we completed negotiations of long-term extensions to payload processing contracts with our two largest customers, Boeing and Lockheed Martin. The total projected revenue under these contracts was approximately $85 million. Additionally, we also have payload processing contracts in place with NASA and Orbital Sciences Corp. Our Astrotech business unit also operates and maintains the payload processing infrastructure of, and provides operational support, to Sea Launch Company, LLC.

On October 1, 2003, we were notified by Boeing that it was exercising its termination rights with regards to its financial guarantees under its contract with us for payload processing support services for the Delta launch vehicle program. Boeing indicated that the decision to terminate its guarantees for future services was based on the downturn of the commercial expendable launch market rather than performance related considerations. We believe that we were in compliance with the contract terms at the time of the termination. Under the contract provision related to termination of its financial guarantees, Boeing paid us $17.5 million representing consideration for future contract payments guaranteed under the contract. Since this time, Boeing has contracted with us for payload processing support on a mission-by-mission basis.

In fiscal year 2004 our Government Services business unit operated primarily under two contracts. For the first half of the year, we were the prime contractor for International Space Station Configuration Management, a contract that was completed. We are now supporting the International Space Station Program Integration & Control contract as a subcontractor to ARES Corporation through a NASA contract awarded at the completion of the original International Space Station Configuration Management contract.

Research and Development

We incurred $0.2 million, $0.1 million, and $0.4 million in research and development expense during fiscal years 2004, 2003, and 2002, respectively. We spent $0.2 million in 2004 and $0.1 million in 2003 on miscellaneous research and development projects, including the design of a new commercial payload service. Research and development in fiscal year 2005 has been directed towards development of commercial responses to the National Vision for Space Exploration.

Most of our research and development expenditures for fiscal year 2004 were spent on the development of the Enterprise module, a commercial space station habitat module, which is no longer under development, but much of the technological and structural design from that effort is being used to develop the new commercial payload service system. The remainder of the $0.2 million was spent on miscellaneous research and development projects in 2004.

Certain Regulatory Matters

We are subject to federal, state, and local laws and regulations designed to protect the environment and to regulate the discharge of materials into the environment. We believe that our policies, practices, and procedures

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are properly designed to prevent unreasonable risk of environmental damage and consequential financial liability to us. Compliance with environmental laws and regulations and technology export requirements has not had in the past, and, we believe, will not have in the future, material effects on our capital expenditures, earnings or competitive position. Our operations are subject to various regulations under federal laws relative to the international transfer of technology as well as to various federal and state laws relative to business operations. In addition, we are subject to federal contracting procedures, audit, and oversight under Federal Acquisition Regulations.

Significant federal regulations impacting our operations include the following:

Federal Regulation of International Business. We are subject to various federal regulations relative to the export of certain goods, services, and technology. These regulations, which include the Export Administration Act of 1979 administered by the Commerce Department and the Arms Export Control Act administered by the State Department, impose substantial restrictions on the sharing or transfer of technology to foreign entities. Our activities in the development of space technology and in the processing of commercial satellites deal with technology of the type subject to these regulations. Our operations are conducted pursuant to a comprehensive export compliance policy that provides close review and documentation of activities subject to these laws and regulations.

Foreign Corrupt Practices Act. The Foreign Corrupt Practices Act establishes rules for U.S. companies doing business internationally. Compliance with these rules is achieved through established and enforced corporate policies and documented procedures in our internal procedures and financial controls.

Iran Nonproliferation Act of 2000. This act includes specific prohibitions on commercial activities with certain specified Russian entities engaged in providing goods or services to the International Space Station. Our activities with RSC Energia of Russia are not subject to this act.

Federal Acquisition Regulations. Goods and services provided by us to NASA and other U.S. Government agencies are subject to Federal Acquisition Regulations. These regulations provide rules and procedures for invoicing, documenting, and conducting business under contract with such entities. The Federal Acquisition Regulations also subject us to audit by federal auditors to confirm such compliance.

Truth in Negotiations Act. The Truth in Negotiations Act was enacted for the purpose of providing for full and fair disclosure by contractors in the conduct of negotiations with the U.S. Government. The most significant provision included in the Truth in Negotiations Act is the requirement that contractors submit certified cost and pricing data for negotiated procurements above a defined threshold.

Regulatory Compliance and Risk Management

We maintain compliance with regulatory requirements and manage our risks through a program of compliance, awareness, and insurance which includes the following:

Safety. We place a continual emphasis on safety throughout our organization. At the corporate level, safety programs and training are monitored by a corporate safety manager. A staff of senior safety professionals within our Flight Services business unit provides safety as a component of our space flight operations and augments the safety awareness and oversight available at the corporate level.

Export Control Compliance. We have a designated senior officer responsible for export control issues and the procedures detailed in our export control policy. This officer and the designated export compliance administrator monitor training and compliance with regulations relative to foreign business activities. Employees are provided comprehensive training in compliance with regulations relative to export and foreign activities through our interactive training program and are certified as proficient in such regulations as are relative to their job responsibilities.

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Insurance. Our operations are subject to the hazards associated with operating assets in the severe environment of space. These hazards include the risk of loss or damage to the assets during storage, preparation for launch, in transit to the launch site, and during the space mission itself. We maintain insurance coverage against these hazards with reputable insurance underwriters. Although we did not fully insure our flight assets in the past, we intend to insure our flight assets at replacement value for risk of loss during future space flight missions. Our insurance providers will not insure our integrated cargo carrier on the space shuttle’s return to flight mission. However, pursuant to our lease agreements for our integrated cargo carriers, we are not responsible for insuring these assets.

Legal Proceedings

Contract Claim. In January 2004 we filed a formal proceeding with NASA seeking indemnification under our Research and Logistics Mission Support contract in the amount of $87.7 million for the value of our research double module and related equipment that was destroyed during the Space Shuttle Columbia tragedy. NASA responded to this contract claim on October 5, 2004. NASA’s determination states that its liability is limited under the Research and Logistics Mission Support contract to $8.0 million. We received payment of $8.2 million, which included $0.2 million of interest, from NASA in October 2004. In January 2005, we filed an appeal of NASA’s decision to deny its claim for indemnification in excess of $8.0 million with the Armed Services Board of Contract Appeals. On May 5, 2005 NASA filed its answer to our complaint with the Armed Services Board of Contract Appeals. We are now proceeding with discovery.

Lloyd’s Complaint. In January 2004, Lloyd’s of London, our insurer for the research double module, filed a complaint in the United States District Court for the Western District of Washington seeking the return of the $17.7 million Lloyd’s had paid to us under the research double module insurance policy. On May 12, 2005 we and Lloyd’s agreed to jointly pursue recovery against NASA with us in full control of the appeals process. Lloyd’s will participate in any recovery, both pursuant to our administrative claim and our tort claim against NASA, net of legal costs, in accordance with a pre-agreed schedule under which our liability to Lloyd’s ranges from a minimum of $500,000 if we do not recover any additional amounts to approximately $17.7 million if we recover over $70.0 million from NASA. Also in accordance with the agreement, Lloyd’s dismissed its complaint against us with prejudice. We will record a charge in our fourth quarter financial statements of $500,000 pending a final resolution of our actions against NASA.

Tort Claim. On November 8, 2004, we filed a second claim with NASA seeking damages of $79.7 million under the federal tort claims act for the loss of our research double module resulting from NASA’s alleged negligence leading to the destruction of the space shuttle Columbia and the loss of our research double module. The claim represents our loss of $87.7 million less the $8.0 million recovered from NASA. NASA has not responded to our claim. In the event that our administrative claim is denied or NASA fails to respond, we would have the right to pursue the claim in federal district court.

Changes in Certifying Accountant

On May 17, 2004, Ernst & Young LLP was dismissed as our independent registered public accounting firm. On May 18, 2004, Grant Thornton LLP was appointed as our new independent registered public accounting firm to replace Ernst & Young for the fiscal year ending June 30, 2004. The decision to dismiss Ernst & Young LLP and to appoint Grant Thornton LLP was recommended by the Audit Committee of our Board of Directors and was approved by our Board of Directors. The decision to dismiss Ernst & Young was the result of our and Ernst & Young’s conclusion to discontinue the client-auditor relationship.

Ernst & Young’s reports on our financial statements for the past two fiscal years did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

During our two most recent fiscal years prior to the engagement of Grant Thornton and the period from June 30, 2003 through May 17, 2004, there were no disagreements with Ernst & Young on any matter of accounting

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principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Ernst & Young, would have caused it to make reference to the subject matter of the disagreements in connection with its report; and there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

We provided Ernst & Young with a copy of prior disclosure regarding its dismissal in a Current Report on Form 8-K dated May 17, 2004 and Ernst & Young furnished us with a letter addressed to the Commission stating whether it agrees with the statements by us in the current report. A letter from Ernst & Young to such effect is filed as an exhibit to our Current Report on Form 8-K dated May 19, 2004.

During our two most recent fiscal years prior to the engagement of Grant Thornton LLP and through May 17, 2004, we did not consult Grant Thornton LLP with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, or any other matters or reportable events listed in Item 304(a)(2) of Regulation S-K.

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SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth our selected consolidated financial data as of and for the years ended June 30, 2000, 2001, 2002, 2003, and 2004. Such data has been derived from our consolidated financial statements audited by Grant Thornton LLP for the fiscal year ended June 30, 2004, by Ernst & Young LLP for the fiscal years ended June 30, 2001, 2002, and 2003, and by KPMG for fiscal year ended June 30, 2000. The summary financial data for the nine-month periods ended March 31, 2004 and 2005 has been derived from our unaudited condensed consolidated financial statements for these periods. The data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and our Consolidated Financial Statements and Notes thereto included in this prospectus. All amounts, except per share amounts, are in thousands.

	Years Ended June 30,															Nine Months Ended March 31,
	2000			2001			2002			2003			2004			2004			2005
										Restated									Restated
Statement of Operations Data:
Revenue from operations	$	105,708		$	105,254		$	102,773		$	94,963		$	77,606	(7)	$	66,466	(7)	$	40,443
Costs of revenue		87,931			92,243			81,767			78,791			45,678			36,172			32,592
Gross profit		17,777			13,011			21,006			16,172			31,928			30,294			7,851
Selling, general and administrative expenses		17,832	(1)		21,796			19,507	(4)		91,434	(5)		20,982	(8)		18,954	(9)		(1,688	)(10)
Research and development expenses		2,440	(2)		393			383			118			223			9			37
Income (loss) from operations		(2,495	)		(9,178	)		1,116			(75,380	)		10,723			11,331			9,502
Interest expense, net of capitalized amounts and interest and other income		3,773			4,804			5,533			7,252			8,142			6,679			4,178
Net income (loss)		(3,844	)		(12,785	)(3)		(2,367	)		(81,775	)		2,075			4,401			5,169
Net income (loss) per common share—basic	$	(0.34	)	$	(1.12	)	$	(0.20	)	$	(6.66	)	$	0.17		$	0.35		$	0.41
Net income (loss) per common share—diluted	$	(0.34	)	$	(1.12	)	$	(0.20	)	$	(6.66	)	$	0.15		$	0.31		$	0.36
Shares used in computing net income (loss) per common share—basic		11,273			11,400			11,884			12,285			12,450			12,416			12,603
Shares used in computing net income (loss) per common share—diluted		11,273			11,400			11,884			12,285			14,142			14,040			14,204
Cash dividends declared per common share		—			—			—			—			—			—			—
Other Data:
Cash provided by (used in) operating activities	$	1,424		$	17,124		$	8,592		$	2,114		$	5,273		$	7,287		$	(6,243	)
Cash provided by (used in) investing activities		(29,794	)		(23,076	)		(13,167	)		3,037	(6)		5,019			6,171			13,646	(10)
Balance Sheet Data (at period end):
Working capital (deficit) surplus	$	(1,601	)	$	(41,424	)	$	(22,022	)	$	(4,750	)	$	(6,351	)	$	(4,277	)	$	1,057
Total assets		225,109			222,477			220,826			121,356			99,925			99,967			95,725
Long-term debt, excluding current portion		75,901			64,589			83,426			80,056			66,942			67,427			65,494
Stockholders’ equity		102,702			90,356			87,670			5,090			9,410			11,704			14,685
Book value per common share (11)		8.06			6.88			6.38			(0.55	)		(0.20	)		(0.02	)		0.22

(1) Includes approximately $1.8 million of expenses associated with the startup of Space Media.

(2) Includes approximately $0.5 million of expenses associated with our discontinued Enterprise module.

(3) Includes approximately $3.3 million of non-cash expense to record a full valuation allowance on our deferred tax asset.

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(4) Includes approximately $0.8 million of non-cash expenses related to subleasing of excess facilities.

(5) Includes approximately $78.3 million of non-cash write downs related to the loss of our research double module, goodwill impairment at our Government Services business unit, and asset impairment.

(6) Includes approximately $17.7 million of insurance proceeds related to the loss of our research double module.

(7) Includes approximately $17.5 million due to Boeing’s termination of its spacecraft processing contract with us.

(8) Includes approximately $0.3 million of non-cash expenses related to subleasing of excess facilities, $8.3 million of goodwill impairment at our Government Services and Astrotech Space Operations business units, and a $1.8 million non-cash write-down of an investment in Guignè.

(9) Includes approximately $8.3 million of goodwill impairment at our Government Services and Astrotech Space Operations business units and a $1.8 million non-cash writedown of an investment in Guignè.

(10) Includes approximately $8.2 million of recovery related to indemnification payments for the loss of our research double module.

(11) Excludes common stock issuable upon conversion of our Series B convertible preferred stock.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements and notes thereto included elsewhere in this prospectus.

Overview

We are pleased that the White House issued a new vision for U.S. space leadership. We view the President’s commitment to space exploration, the human spaceflight program, and the plan for missions to the Moon, Mars, and beyond as positive indicators that will reinvigorate the space program, likely yielding benefits to the aerospace and space commerce industries. We believe that this vision provides NASA with a clear focus, will stabilize the NASA program, and will increase funding for the new pursuits.

We believe the impacts of this vision will materialize over time, and we will continue to align our business direction to remain a constructive force in the human spaceflight program. In the long term, we believe that our core competencies offer opportunities to continue to provide services as well as to design, build, and operate assets that could support initiatives beyond low Earth orbit. We plan to pursue these new opportunities. In the near term, our primary objective is to continue providing services to NASA and the space community in support of the space shuttle and the International Space Station programs. Even with the renewed vision, we expect that the space shuttle and International Space Station will remain an integral part of the human spaceflight program through at least 2010. We are currently supporting four of the next six scheduled space shuttle flights and are pursuing additional missions that will be important for completing the final assembly of the International Space Station. In January 2005 we received authorization to proceed on integration and operations activities for the STS-116 shuttle mission currently scheduled for February 2006. In addition, we received authorization for new contract work to add a deployable stowage platform to the STS-118 shuttle mission scheduled to launch in July 2006. This deployable storage platform will be permanently affixed to the International Space Station. In April 2005 NASA announced the delay of the return to flight of the space shuttle from mid May 2005 to mid July 2005. The delay is expected to have a small impact on our revenues and margins over the coming months as we continue the mission specific work now underway. Our contractual arrangements provide for the payment to us of a periodic asset maintenance fee when we are making available and maintaining our space assets pending launch.

We are actively engaged in defining commercial payload service solutions capable of meeting the International Space Station on-orbit re-supply and return requirements more efficiently than the space shuttle. These activities, some of which leverage our international strategic partnerships and intellectual property rights, include the development of an affordable cargo transportation system based on existing commercial launch vehicles and our modular payload integration architecture to transport pressurized and unpressurized cargo to and from the International Space Station. We further believe that our experience and expertise in the conceptual design, development, ground processing, and on-orbit operations support of payload and crew accommodations position us well for a role in the development of NASA’s space exploration systems, the envisioned next phase in human exploration of space.

In September 2004, our Flight Services business unit was awarded a six-month NASA study contract valued at approximately $1.0 million to support the space agency’s new exploration initiatives. We defined concepts for accomplishing human lunar exploration with a focus on innovative solutions and commercial approaches that could be reapplied to missions to Mars and beyond. In March 2005, we were awarded a contract option for an additional six-month effort valued at nearly $1.0 million.

We operate in three main areas generally related to space flight activities within the aerospace industry: space assets and mission support services for manned and unmanned space exploration and research missions; commercial and exploratory satellite pre-launch services; and engineering services in support of government space operations. We also operate a retail space merchandise business and provide space-related educational services. Because of the diversity among the operations of our activities, we report the results of each business as

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a separate segment in our consolidated financial statements. Our consolidated financial results also reflect corporate-level expenses such as general and administrative, interest, and depreciation and amortization, but because of their nature, these items are not reported as a separate segment.

Business Segments

Following is a brief discussion of each of our four business segments, including a list of key factors that have affected, and are expected to continue to affect, their respective earnings and cash flows. We also present a brief discussion of our corporate-level expenses along with a summary of our current liquidity position and items that could impact our liquidity position in fiscal year 2005 and beyond.

SPACEHAB Flight Services. This business unit generates revenue by providing space shuttle-based, turnkey services that include customer access to space via our pressurized modules and unpressurized integrated cargo carriers; integration and operations support to logistics suppliers transporting their cargo aboard our modules and integrated cargo carriers to and from the orbiting International Space Station; and/or integration and operations support to scientists and technologists responsible for experiments performed aboard module and integrated cargo carrier research platforms.

We also offer on a space-available basis for each mission, access to space on board the space shuttle, Russian Progress, and European Space Agency ATV cargo vehicles under commercial contracts with non-NASA customers, including both government and private customers. Commercial contracts with non-NASA customers will continue to be established directly between us and our commercial customers.

Additionally, during the space shuttle stand-down period, we provided cargo shipment coordination services to NASA for all U.S. cargo shipped to the International Space Station via the Russian Progress space vehicle. These services are provided under contract to Lockheed Martin, the prime Cargo Mission Contract contractor to NASA. We are also providing research access to space and on the International Space Station to the Japanese Aerospace Exploration Agency through RSC-Energia, a major Russian aerospace enterprise. We contracted through V.J.F. Russian Consulting with RSC-Energia for construction of certain space research equipment, access to Russian Progress launch vehicles, and research space aboard the International Space Station when the originally-scheduled services on the space shuttle were suspended due to the Columbia tragedy.

The primary factors impacting our Flight Services business unit earnings and cash flows are the number of space shuttle missions flown and the configuration of the cargo handling and research logistics required for each mission. Our revenues and earnings, if any, from each mission are dependent upon the space assets required in the cargo or research logistics configuration and the mission support services required to employ those assets. Other factors that have impacted, and are expected to continue to impact, earnings and cash flows for this business unit include:

• Congress’ funding for NASA and the allocation of that funding to International Space Station operations and space shuttle cargo missions;

• the return to flight of the U.S. space shuttle;

• the role of international space research projects flying on future space shuttle and Russian and European Space Agency missions;

• the growth of space exploration programs within NASA and NASA’s commitment to the President’s Vision for Space Exploration regarding enhancement of the role of commercial enterprise in space exploration programs; and

• our ability to control our capital expenditures, particularly those for spare or replacement parts for space assets.

Astrotech Space Operations. Revenue is generated from various fixed-price contracts with launch service providers in both the commercial and government markets. The services and facilities we provide to our customers support the final assembly, checkout, and countdown functions associated with preparing a satellite for launch.

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The earnings and cash flows generated from our Astrotech operations are related to the number of commercial satellite launches, which reflects the growth in the satellite-based communication industries, and the requirement to replace aging satellites. Other factors that have impacted, and are expected to continue to impact, earnings and cash flows for this business include:

• our ability to control our capital expenditures, which primarily are limited to modifications to accommodate payload processing for new launch vehicles, maintenance and safety, environmental and reliability projects, and other costs, through disciplined management and safe, efficient operations; and

• the continuing limited availability of competing facilities at the major domestic launch sites that can offer compatible services, leading to an increase in government use of our services.

SPACEHAB Government Services. Our Government Services business unit generates revenue by providing support to the U.S. Government in the areas of large-scale configuration and data management programs such as the International Space Station; specialized hardware design, development, and fabrication; low-to high-fidelity mockup design and construction; and safety and quality support services. This business unit offers a wide array of products and services in these varied fields. Our Government Services business unit currently provides configuration management services as a subcontractor of ARES under ARES’ Program Integration and Control contract with NASA.

Earnings from our Government Services business unit operations are dependent on our ability to continue to win contracts with NASA or other government entities through the competitive bidding process and our performance under those contracts in achieving performance bonuses. Other factors that have impacted, and are expected to continue to impact, earnings and cash flows for this business include:

• continuation through 2008 of our Program Integration and Control contract with the International Space Station program;

• our ability to maintain small business qualification for our Government Services business unit under NASA contracting rules; and

• our ability to control costs within our budget commitments.

Space Media. Our space media business unit operates a retail store and internet store offering space-themed products and is engaged in space-related educational programs and other space-themed activities. Revenue and earnings in our retail operations are dependent upon general enthusiasm for the space exploration program, advertising and promotion, and competition.

Corporate and Other. Significant items impacting future earnings and cash flows include:

• interest expense, which has decreased in the first nine months of fiscal year 2005 as compared to the first nine months of fiscal year 2004, due to the repayment of a substantial portion of our mortgage debt during fiscal year 2004 using proceeds from Boeing’s early termination of their satellite preparation contract with our Astrotech business unit;

• general and administrative costs, which were reduced in fiscal year 2004 due to staff reductions and the closing of our Washington D.C. corporate office, and our ability to continue to manage future overhead costs;

• the ultimate settlement of our claim against NASA for indemnification of our losses on the Space Shuttle Columbia mission and/or our tort claim; and

• income taxes, with respect to which we currently only pay alternative minimum tax and minimal state income taxes; income taxes will also be impacted by our ability to realize our significant deferred tax assets, including loss carry forwards.

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Liquidity and Capital Resources

As of March 31, 2005 we had cash on hand and in short-term investments of $6.0 million, including $0.9 million in restricted cash. Our $5.0 million revolving credit facility had no outstanding borrowings as of March 31, 2005. Our primary source of liquidity is cash flow from operations and short-term investments. The principal uses of cash flow that affect our liquidity position include both operational expenditures and debt service payments. We are focused on increasing cash flow and on managing cash effectively through limiting cash investments in long-term assets. Our ability to maintain sufficient liquidity in the future will depend on a number of factors, including our ability to acquire future business, control our costs and manage capital expenditures, the return to flight of the space shuttle, and the continued activity in the commercial and governmental satellite launch industry.

We expect that our operating cash flows through fiscal year 2006 will be sufficient to satisfy our capital expenditures, debt maturities, interest expenses, and operating commitments. In February 2005, we entered into a new $5.0 million revolving credit facility, replacing our previous revolving credit facility. This new revolving credit facility is secured by our accounts receivable and funds available under the facility are limited to 80% of eligible accounts receivable. Under the credit facility, we are subject to various financial and other covenants, including a minimum tangible net worth covenant, a cash flow covenant, and a secured debt coverage covenant. As of March 31, 2005, there was $5.0 million available for borrowings under this credit facility and restricted cash of $0.3 million. We were required to maintain a restricted cash balance of $0.3 million as of March 31, 2005, because we did not satisfy the minimum tangible net worth covenant in our credit facility as of March 31, 2005. As of June 30, 2005, we were in compliance with this covenant and were not required to maintain a restricted cash account.

Over the longer term we believe that the space shuttle return to flight and the President’s Vision for Space Exploration will lead to increased activity and related cash flows from operations for our Flight Services business unit. We expect additions to our contract with Lockheed Martin for International Space Station configuration hardware and contract additions in our satellite processing business, reflecting increased activity in the space exploration and commercial satellite industries. However, there can be no assurance that we will be able to win future contracts with NASA, other national space agencies, or commercial space enterprises, or to successfully exploit other business opportunities.

Cash Flows From Operating Activities. Cash provided by (used in) operations for the nine months ended March 31, 2005 (restated) and 2004 was $(6.2) million and $7.3 million, respectively. The significant items affecting the differences in cash flows from operating activities for the nine months ended March 31, 2005 as compared to the nine months ended March 31, 2004 are discussed below:

• Net income for the nine months ended March 31, 2005 was $5.2 million as compared to net income for the nine months ended March 31, 2004 of $4.4 million. Previously, net income for the nine months ended March 31, 2005 included $8.2 million recognized as recovery of a previously reported non-recurring loss of our research double module. The $8.2 million in proceeds is being reclassified to Investing Cash Flows out of Operating Cash Flows.

• For the nine months ended March 31, 2004, we received $17.5 million due to the Boeing termination. In addition, we recorded a non-cash charge of $8.3 million for impairment of goodwill at our Astrotech and Government Services business units. We recorded a non-cash valuation allowance charge of $1.8 million for our investment in Guigne. We also recorded a non-cash charge of approximately $0.7 million due to the loan repayment.

• Depreciation and amortization for the nine months ended March 31, 2005 was $4.0 million as compared to $4.2 million for the nine months ended March 31, 2004.

• Changes in assets for the nine months ended March 31, 2005 used cash from operations of $0.6 million. This change is primarily due to an increase in accounts receivable of $1.6 million and an increase in prepaid expenses of $0.4 million, which were partially offset by a decrease in other assets of $1.4 million. The increase in accounts receivable is primarily due to increased billings on the Cargo Mission contract due to contract billable milestones being delivered. The decrease in other assets is primarily due

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to a decrease in deferred mission costs for the Japanese Experiment Thermal Incubator Service contract due to the launch of the first mission in July, 2004 and the subsequent on-orbit operations. For the nine months ended March 31, 2004 change in assets provided cash from operations of $0.6 million primarily from a decrease in accounts receivable.

• Changes in liabilities for the nine months ended March 31, 2005 used cash from operations of $6.6 million. This change is due primarily to the decreases in accounts payable and accrued expenses of $1.8 million and the decrease in deferred revenue of $4.8 million. The decrease in deferred revenue is primarily due to the first launch for the Japanese Experiment Thermal Incubator Service contract during the nine months ended March 31, 2005 and subsequent on-orbit operations. For the nine months ended March 31, 2004 changes in liabilities used cash in operations of $13.0 million, primarily due to a decrease in accounts payable to EADS of $4.4 million and a decrease in deferred revenue of approximately $8.6 million primarily due to revenue recognition for STS-116 and NASA’s planned dedicated research mission that was previously scheduled to follow STS-107.

Cash Flows From Investing Activities. For the nine months ended March 31, 2005 (restated) and 2004, cash flows provided by investing activities were $13.6 million and $6.1 million, respectively. The significant items affecting the differences in cash flows from investing activities for the nine months ended March 31, 2005 as compared to the nine months ended March 31, 2004 are discussed below:

• There were property and equipment purchases of $0.8 million for the nine months ended March 31, 2005 as compared to $1.3 million for the nine months ended March 31, 2004.

• For the nine months ended March 31, 2005, cash flows from investing activities were primarily generated from the sale of short-term investments of $6.6 million as compared to sales of such short-term investments of $7.4 million for the nine months ended March 31, 2004.

• The increase in investing cash flows was offset by an increase in restricted cash of $0.4 million as compared to no change for the nine months ended March 31, 2004.

• For the nine months ended March 31, 2005, cash flows from investing activities included $8.2 million received from NASA under the Research and Logistics Mission Support contract indemnification clause for the loss of our research double module.

Cash Flows From Financing Activities. For the nine months ended March 31, 2005 and 2004, cash flows used in financing activities were $2.8 million and $12.7 million, respectively. The significant items affecting the differences in cash flows from financing activities for the nine months ended March 31, 2005 as compared to the nine months ended March 31, 2004 are discussed below:

• For the nine months ended March 31, 2005, we had net repayments of $1.4 million in principal under the revolving credit facility as compared to no net borrowings for the nine months ended March 31, 2004.

• For the nine months ended March 31, 2005, we paid $1.4 million under various credit agreements as compared to $13.0 million for the nine months ended March 31, 2004. This reduction is primarily due to the payment of $11.0 million on our mortgage loan due to the Boeing termination and the final payment to Alenia Spazio S.P.A during the nine months ended March 31, 2004.

• For the nine months ended March 31, 2005, we had proceeds from the issuance of common stock upon the exercise of employee stock options of $0.1 million as compared to $0.3 million for the nine months ended March 31, 2004.

On March 25, 2003 the Board of Directors authorized us to repurchase up to $1.0 million of our outstanding common stock at market prices. Any purchases under our stock repurchase program may be made from time to time, in the open market, through block trades or otherwise in accordance with applicable regulations of the SEC. As of March 31, 2005, we had repurchased 116,100 shares at a cost of $117,320 under the program. We will continue to evaluate the stock repurchase program and the funds authorized for the program.

We continue to focus our efforts on improving our overall liquidity through identifying new business opportunities within the areas of our core competencies, reducing operating expenses, and limiting cash commitments for future capital investments and new asset development. On November 5, 2003, NASA notified us

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that we were not awarded the International Space Station Mission Integration Contract. Additionally, the Boeing team’s bid for the Cargo Mission Contract with NASA, of which our Government Services business unit was a subcontractor, was not selected for contract award. As a result of the loss of these contract awards, we made significant adjustments to our staffing and cost base structure during 2004. We reduced staffing by 67 employees in the quarter ended March 31, 2004 as a result of NASA’s award decisions. On October 1, 2003 we announced that we would close our corporate office in Washington, D.C. by March 31, 2004 and consolidate those operations into our headquarters in Houston, Texas. We took these actions as part of our continuing efforts to further reduce operating expenses and improve profitability. To offset a portion of our remaining lease commitment, we subleased our Washington, D.C. facility for the remaining lease period which is under lease through May 31, 2006. We have continued to restrict new capital investment and new asset development, limiting projects to those required to support current contracts and facility maintenance. Additionally, we continue to evaluate operating expenses in an effort to reduce or eliminate costs not required for us to operate effectively.

On April 28, 2005 we consummated the sale and simultaneous lease back of our Cape Canaveral, Florida payload processing facility. The sale resulted in net cash to us of approximately $3.8 million. We leased back the facility for an initial period of five years, with an option period of an additional five years. The annual rental for the first five years of this lease is approximately $0.45 million. On May 26, 2005 we consummated the sale and lease back of our corporate offices in Webster (Houston), Texas. The sale resulted in net cash to us of approximately $0.9 million. We leased back 100% of the facility for an initial period of ten years, with two five-year options. We also retained the adjacent 3.0 acres parcel for future development or sale. The annual rental for the first year of this lease is approximately $0.32 million and gradually increases through the tenth year of the lease to approximately $0.4 million.

Our cash and short-term investments were approximately $6.0 million, including $0.9 million in restricted cash, as of March 31, 2005. We believe that we have sufficient liquidity, including cash and short-term investments, advances available under our revolving credit facility, and cash anticipated or expected to be generated from operations to fund ongoing operations beyond the remainder of this fiscal year. We also expect to utilize existing cash and cash anticipated from future operations to support strategies for new business initiatives and to reduce long-term debt.

Our contractual obligations as of March 31, 2005 are as follows (in thousands):

Contractual Obligations	At March 31, 2005		Remaining in Fiscal Year 2005		Fiscal Year 2006		Fiscal Year 2007		Fiscal Year 2008		Fiscal Year 2009		Thereafter
Long-term Debt	$	63,250	$	—	$	—	$	—	$	63,250	$	—	$	—
Mortgage Loan Payable		4,190		497		2,057		1,636		—		—		—
V.J.F. Russian Consultant Agreement		210		45		165		—		—		—		—
V.J.F. Russian Subcontract		1,003		603		400		—		—		—		—
Operating leases(1)(2)		21,826		960		4,918		4,507		4,372		4,217		2,852
Total Contractual Cash Obligations(3)	$	90,479	$	2,105	$	7,540	$	6,143	$	67,622	$	4,217	$	2,852

(1) For the remainder of fiscal year 2005, we expect to receive net payments of $0.2 million for subleases. For fiscal years 2006, 2007, and 2008, we expect to receive net payments of approximately $0.7 million, $0.5 million, and $0.3 million, respectively, for subleases. Additionally, we exercised a four year option on our leases with EADS Space Transportation.

(2) Does not include amounts for sale leaseback of our Payload Processing Facility on April 28, 2005 or our corporate administrative offices on May 26, 2005.

(3) Does not include commitment to Dayna Justiz for compensation that can be earned as a result of the agreement dated June 19, 2000. The agreement states that Dayna Justiz can earn up to $375,000 as additional compensation if she meets certain financial goals in the management of The Space Store. The yearly amount is equal to five percent of The Space Store’s “net after-tax operating income” during each fiscal year until such time an aggregate amount of $375,000 has been earned. At this time, we have recorded no liability for this obligation due to the uncertainty of the obligation being met.

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Critical Accounting Policies

Revenue Recognition. Our business units’ revenue is derived primarily from long-term contracts with the U.S. Government and commercial customers. Revenues under these contracts are recognized using the methods described below. Estimating future costs and, therefore, revenues and profits, is a process requiring a high degree of management judgment. See “Risk Factors—Risks Related to Our Business—Our financial results could be affected if the estimates that we use in accounting for contracts are incorrect and need to be changed.” We base our estimate on historical experience and on various assumptions that are believed to be reasonable under the circumstances including the negotiation of an equitable adjustment on the Research and Logistics Mission Support contract which was added to the contract as a pricing amendment due to the delay in the return to flight. Costs to complete include, when appropriate, material, labor, subcontracting costs, lease costs, commissions, insurance and depreciation. Our business units’ personnel perform periodic contract status and performance reviews. In the event of a change in total estimated contract cost or profit, the cumulative effect of such change is recorded in the period that the change in estimate occurs.

A Summary of Revenue Recognition Methods Follows:

Business Unit	Services/Products Provided	Contract Type	Method of Revenue Recognition
Flight Services	Commercial Space Habitat Modules, Integration & Operations Support Services	Firm Fixed Price	Percentage-of-completion based on costs incurred
Government Services	Configuration Management, Engineering Services	Cost Reimbursable Award/Fixed Fee	Reimbursable costs incurred plus award/fixed fee
Astrotech	Payload Processing Facilities	Firm Fixed Price—Mission Specific Firm Fixed Price—Guaranteed Number of Missions	Ratably, over the occupancy period of a satellite within the facility from arrival through launch For multi-year contract payments recognized ratably over the contract period
Space Media	Space-Themed Commercial Products/Activities	Retail	Internet and retail sales recognized when goods are shipped

Goodwill. In assessing the recoverability of goodwill and other intangibles, we must make assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets. If and when these circumstances or their related assumptions change in the future, we may be required to record impairment charges for these assets. We adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” on July 1, 2002, under which we ceased to amortize goodwill and instead analyze goodwill at least annually for impairment issues. The remaining goodwill on the balance sheet as of December 2003 was tested for impairment and was written off in fiscal year 2004.

Long-Lived Assets. In assessing the recoverability of long-lived assets, fixed assets, assets under construction and intangible assets, we evaluate the recoverability of those assets in accordance with the provisions of the Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or

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Disposal of Long-Lived Assets.” This Statement requires that certain of our long-lived fixed assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Revenue

Our revenue for the nine months ended March 31, 2005 and 2004 was generated primarily from the Research and Logistics Mission Support contract, the Lockheed Martin letter contract, and contracts with related commercial customers in the Flight Services business unit; the remaining contracts under the Flight Crew Systems Development contract and the Program Integration and Control contract in our Government Services business unit; and our contracts with Lockheed Martin and other commercial satellite providers in our Astrotech business unit. Revenue for our Space Media business unit was immaterial for the nine months ended March 31, 2005 and 2004. During the period, there were launch delays that affected planned revenue that is expected to materialize in the upcoming months in our Astrotech business unit.

Our Flight Services business unit is supporting NASA’s return-to-flight activities and is continuing operations in preparation for shuttle missions, including STS-114, 121, 116, and 118 (in order of their anticipated flight sequence). We contracted directly with NASA’s prime International Space Station contractor, Boeing, for the STS-114 mission. Our Flight Services business unit is preparing cargo carriers for shuttle missions STS-114 and STS-118, the External Stowage Platforms 2 and 3, respectively, that will be deployed and permanently mounted to the International Space Station. For STS-121, we are scheduled to provide our non-deployable integrated cargo carrier to NASA under our Cargo Mission Contract subcontract with Lockheed Martin for transport of several critical International Space Station orbital replacement unit spares. For both STS-116 and 118, missions also under the Cargo Mission contract, we are scheduled to provide our pressurized single module and an unpressurized non-deployable integrated cargo carrier for transport of critical cargo and orbital replacement units to and from the International Space Station. We have successfully completed negotiations with Boeing and Lockheed Martin for the respective contract equitable adjustments required to continue uninterrupted support to ongoing STS-114, 121, 116 and 118 mission preparation activities during the shuttle down period following the Columbia tragedy. Support for missions STS-121, 116 and 118 is continuing under a subcontract agreement with Lockheed Martin, effective February 1, 2004. We are currently providing these services under a letter contract, have completed final contract negotiations with Lockheed Martin, and are awaiting issuance of this new contract. Additionally, after approximately April 15, 2004, our Flight Services business unit no longer is subcontracting its module mission integration, operations and sustaining engineering technical support to Boeing. Most module mission tasks previously performed by Boeing personnel are now being performed by our Flight Services business unit personnel, and selected NASA cargo integration tasks on our module missions are now being performed by Lockheed Martin as a part of their Cargo Mission Contract with NASA. This decision enables our Flight Services business unit to continue to provide services to NASA and is consistent with the direction of the International Space Station program office.

In January 2004 we initiated activity under the Japanese Experiment Thermal Incubator Service contract with the Mitsubishi Corporation, representing the Japanese Aerospace Exploration Agency, that was entered into in 2000 and originally scheduled to fly aboard our research double module. Subsequent to the suspension of the space shuttle flights and destruction of our research double module, we contracted for construction of certain space research equipment, research space aboard the International Space Station and up to three Russian Progress cargo missions with V.J.F. Russian Consulting, representing RSC Energia, a major Russian aerospace manufacturer and mission operator. The first experiment was successfully launched on the Russian Progress spacecraft on August 11, 2004.

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During the three and nine months ended March 31, 2005, deferred revenue decreased by $0.2 million and $4.8 million, respectively, as we recognized revenue on contracts where milestone payments had been received in prior periods. We expect further reduction of deferred revenue through the next twelve months which will result in revenue recognition on contracts for which the related cash was received in a prior period.

Costs of Revenue

We have several types of costs of revenue in our business segments. Costs of revenue for our Flight Services business unit include integration and operations expenses associated with the performance of two types of efforts, sustaining engineering in support of all missions under a contract and mission specific support. Costs associated with the performance of the contracts using the percentage-of-completion method of revenue recognition are expensed as incurred. Costs associated with the cost-reimbursable award and fixed-fee contracts are expensed as incurred by our Government Services business unit. Other costs of revenue include depreciation expense and costs associated with the Astrotech payload processing facilities. Flight related insurance covering transportation of our modules from our 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. Selling, general and administrative and interest and other expenses are recognized when incurred.

Non Recurring Charge

On February 1, 2003 our research double module was lost in the Columbia tragedy. The net book value of the research double module was $67.9 million, which, net of insurance proceeds of $17.7 million, was recognized as a loss in the third quarter of fiscal year 2003. The $8.0 million plus interest of $0.2 million paid by NASA as indemnification for our loss of the research double module is recognized as a recovery of previously recognized loss in the quarter ended September 30, 2004. At this time, we do not plan to replace the research double module. Our Flight Services business unit has two additional modules and other flight assets available to support current NASA requirements. We believe that these modules and assets can also be used to support future NASA requirements during the remaining life of the space shuttle fleet. The space shuttle’s expected return to flight was delayed on July 13, 2005.

Results of Operations for the Three and Nine Month Periods Ended March 31, 2005 and 2004

Three Months Ended March 31, 2005 as Compared to the Three Months Ended March 31, 2004

Revenue. Revenue decreased approximately 4% to $14.3 million as compared to $14.8 million for the three months ended March 31, 2005 and 2004, respectively (in millions).

	Three Months Ended March 31,				Dollar Change			Percent Change
	2005		2004
Flight Services	$	10.0	$	10.3	$	(0.3	)	(3	)%
Astrotech Space Operations		2.5		2.5		—		—
Government Services		1.6		1.8		(0.2	)	(11	)%
Space Media		0.2		0.2		0.0		—
	$	14.3	$	14.8	$	(0.5	)	(4	)%

Revenue from our Flight Services business unit has been adversely affected by the temporary grounding of the shuttle fleet due to the Columbia tragedy in February 2003, partially offset by revenue from the Lockheed Martin letter contract, and other contract revenue. The following summarizes the significant changes for the three months ended March 31, 2005 as compared to the comparable period in fiscal year 2004:

• a decrease in the Research and Logistics Mission Support contract revenue of $4.2 million in the three months ended March 31, 2005 compared to the three months ended March 31, 2004 due to the termination of the Research and Logistics Mission Support contract in January 2004;

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• an increase in Lockheed Martin contract revenue of $4.4 million in the three months ended March 31, 2005 compared to the three months ended March 31, 2004 due to the startup of the contract in February 2004;

• a decrease in revenue from the Japanese Experiment Thermal Incubator Service contract of $1.2 million due to the timing of the mission operations;

• an increase in revenue attributable to our Concept Exploration and Refinement contract with NASA of $0.6 million that was started in the first quarter of fiscal year 2005; and

• other contract revenue increase of $0.1 million.

Revenue from our Astrotech business unit was generally unchanged in the quarter ending March 31, 2005 as compared to the comparable quarter in 2004.

The decrease in revenue at our Government Services business unit is primarily due to the closeout of the Stowage, Engineering and Decal contract and Configuration Management contract in December 2004. The following summarizes the significant changes for the three months ended March 31, 2005 as compared to the comparable period in fiscal year 2004:

• a revenue decrease of $0.4 million due to the closeout of the Stowage, Engineering and Decal contract and Configuration Management contract in December 2004; and

• other contract revenue increase of $0.2 million.

Costs of Revenue. Costs of revenue for the three months ended March 31, 2005 increased by 13% to approximately $11.1 million, as compared to $9.8 million for the prior fiscal year’s comparable quarter (in millions):

	Three Months Ended March 31,				Dollar Change		Percent Change
	2005		2004
Flight Services	$	7.9	$	6.2	$	1.7	27	%
Astrotech Space Operations		2.0		2.0		—	0	%
Government Services		1.1		1.5		0.4	(27	)%
Space Media		0.1		0.1		—	—
	$	11.1	$	9.8	$	1.3	13	%

Costs of revenue from our Flight Services business unit have primarily increased due to costs of revenue attributable to our performance under the Lockheed Martin letter contract, the termination of Boeing as a subcontractor for module services, and other contract costs of revenue, partially offset by reduced costs as a result of the temporary grounding of the shuttle fleet due to the Columbia tragedy in February 2003. The following summarizes the significant changes for our Flight Services business unit for the three months ended March 31, 2005 as compared to the comparable period in fiscal year 2004:

• a decrease in costs of revenue for shuttle related mission work performed by Boeing of $0.9 million due to subcontract termination;

• an increase in costs of revenue for shuttle related mission work performed by EADS of $1.4 million due to the scheduled launch of the STS-114 shuttle mission in July 2005;

• an increase in costs of revenue for shuttle related missions for in-house engineering labor of $1.2 million; and

• other costs of revenue decreases of $0.4 million, offset by Concept Exploration and Refinement contract costs of $0.3 million.

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Cost of revenue from our Astrotech business unit were generally unchanged in the quarter ending March 31, 2005 as compared to the comparable quarter in 2004.

The decrease in costs of revenue at our Government Services business unit is primarily due to the closeout of the Stowage, Engineering and Decal contract in December 2004. The following summarizes the significant changes for our Government Services business unit for the three months ended March 31, 2005 as compared to the comparable period in fiscal year 2004:

• costs of revenue decrease of $0.3 million due to the closeout of the Stowage, Engineering and Decal contract in December 2004; and

• other costs of revenue decreases of $0.1 million due to less contract activities in the third quarter of 2005 as compared to third quarter of fiscal year 2004.

Operating Expenses. Operating expenses decreased to $2.3 million for the three months ended March 31, 2005 as compared to approximately $2.6 million for the three months ended March 31, 2004. Operating expenses are lower in the quarter ended March 31, 2005 compared to the last fiscal year’s comparable quarter due to our ongoing cost reduction efforts and staffing and reductions in selling, general and administrative expenses. Research and development expenses were immaterial for the three months ended March 31, 2005 and 2004, although we expect these costs to increase in future periods. In the three months ended March 31, 2005, we recognized legal expenses of $0.3 million relating to our claims against NASA for the loss of the research double module and response to Lloyd’s complaint regarding its payment of insurance proceeds on the accident.

Interest Expense. Interest expense was approximately $1.4 million for the three months ended March 31, 2005 as compared to approximately $2.2 million for the three months ended March 31, 2004. The decrease in interest expense is primarily due to the loss of hedge accounting in 2004 as a result of the termination of our interest rate swap for our mortgage loan payable, resulting in expense of $0.5 million on a portion of the interest rate swap. Additionally, there was an acceleration of $0.2 million of debt placement costs in 2004 associated with the repayment of the mortgage loan and decreasing interest expense on the amended mortgage loan.

Interest and Other Income. Interest and other income was immaterial for the three months ended March 31, 2005 and March 31, 2004. Interest income is earned on our short-term investments.

Income Taxes. Based on our projected effective tax rate for fiscal year 2005, we recorded minimal tax expense for the three months ended March 31, 2005 as compared to a minimal tax expense for the three months ended March 31, 2004.

Net Income (Loss). Net loss for the three months ended March 31, 2005 was approximately $0.5 million or $0.04 per share basic and diluted on 12,626,130 shares as compared to net income of approximately $0.3 million or $0.02 per share basic and $0.02 per share diluted on 12,476,342 and 14,264,818 shares, respectively, for the three months ended March 31, 2004.

Nine Months Ended March 31, 2005 as Compared to the Nine Months Ended March 31, 2004.

Revenue. Revenue decreased approximately 39% to $40.4 million for the nine months ended March 31, 2005 as compared to $66.5 million for the nine months ended March 31, 2004 (in millions):

	Nine Months Ended March 31,				Dollar Change			Percent Change
	2005		2004
Flight Services	$	28.4	$	32.6	$	(4.2	)	(13	)%
Astrotech Space Operations		6.7		24.7		(18.0	)	(73	)%
Government Services		4.7		8.6		(3.9	)	(45	)%
Space Media		0.6		0.6		—		—
	$	40.4	$	66.5	$	(26.1	)	(39	)%

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Revenue from our Flight Services business unit has been adversely affected by the temporary grounding of the shuttle fleet due to the Columbia tragedy in February 2003. Even though the shuttle fleet was grounded for both the nine months ended March 31, 2005 and nine months ended March 31, 2004, there is a significant difference in revenue due to how NASA proceeded with the grounding of the shuttle fleet. For the nine months ended March 31, 2004, we were operating as if the shuttle would return to flight in the near term which resulted in higher revenue due to the products and services that were being required to be delivered to NASA in preparation for the return to flight. For the period ended March 31, 2005, we were required to deliver fewer products and services to NASA due to a more defined return to flight schedule. The following summarizes the significant changes for our Flight Services business unit for the nine months ended March 31, 2005 as compared to the comparable period in fiscal year 2004:

• a decrease in the Research and Logistics Mission Support contract revenue of $23.3 million in the nine months ended March 31, 2005 compared to the nine months ended March 31, 2004 due to the termination of the Research and Logistics Mission Support contract in January 2004;

• an increase in revenue from the Lockheed Martin contract, which replaced the Research and Logistics Mission Support contract in February 2004, of $16.0 million in the nine months ended March 31, 2004;

• an increase in the External Stowage Platform 2 contract revenue of $3.6 million in the nine months ended March 31, 2005 compared to the nine months ended March 31, 2004 due to the anticipated launch in July 2005;

• an increase in revenue from the Japanese Experiment Thermal Incubator Service contract of $0.8 million that was started in the third quarter of fiscal year 2004;

• an increase in revenue from the Concept Exploration and Refinement contract of $1.0 million that was started in the first quarter of fiscal year 2005; and

• other contract revenue decrease of $2.3 million, mainly due to the cancellation of the research double module’s planned second mission under the Research and Logistics Mission Support contract during the nine months ended March 31, 2004.

The decrease in revenue at our Astrotech business unit is primarily due to Boeing’s termination in October 2003 of its contractually fixed guarantee payments, which was partially offset by the one time termination payment in the amount of $17.5 million that we received from Boeing in the nine months ended March 31, 2004 and by the additional services that we supply to Boeing. During the nine months ended March 31, 2005, our Astrotech business unit underwent scheduled downtime between launches and recognized contractually guaranteed revenues of $2.5 million and $0.6 million from missions that began in the fourth quarter of fiscal year 2004 and were completed in the first quarter of fiscal year 2005, contract revenue from five missions that began in the second and third quarters of fiscal year 2005 of $2.9 million and other revenue of $0.7 million.

The decrease in revenue at our Government Services business unit is primarily due to the closeout of the Stowage, Engineering and Decal contract and the Configuration Management contract in December 2004 partially offset by the Program Integration & Control contract which started in January 2004. The following summarizes the significant changes for our Government Services business unit for the nine months ended March 31, 2005 as compared to the comparable period in fiscal year 2004:

• a revenue decrease of $6.3 million due to the closeout of the Stowage, Engineering and Decal contract and the Configuration Management contract in December 2004;

• other contract revenue decrease of $0.3 million due to less contract activity; and

• a revenue increase of $2.7 million due to the Program Integration & Control contract.

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Costs of Revenue. Costs of revenue for the nine months ended March 31, 2005 decreased by 10% to approximately $32.6 million, as compared to $36.2 million for the nine months ended March 31, 2004 (in millions):

	Nine Months Ended March 31,		Dollar Change		Percent Change
	2005	2004
Flight Services	22.8	23.0	(0.2	)	(1	)%
Astrotech	5.9	5.7	0.2		4	%
Government Services	3.6	7.2	(3.6	)	50	%
Space Media	0.3	0.3	—		—
	32.6	36.2	(3.6	)	10	%

Costs of revenue from the Flight Services business unit has been affected by the temporary grounding of the shuttle fleet due to the Columbia tragedy in February 2003, partially offset by costs of revenue from the Lockheed Martin letter contract, the termination of Boeing as a subcontractor for module services, and other contract costs of revenue. The following summarizes the significant changes for our Flight Services business unit for the nine months ended March 31, 2005 as compared to the comparable period in fiscal year 2004:

• a decrease in the Research and Logistics Mission Support contract costs of revenue of $13.0 million from March 31, 2004 to March 31, 2005 due to the Research and Logistics Mission Support contract closeout;

• costs of revenue from Lockheed Martin letter contract of $9.7 million that started in the third quarter of fiscal year 2004;

• an increase in the External Stowage Platform 2 costs of revenue of $3.1 million due to the expected launch in July 2005;

• costs of revenue of $0.2 million from Japanese Experiment Thermal Incubator Service that was started in the third quarter of fiscal year 2004;

• costs of revenue of $0.8 million from the Concept Exploration and Refinement contract that was started in the first quarter of fiscal year 2005; and

• other costs of revenue decreases of $1.0 million, primarily resulting from the termination of Boeing as a subcontractor for module services, offset by in-house engineering labor and related costs.

Our Astrotech business unit’s increase in costs of revenue is due primarily to increased mission support costs and increase in the costs of operations at the satellite processing facilities, including increased utility costs.

The decrease in costs of revenue at our Government Services business unit is primarily due to the closeout of the Stowage, Engineering and Decal contract and the Configuration Management contract in December 2004 partially offset by the Program Integration & Control contract. The following summarizes the significant changes for our Government Services business unit for the nine months ended March 31, 2005 as compared to the comparable period in fiscal year 2004:

• a cost of revenue decrease of $3.8 million due to the closeout of the Stowage, Engineering and Decal contract in December 2004;

• a cost of revenue decrease of $2.3 million due to the closeout of the Configuration Management contract in December 2004;

• a cost of revenue increase of $3.1 million due to the startup of the Program Integration & Control contract in January 2004; and

• other costs of revenue decreases of $0.6 million due to less contract activity.

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Operating Expenses. Operating expenses, other than the $8.2 million recovery of a non-recurring charge for the loss of the research double module that was recorded for the period ended September 30, 2004, and the goodwill and Guignè impairments totaling $10.1 million that were recorded for the period ended March 31, 2004, decreased to $6.6 million for the nine months ended March 31, 2005 as compared to approximately $8.9 million for the nine months ended March 31, 2004. The primary factors causing this decrease are our on-going reductions in staff and facilities. Research and development expenses were immaterial for the nine months ended March 31, 2005 and 2004, although we expect these costs to increase in future periods. For the nine months ended March 31, 2005, our expenses for bid and proposal efforts were less than $0.1 million. In the nine months ended March 31, 2004, we incurred bid and proposal costs of $0.2 million primarily relating to the Mission Integration Contract proposal. During the nine months ended March 31, 2005, we recognized legal expenses of $0.8 million relating to our claims against NASA for loss of our research double module and response to Lloyd’s complaint regarding its payment of insurance proceeds on the accident.

Interest Expense. Interest expense was approximately $4.3 million for the nine months ended March 31, 2005 as compared to approximately $6.8 million for the nine months ended March 31, 2004. The decrease in interest expense is primarily due to the loss of hedge accounting on a portion of the interest rate swap for the mortgage loan in 2004 resulting in the expensing of $1.3 million of unrealized losses previously in other comprehensive loss upon repayment of $9.5 million of the mortgage loan, as well as the acceleration of $0.7 million of debt placement costs associated with the repayment for the nine months ended March 31, 2004. Due to the $9.5 million payment on the mortgage loan and the subsequent lower interest rate (5.5%), the interest expense on our mortgage loan was $0.8 million less in the nine months ended March 31, 2005 compared to the nine months ended March 31, 2004.

Interest and Other Income. Interest and other income was immaterial for the nine months ended March 31, 2005 and March 31, 2004. Interest income is earned on our short-term investments.

Income Taxes. Based on our projected effective tax rate for fiscal year 2005, we recorded a tax expense of $0.2 million for the nine months ended March 31, 2005 as compared to a tax expense of $0.3 million during the nine months ended March 31, 2004.

Net Income. Net income for the nine months ended March 31, 2005 was approximately $5.2 million or $0.41 per share basic and $0.36 per share diluted on 12,603,240 and 14,203,597 shares, respectively, as compared to net income of approximately $4.4 million or $0.35 per share basic and $0.31 per share diluted on 12,415,997 and 14,039,798 shares, respectively, for the nine months ended March 31, 2004.

Results of Operations for the Years Ended June 30, 2004, 2003 and 2002

Overview. In this section we discuss our results of operations, both on a consolidated basis and, where appropriate, by business unit for our fiscal years ended June 30, 2004, 2003, and 2002. Where we report earnings or loss on a per share basis, we have done so on a “diluted earnings per share” basis. The weighted average number of common shares applicable to diluted earnings for 2004, 2003, and 2002 were 14,141,949, and 12,285,467, and 11,884,309, respectively.

We had net income (loss) of $2,075,000 or $0.15 per diluted share on revenues of $77,606,000 for our 2004 fiscal year compared to ($81,775,000) or ($6.66) per diluted share on revenues of $94,963,000 for 2003 and ($2,367,000) or ($0.20) per diluted share on revenues of $102,773,000 for 2002. For our 2002 fiscal year, net earnings and earnings per share included $0.09 per share of goodwill amortization expense. Amortization of goodwill ceased January 1, 2002 as a result of the adoption of Statement of Financial Accounting Standards No. 142.

Non-GAAP Financial Measures. We use income from operations before charges as one measure of financial performance. Income from operations before charges is a non-GAAP financial measure and consists of operating

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income before unusual and infrequent events such as: goodwill impairments, asset impairments, investment impairments and the loss of the research double module. Income from operations before charges also does not include interest expense or income taxes, each of which is evaluated on a consolidated basis. Because we do not allocate interest expense and income taxes by unit, we believe that income from operations is a useful measure of our units’ operating performance for investors. Income from operations before charges should not be considered an alternative to, or more meaningful than, net income or cash flows from operations as determined in accordance with GAAP. The “Other” column in the presentation below is our corporate selling, general and administrative expenses that are incurred for our overall operations that are not allocable to any specific business unit.

The following tables provide summary financial data regarding our consolidated and segmented results of operations for our 2004, 2003, and 2002 fiscal years, respectively (in millions):

Fiscal Year Ended June 30, 2004

	Flight Services Business Unit			Astrotech Business Unit			Government Services Business Unit			Space Media Business Unit			Other			Total
Income (loss) from operations before charges	$	8.9		$	20.0		$	0.3		$	(0.1	)	$	(8.4	)	$	20.7
Goodwill impairment		—			(2.5	)		(5.7	)		—			—			(8.2	)
Investment impairment charge		—			—			—			—			(1.8	)		(1.8	)
Operating income (loss)		8.9			17.5			(5.4	)		(0.1	)		(10.2	)		10.7
Other income/expense		—			—			—			—			0.1			0.1
Interest expense		—			—			—			—			(8.2	)		(8.2	)
Pre-tax income (loss)		8.9			17.5			(5.4	)		(0.1	)		(18.3	)		2.6
Income tax expense		—			—			—			—			(0.5	)		(0.5	)
Net income (loss)	$	8.9		$	17.5		$	(5.4	)	$	(0.1	)	$	(18.8	)	$	2.1
Fiscal Year Ended June 30, 2003
	Flight Services Business Unit			Astrotech Business Unit			Government Services Business Unit			Space Media Business Unit			Other			Total
Income (loss) from operations before charges	$	6.8		$	4.5		$	1.9		$	(0.3	)	$	(10.0	)	$	2.9
Loss on Columbia accident		(50.3	)		—			—			—			—			(50.3	)
Goodwill impairment		—			—			(11.9	)		—			—			(11.9	)
Asset impairment charge		(7.9	)		—			—			—			(8.2	)		(16.1	)
Operating income (loss)		(51.4	)		4.5			(10.0	)		(0.3	)		(18.2	)		(75.4	)
Interest expense		—			—			—			—			(7.2	)		(7.2	)
Pre-tax income (loss)		(51.4	)		4.5			(10.0	)		(0.3	)		(25.4	)		(82.6	)
Income tax expense		—			—			—			—			0.9			0.9
Net income (loss)	$	(51.4	)	$	4.5		$	(10.0	)	$	(0.3	)	$	(24.5	)	$	(81.7	)

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Fiscal Year Ended June 30, 2002
	Flight Services Business Unit		Astrotech Business Unit		Government Services Business Unit		Space Media Business Unit			Other			Total
Operating income (loss)	$	12.9	$	3.8	$	2.0	$	(1.6	)	$	(16.0	)	$	1.1
Other income		—		—		—		—			1.2			1.2
Interest expense		—		—		—		—			(6.7	)		(6.7	)
Pre-tax income (loss)		12.9		3.8		2.0		(1.6	)		(21.5	)		(4.4	)
Income tax expense		—		—		—		—			2.1			2.1
Net income (loss)	$	12.9	$	3.8	$	2.0	$	(1.6	)	$	(19.4	)	$	(2.3	)

Operating Income (Loss). Operating income (loss) was $10.7 million in fiscal year 2004, compared to ($75.4) million and $1.1 million for fiscal years 2003 and 2002, respectively. The following summarizes the activity in each of our operating segments:

SPACEHAB Flight Services

Operating income (loss) for our flights services business unit was $8.9 million for fiscal year 2004, compared to ($51.4) million and $12.9 million for fiscal years 2003 and 2002, respectively. Operating income for 2004 included general and administrative expense of $0.7 million and depreciation and amortization expense of $2.8 million as compared to general and administrative expenses of $0.1 million and $0.1 million and depreciation and amortization expense of $5.0 million and $8.6 million for fiscal years 2003 and 2002, respectively. Please see “Results of Operations for the Years Ended June 30, 2004, 2003 and 2002—Other” for a consolidated discussion of general and administrative expense and depreciation and amortization expense.

Flight Service Business Unit Results of Operations before Charges for the Fiscal Year Ended June 30, 2004 as Compared to the Fiscal Year Ended June 30, 2003

The Flight Services business unit’s operating income before charges increased by $2.1 million from fiscal year 2003 to fiscal year 2004. The following summarizes significant changes for our fiscal year ended June 30, 2004 as compared to our fiscal year ended June 30, 2003:

Revenue decreases of $8.4 million, consisting of the following:

• Research and Logistics Mission Support contract revenue decreased by $14.4 million as it was terminated in January 2004;

• New revenue from the Lockheed Martin letter contract of $7.8 million that replaced the Research and Logistics Mission Support contract;

• The External Stowage Platform 2 contract revenue decreased by $4.5 million;

• The various other contract revenue decreased $0.1 million; and

• Recognized revenue from the Japanese Experiment Thermal Incubator Service of $2.8 million.

Cost of Revenue decrease of $10.5 million, consisting of the following:

• Termination of Boeing’s subcontract decreased cost of revenue by $7.0 million;

• Reduced EADS subcontract costs in 2004 of $3.6 million due to no missions in 2004;

• Decrease in asset depreciation in 2004 of $1.8 million due to the loss of the research double module in fiscal year 2003;

• Decrease in other cost of revenue of $0.3 million;

• Increase in internal labor costs of $1.6 million due to bringing the integrations and operations of our modules in-house; and

• Increase in selling, general and administrative expenses of $0.6 million.

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All space shuttle missions have been suspended since the February 1, 2003 space shuttle Columbia accident, affecting revenues and operating income of our Flight Services business unit for fiscal year 2004. Pending the return to flight of the space shuttle program, we have operated under “equitable adjustments” and subsequently in preparation for the return to flight under the contractual arrangements in place prior to the accident. The equitable adjustment provides compensation for space flight assets committed for future contracted missions and for personnel and services in place to maintain those assets and support the return-to-flight activities.

Our Flight Services business unit is currently supporting NASA’s return-to-flight activities and is continuing its operations in preparation for shuttle missions STS-114, 121, 116, and 118 (in order of their anticipated flight sequence). The Flight Services business unit is preparing an integrated cargo carrier for shuttle mission STS-114, the External Stowage Platform 2, that will be deployed and permanently mounted to the International Space Station. We contracted directly with NASA’s prime International Space Station contractor, Boeing, for the space shuttle STS-114 mission. For the space shuttle STS-121 mission, we are scheduled to provide our non-deployable integrated cargo carrier to NASA for transport of several critical International Space Station orbital replacement unit spares. For both shuttle missions STS-116 and 118, missions previously placed under the Research and Logistics Mission Support contract, we are scheduled to provide our pressurized single module and our unpressurized non-deployable integrated cargo carrier for transport of critical cargo and orbital replacement units to and from the International Space Station. We have completed negotiations with Boeing and NASA for the respective contract equitable adjustments required to continue uninterrupted support to ongoing mission preparation activities during the shuttle down period following the Columbia tragedy. As previously described, the Research and Logistics Mission Support contract expired January 31, 2004 and support for shuttle missions STS-121, 116 and 118 is continuing under a subcontract agreement to Lockheed Martin, effective February 1, 2004. We are currently providing these services under letter agreement and we are in contract negotiations with Lockheed Martin for a new contract. Additionally, after April 15, 2004 our Flight Services business unit is no longer subcontracting its module mission integration, operations, and sustaining engineering technical support to Boeing. Most module mission tasks previously performed by Boeing personnel will now be performed by our Flight Services business unit personnel and selected NASA cargo integration tasks on our module missions will now be performed by Lockheed Martin as a part of the Cargo Mission contract with NASA. This action enables our Flight Services business unit to continue providing services to NASA and is consistent with the direction of the International Space Station program office.

In January 2004, we initiated activity under the Japanese Experiment Thermal Incubator Service contract with Mitsubishi Corporation, representing the Japanese Aeronautics Exploration Agency, that was entered into in 2000 and originally scheduled to fly aboard our research double module. Subsequent to the suspension of the space shuttle flights and destruction of our research double module, we contracted for construction of certain space research equipment, for research space aboard the International Space Station and up to three Russian Progress cargo missions with V.J.F. Russian Consulting, representing RSC Energia, a major Russian aerospace manufacturer and mission operator.

Flight Services Business Unit Operating Results before Charges for Fiscal Year Ended June 30, 2003 as Compared to the Fiscal Year Ended June 30, 2002

Our Flight Services business unit’s operating income before charges decreased by $6.1 million from fiscal year 2002 to fiscal year 2003. The following summarizes significant changes for our fiscal year ended June 30, 2003 as compared to our fiscal year ended June 30, 2002:

Revenue decreases of $4.7 million consisted of the following:

• Research and Logistics Mission Support contract revenue decreased by $8.8 million due to the completion of STS-107 and the grounding of the space shuttle fleet due to the Columbia accident; and

• The External Storage Platform 2 revenue increased by $4.1 million due to the increased work on the project during fiscal year 2003 as compared to fiscal year 2002.

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Cost of Revenue increases of $2.8 million consisted of the following:

• The External Storage Platform 2 cost of revenue increased by $3.6 million due to the increased work on the project during fiscal year 2003 as compared to fiscal year 2002;

• Research and Logistics Mission Support contract cost of revenue decreased by $3.3 million primarily due to the closeout of the Columbia mission;

• Increase of $1.5 million in integrated cargo carrier lease costs in fiscal year 2003 as compared to fiscal year 2002 primarily due to a full year of lease costs related to our vertical integrated cargo carrier in fiscal year 2003; and

• Increase in indirect costs of $1.0 million due to recording certain costs that had been previously recorded as corporate costs as our Flight Services business unit’s indirect costs, such as, depreciation, insurance, and benefits.

Our fiscal year 2003 operating income included a charge of approximately $50.3 million, net of insurance proceeds of $17.7 million on our loss of the research double module in the Columbia tragedy. Also, due to the uncertainties in the human space flight programs following the Columbia accident, we decided to no longer fund certain work in process in development of future flight assets and recorded an impairment charge of $7.9 million. During fiscal year 2003, we contracted for the research double module on shuttle mission STS-107, the integrated cargo carrier on shuttle mission STS-114, and the logistics single module and integrated cargo carrier on shuttle missions STS-116 and 118.

We participated in one space shuttle mission in fiscal year 2002 that included the integrated cargo carrier. In fiscal year 2003 we participated in one space shuttle mission that included our research double module. There were no space shuttle missions in fiscal year 2004.

Astrotech Space Operations

Operating income for our Astrotech business unit was $17.5 million for fiscal year 2004, compared to $4.5 million and $3.8 million for fiscal years 2003 and 2002, respectively. Operating income for 2004 included selling, general and administrative expense of $0.4 million and depreciation and amortization expense of $2.0 million as compared to selling, general and administrative expense of $0.5 million and $0.9 million and depreciation and amortization expense of $1.9 million and $1.3 million for fiscal years 2003 and 2002, respectively. Please see “Results of Operations for the Years Ended June 30, 2004, 2003 and 2002—Other” for a consolidated discussion of selling, general and administrative expense and depreciation and amortization expense.

Astrotech Business Unit Operating Results before Charges for Fiscal Year ended June 30, 2004 as Compared to the Fiscal Year Ended June 30, 2003

Our Astrotech business unit’s operating income before charges increased by $15.5 million from fiscal year 2003 to fiscal year 2004. The following summarizes significant changes for our fiscal year ended June 30, 2004 as compared to our fiscal year ended June 30, 2003:

Revenue increased by $15.8 million as a result of a $17.5 million early payment from Boeing’s termination of their financial guarantees partially offset by decreased Boeing missions in fiscal year 2004.

Cost of Revenue increase of $0.3 million, consisting of:

• Astrotech business unit’s support for 12 missions in 2004 versus 9 missions in 2003 which resulted in higher labor and benefit costs of $0.2 million;

• Additional depreciation expense of $0.2 million in 2004; and

• Decrease in selling, general and administrative expense of $0.1 million.

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Fiscal year 2004 operating income for our Astrotech business unit included a contract early termination payment of $17.5 million by Boeing with regards to its financial guarantees under the contract agreement with Boeing for payload processing support services for the Delta launch vehicle program. Boeing indicated that the decision to terminate its guarantees for future services was based on the downturn of the commercial expendable launch market rather than performance-related considerations. We believe we were in compliance with the contract terms at the time of the termination. We recognized the early termination payment as revenue in the quarter ended December 31, 2003. The termination of the Boeing contract guarantees had a significant impact on the Astrotech business unit’s future guaranteed revenue stream. As a result of this event, we performed a goodwill impairment test in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Intangible Assets.” The impairment test indicated an impairment of the Astrotech business unit’s remaining goodwill of approximately $2.5 million. This impairment was recorded in the period ended December 31, 2003. We utilized market valuation techniques to calculate the fair value of the Astrotech business unit.

Astrotech Business Unit Results of Operations before Charges for Fiscal Year ended June 30, 2003 as Compared to the Fiscal Year Ended June 30, 2002

Astrotech business unit’s operating income before charges increased by $0.7 million from fiscal year 2002 to fiscal year 2003. The following summarizes significant changes for our fiscal year ended June 30, 2003 as compared to our fiscal year ended June 30, 2002:

Revenue increased by $2.5 million from fiscal year 2002 to fiscal year 2003 due to nine launches in fiscal year 2003 as compared to seven launches for fiscal year 2002. Cost of revenue increased by $1.8 million primarily due to increased facilities costs, as a result of our Astrotech business unit’s new building being in full operation for the entire fiscal year. Our Astrotech business unit’s operating expenses decreased $0.4 million due to no longer recording amortization of goodwill of $0.2 million and a reduction of $0.2 million in financing fees that occurred in fiscal year 2002.

SPACEHAB Government Services

Operating income (loss) for our Government Services business unit was ($5.4) million for fiscal year 2004, compared to ($10.0) million and $2.0 million for fiscal years 2003 and 2002, respectively. Operating loss for 2004 included selling, general and administrative expense of $1.3 million and depreciation and amortization expense of $0.1 million as compared to selling, general and administrative expense of $1.9 and $2.0 and depreciation and amortization expense of $0.7 million and $1.6 million for fiscal years 2003 and 2002, respectively. Please see “Results of Operations for the Years Ended June 30, 2004, 2003 and 2002—Other” for a consolidated discussion of selling, general and administrative expense and depreciation and amortization expense.

Government Services Business Unit Results of Operations before Charges for Fiscal year ended June 30, 2004 as Compared to the Fiscal Year Ended June 30, 2003

Our Government Services business unit’s operating income before charges decreased by $1.6 million from fiscal year 2003 to fiscal year 2004. The following summarizes significant changes for our fiscal year ended June 30, 2004 as compared to our fiscal year ended June 30, 2003:

Revenue decreased by $24.5 million for our fiscal year ended June 30, 2004 as compared to our fiscal year ended June 30, 2003 primarily as a result of:

• The completion of the Flight Crew Systems Development contract on April 30, 2003, which resulted in no revenue in fiscal year 2004 versus $25.8 million in fiscal year 2003;

• Revenue recorded under the Stowage, Engineering And Decal contract increased by $1.3 million in fiscal year 2004 as compared to fiscal year 2003 due to increased project work in fiscal year 2004;

• The Configuration Management contract revenue decreased by $2.4 million from fiscal year 2003 to fiscal year 2004 due to completion of the contract;

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• The Program Integration & Control contract which was awarded in January 2004 recognized revenue of $2.8 million in fiscal year 2004; and

• A decrease in other contract revenue of $0.4 million.

Cost of revenue decreased by $22.9 million for our fiscal year ended June 30, 2004 as compared to our fiscal year ended June 30, 2003, primarily due to:

• The completion of the Flight Crew Systems Development contract on April 30, 2003, which resulted in a reduction in our cost of revenue of $23.9 million in fiscal year 2004 as compared to fiscal year 2003;

• Cost of revenue increasing under the Stowage, Engineering And Decal contract by $1.5 million in fiscal year 2004 as compared to fiscal year 2003 due to increased project work in fiscal year 2004;

• The Configuration Management contract cost of revenue decreased by $1.9 million from fiscal year 2003 to fiscal year 2004 due to the completion of the contract;

• The award in January 2004 of the Program Integration and Control contract which increased our cost of revenue for fiscal year 2004 by $2.8 million;

• Decreases in the Shanghai Scienceland project cost of revenue of $0.3 million;

• Decreases in the cost of revenue for the Destiny module of $0.7 million in fiscal year 2004 as compared to fiscal year 2003 due to the completion of the project in fiscal year 2003; and

• Decreases in other cost of revenue of $0.4 million.

On November 5, 2003, NASA notified us that we were not awarded the International Space Station Mission Integration Contract. Additionally, the Boeing team’s bid for the Cargo Mission contract with NASA, of which our Government Services business unit was a subcontractor, was not selected for contract award. As a result of these events, we performed a goodwill impairment test at our Government Services business unit in accordance with SFAS No. 142, “Goodwill and Intangible Assets.” The test indicated an impairment of the Government Services business unit’s remaining goodwill of approximately $5.7 million which was recorded in the period ended December 31, 2003. We utilized market valuation techniques to calculate the fair value of the Government Services business unit.

Government Services Business Unit Operating Results before Charges for Fiscal year ended June 30, 2003 as Compared to the Fiscal Year Ended June 30, 2002

Our Government Services business unit’s operating income before charges decreased by $0.2 million from fiscal year 2002 to fiscal year 2003. The following summarizes significant changes for our fiscal year ended June 30, 2003 as compared to our fiscal year ended June 30, 2002:

Revenue decreases of $6.0 million from fiscal year 2002 to fiscal year 2003, consisting of:

• The Flight Crew Systems Development contract being completed on April 30, 2003, which resulted in $8.8 million less revenue in fiscal year 2003 as compared to fiscal year 2002;

• Revenue recorded under the Stowage, Engineering and Decal contract, which was awarded in fiscal year 2003, was $2.5 million;

• The Configuration Management contract revenue decreased by $0.5 million from fiscal year 2002 to fiscal year 2003 due to a decrease in project work; and

• Other revenue increased by $0.8 million.

Cost of revenue decreases of $6.2 million from fiscal year 2002 to fiscal year 2003, consisting of:

• The Flight Crew Systems Development contract being completed on April 30, 2003, which resulted in $8.0 million less cost of revenue in fiscal year 2003 as compared to fiscal year 2002;

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• Cost of revenue recorded under the Stowage, Engineering and Decal contract, which was awarded in fiscal year 2003, was $2.4 million;

• The Configuration Management contract cost of revenue decreased by $0.4 million from fiscal year 2002 to fiscal year 2003 due to a decrease in project work;

• In fiscal year 2002, there was $1.0 million of cost of revenue for a project with Shanghai Scienceland that was completed in fiscal year 2002 with only minimum trailing costs in fiscal year 2003; and

• Increases in other cost of revenue of $0.8 million.

As a result of the loss of the recompete of the Flight Crew Systems Development contract by our Government Services business unit in fiscal year 2003, a goodwill impairment test was performed. The impairment test indicated that the goodwill at our Government Services business unit was impaired and a $11.9 million impairment charge of goodwill was recorded.

Space Media

Operating loss before charges for our Space Media business unit was ($0.1) million for fiscal year 2004, compared to ($0.3) million and ($1.6) million for fiscal years 2003 and 2002, respectively. Operating loss for 2004 included selling, general and administrative expense of $0.3 million and minimal depreciation and amortization expense as compared to selling, general and administrative expense of $0.8 million and $1.7 million and depreciation and amortization expense of $0.3 million and $0.3 million for fiscal years 2003 and 2002, respectively. Please see “Results of Operations for the Years Ended June 30, 2004, 2003 and 2002—Other” below for a consolidated discussion of selling, general and administrative expense and depreciation and amortization expense.

Other

Other operating loss was ($10.2) million for fiscal year 2004, compared to ($18.2) million and ($16.0) million for fiscal years 2003 and 2002 respectively. The $10.2 million loss for fiscal year 2004 relates primarily to selling, general and administrative expenses and depreciation and amortization expenses that were incurred at the corporate level and an impairment charge of $1.8 million attributable to our write-down of our investment in Guignè. The ($18.2) million loss for fiscal year 2003 includes a $8.2 million charge for asset impairments.

Consolidated selling, general and administrative expenses and research and development were $11.1 million in fiscal year 2004, compared to $13.2 million and $19.9 million in 2003 and 2002, respectively. The $2.1 million decrease for fiscal year 2004 to 2003 is principally the result of our ongoing cost reduction efforts and staffing reductions. In addition, for the year ended June 30, 2004, we recorded a charge of approximately $0.3 million related to the closing of our Washington, D.C. office.

The $6.7 million decrease in selling, general and administrative expenses and research and development for fiscal year 2002 to 2003 was primarily due to our company-wide cost reduction actions. The decrease in our Space Media business unit’s expenses by $1.0 million was associated with the downsizing of its operations during the year ended June 2002. Selling, general and administrative expenses were reduced by $0.6 million in facilities, and $0.5 million in depreciation and other expense. Our Astrotech business unit’s selling, general and administrative expenses decreased $0.4 million due to no longer recording amortization of goodwill of $0.2 million and reduction of $0.2 million in financing that occurred in fiscal year 2002. Our selling, general and administrative expenses decreased due to the closing of the Huntsville operations partially offset by increased bid and proposal efforts.

Consolidated depreciation and amortization expenses were $5.4 million in fiscal year 2004 compared to $8.9 million and $12.7 million in 2003 and 2002, respectively. The $3.5 million decrease in fiscal year 2004 compared to 2003 is primarily due to the write-off of the research double module lost in the space shuttle

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Columbia accident, offset by the increased depreciation on the completion of the new spacecraft processing facility at our Astrotech business unit’s Titusville, Florida facility. The decrease in depreciation of $3.8 million for fiscal year 2003 as compared to 2002 resulted from the research double module having 12 months of depreciation in fiscal year 2002 as compared to seven months of depreciation in fiscal year 2003.

Interest Expense. Interest expense totaled $8.2 million for fiscal year 2004, compared with $7.2 million and $8.0 million for 2003 and 2002, respectively. The $1.0 million increase for 2004 as compared to 2003 resulted primarily from the termination of the interest rate swap upon restructuring our mortgage financing for our Astrotech spacecraft processing facility, partially offset by the lower interest payments on the lower mortgage amount after the restructuring.

The decrease of interest expense from 2002 to 2003 was primarily due to the fact that no interest expense was capitalized in 2003 as compared to $1.3 million of capitalized interest in 2002. In addition, fiscal year 2003 includes a full year of interest on the mortgage loan payable. Interest was capitalized on the in-progress construction of our modules and payload processing facilities in 2002.

Income Tax Provision (Benefit). For fiscal year 2004 we recorded an income tax provision of $0.5 million, applying our net operating loss carry-forwards to the extent allowable. The income tax provision is a result of the alternative minimum tax limiting our ability to use all of our net operating loss carry forwards. We recorded an income tax benefit for fiscal years 2003 and 2002 of ($0.9) million and ($2.1) million, respectively. As of June 30, 2004, we had approximately $22.0 million of available net operating loss carry-forwards expiring between 2008 and 2023 to offset future regular taxable income.

Inflation. The effects of inflation and changing prices had no material effect on our revenue or income from continuing operations during the years ended June 30, 2004 and 2003.

Market Risk

Our primary exposure to market risk relates to interest rates. Our only financial instrument that is subject to interest rate risk is our revolving loan payable that has interest at prime plus one percent. We do not currently use any interest rate swaps or derivative financial instruments to manage our exposure to fluctuations in interest rates. A one percent change in variable interest rates will not have a material impact on our financial condition.

Off Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 31, 2005.

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MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Our common stock trades on the NASDAQ National market System under the symbol “SPAB.” The following table sets forth the quarterly high and low intra-day bid prices for the periods indicated.

Fiscal 2006	High		Low
First Quarter (through July 20, 2005)	$	2.00	$	1.60
Fiscal 2005	High		Low
First Quarter	$	3.89	$	2.16
Second Quarter	$	2.75	$	0.88
Third Quarter	$	2.20	$	1.50
Fourth Quarter	$	2.00	$	1.20
Fiscal 2004	High		Low
First Quarter	$	1.17	$	0.75
Second Quarter	$	1.83	$	0.90
Third Quarter	$	4.74	$	1.40
Fourth Quarter	$	4.81	$	3.00
Fiscal 2003	High		Low
First Quarter	$	1.24	$	0.60
Second Quarter	$	1.10	$	0.54
Third Quarter	$	1.12	$	0.61
Fourth Quarter	$	1.19	$	0.69

We have never paid cash dividends. It is our present policy to retain earnings to finance the growth and development of our business and, therefore, we do not anticipate paying cash dividends on our common stock in the foreseeable future. Our revolving credit facility prohibits, and the indenture for the exchange notes will prohibit, the payment of cash dividends.

We have 30,000,000 shares of common stock authorized for issuance. As of June 30, 2005 we had 12,655,179 shares of common stock outstanding. We had approximately 213 shareholders of record of our common stock on June 30, 2005.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of June 30, 2005, certain information regarding the beneficial ownership of our outstanding common stock and Series B senior convertible preferred stock held by:

• each person known to us to be a beneficial owner of more than five percent of any outstanding class of our capital stock;

• each of our directors, our chief executive officer and four most highly-compensated executive officers, and all of our directors and executive officers as a group.

Unless otherwise indicated below, each of the parties listed in the table below has sole voting and investment power over the shares indicated as owned by such party.

	Amount and Nature of Beneficial Ownership		Percentage of Class(1)
Name and Address of Beneficial Owners:
Series B Senior Convertible Preferred Stock
EADS Space Transportation GmbH	1,333,334	(2)	100	%
Common Stock
EADS Space Transportation GmbH	1,437,499	(2)	10.27	%
SMH Capital Advisors, Inc.	2,576,220	(3)	18.92	%
SPACEHAB Taiwan, Inc.	791,666	(4)	6.25	%
John Joseph Gorman and Tamra I. Gorman	1,228,644	(5)	9.70	%
Austin W. Marxe and David M. Greenhouse	1,816,600	(6)	14.34	%
Ore Hill Hub Fund Ltd.	674,714	(7)	5.33	%
Non-Employee Directors:
Richard S. Bodman	20,000	(8)	*
Dr. Edward E. David, Jr	16,000	(9)	*
Richard M. Fairbanks	115,000	(10)	*
Dr. Stefan-Fritz Graul	—		*
Dr. Shelley A. Harrison	402,000	(11)	3.08	%
James R. Thompson	35,000	(12)	*
Roscoe Michael Moore, III	5,000		*
Thomas Boone Pickens, III	—		*
Barry A. Williamson	—		*
Named Executive Officers:
Daniel A. Bland	130,664	(13)	1.02	%
Brian K. Harrington	20,000	(14)	*
Michael E. Kearney	225,575	(15)	1.75	%
Michael Bain	116,478	(16)	*
Nicholas G. Morgan	1,000	(17)	*
John B. Satrom	32,000	(18)	*
Michael Chewning	57,020	(19)	*
Julia A. Pulzone	—		*
All Directors and Executive Officers as a Group (17 persons)	1,175,737		9.28	%

(*) Indicates beneficial ownership of less than 1% of the outstanding shares of common stock.

(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of 1934. Under Rule 13d-3(d), shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable within 60 days are deemed outstanding for the purpose of calculating the number and percentage owned by a

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person, but not deemed outstanding for the purpose of calculating the number and percentage owned by any other person listed. As of June 30, 2005, we had 12,655,179 shares of common stock outstanding.

(2) Represents shares of our Series B convertible preferred stock that are convertible at the holder’s option into common stock on the basis of one share of preferred stock for one share of common stock. EADS Space Transportation GmbH’s address is Postfacht 80 11 69, 81663 Munich, Germany. The preceding information is based on a Schedule 13D/A, filed with the Securities and Exchange Commission on October 27, 1999.

(3) Represents $40,259,000 principal amount of our 8% Convertible Subordinated Notes due 2007 that may be converted into common stock at a rate of $13.625 per share held by SMH Capital Advisors, Inc. in discretionary accounts for the benefit of its clients. This holder disclaims beneficial ownership of all shares of common stock it holds. This holder’s address is 600 Travis, Suite 3100, Houston, Texas 77002. The preceding information is based on information provided to us by SMH Capital Advisors, Inc.

(4) Except for the ownership of 791,666 shares of our common stock, SPACEHAB Taiwan has no other affiliation with us. SPACEHAB Taiwan’s address is 14^th Floor No. 180, Chang-Shiao E. Road, Sec. 4, Taipei, Taiwan, R.O.C.

(5) John Joseph Gorman owns 58% of the common stock of Westech Capital Corp. and may be deemed to beneficially own the shares of common stock that are beneficially owned by Westech Capital Corp. Westech Capital Corp., Mr. Gorman and Tejas Securities Group, Inc., a wholly-owned subsidiary of Westech Capital Corp., share voting and dispositive power with respect to 541,332 shares, which are held in a proprietary trading account of Tejas Securities Group, Inc. Mr. Gorman and Westech Capital Corp. share voting and dispositive power with respect to 151,400 shares of common stock held by Westech Capital Corp. In addition, Mr. Gorman has sole voting and dispositive power with respect to 431,225 shares of common stock held in his 401(k) account and shared voting and investment power with his spouse, Tamra I. Gorman, with respect to 104,687 shares of common stock held in trusts. The address for each of Mr. Gorman and Mrs. Gorman, Westech Capital Corp. and Tejas Securities Group, Inc. is 2700 Via Fortuna, Suite 400, Austin, Texas 78746. The preceding information is based on a Schedule 13D/A, filed with the Securities and Exchange Commission on October 29, 2004.

(6) Austin W. Marxe and David M. Greenhouse share voting and investment power over 971,600 shares of common stock held by Special Situations Fund III, L.P., 91,780 shares of common stock held by Special Situations Technology Fund, L.P., 467,970 shares of common stock held by Special Situations Technology Fund II, L.P. and 285,300 shares of common stock held by Special Situations Cayman Fund, L.P. Austin W. Marxe and David M. Greenhouse are the controlling principals of AWM Investment Company, Inc., the general partner and investment adviser to Special Situations Cayman Fund, L.P. AWM Investment Company, Inc. also serves as general partner of MGP Advisors Limited Partnership, the general partner of and investment adviser to Special Situations Fund III, L.P. Mr. Marx and Mr. Greenhouse are also members of SST Advisers, L.L.C., the general partner and investment adviser to Special Situations Technology Fund, L.P. and Special Situations Technology Fund II, L.P. The principal business address for Mr. Marx and Mr. Greenhouse is East 53^rd Street, 55^th Floor, New York, New York 10022. The preceding information is based on Amendment No. 4 to Schedule 13G filed with the Securities and Exchange Commission on February 11, 2005.

(7) Ore Hill Partners LLC, a Delaware LLC, is the investment manager of Ore Hill Hub Fund, Ltd. The two entities share voting and investment power over these shares. The principal business address of Ore Hill Partners LLC is 444 Madison Avenue, 12^th Floor, New York, New York 10022. The principal business address of Ore Hill Hub Fund, Ltd. is c/o Bank of Butterfield International (Cayman) Ltd., P.O. Box 705 GT, Butterfield House, 68 Front Street, Grand Cayman, Cayman Islands. The preceding information is based on a Schedule 13G filed with the Securities and Exchange Commission on May 19, 2005.

(8) Includes options to purchase 10,000 shares of common stock.

(9) Includes options to purchase 15,000 shares of common stock.

(10) Includes options to purchase 35,000 shares of common stock.

(11) Includes options to purchase 401,000 shares of common stock.

(12) Includes options to purchase 30,000 shares of common stock.

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(13) Includes 954 shares of common stock held in our 1997 Employee Stock Purchase Plan, and options to purchase 119,425 shares of common stock.

(14) Includes options to purchase 10,000 shares of common stock.

(15) Includes 2,006 shares of common stock held in our 1997 Employee Stock Purchase Plan, and options to purchase 190,929 shares of common stock.

(16) Represents options to purchase 52,912 shares of common stock, and 63,566 shares of common stock held in our 1997 Employee Stock Purchase Plan.

(17) Represents options to purchase 1,000 shares of common stock.

(18) Represents options to purchase 32,000 shares of common stock.

(19) Includes options to purchase 47,020 shares of common stock.

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DESCRIPTION OF OTHER INDEBTEDNESS AND FINANCING ARRANGEMENTS

Revolving Loan Agreement

On February 11, 2005, we entered into a $5.0 million loan agreement with First American Bank, SSB, a Texas financial institution. The agreement provides for a revolving line of credit of up to $5.0 million for 12 months. Funds borrowed under the revolving senior credit facility will be used for general working capital, capital expenditures and corporate purposes. The agreement provides for an unused facility fee incurred on the unused portion of the facility. Contemporaneously with the loan agreement, we entered into a security agreement with First American Bank, SSB. The loans under the revolving credit facility are secured by our accounts, general intangibles, chattel paper and instruments, deposit accounts, and all proceeds of the foregoing. We were required to maintain a restricted cash balance of $0.3 million as of March 31, 2005, because we did not satisfy the minimum tangible net worth covenant in our credit facility as of March 31, 2005. As of June 30, 2005, we were in full compliance with this covenant and were not required to maintain a restricted cash account. As of June 30, 2005, no borrowings were outstanding under the credit facility.

Mortgage Loan Agreement

On August 30, 2001, our Astrotech business unit entered into a credit agreement with Southtrust Bank, an Alabama banking corporation, providing for a $20.0 million financing of our spacecraft processing facility expansion project in Titusville, Florida. The proceeds of this financing were used to complete the construction of a new spacecraft processing facility and supporting infrastructure. The term loan was collateralized primarily by the multi-year payload processing contracts with The Boeing Company and Lockheed Martin and by the new building. The net book value of the building as of December 31, 2004 was $37.4 million. As a result of Boeing’s termination of its financial guarantees related to its use of our payload processing support services, we repaid $9.5 million of principal on the term loan on December 31, 2003. The term loan agreement was amended on January 29, 2004, whereby the maturity date was shortened to January 2007, the interest rate was fixed at 5.5% and the hedge requirement was eliminated. Pursuant to the terms of the term loan agreement, the quarterly payments that we receive from Lockheed Martin under our payload processing contract in the amount of $0.6 million are paid into a “lock box” for the benefit of Southtrust Bank. As of June 30, 2005, the outstanding balance under this loan was $3.7 million.

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THE EXCHANGE OFFER AND CONSENT SOLICITATION

We are making this exchange offer for all of our outstanding 8% Convertible Subordinated Notes due 2007. Concurrently with the exchange offer, we are soliciting consents to amend provisions of the indenture governing the outstanding notes. If you tender any of your outstanding notes in the exchange offer and they are accepted before the exchange offer and consent solicitation expires, you will automatically be consenting to amend the indenture that governs the outstanding notes to eliminate the event of default relating to cross defaults.

Purpose and Effect of the Exchange Offer and Consent Solicitation

We are making this exchange offer and consent solicitation as a part of our overall strategic plan to enhance cash flow from operations, improve our liquidity and working capital position, and provide balance sheet and cash flow capacity for potential future investments in space commerce assets. The consummation of the exchange offer and consent solicitation to restructure our long term debt is the next step in our plan. If we are unable to reduce our current debt obligations and extend debt maturities on the outstanding notes through the exchange offer and thus improve our liquidity and financial stability, we may be unable to replace our shuttle based assets with rocket based launch systems as the space shuttle is phased out of operation. If the exchange offer is not successful, the corporate restructuring and refinancing steps that we have taken to date may be inadequate to provide sufficient cash flow to fund research and development efforts and financial flexibility to obtain future financing for new space assets that will be required to ensure our long term viability and competitiveness. Furthermore, we may be required to direct substantial future available cash flow to note redemption and potentially to divest core assets to generate sufficient funds to redeem the outstanding notes at maturity. In that case, we will face substantially narrowed future prospects at the time the outstanding notes are due for redemption and owners of the outstanding notes may only receive repayments of little or none of the principal amount of their outstanding notes.

Terms of the Exchange Offer and Consent Solicitation

Upon the terms and subject to the conditions stated in this prospectus and in the letter of transmittal, we will accept all outstanding notes properly tendered and not withdrawn prior to 5:00 p.m. New York City time, on [·], 2005. After authentication of the exchange notes by the trustee or an authenticating agent, we will issue $1,000 principal amount of exchange notes in exchange for each $1,000 principal amount of outstanding notes accepted in the exchange offer. Holders may tender some or all of their outstanding notes in denominations of $1,000 or any integral multiple of $1,000.

We will pay the accrued interest on the validly tendered outstanding notes on the settlement date, which will be promptly after the expiration date. We will make all payments by the deposit of immediately available funds with the exchange agent. The exchange agent will act as agent for tendering holders for the purpose of receiving payments from us and transmitting payments to the holders. The exchange agent will pay DTC the aggregate amount of accrued interest we owe holders of outstanding notes held in global form and tendered and accepted in the exchange offer, and such holders will receive the applicable portion of such accrued interest payment pursuant to the applicable procedures established by DTC and its participants.

This prospectus, together with the accompanying letter of transmittal, is initially being sent to all registered holders as of the close of business on [·]. We intend to conduct the exchange offer as required by the Exchange Act, and the rules and regulations of the SEC under the Exchange Act, including Rule 14e-1, to the extent applicable.

Holders of the outstanding notes do not have any appraisal or dissenters’ rights under the Washington Business Corporation Act or under the indenture in connection with the exchange offer. No governmental approvals or consents must be received to consummate the exchange offer. We shall be considered to have accepted outstanding notes tendered according to the procedures in this prospectus when, as and if we have given

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oral or written notice of acceptance to the exchange agent. See “—Exchange Agent.” The exchange agent will act as agent for the tendering holders for the purpose of receiving exchange notes from us and delivering exchange notes to those holders.

Neither we nor our board of directors makes any recommendation to holders of outstanding notes as to whether to tender or refrain from tendering all or any portion of their outstanding notes pursuant to the exchange offer. Moreover, no one has been authorized to make any recommendation. Holders of outstanding notes must make their own decision whether to tender in the exchange offer and, if so, the amount of outstanding notes to tender after reading this prospectus and the letter of transmittal and consulting with their advisors, if any, based on their own financial position and requirements.

Certain Consequences to Holders of Outstanding Notes Not Tendering in the Exchange Offer

See the section of this prospectus entitled “Risk Factors—Risks Related to Retaining the Outstanding Notes” for a discussion of the consequences to holders of outstanding notes who elect not to tender their outstanding notes in the exchange offer.

Acceptance of Outstanding Notes for Exchange; Delivery of New Notes and Cash Consideration

The exchange notes will be delivered in book-entry form and the accrued interest payable on validly tendered outstanding notes will be paid on the settlement date, which will be promptly following the expiration date.

We will be deemed to have accepted validly tendered outstanding notes when, and if, we have given notice of acceptance to the exchange agent. Subject to the terms and conditions of the exchange offer, the issuance of exchange notes will be recorded in book-entry form by the exchange agent on the exchange date upon receipt of such notice. The exchange agent will act as agent for tendering holders of the outstanding notes for the purpose of receiving book-entry transfers of outstanding notes in the exchange agent’s account at DTC. If any tendered outstanding notes are not accepted for exchange because of an invalid tender or the occurrence of other events described in this prospectus, the unaccepted outstanding notes will be credited to the holder’s account at DTC according to the procedures described below or, in the case of outstanding notes tendered by delivery of certificates, certificates for these unaccepted outstanding notes will be returned, at our cost, to the tendering holder of the outstanding notes, promptly after the expiration date of the exchange offer.

Expiration Date; Extensions; Amendments

The term “expiration date” shall mean 5:00 p.m., New York City time, on [·], 2005 unless we, in our sole discretion, extend the exchange offer, in which case the term “expiration date” shall mean the latest date to which the exchange offer is extended.

We expressly reserve the right, in our sole discretion:

• to delay acceptance of any outstanding notes or to terminate the exchange offer and to refuse to accept outstanding notes not previously accepted, if any of the conditions described under “—Conditions” shall have occurred and shall not have been waived by us;

• to extend the expiration date of the exchange offer;

• to interpret, waive or amend the terms of the exchange offer in any manner.

If we amend the exchange offer in a manner that we determine constitutes a material or significant change, then we will extend the exchange offer so that it remains open for a period of five to ten business days after such amendment is communicated to holders, depending upon the significance of the amendment. Any change in the consideration offered to holders of outstanding notes in the exchange offer shall be paid to all holders whose outstanding notes have previously been tendered pursuant to the exchange offer.

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Any delay in acceptance, termination, extension, or amendment will be followed as promptly as practicable by oral or written notice to the exchange agent and by making a public announcement. Without limiting the manner in which we may choose to make public announcements of any delay in acceptance, termination, extension, or amendment of the exchange offer, we will comply with applicable securities laws by disclosing any such amendment by means of a prospectus supplement that we distribute to the holders of the outstanding notes. We shall have no obligation to publish, advise, or otherwise communicate any public announcement, other than by making a timely press release to an appropriate news agency.

You are advised that we may extend the exchange offer because some of the holders of the outstanding notes do not tender on a timely basis.

Interest on the Exchange Notes

The exchange notes will bear interest from the issue date at a rate of 5.5% per year. Holders of outstanding notes that are accepted for exchange will receive interest that is accrued but unpaid on the outstanding notes at the time of the closing of the exchange offer. We will pay interest on the exchange notes twice a year, on April 15^th and October 15^th, beginning October 15, 2005.

Proposed Amendments to Indenture for the Outstanding Notes

Concurrently with the exchange offer, we are soliciting consents to amend the indenture that governs the outstanding notes to eliminate an occurrence of an event of default on our other indebtedness as an event of default under our outstanding notes. Duly executed consents to the proposed amendment from holders representing at least a majority of the principal amount of the outstanding notes are required to amend the indenture governing the outstanding notes. If you tender your outstanding notes in the exchange offer and they are accepted before the consent solicitation expires, you will automatically be consenting to amend the indenture that governs the outstanding notes to eliminate the event of default relating to cross defaults.

Procedures for Tendering

Only a holder may tender his, her or its outstanding notes in the exchange offer. Any beneficial owner whose outstanding notes are registered in the name of such owner’s broker, dealer, commercial bank, trust company or other nominee or are held in book-entry form and who wishes to tender should contact the registered holder promptly and instruct the registered holder to tender on such owner’s behalf. If the beneficial owner wishes to tender on his, her or its own behalf, the beneficial owner must, prior to completing and executing the letter of transmittal and delivering the owner’s outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in the owner’s name or obtain a properly completed bond power from the registered holder. The transfer of record ownership may take considerable time and may not be completed prior to the expiration date.

Any valid tender by a holder of outstanding notes that is not validly withdrawn prior to the expiration date of the exchange offer and consent solicitation will constitute a binding agreement between that holder and us upon the terms and subject to the conditions of the exchange offer and consent solicitation and the letter of transmittal. The acceptance of the exchange offer by a tendering holder of outstanding notes will constitute the agreement by that holder to deliver good, marketable and unencumbered title to the tendered outstanding notes, free and clear of all liens, charges, claims, encumbrances, interests and restrictions of any kind.

Subject to and effective upon the acceptance for exchange, and the exchange, of exchange notes for outstanding notes tendered by a letter of transmittal, by executing and delivering a letter of transmittal (or agreeing to the terms of a letter of transmittal pursuant to an agent’s message), a tendering holder of outstanding notes:

• irrevocably sells, assigns and transfers to or upon the order of the company all right, title and interest in and to, and all claims in respect of or arising or having arisen as a result of the holder’s status as a holder of the outstanding notes tendered thereby;

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• waives any and all rights with respect to the outstanding notes, except for any rights that a holder may have now or in the future under the federal securities laws;

• releases and discharges us and the trustee under the indenture governing the outstanding notes from any and all claims such holder may have, now or in the future, arising out of or related to the outstanding notes, including, without limitation, any claims that such holder is entitled to receive additional principal or interest payments with respect to the outstanding notes or to participate in any redemption of the outstanding notes, but excluding any such claims under the federal securities laws;

• represents and warrants that the outstanding notes tendered were owned as of the date of tender, free and clear of all liens, charges, claims, encumbrances, interests and restrictions of any kind;

• designates an account number of a DTC participant in which the exchange notes are to be credited; and

• irrevocably appoints the exchange agent the true and lawful agent and attorney-in-fact of the holder with respect to any tendered outstanding notes, with full powers of substitution, resubstitution and revocation (such power of attorney being deemed to be an irrevocable power coupled with an interest) to cause the outstanding notes tendered to be assigned, transferred and exchanged in the exchange offer and to consent to the proposed amendments to the indenture governing the outstanding notes.

A holder who desires to tender outstanding notes and who cannot comply with the procedures set forth in this prospectus for tender on a timely basis or whose outstanding notes are not immediately available must comply with the procedures for guaranteed delivery set forth below.

The method of delivery of outstanding notes and the letter of transmittal and all other required documents to the exchange agent is at the election and risk of the holders. Delivery of such documents will be deemed made only when actually received by the exchange agent or deemed received under the ATOP procedures described below. In all cases, sufficient time should be allowed to assure delivery to the exchange agent prior to the expiration date. No letter of transmittal or outstanding notes should be sent to us. Holders may also request that their respective brokers, dealers, commercial banks, trust companies or nominees effect the tender for holders in each case as described in this prospectus and in the letter of transmittal.

Tender of Outstanding Notes Held Through a Custodian or Nominee

If you are a beneficial owner of outstanding notes that are held of record by a custodian bank, depositary, broker, trust company or other nominee, and you wish to tender outstanding notes in the exchange offer, you should contact the record holder promptly and instruct the record holder to tender the outstanding notes on your behalf using one of the procedures described below.

Outstanding Notes Held in Book-Entry Form

We understand that the exchange agent will make a request promptly after the date of the prospectus to establish accounts for the outstanding notes at DTC for the purpose of facilitating the exchange offer, and subject to their establishment, any financial institution that is a participant in DTC may make book-entry delivery of outstanding notes by causing DTC to transfer the outstanding notes into the exchange agent’s account for the outstanding notes using DTC’s procedures for transfer.

The exchange agent and DTC have confirmed that the exchange offer is eligible for DTC’s Automated Tender Offer Program (ATOP). Accordingly, DTC participants may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, electronically transmit their acceptance of the exchange offer by causing DTC to transfer outstanding notes held in book-entry form to the exchange agent in accordance with DTC’s ATOP procedures for transfer. DTC will then send a book-entry confirmation, including an agent’s message to the exchange agent.

The term “agent’s message” means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, which states that DTC has received an express acknowledgment

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from the participant in DTC tendering outstanding notes that are the subject of that book-entry confirmation that the participant has received and agrees to be bound by the terms of the letter of transmittal, and that we may enforce such agreement against such participant. If you use ATOP procedures to tender outstanding notes you will not be required to deliver a letter of transmittal to the exchange agent, but you will be bound by its terms just as if you had signed it.

If you desire to tender outstanding notes held in book-entry form with DTC, the exchange agent must receive, prior to 5:00 p.m. New York City time on the expiration date, at its address set forth in this prospectus, a confirmation of book-entry transfer of the outstanding notes into the exchange agent’s account at DTC, which is referred to in this prospectus as a “book-entry confirmation,” and an agent’s message transmitted pursuant to DTC’s ATOP procedures. In lieu of transmitting an agent’s message pursuant to DTC’s ATOP procedures, you may deliver to the exchange agent, prior to 5:00 p.m. New York City time on the expiration date, at the address set forth in this prospectus, a properly completed and validly executed letter of transmittal, or manually signed facsimile thereof, together with any signature guarantees and other documents required by the instructions in the letter of transmittal.

Outstanding Notes Held in Certificated Form

For a holder to validly tender outstanding notes held in physical, or certificated, form, the exchange agent must receive, prior to 5:00 p.m. New York City time on the expiration date, at its address set forth in this prospectus:

• a properly completed and validly executed letter of transmittal, or a manually signed facsimile thereof, together with any signature guarantees and any other documents required by the instructions to the letter of transmittal, and

• certificates for tendered outstanding notes.

Signatures

Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an “eligible guarantor institution” within the meaning of Rule 17Ad-15 under the Exchange Act, unless the outstanding notes tendered with the letter of transmittal are tendered:

• by a registered holder who has not requested that exchange notes or certificates representing outstanding notes not being tendered be issued to a person other than the registered holder, sent to an address other than that of a registered holder or credited to different account maintained at DTC; or

• for the account of an institution eligible to guarantee signatures.

If the letter of transmittal is signed by a person other than the registered holder or DTC participant who is listed as the owner, the outstanding notes must be endorsed or accompanied by appropriate bond powers which authorize the person to tender the outstanding notes on behalf of the registered holder or DTC participant who is listed as the owner, in either case signed as the name of the registered holder who appears on the outstanding notes or the DTC participant who is listed as the owner. If the letter of transmittal or any outstanding notes or bond powers are signed or endorsed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, those persons should so indicate when signing, and unless waived by us, evidence satisfactory to us of their authority to so act must be submitted with the letter of transmittal.

If you tender your notes through ATOP, signatures and signature guarantees are not required.

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Determinations of Validity

All questions as to the validity, form, eligibility, including time of receipt, acceptance and withdrawal of the tendered outstanding notes will be determined by us in our sole discretion. This determination will be final and binding. We reserve the absolute right to reject any and all outstanding notes not properly tendered or any outstanding notes our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the absolute right to waive any irregularities or conditions of tender as to particular outstanding notes, provided that we will not waive any condition to the exchange offer with respect to an individual holder of outstanding notes unless we waive that condition for all such holders. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of outstanding notes must be cured within the time we shall determine. Although we intend to notify holders of defects or irregularities related to tenders of outstanding notes, neither we, the exchange agent nor any other person shall be under any duty to give notification of defects or irregularities related to tenders of outstanding notes, nor shall any of us incur liability for failure to give notification.

Tenders of outstanding notes will not be considered to have been made until the irregularities have been cured or waived. Any outstanding notes received by the exchange agent that we determine are not properly tendered or the tender of which is otherwise rejected by us and as to which the defects or irregularities have not been cured or waived by us will be returned by the exchange agent to the tendering holder unless otherwise provided in the letter of transmittal, promptly following the expiration date or the withdrawal or termination of the exchange offer.

Guaranteed Delivery Procedures

Holders who wish to tender their outstanding notes and:

• whose outstanding notes are not immediately available;

• who cannot complete the procedure for book-entry transfer on a timely basis;

• who cannot deliver their outstanding notes, the letter of transmittal or any other required documents to the exchange agent prior to the expiration date; or

• who cannot complete a tender of outstanding notes held in book-entry form using DTC’s ATOP procedures on a timely basis,

may effect a tender if they tender through an institution eligible to guarantee signatures described under “—Procedures for Tendering—Signatures,” or if they tender using ATOP’s guaranteed delivery procedures.

A tender of outstanding notes made by or through an eligible institution will be accepted if:

• prior to 5:00 p.m., New York City time, on the expiration date, the exchange agent receives from an eligible institution a properly completed and duly executed notice of guaranteed delivery, by facsimile transmittal, mail or hand delivery, that:

(1) sets forth the name and address of the holder, the certificate number or numbers of the holder’s outstanding notes and the principal amount of the outstanding notes tendered,

(2) states that the tender is being made, and

(3) guarantees that, within three business days after the expiration date, a properly completed and validly executed letter of transmittal or facsimile, together with a certificate(s) representing the outstanding notes to be tendered in proper form for transfer, or a confirmation of book-entry transfer into the exchange agent’s account at DTC of outstanding notes delivered electronically, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and

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• the properly completed and executed letter of transmittal or a facsimile, together with the certificate(s) representing all tendered outstanding notes in proper form for transfer, or a book-entry confirmation, and all other documents required by the letter of transmittal are received by the exchange agent within three business days after the expiration date.

A tender made through DTC’s ATOP procedures will be accepted if:

• prior to 5:00 p.m., New York City time, on the expiration date, the exchange agent receives an agent’s message from DTC stating that DTC has received an express acknowledgment from the participant in DTC tendering the outstanding notes that they have received and agree to be bound by the notice of guaranteed delivery; and

• the exchange agent receives, within three business days after the expiration date, either:

(1) a book-entry conformation, including an agent’s message, transmitted via DTC’s ATOP procedures; or

(2) a properly completed and executed letter of transmittal or a facsimile, together with the certificate(s) representing all tendered outstanding notes in proper form for transfer, or a book-entry confirmation, and all other documents required by the letter of transmittal.

Upon request to the exchange agent, a notice of guaranteed delivery will be sent to holders who wish to tender their outstanding notes according to the guaranteed delivery procedures described above.

Withdrawal of Tenders

Except as otherwise provided in this prospectus, tenders of outstanding notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration date. To withdraw a tender of outstanding notes in the exchange offer:

• a written or facsimile transmission of a notice of withdrawal must be received by the exchange agent at its address listed below prior to 5:00 p.m., New York City time, on the expiration date; or

• you must comply with DTC’s ATOP withdrawal procedures.

Any written or facsimile notice of withdrawal must:

• specify the name of the person that tendered the outstanding notes to be withdrawn;

• identify the outstanding notes to be withdrawn, including the certificate number or numbers and principal amount of the outstanding notes or, in the case of outstanding notes transferred by book-entry transfer, the name and number of the account at DTC from which the outstanding notes were tendered and the name and number of the account at DTC to be credited;

• be signed by the same person and in the same manner as the original signature on the letter of transmittal by which the outstanding notes were tendered, including any required signature guarantee, or be accompanied by documents of transfer sufficient to permit the trustee for the outstanding notes to register the transfer of the outstanding notes into the name of the person withdrawing the tender; and

• specify the name in which any of these outstanding notes are to be registered, if different from that of the person who deposited the outstanding notes to be withdrawn.

Beneficial owners desiring to withdraw outstanding notes previously tendered via DTC’s ATOP Procedures should contact the DTC participant through which such beneficial owners hold their outstanding notes. In order to withdraw outstanding notes previously tendered, a DTC participant may, prior to the expiration date, withdraw its instruction previously transmitted through ATOP by withdrawing its acceptance through ATOP. Withdrawal of a prior instruction will be effective upon receipt of the notice of withdrawal by the exchange agent. A withdrawal of an instruction must be executed by a DTC participant in the same manner as such DTC participant’s name appears on its transmission through ATOP to which such withdrawal relates. A DTC participant may withdraw a tender only if such withdrawal complies with the provisions described in this paragraph.

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All questions as to the validity, form and eligibility, including time of receipt, of the withdrawal notices will be determined by us, and our determination shall be final and binding on all parties. Any outstanding notes so withdrawn will be judged not to have been tendered according to the procedures in this prospectus for purposes of the exchange offer, and no exchange notes will be issued in exchange for those outstanding notes unless the outstanding notes so withdrawn are validly retendered. Any outstanding notes that have been tendered but are not accepted for exchange will be returned to the holder of the outstanding notes without cost to the holder or, in the case of outstanding notes tendered by book-entry transfer into the holder’s account at DTC according to the procedures described above. This return or crediting will take place as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn outstanding notes may be retendered by following one of the procedures described above under “—Procedures for Tendering” at any time prior to the expiration date.

Conditions

Notwithstanding any other provisions of this exchange offer, we will not be required to accept for exchange any outstanding notes tendered, and we may terminate or amend this exchange offer, if any of the following conditions precedent to the exchange offer is not satisfied, or is reasonably determined by us not to be satisfied, and, in our reasonable judgment and regardless of the circumstances giving rise to the failure of the condition, the failure of the condition makes it inadvisable to proceed with the exchange offer or with the acceptance of outstanding notes and issuance of the exchange notes:

• the holders of at least $60,087,500 aggregate principal amount of outstanding notes having tendered and not withdrawn their outstanding notes at the expiration of the exchange offer;

• the holders of our common stock having approved an amendment to our articles of incorporation to increase the number of our authorized shares of common stock to 60,000,000 shares;

• the holders of our common stock having approved the issuance of common stock upon conversion of the exchange notes;

• in our judgment, as determined prior to the expiration date, the exchange will not result in any adverse tax consequences to us;

• no action or event shall have occurred, failed to occur or been threatened, no action shall have been taken, and no statute, rule, regulation, judgment, order, stay, decree or injunction shall have been promulgated, enacted, entered, enforced or deemed applicable to the exchange offer, by or before any court or governmental, regulatory or administrative agency, authority or tribunal, which either:

(1) challenges the making of the exchange offer or the exchange of outstanding notes under the exchange offer or might, directly or indirectly, prohibit, prevent, restrict or delay consummation of, or might otherwise adversely affect in any material manner, the exchange offer or the exchange of outstanding notes under the exchange offer; or

(2) in our reasonable judgment, could materially adversely affect our business, financial or other condition, income, operations, properties, assets, liabilities, taxes or prospects;

• (A) trading generally shall not have been suspended or materially limited on or by, as the case may be, either of the New York Stock Exchange or the National Association of Securities Dealers, Inc.; (B) there shall not have occurred any limitation by a governmental agency or authority that may adversely affect our ability to complete the transactions contemplated by the exchange offer and consent solicitation; (C) there shall not have been any suspension or limitation of trading of any of our securities on any exchange or in the over-the-counter market; (D) no general banking moratorium shall have been declared by federal or New York authorities; or (E) there shall not have occurred any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if the effect of any such outbreak, escalation, declaration, calamity or emergency has a reasonable likelihood to make it impractical or inadvisable to proceed with completion of the exchange offer and consent solicitation;

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• the trustee with respect to the outstanding notes shall not have objected in any respect to, or taken any action that could in our reasonable judgment adversely affect the consummation of the exchange offer or the exchange of outstanding notes under the exchange offer, nor shall the trustee or any holder of outstanding notes have taken any action that challenges the validity or effectiveness of the procedures used by us in making the exchange offer and consent solicitation or the exchange of the outstanding notes under the exchange offer;

• there shall not have occurred or be continuing any tender or exchange offer, other than the exchange offer described in this prospectus by us, with respect to some or all of our outstanding common stock, or any merger, acquisition or other business combination proposal involving us made by any person or entity;

• the registration statement and any post-effective amendment to the registration statement covering the exchange notes shall have been declared effective under the Securities Act; and

• a Form T-1 with respect to the indenture governing the exchange notes shall be effective under the Trust Indenture Act of 1939 immediately prior to the closing of the exchange offer.

All of the foregoing conditions are for our sole benefit and may be waived by us, in whole or in part, in our sole discretion. Any determination that we make concerning an event, development or circumstance described or referred to above shall be conclusive and binding.

Co-Dealer Managers

We have retained Jefferies & Company, Inc. and Sanders Morris Harris Inc. to act as co-dealer managers in connection with the exchange offer and consent solicitation. Upon consummation of the exchange offer and consent solicitation, we will pay to the co-dealer managers an aggregate fee equal to 1.5% of the aggregate principal amount of the outstanding notes validly tendered and accepted by us. Jefferies & Company will receive 80% of this amount and Sanders Morris Harris Inc. will receive 20% of this amount. In addition and without regard to whether the exchange is consummated, we have also agreed to pay to Jefferies & Company other reasonable and customary fees as well as, subject to limitations on the aggregate amount of expense, to reimburse Jefferies & Company for its reasonable expenses, including the expenses of its counsel. The obligations of the co-dealer managers to perform such functions are subject to certain conditions. We have agreed to indemnify the co-dealer managers against certain liabilities, including liabilities under the federal securities laws or to contribute to payments that the co-dealer managers may be required to make in respect thereof. Questions regarding the terms of the exchange offer may be directed to the co-dealer managers at the address and telephone number set forth on the back cover of this prospectus.

Sanders Morris Harris Inc. is an affiliate of SMH Capital Advisors, a registered investment advisor that manages accounts that currently hold more than $40 million in principal amount of the outstanding notes. SMH Capital Advisors has expressed its intent to tender all outstanding notes under its management in the exchange offer. See “Prospectus Summary—The Exchange Offer and Consent Solicitation—Conditions to the Exchange Offer” for more information.

The co-dealer managers and their affiliates may in the future provide investment banking, financial and other services to us for which we intend to pay customary fees.

Soliciting Dealer Fees

We will pay to each soliciting broker a solicitation fee equal to 1.5% of the aggregate principal amount of any outstanding notes accepted by us in the exchange offer that are validly tendered by a beneficial owner, other than a soliciting broker, of outstanding notes who validly tenders $500,000 or less in aggregate principal amount of outstanding notes. If we do not pay a solicitation fee to a soliciting broker in connection with any outstanding notes that are validly tendered by a beneficial owner, meeting the requirements of the preceding sentences, and accepted by us, then we will pay the solicitation fee on those outstanding notes to Jefferies as soon as practicable, but no more than five days, following the completion of the exchange offer. This amount will be in addition to any other compensation to which Jefferies & Company or Sanders Morris Harris Inc. are otherwise entitled as broker-dealers.

A “soliciting broker” is:

• a broker or dealer in securities, including Jefferies & Company and Sanders Morris Harris Inc. in their respective capacities as a dealer or broker, which is a member of any national securities exchange or of the NASD;

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• a foreign broker or dealer not eligible for membership in the NASD that agrees to conform to the NASD’s Rules of Fair Practice in soliciting tenders outside the U.S. to the same extent as though it were an NASD member; or

• a bank or trust company.

In each case, and in order to receive the soliciting dealer fee, the soliciting broker must be identified as the soliciting broker in the appropriate space in the letter of transmittal. You should complete the “Solicited Dealer Fees” box in the applicable letter of transmittal to designate a soliciting dealer even if you tender through DTC’s automated tender offer program.

Soliciting dealers will include any of the organizations described above even when the activities of such organization in connection with the exchange offer and consent solicitation consist solely of forwarding to clients materials relating to the exchange offer and consent solicitation, including the applicable letter of transmittal, and tendering outstanding notes as directed by beneficial owners thereof. No soliciting dealer is required to make any recommendation to holders of outstanding notes as to whether to tender or refrain from tendering in the exchange offer and consent solicitation. No assumption is made, in making payment to any soliciting dealer, that its activities in connection with the exchange offer and consent solicitation included any activities other than those described in this paragraph. For all purposes noted in all materials relating to the exchange offer, the term “solicit” shall be deemed to mean no more than “processing shares tendered” or “forwarding to customers materials regarding the exchange offer.”

By accepting the solicitation fee, a soliciting broker will be deemed to have represented that:

• it has complied with the applicable requirements of the Securities Exchange Act of 1934 in connection with such solicitation;

• it is entitled to such compensation for such solicitation under the terms and conditions of the exchange offer and consent solicitation;

• in soliciting tenders of outstanding notes, it has used no soliciting materials other than this prospectus and other materials furnished by us; and

• if it is a foreign broker or dealer not eligible for membership in the NASD, it has agreed to conform to the NASD’s Rules of Fair Practice in making solicitations.

We will not pay a solicitation fee to any soliciting broker if such soliciting broker is required for any reason to transfer the amount of such fee to the beneficial owner tendering the outstanding notes or the tendered outstanding notes are for the soliciting broker’s own account. If tendered outstanding notes are registered in the name of such soliciting broker, no such fee shall be payable unless such outstanding notes are held by such soliciting broker as nominee and such outstanding notes are being tendered for the benefit of one or more beneficial owners identified on the applicable letter of transmittal. No broker, dealer, bank, trust company or fiduciary shall be deemed to be the agent of us, the exchange agent, or the dealer managers for purposes of the exchange offer and consent solicitation.

Information Agent

We have appointed CapitalBridge to act as the information agent in connection with the exchange offer and consent solicitation of the outstanding notes. Any questions concerning the exchange offer and consent solicitation procedures or requests for assistance or additional copies of this prospectus or the consents and letters of transmittal may be directed to the information agent at:

CapitalBridge

111 River Street, 10^th Floor

Hoboken, NJ 07030

Attention: Aaron Dougherty

Telephone: (877) 746-3583 (toll-free)

(201) 499-3500

Facsimile: (201) 499-3600

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Exchange Agent

Wachovia Bank, National Association, the trustee under the indenture, has been appointed as exchange agent for this exchange offer. We have agreed to pay reasonable and customary fees for the exchange agent’s services and will reimburse the exchange agent for its reasonable out-of-pocket expenses. All executed letters of transmittal and any other required documents should be sent or delivered to the exchange agent at the address set forth below. The address for the exchange agent is:

Wachovia Bank, National Association

Customer Information Center

Corporate Trust Operations-NC1153

1525 West W.T. Harris Boulevard – 3C3

Charlotte, NC 28262-1153

Attention: Marsha Rice

Telephone: (704) 590-7413

Facsimile: (704) 590-7628

Delivery of a letter of transmittal to an address other than that for the exchange agent as set forth above or transmission of instructions via facsimile other than as set forth above does not constitute a valid delivery of a letter of transmittal.

Other Fees and Expenses

We will bear the expenses of requesting that holders of outstanding notes tender those notes for exchange notes. The principal solicitation under the exchange offer is being made by mail. Additional solicitations may be made by the co-dealer managers and the information agent, our officers and regular employees and our affiliates in person, by facsimile or by telephone. We may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this prospectus, letters of transmittal and related documents to the beneficial owners of the outstanding notes and in handling or forwarding tenders for exchange.

We will pay the expenses to be incurred in connection with the exchange offer, including fees and expenses of the exchange agent and trustee, SEC registration fees, and accounting and legal fees, printing costs, transfer taxes and related fees and expenses.

Transfer Taxes

You will not be obligated to pay any transfer tax in connection with the exchange, except if you instruct us to register exchange notes in the name of, or request that outstanding notes not validly tendered or not accepted in the exchange offer be returned to, a person other than you, you will be responsible for the payment of any applicable transfer tax.

Accounting Treatment

We will record the exchange notes at the same carrying value as the outstanding notes as reflected in our accounting records on the date of the exchange. Accordingly, we will not recognize any gain or loss for accounting purposes other than the writeoff of any unamortized deferred debt costs incurred for the previous issuances. We will amortize the costs of the exchange offer and the unamortized expenses related to the issuance of the exchange notes over the term of the exchange notes.

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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a summary of certain U.S. federal income tax considerations associated with the exchange offer and the ownership and disposition of the exchange notes offered herein. This summary is based upon laws, regulations, rulings and decisions currently in effect, all of which are subject to change or differing interpretations at any time, possibly with retroactive effect. There can be no assurance that the Internal Revenue Service (“IRS”) will not challenge one or more of the conclusions described herein, and we have not obtained, nor do we intend to obtain, a ruling from the IRS or an opinion of counsel with respect to the U.S. federal income tax consequences of the exchange offer or the ownership and disposition of the exchange notes. Moreover, this summary deals only with holders who hold the outstanding notes and will hold the exchange notes as “capital assets” within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”), and does not purport to deal with persons in special tax situations, such as financial institutions, insurance companies, regulated investment companies, tax-exempt investors, dealers in securities and currencies, certain former U.S. citizens or residents, persons holding the outstanding notes or exchange notes as a position in a “straddle,” “hedge,” “conversion transaction,” “constructive sale” or other integrated transaction for tax purposes. Further, this discussion does not address the consequences under U.S. alternative minimum tax rules, U.S. federal estate or gift tax laws, the laws of any U.S. state or locality, or any foreign tax laws.

As used herein, the term “U.S. Holder” means a holder of outstanding notes or exchange notes, as the case may be, that is, for U.S. federal income tax purposes, (1) an individual who is a citizen or resident alien of the United States, (2) a corporation or entity treated as a corporation for U.S. federal income tax purposes that is created or organized in or under the laws of the United States or of any political subdivision thereof, (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (4) a trust if (A) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) the trust was in existence on August 20, 1996, was treated as a U.S. person prior to that date, and elected to continue to be treated as a U.S. person. For purposes of this discussion, the term “non-U.S. Holder” means a holder of outstanding notes or exchange notes that is not a U.S. Holder. If a partnership or other entity taxable as a partnership holds outstanding notes or exchange notes, the tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. Such partner should consult a tax advisor as to the tax consequences of the exchange offer and the ownership and disposition of the exchange notes.

Each U.S. Holder and non-U.S. Holder should consult its tax advisor regarding the particular tax consequences to such holder of the exchange offer, the ownership and disposition of the exchange notes, as well as any tax consequences that may arise under the laws of any other relevant foreign, state, local, or other taxing jurisdiction.

Qualification as a Tax-Free Recapitalization

The tax consequences of the exchange offer and the ownership and disposition of the exchange notes will depend upon whether the outstanding notes and exchange notes constitute “securities” for federal income tax purposes. The determination of whether a particular debt instrument constitutes a security is not clearly defined under U.S. federal income tax law. The status of a debt instrument as a security typically is determined based upon an overall evaluation of the nature of the instrument, including, the term of the instrument, the extent of a holder’s proprietary interest in the issuer of the instrument and certain other factors. While this matter is not free from doubt, we believe and intend to take the position that both the outstanding notes and the exchange notes will be considered securities for U.S. federal income tax purposes and that the exchange of outstanding notes for exchange notes pursuant to the exchange offer will qualify as a tax-free recapitalization.

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U.S. Holders

Exchange Offer

If the exchange qualifies as a tax-free recapitalization, a U.S. Holder will not recognize gain or loss as a result of such exchange (other than cash received for accrued and unpaid interest not previously included in income, which will be treated as ordinary interest income). A U.S. Holder will take a tax basis in the exchange notes equal to its tax basis in the outstanding notes immediately prior to the exchange, and a U.S. Holder’s holding period for the exchange notes will include the period during which the outstanding notes surrendered in the exchange were held. Under the market discount rules (described below), U.S. Holders may be able to defer inclusion in taxable income of any market discount with respect to the outstanding notes, in which case any such market discount would be treated as accrued market discount with respect to the exchange notes. Each U.S. Holder should consult its tax advisor regarding the application of the market discount rules in its particular situation.

If the exchange does not qualify as a tax-free recapitalization, a U.S. Holder will recognize gain or loss on the exchange of outstanding notes for exchange notes in an amount equal to the difference between the amount realized in exchange for the outstanding notes (less an amount equal to any accrued interest, which will be treated as ordinary interest income) and the U.S. Holder’s tax basis in the exchange notes. Except to the extent that gain is recharacterized as ordinary income pursuant to the market discount rules discussed below, any gain or loss recognized by a U.S. Holder pursuant to the exchange will be long-term or short-term capital gain or loss depending on whether the U.S. Holder has held the outstanding notes for more than one (1) year. If the U.S. Holder recognizes a capital loss pursuant to the exchange, the deductibility of such capital loss would be subject to certain limitations. Notwithstanding the foregoing, if gain is recognized on the exchange, a U.S. Holder may qualify for installment sale treatment on the exchange. Consequently, gain, if any, realized on the exchange, including any gain recharacterized as ordinary income under the market discount rules, may be deferred until actual payments are made on the exchange notes. A U.S. Holder generally will have an initial tax basis in an exchange note in an amount equal to the issue price (as discussed below) of the exchange note.

A U.S. Holder who acquired the outstanding notes with market discount in excess of a statutorily defined de minimis amount generally will be required to treat gain recognized on the exchange of such outstanding notes as ordinary income to the extent of the market discount accrued to the date of the disposition, less any accrued market discount income previously included in the U.S. Holder’s income pursuant to an election, if any. An outstanding note generally will be considered to be acquired with market discount if the initial tax basis of the outstanding note in the hands of the U.S. Holder was less than the stated redemption price at maturity on the outstanding note.

Cash received in the exchange offer in respect of accrued and unpaid interest will be treated as ordinary interest income.

Payment of Interest on Exchange Notes

Subject to the discussion below of original issue discount, stated interest payable on the exchange notes generally will be included in the gross income of a U.S. Holder as ordinary interest income at the time such interest is accrued or received, in accordance with such U.S. Holder’s method of accounting for U.S. federal income tax purposes.

Original Issue Discount on Exchange Notes

If the “issue price” of the exchange notes as of the date of the exchange offer is less than the stated redemption price at maturity (the sum of all payments to be made on the exchange notes other than payments of qualified stated interest), and the discount is equal to or more than a statutorily defined de minimis amount, the excess of the stated redemption price at maturity over the “issue price” of the exchange notes will constitute original issue discount (“OID”). The “issue price” of the exchange notes will depend on whether the outstanding

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notes or the exchange notes are considered to be publicly traded for purposes of the applicable provisions of the Code. If neither the outstanding notes nor the exchange notes are considered to be publicly traded, the issue price of the exchange notes will equal their stated principal amount. If the outstanding notes are considered to be publicly traded, but the exchange notes are not so traded, the issue price will equal the fair market value of the outstanding notes on the date the exchange notes are issued. If the exchange notes are considered to be publicly traded, their issue price will equal the fair market value of the exchange notes as of the date that the exchange notes are issued. Although it is not entirely free from doubt, we believe and intend to take the position that neither the outstanding notes nor the exchange notes will be considered to be publicly traded.

U.S. Holders generally must include OID in gross income as it accrues, in advance of the receipt of cash attributable to that income. If the exchange notes are treated as issued with OID, any amount of OID included in income will increase a U.S. Holder’s tax basis in the exchange notes and any payments of interest in cash, other than a payment of qualified stated interest, will decrease such U.S. Holder’s tax basis in the exchange notes.

We believe and intend to take the position that the exchange notes will not be subject to the contingent payment debt instrument rules under Treasury Regulation Section 1.1275-4 (“CPDI Regulations”). However, it is possible that the exchange notes could be subject to these rules. If the exchange notes are subject to these rules, a U.S. Holder generally will be required to accrue interest income on the exchange notes on a constant yield-to-maturity basis based on the adjusted issue price (as defined for U.S. federal income tax purposes) of the exchange notes and the comparable yield, regardless of whether the U.S. Holder uses the cash or accrual method of tax accounting. The comparable yield for the exchange notes is the annual yield we would incur, as of the issue date of the exchange notes, on a fixed-rate non convertible debt instrument with no contingent payments, but with terms and conditions otherwise comparable to the exchange notes. If the exchange notes are subject to the CPDI Regulations, a U.S. Holder will be required to include interest in taxable income in any given year significantly in excess of the amount of interest payments actually received by it in that year, and gain recognized on conversion, sale, exchange or retirement of exchange notes would be ordinary income. The remainder of this discussion assumes that the exchange notes will not be subject to the CPDI Regulations.

Market Discount

A subsequent sale or other disposition of exchange notes may be affected by the market discount provisions of the Code. These rules generally provide that if a U.S. Holder of outstanding notes purchased such notes at a market discount (as defined above) in excess of a statutorily defined de minimis amount and the exchange of outstanding notes for exchange notes qualifies as a tax-free recapitalization then the U.S. Holder will recognize ordinary interest income upon the taxable disposition of an exchange note in an amount equal to the lesser of (i) gain recognized upon such disposition and (ii) the portion of the market discount that accrued while the outstanding notes and exchange notes were held by such U.S. Holder to the extent such accrued market discount was not previously included in such U.S. Holder’s income. The market discount rules also provide that a U.S. Holder who acquires exchange notes at a market discount may be required to defer a portion of any interest expense that may otherwise be deductible on any indebtedness incurred or maintained to purchase or carry exchange notes until the U.S. Holder disposes of such notes in a taxable transaction. If a U.S. Holder of exchange notes elects to include market discount in income currently, both of the foregoing rules would not apply.

Conversion of Exchange Notes

A U.S. Holder generally should not recognize gain or loss upon a conversion of exchange notes into our common stock except to the extent of (i) the fair market value of common stock received in respect of accrued but unpaid interest not previously included in income and (ii) cash received in lieu of a fractional share of our common stock. Common stock received in respect of accrued but unpaid interest not previously included in income shall be treated as ordinary interest income. The tax basis in such common stock will be equal to the amount of interest attributable thereto, and the holding period in such common stock will commence with the date of receipt. A U.S. Holder generally will recognize capital gain (except to the extent of accrued market discount not previously included in income which will be treated as ordinary interest income) or loss, for U.S.

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federal income tax purposes, equal to the difference between the amount of cash received for such fractional share and the U.S. Holder’s tax basis allocable to such fractional share. Such gain or loss generally will be long-term if the U.S. Holder’s holding period in respect of the exchange notes is more than one (1) year. A U.S. Holder’s tax basis in the common stock received upon conversion of exchange notes generally will equal such U.S. Holder’s tax basis in exchange notes tendered for conversion, less the tax basis allocable to any fractional share. The holding period in the common stock received upon conversion of exchange notes will include the holding period of exchange notes converted.

Sale, Exchange and Retirement of Exchange Notes

Upon the sale, exchange, retirement, or other taxable disposition of the exchange notes, a U.S. Holder generally will recognize long-term or short-term capital gain or loss (depending on whether the exchange notes are considered to be held for more than one (1) year) equal to the difference between the amount realized by such U.S. Holder (less an amount equal to any accrued and unpaid interest not previously included in income, which will be treated as ordinary interest income) and such U.S. Holder’s tax basis in the exchange notes. See “—U.S. Holders—Exchange Offer” for a discussion of tax basis. The deductibility of capital losses, if any, will be subject to limitations.

Constructive Dividends on Adjustment of Conversion Price

The terms of the exchange notes allow for changes in the conversion price under certain circumstances. A change in conversion price that allows a U.S. Holder to receive more shares of common stock on conversion may increase the U.S. Holder’s proportionate interests in our earnings and profits and assets and could be deemed to be payment of a taxable distribution to the U.S. Holder, although cash or other property is not actually received. A taxable constructive distribution would result, for example, if the conversion price is adjusted to compensate a U.S. Holder for distributions of cash or property to our stockholders. Not all changes in conversion price that allow U.S. Holders to receive more stock on conversion, however, will increase a U.S. Holder’s proportionate interest in the company. For instance, a change in conversion price could simply prevent the dilution of a U.S. Holder’s interest upon a stock split or other change in capital structure. Changes of this type, if made by a bona fide, reasonable adjustment formula, are not treated as constructive stock distributions. Any deemed distributions will be taxable as a dividend (subject to a possible dividends deduction in the case of corporate holders), return of capital, or capital gain to the U.S. Holder, as described in “—U.S. Holders—Dividends on Common Stock” below.

Dividends on Common Stock

If we make cash distributions on our common stock, the distributions generally will be treated as dividends to a U.S. Holder of our common stock to the extent of our current and accumulated earnings and profits as determined under U.S. federal income tax principles at the end of the tax year of the distribution, then as a tax-free return of capital to the extent of the U.S. Holder’s tax basis in the common stock, and thereafter as gain from the sale or exchange of that stock. Dividends received by a corporate U.S. Holder may be eligible for a dividends received deduction. The conversion price on the exchange notes adjusts upwards on certain dates. Such increases in the conversion price may result in deemed dividend treatment to a U.S. Holder of our common stock to the extent of our current earnings and profits as determined under U.S. federal income tax principles.

Disposition of Common Stock

Upon the sale or other disposition of our common stock, a U.S. Holder generally will recognize capital gain (except to the extent of accrued market discount on the exchange notes not previously included in income, which will be treated as ordinary interest income) or loss equal to the difference between (i) the amount of cash and the fair market value of any property received upon the sale or exchange and (ii) the U.S. Holder’s tax basis in our common stock. That capital gain or loss will be long-term if the U.S. Holder’s holding period in respect of such common stock is more than one (1) year. The deductibility of capital losses is subject to limitations.

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Consequences to Non-Tendering U.S. Holders

A significant modification to a debt instrument creates a deemed exchange (upon which gain or loss may be recognized) of the original debt instrument for a new debt instrument. In general, the determination of whether a significant modification has occurred is based on all the facts and circumstances.

We believe the proposed amendment to the indenture governing the outstanding notes should not cause the non-tendering U.S. Holders of the outstanding notes (the “Non-Tendering U.S. Holders”) to be deemed to have exchanged the outstanding notes for deemed new notes. Therefore, Non-Tendering U.S. Holders of the outstanding notes should not realize any gain or loss with respect to the adoption of the proposed amendment to the indenture, and such U.S. Holders should have the same tax basis and holding period in the outstanding notes as immediately before the amendment.

If, however, the amendment to the indenture constitutes a significant modification to the outstanding notes and therefore creates a deemed exchange of the outstanding notes for deemed new notes, the tax consequences of such deemed exchange will depend upon whether the outstanding notes and the deemed new notes constitute “securities” for U.S. federal income tax law. See “—Qualification as a Tax-Free Recapitalization” above for a discussion of the status of a debt instrument as a security for U.S. federal income tax purposes. If the outstanding notes and the deemed new notes constitute securities, the deemed exchange of outstanding notes for deemed new notes will qualify as a tax-free recapitalization. See “—U.S. Holders—Exchange Offer” above for a discussion of the tax consequences if the deemed exchange qualifies as a tax-free recapitalization. If the outstanding notes and the deemed new notes do not constitute securities, the deemed exchange of outstanding notes for deemed new notes will not qualify as a tax-free recapitalization. See “—U.S. Holders—Exchange Offer” above for a discussion of the tax consequences if the deemed exchange does not qualify as a tax-free recapitalization.

Each Non-Tendering U.S. Holder should consult its tax advisor regarding the particular tax consequences to such holder of a failure to tender the outstanding notes in the exchange offer, including any possible deemed exchange of the outstanding notes that may result from the amendment to the indenture.

Backup Withholding and Information Reporting

In general, information reporting requirements will apply to accrual of OID, and payments with respect to the exchange notes, outstanding notes or common stock made to U.S. Holders other than certain payments to exempt recipients (such as corporations). A backup withholding tax will apply to such payments if the U.S. Holder fails to provide a taxpayer identification number on a Form W-9, furnishes an incorrect taxpayer identification number, fails to certify its foreign or other exempt status from backup withholding or receives notification from the IRS that the holder is subject to backup withholding as a result of a failure to report all interest or dividends.

Backup withholding is not an additional tax. Any amounts withheld from a payment to a U.S. Holder under the backup withholding rules will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle the holder to a refund, provided that the required information is furnished to the IRS.

Non-U.S. Holders

Exchange Offer

If the exchange qualifies as a tax-free recapitalization, a non-U.S. Holder will not recognize gain or loss as a result of such exchange (other than cash received for accrued and unpaid interest not previously included in income, which will be treated as ordinary interest income). A non-U.S. Holder will take a tax basis in the exchange notes equal to its tax basis in the outstanding notes immediately prior to the exchange, and a non-U.S. Holder’s holding period for the exchange notes will include the period during which the outstanding notes surrendered in the exchange were held. If the exchange does not qualify as a tax-free recapitalization, a non-U.S. Holder will recognize gain or loss on the exchange of outstanding notes for exchange notes. See “—Non-U.S.

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Holders—Sale, Exchange or Retirement of Exchange Notes or Common Stock Received Upon Conversion of Exchange Notes” for a discussion of the tax consequences to non-U.S. Holders if the exchange does not qualify as a tax-free recapitalization.

Payment of Interest, or OID, on the Exchange Notes

Payments of interest, or OID, on the exchange notes will not be subject to U.S. federal income or withholding tax provided that (i) such non-U.S. Holder is not a controlled foreign corporation that is related to us through stock ownership, (ii) such non-U.S. Holder does not actually or constructively own 10% or more of our voting stock, (iii) such non-U.S. Holder is not a bank whose receipt of interest on the exchange notes is described in Section 881(c)(3)(A) of the Code, and (iv) the statement requirements set forth in section 871(h) or 881(c) of the Code are satisfied, as discussed below. Notwithstanding the above, a non-U.S. Holder that is engaged in the conduct of a United States trade or business will be subject to (A) U.S. federal income tax on a net income basis on interest that is effectively connected with the conduct of such trade or business and (B) if the non-U.S. Holder is a corporation, a United States branch profits tax equal to 30% of its “effectively connected earnings and profits” as adjusted for the taxable year, unless the holder qualifies for an exemption from such tax or a lower tax rate under an applicable treaty.

The statement requirement referred to in the preceding paragraph generally will be satisfied if the beneficial owner of exchange notes certifies on IRS Form W-8BEN, under penalties of perjury, that it is not a United States person and provides its name and address or otherwise satisfies applicable documentation requirements.

Dividends on Common Stock and Constructive Dividends on Common Stock and Exchange Notes

Dividends paid or constructive dividends deemed paid (see “U.S. Holders—Adjustments to Conversion Price” and “—U.S. Holders—Dividends on Common Stock” above) to a non-U.S. Holder generally will be subject to U.S. federal withholding tax at a 30% rate subject to reduction (i) by an applicable treaty if the non-U.S. Holder provides an IRS Form W-8BEN certifying that it is entitled to such treaty benefits or (ii) upon the receipt of an IRS Form W-8ECI from a non-U.S. Holder claiming that the payments are effectively connected with the conduct of a United States trade or business. Notwithstanding the above, a non-U.S. Holder that is engaged in the conduct of a United States trade or business will be subject to (i) U.S. federal income tax on a net income basis on the receipt of a dividend or a constructive dividend that is effectively connected with the conduct of such trade or business and (ii) if the non-U.S. Holder is a corporation, a United States branch profits tax as described above.

Conversion of Exchange Notes

Upon conversion of exchange notes for our common stock, a non-U.S. Holder generally will not be subject to United States federal income tax. See “—Non-U.S. Holders—Sale, Exchange and Retirement of Exchange Notes or Common Stock Received upon Conversion of Exchange Notes” below, however, regarding the taxation of cash received in lieu of a fractional share of common stock, upon a conversion. See “—Non-U.S. Holders—Payment of Interest, or OID, on the Exchange Notes” regarding the taxation of common stock received in respect of accrued interest.

Sale, Exchange or Retirement of Exchange Notes or Common Stock Received Upon Conversion of Exchange Notes

A non-U.S. Holder generally will not be subject to U.S. federal income tax on gain recognized on a sale, exchange, retirement, or other disposition of exchange notes or common stock received upon conversion of the exchange notes (or cash in lieu of a fractional share) unless (i) the gain is effectively connected with the conduct of a trade or business within the United States by the non-U.S. Holder, (ii) in the case of a non-U.S. Holder who is a nonresident alien individual, such holder is present in the United States for 183 or more days during the taxable year and certain other requirements are met, or (iii) we have been a U.S. real property holding corporation (a “USRPHC”) at any time within the shorter of the five-year period preceding such sale, exchange, retirement, or other disposition or the non-U.S. Holder’s holding period in such exchange notes or common stock.

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We believe that we may constitute a USRPHC. If we constitute a USRPHC (i) gain realized by a non-U.S. Holder upon the disposition of our exchange notes will be subject to U.S. federal income tax at the regular rates and (ii) unless such non-U.S. Holder has at all times during the five-year period leading up to such disposition, held five percent (5%) or less of our common stock, gain realized by a non-U.S. Holder upon disposition of our common stock will be subject to U.S. federal income tax at regular rates. Any gain that is effectively connected with the conduct of a United States trade or business by a non-U.S. Holder will be subject to United States federal income tax on a net income basis and, if such non-U.S. Holder is a corporation, may also be subject to the 30% United States branch profits tax described above.

Non-Tendering Holders

A non-tendering non-U.S. Holder’s tax consequences will depend on whether the amendment to the indenture constitutes a significant modification of the outstanding notes. See “—U.S. Holders—Consequences to Non-Tendering Holders” above for a discussion of what constitutes a significant modification.

We believe the proposed amendment to the indenture governing the outstanding notes should not cause the non-tendering non-U.S. Holders of the outstanding notes (the “Non-Tendering non-U.S. Holders”) to be deemed to have exchanged the outstanding notes for deemed new notes. Therefore, Non-Tendering U.S. Holders of the outstanding notes should not realize any gain or loss with respect to the adoption of the amendment to the indenture, and such non-U.S. Holder should have the same tax basis and holding period in the outstanding notes as immediately before the amendment.

If, however, the amendment to the indenture constitutes a significant modification to the outstanding notes creating a deemed exchange of the outstanding notes for deemed new notes, the tax consequences of such deemed exchange will depend upon whether the outstanding notes and the deemed new notes constitute “securities” for U.S. federal income tax law. See “—Qualification as a Tax-Free Recapitalization” above for a discussion of the status of a debt instrument as a security for U.S. federal income tax purposes. If the deemed new notes constitute securities, the deemed exchange of outstanding notes for deemed new notes will qualify as a tax-free recapitalization and such non-U.S. Holder should have the same tax basis and holding period in the outstanding notes as immediately before the amendment. If the deemed new notes do not constitute securities, the deemed exchange of outstanding notes for deemed new notes will not qualify as a tax-free recapitalization. See “Non-U.S. Holders—Sale, Exchange or Retirement of Exchange notes or Common Stock Received Upon Conversion of Exchange Notes” above for a discussion of the tax consequences if the deemed exchange does not qualify as a tax-free recapitalization. See “—Non-U.S. Holders—Payment of Interest, or OID, on the Exchange Notes” regarding the taxation of common stock received in respect of accrued but unpaid interest not previously included in income.

Each Non-Tendering non-U.S. Holder should consult its tax advisor regarding the particular tax consequences to such holder of a failure to tender the outstanding notes in the exchange offer, including any possible deemed exchange of the outstanding notes that may result from the amendment to the indenture.

Information Reporting and Backup Withholding

Information returns will be filed annually with the IRS and provided to each non-U.S. Holder with respect to any payments on exchange notes or our common stock and the proceeds from their sale or other disposition that are subject to withholding tax or that are exempt from United States withholding tax pursuant to an income tax treaty or other reason. Copies of these information returns also may be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which the non-U.S. Holder resides. Under certain circumstances, the Code imposes a backup withholding obligation. Interest, dividends, or constructive dividends paid to a non-U.S. Holder of exchange notes or common stock generally will be exempt from backup withholding if the non-U.S. Holder provides a properly executed IRS Form W-8BEN or otherwise establishes an exemption.

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The payment of the proceeds from the disposition of exchange notes or our common stock to or through the United States office of any broker, United States or foreign, will be subject to information reporting and possible backup withholding unless the owner certifies as to its non-United States status under penalties of perjury or otherwise establishes an exemption, provided that the broker does not have actual knowledge or reason to know that the holder is a United States person or that the conditions of any other exemption are not, in fact, satisfied. The payment of the proceeds from the disposition of exchange notes or our common stock to or through a non-United States office of a non-United States broker will not be subject to information reporting or backup withholding unless the non-United States broker has certain types of relationships with the United States (a “United States related person”). In the case of the payment of the proceeds from the disposition of exchange notes or common stock to or through a non-United States office of a broker that is either a United States person or a United States related person, the Treasury regulations require information reporting (but not backup withholding) on the payment unless the broker has documentary evidence in its files that the owner is a non-U.S. Holder and the broker has no knowledge or reason to know otherwise.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. Holder may be refunded or credited against the non-U.S. Holder’s United States federal income tax liability, if any, if the Non-U.S. Holder provides, on a timely basis, the required information to the IRS.

Tax Consequences to the Company

Cancellation of Indebtedness Income

If the outstanding notes or the exchange notes are publicly traded for U.S. federal income tax purposes, we may realize cancellation of indebtedness income (“COD income”) in an amount equal to the excess of (i) the stated redemption price of the outstanding notes tendered in the exchange offer over (ii) the issue price of the exchange notes. See “—U.S. Holders—Original Issue Discount on Exchange Notes” for a discussion of issue price. See “Risk Factors—We may incur an income tax liability as a result of the exchange offer.”

We have net operating loss carryovers that may offset COD income, if any. However, the ability to use these carryovers may be subject to limitations. To the extent that available net operating loss carryovers are used to offset COD income, they will be unavailable as a potential offset to future income.

Interest Deduction Limitations

No deduction is allowed for interest paid on a disqualified debt instrument. A disqualified debt instrument generally includes any indebtedness of a corporation which is payable in equity of the issuer. Although the application of this provision remains substantially uncertain, depending on how it is interpreted, we may not be entitled to claim an interest expense deduction in respect of interest (or OID) due on the exchange notes. Although it is not entirely free from doubt, we intend to take the position that the exchange notes are not a disqualified debt instrument. See “Risk Factors—We may be unable to deduct for tax purposes the interest or original issue discount, if any, paid or accrued on the exchange notes.”

NOL Limitations Triggered by Conversion of Exchange Notes

Generally, a cumulative change of greater than 50% in the stock ownership of a corporation within a 3 year period (an “ownership change”) will limit the amount of pre-ownership change net operating losses that the corporation may use during the post-ownership change periods. The conversion (or mandatory conversion) of the exchange notes, future equity issuances, or transactions among shareholders may trigger an ownership change. We believe that an ownership change would limit our ability to use our net operating losses. See “Risk Factors—The conversion, including a mandatory conversion, of the exchange notes into our common stock may limit our ability to use our net operating losses to offset future taxable income.”

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DESCRIPTION OF THE EXCHANGE NOTES

We will issue the exchange notes under a new indenture to be dated as of [·], 2005, between us and Wachovia Bank, NA, as trustee. The following description is a summary of the material provisions of the new indenture. It does not restate that agreement in its entirety. The exchange notes will be subject to and governed by the Trust Indenture Act of 1939, as amended. The terms of the exchange notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. We encourage you to read the new indenture because it, and not this description, define your rights as a holder of these notes. A copy of the new indenture has been filed as an exhibit to the registration statement that includes this prospectus and is available to you upon request. See “Where You Can Find More Information.” You can find the definition of certain terms used in this description under the subheading “Certain Definitions.” As used in this section, the terms “we,” “us” and “our” refer to SPACEHAB, Incorporated, but not any of our subsidiaries, unless the context requires otherwise.

Brief Description of the Exchange Notes

The exchange notes are:

• our general unsecured senior obligations;

• equal in right of payment to all of our existing and future senior Indebtedness;

• effectively subordinated to all existing and future Indebtedness and other liabilities of our Subsidiaries;

• effectively subordinated to our secured Indebtedness to the extent of the value securing such Indebtedness;

• senior in right of payment to all of our existing and future subordinated Indebtedness; and

• convertible into shares of our common stock as described under “—Conversion Rights” below.

As of June 30, 2005, we and our subsidiaries had $67.0 million in principal amount of indebtedness outstanding, which consists of $63.3 million in aggregate principal amount of the outstanding notes and $3.7 million in aggregate principal amount of indebtedness of our subsidiary, Astrotech Florida Holdings , which is secured and guaranteed by us. The exchange notes are structurally subordinated to the $3.7 million in subsidiary indebtedness.

Principal, Maturity and Interest of the Exchange Notes

The exchange notes will be limited to an aggregate principal amount of $63,250,000 and will be issued in denominations of $1,000 and integral multiples of $1,000. The exchange notes will mature on October 15, 2010 at the principal amount, plus accrued and unpaid interest to the maturity date.

The exchange notes will accrue interest at the rate of 5.5% per annum. We will pay interest on the exchange notes semi-annually in arrears on April 15 and October 15 of each year, commencing October 15, 2005, to holders of record of the exchange notes at the close of business on the preceding April 1 or October 1 (whether or not a business day), as the case may be. Interest will accrue from the date of original issuance of the exchange notes or, if interest has already been paid, from the date it was most recently paid or provided for. Interest on the exchange notes will be computed on the basis of a 360-day year of twelve 30-day months.

Unless otherwise permitted by the new indenture, we will make all payments of principal, interest and Make-Whole Premium, if any, on the exchange notes in cash. If we elect to make a payment in common stock instead of cash with respect to any payment under the terms of the new indenture that permits such election or in connection with the conversion of any exchange notes, instead of issuing fractional shares of our common stock, we may either pay a cash adjustment based upon the closing sale price of our common stock on the trading day immediately prior to the conversion date or, at our option, round the fractional share up to the nearest whole share.

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The “closing sale price” of our common stock will mean, on any date of determination:

• the closing per share sale price, or

• if no closing sale price is reported, the average of the bid and ask prices.

on such date on the principal United States securities exchange on which our common stock is listed or, if not so listed, on the Nasdaq National Market, or if the shares are not then quoted on the Nasdaq National Market, in the over-the-counter market as furnished by any New York Stock Exchange member firm selected by us and reasonably acceptable to the trustee.

Conversion Rights

General

Subject to satisfaction of the conditions and under the circumstances described below, the exchange notes may be converted into shares of our common stock (together with associated rights). A holder may convert exchange notes only in denominations of $1,000 and integral multiples of $1,000. The right to convert the exchange notes will expire at the close of business on the second business day immediately preceding their maturity date. The right to convert any exchange notes called for redemption will terminate at the close of business on the business day immediately preceding the redemption date unless we default in making the payment due on the redemption date. For information as to notices of redemption, please see “—Optional Redemption.”

Optional Conversion

Subject to the satisfaction of the conditions described under “—Conversion Procedures” below and subject to the conditions described under “—General” above, holders will be able to convert each of their exchange notes into shares of our common stock at their option at the following conversion prices per share, and for the number of shares of our common stock per each $1,000 principal amount of exchange notes converted, if the conversion date occurs during the periods set forth below:

Period	Conversion Price Per Share		Shares Received per $1,000 Principal Amount Converted
Issue Date – April 14, 2006	$	2.12	472
April 15, 2006 – October 14, 2006	$	2.19	457
October 15, 2006 – April 14, 2007	$	2.25	444
April 15, 2007 – October 14, 2007	$	2.32	432
October 15, 2007 – April 14, 2008	$	2.38	420
April 15, 2008 – October 14, 2008	$	2.44	410
October 15, 2008 and thereafter	$	2.50	400

The conversion prices, and therefore the number of shares of our common stock received upon conversion, set forth in the table above are subject to adjustment as described under “—Adjustments to Conversion Price” below.

Mandatory Conversion

The new indenture will require us to convert the exchange notes if the price of our common stock exceeds a specified target. We will automatically convert all of the exchange notes at a conversion price of $2.50, as such price may be adjusted as described in “—Adjustments to Conversion Price” below, at any time on or prior to maturity if the closing sale price of our common stock has exceeded 130% of the conversion price of $2.50, as such price may be adjusted as described in “—Adjustments to Conversion Price” below, for at least 20 consecutive trading days. We refer to this requirement as “mandatory conversion.” We will give the trustee and the holders written notice of the occurrence of a mandatory conversion and the mandatory conversion date as

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soon as practicable, but no more than five days, following the date on which the conditions to the mandatory conversion have been satisfied. We will pay accrued and unpaid interest on the exchange notes to the mandatory conversion date. The notice sent to holders will state the conversion date, which will be no more than 40 nor less than 20 days after the date of mailing, that the exchange notes will be mandatorily converted into shares of our common stock on the date set for mandatory conversion, and that holders may elect to convert their exchange notes at the conversion price described under in “—Optional Conversion” at any time prior to the fifth business day prior to the mandatory conversion date. Any holders that choose such optional conversion will not receive an actual payment of accrued and unpaid interest.

Adjustments to Conversion Price

The conversion price will be adjusted upon the occurrence of any of the following events (without duplication):

(1) the payment of dividends and other distributions on any class of our Capital Stock that is payable in our common stock;

(2) the issuance to all holders of our common stock of rights, warrants or options that entitle such holders to subscribe for or purchase our common stock at less than its Current Market Price;

(3) subdivisions and combinations of our common stock;

(4) distributions to all holders of our common stock of evidences of our indebtedness, shares of our Capital Stock, securities, cash or other property, excluding:

• any distribution described in clause (1) above;

• any rights, warrants or options referred to in clause (2) above and

• dividends or distributions paid exclusively in cash;

(5) distributions consisting exclusively of cash to all holders of our common stock in an aggregate amount that, together with (without duplication):

• other all-cash distributions made within the preceding 12 months and

• any cash and the fair market value (as determined in good faith by our Board of Directors), as of the expiration of the tender or exchange offer referred to below, of consideration payable in respect of any tender or exchange offer by us or any of our subsidiaries for our common stock concluded within the preceding 12 months for which we have not already made an adjustment,

exceeds 12.5% of our Aggregate Market Capitalization on the date of such distribution; and

(6) the successful completion of a tender or exchange offer made by us or any of our subsidiaries for our common stock that involves an aggregate consideration that, together with (without duplication):

• any cash and the fair market value (as determined in good faith by our Board of Directors) of consideration payable in respect of any tender or exchange offer by us or any of our subsidiaries for our common stock concluded within the preceding 12 months, and

• the aggregate amount of any all-cash distributions to all holders of our common stock described in clause (5) above made within the preceding 12 months,

exceeds 12.5% of our Aggregate Market Capitalization on the expiration of such tender or exchange offer.

We will not be required to make any adjustment to the conversion price until cumulative adjustments amount to 1% or more of the conversion price as last adjusted. In addition, we may also make additional reductions in the conversion price as our Board of Directors deems advisable to avoid or diminish any income tax to holders of our common stock that would result from any dividend of stock (or stock rights to acquire stock) for income tax purposes or for any other reasons.

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If we distribute rights or warrants pro rata to holders of our common stock, other than those referred to in paragraph (2) above, and if any such rights or warrants have not expired or been redeemed by us, then the holder of any exchange note surrendered for conversion will be entitled to receive both the shares of common stock issuable upon conversion and a number of rights or warrants to be determined as follows:

• if the conversion occurs after the record date for such distribution and on or prior to the date for the distribution to the holders of rights or warrants of separate certificates evidencing such rights or warrants, then the same number of rights or warrants to which a holder of a number of shares of our common stock equal to the number of shares of our common stock to which the surrendering holder of exchange notes is entitled at the time of such conversion in accordance with the terms and provisions of and applicable to the rights or warrants, and

• if the conversion occurs after the date of distribution of certificates, then the same number of rights or warrants to which a holder of the same number of shares of our common stock into which the exchange notes being surrendered were convertible immediately prior to the date of the distribution of certificates would have been entitled on that distribution date in accordance with the terms and provisions of and applicable to the rights or warrants.

If we declare or make a distribution in respect of our common stock as described in paragraphs (4) or (5) above, then the holder of each exchange note, upon the conversion of that holder’s exchange notes after the close of business on the date fixed for the determination of stockholders entitled to receive such distribution and prior to the effectiveness of the conversion price adjustment in respect of such distribution, will be entitled to receive for each share of our common stock into which that holder’s exchange notes are converted:

• the portion of the evidences of indebtedness, shares of capital stock, cash and other property so distributed applicable to one share of our common stock; or

• at our option and only with respect to the portion of such distribution that does not consist of cash or our securities, an amount in cash equal to the fair market value of that portion of the distribution.

In the event that our common stock is converted into the right to receive other securities, cash or other property, such as in the case of certain reclassifications, consolidations, mergers, sales or transfers of assets or other similar transactions, then the exchange notes would become convertible into the kind and amount of securities, cash and other property receivable upon the transactions by a holder of the number of shares of our common stock that a holder of the exchange notes would have received by a holder of the exchange notes upon conversion immediately prior to such transaction.

These conversion price adjustment provisions apply to the conversion price for both optional and mandatory conversions, including any conversion prices applicable in future periods as provided under “—Optional Conversion” above.

Conversion Procedures

During any period in which the exchange notes are convertible, a holder may convert its exchange notes, in whole or in part, so long as the exchange notes converted are in integral multiples of $1,000.

Upon conversion, we will deliver to the holder shares of our common stock in exchange for the surrendered exchange notes. We will not adjust the conversion price to account for accrued and unpaid interest. Except as described in this paragraph, no holder of exchange notes will be entitled, upon conversion of that holder’s exchange notes, to any actual payment or adjustment on account of accrued and unpaid interest. Instead, delivery of the shares payable by us in satisfaction of the conversion right will be deemed to satisfy our obligation to pay the principal amount of the exchange notes and to satisfy our obligation to pay accrued and unpaid interest attributable to the period from the most recent interest payment date through the conversion date. As a result, unpaid interest through the conversion date is deemed to be paid in full rather than cancelled, extinguished or forfeited.

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We will not deliver fractional shares of our common stock. Instead, to the extent a holder is otherwise entitled to a fractional share, we will at our option either make a payment based on the closing sale price of our common stock on the trading day immediately prior to the conversion date, or, at our option, round the fractional share up to the nearest whole share.

If a holder surrenders an exchange note for optional conversion between the close of business on any record date for the payment of an installment of interest and the opening of business on the related interest payment date, the holder must deliver payment to us in an amount equal to the interest payable on that interest payment date on the principal amount to be converted together with the exchange note being surrendered for conversion. If a holder is required to surrender an exchange note for mandatory conversion or redemption between the close of business on any record date for the payment of an installment of interest and the opening of business on the related interest payment date, the holder will be entitled to receive the interest payable on the principal amount to be converted.

If a holder converts its exchange notes, we will pay any documentary, stamp or similar issue or transfer tax due on the issue of any share of our common stock upon the conversion, unless the tax is due because the holder requests that the shares be issued or delivered to a person other than the holder, in which case the holder will be required to pay the tax.

For so long as the exchange notes are represented by global notes registered in the name of the common depositary for DTC or its nominee, conversions may be effected regular way only through participants in the DTC in accordance with its rules and operating procedures. The conversion right will be exercisable by a holder of an exchange note in certificate form as follows:

• by completing and manually signing a conversion notice in the form available from the conversion agent, which is initially the trustee, and delivering the conversion notice to the conversion agent or, in the case of mandatory conversion, by following such other instructions as may be set forth in the notice of mandatory conversion;

• by surrendering the exchange notes to be converted to the conversion agent;

• if the conversion date for an optional conversion occurs between the close of business on the record date for an installment of interest and the opening of business on the payment date for the related interest payment, by delivering an amount equal to the interest payable on that interest payment date on the principal amount to be converted;

• if required, by furnishing appropriate endorsement and transfer documents; and

• if required, by paying all transfer or similar taxes.

We refer to the date on which all of the foregoing requirements for conversion of a particular exchange note are satisfied as the conversion date for that exchange note. The delivery of a conversion notice will be irrevocable.

In the case of any exchange notes that are converted in part only, the holder will receive new certificated notes or, if the exchange notes are represented by a global security, beneficial ownership in an amount equal to the unconverted exchange notes. Please see “—Book Entry, Delivery and Form” for a discussion of exchange notes represented by global securities.

Optional Redemption

We may redeem all or a part of the exchange notes at any time upon not less than 20 and not more than 40 days’ notice by mail to the registered holders. If we redeem the notes on or prior to [·], 2008, we will redeem the exchange notes at a redemption price equal to 100.00% of the principal amount of the exchange notes being redeemed plus an amount equal to the Make-Whole Premium. If we redeem the exchange notes after [·], 2008, we will redeem the exchange notes at a redemption price equal to 100.00% of the principal amount of the exchange notes being redeemed. We will pay the redemption price in cash.

In addition to the redemption price, the holders of exchange notes that we elect to redeem shall also receive any accrued and unpaid interest to, but not including, the date of redemption of their exchange notes, subject to

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their rights to receive interest due on any exchange notes that they held as of April 1 or October 1 that is scheduled to be paid on the immediately preceding interest payment date of April 15 or October 15, as the case may be, if the interest payment date falls on or prior to the redemption date.

If the redemption date is between the close of business on any record date for the payment of an installment of interest and the opening of business on the related interest payment date, we will pay any accrued and unpaid interest due on such interest payment date to the person in whose name the redeemed note was registered on such record date.

If we elect to redeem less than all of the exchange notes, then the trustee will select the exchange notes to be redeemed using any method that the trustee deems fair and appropriate and that provides for selection for redemption of portions of the principal amount of any exchange note of a denomination larger than $1,000.

We will not provide a sinking fund for the exchange notes.

Repurchase at the Option of Holders upon Change of Control

In the event that a Change of Control occurs, each holder of exchange notes will have the right, at such holder’s option, to require us to repurchase all or any part of such holder’s exchange notes, in integral multiples $1,000 of principal amount. The repurchase price that we will be required to pay will be equal to 100% of the principal amount of the exchange notes to be repurchased, together with accrued and unpaid interest thereon to, but not including, the repurchase date.

We may pay the repurchase price, at our option, in cash or in shares of our common stock, which includes the common stock or other securities of any successor company as described under “—Conversion Rights—Adjustments to Conversion Price” above. If we elect to pay the repurchase price in shares of our common stock, then the shares of our common stock will be valued at the average of the closing sale price of our common stock for each of the 15 trading days immediately preceding the second trading day before the date of our notice of the Change in Control.

Within 30 days following a Change of Control, we are obligated to give each holder a notice of the Change of Control and of the repurchase right arising as a result of the Change of Control. If we elect to pay the repurchase price in shares of our common stock, then we will notify the holders of that election in the Change of Control notice. Our offer to repurchase exchange notes following a Change of Control will remain open for at least 20 business days and not more than 30 business days following the commencement of our offer. Upon expiration of this period, we promptly will purchase all exchange notes properly tendered in response to our offer.

On or before the repurchase date due to a Change in Control, we will:

• accept for payment exchange notes or portions thereof properly tendered pursuant to our offer to repurchase following a Change of Control;

• deposit with the paying agent cash or shares of our common stock, as applicable, sufficient to pay the repurchase price, including accrued and unpaid interest, of all exchange notes tendered; and

• deliver to the trustee the exchange notes accepted together with an officers certificate listing the exchange notes or portions thereof being purchased by us.

The paying agent promptly will pay the holders of exchange notes so accepted an amount of cash or deliver to such holders a number of shares of our common stock, as applicable, equal to the repurchase price, including accrued and unpaid interest. The trustee promptly will authenticate and deliver to such holders an exchange note equal in principal amount to any unpurchased portion of the exchange note surrendered. Any exchange notes not so purchased will be delivered promptly by us to the holder thereof. We publicly will announce the results of the repurchase pursuant to a Change of Control on or as soon as practicable after the repurchase date.

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The redemption right granted to holders of our exchange notes upon a Change of Control may make it more difficult for any person or group to acquire control of us, to effect a business combination with us or to remove incumbent management. See “Risk Factors—Risks Related to the Exchange Notes.” The phrase “all or substantially all” of our assets will likely be interpreted under applicable state law and will be dependent upon particular facts and circumstances. As a result, there may be a degree of uncertainty in ascertaining whether a sale or transfer of “all or substantially all” of our assets has occurred. In addition, our ability to pay cash to holders of exchange notes following the occurrence of a Change in Control may be limited by our financial resources at the time of that event. We can give no assurance that we will have sufficient funds available when necessary to make any required repurchases. See “Risk Factors—Risks Related to the Exchange Notes.”

We will make any offer to repurchase exchange notes in compliance with all applicable laws, rules and regulations, including, if applicable, Regulation 14E under the Exchange Act and the rules thereunder and all other applicable Federal and state securities laws. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this covenant, our compliance with such laws and regulations shall not in and of itself cause a breach of our obligations under this covenant.

If the repurchase date in connection with a Change in Control is on or after a record date for the payment of an installment of interest and on or before the opening of business on the associated interest payment date, we will pay any accrued and unpaid interest due on such interest payment date to the person in whose name the repurchased exchange note was registered on such record date.

We will not be required to make an offer to repurchase exchange notes in connection with a Change of Control if a third party makes a Change of Control offer that would be in compliance with the provisions described in this section if it were made by us, and such third party purchases all exchange notes validly tendered and not withdrawn.

Certain Covenants

Set forth below are summaries of certain covenants contained in the new indenture. In addition, please see “Risk Factors—Risks Related to the Exchange Notes” for an additional discussion of limitations concerning these covenants.

Limitation on Incurrence of Senior Secured Indebtedness and Assumption of Acquired Indebtedness

We will not, directly or indirectly, issue, assume, guaranty, incur, become directly or indirectly liable with respect to, or otherwise become responsible for, contingently or otherwise, any Senior Secured Indebtedness or Acquired Indebtedness, other than Permitted Indebtedness. For avoidance of doubt, the new indenture will deem the addition, amendment or other modification of the subordination provisions of any of our Indebtedness or of any Lien securing our Indebtedness as an incurrence of new Indebtedness, which incurrence must comply with this covenant.

The limitation in the preceding paragraph does not apply to the incurrence of the following:

(1) Senior Secured Indebtedness incurred by us not otherwise included as “Permitted Indebtedness” in an aggregate amount incurred and outstanding at any time pursuant to this clause (1) (plus any Refinancing Indebtedness incurred to repay, redeem, discharge, retire, defease, refinance, replace or refund such Indebtedness) not to exceed $20.0 million; and

(2) Acquired Indebtedness; provided that any such Acquired Indebtedness incurred pursuant to this clause (2):

(A) was incurred prior to the time that the debtor thereunder was acquired or merged into us or prior to the time that the related asset was acquired by us, and was not incurred in connection with, or in contemplation of, such acquisition or merger and

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(B) if on the date of incurrence of such Acquired Indebtedness, immediately after giving effect on a pro forma basis to all proposed or pending Acquisition or Acquisitions (including the incurrence of all such Acquired Indebtedness) and to the incurrence of all Senior Secured Indebtedness permitted by the preceding clause (1), our Consolidated Net Leverage Ratio is the same or lesser than our Consolidated Net Leverage Ratio immediately prior to such Acquisition or Acquisitions.

Indebtedness of any person that is outstanding at the time such person becomes one of our Subsidiaries (including upon designation of any person as a Subsidiary) or is merged with or into or consolidated with us or one of our Subsidiaries shall be deemed to have been incurred at the time such person becomes or is designated one of our Subsidiaries or is merged with or into or consolidated with us or one of our Subsidiaries, as applicable.

Upon each incurrence we may designate pursuant to which provision of this covenant (including which portion of the definition of Permitted Indebtedness) such Indebtedness is being incurred and we may subdivide an amount of Indebtedness and such Indebtedness shall not be deemed to have been incurred or outstanding under any other provision of this covenant (or other portion of the definition of Permitted Indebtedness), except that all Indebtedness under the Credit Agreement shall be deemed to have been incurred pursuant to clause (A) of the definition of Permitted Indebtedness.

Limitation on Dividends

We will not, directly or indirectly, declare or pay any dividend or other distribution in respect of our common stock, except to the extent such dividend or other distribution is payable solely in shares of our Qualified Capital Stock.

Limitation on Consolidation, Sale or Merger

We will not consolidate with or merge with or into another person or, directly or indirectly, sell, lease, convey or transfer all or substantially all of our assets (such amounts to be computed on a consolidated basis), whether in a single transaction or a series of related transactions, to another person or group of affiliated persons unless:

(1) either (A) we are the continuing entity or (B) the resulting, surviving or transferee entity is a corporation organized under the laws of the United States, any state thereof or the District of Columbia and expressly assumes by supplemental indenture all of our obligations in connection with the exchange notes and the new indenture;

(2) no default or event of default shall exist or shall occur immediately after giving effect to such transaction; and

(3) unless such transaction is solely the merger of us and one of our Wholly Owned Subsidiaries in a transaction which is not for the purpose of evading this provision and not in connection with any other transaction, immediately after giving effect to such transaction on a pro forma basis, the Consolidated Net Worth of the consolidated, resulting, surviving or transferee entity is at least equal to our Consolidated Net Worth immediately prior to such transaction.

Upon any consolidation or merger in accordance with the foregoing, the successor corporation shall succeed to and (except in the case of a lease or any transfer of all or substantially all of our assets) be substituted for, and may exercise every right and power of, our company under the new indenture with the same effect as if such successor corporation had been named therein as our company.

For purposes of the foregoing, the transfer by lease, assignment, sale or otherwise of all or substantially all of the properties and assets of one or more Subsidiaries, our interest in which constitutes all or substantially all of our properties and assets shall be deemed to be the transfer of all or substantially all of our properties and assets.

Limitation on Status as Investment Company

The new indenture will prohibit us and our Subsidiaries from being required to register as an “investment company” (as that term is defined in the Investment Company Act of 1940, as amended), or from otherwise becoming subject to regulation under the Investment Company Act.

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Reports

Whether or not required by the rules and regulations of the Commission, so long as any exchange notes are outstanding, we will furnish the holders of exchange notes all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if we were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that describes our financial condition and results of operations and our Consolidated Subsidiaries and, with respect to the annual information only, a report thereon by our certified independent accounts; and all current reports that would be required to be filed with the Commission on Form 8-K if we were required to file such reports, in each case within the time periods specified in the Commission’s rules and regulations.

Events of Default

The following will constitute events of default with respect to the exchange notes:

(1) our failure to pay any installment of interest on the exchange notes as and when the same becomes due and payable and the continuance of any such failure for 30 days;

(2) our failure to pay all or any part of the principal, or premium, if any, on the exchange notes when and as the same becomes due and payable at maturity, redemption, by acceleration or otherwise, including, without limitation, in connection with repurchases required due to a Change of Control;

(3) our failure to observe or perform any other covenant or agreement contained in the exchange notes or the new indenture and, except for the provisions under “Repurchase of Notes at the Option of the Holder Upon a Change of Control” and “Limitation on Merger, Sale or Consolidation,” the continuance of such failure for a period of 60 days after we are given notice of the default by the trustee or holders of 25% in principal amount of exchange notes;

(4) certain events of bankruptcy, insolvency or reorganization in respect of us or any of our Subsidiaries;

(5) a default occurs and is continuing (after giving effect to any waivers, amendments, applicable grace periods or any extension of any maturity date) in our Indebtedness or the Indebtedness of any of our Subsidiaries with an aggregate amount outstanding in excess of $3 million (a) resulting from the failure to pay principal of or interest on such Indebtedness, or (b) if as a result of such default, the maturity of such Indebtedness has been accelerated prior to its stated maturity; and

(6) final nonappealable unsatisfied judgments not covered by insurance aggregating in excess of $3 million, at any one time rendered against us or any of our Subsidiaries and not stayed, bonded or discharged within 60 days.

If a default occurs and is continuing, the trustee must, within 90 days after the occurrence of such default, give to the holders of the exchange notes notice of such default, but the trustee shall be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the holders’ interest, except in the case of a default in the payment of the principal of, premium, if any, or interest on any of the exchange notes when due or in the payment of any redemption or repurchase obligation.

If an event of default occurs and is continuing, other than an event of default specified in clause (4) above, then in every such case, unless the principal of all of the exchange notes shall have already become due and payable, either the trustee or the holders of at least 25% in aggregate principal amount of the exchange notes then outstanding, by notice in writing to us, and to the trustee if given by holders, may, and the trustee at the request of the holders of exchange notes will, declare all principal, premium, if any, and accrued interest on the exchange notes to be due and payable immediately. If an event of default specified in clause (4), above occurs, all principal and accrued interest thereon will be immediately due and payable on all outstanding exchange notes without any declaration or other act on the part of the trustee or the holders. In the event a declaration of acceleration because

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of an event of default set forth in clause (5) above solely by virtue of a default under any Indebtedness has occurred and is continuing, such declaration of acceleration shall be automatically rescinded and annulled if the event of default triggering such event of default pursuant to clause (5) shall be remedied, or cured or waived by the holders of the relevant Indebtedness, within 60 days after such event of default, provided that no judgment or decree for the payment of money due on the exchange notes has been obtained by the trustee.

Except as provided in the new indenture with respect to provisions that cannot be waived or amended without the consent of the holder of each outstanding exchange note, at any time after a declaration of acceleration has been made and before a judgment for payment of money has been obtained by the trustee, the holders of not less than a majority in aggregate principal amount of the exchange notes, by written notice to us and the trustee, may rescind the declaration of acceleration if (1) we have paid or deposited with the trustee cash sufficient to pay all overdue interest, and certain additional amounts, and (2) all events of default (other than the payment of the principal, premium, if any, interest, if any, on the exchange notes that have become due solely by the declaration of acceleration) have been cured or waived as provided in the new indenture.

Prior to the declaration of acceleration of the maturity of the exchange notes, the holders of a majority in aggregate principal amount of the exchange notes at the time outstanding may waive on behalf of all the holders any default, except a default in the payment of principal of or interest on any exchange note not yet cured or a default with respect to any covenant or provision which cannot be modified or amended without the consent of the holder of each outstanding exchange note affected. Subject to the provisions of the new indenture relating to the duties of the trustee, the trustee will be under no obligation to exercise any of its rights or powers under the new indenture at the request, order or direction of any of the holders, unless such holders have offered to the trustee reasonable security or indemnity.

Subject to all provisions of the new indenture and applicable law, the holders of a majority in aggregate principal amount of the exchange notes at the time outstanding will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee.

The new indenture will require us to file annually with the trustee an officer’s certificate stating that, to the best of his knowledge, we are not in default under the new indenture or, if he has knowledge that we are in such default, specifying such default.

Modification and Waiver

We and the trustee may amend the new indenture, any supplemental indenture, or the exchange notes with the consent of a majority in principal amount of the outstanding exchange notes. Without the consent of the holders of each outstanding exchange note, however, no modification may:

(1) change the Stated Maturity on any exchange note, or reduce the principal amount thereof or the rate (or extend the time for payment) of interest thereon or any premium payable upon the redemption thereof at our option, or change the city of payment where, or the coin or currency in which, any exchange note or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity or payment date thereof (or, in the case of redemption at our option, on or after the applicable redemption date),

(2) reduce the repurchase price relating to a Change of Control after the Change of Control has occurred;

(3) alter the provisions regarding our right to redeem the exchange notes, in a manner adverse to the holders;

(4) reduce the percentage in principal amount of the outstanding exchange notes, the consent of whose holders is required for any such amendment, supplemental indenture or waiver provided for in the new indenture, or

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(5) modify any of the waiver provisions, except to increase any required percentage or to provide that certain other provisions of the new indenture cannot be modified or waived without the consent of the holder of each outstanding exchange note affected thereby, or

(6) cause the exchange notes to become contractually subordinate in right of payment to any other Indebtedness.

We may amend or supplement the new indenture or waive any provision of it without the consent of any holders of exchange notes in some circumstances, including:

• to cure any ambiguity, omission, defect or inconsistency, or correct or supplement any provision in the new indenture which may be defective or inconsistent with any other provision; provided that such modification will not adversely affect the interests of the holders of the exchange notes;

• to provide for the assumption of our obligations under the new indenture by a successor upon any merger, consolidation or asset transfer permitted under the new indenture;

• to provide for a successor trustee with respect to the new indenture and the exchange notes;

• to reduce the conversion price; provided that the reduction will not adversely affect the interests of the holders of the exchange notes;

• to provide for uncertificated exchange notes in addition to or in place of certificated exchange notes;

• to secure our obligations under the exchange notes;

• to comply with any requirement to effect or maintain the qualification of the new indenture under the Trust Indenture Act of 1939;

• to add covenants that would benefit the holders of exchange notes or to surrender any rights we have under the exchange notes;

• to add events of default with respect to the exchange notes; or

• to make any change that does not adversely affect any outstanding exchange notes in any material respect.

The holders of a majority in principal amount of the outstanding exchange notes generally may waive any existing or past default or event of default. Those holders may not, however, waive any default or event of default in any payment on any exchange note or compliance with a provision that cannot be amended or supplemented without the consent of each holder affected.

Defeasance

We may, at our option, elect to have our obligations discharged with respect to the outstanding exchange notes (“Legal Defeasance”). Legal Defeasance means that we will be deemed to have paid and discharged the entire Indebtedness represented by the new indenture and the outstanding exchange notes and discharged all of our obligations under the new indenture and the exchange notes, other than with respect to our obligations to:

• register the transfer or exchange of exchange notes;

• replace stolen, lost or mutilated exchange notes;

• maintain paying agents and hold moneys for payment in trust;

• provide for conversion of exchange notes; and

• repurchase exchange notes in the event of a Change in Control.

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In addition, we may, at our option, elect to have our obligations released with respect to certain covenants that are described in the new indenture (“Covenant Defeasance”) and will be absolved from liability thereafter for failing to comply with the such obligations with respect to the exchange notes. If Covenant Defeasance occurs, certain events (excluding non-payment, failure to provide for conversion and failure to repurchase upon a Change in Control) will not be deemed to be an event of default.

In order to elect either Legal Defeasance or Covenant Defeasance:

• we must irrevocably deposit in trust with the trustee money or U.S. government obligations in an aggregate amount sufficient in the written opinion of a nationally recognized firm of independent public accountants to pay the principal of, premium, if any, and each installment of interest on the outstanding exchange notes;

• in the case of Legal Defeasance, we must deliver to the trustee an opinion of counsel confirming that:

• we have received from, or there has been published by, the Internal Revenue Service a ruling, or

• since the date of the new indenture, there has been a change in applicable Federal income tax law,

in either case to the effect that in the opinion of counsel, the holders of exchange notes will not recognize gain or loss for federal income tax purposes as a result of the Legal Defeasance and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if the Legal Defeasance had not occurred;

• in the case of Covenant Defeasance, we must deliver to the trustee an opinion of counsel to the effect that the holders of the exchange notes will not recognize gain or loss for federal income tax purposes as a result of the Covenant Defeasance and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if the Covenant Defeasance had not occurred;

• we must deliver to the trustee an officer’s certificate to the effect that the exchange notes, if then listed on any securities exchange, will not be delisted as a result of the deposit;

• such Legal Defeasance or Covenant Defeasance will not cause the trustee to have a conflicting interest with respect to any of our other securities;

• at the time of the deposit:

o no default in the payment of any amounts due on our Senior Secured Indebtedness shall have occurred and be continuing;

o no event of default with respect to any of our Senior Secured Indebtedness shall have occurred and be continuing and shall have resulted in any of our Senior Secured Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable; and

o no other event with respect to any of our Senior Secured Indebtedness shall have occurred and be continuing that would permit (after notice or the lapse of time, or both) the holders of our Senior Secured Indebtedness (or a trustee on their behalf) to declare any of our Senior Secured Indebtedness due and payable prior to the date on which it would otherwise have become due and payable, or, each such default or event of default shall have been cured or waived or shall have ceased to exist;

• no event of default (or event that with the passing of time or the giving of notice, or both, would constitute an event of default) shall have occurred or be continuing or, with respect to events of default relating from bankruptcy or insolvency, at any time in the period ending on the 91^st day after the date of deposit;

• such Legal Defeasance or Covenant Defeasance will not breach, violate or constitute a default under any other agreement or instrument to which we are a party or by which we are bound;

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• we must deliver to the trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and

• we must deliver to the trustee an opinion of counsel to the effect that such deposit shall not cause the trustee or the trust so created to be subject to the Investment Company Act of 1940, as amended.

Satisfaction and Discharge

The new indenture will provide that we may terminate our obligations under the new indenture and the exchange notes (except as described below) when:

(A) all the exchange notes previously authenticated and delivered (except lost, stolen or destroyed exchange notes which have been replaced and exchange notes for whose payment money has theretofore been deposited with the trustee or the paying agent in trust or segregated and held in trust by us and thereafter repaid to us) have been delivered to the trustee for cancellation, or

(B)  (1) all exchange notes have become due and payable, will become due and payable at their Stated Maturity within one year, or are to be called for redemption pursuant to the provisions under “—Optional Redemption” within one year under arrangements satisfactory to the trustee, and notice of same is mailed to all holders;

(2) we have irrevocably deposited or caused to be irrevocably deposited with the trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the exchange notes not theretofore delivered to the trustee for cancellation, for principal of, and interest and Make-Whole Premium, if any, on the exchange notes to the date of redemption or maturity, as the case may be, together with irrevocable instructions from us directing the trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

(3) our company has paid all other sums payable by it under the new indenture and the exchange notes;

(4) no default or event of default shall have occurred and be continuing on the date of such deposit (other than a default or event of default resulting from the borrowing of funds to be applied to such deposit);

(5) such deposit shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the new indenture) to which we are a party or by which we are bound; and

(6) we shall have delivered to the trustee an officer’s certificate and an opinion of counsel confirming the satisfaction of all conditions set forth in clauses (1) through (5) above.

Book-Entry, Delivery and Form

The exchange notes will be represented by a permanent global note in definitive, fully-registered form without interest coupons. The global note will be deposited with the trustee as custodian for the Depositary Trust Company, or DTC, and registered in the name of a nominee of DTC in New York, New York for the accounts of participants in DTC.

Except in the limited circumstances described below, holders of exchange notes represented by interests in the global note will not be entitled to receive exchange notes in definitive form.

DTC has advised us as follows: DTC is a limited purpose trust company organized under the laws of the State of New York Uniform Commercial Code and a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the

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Exchange Act. DTC was created to hold securities of institutions that have accounts with DTC (which we refer to as “participants”) and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s book-entry system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, whether directly or indirectly.

Ownership of beneficial interests in a global security will be limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in a global security will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of persons other than participants). The laws of some states require that some purchasers of securities take physical delivery of the securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a global security.

So long as DTC or its nominee is the registered owner of a global security, DTC or its nominee, as the case may be, will be considered the sole owner and holder of the exchange notes represented by that global security for all purposes under the new indenture. Except as provided below, owners of beneficial interests in a global security will not be entitled to have exchange notes represented by that global security registered in their names, will not receive or be entitled to receive physical delivery of exchange notes in definitive form and will not be considered the owners or holders thereof under the new indenture. Principal and interest payments, if any, on exchange notes registered in the name of DTC or its nominee will be made to DTC or its nominee, as the case may be, as the registered owner of the relevant global security. Neither our company, the trustee, any paying agent or the security registrar for the exchange notes will have any responsibility or liability for any aspect of the records relating to nor payments made on account of beneficial interests in a global security or for maintaining, supervising or reviewing any records relating to such beneficial interests.

We expect that DTC or its nominee, upon receipt of any payment of principal or interest, if any, will credit immediately participants’ accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the relevant global security as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in a global security held through these participants will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of the participants.

Unless and until they are exchanged in whole or in part for exchange notes in definitive form, the global securities may not be transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC.

Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds.

DTC has advised us that it will take any action permitted to be taken by a holder of exchange notes only at the direction of one or more participants to whose account DTC has credited the interests in the global securities and only in respect of such portion of the aggregate principal amount of exchange notes as to which the participant or participants has or have given such direction.

Certificated Notes

The global securities are exchangeable for definitive exchange notes in registered certificated form if:

• DTC is at any time unwilling or unable to continue as a depositary and a successor depositary is not appointed by us within 90 days;

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• we, at our option, notify the trustee in writing that we elect to cause notes to be issued in certificated form; or

• an event of default occurs and is continuing that entitles the holders of the exchange notes to accelerate the maturity of the exchange notes.

In any such instance, an owner of a beneficial interest in a global security will be entitled to physical delivery in definitive form of exchange notes represented by the global security equal in principal amount to their beneficial interest and to have the exchange notes registered in its name. Exchange notes so issued in definitive form will be issued as registered exchange notes in denominations of $1,000 and integral multiples of $1,000, unless otherwise specified by us. Such exchange notes will be subject to certain restrictions on registration of transfers.

Trustee

Wachovia Bank, National Association is the trustee under the new indenture.

Governing Law

The new indenture and the notes are governed by and construed in accordance with the laws of the State of New York.

Certain Definitions

We have set forth below a summary of certain of the defined terms used in the new indenture. Reference is made to the new indenture for the full definition of all such terms, as well as any other terms used herein for which we have not provided a definition.

“Acquired Indebtedness” means Indebtedness of any person existing at the time such person becomes a Subsidiary of ours, including by designation, or is merged or consolidated into or with us or one of our Subsidiaries.

“Acquisition” means the purchase or other acquisition of any person (or any business for which then current audited financial statements are available) or all or substantially all the assets of any person by any other person, whether by purchase, merger, consolidation, or other transfer, and whether or not for consideration.

“Affiliate” means any person directly or indirectly controlling or controlled by or under direct or indirect common control with us. For purposes of this definition, the term “control” means the power to direct the management and policies of a person, directly or through one or more intermediaries, whether through the ownership of voting securities, by contract, or otherwise.

“Aggregate Market Capitalization” means the product of (1) the Current Market Price (as defined in this section) of our common stock multiplied by (2) the number of outstanding shares of our common stock.

“Average Life” means, as of the date of determination, with respect to any security or instrument, the quotient obtained by dividing:

(1) the product of:

(A) the number of years (calculated to the nearest one-twelfth) from the date of determination to the date or dates of each successive scheduled principal (or redemption) payment of such security or instrument; multiplied by

(B) the amount of each such respective principal (or redemption) payment; divided by

(2) the sum of all such principal (or redemption) payments.

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“Beneficial Owner” or “beneficial owner,” for purposes of the definitions of Change of Control has the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act except that a person is deemed to have beneficial ownership of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time.

“Board of Directors” means, with respect to any person, the board of directors (or if such person is not a corporation, the equivalent board of managers or members or body performing similar functions for such person) of such person or any committee of the Board of Directors of such person authorized, with respect to any particular matter, to exercise the power of the board of directors of such person.

“Capitalized Lease Obligation” means, as to any person, the obligations of such person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP.

“Capital Stock” means, with respect to any corporation, any and all shares, interests, rights to purchase (other than convertible or exchangeable Indebtedness that is not itself otherwise capital stock), warrants, options, participations or other equivalents of or interests (however designated) in stock issued by that corporation.

“Cash Equivalent” means:

(1) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided, that the full faith and credit of the United States of America is pledged in support thereof) and securities issued by any state of the United States of America or any political subdivision thereof having the highest rating obtainable from either Moody’s Investors Service Inc. or Standard & Poor’s Rating Services,

(2) time deposits, certificates of deposit, bankers’ acceptances and commercial paper issued by the parent corporation of any domestic commercial bank of recognized standing having capital and surplus in excess of $500 million,

(3) commercial paper issued by others rated at least A-2 or the equivalent thereof by Standard & Poor’s Corporation or at least P-2 or the equivalent thereof by Moody’s Investors Service, Inc.,

(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in (1) and (2) above entered into with any financial institution meeting the qualifications specified in (2) above, or

(5) investment or money market funds, substantially all of the assets of which constitute Cash Equivalents of the kinds described in (1) through (4) of this definition,

and in the case of each of (1), (2), and (3), maturing within one year after the date of acquisition.

“Change in Control” will be deemed to have occurred at such time as:

(A) any person or group, as such term is used in Section 13(d) of the Exchange Act, together with any Affiliates:

(1) becomes the Beneficial Owner, directly or indirectly, of our Capital Stock which currently entitles such person or group and their Affiliates to exercise more than 50% of the total voting power of all classes of our Capital Stock entitled to vote generally in the election of directors, or

(2) succeeds, without the support of a majority of our then current Board of Directors, in having sufficient of its or their nominees elected to our Board of Directors and the persons so elected when added to any existing directors remaining on our Board of Directors who are Affiliates or are acting in concert with such person or group, constitute a majority of our Board of Directors;

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(B) we are a party to any transaction pursuant to which our common stock is converted into the right to receive securities (other than our common stock), cash and/or property (or we, by dividend, tender, exchange offer or otherwise, distribute other securities, cash and/or property to holders of our common stock) and the value of all such securities, cash and/or property distributed in such transaction and any other transaction within the 12 months preceding consummation of such transaction (as determined in good faith by our Board of Directors) is more than 50% of the average daily closing price of our common stock for the five consecutive trading days immediately preceding the date of such transaction (or if earlier, the trading day immediately preceding the “ex” date for such transaction); or

(C) we consolidate with or merge into any other person or sell, convey, transfer or lease all or substantially all of our properties and assets to any person other than a Subsidiary, or any other person consolidates with or merges into us, (other than pursuant to any consolidation or merger where persons who are our shareholders immediately prior to such merger or consolidation become the Beneficial Owners of shares of Capital Stock of the surviving entity entitling them to exercise more than 50% of the total voting power of all classes of such surviving entity’s Capital Stock entitled to vote in the election of directors).

Notwithstanding the foregoing, the conversion or exchange of the exchange notes pursuant to the terms of the new indenture or otherwise into our Capital Stock of the Company by an person or persons, together with any Affiliates, that would otherwise result in a Change of Control pursuant to the preceding clause (A)(1) or (A)(2) (to the extent such conversion also resulted in a Change of Control pursuant to clause (A)(1)) shall not be deemed a Change of Control until the person or person(s), together with any Affiliates, acquiring such Beneficial Ownership acquire Beneficial Ownership of Capital Stock which currently entitles such person or persons, together with any Affiliates, to exercise an additional 1% of the total voting power of all classes of our Capital Stock entitled to vote generally in the election of directors.

“Commission” means the Securities and Exchange Commission.

“Consolidation” means, with respect to us, the consolidation of the accounts of the Subsidiaries with those of our company, all in accordance with GAAP. The term “consolidated” has a correlative meaning to the foregoing.

“Consolidated EBITDA” means, with respect to any person, for any period, the Consolidated Net Income of such person for such period adjusted to add thereto (to the extent deducted from net revenues in determining Consolidated Net Income), without duplication, the sum of:

(1) Consolidated income tax expense,

(2) Consolidated depreciation and amortization expense,

(3) Consolidated Interest Expense,

(4) Debt extinguishment costs resulting from the redemption, repurchase, discharge or refinancing of our Indebtedness, and

(5) all other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such person and its Consolidated Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing Consolidated Net Income of such person,

less the amount of all cash payments made by such person or any of its Subsidiaries during such period to the extent such payments relate to non-cash charges that were added back pursuant to clauses (2) or (5) above in determining Consolidated EBITDA for such period or any prior period; provided, that Consolidated income tax expense, depreciation and amortization non-cash expenses of a Subsidiary that is not a Wholly Owned Subsidiary shall only be added to the extent of our equity interest in such Subsidiary.

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For the purposes of this calculation, the Consolidated Interest Expense of such person attributable to interest on any Indebtedness or dividends on any Disqualified Capital Stock bearing a floating interest (or dividend) rate shall be computed on a pro forma basis as if the average rate in effect from the beginning of the Reference Period to the Determination Date (as such term is defined in the definition of “Consolidated Net Leverage Ratio” below) had been the applicable rate for the entire period, unless such person or any of its Subsidiaries is a party to an Interest Swap or Hedging Obligation (which shall remain in effect for the 12-month period immediately following the Determination Date) that has the effect of fixing the interest rate on the date of computation, in which case such rate (whether higher or lower) shall be used.

“Consolidated Interest Expense” of any person means, for any period, the aggregate amount (without duplication and determined in each case in accordance with GAAP) of:

(A) interest expensed or capitalized, paid, accrued, or scheduled to be paid or accrued (including, in accordance with the following sentence, interest attributable to Capitalized Lease Obligations) of such person and its Consolidated Subsidiaries during such period, including:

(1) amortization of original issue discount and non-cash interest payments or accruals on any Indebtedness (excluding amortization of debt issuance costs),

(2) the interest portion of all deferred payment obligations, and

(3) all commissions, discounts and other fees and charges owed by such person or its Consolidated Subsidiaries and not reimbursed by third parties with respect to bankers’ acceptances and letters of credit financings and currency and Interest Swap and Hedging Obligations, in each case to the extent attributable to such period, and

(B) the amount of dividends accrued or payable by such person or any of its Consolidated Subsidiaries (other than dividends paid in shares of Qualified Capital Stock) in respect of Preferred Stock (other than by our Subsidiaries to us).

For purposes of this definition:

(1) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined in good faith by us to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP and

(2) interest expense attributable to any Indebtedness represented by the guaranty by such person or a Subsidiary of such person of an obligation of another person shall be deemed to be the interest expense attributable to the Indebtedness guaranteed.

“Consolidated Net Income” means, with respect to any person for any period, the net income (or loss) of such person and its Consolidated Subsidiaries (determined on a consolidated basis in accordance with GAAP) for such period, adjusted to exclude (only to the extent included in computing such net income (or loss) and without duplication):

(A) all gains (but not losses) which are either extraordinary (as determined in accordance with GAAP) or are either unusual or nonrecurring (including any gain from the sale or other disposition of assets outside the ordinary course of business or from the issuance or sale of any capital stock), together with any related provisions for taxes on any such extraordinary, unusual or non-recurring gain; provided that gains attributable to payments from mission success insurance policies shall not be excluded to the extent of any offsetting loss incurred during such period resulting from the failure to which such policy payment relates,

(B) the net income, if positive, of any person, other than a Consolidated Subsidiary, in which such person or any of its Consolidated Subsidiaries has an interest except to the extent of the amount of any dividends or distributions actually paid in cash to such person or a Consolidated Subsidiary of such person during such period, but in any case not in excess of such person’s pro rata share of such person’s net income for such period,

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(C) the net income, if positive, of any of such person’s Consolidated Subsidiaries to the extent that the declaration or payment of dividends or similar distributions is not at the time permitted by operation of the terms of its charter or bylaws or any other agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Consolidated Subsidiary,

(D) all dividends and distributions from any Subsidiary for such period that are a net reduction in Investments of such person made in such Subsidiary,

(E) the cumulative effect of any change in accounting principles, and

(F) the amortization of original issue discount on the exchange notes and the amortization of debt issuance costs, in each case to the extent such amount is not paid in cash.

“Consolidated Net Leverage Ratio” of any person on any date of determination (the “Determination Date”) means the ratio, on a pro forma basis after giving effect to the repayment, repurchase, redemption, defeasance or other acquisition, retirement or discharge of Indebtedness in connection with the transaction, of (a) an amount equal to (1) the aggregate amount of Consolidated Indebtedness of such person and its Subsidiaries on such Determination Date, minus (2) the aggregate amount of cash and Cash Equivalents of such person and its Subsidiaries on such Determination Date; to (b) the aggregate amount of our Consolidated EBITDA for the Reference Period attributable to continuing operations and businesses (exclusive of amounts attributable to operations and businesses permanently discontinued or disposed of); provided, that for purposes of such calculation:

(1) Acquisitions which occurred during the Reference Period or subsequent to the Reference Period and on or prior to the Determination Date shall be assumed to have occurred on the first day of the Reference Period,

(2) transactions giving rise to the need to calculate the Consolidated Net Leverage Ratio shall be assumed to have occurred on the first day of the Reference Period, and

(3) the incurrence of any Indebtedness (including issuance of any Disqualified Capital Stock) during the Reference Period or subsequent to the Reference Period and on or prior to the Determination Date (and the application of the proceeds therefrom to the extent used to refinance or retire other Indebtedness) (other than Indebtedness incurred under any revolving credit facility) shall be assumed to have occurred on the first day of the Reference Period.

“Consolidated Net Worth” of any person at any date means the aggregate consolidated stockholders’ equity of such person (plus amounts of equity attributable to preferred stock) and its Consolidated Subsidiaries, as would be shown on the consolidated balance sheet of such person prepared in accordance with GAAP, adjusted to exclude (to the extent included in calculating such equity):

(a) the amount of any such stockholders’ equity attributable to Disqualified Capital Stock or treasury stock of such person and its Consolidated Subsidiaries,

(b) all upward revaluations and other write-ups in the book value of any asset of such person or a Consolidated Subsidiary of such person subsequent to the Issue Date, and

(c) all investments in Subsidiaries that are not Consolidated Subsidiaries and in persons that are not Subsidiaries.

“Consolidated Subsidiary” means, for any person, each Subsidiary of such person (whether now existing or hereafter created or acquired) the financial statements of which are consolidated for financial statement reporting purposes with the financial statements of such person in accordance with GAAP.

“Credit Agreement” means that certain Loan Agreement dated as of February 11, 2005 by and between SPACEHAB, Incorporated and First American Bank, SSB, including any related notes, guarantees, collateral

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documents, instruments and agreements executed in connection therewith, as such credit agreement and/or related documents may be amended, restated, supplemented, renewed, replaced or otherwise modified from time to time, whether or not with the same agent, trustee, representative lenders or holders, and, subject to the proviso to the next succeeding sentence, irrespective of any changes in the terms and conditions thereof. Without limiting the generality of the foregoing, the term “Credit Agreement” shall include one or more agreements in respect of Interest Swap and Hedging Obligations and letter of credit facilities with lenders (or Affiliates thereof) party to the Credit Agreement and shall also include any amendment, amendment and restatement, renewal, extension, restructuring, supplement or modification to any Credit Agreement and all refundings, refinancings and replacements of any Credit Agreement, including any Credit Agreement:

(1) extending the maturity of any Indebtedness incurred thereunder or contemplated thereby,

(2) adding or deleting borrowers or guarantors thereunder, so long as borrowers and guarantors include one or more of our company and our Subsidiaries and their respective successors and assigns,

(3) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder; provided, that on the date such Indebtedness is incurred it would not be prohibited by the covenant “—Limitation on Incurrence of Senior Secured Indebtedness and Assumption of Acquired Indebtedness,” or

(4) otherwise altering the terms and conditions thereof in a manner not prohibited by the terms of the new indenture.

“Current Market Price” means (A) with respect to paragraphs (2), (4) and (5) under “—Conversion Rights—Adjustments to Conversion Price,” the average of the closing prices of our common stock for the 5 consecutive trading days selected by us commencing not more than 20 trading days before, and ending not later than, the date in question; provided, however, that

(1) if the “ex” date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the conversion price (“Other Event”) occurs on or after the 20^th trading day prior to the date in question and prior to the “ex” date for the issuance or distribution requiring such computation (the “Current Event”), then the closing price for each trading day prior to the “ex” date for such Other Event shall be adjusted by multiplying such closing price by the same fraction by which the conversion price is so required to be adjusted as a result of such Other Event;

(2) if the “ex” date for any Other Event occurs after the “ex” date for the Current Event and on or prior to the date in question, then the closing price for each trading day on and after the “ex” date for such Other Event shall be adjusted by multiplying such closing price by the reciprocal of the fraction by which the conversion price is so required to be adjusted as a result of such Other Event;

(3) if the “ex” date for any Other Event occurs on the “ex” date for the Current Event, one of those events shall be deemed for purposes of clauses (1) and (2) above to have an “ex” date occurring prior to the “ex” date for the other event, and

(4) if the “ex” date for the Current Event is on or prior to the date in question, after taking into account any adjustment required pursuant to clause (2) above, then the closing price for each trading day on or after such “ex” date shall be adjusted by adding thereto the amount of any cash and the fair market value on the date in question as determined in good faith by the Board of Directors of the portion of the rights, warrants, options, evidences of indebtedness, shares of capital stock, securities, cash or property being distributed applicable to one share of our common stock; and

(B) with respect to paragraph (6) under “—Conversion Rights—Adjustment to Conversion Price,” the average of the daily closing prices of our common stock for the 5 consecutive trading days selected by us commencing on or after the latest of:

• the date 20 trading days before the date in question;

• the date of commencement of the tender or exchange offer requiring such computation; and

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• the date of the last amendment, if any, of such tender or exchange offer involving a change in the maximum number of shares for which tenders are sought or a change in the consideration offered, and ending not later than the date of the expiration of such tender or exchange offer (or, if such expiration time occurs before the close of trading on a trading day, not later than the trading day immediately preceding the date of such expiration);

provided, however, that if the “ex” date for any Other Event (other than the tender or exchange offer requiring such computation) occurs on or after the commencement date for such tender or exchange offer and on or prior to the date of expiration for the tender or exchange offer requiring such computation, the closing price for each trading day prior to the “ex” date for such Other Event shall be adjusted by multiplying such closing price by the same fraction by which the conversion price is so required to be adjusted as a result of such other event.

“Disqualified Capital Stock” means with respect to any person:

(A) any Equity Interests of such person that, by its terms or by the terms of any security into which it is convertible, exercisable or exchangeable, is, or upon the happening of an event or the passage of time or both would be, required to be redeemed or repurchased, including at the option of the holder thereof, by such person or any of its Subsidiaries, in whole or in part, on or prior to 91 days following the Stated Maturity of the exchange notes, and

(B) any Equity Interests of any Subsidiary of such person other than any common equity with no preferences, privileges, and no redemption or repayment provisions.

Notwithstanding the foregoing, any Equity Interests that would constitute Disqualified Capital Stock solely because the holders thereof have the right to require us to repurchase such Equity Interests upon the occurrence of a Change of Control shall not constitute Disqualified Capital Stock if the terms of such Equity Interests provide that we may not repurchase or redeem any such Equity Interests pursuant to such provisions prior to our purchase of the exchange notes as are required to be purchased pursuant to the provisions of the new indenture as described under “Repurchase of Notes at the Option of the Holder Upon a Change of Control.” Capital Stock subject to repurchase obligations pursuant to our and our Subsidiaries’ employee benefit plans shall not be considered Disqualified Capital Stock.

“Equity Interests” means Capital Stock or partnership, participation or membership interests and all warrants, options or other rights to acquire Capital Stock or partnership, participation or membership interests (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock or partnership, participation or membership interests).

“‘ex’ date” means:

(1) when used with respect to any issuance or distribution, the first date on which our common stock trades regular way on the relevant exchange or in the relevant market from which the closing price was obtained without the right to receive such issuance or distribution,

(2) when used with respect to any subdivision or combination of shares of our common stock, the first date on which our common stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective, and

(3) when used with respect to any tender or exchange offer, the first date on which our common stock trades regular way on such exchange or in such market after the expiration time of such tender or exchange offer.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.

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“Existing Indebtedness” means the Indebtedness of our company and our Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the date of the new indenture, reduced to the extent such amounts are repaid, refinanced or retired.

“GAAP” means United States generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession in the United States as in effect from time to time.

“Indebtedness” of any person means, without duplication,

(A) all liabilities and obligations, contingent or otherwise, of such person, to the extent such liabilities and obligations would appear as a liability upon the Consolidated balance sheet of such person in accordance with GAAP,

(1) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such person or only to a portion thereof),

(2) evidenced by bonds, notes, debentures or similar instruments, or

(3) representing the balance deferred and unpaid of the purchase price of any property or services, except those incurred in the ordinary course of its business that would ordinarily constitute a trade payable to trade creditors (other than accounts payable or other obligations to trade creditors which have remained unpaid for greater than 90 days past their original due date unless such accounts payable or other obligations are being contested in good faith, in which case they will not constitute Indebtedness pending final resolution of such dispute);

(B) all liabilities and obligations, contingent or otherwise, of such person,

(1) evidenced by bankers’ acceptances or similar instruments issued or accepted by banks,

(2) relating to any Capitalized Lease Obligation, or

(3) evidenced by a letter of credit or a reimbursement obligation of such person with respect to any letter of credit;

(C) all net obligations of such person under Interest Swap and Hedging Obligations;

(D) all liabilities and obligations of others of the kind described in the preceding clause (A), (B) or (C) that such person has guaranteed or provided credit support or that are otherwise its legal liability or which are secured by any assets or property of such person;

(E) any and all deferrals, renewals, extensions, refinancings and refundings (whether direct or indirect) of, or amendments, modifications or supplements to, any liability of the kind described in any of the preceding clauses (A), (B), (C) or (D), or this clause (E), whether or not between or among the same parties; and

(F) all Disqualified Capital Stock of such person (measured at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid dividends);

provided, that any indebtedness which has been defeased in accordance with GAAP or defeased pursuant to the deposit of cash or U.S. Government Obligations (in an amount sufficient to satisfy all such indebtedness obligations at maturity or redemption, as applicable, and all payments of interest and premium, if any) in a trust or account created or pledged for the sole benefit of the holders of the indebtedness, and subject to no other Liens, and in accordance with the other applicable terms of the instrument governing such indebtedness, shall not constitute “Indebtedness.”

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For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the new indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined in good faith by the board of directors (or equivalent body or person) of the issuer of such Disqualified Capital Stock.

The amount of any Indebtedness outstanding as of any date shall be (1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, but the accretion of original issue discount in accordance with the original terms of Indebtedness issued with an original issue discount will not be deemed to be an incurrence and (2) the principal amount thereof, together with any interest, premium or penalties thereon that are more than 30 days past due, in the case of any other Indebtedness.

“Interest Swap and Hedging Obligation” means any obligation of any person pursuant to any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate exchange agreement, currency exchange agreement or any other agreement or arrangement designed to protect against fluctuations in interest rates or currency values, including, without limitation, any arrangement whereby, directly or indirectly, such person is entitled to receive from time to time periodic payments calculated by applying either a fixed or floating rate of interest on a stated notional amount in exchange for periodic payments made by such person calculated by applying a fixed or floating rate of interest on the same notional amount.

“Investment” by any person in any other person means (without duplication):

(A) the acquisition (whether by purchase, merger, consolidation or otherwise) by such person (whether for cash, property, services, securities or otherwise) of Equity Interests, Capital Stock, bonds, notes, debentures or other securities, including any options or warrants, of such other person or any agreement to make any such acquisition;

(B) the making by such person of any deposit with, or advance, loan or other extension of credit to, such other person (including the purchase of property from another person subject to an understanding or agreement, contingent or otherwise, to resell such property to such other person) or any commitment to make any such advance, loan or extension (but excluding accounts receivable, endorsements for collection or deposits arising in the ordinary course of business);

(C) other than guarantees of our Indebtedness to the extent permitted by the covenant “—Limitation on Incurrence of Senior Secured Indebtedness and Assumption of Acquired Indebtedness,” the entering into by such person of any guarantee of, or other credit support or contingent obligation with respect to, Indebtedness or other liability of such other person; and

(D) the making of any capital contribution by such person to such other person.

We will be deemed to make an Investment in an amount equal to the fair market value of the net assets of any person (or, if neither us nor any of our Subsidiaries has theretofore made an Investment in such person, in an amount equal to the Investments being made), at the time that such person is designated a Subsidiary, and any property transferred to a Subsidiary from us or our other Subsidiaries shall be deemed an Investment valued at its fair market value at the time of such transfer. We or any of our Subsidiaries shall be deemed to have made an Investment in a person that is or was a Subsidiary if, upon the issuance, sale or other disposition of any portion of our or our Subsidiary’s ownership in the Capital Stock of such person, such person ceases to be a Subsidiary. The fair market value of each Investment shall be measured at the time made or returned, as applicable.

“Issue Date” means the date of first issuance of the exchange notes under the new indenture.

“Lien” means any mortgage, charge, pledge, lien (statutory or otherwise), privilege, security interest, hypothecation or other encumbrance upon or with respect to any property of any kind, real or personal, movable or immovable, now owned or hereafter acquired.

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“Make-Whole Premium” with respect to an exchange note means an amount equal to the present value of the remaining interest payments due on such exchange note to [·], 2008, computed using a discount rate equal to the Treasury Rate on such date plus 1.00%.

“Permitted Indebtedness” means (without duplication):

(A) Indebtedness incurred pursuant to the Credit Agreement in an aggregate principal amount at any time outstanding not to exceed $5 million;

(B) our other Existing Indebtedness; and

(C) Refinancing Indebtedness with respect to any Existing Indebtedness or Acquired Indebtedness or, with respect to our company, any Indebtedness described in clause (A) or incurred pursuant to the Consolidated Net Leverage Ratio test of the covenant “—Limitation on Incurrence of Senior Secured Indebtedness and Assumption of Acquired Indebtedness,” or which was refinanced pursuant to this clause (C).

“person” means any corporation, individual, limited liability company, joint stock company, joint venture, partnership, limited liability partnership, unincorporated association, governmental regulatory entity, country, state or political subdivision thereof, trust, municipality or other entity.

“Preferred Stock” means any Equity Interest of any class or classes of a person (however designated) which is preferred as to payments of dividends, or as to distributions upon any liquidation or dissolution, over Equity Interests of any other class of such person.

“Pro Forma” or “pro forma” shall have the meaning set forth in Regulation S-X of the Securities Act, unless otherwise specifically stated herein.

“Qualified Capital Stock” means any of our Capital Stock that is not Disqualified Capital Stock.

“Reference Period” with regard to any person means the four full fiscal quarters for which financial statements are available (or such lesser period during which such person has been in existence) ended immediately preceding any date upon which any determination is to be made pursuant to the terms of the exchange notes or the new indenture.

“Refinancing Indebtedness” means Indebtedness (including Disqualified Capital Stock):

(A) issued in exchange for, or the proceeds from the issuance and sale of which are used substantially concurrently to repay, redeem, defease, refund, refinance, replace, discharge or otherwise retire for value, in whole or in part, or

(B) constituting an amendment, modification or supplement to, or a deferral or renewal of (paragraphs (A) and (B) are, collectively, a “Refinancing”),

any Indebtedness (including Disqualified Capital Stock) in a principal amount or, in the case of Disqualified Capital Stock, liquidation preference, not to exceed (after deduction of reasonable and customary fees (including consent fees) and expenses incurred in connection with the Refinancing plus the amount of any premium paid in connection with such Refinancing) the lesser of:

(1) the principal amount or, in the case of Disqualified Capital Stock, liquidation preference, of the Indebtedness (including Disqualified Capital Stock) so Refinanced, and

(2) if such Indebtedness being Refinanced was issued with an original issue discount, the accreted value thereof (as determined in accordance with GAAP) at the time of such Refinancing;

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provided, that:

(A) such Refinancing Indebtedness shall only be used to refinance outstanding Indebtedness (including Disqualified Capital Stock) of such person issuing such Refinancing Indebtedness,

(B) such Refinancing Indebtedness shall (x) not have an Average Life shorter than the Indebtedness (including Disqualified Capital Stock) to be so refinanced at the time of such Refinancing (or, if earlier, 91 days after the Stated Maturity of the exchange notes), and (y) in all respects, be no less contractually subordinated or junior, if applicable, to the rights of holders of the exchange notes than was the Indebtedness (including Disqualified Capital Stock) to be refinanced,

(C) such Refinancing Indebtedness shall have a final stated maturity or redemption date, as applicable, no earlier than the final stated maturity or redemption date, as applicable, of the Indebtedness (including Disqualified Capital Stock) to be so refinanced or, if sooner, 91 days after the Stated Maturity of the exchange notes, and

(D) such Refinancing Indebtedness shall be secured (if secured) in a manner no more adverse to the holders of the exchange notes than the terms of the Liens (if any) securing such refinanced Indebtedness, including, without limitation, the amount of Indebtedness secured shall not be increased (except to the extent of customary fees and expenses incurred in connection with the Refinancing plus the amount of any premium paid in connection with such Refinancing).

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder.

“Senior Secured Indebtedness” means Indebtedness of us that is secured by a Lien.

“Stated Maturity,” when used with respect to any exchange note, means October 15, 2010.

“Subsidiary,” with respect to any person, means:

(1) a corporation a majority of whose Equity Interests entitled to vote in the election of directors is at the time, directly or indirectly, owned by such person, by such person and one or more Subsidiaries of such person or by one or more Subsidiaries of such person, and

(2) any other person (other than a corporation) in which such person, one or more Subsidiaries of such person, or such person and one or more Subsidiaries of such person, directly or indirectly, at the date of determination thereof has a majority ownership interest, or

(3) a partnership in which such person or a Subsidiary of such person is, at the time, a general partner and in which such person, directly or indirectly, at the date of determination thereof has a majority ownership interest.

Unless the context requires otherwise, Subsidiary means each direct and indirect Subsidiary of us.

“Treasury Rate” for any date, means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to the date of redemption is effected pursuant to the event requiring such redemption (or, if such Statistical Release is no longer published, any publicly available source of similar market data) most nearly equal to the period from the redemption date to [·], 2008; provided, however, that if the period from the redemption date to [·], 2008 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given except that if the period from the redemption date to [·], 2008 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

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“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended, and the rules and regulations (and, if applicable, no-action letters) of the Commission thereunder.

“U.S. Government Obligations” means direct non-callable obligations of, or noncallable obligations guaranteed by, the United States of America for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged.

“Wholly Owned Subsidiary” means a Subsidiary all the Equity Interests of which (other than directors’ qualifying shares) are owned by us or one or more of our Wholly Owned Subsidiaries or a combination thereof.

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DESCRIPTION OF OUR CAPITAL STOCK

The following description summarizes certain provisions of our Articles of Incorporation and our Bylaws. Such summaries do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of our Articles of Incorporation, as amended and our Bylaws.

General

Our Articles of Incorporation authorize the issuance of up to 30,000,000 shares of common stock, no par value per share, and 2,500,000 shares of preferred stock, no par value per share.

Common Stock

All of our issued and outstanding shares of common stock are fully paid and nonassessable. Each holder of shares of our common stock is entitled to one vote per share on all matters to be voted on by stockholders generally, including the election of directors. There are no cumulative voting rights. The holders of our common stock are entitled to dividends and other distributions as may be declared from time to time by our Board of Directors out of funds legally available therefore, if any.

Upon the liquidation, dissolution or winding up of our business, the holders of shares of our common stock would be entitled to share ratably in the distribution of the assets remaining available for distribution after satisfaction of all of our liabilities and the payment of the liquidation preference of any outstanding preferred stock as described below. The holders of our common stock have no preemptive or other subscription rights to purchase shares of our stock and are not entitled to the benefits of any redemption or sinking fund provisions.

Preferred Stock

Our Articles of Incorporation authorize our Board of Directors to create and issue one or more series of preferred stock and determine the number of shares to be included in each such series and to fix the designation, powers, rights, preferences, limitations and qualifications of each series, to the extent permitted by the Articles of Incorporation and applicable law. Among other rights, our Board of Directors may determine, without the further vote or action by the stockholders:

• the number of shares constituting the series and the distinctive designation of the series;

• the dividend rate on the shares of the series, whether dividends will be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of the series;

• whether the series will have voting rights, in addition to the voting rights provided by law and, if so, the terms of such voting rights;

• whether the series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as our Board of Directors shall determine;

• whether or not the shares of that series shall be redeemable or exchangeable, and, if so, the terms and conditions of such redemption or exchange, as the case may be, including the date or dates upon or after which they shall be redeemable or exchangeable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;

• whether the series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund, and

• the rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution or winding up and the relative rights or priority, if any, of payment of shares of the series.

Except for any difference so provided by our Board of Directors, the shares of all series of preferred stock will rank on a parity with respect to the payment of dividends and to the distribution of assets upon liquidation.

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Series B Convertible Preferred Stock

Our Board of Directors has designated a series of preferred stock consisting of 1,333,334 shares of Series B convertible preferred stock having the terms described below.

Dividend Rights. The holders of Series B convertible preferred stock are entitled to receive such dividends as may be lawfully declared in the discretion of our Board of Directors. In the event that we declare a dividend with respect to our outstanding common stock, the holders of our Series B convertible preferred stock are entitled to the amount of dividends payable on the number of shares of common stock into which their shares of Series B convertible preferred stock could be converted as of the date of such distribution.

Conversion. Each share of Series B convertible preferred stock is convertible, at the option of the holder, into such number of shares of common stock equal to the amount determined by dividing $9.00 per share by the applicable conversion price, which is currently $9.00 per share. The conversion price is subject to adjustment upon the occurrence of certain events, including a subdivision or combination of our outstanding shares of common stock or payment of dividends or other distributions to the holders of our shares of common stock in additional shares of our common stock or other securities.

Voting Rights. The holders of our Series B convertible preferred stock have the right to one vote for each share of common stock into which each such share of Series B convertible preferred stock could then be converted, and except as described below or as required by law, voting together as a single class with holders of our common stock. For so long as EADS Space Transportation GmbH and its successors and assignees own at least 400,000 shares of our Series B convertible preferred stock or the common stock convertible upon exercise of such shares, holders of the Series B convertible preferred stock elect one director to our board of directors and holders of our common stock elect the remaining directors. Certain actions affecting the rights of holders of Series B convertible preferred stock, such as issuing capital stock ranking prior to or on parity with the Series B convertible preferred stock, amending our Articles of Incorporation or Bylaws in a manner adversely affecting the rights of holders of Series B convertible preferred stock, or issuing additional shares of Series B convertible preferred stock, require the approval of a majority of the shares of Series B convertible preferred stock outstanding.

Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up, the holders of the then outstanding shares of Series B convertible preferred stock are entitled to receive $9.00 per share. This amount will be adjusted upon a stock dividend, stock split, combination or other recapitalization. In addition, such holders are entitled to receive an amount equal to declared or accrued but unpaid dividends, if any. If our assets and funds are insufficient to permit the payment to the holders of our Series B convertible preferred stock of their full preferential amounts, then the entire assets and funds legally available for distribution shall be distributed ratably among the holders of our Series B convertible preferred stock and any other class or series ranking on liquidation in parity with our Series B convertible preferred stock. After the payment of all preferential amounts to the holders of our Series B convertible preferred stock and any other class or series ranking on parity, all remaining amounts will be distributed to the holders of stock ranking junior to our Series B convertible preferred stock.

Change in Control. A consolidation or merger with another entity in which our outstanding securities are exchanged for securities or other consideration of such other entity or the sale of substantially all of our assets, will, upon the election of holders of a majority of the outstanding Series B convertible preferred stock, be treated as a liquidation for purposes of redeeming our Series B convertible preferred stock.

Redemption or Repurchase. Our Articles of Incorporation contain no specific restrictions on the repurchase or redemption of our Series B convertible preferred stock.

Registration Rights

We have granted to EADS, a German corporation and successor to DaimlerChrysler Aerospace AG, demand and incidental registration rights in connection with their prior acquisition of our Series B convertible preferred

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stock, subject to certain conditions. We have also granted similar demand and incidental registration rights to Poly Ventures, Limited Partnership and BEA Associates, Inc. in connection with their prior acquisition of shares of our common stock, subject to certain conditions.

In general, EADS, or its permitted transferees or assignees, have the right, on up to four occasions, to cause us to register under the Securities Act common stock issuable upon conversion of the Series B convertible preferred stock held by EADS. Poly Ventures, Limited Partnership and BEA Associates, Inc., and their respective permitted transferees and assignees, also have the right, on up to two occasions, to cause us to register their holdings of common stock under the Securities Act. EADS, Poly Ventures, Limited Partnership and BEA Associates, Inc., or their respective permitted transferees or assignees, are also entitled, if we determine to file a registration statement covering any of our securities under the Securities Act, whether pursuant to a demand by other security holders or a shelf registration on behalf of other security holders, or otherwise, to notice by us regarding such contemplated registration of securities and have the right to request that we include in such registration their common stock, subject to certain marketing restrictions determined by the managing underwriter or underwriters, if any. We are required to bear all registration expenses, other than selling costs, e.g., underwriting discounts, selling commissions and taxes.

Articles of Incorporation and Bylaws

The rights of our shareholders are governed by the Washington Business Act, our Articles of Incorporation and our Bylaws. Certain provisions of our Articles of Incorporation and our Bylaws, which are summarized below, may discourage or make more difficult a takeover attempt that a shareholder might consider in its best interest.

Our Board of Directors has the authority to issue up to 2,500,000 shares of preferred stock. The issuance of such preferred stock may have the effect of delaying, deferring or preventing a change in control without further action by the stockholders and may adversely affect the voting and other rights of the holders of our common stock, including the loss of voting control to others.

Our Articles of Incorporation prohibit shareholders from taking action by written consent in lieu of an annual or special meeting. In addition, special meetings of shareholders may only be called by the Chairman of the Board, the President, or a majority of the Board of Directors. Special meetings may not be called by shareholders.

Anti-Takeover Effects of Washington Law

Chapter 23B.19 of the Washington Business Act prohibits a corporation, with certain exceptions, from engaging in certain “significant business transactions” with a person or group of persons that beneficially owns 10% or more of the corporation’s outstanding voting securities for a period of five years after such an acquisition unless a majority of the directors approves, prior to the acquisition date, either the significant business transaction or the purchase of shares made by the acquiring person or group of persons acting in concert or under common control on the acquisition date. The prohibited significant business transactions include, among others, a merger with, disposition of assets to, or issuance or redemption of stock to or from such person or groups of persons, or allowing such person or group of persons to receive any disproportionate benefit as a shareholder. These provisions may have the effect of delaying, deterring or preventing a change in control.

Nasdaq National Market Listing

Our common stock trades on the Nasdaq National Market under the trading symbol “SPAB.”

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is the American Stock Transfer and Trust Company.

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LEGAL MATTERS

Certain legal matters in connection with the issuance of the exchange notes will be passed upon for us by our attorneys, Haynes and Boone, LLP. Certain matters will be passed upon for Jefferies & Company, Inc., in its capacity as a dealer manager, by Skadden, Arps, Slate, Meagher & Flom LLP.

INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

The financial statements as of June 30, 2004 and for the year then ended, included in this prospectus, have been audited by Grant Thornton LLP, independent registered public accounting firm, as stated in their report with respect thereto, and are included in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports.

The financial statements as of June 30, 2003 and for the years ended June 30, 2003 and 2002, included in the prospectus, have been audited by Ernst & Young LLP, independent registered public accounting firm, as stated in their report with respect thereto, and are included in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports.

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INDEX TO FINANCIAL STATEMENTS

	Page
Reports of Independent Registered Public Accounting Firm	F-2
Unaudited Condensed Consolidated Balance Sheets as of March 31, 2005 (unaudited) and June 30, 2004	F-4
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2005 and 2004 and for the Nine Months Ended March 31, 2005 and 2004	F-5
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2005 and 2004	F-6
Notes to Unaudited Condensed Consolidated Financial Statements	F-7
Consolidated Balance Sheets as of June 30, 2004 and 2003	F-16
Consolidated Statements of Operations for the Years Ended June 30, 2004, 2003 and 2002	F-17
Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss) for the Years Ended June 30, 2004, 2003 and 2002	F-18
Consolidated Statements of Cash Flows for the Years Ended June 30, 2004, 2003 and 2002	F-19
Notes to Consolidated Financial Statements	F-20

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

SPACEHAB, Incorporated and Subsidiaries:

We have audited the accompanying consolidated balance sheet of SPACEHAB, Incorporated and subsidiaries (the “Company”) as of June 30, 2004, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss) and cash flows for the year then ended June 30, 2004. 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 audit.

We conducted our audit in accordance with the standards of the Public Company Accounting oversight Board (United States). 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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2004, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/    Grant Thornton LLP

Houston, Texas

September 2, 2004

F-2

Report of Independent Registered Public Accounting Firm

The Stockholders and Board of Directors

SPACEHAB, Incorporated and Subsidiaries:

We have audited the accompanying consolidated balance sheet of SPACEHAB, Incorporated and subsidiaries (the Company) as of June 30, 2003, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for each of the two years in the period ended June 30, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of SPACEHAB, Incorporated and subsidiaries as of June 30, 2003 and the consolidated results of their operations and their cash flows for each of the two years in the period ended June 30, 2003, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 26, the consolidated statement of cash flows for the year ended June 30, 2003 has been changed from that on which we reported previously to correct the classification of insurance proceeds received as a result of the loss of the Company’s research double module.

As discussed in Note 2 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” effective July 1, 2002.

/s/    Ernst & Young LLP

McLean, Virginia

August 20, 2003

except for Note 26 as to which the date is

July 11, 2005

F-3

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except share data)

	March 31, 2005			June 30, 2004
	(unaudited)
ASSETS
Cash and cash equivalents	$	5,122		$	506
Restricted cash		872			430
Short-term investments		—			5,037
Restricted short-term investments		—			1,604
Accounts receivable, net		9,459			7,878
Prepaid expenses and other current assets		895			495
Total current assets		16,348			15,950
Property and equipment, net of accumulated depreciation and amortization of $53,640 and $49,755, respectively	$	76,530		$	79,600
Deferred financing costs, net		1,048			1,163
Other assets, net		1,799			3,212
Total assets	$	95,725			99,925
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving loan payable	$	—		$	1,445
Mortgage loan payable, current portion		1,946			1,946
Accounts payable		1,335			2,424
Accounts payable-EADS		1,057			3,262
Accrued interest		2,358			1,108
Accrued expenses		2,414			3,600
Accrued subcontracting services		3,752			2,176
Deferred revenue, current portion		2,429			6,340
Total current liabilities		15,291			22,301
Accrued contract cost and other		255			372
Deferred revenue, net of current portion		—			900
Mortgage loan payable, net of current portion		2,244			3,692
Convertible subordinated notes payable		63,250			63,250
Total liabilities		81,040			90,515
Commitments and contingencies
Stockholders’ equity
Preferred Stock, no par value, convertible, 2,500,000 shares authorized, 1,333,334 shares issued and outstanding, (liquidation preference of $9.00 per share)		11,892			11,892
Common stock, no par value, 30,000,000 shares authorized, 12,760,227 and 12,688,062 shares issued, respectively		83,857			83,751
Less treasury stock, 116,100 and 116,100 shares, respectively, at cost		(117	)		(117	)
Additional paid-in capital		16			16
Accumulated deficit		(80,963	)		(86,132	)
Total stockholders’ equity		14,685			9,410
Total liabilities and stockholders’ equity	$	95,725		$	99,925

See accompanying notes to unaudited condensed consolidated financial statements.

F-4

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except share data)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2005			2004			2005			2004
Revenue	$	14,272		$	14,800		$	40,443		$	66,466
Costs of revenue		11,085			9,815			32,592			36,172
Gross profit		3,187			4,985			7,851			30,294
Operating expenses
Selling, general and administrative		2,321			2,545			6,556			8,880
Research and development		21			7			37			9
Goodwill impairment		—			—			—			8,274
Impairment of investment in Guigne		—			—			—			1,800
Recovery of nonrecurring charge, loss of Research Double Module		—			—			(8,244	)		—
Total operating expenses		2,342			2,552			(1,651	)		18,963
Income from operations		845			2,433			9,502			11,331
Interest expense		(1,413	)		(2,177	)		(4,299	)		(6,776	)
Interest and other income, net		40			22			121			97
Income (loss) before income taxes		(528	)		278			5,324			4,652
Income tax expense		(13	)		(11	)		(155	)		(251	)
Net income (loss)	$	(541	)	$	267		$	5,169		$	4,401
Income (loss) per share:
Net income (loss) per share—basic	$	(0.04	)	$	0.02		$	0.41		$	0.35
Shares used in computing net income (loss) per share—basic		12,626,130			12,476,342			12,603,240			12,415,977
Net income (loss) per share—diluted	$	(0.04	)	$	0.02		$	0.36		$	0.31
Shares used in computing net income (loss) per share—diluted		12,626,130			14,264,818			14,203,597			14,039,798

See accompanying notes to unaudited condensed consolidated financial statements.

F-5

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

	Nine Months Ended March 31,
	2005			2004
Cash flows from operating activities		Restated
Net income	$	5,169		$	4,401
Adjustments to reconcile net income to net cash provided by operating activities:
Goodwill impairment		—			8,274
Recovery of nonrecurring charge, loss of Research Double Module		(8,244	)		—
Impairment of investment in Guigne		—			1,800
Amortization of debt placement costs		—			729
Depreciation and amortization		3,953			4,206
Loss on asset sales and write-offs		29			358
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable		(1,581	)		953
Increase in prepaid expenses and other current assets		(400	)		(329	)
(Increase) Decrease in other assets		1,413			(30	)
Decrease in accounts payable, accounts payable-EADS and accrued expenses		(3,230	)		(4,412	)
Increase in accrued subcontracting services		1,576			12
Decrease in deferred revenue		(4,811	)		(8,581	)
Decrease in long-term contracts costs and other liabilities		(117	)		(94	)
Net cash provided by operating activities		(6,243	)		7,287
Cash flows from investing activities
Payments for flight assets under construction		(62	)		(426	)
Purchases of property, equipment and leasehold improvements		(750	)		(868	)
Proceeds received from sale of property and equipment		15			46
Sale of short-term investments		6,641			7,419
Proceeds from contract indemnification		8,244			—
Increase in restricted cash		(442	)		—
Net cash provided by investing activities		13,646			6,171
Cash flows from financing activities
Repayment of revolving loan payable, net		(1,445	)		—
Payment of mortgage loan		(1,448	)		(10,978	)
Payment of convertible notes payable to shareholder		—			(2,004	)
Proceeds from issuance of common stock, net of expenses		106			273
Purchase of treasury stock		—			(6	)
Net cash used in financing activities		(2,787	)		(12,715	)
Net change in cash and cash equivalents		4,616			743
Cash and cash equivalents at beginning of period		506			1,301
Cash and cash equivalents at end of period	$	5,122		$	2,044

See accompanying notes to unaudited condensed consolidated financial statements.

F-6

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

1. The Company

Incorporated in 1984, SPACEHAB was the first company to commercially develop, own and operate pressurized space habitat modules which serve the international community in supporting both manned and unmanned missions to space. SPACEHAB and its subsidiaries provide the following services:

• Access to space through the use of research and logistics modules and carriers

• Expertise on space architectures, habitability and occupational challenges of space

• Facility operations and spacecraft processing services

• Engineering, analysis, and space payload transportation services

• Program integration and control

• Space equipment and product design and development

• Space media, education, and retail goods

Through our SPACEHAB Flight Services (“SFS”) business unit, the Company owns pressurized space habitat modules which are carried in the cargo bay of the space shuttle to provide capacity and workspace for cargo and research payloads, and unpressurized integrated cargo carriers which also are carried in the cargo bay of the space shuttle providing unpressurized capacity for cargo payloads such as International Space Station spare and component parts. The need for our modules and ICCs depends on the specific requirements of each space shuttle mission. When our equipment is deployed on a space shuttle mission we provide the mission integration and operations support required to successfully configure, load, operate and ultimately unload our modules and/or ICCs. We also solicit research payloads worldwide for space shuttle missions when space is available on our modules beyond NASA’s requirements and have provided similar research payload marketing for the Russian Progress spacecraft and the European ATV. Through March 31, 2005, SPACEHAB modules and ICCs have flown on 18 missions on the space shuttle, including 12 logistics missions (five to the ISS and seven to the Russian space station Mir).

SPACEHAB provides commercial satellite processing facilities and services through its wholly-owned subsidiary, Astrotech Space Operations, Inc. (“Astrotech” or “ASO”). Astrotech is a commercial provider of satellite processing services in the United States, supplying the facilities and services used in the launch preparation of spacecraft. We offer customers an alternative to using government-owned facilities and serve payload customers launching on a wide range of expendable launch vehicles including Atlas, Delta, Pegasus, Sea Launch, and Taurus, as well as secondary payloads flown on the space shuttle. In fiscal year 2002, We completed construction of a state-of-the-art processing facility in Titusville, Florida to process larger five-meter class satellites and payload fairings for the Evolved Expendable Launch Vehicle (“EELV”) programs. With more than 220 satellites processed, ASO diversifies SPACEHAB’s customer base and broadens our core competencies.

SPACEHAB Government Services (“SGS”) provides engineering support services for the U.S. Government and various commercial industries. As a NASA contractor for over 30 years, this unit offers a wide array of products and services in the engineering, program integration and control, and product development disciplines. Specifically, SGS manages projects in need of comprehensive engineering solutions and provides unique capabilities such as specialty engineering, hardware design and development, and configuration and data management.

Space Media, Inc. (“SMI”), a majority-owned subsidiary intended to create proprietary space-themed content for education and commerce, now provides the space enthusiast with a variety of services. These services range from outfitting a comprehensive space exhibit to providing astronaut appearances and product

F-7

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

endorsements including an online retailing outlet, TheSpaceStore.com. This website and retail store, adjacent to NASA’s Johnson Space Center in Houston, offers more than 500 products, providing distinctive and personalized gifts, clothing, mission patches, and more. Through the STARS Program, SMI also provides educational and outreach services to schools around the globe.

2. Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring accruals, except as discussed elsewhere within, necessary for a fair presentation of the consolidated financial position of SPACEHAB, Incorporated and its subsidiaries as of March 31, 2005, and the results of its operations and cash flows for the periods ended March 31, 2005 and 2004. However, the condensed consolidated financial statements are unaudited and do not include all related footnote disclosures. Certain amounts presented for prior periods have been reclassified to conform with the fiscal year 2005 presentation.

The consolidated results of operations for the three and nine month periods ended March 31, 2005 are not necessarily indicative of the results that may be expected for the full year. Our results of operations have fluctuated significantly from quarter to quarter. The interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements appearing in our Annual Report on Form 10-K for the fiscal year ended June 30, 2004.

The Company’s cash and short-term investments were approximately $6.0 million, of which $0.9 million is restricted, as of March 31, 2005. Management believes that we have sufficient liquidity, including cash and short-term investments, advances available under the Company’s revolving credit facility, and cash anticipated or expected to be generated from operations to fund ongoing operations. We also expect to utilize existing cash and cash anticipated from future operations for research and development activities, and for new business initiatives.

3. Earnings per Share

The following are reconciliations of the numerators and denominators of the basic and diluted earnings per share (“EPS”) computations for the three and nine month periods ended March 31, 2005 and 2004 (in thousands, except per share data):

	Three months ended March 31, 2005							Three months ended March 31, 2004
	Income (Numerator)			Shares (Denominator)	Per Share Amount			Income (Numerator)		Shares (Denominator)	Per Share Amount
Basic EPS:
Income (loss) available to common stockholders	$	(541	)	12,626,130	$	(0.04	)	$	267	12,476,342	$	0.02
Effect of dilutive securities:
Options and warrants, using the treasury stock method		—		—		—			—	455,142		—
Convertible preferred shares		—		—		—			—	1,333,334		—
Diluted EPS:
Income (loss) available to common stockholders	$	(541	)	12,626,130	$	(0.04	)	$	267	14,264,818	$	0.02

F-8

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

	Nine months ended March 31, 2005					Nine months ended March 31, 2004
	Income (Numerator)		Shares (Denominator)	Per Share Amount		Income (Numerator)		Shares (Denominator)	Per Share Amount
Basic EPS:
Income available to common stockholders	$	5,169	12,603,240	$	0.41	$	4,401	12,415,977	$	0.35
Effect of dilutive securities:
Options and warrants, using the treasury stock method		—	267,023		—		—	290,487		—
Convertible preferred shares		—	1,333,334		—		—	1,333,334		—
Diluted EPS:
Income available to common stockholders	$	5,169	14,203,597	$	0.36	$	4,401	14,039,798	$	0.31

Convertible notes payable outstanding as of March 31, 2005, convertible into 4,642,202 shares of common stock at $13.625 per share and due October 2007, were not included in the computation of diluted EPS for the three and nine months ended March 31, 2005 and 2004, as the conversion price of the convertible notes payable per share was greater than the average market price of the common shares during the periods.

Options to purchase 1,877,313 shares of common stock outstanding at March 31, 2005 were not included in diluted EPS for the three months ended March 31, 2005 as they were anti-dilutive to the Company’s net loss. The options expire between July 2, 2005 and August 16, 2014.

Options to purchase 1,363,559 shares of common stock, at prices ranging from $2.08 to $11.75 per share, were outstanding at March 31, 2005 but were not included in diluted EPS for the nine months ended March 31, 2005 as the option prices were greater than the average market price of the common shares during the period. The options expire between July 2, 2005 and August 16, 2014.

Options to purchase 1,422,411 shares of common stock, at prices ranging from $3.44 to $12.00 per share, were outstanding at March 31, 2004 but were not included in diluted EPS for the three months ended March 31, 2004 as the option prices were greater than the average market price of the common shares during the period. The options expire between July 13, 2004 and February 12, 2011.

Options to purchase 1,468,441 shares of common stock, at prices ranging from $2.31 to $12.00 per share, were outstanding at March 31, 2004 but were not included in diluted EPS for the nine months ended March 31, 2004 as the option prices were greater than the average market price of the common shares during the period. The options expire between July 13, 2004 and July 23, 2011.

4. Revenue Recognition

Our business units’ revenue is derived primarily from long-term contracts with the U.S. Government, U.S. Government contractors, and commercial customers. Revenue under these contracts are recognized using the methods described below. Estimating future costs and, therefore, revenues and profits is a process requiring a high degree of management judgment. Management bases its estimate on historical experience and on various assumptions that are believed to be reasonable under the circumstances including the negotiation of an equitable adjustment on the Research and Logistics Mission Support (“ReALMS”) contract which was added to the contract as a pricing amendment due to the delay in the return to flight of the space shuttle. Costs to complete include, when appropriate, material, labor, subcontracting costs, lease costs, commissions, insurance and

F-9

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

depreciation. Our business segment personnel perform periodic contract status and performance reviews. In the event of a change in total estimated contract cost or profit, the cumulative effect of such change is recorded in the period that the change in estimate occurs.

A Summary of Revenue Recognition Methods Follows:

Business Segment	Services/Products Provided	Contract Type	Method of Revenue Recognition
SPACEHAB Flight Services	Commercial Space Habitat Modules, Integration & Operations Support Services	Firm Fixed Price	Percentage-of-completion based on costs incurred
Astrotech Space Operations	Payload Processing Facilities	Firm Fixed Price—Mission Specific	Ratably, over the occupancy period of a satellite within the facility from arrival through launch
		Firm Fixed Price—Guaranteed Number of Missions	For multi-year contract payments recognized ratably over the contract period
SPACEHAB Government Services	Configuration Management, Engineering Services	Cost Plus Award/Fixed Fee	Reimbursable costs incurred plus award/fixed fee
Space Media, Inc.	Space-Themed Commercial Products/Activities	Retail	Internet and retail sales recognized when goods are shipped

For the three and nine months ended March 31, 2005, the Company recognized revenue of approximately $0.6 million and $2.7 million, respectively, under the Japanese Experiment Thermal Incubator Service (“JETIS”) contract with the Mitsubishi Corporation, representing the Japanese Aerospace Exploration Agency (“JAXA”), that was entered into in 2000. Subsequent to the suspension of the space shuttle flights and destruction of SPACEHAB’s Research Double Module (“RDM”), we contracted for construction of certain space research equipment, for research space onboard the ISS, and for up to three Russian Progress cargo missions with V.J.F. Russian Consulting who is representing Rocket Space Corporation—Energia (“RSC-Energia”), a major Russian aerospace manufacturer and mission operator. Revenue on this contract is recognized on the percentage-of-completion method as costs are incurred.

The ReALMS contract expired January 31, 2004 and support for STS-121, 116, and 118 continues under a subcontract with Lockheed Martin Corporation (“Lockheed Martin”), effective February 1, 2004. We are currently providing these services under letter contract and we are in final contract negotiations with Lockheed Martin for this new contract. Pending finalization of contract negotiations with Lockheed Martin, we are providing asset maintenance and continuing services in anticipation of the contractual missions under letter agreements, generally entered into on a month-to-month basis. Revenues for the Lockheed Martin agreement are being accounted for under the percentage-of-completion method based on costs incurred over the period of the agreement. In April 2005 NASA announced the postponement of the return to flight of the space shuttle from mid May 2005 to mid July 2005. We expect this delay to have a marginal impact on our revenues and margins over the coming months as we continue the mission specific work and receive revenue for our asset maintenance fees.

F-10

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

For the period ended March 31, 2003, we recognized a non-recurring charge of $50.3 million net of insurance proceeds, on the loss of its RDM in the Space Shuttle Columbia accident. Upon notification by NASA of its acceptance of our claim for indemnification of $8.0 million plus interest of $0.2 million, we recognized a recovery of $8.2 million of previously recognized loss in the period ended September 30, 2004. The Company received payment of the $8.2 million accounts receivable established for the period ended September 30, 2004 in October 2004. The $8.2 million has been reflected in cash flows from investing activities in the restated statement of cash flows for the nine months ended March 31, 2005.

5. Statements of Cash Flows—Supplemental Information

a) Cash paid for interest costs was $2.8 million and $4.9 million for the nine months ended March 31, 2005 and 2004, respectively. We did not capitalize any interest costs during the nine months ended March 31, 2005 or 2004.

b) We paid an immaterial amount of income taxes for the nine months ended March 31, 2005 and paid no income taxes the nine months ended March 31, 2004.

6. Credit Facilities

On August 29, 2002 we entered into a $5.0 million line of credit with a financial institution. The term of this credit facility was through August 28, 2005. Covenants included a liquidity ratio and a limited pledge of $5.6 million of the Company’s investment account. The restriction on the investment balance was equal to 111% of the borrowings on the line of credit. In June 2004 the credit agreement was amended again to remove the financial covenant on capital expenditures. Borrowing on this credit facility for the nine months ended March 31, 2005 was at a weighted average interest rate of 4.8%. This credit facility was replaced with a new revolving credit facility from another financial institution on February 11, 2005.

On February 11, 2005 we entered into a revolving credit facility with a bank providing for loans up to $5.0 million secured by the Company’s accounts receivable. Funds available under the revolving credit facility are limited to 80% of eligible accounts receivable and the Company is subject to various financial and other covenants including a minimum tangible net worth covenant, a cash flow coverage covenant, and a secured debt coverage covenant. As of March 31, 2005 there have been no borrowings under this revolving credit facility, and we posted a restricted cash balance of $314,000 in accordance with the financial covenants. As of March 31, 2005 there was $5.0 million available under this credit facility.

On August 30, 2001 our Astrotech subsidiary completed a $20.0 million financing of its Spacecraft Processing Facility (“SPF”) expansion project in Titusville, Florida (the “term loan”) with a financial institution. The proceeds of this financing were used to complete the construction of the SPF and supporting infrastructure. The term loan was collateralized primarily by the multi-year payload processing contracts with The Boeing Company (“Boeing”) and Lockheed Martin and by the building. The net book value of the building as of March 31, 2005 was $22.5 million. The term loan was scheduled to mature on January 15, 2011.

On October 1, 2004 Astrotech was notified by Boeing that it was exercising its termination rights with regards to its financial guarantees under the contract agreement with Astrotech for payload processing support services for the Delta launch vehicle program. Boeing indicated that the decision to terminate its guarantees for future Astrotech services was based on the downturn of the commercial expendable launch market rather than performance related considerations. We were in full compliance with the contract terms at the time of the termination. Under the contract provision related to termination of its financial guarantees, Boeing paid us $17.5 million representing consideration of future contract payments previously used to collateralize the obligation. In the quarter ending March 31, 2004 we repaid $9.5 million of principal on the term loan.

F-11

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

In conjunction with the term loan, a swap agreement was required to be entered into to provide for a fixed rate of interest under the term loan commitment beginning January 15, 2002. The fixed rate of interest on the outstanding principal balance was 5.62% plus 225 basis points. The objective of the swap was to eliminate the variability of cash flows in the interest payments for the total amount of the variable rate debt, the sole source of which are changes in the USD-LIBOR-BBA interest rate. Due to the repayment of the Boeing portion of the term loan and the subsequent amendment of the loan agreement, the swap was no longer effective as a hedge. The unrealized loss in other comprehensive loss for the portion of the debt that was repaid in December 2004 was recorded as interest expense in the period ended March 31, 2004 in the amount of $0.8 million. We recognized interest expense of $0.4 million for the unamortized debt placement costs related to the debt repayment in the period ended March 31, 2004. We recognized as additional interest expense the unamortized debt placement costs of $0.2 million and the balance of the deferred loss on the swap in other comprehensive loss of $0.5 million in the third quarter of fiscal year 2004 in connection with the amendment of the loan agreement.

The term loan agreement was amended on January 29, 2004, whereby the maturity date was shortened to January 2007, the interest rate was fixed at 5.5% and the hedge requirement was eliminated. For the fiscal year ended June 30, 2004, approximately $11.4 million of principal was repaid and the outstanding balance was $5.6 million as of June 30, 2004. For the nine months ended March 31, 2005, approximately $1.4 million was repaid and the outstanding balance was $4.1 million as of March 31, 2005.

7. Segment Information

Based on our organization, we operate in four business segments: SFS, Astrotech, SGS, and SMI. SFS was founded to commercially develop space habitat modules that operate in the cargo bay of the space shuttles. SFS provides access to the modules and integration and operations support services for both NASA and commercial customers. Astrotech provides payload processing facilities and services to serve the spacecraft manufacturing and launch services industry. SGS is primarily engaged in providing engineering services and products to the Government including NASA. SMI was established in April 2000 to develop space-themed commercial business activities.

The Company’s chief operating decision maker utilizes both revenue and income (loss) before income taxes, in assessing performance and making overall operating decisions and resource allocations.

Three Months Ended March 31, 2005 (in thousands):	Revenue		Income (Loss) before income taxes			Net Fixed Assets		Depreciation And Amortization
SPACEHAB Flight Services	$	10,007	$	2,032		$	30,279	$	706
Astrotech		2,533		443			45,966		525
SPACEHAB Government Services		1,553		337			55		6
Space Media		179		(41	)		—		—
Corporate and Other		—		(3,299	)		230		93
	$	14,272	$	(528	)	$	76,530	$	1,330

F-12

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

Three Months Ended March 31, 2004 (in thousands):	Revenue		Income (Loss) before income taxes			Net Fixed Assets		Depreciation And Amortization
SPACEHAB Flight Services	$	10,240	$	3,996		$	32,935	$	842
Astrotech		2,542		416			47,422		524
SPACEHAB Government Services		1,826		171			125		15
Space Media		192		(15	)		—		—
Corporate and Other		—		(4,290	)		—		—
	$	14,800	$	278		$	80,482	$	1,381
Nine Months Ended March 31, 2005 (in thousands):	Revenue		Income (Loss) before income taxes			Net Fixed Assets		Depreciation And Amortization
SPACEHAB Flight Services	$	28,351	$	13,523		$	30,279	$	2,110
Astrotech		6,755		566			45,966		1,556
SPACEHAB Government Services		4,710		862			55		19
Space Media		627		(29	)		—		—
Corporate and Other		—		(9,598	)		230		268
	$	40,443	$	5,324		$	76,530	$	3,953
Nine Months Ended March 31, 2004 (in thousands):	Revenue		Income (Loss) before income taxes			Net Fixed Assets		Depreciation And Amortization
SPACEHAB Flight Services	$	32,612	$	9,381		$	32,935	$	2,635
Astrotech		24,654		16,169			47,422		1,518
SPACEHAB Government Services		8,601		(5,469	)		125		53
Space Media		599		(25	)		—		—
Corporate and Other		—		(15,404	)		—		—
	$	66,466	$	4,652		$	80,482	$	4,206

8. Stock—Based Compensation

In December 2002 the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure—an amendment of SFAS No. 123.” This statement amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company has chosen to continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (“APB”) Opinion No. 25 and related interpretations. Accordingly, compensation expense for stock options is measured as the excess, if any, of the fair market value of the Company’s stock at the date of the grant over the exercise price of the related option.

F-13

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

If compensation costs for the Company’s stock options were determined based on SFAS No. 123, “Accounting for Stock-Based Compensation,” the Company’s net income (loss) and earnings per share would have been as follows (in thousands, except per share amounts):

	Three Months Ended March 31,						Nine Months Ended March 31,
	2005			2004			2005			2004
Net income (loss), as reported	$	(541	)	$	267		$	5,169		$	4,401
Deduct: Total stock-based compensation expense determined under fair value based Method (SFAS No. 123) for all awards, net of related tax effects		(70	)		(75	)		(157	)		(248	)
Pro forma net income (loss)	$	(611	)	$	192		$	5,012		$	4,153
Earnings per share:
Basic—as reported	$	(0.04	)	$	0.02		$	0.41		$	0.35
Diluted—as reported	$	(0.04	)	$	0.02			0.36		$	0.31
Basic—pro forma	$	(0.05	)	$	0.02		$	0.40		$	0.33
Diluted—pro forma	$	(0.05	)	$	0.01		$	0.35		$	0.30

9. Stock Repurchase

On March 25, 2003 the Board of Directors authorized the Company to repurchase up to $1.0 million of the Company’s outstanding common stock at market prices. Any purchases under the Company’s stock repurchase program may be made from time to time, in the open market, through block trades or otherwise in accordance with applicable regulations of the Securities and Exchange Commission (“SEC”). For the three and nine months ended March 31, 2005, the Company did not repurchase any shares. As of March 31, 2005, the Company had repurchased 116,100 shares at a cost of $117,320 under the program.

10. Related Party Transaction

The Company engaged in certain transactions with directors, executive officers, shareholders, and certain former officers during the nine months ended March 31, 2005. Following is a description of these transactions:

EADS Space Transportation

Dr. Graul, a member of SPACEHAB’s Board of Directors, is the Executive Vice President for EADS Space Transportation. EADS provides unpressurized payload and integration efforts to SPACEHAB on a fixed-price basis in addition to providing engineering services as required. For the three months ended March 31, 2005 and 2004, EADS’s payload and integration services included in cost of revenue were approximately $2.9 million and $1.5 million, respectively. For the nine months ended March 31, 2005 and 2004, EADS’s payload and integration services included in cost of revenue were approximately $9.2 million and $5.4 million, respectively.

V.J.F. Russian Consulting

On January 30, 2004 we entered into a subcontract agreement with V.J.F. Russian Consulting. The president of V.J.F. Russian Consulting, Vladimir Fishel, is a former Vice President of SPACEHAB who at the time of entering into a part-time employment agreement for other consulting activities was receiving severance payments from the Company on a part-time employment arrangement for other consulting activities. The services being provided under the subcontract agreement (valued at $2.6 million) is in support of a contract that SPACEHAB has with the Mitsubishi Corporation in support of JAXA. The amount paid for the three months ended March 31, 2005 was $0.3 million. The amount paid for the nine months ended March 31, 2005 was $0.7 million.

F-14

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

On June 1, 2004 the Company entered into a consulting agreement with V.J.F. Russian Consulting for:

(1) Marketing and promotion of SPACEHAB capabilities and services to RSC-Energia, the Russian Federation Space Agency, and other Russian entities involved in the exploration and development of space;

(2) Supporting and assisting SPACEHAB in the negotiation of service contracts and agreements between Russian entities; and

(3) Providing technical expertise and services in support of SPACEHAB activities, under contracts with Russian entities.

Total commitments under the consulting agreement are $0.4 million, of which $0.1 million was paid in the three months ended March 31, 2005. For the nine months ended March 31, 2005, $0.2 million was paid.

11. Recent Accounting Pronouncement

The FASB has issued Statement 123R (revised 2004), Share-Based Payment. Statement 123(R) which will, with certain exceptions, require entities that grant stock options and shares to employees to recognize the fair value of those options and shares as compensation cost over the service (vesting) period in their financial statements. The measurement of that cost will be based on the fair value of the equity or liability instruments issued. The effective date for Statement 123(R) for the Company is the fiscal year beginning July 1, 2005. We have not yet made an assessment as to the impact on the Company’s financial statements.

12. Subsequent Events

On April 28, 2005 we consummated the sale and simultaneous leaseback of our Cape Canaveral Florida SPPF. The sales price of the building was $4.8 million including a note receivable of $0.7 million due December 2010. We received $4.1 million in cash of which $0.3 million was used for expenses related to the transaction. We will lease the building back for an initial term expiring December 31, 2010 with an option to renew for one additional five-year term. In accordance with FASB 28, the Company will defer the gain of approximately $0.5 million from the sale leaseback transaction and recognize it as an offset to rent expense over the five-year lease term.

In April 2005 NASA announced the postponement of the return to flight of the space shuttle from mid May 2005 to mid July 2005. The delay is expected to have a small impact on our revenues and margins over the coming months as we continue the mission specific work now underway and are protected in our contractual arrangements with a periodic asset maintenance fee applicable to provide and maintain our space assets pending launch.

13. Statement of Cash Flows

For the period ending March 31, 2005, the statement of cash flows has been changed from that reported previously to classify the proceeds received from NASA related to the loss of our Research Double Module as an investing cash flow consistent with the guidance in footnote 5 of Financial Accounting Standards No. 95, “Statement of Cash Flows”. The proceeds were reported previously as an operating cash flow.

F-15

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share data)

	June 30,
	2004			2003
Assets
Current assets
Cash and cash equivalents	$	506		$	1,301
Restricted cash		430			—
Short-term investments		5,037			14,047
Restricted short-term investments		1,604			—
Accounts receivable, net		7,878			6,780
Prepaid expenses and other current assets		495			343
Total current assets		15,950			22,471
Property and equipment
Flight assets		64,476			63,970
Module improvements in progress		913			305
Payload processing facilities		45,895			46,026
Furniture, fixtures, equipment and leasehold improvements		18,071			22,088
		129,355			132,389
Less accumulated depreciation and amortization		(49,755	)		(48,700	)
Property and equipment, net		79,600			83,689
Goodwill, net		—			8,274
Investment in Guignè, net		—			1,800
Deferred financing costs, net		1,163			2,182
Other assets, net		3,212			2,940
Total assets	$	99,925		$	121,356
Liabilities and Stockholders’ Equity
Current liabilities
Revolving loan payable	$	1,445		$	—
Convertible notes payable to shareholder, current portion		—			2,004
Mortgage loan payable, current portion		1,946			2,218
Accounts payable		2,424			3,231
Accounts payable—EADS		3,262			7,824
Accrued interest		1,108			1,365
Accrued expenses		3,600			2,687
Accrued subcontracting services		2,176			522
Deferred revenue, current portion		6,340			7,370
Total current liabilities		22,301			27,221
Accrued contract costs and other		372			255
Deferred revenue, net of current portion		900			8,734
Mortgage loan payable, net of current portion		3,692			16,806
Convertible subordinated notes payable		63,250			63,250
Total liabilities		90,515			116,266
Commitments and contingencies
Stockholders’ equity
Preferred stock, no par value, convertible, authorized 2,500,000 shares, issued and outstanding 1,333,334 shares, (liquidation preference of $9.00 per share)		11,892			11,892
Common stock, no par value, 30,000,000 shares authorized 12,688,062 and 12,484,779 shares issued, respectively		83,751			83,446
Treasury stock, 116,100 and 109,800 shares, respectively, at cost		(117	)		(111	)
Additional paid-in capital		16			16
Accumulated other comprehensive loss		—			(1,946	)
Accumulated deficit		(86,132	)		(88,207	)
Total stockholders’ equity		9,410			5,090
Total liabilities and stockholders’ equity	$	99,925		$	121,356

See accompanying notes to consolidated financial statements.

F-16

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except share and per share data)

	Year ended June 30, 2004			Year ended June 30, 2003			Year ended June 30, 2002
Revenue	$	77,606		$	94,963		$	102,773
Costs of revenue		45,678			78,791			81,767
Gross profit		31,928			16,172			21,006
Operating expenses
Selling, general and administrative		10,908			13,098			18,737
Loss on subleases		—			—			770
Research and development		223			118			383
Nonrecurring charge, loss of Research Double Module		—			50,268			—
Goodwill impairment		8,274			11,925			—
Asset impairment charge		1,800			16,143			—
Total operating expenses		21,205			91,552			19,890
Income (loss) from operations		10,723			(75,380	)		1,116
Interest expense, net of capitalized interest		(8,237	)		(7,243	)		(6,683	)
Interest and other income (expense), net		95			(9	)		1,150
Income (loss) before income taxes		2,581			(82,632	)		(4,417	)
Income tax expense (benefit)		506			(857	)		(2,050	)
Net income (loss)	$	2,075		$	(81,775	)	$	(2,367	)
Net income (loss) per share—basic	$	0.17		$	(6.66	)	$	(0.20	)
Shares used in computing net income (loss) per share—basic		12,450,320			12,285,467			11,884,309
Net income (loss) per share—diluted	$	0.15		$	(6.66	)	$	(0.20	)
Shares used in computing net income (loss) per share—diluted		14,141,949			12,285,467			11,884,309

See accompanying notes to consolidated financial statements.

F-17

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of

Stockholders’ Equity and Comprehensive Income (Loss)

(In thousands, except share data)

	Shares	Amount		Shares	Amount		Treasury Stock Amount			Add’l Paid-In- Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity
Balance at June 30, 2001	1,333,334	$	11,892	11,528,145	$	82,513		—		$	16	$	—		$	(4,065	)	$	90,356
Common stock issued under bonus plan	—		—	224,635		350		—			—		—			—			350
Common stock issued under employee stock purchase plan	—		—	401,685		341		—			—		—			—			341
Accumulated other comprehensive loss	—		—	—		—		—			—		(1,010	)		—			(1,010	)
Net loss	—		—	—		—		—			—		—			(2,367	)		(2,367	)
Total comprehensive loss																			(3,377	)
Balance at June 30, 2002	1,333,334	$	11,892	12,154,465	$	83,204	$	—		$	16	$	(1,010	)	$	(6,432	)	$	87,670
Common stock issued under employee stock purchase plan	—		—	230,314		152		—			—		—			—			152
Common stock issued under settlement	—		—	100,000		90		—			—		—			—			90
Treasury stock purchased, 109,800 shares	—		—	—		—		(111	)		—		—			—			(111	)
Accumulated other comprehensive loss	—		—	—		—		—			—		(936	)		—			(936	)
Net loss	—		—	—		—		—			—		—			(81,775	)		(81,775	)
Total comprehensive loss																			(82,711	)
Balance at June 30, 2003	1,333,334	$	11,892	12,484,779	$	83,446		(111	)	$	16	$	(1,946	)	$	(88,207	)	$	5,090
Common stock options exercised	—		—	133,246		225		—			—		—			—			225
Common stock issued under employee stock purchase plan	—		—	70,037		80		—			—		—			—			80
Treasury stock purchased, 6,300 shares	—		—	—		—		(6	)		—		—			—			(6	)
Accumulated other comprehensive income	—		—	—		—		—			—		1,946			—			1,946
Net income	—		—	—		—		—			—		—			2,075			2,075
Total comprehensive income																			4,021
Balance at June 30, 2004	1,333,334	$	11,892	12,688,062	$	83,751		(117	)	$	16	$	—		$	(86,132	)	$	9,410

See accompanying notes to consolidated financial statements.

F-18

SPACEHAB, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

	Year ended June 30, 2004			Year ended June 30, 2003			Year ended June 30, 2002
				Restated
Cash flows from operating activities
Net income (loss)	$	2,075		$	(81,775	)	$	(2,367	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Nonrecurring charge, loss of Research Double Module		—			50,268			—
Goodwill impairment		8,274			11,925			—
Asset impairment charge		1,800			16,143			—
(Gain) loss on sale and write-offs of property and equipment		615			—			(1,096	)
Loss on subleases		—			—			770
Depreciation and amortization, including deferred debt issuance costs		5,883			9,385			13,414
Write-off of debt placement fees		567			—			—
Loss on interest rate swap		(613	)		—			—
Other		—			(146	)		—
Changes in assets and liabilities:
(Increase) decrease in accounts receivable		(1,098	)		7,022			4,211
(Increase) decrease in prepaid expenses and other current assets		(152	)		120			917
Increase in other assets		(272	)		(21	)		(691	)
(Decrease) increase in accounts payable, accrued expenses, and accrued interest		(4,596	)		575			(6,135	)
Increase (decrease) in accrued subcontracting services		1,654			(2,521	)		831
Decrease in deferred revenue		(8,864	)		(8,861	)		(1,262	)
Net cash provided by operating activities		5,273			2,114			8,592
Cash flows from investing activities
Payments for flight assets under construction		(609	)		(161	)		(2,600	)
Payments for building under construction and leasehold improvements		(71	)		(1,003	)		(15,409	)
Purchases of property and equipment		(1,410	)		(294	)		(983	)
Investments in restricted cash		(430	)		—			—
Sale of Vertical Cargo Carrier		—			—			4,400
Proceeds from state grant		—			750			—
Proceeds from sale of property and equipment		133			125			1,425
Sale (purchase) of short-term investments		7,406			(14,047	)		—
Proceeds from insurance		—			17,667			—
Net cash provided by (used in) investing activities		5,019			3,037			(13,167	)
Cash flows from financing activities
Payments of note payable to insurers		—			—			(333	)
Net borrowings (repayments) under revolving loan payable		1,445			(2,150	)		(4,600	)
Payments of note payable		—			(218	)		(4,047	)
Payments of note payable to shareholder		(2,004	)		(1,862	)		(3,994	)
Proceeds from sale of minority interest in SMI		—			—			750
Purchase of minority interest		—			(315	)		—
Proceeds from mortgage loan		—			—			20,000
Payment of interest rate swap		(1,333	)		—			—
Payment of mortgage loan		(9,494	)		(2,039	)		(882	)
Purchase of treasury stock		(6	)		(111	)		—
Proceeds from issuance of common stock, net of expenses		305			151			341
Net cash (used in) provided by financing activities		(11,087	)		(6,544	)		7,235
Net increase (decrease) in cash and cash equivalents		(795	)		(1,393	)		2,660
Cash and cash equivalents at beginning of year		1,301			2,694			34
Cash and cash equivalents at end of year	$	506		$	1,301		$	2,694

See accompanying notes to consolidated financial statements.

F-19

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Description of the Company and Operating Environment

SPACEHAB is a developer and operator of space flight hardware assets, a provider of manned and unmanned payload processing services, and an entrepreneurial force in space commerce applications.

A substantial portion of our revenue has been generated under contracts with the National Aeronautics and Space Administration (“NASA”). The Company’s contracts are subject to periodic funding allocations by NASA. NASA’s funding is dependent on receiving annual appropriations from the U.S. Government. During the years ended June 30, 2004, 2003, and 2002 approximately 54%, 77%, and 81% of the Company’s revenues were generated under U.S. Government contracts, respectively.

The SPACEHAB Flight Services (“SFS”) business unit is continuing operations pending return to flight of the U. S. space shuttle program, supporting four of the next six planned space shuttle missions through the use of our pressurized laboratory and logistics supply modules and integrated cargo carrier (“ICC”) system, which significantly enhances the capabilities of the space shuttle fleet. We are in negotiations with Lockheed Martin Corporation (“Lockheed Martin”) and The Boeing Company (“Boeing”) to finalize contract provisions for these missions and for equitable adjustments for asset maintenance and contracted preparation activities during the period prior to NASA’s return to flight.

Our most recent mission was STS-107 on NASA’s Columbia orbiter, which utilized our research double module (“RDM”). The RDM was lost in the tragic accident (see note 21), and at this time we do not plan to replace this asset. SFS has two additional modules and other flight assets available to support the Company’s current contracts. These modules and assets can also be used to support future NASA requirements.

In January 2004, the Company submitted a detailed claim for recovery of its RDM investment to NASA in the amount of $87.7 million. In June 2004, SPACEHAB mutually agreed with NASA to waive the Agency’s response date of June 24, 2004 on our contract claim for indemnification. The contractually stipulated indemnification is $8.0 million but NASA’s reconciliation of the losses under Federal Acquisition Regulations approximate $47.4 million. In the event an acceptable resolution cannot be reached, SPACEHAB has the right to file for administrative and/or judicial review of its claim for indemnification. We believe we have a basis for recovery of the loss from NASA but there can be no assurance as to the timing or the amount, if any, to be received from the claim. Upon resolution of the claim, any proceeds from NASA would be recorded in the period in which the claim is resolved.

The Company’s Astrotech Space Operations (“Astrotech”) subsidiary provides commercial satellite launch processing services and payload processing facilities in the U.S. These services are offered at the Astrotech facilities in Titusville, Florida and Vandenberg Air Force Base in California, and are provided on a fixed-price basis. Additionally, Astrotech supplies payload processing and facilities maintenance support services to Sea Launch Company, LLC for its Sea Launch program at the Home Port facilities in Long Beach, California.

Future growth of Astrotech’s business base is linked to the prospects for new commercial satellite manufacturing orders and an increased market-share in the government satellite processing sector. Activity in the commercial market fell sharply in 2000 as telecom and Internet-related investments plunged, but independent observers expect a rebound ahead in the telecommunications market. Experts point to the aging of existing commercial geostationary communications satellites—up to 100 of which will reach the end of their service lives in the next five years—increased bandwidth demands from the U.S. Department of Defense, and an increasing market for satellite-based broadband services.

Our SPACEHAB Government Services subsidiary manages projects in need of comprehensive engineering solutions and provides unique capabilities such as specialty engineering, hardware design and development, and

F-20

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

configuration and data management. SPACEHAB Government Services (“SGS”) also designs and fabricates space flight hardware. We continuously review and seek new business opportunities with NASA, either through current contract expansion or teaming with other aerospace companies on new contract bid initiatives.

A majority-owned subsidiary of SPACEHAB, Space Media, Inc., is a provider for the space enthusiast. From outfitting a comprehensive space exhibit, to providing astronaut product endorsements, Space Media, Inc. (“SMI”) brings space down to Earth. Formed in April 2000, SMI has access to myriad engineers, marketing and industry professionals, and aerospace subcontractors, all prepared to apply their knowledge and expertise to support various space-related needs. The retail business of SMI continues to maintain steady sales and is exploring new market opportunities.

In fiscal year 2000, SPACEHAB began design and construction of a commercial space station habitat module, in partnership with RSC Energia of Korolev, Russia. Named Enterprise, this multipurpose module was intended to be attached to the International Space Station (“International Space Station”) for habitation, laboratory, and stowage space; communications; power; and other utilities. In evaluating our investment in Enterprise in June 2003, the Company identified significant uncertainties in new human space flight programs. We ceased funding development and were unable to determine if or when this investment would be recovered. Therefore, we wrote down the full investment of $8.2 million as of June 30, 2003.

We believe that NASA, as well as future space shuttle and International Space Station programs will continue to be funded and supported by the U.S. Government. Furthermore, we believe that it is highly unlikely that any decision to discontinue these programs would be made during the next twelve months. However, the Company is subject to risks and uncertainties. We continue to focus efforts on improving the overall liquidity of the Company through identifying new business opportunities within the areas of our core competencies, reducing operating expenses and limiting cash commitments for future capital investments and new asset development.

The Company’s cash and short-term investments are approximately $7.6 million as of June 30, 2004, which includes $2.0 million of restricted cash and short-term investments. We believe the Company has sufficient liquidity to fund ongoing operations for at least the next fiscal year and expect to utilize existing cash and any potential payment from NASA to support strategies for new business initiatives and reduce debt service requirements. However, under certain scenarios the Company could be facing liquidity concerns after that point in time.

(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 and majority-owned subsidiaries: Astrotech Space Operations (“ASO”), SGS, and SMI. All significant intercompany transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers short-term investments with original maturities of three months or less to be cash equivalents. Cash equivalents are primarily made up of money market investments and overnight repurchase agreements recorded at cost, which approximate market value.

Investments

The Company accounts for investments in accordance with Statements of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” In fiscal year 2003 we began

F-21

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

investing the insurance proceeds from the RDM loss in certain debt securities, primarily U.S. government and government agency securities. The Company designated all of its investments as of June 30, 2004, and 2003 to be available for sale and has classified these as current based on their intent to use these securities in operations during fiscal year 2005.

For the years ended June 30, 2002, 2003, and 2004, interest income was immaterial. Interest income is recorded as a component of other income (expense).

Available-for-sale securities are recorded at fair value on the balance sheet, with the change in fair value during the period excluded from earnings and recorded as a component of other comprehensive income. As of June 30, 2004 and 2003, the fair market value of these securities approximated cost. Maturities of the debt securities held by the Company range from April 13, 2005 to September 29, 2006. For securities sold during 2004 and 2003, the Company had no gross realized gains or losses.

Property and Equipment

Property and equipment are stated at cost. All furniture, fixtures, and equipment are depreciated using the straight-line method over the estimated useful lives of the respective assets, which is generally five years. The Company’s payload processing facilities are depreciated using the straight-line method over their estimated useful lives ranging from sixteen to forty-three years.

Effective January 1, 2002, the Company extended the estimated useful lives of its space flight assets, which is a component of property and equipment, through June 30, 2016. This change in accounting estimate is treated prospectively and is based on current available space-related programs and activities which extend the expected life of the International Space Station and space shuttles from 2012 through at least 2016.

Leasehold improvements are amortized over the shorter of the useful life of the building or the term of the lease. Repairs and maintenance are expensed when incurred.

Goodwill

The excess of the cost over the fair value of net tangible and identifiable intangible assets acquired in business combinations accounted for as a purchase has been assigned to goodwill. Goodwill was previously amortized on a straight-line basis over five to twenty-five years.

In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets,” effective for fiscal years beginning after December 15, 2001. Under these standards, goodwill is no longer amortized but is subject to annual impairment tests in accordance with SFAS 142. Intangible assets that are not determined to have indefinite lives will continue to be amortized over their useful lives. The Company adopted these standards effective July 1, 2002.

Goodwill is related to the acquisition of Astrotech on February 12, 1997, SGS on July 1, 1998, and The Space Store on June 28, 2000, the retail operations of Space Media, Inc. The Company is required to analyze goodwill at least annually for impairment issues. Should an indicator of impairment occur earlier than the annual analysis date, the Company will analyze the goodwill of the affected business unit at that time (see note 20). As of June 30, 2004, all goodwill has been written off.

F-22

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s results of operations prior to fiscal year 2003 do not reflect the provisions of SFAS No. 142. A reconciliation of previously reported net loss adjusted for the exclusion of goodwill amortization, net of tax, is as follows (in thousands, except per share data):

	Year Ended June 30,
	2004		2003			2002
Net income (loss) as reported	$	2,075	$	(81,775	)	$	(2,367	)
Add back goodwill amortization, net of tax		—		—			1,053
Adjusted net income (loss)		2,075		(81,775	)		(1,314	)
Basic net income (loss) per share as reported		0.17		(6.66	)		(0.20	)
Goodwill amortization, net of tax		—		—			0.09
Adjusted basic income (loss) per share		0.17		(6.66	)		(0.11	)

Investments in Affiliates

We use the equity method of accounting for our investments in, and earnings of, investees in which we exert significant influence. In accordance with the equity method of accounting, the carrying amount of such an investment is initially recorded at cost and is increased to reflect the Company’s share of the investor’s income and is reduced to reflect the Company’s share of the investor’s losses. Investments in which the Company has less than 20% ownership and no significant influence are accounted for under the cost method and are carried at cost (see note 17).

Impairment of Long- Lived Assets

We account for long-lived assets in accordance with the provisions SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This Statement requires long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets (see note 22). Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Stock-Based Compensation

We account for stock-based employee compensation arrangements using the intrinsic value method as prescribed in Accounting Principles Board Opinion No. 25 (“APB Opinion 25”), “Accounting for Stock Issued to Employees,” and related interpretations. Accordingly, compensation cost for options to purchase SPACEHAB Common Stock (“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. We have adopted the disclosure requirements of SFAS No. 148, “Accounting for Stock-based Compensation—Transition and Disclosure—an Amendment of SFAS No. 123.”

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 SFAS No. 123, our net income (loss) and net income

F-23

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(loss) per common share would have been changed to the pro forma amounts indicated below (in thousands, except per share data):

	Year Ended June 30,
	2004			2003			2002
Net income (loss), as reported	$	2,075		$	(81,775	)	$	(2,367	)
Deduct: Total stock-based compensation expense determined under fair value based method (SFAS No. 123) for all awards, net of related tax effects		(296	)		(573	)		(973	)
Pro forma net income (loss)	$	1,779		$	(82,348	)	$	(3,340	)
Earnings (loss) per share:
Basic—as reported	$	0.17		$	(6.66	)	$	(0.20	)
Diluted—as reported	$	0.15		$	(6.66	)	$	(0.20	)
Basic—pro forma	$	0.14		$	(6.70	)	$	(0.28	)
Diluted—pro forma	$	0.13		$	(6.70	)	$	(0.28	)

The fair value of each option granted and each employee stock purchase right is estimated using the Black-Scholes option-pricing model. The following weighted average assumptions were used for grants:

	2004		2003		2002
Expected Dividend Yield	0	%	0	%	0	%
Expected Volatility	1.00		.50		.50
Risk-Free Interest Rates	3.84	%	5.63	%	3.88	%
Expected Option Life (in years)	7		7		7

The effects of compensation cost as determined under SFAS No. 123 on pro forma net income (loss) in years ended June 30, 2004, 2003, and 2002 may not be representative of the effects on pro forma net income (loss) in future periods.

Revenue Recognition

SPACEHAB recognizes revenue employing several generally accepted revenue recognition methodologies across its business segments. The methodology used is based on contract type and the manner in which products and services are provided. Revenue generated under existing SFS contracts and for all other 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, is recognized under the percentage-of-completion method based on costs incurred over the period of the contract. Revenue provided by SGS is primarily derived from cost-reimbursable award fee contracts, whereby revenue is recognized to the extent of reimbursable costs incurred plus award fee. Award fees which provide earnings based on the Company’s contract performance, as determined by NASA evaluations, are recorded when the amounts are probable and can be reasonably estimated. Changes in estimated costs to complete and provisions for contract losses and estimated amounts recognized as award fees are recognized in the period they become known. Revenue generated by Astrotech’s payload processing services is recognized ratably over the occupancy period of the satellite while in the Astrotech facilities. For the multi-year contract with Lockheed Martin, revenue is billed and recognized on a quarterly basis for costs incurred. SMI recognizes revenue as merchandise is sold to customers.

F-24

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred Revenue

Deferred revenue represents amounts collected from customers for projects, products, or services to be provided at a future date. Deferred revenue is shown on the balance sheet as either a short-term or long-term liability, depending on when the service or product is to be provided.

Research and Development

Research and development costs are expensed as incurred.

Income Taxes

We recognize income taxes 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 and operating loss and tax credit carry forward. 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.

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share includes all common stock options and other common stock equivalents that potentially may be issued as a result of conversion privileges, including the convertible subordinated notes payable and convertible preferred stock. See note 13.

Accounting Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. 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 reporting periods. Actual results could differ from these estimates.

Derivatives

The Company accounts for derivatives pursuant to SFAS No.133, “Accounting for Derivative Instruments and Hedging Activities,” as amended. This standard requires that all derivative instruments be recognized in the financial statements and measured at fair value regardless of the purpose or intent for holding them. We use cash flow hedges whereas changes in the fair value of derivative instruments are recognized periodically in shareholders’ equity (as a component of accumulated other comprehensive income (loss).

Reclassification

Certain 2003 and 2002 amounts have been reclassified to conform with the 2004 consolidated financial statement presentation.

(3) Statements of Cash Flows—Supplemental Information

Cash paid for interest costs was approximately $7.2 million, $6.7 million, and $7.3 million for the years ended June 30, 2004, 2003, and 2002, respectively. The Company capitalized interest of approximately $1.3

F-25

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

million for the year ended June 30, 2002 related to the module improvements and a building in progress. No interest was capitalized in fiscal years 2003 and 2004. In fiscal year 2004, we paid approximately $1.3 million to terminate our swap arrangement that related to our bank financing of our spacecraft processing facility expansion project in Titusville, Florida.

The Company paid income taxes of $0.4 million for year ended June 30, 2004 and no income taxes for the years ended June 30, 2003 and 2002.

Depreciation and amortization in the statements of cash flows includes approximately $0.5 million, $0.5 million, and $0.7 million related to the amortization of deferred debt issuance costs in 2004, 2003, and 2002, respectively.

(4) Accounts Receivable

At June 30, 2004 and 2003, accounts receivable consisted of the following (in thousands):

	2004			2003
U.S. government contracts:
Billed	$	5,450		$	3,681
Unbilled:
Indirect costs incurred and charged to cost-reimbursable-fee contracts in excess of provisional billing rates		666			836
Revenues in excess of milestone and time-based billings		818			215
Total U.S. government contracts		6,934			4,732
Commercial contracts:
Billed		628			1,421
Unbilled		975			903
Allowances		(659	)		(276	)
Total commercial contracts		944			2,048
Total accounts receivable	$	7,878		$	6,780

The Company anticipates collecting all receivables within one year.

The accuracy and appropriateness of the Company’s direct and indirect costs and expenses under its government contracts, and therefore its accounts receivable recorded pursuant to such contracts, are subject to extensive regulation and audit by the U.S. Defense Contract Audit Agency or by other appropriate agencies of the U.S. Government. Such agencies have the right to challenge our cost estimates or allocations with respect to any government contract. Additionally, a substantial portion of the payments to the Company under government contracts are provisional payments that are subject to potential adjustment upon audit by such agencies. In the opinion of management, any adjustments likely to result from inquiries or audits of its contracts would not have a material adverse impact on our financial condition or results of operations.

(5) Convertible Notes Payable to Shareholder

On November 15, 2001 the Company entered into an agreement with Alenia Spazio S.P.A. to restructure the terms of its $11.9 million principal amount of debt. The final payment under the agreement was made simultaneously with the delivery of the cancelled note and the release of the collateral in the three months ended March 31, 2004.

F-26

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(6) Other Debt

Revolving Loan Payable

In August 2002, we entered into a $5.0 million line of credit with a new financial institution. This credit facility replaced the previous credit facility which was repaid and expired subsequent to the year ended June 30, 2002. The term of this credit facility is through June 2005. Financial covenants under this credit facility originally included, but were not limited to, leverage ratio and liquidity ratio. In September 2003, the credit agreement was amended to remove the financial covenants exclusive of the limitation on capital expenditures and add a covenant requiring a pledge of investments of 111% of the outstanding balance shown under the facility. In June 2004, the credit agreement was amended again to remove the financial covenant on capital expenditures. As of June 30, 2004, the amount drawn on this line of credit was $1.4 million. The revolving feature of the agreement applies cash receipts immediately to the outstanding balance, if any. The weighted average interest rate for the years ended June 30, 2004 and 2003 was 5.94% and 5.25%, respectively. The terms of the agreement are prime plus one percent interest on borrowed funds and twenty-five basis points on unused funds.

Mortgage Loan Payable

On August 30, 2001, our Astrotech subsidiary completed a $20.0 million financing of its Spacecraft Processing Facility (“SPF”) expansion project in Titusville, Florida with a financial institution. The proceeds of this financing were used to complete the construction of the SPF and supporting infrastructure. The loan was collateralized primarily by the multi-year payload processing contracts with Boeing and Lockheed Martin and by the building. The net book value of the building as of June 30, 2004 was $32.9 million. Interest accrued on the outstanding principal balance is at a LIBOR-based rate, adjustable quarterly. The loan was scheduled to mature on January 15, 2011. The loan was converted from a construction loan to a term loan on December 31, 2001. Amortization of loan principal began on January 15, 2002 on a quarterly basis through the loan maturity date.

On October 1, 2003, Astrotech was notified by Boeing that it was exercising its termination rights with regards to its financial guarantees under the contract agreement with Astrotech for payload processing support services for the Delta launch vehicle program. Boeing indicated that the decision to terminate its guarantees for future Astrotech services was based on the downturn of the commercial expendable launch market rather than performance related considerations. Astrotech was in full compliance with the contract terms at the time of the termination. Under the contract provision related to termination of its financial guarantees, Boeing paid Astrotech $17.5 million representing consideration of future contract payments previously used to collateralize the obligation. On December 31, 2003, the Company repaid $9.5 million of principal on the debt.

In conjunction with the original financing, a swap agreement was required to be entered into to provide for a fixed rate of interest under the loan commitment beginning January 15, 2002. The fixed rate of interest on the outstanding principal balance was 5.62% plus 225 basis points. The objective of the swap was to eliminate the variability of cash flows in the interest payments for the total amount of the variable rate debt, the sole source of which are changes in the USD-LIBOR-BBA interest rate. Due to the repayment of the Boeing portion of this debt and the subsequent amendment of the loan agreement, the swap was no longer effective as a hedge. The unrealized loss in other comprehensive loss for the portion of the debt that was repaid in December 2003 was recorded as interest expense in the period ended December 31, 2003 in the amount of $0.8 million. The Company recognized interest expense of $0.4 million for the unamortized debt placement costs related to the debt repayment in the period ended December 31, 2003. We recognized as additional interest expense, the unamortized debt placement costs of $0.2 million and the balance of the deferred loss on the swap in other comprehensive loss of $0.5 million in the third quarter of the fiscal year 2004 in connection with the amendment of the loan agreement.

F-27

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The loan agreement was amended on January 29, 2004, whereby the maturity date was shortened to January 2007, the interest rate was fixed at 5.5% and the hedge requirement was eliminated. For the fiscal year ended June 30, 2004, approximately $11.4 million of principal was repaid and the outstanding balance is $5.6 million as of June 30, 2004.

Convertible Subordinated Notes Payable

In October 1997, the Company completed a private placement offering for $63.3 million of aggregate principal of unsecured 8% Convertible Subordinated Notes due October 2007. Interest is payable semi-annually. The notes are convertible into the Common Stock of the Company at a rate of $13.625 per share. This offering provided us with net proceeds of approximately $59.9 million that were used for capital expenditures associated with the development and construction of space related assets and for other general corporate purposes.

The Company’s debt repayments are due as follows (in thousands):

	Balance 6/30/2004		FY05		FY06		FY07		FY08		FY09		Thereafter
Mortgage Loan Payable		5,638		1,946		2,057	$	1,635	$	—	$	—	$	—
Revolving Loan Payable		1,445		1,445		—		—		—		—		—
Convertible Subordinated Notes Payable		63,250		—		—		—		63,250		—		—
	$	70,333	$	3,391	$	2,057	$	1,635	$	63,250		—		—

(7) Fair Value of Financial Instruments

The following table presents the carrying amounts and estimated fair values of certain of the Company’s financial instruments as of June 30, 2004 and 2003 in accordance with SFAS No. 107, “Disclosures about Fair Value of Financial Instruments” (in thousands):

	June 30, 2004				June 30, 2003
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Convertible notes payable to shareholder	$	—	$	—	$	2,004	$	2,004
Loan payable under credit facility		1,445		1,445		—		—
Mortgage loan payable		5,638		5,638		19,024		19,024
Convertible subordinated notes payable		63,250		53,763		63,250		38,266

The fair value of the Company’s long-term debt is based on quoted market prices or is estimated based on the current rates offered to us for debt of similar remaining maturities and other terms. The carrying amounts of cash and cash equivalents, investments, accounts receivable, accounts payable and accrued expenses approximate their fair market value because of the relatively short duration of these instruments.

(8) NASA Contracts

Research and Logistics Mission Support Contract

On December 21, 1997, the Company entered into the Research and Logistics Mission Support (“ReALMS”) contract to provide to NASA its flight modules and related integration services. This contract provided NASA the use of the flight modules for both science and logistics missions. This contract was subsequently amended whereby the contract value was increased to $241.5 million and the number of missions was increased to nine. The final value of the ReALMS contract is $222.0 million.

F-28

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During the years ended June 30, 2004, 2003, and 2002, the Company recognized $24.9 million, $37.0 million and $43.0 million of revenue, respectively, under this contract. Beginning in February 2004, and under NASA’s new consolidated International Space Station contracts structure, we will provide services to NASA (similar to the services provided under the ReALMS contract) under subcontract to NASA’s Cargo Mission Contract (“CMC”) contractor, Lockheed Martin. SFS is currently under letter contract with Lockheed Martin for unpressurized pallet and pressurized module services supporting STS-121 ICC and STS-116 and STS-118 (module and ICC) through July 2004. Final contract negotiations are expected to be completed in September 2004.

SFS’s contract with the prime International Space Station contractor, Boeing, for the STS-114 mission carrying the deployable ICC, was not affected by the International Space Station contract consolidation restructure and continues as before during this period of the space shuttle stand-down. STS-114 will be the first mission flown by NASA following the Columbia tragedy and is expected to launch no sooner than March 2005.

Additionally, during the space shuttle stand-down period, SFS is providing cargo shipment coordination services to NASA for all U.S. cargo shipped to the International Space Station via the Russian Progress space vehicle. These services are provided under contract to Lockheed Martin, the CMC contractor to NASA.

Flight Crew Systems Development Contract

In prior fiscal years, SGS primarily operated under the Flight Crew System Development contract which was a $399.1 million multi-task cost-reimbursable award and incentive fee contract. The contract commenced in May 1993 and concluded in April 2003. Portions of the contract were under two different recompetitions and those portions were awarded to another bidder and transitioned to that successful bidder in April 2003 and November 2003. One of the original seven contract tasks remained under a new contract with SGS. That contract was the International Space Station Configuration Management contract that was completed on December 31, 2003. The configuration management task was consolidated within the Program Integration and Control (“PI&C”) contract of which ARES Corporation was the successful bidder. SGS is a major subcontractor to ARES providing configuration management and data integration services.

Astrotech’s NASA Contracts

During fiscal year 2004, Astrotech started direct satellite processing support for NASA. Astrotech has two missions under contract and is working with NASA on an Indefinite Delivery Indefinite Quantity (“IDIQ”) format for future missions.

(9) Stockholder Rights Plan

On March 26, 1999, the Board of Directors adopted a Stockholder Rights Plan designed to deter coercive takeover tactics and to prevent a potential acquirer from gaining control of the Company without offering a fair price to all of the Company’s stockholders. The stockholder rights plan was amended and restated in February 2004. A dividend of one preferred share purchase right (a “Right”) was declared on every share of Common Stock outstanding on April 9, 1999. Each Right under the plan entitles the holder to buy one one-thousandth of a share of a new series of junior participating preferred stock for $35. If any person or group becomes the beneficial owner of 20% or more of Common Stock (with certain limited exceptions), then each Right (not owned by the 20% stockholder) will then entitle its holder to purchase, at the Right’s then current exercise price, common shares having a market value of twice the exercise price. In addition, if after any person has become a 20% stockholder, and is involved in a merger or other business combination transaction with another person, each Right will entitle its holder (other than the 20% stockholder) to purchase, at the Right’s then current exercise price, common shares of the acquiring company having a value of twice the Right’s then current exercise price. The Rights were granted to each shareholder of record on April 9, 1999. At any time before a

F-29

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

person or group acquires a 20% position, the Company generally will be entitled to redeem the Rights at a redemption price of $0.01 per Right. The Rights will expire on April 9, 2009.

(10) Convertible Preferred Stock

On August 2, 1999, EADS (formerly Astrium GmbH), a related party and shareholder, purchased an additional $12.0 million equity interest in SPACEHAB representing 1,333,334 shares of Series B Senior Convertible Preferred Stock. Under the agreement, EADS purchased all of SPACEHAB’s 975,000 authorized and unissued shares of preferred stock. At the annual stockholders meeting held on October 14, 1999, the shareholders approved the proposal to increase the number of authorized shares of preferred stock to 2,500,000, in order to complete the transaction with EADS allowing them to purchase the additional 358,334 preferred shares. The preferred stock purchase increased EADS’s voting interest in SPACEHAB to approximately 11.5%. The Series B Senior Convertible Preferred Stock is: convertible at the holders’ option on the basis of one share of preferred stock for one share of Common Stock, entitled to vote on an “as converted” basis the equivalent number of shares of Common Stock, and has preference in liquidation, dissolution, or winding up of $9.00 per preferred share. No dividends are payable on the convertible preferred shares.

(11) Common Stock Options and Stock Purchase Plans

As of June 30, 2004, 2,495,788 shares of Common Stock were reserved for future grants of stock options under the Company’s three stock option plans.

Non-qualified Options

Non-qualified options are granted at the sole discretion of the Board of Directors. 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 were 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

Each new non-employee director receives a one-time grant of an option to purchase 10,000 shares of common stock at an exercise price equal to the fair market value on the date of grant. In addition, effective as of the date of each annual meeting of the Company’s stockholders, each non-employee director who is elected or continues as a member of the Board of Directors of the Company shall be awarded an option to purchase 5,000 shares of common stock. Options under the Director’s Plan vest after one year and expire seven years from the date of grant.

1997 Employee Stock Purchase Plan

The Company adopted an employee stock purchase plan that permits eligible employees to purchase shares of Common Stock of the Company at prices no less than 85% of the current market price. Eligible employees may elect to participate in the plan by authorizing payroll deductions from 1% to 10% of gross compensation for each payroll period. On the last day of each quarter, each participant’s contribution account is used to purchase

F-30

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the maximum number of whole and fractional shares of Common Stock determined by dividing the contribution account’s balance by the lesser of 85% of the price of a share of Common Stock on the first day of the quarter or the last day of a quarter. The number of shares of Common Stock that may be purchased under the plan is 1,500,000. Through June 30, 2004, employees have purchased 1,071,659 shares under the plan.

Space Media, Inc. Stock Option Plan

During the year ended June 30, 2000, Space Media, Inc., a majority owned subsidiary of the Company, adopted an option plan (“SMI Plan”) for employees, officers, directors and consultants of SMI. Under the terms of the SMI Plan, 1,500,000 shares have been reserved for future grants for which the number and price of the options granted 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. At June 30, 2004 and June 30, 2003, there were 388,750 options issued and outstanding under the SMI Plan at a weighted average exercise price of $1.00. The options vest equally over a four-year period and have a life of 10 years. There were 274,063 options exercisable as of June 30, 2004 and June 30, 2003 with a weighted-average exercise price of $1.00 and a weighted-average remaining contractual life of six and seven years, respectively.

Stock Option Activity Summary

The following table summarizes the Company’s stock option plans, excluding the SMI plan:

	Non-qualified Options				1994 Plan				Directors’ Plan
	Shares Outstanding		Weighted Average Exercise Price		Shares Outstanding		Weighted Average Exercise Price		Shares Outstanding		Weighted Average Exercise Price
Outstanding at June 30, 2001	330,266		$	13.89	2,652,114		$	6.62	315,000		$	8.11
Granted	—			—	52,000			2.31	65,000			1.40
Exercised	—			—	—			—	—			—
Forfeited	(316,100	)		14.03	(804,882	)		6.97	—			—
Outstanding at June 30, 2002	14,166		$	10.68	1,899,232		$	6.34	380,000		$	6.96
Granted	—			—	436,000			0.76	30,000			0.93
Exercised	—			—	—			—	—			—
Forfeited	(10,000	)		10.13	(607,107	)		6.54	(10,000	)		2.58
Outstanding at June 30, 2003	4,166		$	12.00	1,728,125		$	4.86	400,000		$	6.62
Granted	—			—	312,000			1.07	30,000			0.99
Exercised	—			—	(88,246	)		2.42	(45,000	)		1.26
Forfeited	—			—	(218,548	)		5.39	(55,000	)		5.81
Outstanding at June 30, 2004	4,166		$	12.00	1,733,331		$	4.27	330,000		$	6.68
Options exercisable at:
June 30, 2002	14,166		$	10.68	1,114,160		$	7.26	315,000		$	8.11
June 30, 2003	4,166			12.00	1,026,840			6.47	370,000			7.08
June 30, 2004	4,166			12.00	1,112,582			5.84	300,000			7.25
Weighted-average fair value (pursuant to FAS 123) at date of grant during the fiscal year ended
June 30, 2002	—			—	52,000		$	1.14	65,000		$	0.64
June 30, 2003	—			—	436,000			0.36	30,000			0.44
June 30, 2004	—			—	312,000			0.57	30,000			0.44

F-31

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes information about the Company’s stock options outstanding at June 30, 2004:

	Options outstanding				Options exercisable
Range of exercise prices	Number Outstanding	Weighted- Average Remaining Contractual Life (years)	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise Price
$  .70   –  1.02	513,754	8.46	$	0.88	39,004	$	0.79
1.06   –  4.125	422,000	6.67		2.77	292,251		3.05
4.750 –  5.125	651,912	4.98		5.00	605,662		5.01
6.625 –  11.75	475,665	1.00		9.93	475,665		9.93
12.00 –  12.00	4,166	0.04		12.00	4,166		12.00
	2,067,497	5.26	$	4.67	1,416,748	$	6.16

(12) Income Taxes

The Company accounts for taxes under SFAS No. 109, “Accounting for Income Taxes.” Under SFAS 109, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted rates expected to be in effect during the year in which the differences reverse.

The components of income tax expense (benefit) from continuing operations are as follows (in thousands):

	Year Ended June 30,
	2004		2003			2002
Current:
Federal	$	455		(857	)		(2,134	)
State and local		51		—			84
Foreign		—		—			—
		506		(857	)		(2,050	)
Deferred:
Federal		—		—			—
State and local		—		—			—
Foreign		—		—			—
Income tax expense (benefit)	$	506	$	(857	)	$	(2,050	)

A reconciliation of the reported income tax expense to the amount that would result by applying the U.S. federal statutory rate to the income (loss) before income taxes to the actual amount of income tax expense (benefit) recognized follows (in thousands):

	Year Ended June 30,
	2004			2003			2002
Expected expense (benefit)	$	878		$	(28,095	)	$	(1,502	)
Change in valuation allowance		(3,278	)		26,823			(946	)
State income taxes		51			(2,832	)		(128	)
Other, primarily goodwill amortization		2,855			3,247			526
Total	$	506		$	(857	)	$	(2,050	)

F-32

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s deferred tax asset as of June 30, 2004 and 2003 consists of the following (in thousands):

	2004			2003
Deferred tax assets:
Net operating loss carry forwards	$	8,340		$	18,052
General business credit carry forwards		2,020			2,020
Alternative minimum tax credit carry forwards		748			—
Accrued expenses		717			981
Capitalized start-up and organization costs		1,008			859
Other		221			254
Total gross deferred tax assets		13,054			22,166
Less—valuation allowance		(10,268	)		(13,546	)
Net deferred tax assets		2,786			8,620
Deferred tax liabilities:
Property and equipment, principally due to differences in depreciation		2,773			8,413
Other		13			207
Total gross deferred tax liabilities		2,786			8,620
Net deferred tax assets (liabilities)	$	—		$	—

At June 30, 2004, the Company had accumulated net operating losses of approximately $22.0 million for Federal income tax purposes, which are available to offset future regular taxable income. These operating loss carry forwards expire between the years 2008 and 2023. 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 $2.1 million of research and experimentation and alternative credit carry forwards, respectively, available to offset future regular tax liabilities. The research and experimentation credits expire between the years 2005 and 2007.

In assessing the realizability of its net deferred tax assets, management considers whether it is more likely than not that some portion or all of the net deferred tax assets are realizable. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of June 30, 2004, the Company provided a full valuation allowance of approximately $10.3 million against its net deferred tax assets.

The Company has received approximately $2.8 million in refund claims related to net operating loss carry forwards for alternative minimum taxes paid in prior years.

(13) Net Income (Loss) Per Share

The following are reconciliations of the denominators of the basic and diluted net income (loss) per share computations for the years ended June 30, 2004, 2003, and 2002. There were no adjustments for the numerators.

	June 30,
	2004	2003	2002
Weighted average outstanding common shares—basic	12,450,320	12,285,467	11,884,309
Common stock equivalents	1,691,629	—	—
Weighted average outstanding common shares—diluted	14,141,949	12,285,467	11,884,309

F-33

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(14) Employee Benefit Plan

The Company has a defined contribution retirement plan, which covers substantially all employees and officers. For the years ended June 30, 2004, 2003, and 2002, we have contributed $0.6 million, $1.0 million, and $1.4 million, respectively, to the plan. The Company has the right, but not an obligation, to make additional contributions to the plan in future years at the discretion of the Company’s Board of Directors. The Company has not made any such contributions for the years ended June 30, 2004, 2003, and 2002.

(15) Commitments

Integration and Operations Contracts

On August 13, 1997, we initiated a letter agreement with Boeing, a major subcontractor for standard integration and operation services to the Company for future missions that were not already provided for under our contract for missions to the Mir Space Station. In August 1998, this letter agreement became a cost plus incentive fee contract whereby Boeing will provide integration and operations services required to successfully complete four research missions (one single module mission and three double module missions) and seven logistics double module missions. Additionally, there were several tasks that were separately priced to yield a contract value of up to $128.9 million. The contract was terminated in April 2004. As of June 30, 2004, $127.1 million has been incurred under this commitment. Minimal trailing termination costs and prior year rate adjustments are the only outstanding costs on this contract.

Consulting Agreement

On June 1, 2004, the Company entered into a consulting agreement with V.J.F. Russian Consulting LTD for:

• Marketing and promotion of SPACEHAB capabilities and services to RSC Energia, The Russian Federation Space Agency, and other Russian entities involved in the exploration and development of space

• Supporting and assisting SPACEHAB in the negotiation of service contracts and agreements between Russian entities

• Providing technical expertise and services in support of SPACEHAB activities, under contracts with Russian entities

Total commitments under the consulting agreement over the next two years are $0.4 million. In fiscal year 2004, $15,000 was paid under this agreement.

Compensation Agreement

The Company has a commitment to Dayna Justiz for additional compensation that can be earned as a result of the agreement dated June 19, 2000. The agreement states that Dayna Justiz can earn up to $375,000 as additional compensation if she meets certain financial goals in the management of The Space Store. The yearly amount is equal to five percent of the Space Store’s “net after-tax operating income” during each fiscal year until such time an aggregate amount of $375,000 has been earned. At this time, we have not recorded a liability for this obligation due to the uncertainty of the obligation being met.

F-34

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Leases

The Company is obligated under capital leases for equipment and noncancelable operating leases for equipment, office space, storage space, the land for a payload processing facility, and certain flight assets. Future minimum payments under these capital leases and noncancelable operating leases are as follows (in thousands):

Year ending June 30, 2004	Capital Leases			Operating Leases
2005	$	67		$	4,715
2006		—			1,348
2007		—			761
2008		—			441
2009		—			91
Thereafter		—			2,852
Subtotal		67			10,208
Less: payments due for sublease		—			(2,112	)
Total	$	67		$	8,096
Less: amount representing interest between 9% and 12%		(6	)
Present value of net minimum capital lease payments		61

Rent expense for the years ended June 30, 2004, 2003, and 2002 was approximately $5.7 million, $6.4 million, and $5.0 million, respectively, including lease expense for the ICC and vertical cargo carrier (“VCC”) asset leases of $3.8 million in fiscal year 2004, $3.9 million in fiscal year 2003, and $2.4 million in fiscal year 2002. For fiscal years 2005, 2006, 2007, and 2008, we expect to receive net payments of approximately $0.7 million, $0.7 million, $0.5 million, and $0.2 million, respectively, for subleases. In the year ended June 30, 2002, we recognized $0.8 million of expenses for excess facilities that have been sublet. In the year ended June 30, 2004, we recognized $0.2 million of expenses for excess facilities that have been sublet.

At June 30, 2004, the capitalized lease assets are recorded at $80,976 and the annual amortization is $67,000.

(16) Segment Information

Based on our organization, we operate in four business segments: SFS, Astrotech, SGS, and SMI. SFS was founded to commercially develop space habitat modules to operate in the cargo bay of the space shuttles. SFS provides access to the modules and integration and operations support services for both NASA and commercial customers. Astrotech provides payload processing facilities and services to serve the satellite manufacturing and launch services industry. SGS is primarily engaged in providing engineering services and products to the Federal government including NASA. SMI was established in April 2000, to develop space-themed commercial business activities.

On April 3, 2003, the Company changed the name of its Johnson Engineering Corporation (“JE”) subsidiary to SPACEHAB Government Services, Incorporated, to more appropriately reflect the subsidiary’s strategic direction of operating in the government business section. As part of the realignment of our operating units, the Strategic Programs operating unit, which was included in the Other segment, was moved into SGS in the fourth quarter of our fiscal year ending June 30, 2003. In the fourth quarter of our fiscal year ending June 30, 2004, the Other segment represents corporate selling, general and administrative expenses. Segment amounts have been restated based on the revised reporting structure.

F-35

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s chief operating decision maker utilizes both revenue and income (loss) before income taxes, in assessing performance and making overall operating decisions and resource allocations. The Other segment represents corporate selling, general and administrative expenses and interest expense for the Company. In fiscal year 2002, the Other segment also includes bid and proposal costs for a proposal in Huntsville, Alabama. In fiscal years 2004 and 2003 there were no costs for the Huntsville location due to closing the office in Huntsville.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies (note 2). Information about the Company’s segments is as follows (in thousands):

Year Ended June 30, 2004:	Revenue		Income (loss) before income taxes			Net Fixed Assets		Depreciation And Amortization
SPACEHAB Flight Services	$	38,384	$	8,872		$	32,188	$	2,750
SPACEHAB Government Services		10,229		(5,387	)		104		65
Astrotech		28,258		17,486			46,976		2,045
Space Media		735		(74	)		—		—
Other		—		(18,316	)		332		571
	$	77,606	$	2,581		$	79,600	$	5,431
Year Ended June 30, 2003:	Revenue		Income (loss) before income taxes			Net Fixed Assets		Depreciation And Amortization
SPACEHAB Flight Services	$	46,757	$	(51,414	)	$	34,160	$	5,501
SPACEHAB Government Services		34,742		(9,996	)		262		745
Astrotech		12,410		4,533			48,372		1,892
Space Media		1,054		(313	)		—		332
Other		—		(25,442	)		895		454
	$	94,963	$	(82,632	)	$	83,689	$	8,924
Year Ended June 30, 2002:	Revenue		Income (loss) before income taxes			Net Fixed Assets		Depreciation And Amortization
SPACEHAB Flight Services	$	51,366	$	12,888		$	120,031	$	8,418
SPACEHAB Government Services		40,785		2,016			1,553		1,633
Astrotech		9,936		3,752			50,074		1,266
Space Media		678		(1,587	)		71		293
Other		8		(21,486	)		4,122		1,074
	$	102,773	$	(4,417	)	$	175,851	$	12,684

Foreign revenue for the years ended June 30, 2004, 2003, and 2002 was approximately $2.8 million, $9.5 million, and $5.9 million, respectively. The foreign revenue is mainly generated in China and Japan. Domestic revenue for the years ended June 30, 2004, 2003, and 2002 was approximately $74.8 million, $85.4 million, and $96.8 million, respectively.

(17) Investment in Guignè

During June 1998, the Company entered into a joint venture agreement with Guignè Technologies Limited (“GTL”), a Canadian Company, for the purpose of developing, fabricating, marketing and selling of Space-DRUMS services, a containerless processing facility intended to be deployed on the International Space Station.

F-36

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In accordance with the joint venture agreement, the Company contributed, in exchange for a 50% interest in the joint venture, an aggregate of $2.0 million of working capital through December 1999. Our contributions were made in the form of an unsecured non-interest bearing note.

The joint venture agreement contained an option whereby we could exchange our interest in the joint venture and the $2.0 million note for a common equity interest in Guignè Inc. (“GI”), the ultimate parent of GTL. In December 1999 the Company notified GI of its intention to exercise its option, which resulted in us obtaining a 15% common equity interest in GI. The Company accounts for its investment in GI under the cost method. During the quarter ended December 31, 1999, at the time of our exercise of the option, we recognized a $0.2 million impairment against our investment in GI based on our estimate of the fair value of GI. During the quarter ended December 31, 2003, the Company recognized a $1.8 million impairment against its investment in GI due to Guignè experiencing an adverse financial event that, in the opinion of management, impairs the value of SPACEHAB’s investment.

(18) Asset Sales

On November 30, 2000, EADS entered into an agreement with the Company to purchase our ICC and VCC flight assets. The total purchase price of $15.4 million is comprised of both cash and services payments. The transaction occurred in two phases. The first phase was for the purchase of the ICC assets and the second phase was for the purchase of the VCC assets. Phase one of the transactions was completed in the three months ended March 31, 2001. Phase two was completed in June 30, 2002. The sale was approximately at book value and the Company recognized a minimal loss. We have entered into an agreement with EADS to lease these assets for a period of four years with two additional four-year options.

On August 2, 2001, SPACEHAB’s Astrotech subsidiary sold the assets of its Oriole Sounding Rocket program and related property for approximately $1.2 million to DTI Associates of Arlington, Virginia. The sale turned over all physical and intellectual property assets of Astrotech’s Sounding Rocket program, including the design of the Oriole Rocket, except for those assets required for Astrotech to fulfill the terms of an agreement with an existing customer. The terms of the sale were as follows: an initial cash payment at closing, five equal monthly payments beginning September 2001, and a promissory note of $655,000 bearing interest and secured by the Astrotech Sounding Rocket Program intellectual property and due July 26, 2002. Astrotech recognized a gain of approximately $1.1 million on the sale in the quarter ended September 30, 2002. All payments due under the arrangement have been received by Astrotech.

(19) Minority Investment in Consolidated Subsidiary

Pursuant to agreements entered into as of September 27, 2001, eScottVentures II, LLC (“ESV”), of Melbourne, Florida, purchased 5,914,826 newly issued shares of SMI’s Series A redeemable, convertible preferred stock for $750,000. On June 21, 2002 ESV filed Case Number 1:02CV01236 in the U.S. District Court for the District of Columbia against Space Media, Inc., SPACEHAB, Inc., Shelley A. Harrison and Julia A. Pulzone (collectively, “Defendants”). This suit, relating to ESV’s investment in SMI, sought rescission of the stock purchase agreement and return of its $750,000 investment, plus unspecified expenses, consequential damages exemplary and punitive damages, prejudgment interest, and costs and disbursements, including attorney and expert fees. The Defendants and ESV settled the suit through mediation. A stipulation and order of dismissal was filed with the Court by the parties on January 22, 2003, following the payment of cash and issuance of restricted shares of SPACEHAB’s Common Stock to ESV. ESV is no longer a shareholder of SMI.

F-37

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(20) Goodwill Impairment

On November 5, 2003, NASA notified the Company that it was not awarded the International Space Station Mission Integration contract for which a proposal was submitted. Additionally, the Boeing team’s bid for the CMC with NASA, of which SGS was a subcontractor, was not selected for contract award. As the result of these events, we performed a goodwill impairment test at SGS in accordance with SFAS No. 142, “Goodwill and Intangible Assets.” The impairment test indicated an impairment of SGS’s remaining goodwill of approximately $5.7 million, which was recorded in the period ended December 31, 2003. We utilized market valuation techniques to calculate the fair value of SGS.

On October 1, 2003, Astrotech was notified by Boeing that it was exercising its termination rights with regards to its financial guarantees under the contract agreement with Astrotech for payload processing support services for the Delta launch vehicle program. Boeing indicated that the decision to terminate its guarantees for future Astrotech services was based on the downturn of the commercial expendable launch market rather than due to performance related considerations. Astrotech was in full compliance with the contract terms at the time of the termination. The termination of these financial guarantees had a significant impact on Astrotech’s future guaranteed revenue stream. As the result of this event, we performed a goodwill impairment test at Astrotech in accordance with SFAS No. 142, “Goodwill and Intangible Assets.” The impairment test indicated an impairment of Astrotech’s remaining goodwill of approximately $2.5 million which was recorded in the period ended December 31, 2003. We utilized market valuation techniques to calculate the fair value of Astrotech.

As a result of the loss of the recompete of the Flight Crew Systems Development contract, we performed a goodwill impairment test of the goodwill at SGS in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” The impairment test indicated an impairment of SGS’s goodwill of approximately $11.9 million, which was recorded in the three months ended March 31, 2003. We utilized discounted cash flows and market valuation techniques to calculate the fair value of SGS.

(21) Loss of Research Double Module

The Company was under contract with NASA to support the STS-107 mission on its Columbia Orbiter. The mission utilized our RDM flight asset. On February 1, 2003, the RDM was lost in the tragic STS-107 accident. The RDM was partially covered by commercial insurance. The commercial insurance on the module was $17.7 million and the net book value of the RDM was $67.9 million. The Company recorded a nonrecurring charge of approximately $50.3 million in the three months ended March 31, 2003 in the SFS business unit.

In January 2004, the Company submitted a detailed claim for recovery of its RDM investment in the amount of $87.7 million. In June 2004, SPACEHAB mutually agreed with NASA to waive the Agency’s response date of June 24, 2004 on our contract claim for indemnification. The contractually stipulated indemnification is $8.0 million but NASA’s reconciliation of the losses under Federal Acquisition Regulations approximate $47.4 million. In the event an acceptable resolution cannot be reached, SPACEHAB has the right to file for administrative and/or judicial review of its claim for indemnification. We believe we have a basis for recovery of the loss from NASA but there can be no assurance as to the timing or the amount, if any, to be received from the claim. Upon resolution of the claim, any proceeds from NASA would be recorded in the period in which the claim is resolved.

Our insurer, Certain Underwriters at Lloyd’s of London (“Lloyd’s”), on the Space Shuttle Columbia accident paid the full proceeds of $17.7 million to the Company shortly after the accident. Subsequently, Lloyd’s has filed suit against SPACEHAB seeking recovery of the $17.7 million alleging that: (i) such proceeds were paid erroneously primarily due to the fact that NASA had not paid indemnification due to the Company prior to

F-38

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the payment of the insurance proceeds, (ii) the Company and our insurance broker misled Lloyd’s in issuing the policy, and (iii) the Company has not cooperated with Lloyd’s in protecting Lloyd’s right of subrogation. We believe that the Lloyd’s complaint is without merit and while cooperating with Lloyd’s in protecting their interests, have responded accordingly.

(22) Asset Impairments

The Company conducted an impairment test of certain assets within its SFS business segment in accordance with SFAS No. 144. We recorded a non-cash impairment charge of $0.4 million to write down these assets in the fourth quarter of fiscal year 2004. The impairment was due to the Company closing the Huntsville, Alabama location where our subcontractor, Boeing, was housed.

The Company conducted an impairment test of its work-in-process flight assets in accordance with SFAS No. 144 during fiscal year 2003. The Company recorded a non-cash impairment charge of $16.1 million to write down certain assets under development, primarily Enterprise and the SPACEHAB Universal Communications System, in the SFS segment, that are no longer being funded due to uncertainties in human space flight programs during the three months ended June 30, 2003. The Company utilized projected undiscounted cash flows to conclude the assets were impaired and calculated the fair value based on the net present value of projected cash flows.

(23) Closing of the Washington, D.C. Office

On October 1, 2003 the Company announced that it would be closing its corporate office in Washington, D.C. by December 31, 2003 and would consolidate those operations into its headquarters in Webster, Texas. We took these actions as part of our continuing efforts to further reduce operating expenses and improve profitability. We have entered into a sublease of the Washington, D.C. facility which is under lease through May 31, 2006, for the remainder of the lease term. The Company has recorded a charge in the amount of $0.3 million for severance and facilities costs as required under SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” as of December 31, 2003. All amounts were subsequently paid by June 30, 2004 and these were no significant adjustments to the original accrual.

(24) Related Party Transactions

The Company engaged in certain transactions with directors, executive officers, shareholders, and certain former officers during fiscal year 2004. Following is a description of these transactions:

Orbital Sciences Corporation

The Company provides satellite processing services and other space-related services to Orbital Science Corporation (“Orbital”), an entity providing commercial satellite launch and related aerospace services. Mr. James R. Thompson, a director of the Company, is President and Chief Operating Officer of Orbital. During the years ended June 30, 2004, 2003 and 2002 respectively, Orbital provided revenues to the Company of approximately $0.7 million, $0.1 million and $0.0 million, respectively.

EADS Space Transportation

The Company issued subordinated notes for a portion of the amount due to Alenia Spazio S.p.A. (“Alenia”), a subsidiary of EADS Space Transportation, a shareholder, under a previously completed construction contract for the Company’s flight modules. Dr. Graul is the Executive Vice President for EADS Space Transportation. Under the subordinated notes, Alenia had the right to elect to convert, in whole or part, the remaining principal amount into equity, on terms and conditions to be agreed with the Company.

F-39

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On November 15, 2001, the Company entered into an agreement with Alenia to restructure the terms of its $11.9 million debt. The terms of the restructuring provided for a $3.0 million payment of principal and interest on December 31, 2001 and quarterly amortization of the remaining principal beginning March 2002 through December 2003. In addition, the interest rate was reduced to 8% effective January 1, 2002. The obligation was collateralized by one of the Company’s flight assets. The Company paid interest of approximately $0.1 million, $0.2 million, and $0.6 million during the years ended June 30, 2004, 2003 and 2002, respectively. The Company paid the shareholder subordinated notes in full and received a release of the lien as of December 31, 2003.

EADS provides unpressurized payload and integration efforts to SPACEHAB on a fixed price basis in addition to providing engineering services as required. For the years ended June 30, 2004, 2003 and 2002, EADS’s payload and integration services included in cost of revenue was approximately $6.8 million, $8.5 million and $4.3 million, respectively.

V.J.F. Russian Consulting

On January 30, 2004, the Company entered into a subcontract agreement with V.J.F. Russian Consulting. The president of V.J.F. Russian Consulting, Vladimir Fishel, is a former Vice President of SPACEHAB was receiving severance payments from the Company and working on a part-time employment arrangement for other consulting activities. The services being provided under the subcontract agreement (valued at $2.6 million) is in support of a contract that SPACEHAB has with the Mitsubishi Corporation in support of the Japan Aerospace Exploration Agency. The amount paid for fiscal year 2004 was $1.3 million.

On June 1, 2004 the Company entered into a consulting agreement with V.J.F. Russian Consulting LTD for:

(1) Marketing and promotion of SPACEHAB capabilities and services to RSC Energia, The Russian Federation Space Agency, and other Russian entities involved in the exploration and development of space;

(2) Supporting and assisting SPACEHAB in the negotiation of service contracts and agreements between Russian entities; and

(3) Providing technical expertise and services in support of SPACEHAB activities, under contracts with Russian entities.

Total commitments under the consulting agreement are $0.4 million.

F-40

SPACEHAB, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(25) Summary of Selected Quarterly Financial Data (Unaudited)

The following is a summary of selected quarterly financial data (in thousands, except per share data):

	Three months ended
	September 30			December 313		March 311			June 302
Year ended June 30, 2004
Revenue	$	18,850		$	32,816	$	14,800		$	11,140
Income (loss) from operations		2,391			6,507		2,433			(608	)
Net income (loss)		666			3,468		267			(2,326	)
Net income (loss) per share—basic		0.05			0.28		0.02			(0.19	)
Net income (loss) per share—diluted		0.05			0.25		0.02			(0.19	)
Year ended June 30, 2003
Revenue	$	26,812		$	28,050	$	26,413		$	13,688
Income (loss) from operations		1,750			2,552		(61,069	)		(18,613	)
Net income (loss)		(94	)		1,175		(62,719	)		(20,137	)
Net income (loss) per share—basic		(0.01	)		0.10		(5.06	)		(1.63	)
Net income (loss) per share—diluted		(0.01	)		0.09		(5.06	)		(1.63	)

¹ The loss for the three months ended March 31, 2003 includes a $50.3 million charge from the uninsured loss of the RDM and a goodwill impairment charge of $11.9 million.

² The decrease in revenue for the three months ended June 30, 2003 reflects the loss of the recompete for the Flight Crew Systems Development contract. The loss includes the asset impairment charge of $16.1 million. The loss from operations for the three months ended June 30, 2004 includes $0.9 million for an incentive fee charge from Boeing for work on the ReALMS contract and $0.4 million for asset impairment at SFS.

³ The revenue for the three months ended December 31, 2003 includes a $17.5 million payment from Boeing for termination of financial guarantees under the contract agreement with ASO. The loss for the same period includes an $8.3 million write-down of remaining goodwill for ASO and SGS and a $1.8 million write-down of remaining investment in Guignè.

(26) Statement of Cash Flows

The fiscal year 2003 statement of cash flows has been changed from that reported previously to classify the insurance proceeds received relating to the loss of our Research Double Module as an investing cash flow consistent with the guidance in footnote 5 of Financial Accounting Standards No. 95, “Statement of Cash Flows”. The insurance proceeds were reported previously as an operating cash flow.

F-41

The Exchange Agent for the exchange offer and consent solicitation is:

Wachovia Bank, National Association

Customer Information Center

Corporate Trust Operations-NC1153

1525 West W.T. Harris Boulevard – 3C3

Charlotte, NC 28262-1153

Attention: Marsha Rice

Telephone: (704) 590-7413

Facsimile: (704) 590-7628

The Information Agent for the exchange offer and consent solicitation is:

CapitalBridge

111 River Street, 10^th Floor

Hoboken, NJ 07030

Attention: Aaron Dougherty

Telephone: (877) 746-3583 (toll-free)

(201) 499-3500

Facsimile: (201) 499-3600

The Co-Dealer Managers for the exchange offer and consent solicitation are:

Jefferies & Company, Inc. 520 Madison Avenue New York, New York 10022 Attn: Henry Hsu Telephone: (212) 284-1723 Facsimile: (212) 284-2114 and Sanders Morris Harris Inc. 600 Travis, Suite 3100 Houston, Texas 77002 Attn:  William E. Page Telephone: (713) 220-5143 Facsimile: (713) 250-4294

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS [UNDER REVIEW]

Item 20. Indemnification of Directors and Officers.

SPACEHAB, Incorporated is organized under the laws of the State of Washington. Sections 23B.08.500 through 23B.08.600 of the Washington Business Corporation Act provide that a corporation may indemnify an individual who is made a party to a proceeding because he or she is or was a director against liability incurred in the proceeding if: (1) the individual conducted himself or herself in good faith; and (2) the individual reasonably believed: (i) in the case of conduct in his or her official capacity with the corporation, that the conduct was in the corporation’s best interest; and (ii) in all other cases, that the conduct was at least not opposed to the corporation’s best interests; and (iii) in the case of any criminal proceeding, the individual had no reasonable cause to believe that his or her conduct was unlawful. A corporation may not indemnify a director: (i) in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or (ii) in connection with any other proceeding charging improper personal benefit to the director, whether or not involving action in his or her official capacity, in which the director was adjudged liable on the basis that personal benefit was improperly received by him or her. Indemnification is mandatory for an officer or director who was wholly successful, on the merits or otherwise, in the defense of any proceeding, or of any claim, issue or matter, against reasonable expenses incurred in connection with the proceeding. A Washington corporation may indemnify an officer, agent or employee to the same extent as a director.

SPACEHAB, Incorporated’s restated articles of incorporation provide that the corporation shall indemnify any person who is or was a party or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal by reason of the fact that he is or was a director of officer of the corporation. The board of directors of the corporation has discretion to provide the same indemnification as to directors and officers to any employee or agent of the corporation. The indemnification covers reasonable expenses, including counsel fees, judgments, decrees, fines, penalties and amounts paid in settlement, incurred in connection with the action, suit or proceeding, subject to the standard of conduct as set forth in the Washington Business Corporation Act as outlined above. No indemnification is allowed in respect to any claim, issue or matter as to which the person seeking indemnification has been adjudged liable for (i) negligence or misconduct in the performance of his duty to the corporation, unless and to the extent a court of competent jurisdiction determines that such person is entitled to indemnification, or (ii) violating any of the terms and provisions of Section 16 of Securities Exchange Act of 1934, as amended, or any rules and regulations promulgated thereunder. The indemnification provisions in the restated articles of incorporation are nonexclusive of any other rights to which the person seeking indemnification may be entitled under any law, bylaw, or agreement.

The articles of incorporation of SPACEHAB, Incorporated provide that the corporation may, and the bylaws of SPACEHAB, Incorporated provide that the corporation shall, indemnify any person made or threatened to be made a party to any proceeding, whether brought in the right of the corporation or otherwise, by reason of the fact that such person is or was an officer or director of the corporation, to the full extent permitted by the Washington Business Corporation Act. The corporation may purchase and maintain indemnification insurance for any person to the extent provided by applicable law.

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Item 21. Exhibits and Financial Statement Schedules.

Exhibit No.		Description
(1)		Underwriting Agreement*
(2)		Plan of acquisition*
(4)		Instruments Defining the Rights of Security Holders, including Indentures
	4.1	Amended and Restated Articles of Incorporation of the Registrant, as amended
	4.2	Bylaws of the Registrant (incorporated by reference to the Registrant’s registration statement on Form S-1, File No. 33- 97812, and all amendments thereto, filed with the Securities and Exchange Commission on October 5, 1995)
	4.3	Designation of Rights, Terms and Preferences of Series B Senior Convertible Preferred Stock of the Registrant
	4.4	Preferred Stock Purchase Agreement between the Registrant and DaimlerChrysler Aerospace AG dated as of August 2, 1999 (incorporated by reference to Exhibit 4.2 of the Registrant’s Report on Form 8-K filed with the Securities and Exchange Commission on August 19, 1999)
	4.5	Registration Rights Agreement between the Registrant and DaimlerChrysler Aerospace AG dated as of August 5, 1999 (incorporated by reference to Exhibit 4.3 of the Registrant’s Report on Form 8-K filed with the Securities and Exchange Commission on August 19, 1999)
	4.6	Indenture dated as of October 15, 1997 between the Registrant and First Union National Bank, as Trustee, relating to the Registrant’s 8% Convertible Subordinated Notes due 2007 (incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement on Form S-3 (Reg. No. 333-43221) filed with the Securities and Exchange Commission on December 24, 1997)
	4.7	Form of Indenture between the Registrant and Wachovia Bank, National Association, as Trustee, relating to the Registrant’s 5.5% Senior Convertible Notes due 2010**
(5)		Opinion Regarding Legality
	5.1	Opinion of Haynes and Boone, LLP
(8)		Opinion Regarding Tax Matters
(10)		Material Contracts
	10.1	Amended and Restated Representation Agreement, dated August 15, 1995, by and between the Registrant and Mitsubishi Corporation
	10.2	Amended and Restated Representation Agreement—Revision I, dated January 13, 2004, by and between the Registrant and Mitsubishi Corporation
	10.3	Letter Agreement dated August 15, 1995, by and between the Registrant and Mitsubishi Corporation (incorporated by reference to Exhibit 10.7 of the Registrant’s Registration Statement on Form S-1 (Reg. No. 33-97812) filed with the Securities and Exchange Commission on October 5, 1995)
	10.4	SPACEHAB, Incorporated 1995 Directors’ Stock Option Plan as amended and restated effective October 21, 1997 (incorporated by reference to Exhibit B of the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on September 12, 1997)

II-2

Exhibit No.		Description
	10.5	Office Building Lease Agreement, dated October 6, 1993, between Astrotech and the Secretary of the Air Force (Lease number SPCVAN – 2-94-001) (incorporated by reference to Exhibit 10.52 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1997 filed with the Securities and Exchange Commission on September 12, 1997)
	10.6	SPACEHAB, Incorporated 1994 Stock Incentive Plan as amended and restated effective October 14, 1999 (incorporated by reference to Exhibit 10.90 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1999 filed with the Securities and Exchange Commission on September 17, 1999)
	10.7	Agreement, dated September 30, 2004, between the Registrant and Dr. Shelley A. Harrison
	10.8	Lease for property at 300 D Street, SW, Suite #814, Washington, DC, dated as of December 16, 1998, by and between the Registrant and The Washington Design Center, LLC
	10.9	Sublease Agreement, dated as of July, 2002, between the Registrant and The Boeing Company
	10.10	SPACEHAB, Incorporated 1997 Employee Stock Purchase Plan (incorporated by reference to Exhibit C of the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on September 12, 1997)
	10.11	Agreement between Astrotech Space Operations, Inc. and McDonnell Douglas Corporation, dated January 7, 2000 (incorporated by reference to Exhibit 10.103 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 filed with the Securities and Exchange Commission on May 12, 2000)
	10.12	Agreement between Astrotech Space Operations, Inc. and Lockheed Martin Commercial Launch Services, Inc., dated January 24, 2000 (incorporated by reference to Exhibit 10.104 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 filed with the Securities and Exchange Commission on May 12, 2000)
	10.13	Credit agreement dated as of August 30, 2001 by and between Astrotech Florida Holdings, Inc. and SouthTrust Bank (incorporated by reference to Exhibit 10.114 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 filed with the Securities and Exchange Commission on November 8, 2001)
	10.14	Employment and Non-Interference Agreement, dated as of April 1, 2003, between the Registrant and Michael E. Kearney (incorporated by reference to Exhibit 10.119 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 filed with the Securities and Exchange Commission on May 14, 2003)
	10.15	First amendment to the Credit Agreement dated as of August 30, 2001 by and between Astrotech Florida Holdings, Inc. and SouthTrust Bank (incorporated by reference to Exhibit 10.122 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2003 filed with the Securities and Exchange Commission on February 13, 2004)
	10.16	Employment and Non-Interference Agreement, dated as of January 9, 2004, between the Registrant and Brian K. Harrington (incorporated by reference to Exhibit 10.123 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 filed with the Securities and Exchange Commission on May 12, 2004)

II-3

Exhibit No.		Description
	10.17	50 Year Lease, dated as of February 1, 1991, between the Registrant and Canaveral Port Authority
	10.18	Commercial Contract, dated as of March 3, 2005, between the Registrant and Tamir Silvers, LLC
	10.19	Lease Agreement, dated as of February 18, 2005, between the Registrant and R & H Investments, a California partnership
	10.20	Fixed Price Subcontract 889208 for Wideband Gapfiller Satellite Program Launch Site Payload Processing Facilities and Services, dated as of January 18, 2005, between Boeing Satellite Systems, Inc. and Astrotech Space Operations, Inc.
	10.21	Purchase Order 3H03105, dated as of July 14, 2003, between the Registrant and The Boeing Company
	10.22	Loan Agreement, dated as of February 11, 2005, between the Registrant and First American Bank, SSB (incorporated by reference to Exhibit 10.125 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2004 filed with the Securities and Exchange Commission on February 14, 2005)
	10.23	Letter Contract No. GF80726B11, dated as of February 18, 2004, between the Registrant and Lockheed Martin Corporation
	10.24	ISS Program Integration and Control Contract, between SPACEHAB Government Services, Inc. and ARES Corporation
	10.25	Contract No. SHI-SFS-03001 for Thermal Conditioning Service for Granada Crystallzation Facilities, dated as of December 18, 2003, between the Registrant and V.J.F. Russian Consulting, Ltd.
	10.26	Consulting Agreement No. 2004-006-SHI-SFS, dated as of June 1, 2004, between the Registrant and V.J.F. Russian Consulting, Ltd.
	10.27	Asset Purchase Agreement, dated as of December 19, 2000, between the Registrant and Astrium GmbH.
	10.28	Amendment No. 1 to Asset Purchase Agreement, dated as of December 19, 2000, between the Registrant and Astrium GmbH, dated July 3, 2001
	10.29	Lease Agreement, dated as of February 28, 2001, between the Registrant and Astrium GmbH
	10.30	Binding Term Sheet, dated as of December 19, 2001, between the Registrant and Astrium GmbH, amending the Lease Agreement, dated as of February 28, 2001, between the Registrant and Astrium GmbH
	10.31	Lease Agreement, dated as of July 3, 2001, between the Registrant and Astrium GmbH
	10.32	Agreement No. 48801 for Provision of Payload Processing Facilities and Support in Conjunction with Commercial Atlas Launches, between Astrotech Space Operations, Inc. and Lockheed Martin Commercial Launch Services, Inc.
	10.33	Contract No. NNK04LA75C, dated as of July 2, 2004, between Astrotech Space Operations, Inc. and John F. Kennedy Space Center, NASA
	10.34	Agreement and Statement of Work, dated as of April 25, 1996 and as amended by Amendment No. 3 as of December 6, 2002, between Astrotech Space Operations, Inc. and Sea Launch Company, L.L.C.
	10.35	Employment and Non-Interference Agreement, dated as of May 12, 2005, between the Registrant and Michael E. Bain

II-4

Exhibit No.		Description
	10.36	Employment and Non-Interference Agreement, dated as of May 12, 2005, between the Registrant and E. Michael Chewning
	10.37	Settlement Agreement and Mutual Release of All Claims, dated as of May 25, 2005, among the Registrant and Lloyd’s of London, Goshawk Syndicate No. 102, Euclidian Syndicate No. 1243, Ascot Underwriting Ltd. Syndicate No. 1414, and R.J. Kiln Syndicate No. 510
	10.38	Sublease Agreement, dated as of May 14, 2004, between the Registrant and Paragon Personnel, Inc.
	10.39	Lease No. SPCVAN-2-94-0001, between the Secretary of the Airforce and Astrotech Space Operations, L.P.
	10.40	Strategic Collaboration Agreement, dated as of August 5, 1999, between the Registrant and DaimlerChrysler Aerospace AG
	10.41	Guaranty Agreement, dated as of August 30, 2001, between the Registrant and Southtrust Bank
	10.42	Guaranty Agreement, dated as of August 30, 2001, between Astrotech Space Operations, Inc. and Southtrust Bank
	10.43	Stock Pledge and Security Agreement, dated as of August 30, 2001, between the Registrant and Southtrust Bank
	10.44	Stock Pledge and Security Agreement, dated as of August 30, 2001, between Astrotech Space Operations, Inc. and Southtrust Bank
	10.45	Assignment of CLIN 1 Rights, dated as of August 30, 2001, between Astrotech Space Operations, Inc. and Southtrust Bank
	10.46	Termination Agreement, dated as of June 1, 2004, between the Registrant and Vladimir J. Fishel
	10.47	Memorandum of Understanding, dated as of June 8, 2005, between the Registrant and SMH Capital Advisors, Inc.
(11)		Statement regarding computation of per share earnings*
(12)		Statement regarding computation of ratios
	12.1	Computation of ratio of earnings to fixed charges
(13)		Annual report to security holders, Form 10-Q and Form 10-QSB, or quarterly report to security holders*
(15)		Letter regarding unaudited interim financial information*
(16)		Letter regarding change in certifying accountant
	16.1	Letter from Ernst & Young LLP regarding change in certifying accountant, dated May 18, 2004 (incorporated by reference to Exhibit 16 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 18, 2004)
(23)		Consents of Experts and Counsel
	23.1	Consent of Haynes and Boone, LLP (included in Exhibit 5.1)
	23.2	Consent of Grant Thornton LLP
	23.3	Consent of Ernst & Young LLP
(24)		Power of Attorney
	24.1	Powers of Attorney (included on the signature page of this Registration Statement)
(25)		Statement of Eligibility of Trustee
	25.1	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of Wachovia Bank, National Association, as Trustee**

II-5

Exhibit No.		Description
(26)		Invitations for competitive bids*
(99)		Additional Exhibits
	99.1	Form of Letter of Transmittal
	99.2	Form of Notice of Guaranteed Delivery

* Inapplicable.

** To be filed by amendment.

II-6

Item 22. Undertakings.

The undersigned registrant hereby undertakes:

(1) To file, during any period during which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of this registration statement through the date of responding to the request.

The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in this registration statement when it became effective.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Houston, state of Texas, on July 20, 2005.

SPACEHAB, INCORPORATED
By:	/S/    MICHAEL E. KEARNEY
	Michael E. Kearney President and Chief Executive Officer and Director

II-8

POWER OF ATTORNEY

Each of the undersigned constitutes and appoints Michael E. Kearney his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments to this registration statement (including post-effective amendments) and to file same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and/or any state securities department or any other federal or state agency or governmental authority granting unto such attorney-in-fact and agent full power to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all extents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorney-in-fact and agent, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities indicated on July 20, 2005.

Signature	Title
/S/    MICHAEL E. KEARNEY         Michael E. Kearney	President and Chief Executive Officer and Director (Principal Executive Officer)
/S/    BRIAN K. HARRINGTON         Brian K. Harrington	Senior Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Financial and Accounting Officer)
/S/    DR. SHELLEY A. HARRISON         Dr. Shelley A. Harrison	Director, Chairman of the Board
/S/    RICHARD S. BODMAN         Richard S. Bodman	Director
/S/    DR. EDWARD E. DAVID, JR.         Dr. Edward E. David, Jr.	Director
/S/    RICHARD M. FAIRBANKS         Richard M. Fairbanks	Director
/S/    JAMES R. THOMPSON         James R. Thompson	Director
/S/    ROSCOE MICHAEL MOORE, III         Roscoe Michael Moore, III	Director
/S/    THOMAS BOONE PICKENS, III         Thomas Boone Pickens, III	Director
/S/    BARRY A. WILLIAMSON         Barry A. Williamson	Director
/S/    DR. STEFAN-FRITZ GRAUL         Dr. Stefan-Fritz Graul	Director

II-9

Exhibit Index

Exhibit No.		Description
(1)		Underwriting Agreement*
(2)		Plan of acquisition*
(4)		Instruments Defining the Rights of Security Holders, including Indentures
	4.1	Amended and Restated Articles of Incorporation of the Registrant, as amended
	4.2	Bylaws of the Registrant (incorporated by reference to the Registrant’s registration statement on Form S-1, File No. 33- 97812, and all amendments thereto, filed with the Securities and Exchange Commission on October 5, 1995)
	4.3	Designation of Rights, Terms and Preferences of Series B Senior Convertible Preferred Stock of the Registrant
	4.4	Preferred Stock Purchase Agreement between the Registrant and DaimlerChrysler Aerospace AG dated as of August 2, 1999 (incorporated by reference to Exhibit 4.2 of the Registrant’s Report on Form 8-K filed with the Securities and Exchange Commission on August 19, 1999)
	4.5	Registration Rights Agreement between the Registrant and DaimlerChrysler Aerospace AG dated as of August 5, 1999 (incorporated by reference to Exhibit 4.3 of the Registrant’s Report on Form 8-K filed with the Securities and Exchange Commission on August 19, 1999)
	4.6	Indenture dated as of October 15, 1997 between the Registrant and First Union National Bank, as Trustee, relating to the Registrant’s 8% Convertible Subordinated Notes due 2007 (incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement on Form S-3 (Reg. No. 333-43221) filed with the Securities and Exchange Commission on December 24, 1997)
	4.7	Form of Indenture between the Registrant and Wachovia Bank, National Association, as Trustee, relating to the Registrant’s 5.5% Senior Convertible Notes due 2010**
(5)		Opinion Regarding Legality
	5.1	Opinion of Haynes and Boone, LLP
(8)		Opinion Regarding Tax Matters
(10)		Material Contracts
	10.1	Amended and Restated Representation Agreement, dated August 15, 1995, by and between the Registrant and Mitsubishi Corporation
	10.2	Amended and Restated Representation Agreement—Revision I, dated January 13, 2004, by and between the Registrant and Mitsubishi Corporation
	10.3	Letter Agreement dated August 15, 1995, by and between the Registrant and Mitsubishi Corporation (incorporated by reference to Exhibit 10.7 of the Registrant’s Registration Statement on Form S-1 (Reg. No. 33-97812) filed with the Securities and Exchange Commission on October 5, 1995)
	10.4	SPACEHAB, Incorporated 1995 Directors’ Stock Option Plan as amended and restated effective October 21, 1997 (incorporated by reference to Exhibit B of the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on September 12, 1997)
	10.5	Office Building Lease Agreement, dated October 6, 1993, between Astrotech and the Secretary of the Air Force (Lease number SPCVAN – 2-94-001) (incorporated by reference to Exhibit 10.52 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1997 filed with the Securities and Exchange Commission on September 12, 1997)

Exhibit No.		Description
	10.6	SPACEHAB, Incorporated 1994 Stock Incentive Plan as amended and restated effective October 14, 1999 (incorporated by reference to Exhibit 10.90 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1999 filed with the Securities and Exchange Commission on September 17, 1999)
	10.7	Agreement, dated September 30, 2004, between the Registrant and Dr. Shelley A. Harrison
	10.8	Lease for property at 300 D Street, SW, Suite #814, Washington, DC, dated as of December 16, 1998, by and between the Registrant and The Washington Design Center, LLC
	10.9	Sublease Agreement, dated as of July, 2002, between the Registrant and The Boeing Company
	10.10	SPACEHAB, Incorporated 1997 Employee Stock Purchase Plan (incorporated by reference to Exhibit C of the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on September 12, 1997)
	10.11	Agreement between Astrotech Space Operations, Inc. and McDonnell Douglas Corporation, dated January 7, 2000 (incorporated by reference to Exhibit 10.103 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 filed with the Securities and Exchange Commission on May 12, 2000)
	10.12	Agreement between Astrotech Space Operations, Inc. and Lockheed Martin Commercial Launch Services, Inc., dated January 24, 2000 (incorporated by reference to Exhibit 10.104 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 filed with the Securities and Exchange Commission on May 12, 2000)
	10.13	Credit agreement dated as of August 30, 2001 by and between Astrotech Florida Holdings, Inc. and SouthTrust Bank (incorporated by reference to Exhibit 10.114 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 filed with the Securities and Exchange Commission on November 8, 2001)
	10.14	Employment and Non-Interference Agreement, dated as of April 1, 2003, between the Registrant and Michael E. Kearney (incorporated by reference to Exhibit 10.119 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 filed with the Securities and Exchange Commission on May 14, 2003)
	10.15	First amendment to the Credit Agreement dated as of August 30, 2001 by and between Astrotech Florida Holdings, Inc. and SouthTrust Bank (incorporated by reference to Exhibit 10.122 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2003 filed with the Securities and Exchange Commission on February 13, 2004)
	10.16	Employment and Non-Interference Agreement, dated as of January 9, 2004, between the Registrant and Brian K. Harrington (incorporated by reference to Exhibit 10.123 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 filed with the Securities and Exchange Commission on May 12, 2004)
	10.17	50 Year Lease, dated as of February 1, 1991, between the Registrant and Canaveral Port Authority
	10.18	Commercial Contract, dated as of March 3, 2005, between the Registrant and Tamir Silvers, LLC
	10.19	Lease Agreement, dated as of February 18, 2005, between the Registrant and R & H Investments, a California partnership
	10.20	Fixed Price Subcontract 889208 for Wideband Gapfiller Satellite Program Launch Site Payload Processing Facilities and Services, dated as of January 18, 2005, between Boeing Satellite Systems, Inc. and Astrotech Space Operations, Inc.
	10.21	Purchase Order 3H03105, dated as of July 14, 2003, between the Registrant and The Boeing Company

Exhibit No.		Description
	10.22	Loan Agreement, dated as of February 11, 2005, between the Registrant and First American Bank, SSB (incorporated by reference to Exhibit 10.125 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2004 filed with the Securities and Exchange Commission on February 14, 2005)
	10.23	Letter Contract No. GF80726B11, dated as of February 18, 2004, between the Registrant and Lockheed Martin Corporation
	10.24	ISS Program Integration and Control Contract, between SPACEHAB Government Services, Inc. and ARES Corporation
	10.25	Contract No. SHI-SFS-03001 for Thermal Conditioning Service for Granada Crystallzation Facilities, dated as of December 18, 2003, between the Registrant and V.J.F. Russian Consulting, Ltd.
	10.26	Consulting Agreement No. 2004-006- SHI-SFS, dated as of June 1, 2004, between the Registrant and V.J.F. Russian Consulting, Ltd.
	10.27	Asset Purchase Agreement, dated as of December 19, 2000, between the Registrant and Astrium GmbH.
	10.28	Amendment No. 1 to Asset Purchase Agreement, dated as of December 19, 2000, between the Registrant and Astrium GmbH, dated July 3, 2001
	10.29	Lease Agreement, dated as of February 28, 2001, between the Registrant and Astrium GmbH
	10.30	Binding Term Sheet, dated as of December 19, 2001, between the Registrant and Astrium GmbH, amending the Lease Agreement, dated as of February 28, 2001, between the Registrant and Astrium GmbH
	10.31	Lease Agreement, dated as of July 3, 2001, between the Registrant and Astrium GmbH
	10.32	Agreement No. 48801 for Provision of Payload Processing Facilities and Support in Conjunction with Commercial Atlas Launches, between Astrotech Space Operations, Inc. and Lockheed Martin Commercial Launch Services, Inc.
	10.33	Contract No. NNK04LA75C, dated as of July 2, 2004, between Astrotech Space Operations, Inc. and John F. Kennedy Space Center, NASA
	10.34	Agreement and Statement of Work, dated as of April 25, 1996 and as amended by Amendment No. 3 as of December 6, 2002, between Astrotech Space Operations, Inc. and Sea Launch Company, L.L.C.
	10.35	Employment and Non-Interference Agreement, dated as of May 12, 2005, between the Registrant and Michael E. Bain
	10.36	Employment and Non-Interference Agreement, dated as of May 12, 2005, between the Registrant and E. Michael Chewning
	10.37	Settlement Agreement and Mutual Release of All Claims, dated as of May 25, 2005, among the Registrant and Lloyd’s of London, Goshawk Syndicate No. 102, Euclidian Syndicate No. 1243, Ascot Underwriting Ltd. Syndicate No. 1414, and R.J. Kiln Syndicate No. 510
	10.38	Sublease Agreement, dated as of May 14, 2004, between the Registrant and Paragon Personnel, Inc.
	10.39	Lease No. SPCVAN-2-94-0001, between the Secretary of the Airforce and Astrotech Space Operations, L.P.
	10.40	Strategic Collaboration Agreement, dated as of August 5, 1999, between the Registrant and DaimlerChrysler Aerospace AG

Exhibit No.		Description
	10.41	Guaranty Agreement, dated as of August 30, 2001, between the Registrant and Southtrust Bank
	10.42	Guaranty Agreement, dated as of August 30, 2001, between Astrotech Space Operations, Inc. and Southtrust Bank
	10.43	Stock Pledge and Security Agreement, dated as of August 30, 2001, between the Registrant and Southtrust Bank
	10.44	Stock Pledge and Security Agreement, dated as of August 30, 2001, between Astrotech Space Operations, Inc. and Southtrust Bank
	10.45	Assignment of CLIN 1 Rights, dated as of August 30, 2001, between Astrotech Space Operations, Inc. and Southtrust Bank
	10.46	Termination Agreement, dated as of June 1, 2004, between the Registrant and Vladimir J. Fishel
	10.47	Memorandum of Understanding, dated as of June 8, 2005, between the Registrant and SMH Capital Advisors, Inc.
(11)		Statement regarding computation of per share earnings*
(12)		Statement regarding computation of ratios
	12.1	Computation of ratio of earnings to fixed charges
(13)		Annual report to security holders, Form 10-Q and Form 10-QSB, or quarterly report to security holders*
(15)		Letter regarding unaudited interim financial information*
(16)		Letter regarding change in certifying accountant
	16.1	Letter from Ernst & Young LLP regarding change in certifying accountant, dated May 18, 2004 (incorporated by reference to Exhibit 16 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 18, 2004)
(23)		Consents of Experts and Counsel
	23.1	Consent of Haynes and Boone, LLP (included in Exhibit 5.1)
	23.2	Consent of Grant Thornton LLP
	23.3	Consent of Ernst & Young LLP
(24)		Power of Attorney
	24.1	Powers of Attorney (included on the signature page of this Registration Statement)
(25)		Statement of Eligibility of Trustee
	25.1	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of Wachovia Bank, National Association, as Trustee**
(26)		Invitations for competitive bids*
(99)		Additional Exhibits
	99.1	Form of Letter of Transmittal
	99.2	Form of Notice of Guaranteed Delivery

* Inapplicable.

** To be filed by amendment.

EX-4.1

Exhibit 4.1

ARTICLES OF AMENDMENT

of

SPACEHAB, INCORPORATED

pursuant to Chapter 10 of the

Washington Business Corporation Act

SPACEHAB, Incorporated, (the “Corporation”), a corporation organized and existing under and by virtue of the Washington Business Corporation Act, as amended, (the “WBCA”), hereby certifies that:

1. The name of the corporation is SPACEHAB, Incorporated.

2. ARTICLE FOURTH of the Articles of Incorporation of the Corporation are amended to read as follows:

FOURTH: The total number of shares of capital stock which the Corporation shall have authority to issue is 32,500,000 shares, consisting of 30,000,000 shares of common stock, no par value per share (the “Common Stock”) and 2,500,000 shares of preferred stock, no par value per share (the “Preferred Stock”).

3. These Articles of Amendment were duly approved by the shareholders of the Corporation on October 14, 1999 in accordance with the provisions of WBCA 23B.10.030 and 23B.10.040.

4. The manner in which the amendment to ARTICLE FOURTH effects a change in authorized capital stock is to increase the number of shares of authorized Preferred Stock.

These Articles of Amendment are executed by the Corporation by its duly authorized officer.

DATED: October 14, 1999

SPACEHAB, INCORPORATED
By:	/s/    SHELLEY A. HARRISON
	Shelley A. Harrison
	Chairman of the Board and Chief Executive Officer

DESIGNATION OF RIGHTS, TERMS AND PREFERENCES

OF

ADDITIONAL SHARES OF

SERIES B SENIOR CONVERTIBLE PREFERRED STOCK

OF

SPACEHAB, INCORPORATED

(Pursuant to Chapter 6 of the

Washington Business Corporation Act)

Spacehab, Incorporated, a corporation organized and existing under the Business Corporation Act of the State of Washington (hereinafter called the “Corporation”), hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation as required by Chapter 6 of the Business Corporation Act at a meeting duly called and held on August 26, 1999:

RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of this Corporation (hereinafter called the “Board of Directors” or the “Board”) in accordance with the provisions of the Articles of Incorporation, the Board of Directors hereby designates additional shares of Series B Preferred Stock of the Corporation, no par value per share (the “Preferred Stock”), as follows:

Series B Senior Convertible Preferred Stock:

Section 1. Designation and Amount. The shares of such series shall be designated as “Series B Senior Convertible Preferred Stock” (the “Series B Preferred Stock”). The number of existing and outstanding shares of Series B Preferred Stock is Nine Hundred Seventy-Five Thousand (975,000) and the number of additional shares of Series B Preferred Stock shall be Three Hundred Fifty-Eight Thousand Three Hundred Thirty-Four (358,334). As a result, the total number of shares of Series B Preferred Stock shall be One Million Three Hundred Thirty-Three Thousand Three Hundred Thirty-Four (1,333,334). Such number of shares may be decreased by resolution of the Board of Directors; provided that no decrease shall reduce the number of shares of Series B Preferred Stock to a number less than the number of shares then outstanding.

Section 2. Dividends. The holders of the Series B Preferred Stock shall be entitled to receive, out of funds legally available therefor, such dividends with respect to the shares of Series B Preferred-Stock as may be declared by the Board of Directors. In addition, when and if the Board of Directors shall declare a dividend payable with respect to the then outstanding shares of Common Stock, no par value per share (“Common Stock”) of the Corporation, each holder of Series B Preferred Stock shall be entitled to the amount of dividends as would be payable on the largest number of whole shares of

Common Stock into which shares of Series B Preferred Stock held by such holder could then be converted pursuant to Section 5 hereof (such number to be determined as of the record date for the determination of holders of Common Stock entitled to receive such dividend). Dividends shall not be declared or paid to holders of Common Stock unless and until the Corporation shall simultaneously declare and pay to holders of Series B Preferred Stock the dividend referred to in the preceding sentence.

Section 3. Liquidation, Dissolution or Winding Up; Certain Mergers. Consolidations and Asset Sales.

a. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series B Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made to the holders of Common Stock or any other class or series of stock ranking on liquidation junior to the Series B Preferred Stock (the Common Stock and any other class or series of stock ranking on liquidation junior to the Series B Preferred Stock, including without limitation, the Series A Junior Participating Preferred Stock of the Corporation, being collectively referred to as “Junior Stock”) by reason of their ownership thereof, an amount equal to Nine Dollars ($9.00) for each outstanding share of Series B Preferred Stock (the “Series B Original Issue Price”) (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares) plus (ii) any dividends declared or accrued but unpaid thereon. If upon any such liquidation, dissolution or winding up of the Corporation, the remaining assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series B Preferred Stock the full amount to which they shall be entitled, the holders of shares of Series B Preferred Stock and any class or series of stock ranking on liquidation on a parity with the Series B Preferred Stock shall share ratably (based upon the sum of each series respective Original Issue Price plus accrued but unpaid dividends) in any distribution of the remaining assets and funds of the Corporation in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

b. After the payment of all preferential amounts required to be paid to the holders of Series B Preferred Stock and any other class or series of stock of the Corporation ranking on liquidation on a parity with the Series B Preferred Stock upon the dissolution, liquidation or winding up of the Corporation, the holders of shares of Junior Stock then outstanding shall be entitled to receive the remaining assets and funds of the Corporation available for distribution to its stockholders.

c. The consolidation or merger of the Corporation into or with any other entity or entities which results in the exchange of outstanding shares of the Corporation for securities or other consideration issued or paid or caused to be issued or paid by any such entity or affiliate thereof, and the sale or transfer by the Corporation of all or substantially all its assets, shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of the provisions of this Section 3, but

only for the purposes of the redemption of such Series B Preferred Stock, and only if so elected by the holders of a majority of the outstanding shares of Series B Preferred Stock, in their sole discretion.

Section 4. Voting.

a. Each holder of outstanding shares of Series B Preferred Stock shall be entitled to the number of votes equal to the number of whole shares of Common Stock into which the shares of Series B Preferred Stock held by such holder are then convertible (as adjusted from time to time pursuant to Section 5 hereof), at each meeting of stockholders of the Corporation (and written actions of stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Corporation for their action or consideration. Except as provided by law, or by the provisions of Subsections 4(b), 4(c) and 4(d) below, holders of Series B Preferred Stock shall vote together with the holders of Common Stock, as a single class.

b. For so long as (i) any shares of Series B Preferred Stock remain outstanding and (ii) any holder thereof is a Qualified Holder (as defined in the Preferred Stock Purchase Agreement (the “Purchase Agreement”) dated as of August 2, 1999 between the Corporation and Daimler Chrysler Aerospace AG (“DASA”)), the Series B Preferred Stock (voting as a class) will elect one of the Directors (the “Preferred Director”) and the Common Stock (voting as a class) will elect the remaining Directors. The Preferred Director shall be included as a member of the Executive Committee of the Board. If at any time Series B Preferred Stock issued remains outstanding but there is no Qualified Holder, all of the Directors will be elected by the Series B Preferred Stock and Common Stock voting together as one class. This Section 4(b) shall not affect or limit provisions of Section 8.1 of the Purchase Agreement as to the right of a Qualified Holder to designate a nominee for election to the Board (and for such designee, if elected by the shareholders, to serve on the Executive Committee of the Board), which provisions may remain applicable notwithstanding there not being any shares of Series B Preferred Stock outstanding.

c. Any Preferred Director may be removed at any time, by the vote of the holders of more than fifty percent (50%) of all of the then outstanding shares of Series B Preferred Stock, voting as a separate class in person or by proxy at a special meeting of stockholders called for such purpose (or at any adjournment thereof) by holders of at least twenty percent (20%) of the outstanding shares of Series B Preferred Stock or at any annual meeting of stockholders, or by written consent delivered to the Secretary of the Corporation, and no Preferred Director may be removed at any time without the affirmative vote or consent of the holders of more than fifty percent (50%) of all of the outstanding shares of Series B Preferred Stock. Any vacancy created by the removal, death or resignation of a Preferred Director may be filled by the holders of more than fifty percent (50%) of all of the outstanding shares of Series B Preferred Stock by vote in person or by proxy at a special meeting of stockholders of the Corporation called for such purpose by holders of at least twenty percent (20%) of the outstanding shares of Series B Preferred Stock, or at any annual meeting, or by written consent delivered to the Secretary of the Corporation.

d. So long as any shares of the Series B Preferred Stock remain outstanding, unless the vote or consent of the holders of a greater number of shares shall then be required by law, the affirmative vote or consent of the holders of more than fifty percent (50%) of all of the shares of Series B Preferred Stock at the time outstanding, voting separately as a class, given in person or by proxy either in writing (as may be permitted by law and the Articles of Incorporation and By-laws of the Corporation) or at any special or annual meeting, shall be necessary to permit, effect or validate the taking of any of the following actions by the Corporation:

(i) create, authorize, issue or sell (i) any class or series of capital stock ranking prior to or on parity with the Series B Preferred Stock as to dividends or upon liquidation, dissolution or winding up; provided, however, that holders of Common Stock may receive dividends to the extent provided by Section 2 above and, provided further, that the consent to issuance of any class or series of capital stock ranking on parity with the Series B Preferred Stock shall not be unreasonably withheld; or (ii) any rights, options or other securities convertible, exercisable or exchangeable for or into, or having rights to purchase, any shares of capital stock described in clause (i) hereof; or

(ii) amend the Articles of Incorporation or By-laws of the Corporation, or in any other manner alter or change the powers, rights, privileges or preferences of the Series B Preferred Stock, if such amendment or action would alter, change or affect adversely the powers, rights, privileges or preferences of the holders of the Series B Preferred Stock; or

(iii) increase the number of shares of Series B Preferred Stock authorized for issuance above 1,333,334 shares; or

(iv) at any time after the initial issuance date of the Series B Preferred Stock, issue any shares of Series B Preferred Stock, except (i) issuances pursuant to the Purchase Agreement, or (ii) issuances of share certificates upon transfers or exchanges of shares by holders (other than the Corporation) or in replacement of lost, stolen, damaged or mutilated share certificates;

Section 5. Optional Conversion. The holders of the Series B Preferred Stock shall each have conversion rights as follows (the “Conversion Rights”):

a. Right to Convert. Shares of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the aggregate Series B Original Issue Price of the Shares of Series B Preferred Stock being converted by the Series B Conversion Price in effect at the time of conversion or such share. The initial “Series B Conversion Price” shall be Nine Dollars ($9.00), subject to adjustment as provided below. For purposes of this Section 5, “Original Issue Date” shall mean, for the Series B Preferred Stock, the date on which the first share of Series B Preferred Stock was issued.

In the event of a liquidation of the Corporation, the Conversion Rights shall terminate at the close of business on the first full day preceding the date fixed for the payment of any amounts distributable on liquidation to the holders of Series B Preferred Stock.

b. Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series B Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. The shares issuable upon such conversion shall be determined on the basis of the total number of shares of Series B Preferred Stock which the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.

c. Mechanics of Conversion.

(i) In order for a holder of Series B Preferred Stock to convert shares of Series B Preferred Stock into shares of Common Stock, such holder shall surrender the certificate or certificates for such shares of Series B Preferred Stock, at the office of the transfer agent for the Corporation (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), together with written notice that such holder elects to convert all or any number of the shares of the Series B Preferred Stock represented by such certificate or certificates. Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The date of receipt of such certificates and notice by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) shall be the conversion date (“Conversion Date”). The Corporation shall, as soon as practicable after the Conversion Date, issue and deliver at such office to such holder of Series B Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled, together with cash in lieu of any fraction of a share. In case less than all the shares of Series B Preferred Stock represented by any certificate are being converted, a new certificate representing the unconverted shares of Series B Preferred Stock shall be issued to the holder thereof without cost to such holder.

(ii) The Corporation shall at all times when the Series B Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series B Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series B Preferred Stock.

(iii) Upon any such conversion, no adjustment to the Series B Conversion Price shall be made for any declared or accrued but unpaid dividends on the Series B Preferred Stock surrendered for conversion or on the Common Stock delivered

upon conversion, but, as provided in clause (iv) below, such dividends shall remain payable to the holder thereof.

(iv) All shares of Series B Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall immediately cease and terminate on the Conversion Date, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor and payment of any dividends declared or accrued but unpaid thereon. Any shares of Series B Preferred Stock so converted shall be retired and cancelled and shall not be reissued, and the Corporation (without the need for stockholder action) may from time to time take such appropriate action as may be necessary to reduce the authorized Series B Preferred Stock accordingly.

(v) The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Series B Preferred Stock pursuant to this Section 5. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Series B Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

d. Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Original Issue Date of the Series B Preferred Stock effect a subdivision of the outstanding Common Stock, the Series B Conversion Price then in effect with respect to the Series B Preferred Stock immediately before that subdivision shall be proportionately decreased. If the Corporation shall at any time or from time to time after the Original Issue Date of the Series B Preferred Stock combine the outstanding shares of Common Stock, the Series B Conversion Price then in effect immediately before the combination with respect to the Series B Preferred Stock shall be proportionately increased. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective.

e. Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time, or from time to time after the Original Issue Date of the Series B Preferred Stock shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then and in each such event the Series B Conversion Price with respect to the Series B Preferred Stock then in effect shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Series B Conversion Price for the Series B Preferred Stock then in effect by a fraction:

(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Series B Conversion Price for the Series B Preferred Stock shall be recomputed accordingly as of the close of business on such record date and thereafter the Series B Conversion Price for the Series B Preferred Stock shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions.

f. Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original Issue Date of the Series B Preferred Stock shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, then and in each such event provision shall be made so that the holders of Series B Preferred Stock shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they would have received had the Series B Preferred Stock been converted into Common Stock on the date of such event and had thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period, giving application to all adjustments called for during such period under this paragraph with respect to the rights of the holders of the Series B Preferred Stock.

g. Adjustment for Reclassification Exchange or Substitution. If the Common Stock issuable upon the conversion of the Series B Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provided for below), then and in each such event the holders of the Series B Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such shares of Series B Preferred Stock might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein.

h. Adjustment for Merger or Reorganization, etc. In case of any consolidation or merger of the Corporation with or into another corporation or the sale of all or substantially all of the assets of the Corporation to another corporation (other than a consolidation, merger or sale which is covered by Subsection 3(c)), each share of Series B

Preferred Stock shall thereafter be convertible (or shall be converted into a security which shall be convertible) into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of such Series B Preferred Stock would have been entitled upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions in this Section 5 set forth with respect to the rights and interest thereafter of the holders of the Series B Preferred Stock, to the end that the provisions set forth in this Section 5 (including provisions with respect to changes in and other adjustments of the Series B Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Series B Preferred Stock.

i. No Impairment. The Corporation will not, by amendment of its Articles of Incorporation, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such action as may be necessary or appropriate in order to protect the respective Conversion Rights of the holders of the Series B Preferred Stock against impairment.

j. Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Series B Conversion Price pursuant to this Section 5, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series B Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of Series B Preferred Stock, furnish or cause to be furnished to such holder a similar certificate setting forth (i) such adjustments and readjustments, (ii) the Series C Conversion Price then in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which then would be received upon the conversion of such Series B Preferred Stock.

k. Notice of Record Date. In the event:

(a) that the Corporation declares a dividend (or any other distribution) on its Common Stock payable in Common Stock or other securities of the corporation;

(b) that the Corporation subdivides or combines its outstanding shares of Common Stock;

(c) of any reclassification of the Common Stock of the Corporation (other than a subdivision or combination of its outstanding shares of Common Stock or a stock dividend or stock distribution thereon), or of any consolidation or

merger of the Corporation into or with another corporation, or of the sale of all or substantially all of the assets of the Corporation; or

(d) of the involuntary or voluntary dissolution, liquidation or winding up of the Corporation;

then the Corporation shall cause to be filed at its principal office, and shall cause to be mailed to the holders of the Series B Preferred Stock at their last addresses as shown on the records of the Corporation or its transfer agent, at least ten (10) days prior to the date specified in (i) below or twenty (20) days before the date specified in (ii) below, a notice stating

(i) the record date of such dividend, distribution, subdivision or combination, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, subdivision or combination are to be determined, or

(ii) the date on which such reclassification, consolidation, merger, sale, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, dissolution or winding up.

[the remainder of this page intentionally left blank]

IN WITNESS WHEREOF, this Designation of Rights, Terms and Preferences is executed on behalf of the Corporation by its President and attested by its Assistant Secretary this 14th day of October, 1999.

SPACEHAB, INCORPORATED
By:	/s/    SHELLEY A. HARRISON
Name:	Shelley A. Harrison
Title:	Chairman and CEO

Attest:	/s/    MARK A. KISSMAN
Name:	Mark A. Kissman
Title:	Secretary

DESIGNATION OF RIGHTS, TERMS AND PREFERENCES

of

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

of

SPACEHAB, INCORPORATED

(Pursuant to Chapter 6 of the

Washington Business Corporation Act)

SPACEHAB, Incorporated, a corporation organized and existing under the Business Corporation Act of the State of Washington (hereinafter called the “Corporation”), hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation as required by Chapter 6 of the Business Corporation Act at a meeting duly called and held on March 26, 1999:

RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of this Corporation (hereinafter called the “Board of Directors” or the “Board”) in accordance with the provisions of the Articles of Incorporation, the Board of Directors hereby creates a series of Preferred Stock of the Corporation, par value $.01 per share (the “Preferred Stock”), and hereby states the designation and number of shares, and fixes the relative rights, preferences, and limitations thereof as follows:

Series A Junior Participating Preferred Stock:

Section 1. Designation and Amount. The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of shares constituting the Series A Preferred Stock shall be 25,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Preferred Stock.

Section 2. Dividends and Distributions.

(A) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, no par value per share (the “Common Stock”), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend

Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10 or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non- cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon,

2

which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

Section 3. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights:

(A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 1000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) Except as otherwise provided herein, in any other Designation of Rights, Terms and Preferences creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all-matters submitted to a vote of stockholders of the Corporation.

(C) Except as set forth herein, or as otherwise provided by law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

Section 4. Certain Restrictions.

(A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

(ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or

3

winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or

(iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

Section 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Articles of Incorporation, or in any other Designation of Rights, Terms and Preferences creating a series of Preferred Stock or any similar stock or as otherwise required by law.

Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $1000 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1000 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution

4

or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 8. No Redemption. The shares of Series A Preferred Stock shall not be redeemable.

Section 9. Rank. The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation’s Preferred Stock.

Section 10. Amendment. The Articles of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single class.

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IN WITNESS WHEREOF, this Designation of Rights, Terms and Preferences is executed on behalf of the Corporation by its President and attested by its Secretary this the 26th day of March, 1999.

SPACEHAB, INCORPORATED
By:	/s/ Shelley A. Harrison
	Name:	Shelley A. Harrison
	Title:	Chairman and Chief Executive Officer

Attest:
By:	/s/ William S. Dawson III
	Name:	William S. Dawson III
	Title:	Secretary

6

RESTATED ARTICLES OF INCORPORATION

OF

SPACEHAB, INCORPORATED

(current as of January 8, 1998)

Pursuant to RCW 23B.10.070, the following Restated Articles of Incorporation are hereby submitted for filing.

FIRST: The name of the Corporation is SPACEHAB, Incorporated.

SECOND: The address of the Corporation’s registered office in the state of Washington is 520 Pike Street, Seattle, Washington 98101. The name of the registered agent at such address is C T Corporation System.

THIRD: The nature of the business or purpose to be conducted or promoted by the Corporation is to engage in any lawful business, trade or activity which Corporations may be conducted by Corporations organized under the Washington Business Corporation Act (“WBCA”) and to engage in any and all such activities as are incidental or conducive to the attainment of the foregoing purpose or purposes.

FOURTH: The total number of shares of capital stock which the Corporation shall have authority to issue is 31,000,000 shares, consisting of 30,000,000 shares of common stock, no par value per share (the “Common Stock”) and 1,000,000 shares of preferred stock, no par value per share (the “Preferred Stock”).

4.1 Common Stock. A statement of the designations, powers, preferences, rights, qualifications, limitations and restriction in respect to the shares of Common Stock is as follows:

(a) Dividends. The Board of Directors of the Corporation may cause dividends to be paid to the holders of shares of Common Stock out of funds legally available for the payment of dividends by declaring an amount per share as a dividend. When and as dividends are declared, whether payable in cash, in property or in shares of stock or other securities of the Corporation, the holders of Common Stock shall be entitled to share ratably according to the number of shares of Common Stock held by them, in such dividends.

(b) Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of Common Stock shall be entitled to share ratably, according to the number of shares of Common Stock held by them, in all remaining assets of the Corporation available for distribution to its shareholders.

(c) Voting Rights. Except as otherwise provided in these Articles or by applicable law, the holders of Common Stock shall be entitled to vote on each matter on which

the shareholders of the Corporation shall be entitled to vote, and each holder of Common Stock shall be entitled to one vote for each share of such stock held by him.

4.2 Preferred Stock. The Board of Directors is authorized, subject to limitation prescribed by law and the provisions of this ARTICLE FOURTH, to provide for the issuance of the shares of Preferred Stock in series, and by filing an article of amendment pursuant to Section 23B.06.020 of the WCBA, to establish from time to time the number of shares to be included in each such class or series within a class, and to fix the designation, powers, preferences and rights of the shares of each such class or series within a class and the qualifications, limitations or restrictions thereof.

The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following:

(a) The number of shares constituting the series and the distinctive designation of the series;

(b) The dividend rate (or the method of calculation of dividends) on the shares of the series, whether dividends will be cumulative, and if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of the series;

(c) Whether the series shall Have voting rights, in addition to the voting rights provided by law, and if so, the terms of such voting rights;

(d) Whether the series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors shall determine;

(e) Whether or not the shares of that series shall be redeemable or exchangeable, and, if so, the terms and conditions of such redemption or exchange, as the case may be, including the date or dates upon or after which they shall be redeemable or exchangeable, as the case may be, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;

(f) Whether the series shall have a sinking fund for the redemption or purchase of shares of that series, and if so, the terms and amount of such sinking fund;

(g) The rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation and the relative rights or priority, if any, of payment of shares of the series; and

(h) Any other relative rights, preferences and limitations of that series.

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Except for any difference so provided by the Board of Directors, the shares of Preferred Stock will rank on parity with respect to the payment of dividends and to the distribution of assets upon liquidation.

Shares of any series of Preferred Stock which have been redeemed (whether through the operation of a sinking find or otherwise) or which, if convertible or exchangeable, have been converted into or exchanged for shares of stock of any other class or classes shall have the status of authorized and unissued shares of Preferred Stock and may be reissued as shares of the same or any other series of Preferred Stock.

FIFTH: At all meetings of shareholders, each shareholder shall be entitled to vote, in person or by proxy, each share of voting stock owned by such shareholder of record on the record date for the meeting. At each meeting of the shareholders, except where otherwise provided by these Articles, the By-laws of the Corporation, or required by law, the holders of at least one-third of the issued and outstanding shares of stock of the Corporation entitled to vote at such meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business. When a quorum is present or represented at any meeting, the affirmative vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question, matter or proposal brought before such meeting unless the question is one upon which, by express provision of law, these Articles, the By-laws or, with respect to a class or series of Preferred Stock, the terms of the resolution or resolutions adopted by the Board of Directors pursuant to ARTICLE FOURTH applicable thereto, a different vote is required, in which case such express provision shall govern and control the decision of such question. Any shareholder who is in attendance at a meeting of shareholders either in person or represented by proxy, but who abstains from the vote on any matter, shall not be deemed present or represented at such meeting for purposes of the preceding sentence with respect to such vote, but shall be deemed present or represented at such meeting for all other purposes.

SIXTH:

6.1 Location for Shareholder Meetings; Keeping of Books and Records. Meetings of shareholders may be held within or outside the state of Washington as the By-laws may provide. The books of the Corporation may be kept (subject to any provision contained in the WBCA) outside the state of Washington at such place or places as may be designated from time to time by the Board of Directors or in the By-laws of the Corporation.

6.2 Shareholder Action. Any action required or permitted to be taken by the shareholders must be effected at a duly called annual or special meeting of such shareholders, and may not be effected by a consent in writing by any such shareholders.

6.3 Special Shareholders Meetings. Except as otherwise required by law, special meetings of the Corporation’s shareholders may be called only by (i) the Board of Directors pursuant to a resolution approved by the affirmative vote of a majority of the directors then in office; (ii) the Chairman of the Board, if one is elected, or (iii) the President. Only those matters

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set forth in the notice of the special meeting may be considered or acted upon at such special meeting, unless otherwise provided by law. Notwithstanding the foregoing, whenever holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, such holders may call, pursuant to the terms of the resolution or resolutions adopted by the Board of Directors pursuant to ARTICLE FOURTH hereto, special meetings of holders of such Preferred Stock.

SEVENTH:

7.1 Number of Directors. The number of directors of the Corporation shall be fixed from time to time by the vote of a majority of the entire Board of Directors, except as may be provided by the resolution or resolutions adopted by the directors of the Corporation in respect of Preferred Stock adopted pursuant to ARTICLE FOURTH hereto, but such number shall in no case be less than one (1) nor more than fifteen (15). Any such determination made by the Board of Directors shall continue in effect unless and until changed by the Board of Directors, but no such changes shall affect the term of any directors then in office.

7.2 Term of Office; Quorum; Vacancies. A director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Subject to the By-laws, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business. Any vacancies and newly created directorships resulting from an increase in the number of directors shall be filled by a majority of the Board of Directors then in office, even if less than a quorum, and shall hold office until the next shareholder’s meeting at which directors are elected and his successor is elected and qualified or until his earlier death, resignation, retirement, disqualification or removal from office.

7.3 Removal. Any director may be removed only for cause upon the affirmative vote of the holders of a majority of the votes which could be cast by the holders of all outstanding shares of capital stock entitled to vote for the election of directors, voting together as a class, given at a duly called annual or special meeting of shareholders for which notice, stating the purpose, or purposes, of the meeting is the removal of the director, is given.

7.4 No Written Ballot. Election of directors need not be by written ballot, unless the By-laws of the Corporation provide otherwise.

7.5 Preferred Stock Directors. Notwithstanding the foregoing, whenever the holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, the election, term of office, filling of vacancies, removal and other features of such directorships shall be governed by the terms of the resolution or resolutions adopted by the Board of Directors pursuant to ARTICLE FOURTH applicable thereto, and each director so elected shall not be subject to the provisions of this ARTICLE SEVENTH unless otherwise provided therein.

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EIGHTH: For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation and regulation of the powers of the Corporation and of its directors and of its shareholders or any class thereof, as the case may be, it is further provided:

(1) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

(2) The directors shall have the power to make, alter, amend, change, add to or repeal the By-laws of the Corporation.

(3) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the WBCA, these Articles, and the By-laws.

NINTH:

9.1 Limits on Director Liability. Directors of the Corporation shall have no personal liability to the Corporation or its shareholders for monetary damages for breach of conduct as a director; provided that nothing contained in this ARTICLE NINTH shall eliminate or limit the liability of a director for acts or omissions that involve intentional misconduct by a director or a knowing violation of law by a director, for voting or assenting to an unlawful distribution, or for any transaction from which the director will personally receive a benefit in money, property, or services to which the director is not legally entitled. This does not affect the availability of equitable remedies such as an injunction or rescission based upon a director’s breach of his duty of care. If the WBCA is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then by virtue of this ARTICLE NINTH the liability of a Director of the Corporation shall be eliminated or limited to the fullest extent permitted by the WBCA, as so amended.

9.2 Indemnification.

(a) Third Party Actions. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party (including, without limitation as a witness) to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal, including all appeals (other than an action, suit or proceeding by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation (and the Corporation, in the discretion of the Board, may so indemnify a person by reason of the fact that he is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation in any other capacity for or on behalf of the Corporation), against reasonable expenses (including counsel fees), judgments, decrees, fines, penalties and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if, in the case of conduct in his official capacity

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with the Corporation, he acted in good faith and in the Corporation’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 to 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 Corporation 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, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper, or (ii) violating any of the terms or provisions of Section 16 of the Securities Exchange Act of 1934, as amended, or any of the rules or regulations promulgated thereunder. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith or in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Notwithstanding the foregoing, the Corporation 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 shall be provided by the Corporation for expenses that have been paid directly by an insurance carrier under a policy of directors’ and officers’ liability insurance maintained by the Company.

(b) Actions By or in the Right of the Company. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit, including all appeals, by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the Corporation (and the Corporation, in the discretion of the Board, may so indemnify a person by reason of the fact that he is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation in any other capacity for or on behalf of the Corporation), against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if, in the case of conduct in his official capacity with the Corporation, he acted in good faith and in the Corporation’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 such person shall have been finally adjudged to be liable for (i) negligence or misconduct in the performance of his duty to the Corporation 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, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper or (ii) violating any of the terms or provisions of Section 16 of the Securities Exchange Act of 1934, as amended, or any of the rules or regulations promulgated thereunder. Notwithstanding the foregoing, the Corporation shall be required to indemnify an officer or director in connection with an action, suit or proceeding initiated by such

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person only if such action, suit or proceeding was authorized by the Board or a committee thereof. No indemnity shall be provided by the Corporation for expenses that have been paid directly by an insurance carrier under a policy of directors’ and officers’ liability insurance maintained by the Company.

(c) Indemnify if Successful. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this Section 2, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.

(d) Standard of Conduct. Except in a situation governed by subsection (c) of this Section 2, any indemnification under subsections (a) and (b) of this Section 2 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in subsections (a) and (b) of this Section 2. Such determination shall be made (1) by the Board by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the shareholders, but shares owned by or voted under the control of directors who are parties to the proceeding may not be voted on determination. The determination required by clauses (1) and (2) of this subsection (d) may in either event be made by the written consent of the majority required by each clause.

(e) Advancement of Expenses. Expenses (including attorneys’ fees) of each officer and director hereunder indemnified actually and reasonably incurred in defending any civil, criminal, administrative or investigative action, suit or proceeding or threat thereof shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of (i) an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in the Article and (ii) a written affirmation of director’s good faith belief that he has performed his duty to the company, upon request by the Corporation and if required under applicable law. Such expenses (including counsel fees) incurred by employees and agents may be so paid upon the receipt of the aforesaid undertaking and such terms and conditions, if any, as the Board deems appropriate.

(f) Nonexclusivity. The indemnification and advancement of expenses provided by, or granted pursuant to, this ARTICLE NINTH shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any law, by-law, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

(g) Procedures Exclusive. Pursuant to Section 23B.08.560(l) or any successor provision of the WBCA, the procedures for indemnification and advancement of expenses set

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forth in this Article are in lieu of the procedures required by Sections 23B.08.510 through 23B.08.550 or any successor provisions of the WBCA.

(h) Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of the WBCA.

(i) Definitions.

(1) For purposes of this ARTICLE NINTH, references to “the Corporation” shall include, in addition to the resulting Corporation, any constituent Corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent Corporation, or is or was serving at the request of such constituent Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this ARTICLE NINTH with respect to the resulting or surviving Corporation as he would have with respect to such constituent Corporation if its separate existence had continued.

(2) References to “other capacities” shall include serving as a trustee or agent for any employee benefit plan; references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries, and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this ARTICLE NINTH.

(3) The indemnification and advancement of expenses provided by, or granted pursuant to, this ARTICLE NINTH shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

(4) The right to indemnification conferred by this ARTICLE NINTH shall be deemed to be a contract between the Corporation and each person referred to herein until amended or repealed, but no amendment to or repeal of these provisions shall apply to or have any effect on the right to indemnification of any person with respect to any liability or alleged liability of such

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person for or with respect to any act or omission of such person occurring prior to such amendment or repeal.

(5) A person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to him by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term “another enterprise” as used herein shall mean any other Corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director or executive officer. The provisions of this subsection shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Section 2(a) or Section 2(b) of this ARTICLE NINTH, as the case may be.

(j) Additional Indemnification. The Corporation may, by action of its Board of Directors, provide indemnification to such of the directors, officers, employees and agents of the Corporation to such extent and to such effect as the Board of Directors shall determine to be appropriate and authorized by Washington law.

(k) Effect of Amendments. Neither the amendment, change, alteration nor repeal of this ARTICLE NINTH, nor the adoption of any provision of these Articles, the By-laws of the Corporation, nor, to the fullest extent permitted by Washington Law, any modification of law, shall eliminate or reduce the effect of this ARTICLE NINTH or the rights or any protections afforded under this ARTICLE NINTH in respect of any acts or omissions occurring prior to such amendment, repeal, adoption or modification.

TENTH: The Corporation reserves the right to repeal, alter or amend these Articles in the manner now or hereafter prescribed by statute. No repeal, alteration or amendment of these Articles shall be made unless the same is first approved by the Board of Directors of the Corporation pursuant to a resolution adopted by the directors then in office in accordance with the By-laws and applicable law and thereafter approved by the shareholders.

ELEVENTH: No preemptive rights shall exist with respect to shares of stock or securities convertible into shares of stock of this Corporation.

TWELFTH: The right to cumulate votes in the election of directors shall not exist with respect to shares of stock of this Corporation.

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THIRTEENTH: These Articles shall constitute a restatement of, and shall supersede the Articles of Incorporation and its corresponding Articles of Amendment of the Corporation, effective prior to the date hereof.

IN WITNESS WHEREOF, the Corporation has caused these Restated Articles of Incorporation to be signed by its Chairman and Chief Executive Officer and attested to by its Secretary.

	SPACEHAB, INCORPORATED
Dated: January 8, 1998
	By	/s/ Dr. Shelley A. Harrison
		Name: Dr. Shelley A. Harrison
		Title:   Chairman and Chief Executive Officer

ATTEST:
By	/s/ William S. Dawson III
	Name: William S. Dawson III
	Title:   Secretary

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OFFICER’S CERTIFICATE

The undersigned, as the duly elected and acting secretary of SPACEHAB, Incorporated hereby certifies that the Restated Articles of Incorporation of SPACEHAB, Incorporated filed herewith restate the articles to incorporate the prior effects of the conversion of Convertible Preferred Stock into Common Stock as provided for in the Articles in connection with the Company’s initial public offering of its shares, and do not include an amendment to the Articles of Incorporation.

Dated: January 8, 1998.

SPACEHAB, Incorporated

/s/ William S. Dawson III

William S. Dawson III, Secretary

EX-4.3

Exhibit 4.3

DESIGNATION OF RIGHTS, TERMS AND PREFERENCES

OF

ADDITIONAL SHARES OF

SERIES B SENIOR CONVERTIBLE PREFERRED STOCK

OF

SPACEHAB, INCORPORATED

(Pursuant to Chapter 6 of the

Washington Business Corporation Act)

Spacehab, Incorporated, a corporation organized and existing under the Business Corporation Act of the State of Washington (hereinafter called the “Corporation”), hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation as required by Chapter 6 of the Business Corporation Act at a meeting duly called and held on August 26, 1999:

RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of this Corporation (hereinafter called the “Board of Directors” or the “Board”) in accordance with the provisions of the Articles of Incorporation, the Board of Directors hereby designates additional shares of Series B Preferred Stock of the Corporation, no par value per share (the “Preferred Stock”), as follows:

Series B Senior Convertible Preferred Stock:

Section 1. Designation and Amount. The shares of such series shall be designated as “Series B Senior Convertible Preferred Stock” (the “Series B Preferred Stock”). The number of existing and outstanding shares of Series B Preferred Stock is Nine Hundred Seventy-Five Thousand (975,000) and the number of additional shares of Series B Preferred Stock shall be Three Hundred Fifty-Eight Thousand Three Hundred Thirty-Four (358,334). As a result, the total number of shares of Series B Preferred Stock shall be One Million Three Hundred Thirty-Three Thousand Three Hundred Thirty-Four (1,333,334). Such number of shares may be decreased by resolution of the Board of Directors; provided that no decrease shall reduce the number of shares of Series B Preferred Stock to a number less than the number of shares then outstanding.

Section 2. Dividends. The holders of the Series B Preferred Stock shall be entitled to receive, out of funds legally available therefor, such dividends with respect to the shares of Series B Preferred-Stock as may be declared by the Board of Directors. In addition, when and if the Board of Directors shall declare a dividend payable with respect to the then outstanding shares of Common Stock, no par value per share (“Common Stock”) of the Corporation, each holder of Series B Preferred Stock shall be entitled to the amount of dividends as would be payable on the largest number of whole shares of

Common Stock into which shares of Series B Preferred Stock held by such holder could then be converted pursuant to Section 5 hereof (such number to be determined as of the record date for the determination of holders of Common Stock entitled to receive such dividend). Dividends shall not be declared or paid to holders of Common Stock unless and until the Corporation shall simultaneously declare and pay to holders of Series B Preferred Stock the dividend referred to in the preceding sentence.

Section 3. Liquidation, Dissolution or Winding Up; Certain Mergers. Consolidations and Asset Sales.

a. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series B Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made to the holders of Common Stock or any other class or series of stock ranking on liquidation junior to the Series B Preferred Stock (the Common Stock and any other class or series of stock ranking on liquidation junior to the Series B Preferred Stock, including without limitation, the Series A Junior Participating Preferred Stock of the Corporation, being collectively referred to as “Junior Stock”) by reason of their ownership thereof, an amount equal to Nine Dollars ($9.00) for each outstanding share of Series B Preferred Stock (the “Series B Original Issue Price”) (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares) plus (ii) any dividends declared or accrued but unpaid thereon. If upon any such liquidation, dissolution or winding up of the Corporation, the remaining assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series B Preferred Stock the full amount to which they shall be entitled, the holders of shares of Series B Preferred Stock and any class or series of stock ranking on liquidation on a parity with the Series B Preferred Stock shall share ratably (based upon the sum of each series respective Original Issue Price plus accrued but unpaid dividends) in any distribution of the remaining assets and funds of the Corporation in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

b. After the payment of all preferential amounts required to be paid to the holders of Series B Preferred Stock and any other class or series of stock of the Corporation ranking on liquidation on a parity with the Series B Preferred Stock upon the dissolution, liquidation or winding up of the Corporation, the holders of shares of Junior Stock then outstanding shall be entitled to receive the remaining assets and funds of the Corporation available for distribution to its stockholders.

c. The consolidation or merger of the Corporation into or with any other entity or entities which results in the exchange of outstanding shares of the Corporation for securities or other consideration issued or paid or caused to be issued or paid by any such entity or affiliate thereof, and the sale or transfer by the Corporation of all or substantially all its assets, shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of the provisions of this Section 3, but

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only for the purposes of the redemption of such Series B Preferred Stock, and only if so elected by the holders of a majority of the outstanding shares of Series B Preferred Stock, in their sole discretion.

Section 4. Voting.

a. Each holder of outstanding shares of Series B Preferred Stock shall be entitled to the number of votes equal to the number of whole shares of Common Stock into which the shares of Series B Preferred Stock held by such holder are then convertible (as adjusted from time to time pursuant to Section 5 hereof), at each meeting of stockholders of the Corporation (and written actions of stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Corporation for their action or consideration. Except as provided by law, or by the provisions of Subsections 4(b), 4(c) and 4(d) below, holders of Series B Preferred Stock shall vote together with the holders of Common Stock, as a single class.

b. For so long as (i) any shares of Series B Preferred Stock remain outstanding and (ii) any holder thereof is a Qualified Holder (as defined in the Preferred Stock Purchase Agreement (the “Purchase Agreement”) dated as of August 2, 1999 between the Corporation and Daimler Chrysler Aerospace AG (“DASA”)), the Series B Preferred Stock (voting as a class) will elect one of the Directors (the “Preferred Director”) and the Common Stock (voting as a class) will elect the remaining Directors. The Preferred Director shall be included as a member of the Executive Committee of the Board. If at any time Series B Preferred Stock issued remains outstanding but there is no Qualified Holder, all of the Directors will be elected by the Series B Preferred Stock and Common Stock voting together as one class. This Section 4(b) shall not affect or limit provisions of Section 8.1 of the Purchase Agreement as to the right of a Qualified Holder to designate a nominee for election to the Board (and for such designee, if elected by the shareholders, to serve on the Executive Committee of the Board), which provisions may remain applicable notwithstanding there not being any shares of Series B Preferred Stock outstanding.

c. Any Preferred Director may be removed at any time, by the vote of the holders of more than fifty percent (50%) of all of the then outstanding shares of Series B Preferred Stock, voting as a separate class in person or by proxy at a special meeting of stockholders called for such purpose (or at any adjournment thereof) by holders of at least twenty percent (20%) of the outstanding shares of Series B Preferred Stock or at any annual meeting of stockholders, or by written consent delivered to the Secretary of the Corporation, and no Preferred Director may be removed at any time without the affirmative vote or consent of the holders of more than fifty percent (50%) of all of the outstanding shares of Series B Preferred Stock. Any vacancy created by the removal, death or resignation of a Preferred Director may be filled by the holders of more than fifty percent (50%) of all of the outstanding shares of Series B Preferred Stock by vote in person or by proxy at a special meeting of stockholders of the Corporation called for such purpose by holders of at least twenty percent (20%) of the outstanding shares of Series B Preferred Stock, or at any annual meeting, or by written consent delivered to the Secretary of the Corporation.

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d. So long as any shares of the Series B Preferred Stock remain outstanding, unless the vote or consent of the holders of a greater number of shares shall then be required by law, the affirmative vote or consent of the holders of more than fifty percent (50%) of all of the shares of Series B Preferred Stock at the time outstanding, voting separately as a class, given in person or by proxy either in writing (as may be permitted by law and the Articles of Incorporation and By-laws of the Corporation) or at any special or annual meeting, shall be necessary to permit, effect or validate the taking of any of the following actions by the Corporation:

(i) create, authorize, issue or sell (i) any class or series of capital stock ranking prior to or on parity with the Series B Preferred Stock as to dividends or upon liquidation, dissolution or winding up; provided, however, that holders of Common Stock may receive dividends to the extent provided by Section 2 above and, provided further, that the consent to issuance of any class or series of capital stock ranking on parity with the Series B Preferred Stock shall not be unreasonably withheld; or (ii) any rights, options or other securities convertible, exercisable or exchangeable for or into, or having rights to purchase, any shares of capital stock described in clause (i) hereof; or

(ii) amend the Articles of Incorporation or By-laws of the Corporation, or in any other manner alter or change the powers, rights, privileges or preferences of the Series B Preferred Stock, if such amendment or action would alter, change or affect adversely the powers, rights, privileges or preferences of the holders of the Series B Preferred Stock; or

(iii) increase the number of shares of Series B Preferred Stock authorized for issuance above 1,333,334 shares; or

(iv) at any time after the initial issuance date of the Series B Preferred Stock, issue any shares of Series B Preferred Stock, except (i) issuances pursuant to the Purchase Agreement, or (ii) issuances of share certificates upon transfers or exchanges of shares by holders (other than the Corporation) or in replacement of lost, stolen, damaged or mutilated share certificates;

Section 5. Optional Conversion. The holders of the Series B Preferred Stock shall each have conversion rights as follows (the “Conversion Rights”):

a. Right to Convert. Shares of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the aggregate Series B Original Issue Price of the Shares of Series B Preferred Stock being converted by the Series B Conversion Price in effect at the time of conversion or such share. The initial “Series B Conversion Price” shall be Nine Dollars ($9.00), subject to adjustment as provided below. For purposes of this Section 5, “Original Issue Date” shall mean, for the Series B Preferred Stock, the date on which the first share of Series B Preferred Stock was issued.

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In the event of a liquidation of the Corporation, the Conversion Rights shall terminate at the close of business on the first full day preceding the date fixed for the payment of any amounts distributable on liquidation to the holders of Series B Preferred Stock.

b. Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series B Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. The shares issuable upon such conversion shall be determined on the basis of the total number of shares of Series B Preferred Stock which the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.

c. Mechanics of Conversion.

(i) In order for a holder of Series B Preferred Stock to convert shares of Series B Preferred Stock into shares of Common Stock, such holder shall surrender the certificate or certificates for such shares of Series B Preferred Stock, at the office of the transfer agent for the Corporation (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), together with written notice that such holder elects to convert all or any number of the shares of the Series B Preferred Stock represented by such certificate or certificates. Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The date of receipt of such certificates and notice by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) shall be the conversion date (“Conversion Date”). The Corporation shall, as soon as practicable after the Conversion Date, issue and deliver at such office to such holder of Series B Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled, together with cash in lieu of any fraction of a share. In case less than all the shares of Series B Preferred Stock represented by any certificate are being converted, a new certificate representing the unconverted shares of Series B Preferred Stock shall be issued to the holder thereof without cost to such holder.

(ii) The Corporation shall at all times when the Series B Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series B Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series B Preferred Stock.

(iii) Upon any such conversion, no adjustment to the Series B Conversion Price shall be made for any declared or accrued but unpaid dividends on the Series B Preferred Stock surrendered for conversion or on the Common Stock delivered

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upon conversion, but, as provided in clause (iv) below, such dividends shall remain payable to the holder thereof.

(iv) All shares of Series B Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall immediately cease and terminate on the Conversion Date, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor and payment of any dividends declared or accrued but unpaid thereon. Any shares of Series B Preferred Stock so converted shall be retired and cancelled and shall not be reissued, and the Corporation (without the need for stockholder action) may from time to time take such appropriate action as may be necessary to reduce the authorized Series B Preferred Stock accordingly.

(v) The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Series B Preferred Stock pursuant to this Section 5. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Series B Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

d. Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Original Issue Date of the Series B Preferred Stock effect a subdivision of the outstanding Common Stock, the Series B Conversion Price then in effect with respect to the Series B Preferred Stock immediately before that subdivision shall be proportionately decreased. If the Corporation shall at any time or from time to time after the Original Issue Date of the Series B Preferred Stock combine the outstanding shares of Common Stock, the Series B Conversion Price then in effect immediately before the combination with respect to the Series B Preferred Stock shall be proportionately increased. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective.

e. Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time, or from time to time after the Original Issue Date of the Series B Preferred Stock shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then and in each such event the Series B Conversion Price with respect to the Series B Preferred Stock then in effect shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Series B Conversion Price for the Series B Preferred Stock then in effect by a fraction:

(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

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(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Series B Conversion Price for the Series B Preferred Stock shall be recomputed accordingly as of the close of business on such record date and thereafter the Series B Conversion Price for the Series B Preferred Stock shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions.

f. Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original Issue Date of the Series B Preferred Stock shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, then and in each such event provision shall be made so that the holders of Series B Preferred Stock shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they would have received had the Series B Preferred Stock been converted into Common Stock on the date of such event and had thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period, giving application to all adjustments called for during such period under this paragraph with respect to the rights of the holders of the Series B Preferred Stock.

g. Adjustment for Reclassification Exchange or Substitution. If the Common Stock issuable upon the conversion of the Series B Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provided for below), then and in each such event the holders of the Series B Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such shares of Series B Preferred Stock might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein.

h. Adjustment for Merger or Reorganization, etc. In case of any consolidation or merger of the Corporation with or into another corporation or the sale of all or substantially all of the assets of the Corporation to another corporation (other than a consolidation, merger or sale which is covered by Subsection 3(c)), each share of Series B

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Preferred Stock shall thereafter be convertible (or shall be converted into a security which shall be convertible) into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of such Series B Preferred Stock would have been entitled upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions in this Section 5 set forth with respect to the rights and interest thereafter of the holders of the Series B Preferred Stock, to the end that the provisions set forth in this Section 5 (including provisions with respect to changes in and other adjustments of the Series B Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Series B Preferred Stock.

i. No Impairment. The Corporation will not, by amendment of its Articles of Incorporation, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such action as may be necessary or appropriate in order to protect the respective Conversion Rights of the holders of the Series B Preferred Stock against impairment.

j. Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Series B Conversion Price pursuant to this Section 5, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series B Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of Series B Preferred Stock, furnish or cause to be furnished to such holder a similar certificate setting forth (i) such adjustments and readjustments, (ii) the Series C Conversion Price then in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which then would be received upon the conversion of such Series B Preferred Stock.

k. Notice of Record Date. In the event:

(a) that the Corporation declares a dividend (or any other distribution) on its Common Stock payable in Common Stock or other securities of the corporation;

(b) that the Corporation subdivides or combines its outstanding shares of Common Stock;

(c) of any reclassification of the Common Stock of the Corporation (other than a subdivision or combination of its outstanding shares of Common Stock or a stock dividend or stock distribution thereon), or of any consolidation or

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merger of the Corporation into or with another corporation, or of the sale of all or substantially all of the assets of the Corporation; or

(d) of the involuntary or voluntary dissolution, liquidation or winding up of the Corporation;

then the Corporation shall cause to be filed at its principal office, and shall cause to be mailed to the holders of the Series B Preferred Stock at their last addresses as shown on the records of the Corporation or its transfer agent, at least ten (10) days prior to the date specified in (i) below or twenty (20) days before the date specified in (ii) below, a notice stating

(i) the record date of such dividend, distribution, subdivision or combination, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, subdivision or combination are to be determined, or

(ii) the date on which such reclassification, consolidation, merger, sale, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, dissolution or winding up.

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IN WITNESS WHEREOF, this Designation of Rights, Terms and Preferences is executed on behalf of the Corporation by its President and attested by its Assistant Secretary this 14th day of October, 1999.

SPACEHAB, INCORPORATED
By:	/s/    SHELLEY A. HARRISON
Name:	Shelley A. Harrison
Title:	Chairman and CEO

Attest:	/s/    MARK A. KISSMAN
Name:	Mark A. Kissman
Title:	Secretary

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EX-5.1

Exhibit 5.1

July 21, 2005

SPACEHAB, Incorporated

12130 State Highway 3, Building 1

Webster, TX 77598

Re: Registration Statement on Form S-4; Offer to Exchange $63,250,000 Aggregate Principal Amount of 5.5% Senior Convertible Notes due 2010 for an Equal Principal Amount of 8% Convertible Subordinated Notes due 2007.

Ladies and Gentlemen:

We have acted as counsel for SPACEHAB, Incorporated, a Washington corporation (the “Company”), in connection with the proposed issuance by the Company of up to $63,250,000 aggregate principal amount of 5.5% Senior Convertible Notes due 2010 (the “Exchange Notes”) in exchange for an equivalent amount of the Company’s outstanding 8% Convertible Subordinated Notes due 2007 (the “Outstanding Notes”). The terms of the offer to exchange and consent solicitation are described in the Registration Statement on Form S-4 (the “Registration Statement”) filed with the Securities and Exchange Commission for the registration of the Exchange Notes under the Securities Act of 1933, as amended (the “Act”). The Outstanding Notes were issued pursuant to an Indenture dated October 15, 1997 between the Company and Wachovia Bank, National Association (formerly First Union National Bank), as trustee (the “Trustee”), and the Exchange Notes will be, issued pursuant to an indenture (the “Indenture”), between the Company and the Trustee.

In connection with the foregoing, we have examined the Indenture, the Registration Statement and such corporate records and instruments of the Company as we have deemed necessary or appropriate for purposes of this opinion.

In making the foregoing examination, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals, and the conformity to original documents of all documents submitted to us as certified or photostatic copies. As to questions of fact material to this opinion, where such facts have not been independently established, and as to the content and form of the organizational documents, minutes, records, resolutions and other documents or writings of the Company, we have relied, to the extent we deem reasonably appropriate, upon representations or certificates of officers or directors of the Company and upon documents, records and instruments furnished to us by the Company, without independent check or verification of their accuracy.

We are opining herein as to the effect on the proposed issuance of the Exchange Notes of the federal laws of the United States, the laws of the State of Texas, the General Corporation Law of the State of Delaware and the laws of the State of New York.

SPECIFIC LIMITATIONS AND QUALIFICATIONS ON

OPINIONS REGARDING ENFORCEABILITY OF THE EXCHANGE NOTES

The enforceability of the Exchange Notes is subject to the effects of (i) applicable bankruptcy, insolvency, reorganization, moratorium, rearrangement, liquidation, conservatorship or similar laws and court decisions of general application (including, without limitation, statutory or other laws regarding fraudulent or preferential transfers) now or hereafter in effect relating to or affecting the rights or remedies of creditors

generally, and (ii) general equity principles (regardless of whether enforcement is sought in a proceeding in equity or law).

We express no opinion as to the enforceability of provisions of the Exchange Notes to the extent that such provisions: (i) state that any party’s failure or delay in exercising rights, powers, privileges or remedies under the Exchange Notes shall not operate as a waiver thereof; (ii) purport to preclude the amendment, waiver, release or discharge of obligations except by an instrument in writing; (iii) purport to indemnify any person for (A) such person’s violations of federal or state securities laws or environmental laws, or (B) any obligation to the extent such obligation arises from or is a result of such person’s own negligence; (iv) purport to establish or satisfy certain factual standards or conditions; (v) purport to sever unenforceable provisions from the Exchange Notes, to the extent that the enforcement of remaining provisions would frustrate the fundamental intent of the parties to such instrument; (vi) restrict access to legal or equitable remedies; or (vii) purport to waive any claim arising out of, or in any way related to, the Exchange Notes.

We express no opinion as to: (i) whether a court would grant specific performance or any other equitable remedy with respect to enforcement of any provision contained in the Exchange Notes; or (ii) the enforceability of any provision contained in the Indenture relating to the appointment of a receiver, to the extent that appointment of a receiver is governed by applicable statutory requirements, and to the extent that such provision may not be in compliance with such requirements.

We express no opinion as to: (a) any provisions of the Exchange Notes or the Indenture regarding the remedies available to any person (i) to take action that is arbitrary, unreasonable or capricious or is not taken in good faith or in a commercially reasonable manner, whether or not such action is permitted by the Exchange Notes or the Indenture or (ii) for violations or breaches that are determined by a court to be non-material or without substantially adverse effect upon the ability of the Company to perform its material obligations under the Exchanges Notes or the Indenture; or (b) the provisions of the Exchange Notes or the Indenture that may provide for interest on interest or penalty interest.

Based upon the foregoing and subject to the qualifications stated herein, it is our opinion that, when (i) the Registration Statement has been declared effective under the Act, (ii) the Outstanding Notes have been validly exchanged by the Company, and (iii) when the Exchange Notes have been executed and delivered by the Company and authenticated by the Trustee, all in accordance with the terms of the Indenture and the Registration Statement, the Exchange Notes will constitute binding obligations of the Company.

To the extent that the obligations of the Company under the Indenture may be dependent upon such matters, we assume for purposes of this opinion that the Trustee is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization; that the Trustee is duly qualified to engage in the activities contemplated by the Indenture; that the Indenture has been duly authorized, executed and delivered by the Trustee and constitutes the legally valid and binding obligation of the Trustee, enforceable against the Trustee in accordance with its terms; that the Trustee is in compliance, generally and with respect to acting as a trustee under the Indenture, with all applicable laws and regulations; and that the Trustee has the requisite organizational and legal power and authority to perform its obligations under the Indenture.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm contained therein under the heading “Legal Matters.”

Very truly yours,

HAYNES AND BOONE, LLP

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EX-10.1

Exhibit 10.1

AMENDED AND RESTATED REPRESENTATION AGREEMENT

THIS AMENDED AND RESTATED REPRESENTATION AGREEMENT (the “Agreement”) is made and entered into as of the 15 day of August, 1995, by and between SPACEHAB, INC., a Washington State corporation, with its principal offices and address at 1215 Jefferson Davis Highway, Suite 1501, Arlington, Virginia 22202-4302, U.S.A. (hereinafter “SPACEHAB”) and MITSUBISHI CORPORATION, a company with its principal place of business in Tokyo, Japan (hereinafter “MITSUBISHI CORPORATION”).

WITNESSETH

WHEREAS, SPACEHAB is engaged in the promotion, sale and lease of certain products and services and desires to sell or lease these products and services (“Products”) in country(ies) (“Territory”), as set forth in Exhibit(s) hereto; and

WHEREAS, MITSUBISHI CORPORATION is engaged in business as a sales representative in Japan and desires to be appointed SPACEHAB’s sales representative for the Products within the Territory; and

WHEREAS, the parties entered into a Representation Agreement, as of January 12, 1989 (the “Original Agreement”), pursuant to which MITSUBISHI CORPORATION was appointed as SPACEHAB’s sales representative for the Products within the Territory; and

WHEREAS, the parties wish to amend certain provisions of, and then restate, the Original Agreement;

NOW, THEREFORE, in consideration of mutual promises herein contained, the parties agree as follows:

ARTICLE 1. APPOINTMENT AND TERM

1.1 SPACEHAB hereby appoints MITSUBISHI CORPORATION as its exclusive sales representative in the Territory to solicit, promote, and consummate sales or leases of the Products in the Territory on an exclusive basis.

1.2 The term of this Agreement is fifteen (15) years, commencing on January 12, 1989, unless sooner terminated as provided in ARTICLE 7 hereof. SPACEHAB and MITSUBISHI CORPORATION may extend this Agreement for additional terms by mutual agreement in writing.

1.3 During the term hereof, SPACEHAB shall not: (1) appoint additional representatives in the Territory, or make a request to any person, firm or corporation other than MITSUBISHI CORPORATION in connection with, the sale, lease, license or

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other disposition or use of the Products, (2) entertain any direct or indirect inquiry for the Products from any person, firm or corporation in the Territory other than MITSUBISHI CORPORATION and shall refer to MITSUBISHI CORPORATION any inquiry which SPACEHAB may receive from any person, firm or corporation in the Territory or (3) sell or lease the Products to any person, firm or corporation, other than the U.S. Government or any agency or instrumentality thereof, outside the Territory who SPACEHAB knows or has reason to know, intends to resell or sub-lease the Products in or into the Territory.

ARTICLE 2. MITSUBISHI CORPORATION’S UNDERTAKINGS

2.1 Sales Efforts - MITSUBISHI CORPORATION agrees to devote its best efforts to the sale or lease of the Products in the Territory. In furtherance of such sales efforts, MITSUBISHI CORPORATION agrees to appoint and dedicate the equivalent of at least one full-time sales representative to act on its behalf and to facilitate the performance of its obligations under this Agreement. MITSUBISHI CORPORATION shall cause such sales representative(s) to dedicate his or her full-time best efforts towards the performance of such obligations. All costs and expenses associated with such full-time sales representative(s), including but not limited to salary, maintenance of office facilities, employee benefits and other similar employer-related expenses, shall be borne by MITSUBISHI CORPORATION. The duties and responsibilities of MITSUBISHI CORPORATION described in this Section 2 shall be collectively referred to as the “Services.”

2.2 Other Services - MITSUBISHI CORPORATION shall:

(1) Share with SPACEHAB its knowledge relative to economic, commercial and industrial data, customs and procedures, business trends, market conditions and potential customers for the Products, within the Territory, as they pertain to the Products, and

(2) Cooperate with SPACEHAB in its efforts to sell the Products in or into the Territory by providing services as requested including, but not limited to, assisting with visas, customers clearance, local transportation and accommodations, interpreter and translation services, business appointments, secretarial services, and telex and telephone communications.

2.3 Compliance with Law - MITSUBISHI CORPORATION (as used in this Article 2.3 includes its directors, officers, employees and others acting on its behalf) is legally qualified in the Territory to perform the services contemplated by this Agreement. MITSUBISHI CORPORATION shall, in performing its obligations under this Agreement, comply with all applicable existing and future laws, regulations and acts of the government(s) of the Territory. Further, MITSUBISHI CORPORATION shall take

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no action on behalf of SPACEHAB that would be illegal under U.S.A. law if taken by SPACEHAB itself.

ARTICLE 3. COMPENSATION

3.1 Amount and Time of Payment - As compensation for MITSUBISHI CORPORATION’s Services rendered hereunder, SPACEHAB shall pay to MITSUBISHI CORPORATION commissions in accordance with the schedules set forth in the Exhibit(s) hereto.

3.2 Method of Payment - Payments will be made by check or order payable in U.S. currency. Payments will be delivered to MITSUBISHI CORPORATION’s principal place of business or mailed or credited to such bank in the Territory or in the U.S.A. as SPACEHAB and MITSUBISHI CORPORATION shall hereafter and from time to time agree upon. This procedure will be adjusted as necessary to comply with all laws of the Governments of the Territory and the U.S.A. Payment will only be made pursuant to and consistent with the terms of this Agreement.

3.3 Termination for Convenience or Expiration - In the event this Agreement is discontinued by termination for convenience pursuant to ARTICLE 7 hereof or by expiration, MITSUBISHI CORPORATION’s right to receive commission payments, if any, in connection with sales or leases of the Products pursuant to orders accepted by SPACEHAB before such termination or expiration, or within one (1) year after notice of termination is given, as provided in Articles 7 or 9, or within one (1) year after expiration, shall not be affected.

3.4 Reimbursement of Other Expenses - MITSUBISHI CORPORATION may incur costs other than and/or over and above those specified in this Agreement and Exhibit(s) thereto as authorized by SPACEHAB. In this event, reimbursement of such expenses, as approved by SPACEHAB, will be paid by SPACEHAB within 30 days after receipt of MITSUBISHI CORPORATION’s invoice.

ARTICLE 4. LIMITATION ON MITSUBISHI CORPORATION’S RIGHTS AND AUTHORITY

4.1 Sales Outside the Territory - MITSUBISHI CORPORATION shall not perform Sales Efforts or Services, as described in ARTICLE 2, outside the Territory without prior written approval of SPACEHAB.

4.2 No Power To Obligate SPACEHAB - MITSUBISHI CORPORATION and its employees shall be deemed to be and act solely as independent contractors and shall not represent themselves to be employees or agents of SPACEHAB for any purpose. MITSUBISHI CORPORATION and its employees are not authorized to make commitments for the account of, assume or create express or implied obligations on behalf of, or in any respect bind SPACEHAB, and SPACEHAB reserves the right, in its

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sole discretion, to refuse to quote on any proposed sale, lease or license or to accept any order solicited or negotiated by MITSUBISHI CORPORATION.

4.3 Product Literature - Subject to applicable U.S.A. security and export laws and regulations, SPACEHAB will furnish MITSUBISHI CORPORATION with such quantities of current literature, data, and technical information covering the Products as deemed necessary by SPACEHAB at no cost for MITSUBISHI CORPORATION’s use in performing its duties hereunder. MITSUBISHI CORPORATION agrees that such material is proprietary to SPACEHAB and that SPACEHAB retains the exclusive right thereto. The material may be disseminated as necessary to prospective customers. Furnishing above described materials shall not be construed as granting any license under any invention, patent concept, technology or copyright now or hereafter owned or controlled by SPACEHAB.

4.4 Confidentiality - MITSUBISHI CORPORATION shall not disclose to anyone, or except for performance of this Agreement, make use of information owned or controlled by SPACEHAB relative to their business or the business of their suppliers or affiliates, unless such information is so generally known or recognized as standard practice as to be in the public domain.

ARTICLE 5. QUOTATIONS TO PURCHASERS

SPACEHAB may provide or cause to be provided to MITSUBISHI CORPORATION written material which may be amended from time to time, setting forth prices, charges, terms and conditions or such other additional information which MITSUBISHI CORPORATION may quote or provide in connection with any proposed sale. MITSUBISHI CORPORATION may deviate from the material only when SPACEHAB issues contrary written instructions on any order by order basis. Such instructions shall apply solely to the order for which issued.

ARTICLE 6. RESERVATIONS AND EXCLUSIONS

6.1 Government Approval - The express consent and approval of the Governments of the U.S.A. and the Territory may be required before any agreement to sell or sale of the Products hereunder can be effective, and neither SPACEHAB nor MITSUBISHI CORPORATION represents that such consent or approval will be granted.

6.2 Failure to Enforce - Failure to enforce any provisions of this Agreement shall not be construed as a waiver of such provisions by either party or of the right to enforce them subsequently.

ARTICLE 7. TERMINATION FOR BREACH

Either party shall have the right and option to terminate this Agreement immediately by written notice to the other party upon the material breach of any

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provision hereto by the other party, and shall thereupon have a claim against such party in breach for such reasonable costs and direct damage as may have been incurred by the terminating party resulting from the breach by the other party.

ARTICLE 8. ASSIGNMENT

Neither this Agreement nor rights and duties hereunder may be assigned or transferred, by operation of law or otherwise, or delegated by either party without prior written consent of the other party.

ARTICLE 9. NOTICES

All formal notices and communications hereunder shall be sent by telegram, cablegram or by registered airmail, with a copy by ordinary airmail, and shall be deemed given on the date deposited in the cable, telegraph or post office, addressed to the other party as follows, provided that either party may from time to time change the address to which notices to it are to be sent by giving written notice of such change to the other party:

SPACEHAB, Inc.	MITSUBISHI CORPORATION
1215 Jefferson Davis Highway, Suite 1501	3-1, Marunouchi 2-chome
Arlington, VA 22202-4302	Chiyoda-ku, Tokyo
	Japan 100-86
Attention:	Attention:
Mr. Richard P. Hora	Mr. Kenichiro Yoshiyama,
President and CEO	General Manager,
	Aerospace Division

ARTICLE 10. EXHIBITS

Exhibit A constitutes a part of this Agreement.

ARTICLE 11. ENTIRE AGREEMENT - AMENDMENT APPLICABLE LAWS

This Agreement, together with all amendments hereto:

(1) Constitutes the entire understanding between the parties concerning the subject matter hereof,

(2) Supersedes all prior written or oral understandings of the parties concerning the subject matter hereof, including but not limited to, the Original Agreement,

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(3) May be amended only by written instrument signed by both parties subsequent to the data hereof,

(4) May be executed in any number of counterparts, whether transmitted by facsimile or otherwise, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument; and

(5) Shall be construed in accordance with the laws of the Commonwealth of Virginia.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written by their officers thereunto duly authorized.

SPACEHAB, INC.		MITSUBISHI CORPORATION
By:	/s/    RICHARD P. HORA	By:	/s/    KENICHIRO YOSHIYAMA
	Richard P. Hora		Kenichiro Yoshiyama
	President and CEO		General Manager
			Aerospace Division

Witness:  /s/ Illegible Witness:  /s/ Illegible

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EXHIBIT A

AMENDED AND RESTATED REPRESENTATION AGREEMENT

1. Products: All SPACEHAB products and services to be marketed, leased and/or sold in the Territory, including, but not limited to, SPACEHAB pressurized middeck augmentation module facilities (“Spacehab Modules”), and all related goods and services.

2. Territory - Japan

3. Compensation - as referred in Article 3, shall consist of:

3.1. Amount - SPACEHAB shall compensate MITSUBISHI CORPORATION for the Services in the amount of (i) twelve percent (12%) of the Sales Price (as defined in Section 3.2 of this Exhibit A) earned by SPACEHAB from sales of the Product(s) in the Territory to NASDA relating to the so-called “Joint Mission” for orbital research, currently expected to be between NASA, NASDA and ESA, whether such sales are made directly to the purchaser or through the U.S. Government (but only in cases where the Sales Price for the Product(s) in the Territory is paid by the purchaser to the U.S. Government and subsequently paid to SPACEHAB), and (ii) fifteen percent (15%) of the Sales Price (as defined in Section 3.2 of this Exhibit A) earned by SPACEHAB from all other sales of the Product(s) in the Territory, whether such sales are made directly to the purchaser or through the U.S. Government (but only in cases where the Sales Price for the Product(s) in the Territory is paid by the purchaser to the U.S. Government and subsequently paid to SPACEHAB).

3.2 Sale Price - Compensation shall be based on the sale or lease price of the Product(s), excluding only the price of Space Shuttle flight and other services payable by SPACEHAB to NASA either directly or indirectly.

3.3 Time of Payment - Compensation will be payable thirty (30) days after SPACEHAB receives full cash payment from the purchaser or at such other times as mutually agreed between MITSUBISHI CORPORATION and SPACEHAB.

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EX-10.2

Exhibit 10.2

AMENDED AND RESTATED REPRESENTATION AGREEMENT -REV I

THIS AMENDED AND RESTATED REPRESENTATION AGREEMENT -REV 1 (the “Amended Agreement-Rev 1”) is effective as of the 13th of January, 2004, by and between SPACEHAB, INC. a Washington State corporation, with its principal place of business in Houston, Texas, U.S.A. (hereinafter “SPACEHAB”) and MITSUBISHI CORPORATION, a company with its principal place of business in Tokyo, Japan (hereinafter “MITSUBISHI CORPORATION”).

WITNESSETH

WHEREAS, SPACEHAB is engaged in the promotion, sale and lease of certain products and services and desires to sell or lease these products and services (“Products”) in country(ies) (“Territory”), as set forth in Exhibit A hereto; and

WHEREAS, MITSUBISHI CORPORATION is engaged in business as a sales representative in Japan and desires to be appointed SPACEHAB’s sales representative for the Products within the Territory; and

WHEREAS, the parties entered into a Representation Agreement, as of January 12, 1989 (the “Original Agreement”), pursuant to which MITSUBISHI CORPORATION was appointed as SPACEHAB’s sales representative for the Products within the Territory; and

WHEREAS, the parties entered into an Amended and Restated Representation Agreement (the “Amended Agreement”) on August 15, 1995, and

WHEREAS, the parties wish to amend certain provisions of, and then restate, the Amended Agreement;

NOW, THEREFORE, in consideration of mutual promises herein contained, the parties agree as follows:

ARTICLE 1. APPOINTMENT AND TERM

1.1 SPACEHAB hereby appoints MITSUBISHI CORPORATION as its exclusive sales representative in the Territory to solicit, promote, and consummate sales or leases of the Products in the Territory on an exclusive basis.

1.2 The cumulative term of all Agreements referenced herein is twenty (20) years, commencing on the date of the Original Agreement, January 12, 1989, unless sooner terminated as provided in ARTICLE 7 hereof. SPACEHAB and MITSUBISHI CORPORATION may extend this Agreement for additional terms by mutual agreement in writing.

1.3 During the term hereof, SPACEHAB shall not: (1) appoint additional representatives in the Territory, or make a request to any person, firm or corporation other than MITSUBISHI CORPORATION in connection with, the sale, other disposition or use of the Products, (2) entertain any direct or indirect inquiry for the Products from any person, firm or corporation in the Territory other than MITSUBISHI CORPORATION and shall refer to MITSUBISHI CORPORATION any inquiry which SPACEHAB may receive from any person, firm or corporation in the Territory or (3) sell or lease the Products to any person, firm or corporation, other than the U.S. Government or any agency or instrumentality thereof, outside the Territory who SPACEHAB knows or has reason to know, intends to resell or sub-lease the Products in or into the Territory.

ARTICLE 2. MITSUBISHI CORPORATION’S UNDERTAKINGS

2.1 Sales Efforts - MITSUBISHI CORPORATION agrees to devote its best efforts to the sale or lease of the Products in the Territory. In furtherance of such sales efforts, MITSUBISHI CORPORATION agrees to appoint and dedicate the equivalent of at least one full-time sales representative to act on its behalf and to facilitate the performance of its obligations under this Agreement. MITSUBISHI CORPORATION shall cause such sales representative(s) to dedicate his or her full-time best efforts towards the performance of such obligations. All costs and expenses associated with such full-time sales representative(s), including but not limited to salary, maintenance of office facilities, employee benefits and other similar employer-related expenses, shall be borne by MITSUBISHI CORPORATION. The duties and responsibilities of MITSUBISHI CORPORATION described in this Section 2 shall be collectively referred to as the “Services.”

2.2 Other Services - MITSUBISHI CORPORATION shall:

(1) Share with SPACEHAB its knowledge relative to economic, commercial and industrial data, customs and procedures, business trends, market conditions and potential customers for the Products, within the Territory, as they pertain to the Products, and

(2) Cooperate with SPACEHAB in its efforts to sell the Products in or into the Territory by providing services as requested including, but not limited to, assisting with visas, customers clearance, local transportation and accommodations, interpreter and translation services, business appointments, secretarial services, and telex and telephone communications.

2.3 Compliance with Law - MITSUBISHI CORPORATION (as used in this Article 2.3 includes its directors, officers, employees and others acting on its behalf) is legally qualified in the Territory to perform the services contemplated by this Agreement. MITSUBISHI CORPORATION shall, in performing its obligations under this Agreement, comply with all applicable existing and future laws, regulations and acts of the government(s) of the Territory. Further, MITSUBISHI CORPORATION shall take no action on behalf of SPACEHAB that would be illegal under U.S.A. law if taken by SPACEHAB itself.

ARTICLE 3. COMPENSATION

3.1 Amount and Time of Payment - As compensation for MITSUBISHI CORPORATION’s Services rendered hereunder, SPACEHAB shall pay to MITSUBISHI CORPORATION commissions in accordance with the schedules set forth in Exhibit A hereto.

3.2 Method of Payment - Payments will be made by check or order payable in U.S. currency. Payments will be delivered to MITSUBISHI CORPORATION’s principal place of business or mailed or credited to such bank in the Territory or in the U.S.A. as SPACEHAB and MITSUBISHI CORPORATION shall hereafter and from time to time agree upon. This procedure will be adjusted as necessary to comply with all laws of the Governments of the Territory and the U.S.A. Payment will only be made pursuant to and consistent with the terms of this Agreement.

3.3 Termination for Convenience or Expiration - In the event this Agreement is discontinued by termination for convenience pursuant to ARTICLE 7 hereof or by expiration, MITSUBISHI CORPORATION’s right to receive commission payments, if any, in connection with sales or leases of the Products pursuant to orders accepted by SPACEHAB before such termination or expiration, or within one (1) year after notice of termination is given, as provided in Articles 7 or 9, or within one (1) year after expiration, shall not be affected.

3.4 Reimbursement of Other Expenses - MITSUBISHI CORPORATION may incur costs other than and/or over and above those specified in this Agreement and Exhibit(s) thereto as authorized by SPACEHAB. In this event, reimbursement of such expenses, as approved by SPACEHAB, will be paid by SPACEHAB within 30 days after receipt of MITSUBISHI CORPORATION’s invoice.

ARTICLE 4. LIMITATION ON MITSUBISHI CORPORATION’S RIGHTS AND AUTHORITY

4.1 Sales Outside the Territory - MITSUBISHI CORPORATION shall not perform Sales Efforts or Services, as described in ARTICLE 2, outside the Territory without prior written approval of SPACEHAB.

4.2 No Power To Obligate SPACEHAB - MITSUBISHI CORPORATION and its employees shall be deemed to be and act solely as independent contractors and shall not represent themselves to be employees or agents of SPACEHAB for any purpose. MITSUBISHI CORPORATION and its employees are not authorized to make commitments for the account of, assume or create express or implied obligations on behalf of, or in any respect bind SPACEHAB, and SPACEHAB reserves the right, in its sole discretion, to refuse to quote on any proposed sale, lease or license or to accept any order solicited or negotiated by MITSUBISHI CORPORATION.

4.3 Product Literature - Subject to applicable U.S.A. security and export laws and regulations, SPACEHAB will furnish MITSUBISHI CORPORATION with such quantities of current literature, data, and technical information covering the Products as deemed necessary by SPACEHAB at no cost for MITSUBISHI CORPORATION’s use in performing its duties hereunder. MITSUBISHI CORPORATION agrees that such material is proprietary to SPACEHAB and that

SPACEHAB retains the exclusive right thereto. The material may be disseminated as necessary to prospective customers. Furnishing above described materials shall not be construed as granting any license under any invention, patent concept, technology or copyright now or hereafter owned or controlled by SPACEHAB.

4.4 Confidentiality - MITSUBISHI CORPORATION shall not disclose to anyone, or except for performance of this Agreement, make use of information owned or controlled by SPACEHAB relative to their business or the business of their suppliers or affiliates, unless such information is so generally known or recognized as standard practice as to be in the public domain.

ARTICLE 5. QUOTATIONS TO PURCHASERS

SPACEHAB may provide or cause to be provided to MITSUBISHI CORPORATION written material which may be amended from time to time, setting forth prices, charges, terms and conditions or such other additional information which MITSUBISHI CORPORATION may quote or provide in connection with any proposed sale. MITSUBISHI CORPORATION may deviate from the material only when SPACEHAB issues contrary written instructions on any order by order basis. Such instructions shall apply solely to the order for which issued.

ARTICLE 6. RESERVATIONS AND EXCLUSIONS

6.1 Government Approval - The express consent and approval of the Governments of the U.S.A. and the Territory may be required before any agreement to sell or sale of the Products hereunder can be effective, and neither SPACEHAB nor MITSUBISHI CORPORATION represents that such consent or approval will be granted.

6.2 Failure to Enforce - Failure to enforce any provisions of this Agreement shall not be construed as a waiver of such provisions by either party or of the right to enforce them subsequently.

ARTICLE 7. TERMINATION FOR BREACH

Either party shall have the right and option to terminate this Agreement immediately by written notice to the other party upon the material breach of any provision hereto by the other party, and shall thereupon have a claim against such party in breach for such reasonable costs and direct damage as may have been incurred by the terminating party resulting from the breach by the other party.

ARTICLE 8. ASSIGNMENT

Neither this Agreement nor rights and duties hereunder may be assigned or transferred, by operation of law or otherwise, or delegated by either party without prior written consent of the other party.

ARTICLE 9. NOTICES

All formal notices and communications hereunder shall be sent by telegram, cablegram or by registered airmail, with a copy by ordinary airmail, and shall be deemed given on the date deposited in the cable, telegraph or post office, addressed to the other party as follows, provided that either party may from time to time change the address to which notices to it are to be sent by giving written notice of such change to the other party:

SPACEHAB, INC.	MITSUBISHI CORPORATION
12130 Highway 3, Bldg. 1	16-3, Konan 2-Chome
Webster, TX 77598	Minato-ku, Tokyo
	108-8228, Japan
Attention:	Attention:
Ms. Kathy K. Whitaker	Mr. Yoichi Kamiyama
Director, Business Management	General Manager, Space Systems Unit
Space Flight Services	Aerospace Division

ARTICLE 10. EXHIBITS

Exhibit A constitutes a part of this Agreement.

ARTICLE 11. ENTIRE AGREEMENT - AMENDMENT APPLICABLE LAWS

This Agreement, together with all amendments hereto:

(1) Constitutes the entire understanding between the parties concerning the subject matter hereof,

(2) Supersedes all prior written or oral understandings of the parties concerning the subject matter hereof, including but not limited to, the Original Agreement,

(3) May be amended only by written instrument signed by both parties subsequent to the data hereof,

(4) May be executed in any number of counterparts, whether transmitted by facsimile or otherwise, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument; and

(5) Shall be construed in accordance with the laws of the Commonwealth of Virginia.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written by their officers thereunto duly authorized.

SPACEHAB, INC.		MITSUBISHI CORPORATION
By:	/s/    DANIEL A. BLAND, JR.	By:	/s/    TATSUO SATO

	Daniel A. Bland, Jr.		Tatsuo Sato
	Senior Vice President		Senior Vice President
	Space Flight Services		Division COO
			Aerospace Division
Date:	25 Aug 2004	Date:	Aug 25, 2004

EXHIBIT A

AMENDED AND RESTATED-REPRESENTATION AGREEMENT-REV 1

1. Products: All SPACEHAB products and services to be marketed, leased and/or sold in the Territory, including, but not limited to, SPACEHAB pressurized middeck augmentation module facilities (“Spacehab Modules”), and all related goods and services.

2. Territory - Japan

3. Compensation - as referred in Article 3, shall consist of:

3.1. Amount - SPACEHAB shall compensate MITSUBISHI CORPORATION for the Services in the amount of (i) fifteen percent (15%) of the Sales Price for the time period January 13, 2004 to June 30, 2004, and (ii) ten percent (10%) of the Sales Price for the time period July 1, 2004 to January 12, 2009 earned by SPACEHAB from all sales of the Product(s) in the Territory, whether such sales are made directly to the purchaser or through the U.S. Government (but only in cases where the Sales Price for the Product(s) in the Territory is paid by the purchaser to the U.S. Government and subsequently paid to SPACEHAB).

3.2 Sale Price - Compensation shall be based on the sale or lease price of the Product(s), excluding only the price of Space Shuttle flight and other services payable by SPACEHAB to NASA either directly or indirectly.

3.3 Time of Payment - Compensation will be payable thirty (30) days after SPACEHAB receives full cash payment from the purchaser or at such other times as mutually agreed between MITSUBISHI CORPORATION and SPACEHAB.

EX-10.7

Exhibit 10.7

AGREEMENT

This Agreement (this “Agreement”), is dated as of September 30, 2004 by and between Dr. Shelley A. Harrison (the “Executive”) and SPACEHAB, Incorporated, a Washington corporation (the “Company”).

W I T N E S S E T H:

WHEREAS, Executive currently serves as the non-executive Chairman of the Company under an Agreement dated as of October 24, 2002 (the “Prior Employment Agreement”);

WHEREAS, the initial term of the Prior Employment Agreement expired on March 31, 2004 and was automatically renewed for an additional one year term expiring March 31, 2005;

WHEREAS, the Company wishes to retain the future services of Executive for the Company following expiration of the additional term of the Prior Employment Agreement; and

WHEREAS, Executive is willing, upon the terms and conditions set forth in this Agreement, to continue to provide services to the Company;

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 Service

Subject to Section 3, the Company hereby appoints Executive, and Executive agrees to accept such appointment, during the Term of Service (as defined in Section 3(a)), as the non-executive Chairman of the Board of the Company and a member of the Board’s Executive Committee, provided however, that nothing herein shall require Executive to relocate his principal residence from the Long Island, New York area.

2. Extent of Service

(a) During the Term of Service, 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 and shall abide by the rules, customs and usages from time to time established by the Company.

(b) During the Term of Service, 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. Subject to the provisions of

Section 7 and 8, Executive may engage in other employment or consulting work, or in any trade or business, during the Term of Service for his own account or on behalf of any person or entity and may serve on any corporate, political, civic or charitable boards of committees, provided, in each case, such activities do not violate any of his obligations under this Section 2.

(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 Service; Termination

(a) The “Term of Service” shall commence on April 1, 2005 and shall continue for a term ending on March 31, 2006 (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 at least ninety (90) days prior to the end of the Initial Term or an Additional Term, as the case may be. Should Executive’s service by the Company be earlier terminated pursuant to Section 3(b) or 3(c), the Term of Service shall end on the date of such earlier termination.

(b) Subject to the payments contemplated by Section 3(d), the Term of Service 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)); or

(iv) for any other reason not referred to in clauses (i) through (iii), 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

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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 Service 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 compensation, 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 for any proposal that would require the relocation of Executive from the Long Island, New York area; 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.

(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 Executive on a per se basis due to the offices held by 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,

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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 7 and 8. 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 Service is terminated pursuant to Section 3(b)(i) [death], 3(b)(ii) [disability] or 3(b)(iv) [by the Company for any other reason or no reason] or 3(c)(i) [death], 3(c)(ii) [disability], 3(c)(iii) [material reduction], the Company will: (A) pay to Executive (or his estate or representative) a lump-sum amount equal to the sum of his earned but unpaid base salary through the date of termination and any unreimbursed business expenses or other amounts due to Executive from the Company as of the date of termination (the “Accrued Rights”) and (B) pay to Executive (or his estate or representative) the full amounts to which Executive would be entitled to under Section 4 for the period from effectiveness of termination until the end of the Term of Service.

Payment of the amounts 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 Sections 7 and 8. 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.

(ii) In the event Executive’s Service is terminated pursuant to Section 3(b)(iii) [Cause or Material Breach] or 3(c)(iv) [voluntary], the Company will pay and provide to Executive any Accrued Rights and the Company will not be obligated to pay any further amounts to Executive under this Agreement.

(e) In the event the Term of Service is terminated and the Company is obligated to make payments to Executive pursuant to Section 3(d), 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) will not be mitigated or reduced by Executive’s compensation under such alternative employment.

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(f) In the event the Term of Service is terminated and the Company is obligated to make payments pursuant to Section 3(d), 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 Service during the Term of Service and this Agreement, other than claims relating to Executive’s right to payments or benefits under Sections 3(d).

(g) Notwithstanding the terms of any stock option plan or grant documentation, any unexercised stock options granted to Executive shall immediately vest and be immediately exercisable and any and all stock options then held by Executive shall remain exercisable for their full ten year term in the event of a termination of Service, unless such termination is pursuant to Sections 3(b)(iii) or 3(c)(iv) hereof.

(h) Termination of the Term of Service will not terminate Sections 3(d), 3(f), 3(g), and 7 through 21.

4. Compensation

During the Term of Service, the Company shall pay to Executive as compensation for his services hereunder, in bi-monthly installments, a base salary at a rate of $60,000 per annum. 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. The Company and Executive confirm that during the period from the date hereof through March 31, 2005, Executive shall continue to be compensated at a rate of $120,000 per annum, as contemplated by the Prior Employment Agreement.

5. Reimbursement of Expenses

During the Term of Service, Executive shall be entitled to receive prompt reimbursement of all reasonable out-of-pocket expenses properly incurred by him in connection with his duties under this Agreement, including reasonable expenses for entertainment and travel, provided that such expenses are properly approved, documented and reported in accordance with the policies and procedures of the Company applicable at the time the expenses are incurred.

6. Other Benefits

(a) The Company shall continue to extend COBRA benefits and extend whatever coverages and benefits that are extended to former employees of the Company in accordance with the terms of any benefit plans and the Company’s past practice. Executive shall not be considered as an employee for purposes of Company benefits following March 31, 2003. He shall, however, be entitled to any benefits that are or may be extended to Company directors during his Term of Service.

(b) Notwithstanding the terms of any stock option plan or grant documentation, any unexercised stock options granted to Executive shall continue to vest

5

during the Term of Service and all vested options, whether during or after the Term of Service, shall remain exercisable for the balance of their remaining ten (10) year term.

7. Confidential Information

(a) Executive acknowledges that his Service 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 Service, 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 Company, Confidential Information (as defined in Section 9), whether prepared by Executive or not; provided, however, that any Confidential Information may be disclosed to officers, representatives, employees and agents of the Company 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 9). Executive shall use his best efforts to prevent the removal of any Confidential Information from the premises of the Company, except as required in his normal course of service 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 Service, or thereafter, all Confidential Information which he may possess or control. Executive agrees that all Confidential Information of the Company (whether now or hereafter existing) conceived, discovered or made by him during the Term of Service exclusively belongs to the Company (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 7, 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.

8. Non-Interference

(a) Executive acknowledges that the services to be provided give him the opportunity to have special knowledge of the Company and its Confidential

6

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 Term of Service, 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 Service with a successor company to the Company.

(ii) During the Term of Service, 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 Service, 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 Service opportunity.

(iii) The scope and term of this Section 8 would not preclude him from earning a living with an entity that is not a Competitive Business.

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9. 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, 2004, 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 Company prior to the date hereof or at any time during the Term of Service.

“Cause” is defined in Section 3(d).

“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 Executive contracts, pricing policies, sales techniques, confidential information relating to suppliers, information relating to the special and particular needs of the Company’ 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 Company, 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 Company 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 Company at any time during the Term of Service.

“Material Breach” is defined in Section 3(d). “Prior Service Agreement” is defined in Section 11.

“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

8

more intermediaries, more than fifty percent (50%) of the voting securities at the time of determination.

“Term of Service” is defined in Section 3(a).

10. 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
	12130 Highway 3
	Building One
	Webster, Texas 77598
	Attention: Chief Executive Officer
	with a copy to:
	Frederick W. Kanner
	Dewey Ballantine LLP
	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.

11. Previous Agreements

Executive and the Company agree as of April 1, 2005 to cancel, void and render without force and effect all prior Employment Agreements (including the Prior Employment Agreement) or severance agreements (other than this Agreement) between Executive and the Company (“Prior Service Agreements”), and as of such date Executive releases and discharges the Company from any further obligations or liabilities thereunder. Notwithstanding the foregoing, the terms and provisions in any Prior Service Agreement relating to indemnification or 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.

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12. Other Matters

The Company agrees and acknowledges that the existing Indemnification Agreement by and between the Company and Executive shall remain in full force and effect during the Term of Service and thereafter in accordance with its terms.

13. 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.

14. 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 8 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.

15. 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 7 and 8 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.

16. Successors

This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and any person, firm, corporation or other entity which succeeds to all or substantially all of the business, assets or property of the Company. The Company will require any successor (whether direct or indirect, by purchase, merger,

10

consolidation or otherwise) to all or substantially all of the business, assets or property of the Company, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, the “Company” shall mean the Company as hereinbefore defined and any successor to its business, assets or property as aforesaid which executes and delivers an agreement provided for in this Section 16 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

17. Assignment

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.

18. 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 embody the entire agreement and understanding of the parties hereto in respect of the subject matter of this Agreement, and supersede and replace all prior Agreements, understandings and commitments with respect to such subject matter.

19. Litigation

THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF NEW YORK, 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. 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 STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURTS IN THE SOUTHERN DISTRICT OF NEW YORK. 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 19 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.

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20. 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.

21. Legal Fees and Expenses.

To induce Executive to execute this Agreement and to provide Executive with reasonable assurance that the purposes of this Agreement will not be frustrated by the cost of its enforcement should the Company fail to perform its obligations hereunder, the Company shall pay and be solely responsible for any attorneys’ fees and expenses and court costs incurred by Executive as a result of a claim that the Company has breached or otherwise failed to perform this Agreement or any provision hereof to be performed by the Company, regardless of which party, if any, prevails in the contest.

22. 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.

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IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first written above.

/s/    SHELLEY A. HARRISON        

Dr. Shelley A. Harrison

SPACEHAB, INCORPORATED
By:	/s/    MICHAEL E. KEARNEY
	Michael E. Kearney Chief Executive Officer

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EX-10.8

Exhibit 10.8

OFFICE LEASE

300 D THIRD STREET, S.W.

WASHINGTON, D.C.

Between

Washington Design Center L.L.C.

Landlord

and

SPACEHAB, Incorporated

Tenant

December 16, 1998

TABLE OF CONTENTS

			Page
ARTICLE I	Premises; Landlord’s Rights
	1.01	Premises	1
	1.02	Landlord’s Rights	1
ARTICLE II	Term; Commencement Date
	2.01	Term	2
	2.02	Commencement Date	2
	2.03	Commencement of Work	2
	2.04	Tenant Allowance	2
	2.05	Renewal Option	2
ARTICLE III	Use; Legal Requirements
	3.01	Use	3
	3.02	Legal Requirements	3
ARTICLE IV	Base Rent; Additional Rent
	4.01	Rent Generally	4
	4.02	Base Rent	4
	4.03	Additional Rent	4
	4.04	Rent Payments: No Waiver	5
	4.05	Moratorium	5
	4.06	No Conditions	5
ARTICLE V	Rent Adjustments
	5.01	Real Estate Taxes	5
	5.02	Operating Expenses	6
	5.03	Payments of Rent Adjustments	6
	5.04	Audit Rights By Tenant	7
ARTICLE VI	Financial Reports
	6.01	Tenant’s Financial Reports	7
ARTICLE VII	Condition of Premises; Duty of Care
	7.01	Condition of the Premises	7
	7.02	Tenant’s Duty of Care	8
ARTICLE VIII	Tenant’s Alterations and Equipment
	8.01	Alterations; Equipment	8
	8.02	Landlord’s Consent	8
ARTICLE IX	Services
	9.01	Business Hours	9

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	9.02	Utilities; Access	9
	9.03	HVAC	10
	9.04	Cleaning	10
	9.05	Security	10
	9.06	Signage	10
	9.07	Parking	10
ARTICLE X	Assignment; Sublease
	10.01	Prohibited Leasehold Transfers	10
	10.02	Landlord’s Consent	11
	10.03	Recapture	12
ARTICLE XI	Right of First Offer
	11.01	Right of First Offer	12
ARTICLE XII	Surrender; Holdover
	12.01	Surrender of the Premises	13
	12.02	Holdover	14
ARTICLE XIII	Quiet Enjoyment; Subordination
	13.01	Covenant of Quiet Enjoyment	14
	13.02	Subordination	15
	13.03	Subordination, Attornment and Non-Disturbance Agreement; Estoppel Certificate	16
ARTICLE XIV	Fire or Casualty; Condemnation
	14.01	Fire or Casualty	16
	14.02	Condemnation	16
ARTICLE XV	Landlord’s Access, Repairs and Alterations
	15.01	Access; Repairs, Alterations	17
ARTICLE XVI	Insurance: Waiver of Claims; Indemnity
	16.01	Insurance Generally	17
	16.02	Casualty Insurance	18
	16.03	Property Insurance	18
	16.04	Waiver of Claims	19
	16.05	Indemnity	19
	16.06	Landlord’s Insurance	19
ARTICLE XVII	[Reserved]		19
ARTICLE XVIII	Insolvency; Events of Default; Remedies
	18.01	Events of Insolvency	20
	18.02	Events of Default	20

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	18.03	Remedies; Waivers	21
	18.04	Intentionally Deleted	22
	18.05	Late Payments; Interest	22
	18.06	Landlord’s Right to Cure Defaults	22
ARTICLE XIX	Miscellaneous
	19.01	Rules and Regulations	22
	19.02	Brokerage	23
	19.03	Transfers of Title	23
	19.04	Notices	23
	19.05	Interpretation	24
	19.06	Successors and Assigns	25
	19.07	Cumulative Rights and Remedies	25
	19.08	Counterparts	25
	19.09	Rule Against Perpetuities	25
	19.10	Authority/Limitation of Landlord’s liability	25
	19.11	Affirmative Action Program	26

Addendum
Exhibit A-1	Office Space A-2 Land
Exhibit B	Reserved
Exhibit C	Reserved
Exhibit D	Reserved
Exhibit E	Cleaning Services
Exhibit F	Reserved
Exhibit G	Form of Estoppel Certificate
Exhibit H	Rules and Regulations
Exhibit I	License Agreement
Exhibit J	Affirmative Action Program
Exhibit K	Title Instruments of Record

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DEED OF LEASE

THIS DEED OF LEASE (the “Lease”) made as of December 16, 1998, between WASHINGTON DESIGN CENTER L.L.C., a Delaware limited liability company (“Landlord”), and SPACEHAB, INCORPORATED, a Washington corporation (“Tenant”).

In consideration of the mutual promises set forth below, the parties agree as follows:

ARTICLE I

Premises; Landlord’s Rights

1.01 Premises. Subject to the terms and conditions hereof, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord Suite 814, containing approximately 15,499 rentable square feet as indicated on the floor plan attached hereto as Exhibit A-l (the “Premises”), of the building constructed on the land identified in the legal description attached hereto as Exhibit A-2 (the “Land”), known by street address as 300 D Street, S.W., Washington, D.C. (the “Building”). The “Property” consists of the Land and the Building, together with all present and future easements, additions, expansions, improvements and other rights appurtenant thereto. In addition to the exclusive right to use and occupy the Premises subject to the terms hereof, Tenant shall, subject to the terms hereof, have nonexclusive access to such portions of the Property which are designated by Landlord as common areas and which are reasonably required for the access to and use of the Premises (e.g., main lobby entrances, common elevators, and the corridors, elevator lobby and restrooms on the floor on which the Premises is located). Tenant shall have no other rights to any portion of the Property other than as expressly set forth herein. Landlord and Tenant agree that the rentable area of the Premises set forth above shall be conclusive for all purposes of this Lease.

1.02 Landlord’s Rights. Landlord retains the exclusive right to use or modify in any manner whatsoever all Property other than the Premises located outside of the interior walls, ceiling and floor of the Premises, Building systems, and structural parts of the Building. For example, Landlord may: (1) change the name or the street address of the Building; (2) install or replace any signs located outside the Premises; (3) regulate window treatments, lighting fixtures and similar items visible from the common areas or exterior of the Building; (4) regulate the furnishing of services [including utilities and telephone (but not including the telephone equipment within Tenant’s Premises or the servicer used by Tenant provided that such servicer shall have no right to install equipment or lines of any type in the Building except within the Premises) at commercially reasonable rates] to the Building or any occupant thereof, (5) grant any person the exclusive right to conduct any business or render any service in the Building, provided that such exclusive right shall not operate to exclude Tenant from any use expressly permitted herein; and (6) regulate the movement of individuals and property into and throughout the Building outside the Premises, provided that the exercise of such rights does not unreasonably limit access to the Premises or Tenant’s right to conduct its business and operate the Premises in its discretion (subject to the other terms of this Lease). Landlord also retains the right to demolish that portion of the Building which does not contain the Premises and to erect new improvements on the Land, so long as such demolition and construction does not interfere with and interrupt Tenant’s use of the Premises; provided that, Landlord shall not demolish the restrooms on the floor on which the Premises are located, the existing means of access to the Premises, or any systems

1

which provide HVAC, electricity, plumbing or other services to the Premises, unless Landlord makes arrangements for substitute facilities or services for the same.

1.03 Roof-Top-Rights. Provided Tenant first executes and delivers to Landlord the Licence Agreement attached hereto as Exhibit I, Tenant shall have the right to utilize a portion of the roof of the Building for purposes of installing and operating one or more satellite dishes or antenna, subject to and in accordance with the terms of said Exhibit I.

ARTICLE II

Term; Commencement Date

2.01 Term. The initial term of the Lease (the “Initial Term”) shall commence upon the date of this Lease (the “Commencement Date”) and shall end at 11:59 p.m. on the day preceding the ninth (9th) anniversary of the Rent Commencement Date defined herein or any earlier date on which this Lease is terminated (the “Expiration Date”). The Initial Term, together which the Renewal Term (if any) is referred to herein as the “Term”.

2.02 Commencement Date. Landlord shall deliver all available portions of the Premises to Tenant upon the execution hereof, and shall use reasonable efforts to deliver the remainder of the Premises on or before December 28, 1998. If Landlord fails to tender possession of the entire Premises to Tenant by December 28, 1998, Landlord shall not be subject to liability, nor shall this Lease be void or voidable in whole or part, but in such event the Tenant shall be entitled to one (1) additional day of rent abatement with regard to the Premises for each day of delay in the tender of the Premises or any portion thereof nor tendered by December 28, 1998 which is not due to the acts or omissions of Tenant or Tenant’s agents, employees or contractors. The Premises shall be provided to Tenant in an “as is” condition pursuant to Section 7.01. Upon delivery of the remainder of the Premises, Tenant shall execute and deliver to Landlord a Declaration as to Date of Delivery and Acceptance of Premises, substantially in the form of Exhibit C attached hereto, confirming the Commencement Date and delivery of the entire Premises.

2.03 Commencement of Work. Tenant shall be permitted, subject to the terms hereof, to commence construction of the Tenant Work (as herein defined) and installation of telephones, computers, fixtures, furnitures, etc., in the Premises upon delivery thereof.

2.04 Tenant Allowance. Landlord will provide Tenant with an allowance (the “Tenant Allowance”) of up to Three Hundred Nine Thousand Nine Hundred Eighty Dollars ($309,980.00) for any construction, architectural, design, MEP and cabling costs incurred in connection with the Tenant Work. Landlord will reimburse Tenant for such costs incurred by the Tenant (not to exceed the amount of the Tenant Allowance) upon completion of Tenant Work and Tenant providing Landlord copies of paid bills supporting the amount of Tenant Allowance requested and appropriate lien waivers and releases of liens. After final completion of the Tenant Work and full payment of all costs incurred in connection therewith, if directed by Tenant, any unused Tenant Allowance shall be applied to Tenant’s rent obligations under this Lease next due after Tenant provides written notice to Landlord to so apply the Tenant Allowance or remaining portion thereof.

2.05 Renewal Option. Subject to the terms and conditions hereof, Tenant is hereby granted one (1) option (the “Renewal Option”) to extend the Term for an additional period of five (5) years (the “Renewal Term”), to commence at the expiration of the Initial Term provided Tenant notifies

2

Landlord in writing of its intent to exercise the Renewal Option a minimum of nine (9) months prior to the Expiration Date, and further provided that if Tenant is in default on the date of giving such notice, said notice shall be totally ineffective, or if Tenant is in default beyond the applicable notice and cure period(s) (if any) pursuant to Section 18.02 on the last day of the Initial Term, at Landlord’s option the Renewal Term shall not commence and this Lease shall terminate at the end of the Initial Term. It is mutually agreed that all provisions of the Lease, unless otherwise provided, will remain in full force and effect for the Renewal Term (including the pass through of increases in Operating Expenses and Real Estate Taxes which shall continue uninterrupted) and further provided that Base Rent shall be the prevailing fair rental value of the Premises as determined in accordance with this Section 2.05 at the time the Renewal Term is to commence. Landlord shall notify Tenant of its determination of fair rental value within thirty (30) days after Tenant exercises its Renewal Option. If Tenant does not agree with Landlord’s determination of fair rental value, Tenant shall advise Landlord and each party shall designate in writing, within ten (10) days after the expiration of the aforementioned thirty (30) day period, an MAI or similarly accredited appraiser having at least 10 years experience in the appraisal of commercial real estate in the Metropolitan Washington, D.C. area, for the purpose of determining fair rental value. The appraiser may not be affiliated in any respect with either Landlord or Tenant or their respective affiliates. Within fifteen (15) days after the designation of the appraisers, the two appraisers so designated shall designate a third appraiser of the same qualifications. The appraisers so designated, shall within forty-five (45) days after the date the third appraiser is designated, determine the fair rental value of the Premises, taking into consideration all relevant factors (including, but not limited to, that the Tax Base Year and the Operating Expense Base Year are not being updated). If the three appraisers are unable to agree upon the fair rental value, then the fair rental value of the Premises shall be the average of the two closest appraisals.

ARTICLE III

Use; Legal Requirements

3.01 Use. The Premises shall be used solely for general office purposes and not in violation of any Legal Requirements (as defined in Section 3.02 hereof). Tenant shall not carry on or permit any activities which might: (1) invalidate or increase the costs of any insurance coverages carried with respect to the Building; (2) involve the storage, use or disposal of medical or hazardous wastes or substances or the creation of an environmental hazard; or (3) impair or interfere with (i) the structure of the Building or the operation of Building systems, (ii) the character, reputation or appearance of the Building as a first-class office building, (iii) the furnishing of services (including utilities and telephone) to any portion of the Building, or (iv) the enjoyment by other occupants of the Building of the benefits of such occupancy (for example, free of noise, odors or vibration emanating from the Premises). The Premises shall not be used for the purposes of so-called “office suites,” schools, governmental agencies, employment agencies, medical treatment facilities, or any commercial or retail activities (other than general office purposes as set forth above). Tenant shall at no expense to Landlord comply with all Legal Requirements imposing any duty on Tenant or, to the extent responsibility for the action required by such Legal Requirement is allocated to Tenant hereunder with respect to the Premises and the use or occupation thereof by Tenant.

3.02 Legal Requirements. “Legal Requirements” means: (1) all laws, statutes, ordinances, rules, regulations, directives and orders of federal, state, county or municipal authorities, whether now or hereafter in effect, which may be applicable to any portion of the Property, the use or operation thereof, or any interest therein; and (2) all requirements, obligations and conditions of all instruments of record (as described on Exhibit K attached hereto and made a part hereof) pertaining to any portion of

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the Property, the use or operation thereof, or any interest therein, now or hereafter of record; provided that, “Legal Requirements” shall exclude any affirmative obligations imposed by any instrument placed of record after the date hereof which exceed the Tenant’s obligations hereunder or which conflict with Tenant’s rights hereunder.

ARTICLE IV

Base Rent; Additional Rent

4.01 Rent Generally. Each reference herein to “rent” shall, unless otherwise specified, mean the aggregate amount of “Base Rent” and “additional rent” payable at any time or from time to time hereunder. Each item of rent shall accrue continuously from the Rent Commencement Date until the Expiration Date, and Tenant’s obligation to pay the same shall survive termination of Tenant’s right of possession to the Premises and the end of the Term.

4.02 Base Rent.

(a) From December 28, 1998 (the “Rent Commencement Date”) and during each of the Lease Years (as defined below), the “Base Rent” shall be Four Hundred Sixty-eight Thousand Eight Hundred Forty-four and 75/100 Dollars ($468,844.75) annually (the annual Base Rent being the product of 15,499 rentable square feet times $30.25 per rentable square foot), payable by Tenant, without demand therefor, in advance on the first day of each calendar month in equal installments of Thirty-Nine Thousand Seventy and 40/100 Dollars ($39,070.40); provided that the first installment of Base Rent shall be due upon the execution of this Lease. Commencing on the first day of the sixth Lease Year, Base Rent shall increase by $1.00 per square foot above the then escalated amount of Base Rent. Notwithstanding the provisions of this subparagraph (a) provided Tenant is not in default hereunder, Base Rent shall abate for the ninety (90) day period commencing on the Rent Commencement Date.

(b) Commencing with the first day of the second Lease Year (as defined below) and the first day of each Lease Year thereafter, with the exception of the sixth Lease Year, Base Rent shall increase by an amount equal to 2% of the Base Rent payable for the immediately preceding Lease Year, said increase to be payable in equal monthly installments as aforesaid. The Base Rent as so adjusted shall be the new Base Rent.

(c) “Lease Year” shall mean the twelve-month period beginning on the first day of a calendar month occurring on or immediately after the Rent Commencement Date, and each twelve-month period thereafter beginning on the anniversary of such first day. If the Commencement Date is other than the first day of a calendar month or this Lease terminates other than on the last day of a calendar month, the Base Rent for each such partial calendar month shall be prorated on the basis of 1/365 of the then current annual Base Rent.

4.03 Additional Rent. All amounts, other than the Base Rent, payable by Tenant hereunder or under any other agreement between Landlord and Tenant relating to the Premises or Tenant’s use or occupancy thereof shall be deemed to be “additional rent.” Each item of additional rent shall be payable immediately upon Landlord’s demand, unless otherwise expressly provided for herein. Landlord’s failure to make demand upon Tenant during the Term for any item of additional rent (including rent adjustments provided for in Article V hereof) shall not operate as a waiver of Landlord’s right to demand or Tenant’s obligation to pay such additional rent, so long as Landlord makes such demand

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within two (2) years after the date such amounts were originally due in accordance with the terms hereof. The determination of any item of additional rent shall result in no decrease in the Base Rent. Whenever an item of additional rent is to be determined based upon the amount of Base Rent, such amount shall be determined pursuant to Section 4.02 hereof, with no reduction for credits, abatements or concessions.

4.04 Rent Payments; No Waiver. Tenant shall pay all rents in lawful money of the United States by good check (subject to collection) drawn to Landlord’s order on a national bank, and delivered to Landlord, c/o Merchandise Mart Properties, Inc., 222 Merchandise Mart Plaza, Room 470, Chicago, Illinois 60654. Landlord’s acceptance of rent with the knowledge of an existing default hereunder shall not constitute a waiver thereof. Each rent payment shall be on account of rents longest past due, and Landlord’s acceptance of less than the full amount of rent then due shall not constitute a waiver of any unpaid rent. No writing accompanying any check or payment of rent shall constitute an accord and satisfaction, and Landlord may accept and endorse such check or payment without limiting Landlord’s right to recover the balance of such rent or pursue any other remedy hereunder.

4.05 Moratorium. If by virtue of any Legal Requirement the amount of rent which Landlord may collect hereunder is limited, Tenant shall remain liable for all rent provided for hereunder and such rent shall continue to accrue. When such limitation is no longer in effect, Tenant shall promptly pay all accrued and unpaid rent upon Landlord’s demand, so long as Landlord makes such demand within two (2) years after the date such amounts were originally due in accordance with the terms hereof.

4.06 No Conditions. Tenant’s covenant to pay rent is independent of all other covenants and conditions, except for Landlord’s covenant of quiet enjoyment set forth in Section 13.01. Notwithstanding any other provision hereof, Tenant shall pay in full each item of rent when due without any demand (unless expressly provided for herein), deduction or set-off, except with respect to unused Tenant Allowance pursuant to Section 2.04 above and regardless of any counterclaim.

ARTICLE V

Rent Adjustments

5.01 Real Estate Taxes.

(a) In addition to the Base Rent, Tenant shall, in monthly installments pursuant to Section 5.04 hereof, pay to Landlord as additional rent an amount (the “Tax Adjustment”) equal to four and one tenth percent (4.1%), subject to adjustment as provided for below (“Tenant’s Share of Real Estate Tax Increases”), of the amount by which Real Estate Taxes (as defined below) for the then current Tax Year exceed Real Estate Taxes for the Tax Base Year. “Tax Year” shall mean the 12-month, District of Columbia tax year commencing each October 1 and ending the following September 30. “Tax Base Year” shall mean the Tax Year commencing October 1, 1998 and ending September 30, 1999. If the Tax Year changes and the effect of the change can be reasonably determined, Landlord may adjust Real Estate Taxes for the Tax Base Year to produce Tax Adjustments substantially equivalent to those which would have been calculated without a change in the Tax Year. Real Estate Taxes shall be calculated for each Tax Year, including the Tax Base Year as if the building was at least 95% occupied.

(b) “Real Estate Taxes” shall mean all taxes, rates and assessments, general and special, foreseen or unforeseen, of every kind and nature which Landlord shall pay or become obligated

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to pay because of or in any way connected with the ownership, leasing or operation of the Property, including general real estate taxes, assessments, impositions and governmental charges (including vault fees and transit or other special district assessments) levied on or charged against the real estate or personal property used in connection with the operation of the Property, or on the right or privilege of leasing real estate or on the rentals or other receipts from the Property (or on the value of the leases thereon), or on the value of improvements made to the Property at any time for any purpose, or in any way attributable to the ownership, leasing or operation of the Property. Real Estate Taxes shall include all reassessments in connection with the sale or lease of any portion of the Property, and all fees, costs and expenses (including reasonable attorneys’ fees and expenses) that Landlord incurs contesting or attempting to reduce or limit Real Estate Taxes. The amount of any tax refunds shall be applied as a credit to Real Estate Taxes for the relevant Tax Year. If a refund is applicable to the Tax Base Year, Real Estate Taxes for the Tax Base Year shall be reduced thereby, and Tax Adjustments shall be recalculated. If the system of real estate taxation is changed or any new tax or assessment is imposed or levied on the Property in lieu of any item of Real Estate Taxes presently imposed or levied on real estate or fixtures in the District of Columbia, Real Estate Taxes shall include the new tax, assessment and levy. Real Estate Taxes shall not include any net income, inheritance or estate taxes.

5.02 Operating Expenses.

(a) In addition to the Base Rent, Tenant shall, in monthly installments pursuant to Section 5.04 hereof, pay to Landlord as additional rent an amount (the “Operating Expense Adjustment”) equal to four and one tenth percent (4.1%) (“Tenant’s Share of Operating Expense Increases”) of the amount by which Operating Expenses (as defined below) for the then current calendar year exceed Operating Expenses for the calendar year commencing the January 1, 1999 (the “Operating Expense Base Year”). Operating Expenses shall be calculated for each calendar year as if the Building was not less than 95% occupied.

(b) “Operating Expenses” shall mean all expenses, costs and disbursements of every kind and nature paid, incurred, or otherwise arising because of or in any way connected with the management, maintenance, servicing, repair and/or operation of the Property (including the costs of electrical service, HVAC, cleaning, employee salaries, withholding and other taxes and employee benefits, water and sewerage, landscaping, maintenance and service contracts, security systems, management fees (not to exceed four percent) equipment rental, and all other usual and customary costs of operating and maintaining a first-class office building in downtown Washington, D.C.). Operating Expenses shall not include: (1) interest payments; (2) ground rental; (3) depreciation; or (4) capital expenditures other than (i) those capital expenditures incurred to reduce Operating Expenses and (ii) those capital expenditures incurred to comply with any Legal Requirement to the extent such compliance is not required as of the date hereof. Landlord agrees to amortize the cost of any capital expenditure (together with interest thereon at nine percent) over the shorter of (i) the useful life thereof as determined under generally accepted accounting principles, or (ii) the depreciation period permitted by the Internal Revenue Code and only the portion of such amortization allocable to each year shall be included in Operating Expenses for such year.

5.03 Payments of Rent Adjustments. Commencing on the first day of the month immediately following a notice from Landlord setting forth the then current estimated Tax Adjustment and/or Operating Expense Adjustment (collectively, “Rent Adjustments”), as estimated by Landlord from time to time, Tenant shall pay monthly installments on account of Rent Adjustments. The amount of each such installment shall equal the aggregate unpaid balance of the then current estimated Rent Adjustments, divided by the number of months remaining in the Lease Year. If, upon the final determination of Rent Adjustments for each Lease Year, the total installments paid on account of Rent

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Adjustments do not equal the total actual amount of Rent Adjustments, Tenant shall pay any balance due within thirty (30) days after receiving Landlord’s demand therefor, or, if applicable, Landlord shall credit against the next payment of Base Rent due hereunder the amount of any overpayment.

5.04 Audit Rights By Tenant. If Tenant disputes any Operating Expenses or Real Estate Taxes statement, Tenant must provide Landlord with specific written objections within 30 days after receiving the statement (failing which, the statement will be deemed conclusive). Within 30 days after receiving these objections, Landlord will either adjust the disputed statement in response to Tenant’s objection(s) and credit any overpayment to Tenant as stated above, or notify Tenant that it believes Tenant’s objection is without merit. If Tenant timely disputes a statement and Landlord notifies Tenant that Tenant’s objection is without merit, Tenant may — if Tenant is not then in default beyond any applicable cure period — cause a nationally recognized independent, certified public accountant (“CPA”) to audit the supporting data for the disputed statement. However, Tenant may not exercise its audit right unless the audit commences within 20 days after Landlord notifies Tenant that Tenant’s objection is without merit, nor may Tenant audit any statement more than once. The CPA must sign a confidentiality statement in form acceptable to Landlord. Each audit under this Section 5.04 must be conducted at Landlord’s property manager’s District of Columbia office. If Landlord does not agree with the audit results of the CPA Tenant selects, Landlord and Tenant will endeavor to resolve their differences (failing which, the dispute will be conclusively determined based on an independent audit by a third-party CPA selected by the parties or, failing agreement, appointed by the American Arbitration Association or any recognized successor thereto upon application by either party). The parties will make any necessary adjustments in accordance with the third-party CPA audit. Tenant must pay all costs and expenses of Tenant’s audit (including, but not limited to, reasonable copying charges). In addition, Tenant must pay the costs incurred in connection with the third-party CPA audit (including, but not limited to, reasonable copying charges) unless the amounts paid by Tenant to Landlord for the year in question exceeded the amounts to which Landlord was entitled by more than 5%, in which event Landlord will pay the costs incurred in connection with the third-party CPA audit. If the third-party CPA audit shows Tenant has underpaid Operating Expenses or Real Estate Taxes (or both), in addition to paying to Landlord the underpayment amount and bearing the third-party CPA audit costs, Tenant must reimburse Landlord upon demand for all reasonable costs, expenses and fees incurred by Landlord in connection with such dispute. Tenant has no right to withhold or reduce any performance by Tenant under the Lease pending or based upon any audit under this Section 5.04.

ARTICLE VI

Financial Reports

6.01 Tenant’s Financial Reports. Tenant shall deliver to Landlord as they become available, a copy of Tenant’s quarterly and annual reports.

ARTICLE VII

Condition of Premises; Duty of Care

7.01 Condition of the Premises. Tenant shall accept possession of the Premises in their current “as-is” condition, broom clean with all equipment in working order. In compliance with Article VIII

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hereof and at no expense to Landlord, Tenant shall do such work as Tenant shall deem necessary or desirable to render the Premises suitable for Tenant’s use. Landlord shall have no obligation with respect to the alteration, remodeling or improvement of the Premises.

7.02 Tenant’s Duty of Care. Tenant at its expense shall take good care of and allow no damage (other than ordinary wear and tear) to the Premises, and shall keep the Premises in clean, safe and sanitary condition. Tenant shall segregate, store and dispose of trash and garbage in the manner Landlord reasonably specifies. Tenant shall promptly notify Landlord of the occurrence of any event or the existence of any condition that may adversely affect the Premises or the Building or the occupancy, use or operation thereof If the Building or the Premises are damaged by Tenant, its employees, agents, contractors, licensees or invitees (including any damage in connection with the making of an Alteration or Tenant’s surrender of the Premises), Tenant shall promptly notify Landlord and, except to the extent such damage is covered by normal and customary extended coverage fire and casualty insurance, shall pay to Landlord upon demand as additional rent all actual documented costs (including attorneys’ fees and expenses and Landlord’s customary overhead, profit and costs of general conditions) Landlord incurs for the repair and restoration of the same. Tenant shall promptly remove from all common areas in or around the Property Tenant’s property and items placed or delivered there on Tenant’s behalf.

ARTICLE VIII

Tenant’s Alterations and Equipment

8.01 Alterations; Equipment. Except as expressly permitted herein, Tenant shall not, without in each instance obtaining Landlord’s prior consent, make or permit any Alteration. “Alteration” shall mean any alteration, installation, removal or improvement of any nature with respect to the Premises or the Building, or any installation, removal or operation in the Premises of any equipment or machinery, except for office equipment which (1) is normally used in modern offices for general office use, and (2) does not (i) require electrical power in excess of the power requirements for office tenants of the Building (it being understood that Tenant’s connected load for lighting and outlets shall not exceed five (5) watts per square foot of the Premises); (ii) require changes to the electrical, water, plumbing, or HVAC systems, (iii) be so heavy as to create any risk of structural damage to the Building, or (iv) cause any unreasonable noise, vibration or odor to be transmitted to the structure of the Building or outside the Premises.

8.02 Landlord’s Consent. Landlord shall not unreasonably withhold, delay or condition its consent to the making of any Alteration. Landlord shall not be obligated to give its consent, if Landlord believes in good faith that there is a significant risk that the Alteration (x) would not be made in a manner comparable in workmanship and quality with the reputation and character of the Building as a first-class office building, or (y) would materially adversely affect (i) the structure or the appearance of the Building or the operation of Building systems, (ii) Landlord’s ability to rent the Premises at the end of the Term to other tenants at then current market rates, or (iii) the enjoyment by other occupants of the Building of the benefits of such occupancy. Landlord’s consent to an Alteration, if given, shall be subject in each instance to the following conditions:

(1) Landlord acknowledges that it has approved Tenant’s preliminary plans for the Premises. At least ten (10) days prior to commencing work, Tenant shall submit to Landlord final plans and specifications therefor which are consistent with the preliminary plans previously approved by Landlord and sufficient to obtain a building permit therefor, together with detailed background

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information, references and, with respect to contractors and subcontractors, current financial statements, about the architects, engineers, contractors and subcontractors to be utilized, and full information regarding the materials to be used, and Tenant shall promptly submit for Landlord’s approval every material change to the work, the scope of the work or the plans and/or specifications therefor. A “material charge” shall mean any change which (i) requires a building permit or permit modification, (ii) involves the Building mechanical, electrical, plumbing, HVAC or other systems, (iii) is likely to adversely affect any other tenant or occupant of the Building, or (iv) will cost in excess of Two Thousand Five Hundred Dollars ($2,500.00) to implement. The work shall be performed by persons and pursuant to plans, specifications and change orders that Landlord shall have approved (such approval not to be unreasonably withheld or delayed) and in accordance with all Legal Requirements and requirements of Landlord’s insurance carriers, and Tenant shall at no expense to Landlord insure continuous compliance with the same and, upon demand, promptly submit to Landlord satisfactory evidence of such performance (including all permits, approvals and certificates required therefor). If in connection with making any Alteration, any conflict arises for any reason whatsoever between any persons under Tenant’s direct or indirect control engaged in making the Alteration and Landlord’s contractors, subcontractors or other persons performing work for Landlord, Tenant shall take all reasonable actions necessary to eliminate such conflict.

(2) All architects and engineers shall continuously carry errors and omissions insurance in such reasonable amounts as Landlord may specify, and all contractors and subcontractors shall continuously carry such amounts of workers’ compensation, employer’s liability and commercial/comprehensive general liability insurance as Landlord may reasonably specify, and, upon demand, Tenant shall furnish Landlord with certificates evidencing such insurance coverages.

(3) Upon completion of the Alteration, Tenant shall furnish Landlord with enforceable releases of all claims and waivers of all liens executed by each contractor, subcontractor and material supplier involved in making the Alteration and paid invoices with respect to the costs thereof If in connection with the work any mechanic’s materialman’s lien is filed against any portion of the Property, Tenant shall at no expense to Landlord cause such lien to be released of record within ten (10) days after notice thereof.

(4) In connection with the making of the Alteration or the maintenance or repair thereof, Landlord shall have no obligation to modify, install or replace any structural component or system contained in the Building or bear any cost.

(5) At the time Landlord consents to any Alteration, improvements, fixtures and other property, Landlord shall advise Tenant what Alterations, improvements, fixtures and other property must be removed by Tenant before the end of the Term.

ARTICLE IX

Services

9.01 Business Hours. “Business Hours” shall mean 7:00 a.m. to 6:00 p.m., Monday through Friday, and 9:00 a.m. to 1:00 p.m., Saturday, except for holidays recognized by the Federal government (“Holidays”).

9.02 Utilities; Access. Twenty-four hours a day, seven days a week, Landlord shall provide to the Premises: (1) electricity, running water, and sewerage removal services at (i) current locations and

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(ii) such usage levels as are customary in general office space; and (2) access via at least one operating elevator.

9.03 HVAC. During Business Hours, Landlord shall provide heating and cooling to the Premises. Upon twenty-four (24) hours prior notice, Landlord shall provide heating and cooling to the Premises outside Business Hours, with the minimum charge being based on four (4) hours usage. Landlord shall adjust overtime charges to reflect actual heating and cooling expenses. Initially, the following hourly rates will apply:

Monday - Saturday	$	25.00/hour
Sunday		37.50/hour
Holidays		37.50/hour

9.04 Cleaning. After Business Hours, Monday through Friday, except for Holidays, Landlord shall provide the Premises with the cleaning and janitorial services specified in Exhibit E attached hereto

9.05 Security. Landlord shall provide the following security services: a staffed reception/guard desk in the lobby of the Building during Business Hours.

9.06 Signage. Landlord intends that all tenants will be identified on the Building directory signs. Landlord shall, at its expense for the initial names designated by Tenant at the Commencement Date, provide Tenant with a pro rata number of lines on the directory in the Building lobby. Any names placed on the directory after the initial name shall be at Tenant’s expense. Landlord, at its sole cost and expense, will also provide Tenant with building standard signage on Tenant’s suite entry door.

9.07 Parking. Tenant may, by notice to Landlord, acquire up to fifteen (15) monthly parking contracts in the Building garage at the prevailing monthly rates in effect from time to time, subject to availability. Tenant shall abide the rules and regulations issued by the Building garage operator.

ARTICLE X

Assignment; Sublease

10.01 Prohibited Leasehold Transfers.

(a) Except as expressly permitted herein, Tenant shall not, without in each instance obtaining Landlord’s prior consent, make or permit any Leasehold Transfer. “Leasehold Transfer” shall mean, whether voluntarily or by operation of law, the assignment, transfer, subleasing or encumbering of any portion of Tenant’s rights to and interest in this Lease or the Premises, including permitting any person to use or occupy any portion of the Premises (except in connection with Tenant’s use of the Premises permitted herein). The transfer (however effected) of a “controlling ownership interest” in a person (defined to mean an ownership interest in whatever form by which the holder thereof exercises effective control over the management and policies of such person) shall be deemed to be a Leasehold Transfer if such person holds any interest in this Lease or the Premises; provided that, this sentence shall not apply to transfers of a controlling ownership interest in any corporation while the stock of such corporation is publicly traded on the New York or American Stock Exchanges or while listed in the NASDAQ National Market.

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(b) Any apparent Leasehold Transfer made without Landlord’s consent shall be void. Nevertheless, without waiving any of Tenant’s obligations hereunder or the failure to obtain Landlord’s consent, Landlord may collect from any person occupying the Premises in connection with an attempted Leasehold Transfer all rent due with respect to the portion of the Premises occupied thereby, and apply the same to the satisfaction of Tenant’s obligations hereunder.

10.02 Landlord’s Consent.

(a) In seeking Landlord’s consent to a Leasehold Transfer, Tenant shall at least twenty (20) days before the anticipated effective date of the Leasehold Transfer submit: (1) the proposed terms and conditions of the Leasehold Transfer, (2) all relevant information about the proposed transferee; and (3) satisfactory evidence that the Leasehold Transfer will result in the Premises being used only as permitted pursuant to Article III hereof.

(b) Landlord shall not unreasonably withhold, delay or condition its consent to any Leasehold Transfer. The reasonableness of any decision by Landlord to withhold, delay or condition its consent shall be evaluated in light of all of the relevant circumstances. Landlord shall not be obligated to give its consent, if (i) any event exists which constitutes or which with the lapse of time or the giving of notice would constitute a material default hereunder, (ii) Landlord has pursuant to Section 10.03 hereof exercised its recapture right with respect to the Leasehold Transfer, (iii) the Leasehold Transfer would result in the Premises being used for a purpose prohibited hereunder, or (iv) if the Leasehold Transfer is to be effectuated during the last two (2) years of the Initial Term or the Renewal Term, the rent under the Leasehold Transfer would be less than the rental rate at which Landlord is then offering to lease comparable space in the Building. Landlord’s consent to a Leasehold Transfer, if given, shall be subject in each instance to the following conditions:

(1) Tenant shall remain fully and primarily liable for the performance of all of Tenant’s obligations hereunder, whenever such performance may be required. The transferee with respect to the Leasehold Transfer shall be subject to any defaults by Tenant hereunder and bound by all of the terms and conditions of this Article X. Landlord’s consent to any Leasehold Transfer shall not constitute consent to any other or subsequent Leasehold Transfer, except in each case as permitted herein.

(2) Within five (5) days after Tenant receives Landlord’s consent thereto and prior to the effective date of the Leasehold Transfer, Tenant shall deliver to Landlord a fully executed and acknowledged instrument in form and substance satisfactory to Landlord, providing for: (i) the Leasehold Transfer on substantially the same terms and conditions previously submitted to Landlord; (ii) the transferee’s unconditional agreement to be bound by, and to hold the Premises subject to, all of the terms and conditions hereof and, if the Leasehold Transfer involves an assignment of all or a portion of the Premises, to assume all of Tenant’s obligations hereunder with respect thereto; and (iii) an effective date of the Leasehold Transfer not later than six (6) months after the execution of such instrument. The Leasehold Transfer shall be effective only in accordance with the terms and conditions of such instrument. Landlord and Tenant may amend this Lease at any time, and Landlord may take any other action in connection herewith, and Landlord shall not be obligated to give any notice to or obtain the consent of any Leasehold Transfer transferee for any reason whatsoever. The transferee shall automatically be bound by the terms and conditions of this Lease as amended by Landlord and Tenant at any time.

(3) Tenant hereby assigns to Landlord the rents due from the transferee and authorizes the transferee to pay such rents directly to Landlord, at Landlord’s option, upon the

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occurrence of any default by Tenant under this Lease, whereupon Landlord may, without waiving any of Tenant’s obligations hereunder, collect and apply such rents to the satisfaction of such obligations.

(4) Tenant shall promptly reimburse Landlord upon demand for all reasonable costs (including reasonable attorneys’ fees and expenses) Landlord incurs in connection with the Leasehold Transfer and the transferee thereunder.

(5) Tenant shall promptly pay Landlord as additional rent fifty percent (50%) of all of the consideration for the Leasehold Transfer. “Consideration” shall mean (i) all rents in excess of the rents payable by Tenant hereunder with respect to the space subject to the Leasehold Transfer, and all profits in connection with the Leasehold Transfer (including, but not limited to, all proceeds from the sale or rental of Tenant’s fixtures, leasehold improvements, equipment, furniture, furnishings and other personal property, to the extent the price or rent paid therefor exceeds the fair market value or the fair rental value, as the case may be, of the fixtures, improvements, equipment, furniture, furnishings or other personal property so sold or rented), less (ii) all reasonable out-of-pocket expenses Tenant incurs in effecting the Leasehold Transfer. Upon demand, Tenant’s chief financial officer shall promptly certify to Landlord accountings setting forth the character, amount and date of receipt or expenditure of each item of consideration and expense, and submit such supporting documentation as Landlord may reasonably request.

10.03 Recapture. Landlord may, with respect to each Leasehold Transfer for which Landlord’s consent is required, elect to: (1) become Tenant’s subtenant with respect to the space subject to the proposed Leasehold Transfer, or (2) terminate Tenant’s leasehold interest in such space, in either case effective thirty (30) days after Landlord notifies Tenant of Landlord’s exercise of its recapture right with respect to the Leasehold Transfer. With respect to a Leasehold Transfer for which Tenant has requested Landlord’s consent, Landlord shall so notify Tenant within twenty (20) days after receiving Tenant’s request, or Landlord shall be deemed to have declined to exercise its recapture right with respect to such Leasehold Transfer. If Landlord declines to exercise its recapture right with respect to a Leasehold Transfer, Landlord’s consent to the Leasehold Transfer shall nonetheless be required. If Landlord exercises its recapture right with respect to a Leasehold Transfer: (i) Landlord may at Tenant’s expense reconfigure the Premises to provide public access to the recaptured space; and (ii) Tenant shall promptly execute and deliver to Landlord (x) if Landlord elects to sublet the space, a sublease in a form reasonably satisfactory to Landlord and providing that Landlord shall be required during the term of the sublease to abate all rents accruing with respect to the space, or (y) if Landlord elects to terminate Tenant’s leasehold interest in the space, an amendment hereto in a form reasonably satisfactory to Landlord and providing for such termination. Landlord may, without incurring any liability to Tenant, lease or sublet the recaptured space to any person (including any person which Tenant proposed as a transferee under a Leasehold Transfer).

ARTICLE XI

Right of First Offer

11.01 Right of First Offer. Provided no Event of Default has occurred under this Lease, and subject to the right of Landlord to renew the lease of any tenant currently leasing space on the eighth (8^th) floor on the date of this Lease, Tenant shall have the right of first offering to lease contiguous office space located on the eighth (8^th) floor of the Building (the “Additional Premises”). Such right shall arise whenever, during the Term the Landlord wishes to lease the Additional Premises. Landlord shall provide Tenant with not less than thirty (30) days written notice (“Landlord’s Notice”) setting forth the date the Additional Premises will be

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available. Tenant shall exercise its right of first offering (if at all) by written notice (“Tenant’s Notice”), delivered to Landlord not later than twenty (20) days after delivery of Landlord’s Notice to Tenant, and agreeing to lease the Additional Premises commencing on the date the Additional Premises are available as set forth in Landlord’s Notice. In the event the Tenant’s Notice is not timely given, Tenant shall be deemed to have waived its right of first offering and Landlord may proceed to lease the Additional Premises to third parties. Prior to the commencement of the term for the Additional Premises, Tenant agrees to execute an amendment to this Lease incorporating the Additional Premises into this Lease as part of the Premises on the following terms and conditions:

(a) If the Tenant exercises its right of first offer for the Additional Premises during the first three Lease Years the terms and conditions applicable to the Additional Premises shall be the same terms and conditions as the terms of this Lease including rental rates. The term for the Additional Premises will be co-terminous with the Term under this Lease. The Tenant allowance shall be prorated based on the number of months remaining in the first three Lease Years.

(b) If the Tenant takes the Additional Premises during the last six Lease Years, the rental rate, Tenant allowance and other terms applicable to the Additional Premises (other than Lease Term, which will be co-terminous with the Lease Term for the Premises) will be subject to the then current market terms and conditions for similar space within the Building (taking into consideration the applicable Lease Term).

ARTICLE XII

Surrender; Holdover

12.01 Surrender of the Premises.

(a) At the end of the Term Tenant shall deliver to Landlord exclusive possession of the Premises, broom clean and in “as is” condition on the Commencement Date, ordinary wear and tear excepted; provided, however, that Tenant shall remove from the Premises and the Building all property specified in subsection (b) below. The delivery of keys to the Premises to anyone (including delivery of the keys to Landlord so that Landlord may sublet the Premises for Tenant) shall not terminate this Lease or effect a surrender of the Premises.

(b) Tenant may not, without Landlord’s consent, remove any Alterations, other improvements to the Premises or fixtures (including all such improvements and fixtures existing on the Commencement Date), which cannot be removed without damage to the Premises or the Building. Tenant shall, at no expense to Landlord and subject to Article VIII hereof, remove any Alteration, improvements, fixtures and other property which, pursuant to Section 8.02(5) Landlord has advised Tenant must be removed before the end of the Term. Where furnished by Tenant or at its expense, all moveable furnishings and trade fixtures shall remain Tenant’s property, which Tenant may at no expense to Landlord remove before the end of the Term. Alterations, improvements, fixtures and other property, which Tenant is required pursuant to Section 8.02(5) or permitted to remove from the Premises and which remain on the Premises after the end of the Term, shall be deemed to be abandoned, and Landlord may, at Tenant’s expense and without incurring any liability (as a bailee or otherwise) to Tenant, remove and dispose of the same in any fashion.

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(c) Upon demand, Tenant shall promptly pay to Landlord as additional rent all reasonable direct costs (including reasonable attorneys’ fees and expenses), Landlord incurs in connection with the removal of property from the Premises and the Building and the disposal thereof pursuant hereto, and the repair of any damage to the Premises or the Building occasioned thereby.

12.02 Holdover. If Tenant fails to surrender the Premises at the end of the Term, at Landlord’s option the Tenant shall become a month-to-month tenant subject to all of the terms and conditions hereof, except that Tenant shall on account of such tenancy pay in advance on the first day of each calendar month, without demand therefor, a monthly rental equal to the greater of (i) two hundred percent (200%) of the aggregate amount of Base Rent plus Rent Adjustments in effect immediately preceding the end of the Lease Term, or (ii) the fair market rental value of the Premises, prorated on a monthly basis; provided that, notwithstanding the foregoing, during the first (1st) ninety (90) days of any such monthly tenancy, Tenant shall pay a monthly rental equal to the greater of (i) one hundred fifty percent (150%) of the aggregate amount of Base Rent plus Rent Adjustments in effect immediately preceding the end of the Lease Term, or (ii) the fair market rental value of the Premises. Such tenancy may be terminated by either party upon thirty (30) days prior notice. During such tenancy Landlord may with respect to any default hereunder exercise all rights and remedies provided for herein. Notwithstanding the foregoing, any time prior to Landlord’s acceptance of rent from Tenant as a monthly tenant hereunder, Landlord, at its option, may forthwith re-enter and take possession of the Premises by any means permitted by law, TENANT HEREBY WAIVING ANY NOTICE TO QUIT; provided, however, that (i) Tenant shall pay Landlord as damages (but not as rent) the greater of the fair market value rent for the Premises or two (2) times (1.5 times, during the first 90 days of such holdover) the Base Rent plus all Additional Rent payable for the last month of the Term, for each month or portion thereof that Tenant remains in possession following the Expiration Date, and (ii) Tenant shall defend, indemnify and hold Landlord harmless from and against any and all claims, losses, liabilities or damages resulting from Tenant’s failure to surrender possession of the Premises on the Expiration Date (including, but not limited to, claims made by any succeeding tenant).

ARTICLE XIII

Quiet Enjoyment; Subordination

13.01 Covenant of Quiet Enjoyment. Subject to all of the terms and conditions of this Lease, Tenant’s interest in this Lease and possession of the Premises shall not be terminated during the Term by Landlord or any person claiming an interest in the Premises, the Building or the Land through Landlord. Neither Landlord’s inability to perform Landlord’s obligations hereunder (including the furnishing of utilities and HVAC) by virtue of any circumstance beyond Landlord’s reasonable control, nor the taking of any action in or around the Premises permitted hereunder, shall constitute an actual or constructive eviction of Tenant in whole or in part or provide any grounds (including an interruption or reduction in Tenant’s business) for an abatement of rent or for Landlord’s liability; provided that, notwithstanding the foregoing, if Landlord fails to provide HVAC or electric service to the Premises for a period in excess of five (5) consecutive business days, Landlord agrees to thereafter abate the Rent payable hereunder for so long as Tenant cannot and in fact does not use the Premises as a result of such failure.

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13.02 Subordination.

(a) This Lease shall be automatically subordinate to and bound by each underlying lease, deed of trust and mortgage (including all advances made thereunder at any time), and all amendments thereto and renewals, extensions, modifications, consolidations, replacements and transfers thereof (whether by sale, assignment, foreclosure or otherwise), now or hereafter affecting any portion of the Land, the Building or the Premises (in each case, a “Superior Instrument”). Tenant may not terminate this Lease, and this Lease shall remain in effect upon any sale or assignment of, or foreclosure upon, any portion of the Property pursuant to any Superior Instrument, or upon the termination of any Superior Instrument. Notwithstanding any other provision hereof, no holder of a Superior Instrument shall be liable for any act, omission or default of Landlord, subject to any offsets, claims or defenses which Tenant may have against Landlord, bound by any rent that Tenant paid to Landlord more than one (1) month in advance, or bound by any amendment, waiver or termination of this Lease, unless consented to by such holder in writing. If by virtue of Landlord’s default Tenant may obtain an abatement of rent, remedy such default or terminate this Lease, Tenant shall not exercise such right(s) unless Tenant first notifies each holder of a Superior Instrument (which notice may be given simultaneously with any notice Tenant gives to Landlord), which has furnished Tenant with its address, and such holder fails to initiate promptly and use reasonable efforts to cure such Landlord’s default. If in connection with any financing of any portion of the Property or improvements thereto the holder of a Superior Instrument requires modifications to this Lease, Tenant shall not unreasonably withhold, delay or condition Tenant’s consent to such modifications, so long as such modifications do not increase the rents payable by Tenant hereunder, reduce or extend the Term, reduce or increase the area of the Premises, or materially adversely affect Tenant’s rights and obligations hereunder. The holder of a Superior Instrument may subordinate such Instrument to this Lease at any time and Tenant hereby consents to such subordination. Upon request Tenant shall execute, acknowledge and deliver in recordable form such instruments effecting such subordination.

(b) Upon request of the holder or beneficiary of any Superior Instrument (each a “Lender”), Tenant shall agree in writing that no action taken by such holder or beneficiary to enforce said Superior Instrument shall terminate this Lease or invalidate or constitute a breach of any of the provisions hereof and Tenant will attorn to such Lender, or to any purchaser of the Building or Property at any foreclosure sale or sale in lieu of foreclosure, for the balance of the Term of this Lease and on all other terms and conditions herein set forth. Tenant, by entering into this Lease, covenants and agrees that (a) upon the written direction of Lender it shall pay all rents arising under this Lease as directed by such Lender, and (b) in the event such Lender enforces its rights under the Superior Instrument due to a default by Landlord this Lease is not extinguished by a foreclosure of the Superior Instrument, and Tenant will, upon request of any person succeeding to the interest of Landlord in the Property (“successor in interest”) as the result of said enforcement, automatically attorn to such successor in interest, without any change in terms or other provisions of this Lease; provided, however, that said successor in interest shall not be: (i) bound by any payment of rent or additional rent for more than one month in advance, except payments in the nature of security (but only to the extent such payments have been delivered to such successor in interest); (ii) bound by any modifications to the Lease (including, but not limited to, any agreement providing for early termination or cancellation of the Lease) made without any requisite consent of the Lender or any such successor in interest; (iii) liable for damages for any act or omission of any prior landlord (including, but not limited to, Landlord); or (iv) subject to any offsets or defenses which Tenant might have against any prior landlord (including, but not limited to, Landlord). Notwithstanding the foregoing, Tenant shall retain any rights it may have to proceed against the original Landlord.

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13.03 Subordination, Attornment and Non-Disturbance Agreement; Estoppel Certificate. Within ten (10) days after demand therefor by Landlord, the holder or beneficiary of any Superior Instrument or any of their successors in interest, Tenant shall execute, acknowledge and deliver in recordable form: (1) a Subordination, Attornment and Non-Disturbance Agreement and/or (2) an estoppel certificate substantially in the form of Exhibit G attached hereto.

ARTICLE XIV

Fire or Casualty; Condemnation

14.01 Fire or Casualty.

(a) The occurrence of any fire or other casualty shall constitute no basis for the termination of this Lease or any abatement of rent, except as expressly provided for herein. If the Building is damaged by fire or other casualty (whether or not the Premises are damaged) and if Landlord obtains a reasonable professional estimate that the cost of restoring the Building would exceed fifty percent (50%) of the full insurable value of the Building, Landlord may, by notice to Tenant within sixty (60) days after such fire or other casualty, terminate this Lease without incurring any liability to Tenant. If Landlord fails so to notify Tenant, Landlord shall use reasonable efforts to repair the Building (including the restoration of the demising walls of the Premises and Building services to the outside perimeter of the Premises) with reasonable dispatch, allowing for the adjustment and settlement of insurance claims, the preparation of plans and specifications, the obtaining of governmental approvals and certificates, the obtaining of contractors and laborers and any other delay. So long as Landlord restores the Building so it is suitable for substantially the same uses, Landlord shall not be obligated to duplicate the original construction or design of the Building. Landlord shall not be obligated to repair, restore or replace: (1) any property within the Premises; (2) any damage that occurs during the last year of the Term (as extended, if at all, pursuant to the exercise of any Renewal Option); or (3) any damage for the repair of which insurance proceeds are not available. Tenant shall cooperate fully with all repairs made to the Building (including removing Tenant’s moveable property and trade fixtures from the Premises as soon as practicable to clear the way therefor).

(b) Rents hereunder shall be abated during the period and to the extent that a material portion of the Premises is rendered untenantable because of a fire or other casualty. If more than thirty percent (30%) of the Premises is rendered untenantable by fire or other casualty and Landlord cannot, given Tenant’s full cooperation, substantially complete such repairs so that the Premises are rendered substantially tenantable within one hundred eighty (180) days after such fire or other casualty, then Tenant may, by notice to Landlord, terminate this Lease with thirty (30) days of the date of such casualty.

14.02 Condemnation.

(a) The occurrence of any condemnation or taking pursuant to the exercise of the power of eminent domain, or any sale in lieu thereof, shall constitute no basis for the termination of this Lease or any abatement of rent, except as expressly provided for herein. If the entire Premises are lawfully condemned or taken, this Lease shall terminate as of the date title vests pursuant to such condemnation or taking, and Tenant shall have no claim for the value of the unexpired portion hereof. If fifteen percent (15%) or more of the Premises, or the means of access thereto, are lawfully condemned or taken, Tenant may, by notice to Landlord within thirty (30) days after the date title vests

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pursuant to such condemnation or taking, terminate this Lease. If any portion of the Premises is lawfully condemned or taken and this Lease is not terminated as provided herein, Tenant shall be entitled to a rent abatement with respect thereto, commencing the date title vests pursuant to such condemnation or taking. However, if any portion of the Premises is condemned or taken without compensation to effect compliance with any Legal Requirement and if such compliance is Tenant’s obligation hereunder, Tenant shall be entitled to no rent abatement. If only a portion of the Building is lawfully condemned or taken and if such condemnation or taking would permit Landlord to terminate leases with respect to a significant portion of the leased space in the Building, Landlord may, by notice to Tenant within thirty (30) days after the date title vests pursuant to such condemnation or taking, terminate this Lease (whether or not the Premises are affected by such condemnation or taking).

(b) Landlord shall receive the entire award made in each proceeding in connection with the condemnation or taking of the Building, the Premises or any portion thereof (including any award made for the value of Tenant’s interest in this Lease or the Premises), and Tenant hereby assigns to Landlord any and all right, title and interest Tenant may have now or in the future to any such award or any part thereof. Tenant may pursue a separate claim against the condemning authority, so long as such claim does not in any way diminish the award or compensation payable to or recoverable by Landlord in connection with such taking or condemnation.

ARTICLE XV

Landlord’s Access, Repairs and Alterations

15.01 Access; Repairs; Alterations. Tenant shall furnish Landlord with keys and other means of effecting entry into all portions of the Premises at all times. Upon prior notice to Tenant, Landlord may enter the Premises from time to time to: (1) inspect, maintain, clean, repair, make alterations to and install equipment in the Premises (and for such purposes Landlord may bring into and store in the Premises reasonable quantities of equipment and materials); (2) comply with the demand of any person submitting reasonable evidence of a lawful purpose and a legal entitlement to access to the Premises; (3) show the Premises to potential purchasers and mortgagees of the Building; and (4) within the last twelve (12) months of the Term, show the Premises to prospective tenants. Landlord may change the arrangement and location of entrances, passageways, doorways, corridors, elevators, stairways, toilets and other parts of the Premises and the Building, so long as doing so will not substantially or materially adversely interfere with Tenant’s access to the Premises. In any emergency, Landlord may without notice enter the Premises by any and all means which are reasonable under the circumstances and take all necessary or desirable measures to resolve the emergency. In resolving an emergency, Landlord shall not be liable for any damage to Tenant’s property, so long as such damage is not caused by Landlord’s gross negligence or willful misconduct in taking actions permitted by this Section, Landlord shall use reasonable efforts to accommodate Tenant, but shall not be obligated to incur overtime or premium costs.

ARTICLE XVI

Insurance; Waiver of Claims; Indemnity

16.01 Insurance Generally.

(a) Throughout the Term, Landlord and Tenant shall each obtain and maintain in effect the insurance coverages specified in this Article, by virtue of insurance policies underwritten only

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by solvent insurance companies authorized to do business in the District of Columbia. The insurance policies that Tenant is required to carry hereunder shall: (1) be written as primary coverage and not contributing with or in excess of any coverages Landlord may carry; (2) contain an endorsement requiring each insurer to provide thirty (30) days prior written notice to Landlord before any cancellation or material change in the type or amount of any coverage thereunder; and (3) designate Landlord as an “additional insured” and, at Landlord’s request, if available, include a standard mortgagee clause for the benefit of any person holding an insurable interest in the Premises or the Building.

(b) Tenant shall give Landlord prompt notice and a detailed description of each event which might constitute the basis for a material claim under any of the insurance policies required to be carried hereunder. Tenant shall cooperate fully with Landlord in prosecuting and resolving all such claims. Whether or not Tenant fully complies with all of the provisions of this Article, the description of required insurance policies and related maximum coverage amounts set forth herein shall not operate to limit Tenant’s liability under any provision of this Lease. On an annual basis, if requested by Landlord, Tenant shall promptly furnish Landlord certificates evidencing the insurance coverages required to be maintained hereunder and the payment of premiums therefor.

(c) Tenant shall not act or fail to act, or permit any person under Tenant’s reasonable control to act or fail to act, in any way which might invalidate or reduce any coverages or increase the premiums therefor under any insurance policies required to be carried hereunder or carried by Landlord with respect to the Property or the use or operation thereof. If any insurance carrier or board of underwriters determines that any such coverage shall be invalidated or reduced or premiums therefor shall be increased as a direct or indirect result of any act or omission of Tenant or any person under Tenant’s reasonable control (whether or not such act or omission would otherwise constitute a default hereunder), Tenant shall promptly pay to Landlord as additional rent the costs of securing comparable coverages and the increased premiums.

(d) Each party hereunder shall, at its own expense, cause each insurance policy that it obtains in connection with this Lease, the Premises or the Building to contain an endorsement providing that: (1) the issuer of such policy waives all rights of subrogation against the other party; and (2) such policy shall not be invalidated if the insured, prior to a loss, waives in writing all rights of recovery against any person for losses covered by such policy.

16.02 Casualty Insurance. Tenant shall maintain a commercial/comprehensive general liability policy with a limit of at least $3,000,000 per occurrence and $3,000,000 in the general aggregate and the following coverages: (1) a broad form, commercial liability endorsement; (2) endorsements covering premises/operations, independent contractors and host liquor liability; and (3) a broad form contractual liability endorsement insuring the performance of Tenant’s indemnification obligations hereunder.

16.03 Property Insurance. Tenant shall carry all risk property insurance in such amounts as shall be sufficient to cover the repair, restoration and replacement of all Alterations, other improvements to the Premises and fixtures (including all such improvements and fixtures existing on the Commencement Date). Tenant shall carry such other insurance as Tenant may deem necessary or desirable to protect Tenant’s property located in or around the Premises. Landlord shall have no obligation to insure the Premises or Tenant’s property. Landlord shall obtain and maintain all risk property insurance in an amount equal to the full replacement cost of the Building.

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16.04 Waiver of Claims. Each party hereunder hereby waives all rights of recovery against the other party for any claim, loss, injury or expense in connection with any property damage or loss, to the extent such claims are covered by casualty insurance maintained (or required hereby to be maintained) by the injured party, each party hereby agreeing to look only to its insurance policies for recovery in respect of any such property damage or suffered by it. Notwithstanding anything herein contained to the contrary, Landlord shall not be liable for any claim, loss, injury or expense (including any claim for compensation for reduction in the value of Tenant’s leasehold or interest in the Premises, inconvenience or annoyance to Tenant, injury to Tenant’s business or property, or, except as expressly set forth herein, rent abatement in connection with Landlord’s taking any action permitted hereunder) in connection with this Lease, the Property, or Tenant’s use or occupancy of the Premises. In any event, Landlord’s aggregate liability in connection with this Lease, the Property and Tenant’s use and occupancy of the Premises shall be limited as set forth in Section 19.10 and in no event shall Landlord be liable for any indirect or consequential damages for any reason whatsoever.

16.05 Indemnity. Subject to the provisions of Section 16.04 above, Tenant hereby indemnifies and shall hold harmless and defend Landlord, its partners, directors, officers, employees, contractors and agents against all claims, liabilities, losses, injuries and expenses (including attorneys’ fees and expenses and the costs of investigating and/or settling claims) arising directly or indirectly out of: (1) the occurrence of any event within the Premises; (2) any act or omission of Tenant, its employees or agents, or any contractor performing work in or to, or any licensee operating within, the Premises; (3) alterations to, or installation or operation of equipment in, any portion of the Building or the Premises by Tenant or a Leasehold Transfer transferee; (4) any breach of Tenant’s representations, warranties or covenants hereunder, or (5) any act or failure to act by Tenant or any Leasehold Transfer transferee invalidating or reducing any coverages under any insurance policies required to be carried hereunder or carried by Landlord with respect to the Property or the use or operation thereof. The foregoing indemnity shall not be applicable insofar as Landlord incurs a loss or expense through its gross negligence or willful misconduct. The provisions of this Section shall survive termination of Tenant’s right of possession to the Premises and the end of the Term.

16.06 Landlord’s Insurance. Landlord agrees to carry broad form fire and casualty insurance with respect to the Building, in such amounts and form as required by Landlord’s mortgagee with respect to the Building from time to time, but in all events in an amount sufficient to satisfy any co-insurance requirements.

ARTICLE XVII

[RESERVED]

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ARTICLE XVIII

Insolvency; Events of Default; Remedies

18.01 Events of Insolvency.

(a) “Event of Insolvency” means: (1) Tenant (including, with respect to Events of Insolvency, any guarantor of Tenant’s obligations hereunder) becomes bankrupt or insolvent under any applicable federal, state or local statute or rule of law (collectively, “Insolvency Laws”); (2) Tenant files a petition, or acquiesces in a petition filed, under any Insolvency Law; (3) an involuntary petition is filed against Tenant under any Insolvency Law, which is neither dismissed within sixty (60) days after such filing or results in the issuance of an order for relief against Tenant, whichever occurs earlier, (4) a receiver or trustee is appointed for, or a foreclosure action is instituted upon, all or a substantial portion of Tenant’s property or assets; or (5) Tenant makes or consents to an assignment or other conveyance in trust for the benefit of creditors.

(b) This Lease shall not be considered an asset of Tenant’s estate in bankruptcy or insolvency. Upon an Event of Insolvency, Landlord may by notice to Tenant terminate this Lease; provided that Tenant shall remain liable for all rents and other damages payable hereunder without prejudice to Landlord’s right in any proceeding under any Insolvency Law to prove and obtain as liquidated damages the maximum such amount permitted thereby; and provided, further, that if, by virtue of any Insolvency Law, Landlord is not permitted to enforce such termination, the following provisions shall apply, to the extent enforceable:

(1) If there is an uncured default under this Lease, no receiver or trustee may assume and retain, or assign, this Lease unless at the time of such assumption or assignment the receiver or trustee (x) cures such default or provides adequate assurance to Landlord’s reasonable satisfaction that such default will be cured promptly, (y) compensates, or provides adequate assurance to Landlord’s reasonable satisfaction that such receiver or trustee will promptly compensate, Landlord for any actual pecuniary loss incurred by Landlord as a result of such default, and (z) provides adequate assurance to Landlord’s reasonable satisfaction of the future performance of all of Tenant’s obligations under this Lease.

(2) No receiver or trustee may require Landlord to furnish any services or supplies required to be furnished under this Lease unless (x) Landlord is compensated therefor before such services or supplies are furnished, or (y) such receiver or trustee assumes this Lease as provided in clause (1) above.

18.02 Events of Default. The occurrence of an Event of Default shall constitute a breach of Tenant’s obligations hereunder. “Event of Default” shall mean any of the following:

(a) the failure to pay Landlord an installment of Base Rent or any Rent Adjustment within five (5) days after notice to Tenant of the failure to make such payment when due, or the failure to make any other payment of additional rent within five (5) days after Landlord’s second demand therefor;

(b) the transfer by operation of law or otherwise of any portion of Tenant’s interest herein or in any portion of the Premises to any person other than as expressly permitted hereunder;

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(c) by virtue of Tenant’s interest herein or occupancy of the Premises or any act or omission of Tenant, its employees, agents, contractors, invitees or licensees, or any transferee under a Leasehold Transfer, any portion of the Property or Landlord’s interest therein becomes subject to any claim, lien or other encumbrance which is not irrevocably released and removed of record at no expense to Landlord within thirty (30) days thereafter;

(d) the failure to maintain insurance in the amounts and coverages required to be maintained by Tenant hereunder;

(e) the abandonment or vacating of the Premises for a continuous period of thirty (30) days or more, except as expressly permitted hereunder; provided that, abandonment of the Premises shall not be deemed an Event of Default if (i) Tenant notifies Landlord in writing of Tenant’s intent to vacate or abandon not less than thirty (30) days in advance, (ii) Tenant obtains and provides to Landlord prior to vacating all necessary endorsements required to ensure that Tenant’s insurance with respect to the Premises shall remain in full force and effect notwithstanding such abandonment, (iii) Tenant takes all commercially reasonable steps necessary to secure the Premises against unauthorized entry during the period of such vacancy or abandonment, and (iv) Tenant indemnifies Landlord against any claim, cost, damage, expense, fee, liability or suit arising from or out of, or in connection with, such vacating or abandonment.

(f) the occurrence of any breach of any of Tenant’s representations, warranties or covenants hereunder (excluding the Events of Default described above) or of a material breach under any other agreement between Landlord and Tenant relating to the Premises or under any other lease between Tenant and Landlord: (1) which breach is not cured within thirty (30) days thereafter, or (2) if such breach cannot be cured with reasonable efforts within such thirty-day period and if extending the cure period will not (i) subject Landlord to the risk of a civil claim or criminal liability or the Property to any claim or encumbrance, or (ii) result in the termination or impairment of any Superior Instrument, the failure of Tenant to initiate the cure thereof within such thirty-day period and to continuously and diligently prosecute the same to completion; or

(g) the occurrence more than twice in any twelve-month period of any event which would have constituted an Event of Default but for the curing thereof within the applicable grace period provided for herein.

18.03 Remedies; Waivers.

(a) In the event of any breach of any of Tenant’s representations, warranties or covenants hereunder, Landlord may pursue any and all remedies available at law or in equity. Upon demand, Tenant shall pay Landlord as additional rent: (1) all damages, losses and expenses Landlord reasonably incurs as the result of each such breach, including (i) reasonable attorneys’ fees and expenses in enforcing Landlord’s rights and remedies hereunder, and (ii) in connection with any attempt by Landlord to re-let the Premises, attorneys’ fees and expenses, advertising costs, brokerage commissions, lease concessions, improvement allowances, architects’ and engineers’ fees and expenses; and (2) the aggregate amount of all abatements of Base Rent, tenant allowances under the Work Letter and all other concessionary payments to Tenant.

(b) Upon the occurrence of an Event of Insolvency or Event of Default, Landlord may, without incurring any liability to Tenant: (1) by notice to Tenant, terminate this Lease; or (2) with or without terminating this Lease and without notice to Tenant to quit or making a demand for rent or possession (such notices and demands being hereby waived by Tenant), enter into and take

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possession of the Premises pursuant to summary dispossession proceedings or any other action at law. Without limiting whatsoever any of its rights and remedies hereunder, Landlord may retain all monies (including the Security Deposit) that Tenant has paid, and shall credit the same against rents payable hereunder. Landlord shall use reasonable efforts to re-let the Premises for Tenant’s benefit, in which event Landlord shall credit against rent payable hereunder, but only to the extent thereof, the rent Landlord collects on or before the Expiration Date from such reletting.

(c) Landlord may initiate legal proceedings against Tenant at any time and from time to time to recover any and all rent due hereunder, and the bringing of any such proceedings shall not preclude Landlord from bringing, simultaneously and in the future, other proceedings against Tenant in connection with this Lease. No provision of this Lease shall be deemed to require Landlord to postpone any legal or equitable proceedings until the end of the Term. Tenant hereby waives all rights of redemption available under any present or future law, regardless of the grounds that might support any claim to such rights. Landlord and Tenant hereby waive trial by jury in any action, proceeding or counterclaim arising in connection with this Lease, the relationship of Landlord and Tenant, or Tenant’s use or occupancy of the Premises.

18.04 Intentionally Deleted.

18.05 Late Payments; Interest. Tenant shall promptly pay to Landlord as additional rent with respect to any amount due hereunder and not paid interest accruing at an annual rate equal to the lesser of eighteen percent (18%) and the maximum rate, if any, that Landlord may charge Tenant under applicable law (the “Interest Rate”), from the date upon which such amount is due (as specified herein with respect to installment payments and, with respect to other rent payments, as specified in Landlord’s demand to Tenant for payment as provided for herein). If Tenant shall fail to pay any installment of Base Rent, Real Estate Taxes, Operating Expenses, or annual Base Rent Adjustments when due and payable as provided for herein, a five percent (5%) late charge shall be added to each such late installment.

18.06 Landlord’s Right to Cure Defaults. Upon a breach of any of Tenant’s obligations hereunder, Landlord may, at Tenant’s expense and without limiting Tenant’s liability for such breach and without incurring any liability to Tenant, take all necessary or desirable actions (including entering the Premises) to cure such breach. Upon demand, Tenant shall pay to Landlord as additional rent (1) all direct and indirect costs (including the fees and disbursements of attorneys, architects and engineers and Landlord’s customary overhead, profit and costs of general conditions) Landlord incurs in taking such actions, together with (2) interest thereon, which interest shall accrue at the Interest Rate from the date Landlord incurs such costs.

ARTICLE XIX

Miscellaneous

19.01 Rules and Regulations. Tenant shall comply, and cause all persons under Tenant’s reasonable control to comply, with the rules and regulations set forth in Exhibit H attached hereto and such additional rules and regulations as Landlord may reasonably adopt (collectively, the “Rules and Regulations”). If any of the Rules and Regulations conflict with the provisions of this Lease, the provisions of the lease shall control. Landlord shall not be required to enforce, and shall not be liable for failing to enforce, the Rules and Regulations against any other tenant in the Building, and

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Landlord’s failure to enforce the Rules and Regulations against any such tenant shall not constitute a waiver of Tenant’s obligations hereunder.

19.02 Brokerage. Tenant represents and warrants that neither it nor its employees nor agents have dealt with any broker or finder other than Cushman and Wakefield of Washington, D.C., Incorporated (“Landlord’s Broker”) and Spaulding & Slye (“Tenant’s Broker”) (collectively the “Brokers”) in connection with this Lease or the transactions contemplated hereby. Landlord shall have no obligation to compensate the Brokers, other than the compensation Landlord shall pay to Landlord’s Broker pursuant to the separate agreement between Landlord’s Broker and Landlord. By executing this Lease, Tenant’s Broker releases Landlord from all claims whatsoever in connection with the negotiation and execution of this Lease and all options Tenant may exercise hereunder. Tenant’s Broker agrees to look to Landlord’s Broker for compensation pursuant to a separate agreement between Landlord’s Broker and Tenant’s Broker.

19.03 Transfers of Title. If title to the Building or any other portion of the Property is transferred or the leasehold estate in the entire Building becomes vested in another person (whether voluntarily or by operation of law), thereafter and upon notice to Tenant and the delivery of the Security Deposit, if any, to the transferee, the transferor shall be entirely released from and relieved of all existing and future covenants, obligations and liabilities hereunder so long as transferee is obligated to perform all of Landlord’s obligations hereunder. The provisions of this Section shall be self-executing and deemed to be a covenant running with the land.

19.04 Notices.

(a) Any notice, demand, consent, approval, disapproval or statement (collectively, “Notices”) required or permitted to be given hereunder or any applicable law shall be in writing and shall be deemed duly given when personally delivered or deposited in the mail (postage prepaid, registered or certified mail) or with an overnight courier service, in each case with return receipt requested addressed as follows (or pursuant to such other address as any party may specify upon ten (10) days prior Notice):

If to Landlord:

Washington Design Center L.L.C.

300 D Street, S.W.

Washington, D.C. 20024

Attention: Vice President, Property Manager

                            and

Merchandise Mart Properties, Inc.

222 Merchandise Mart Plaza

Room 470

Chicago, IL 60654

Attention: Executive Vice President, Chief Operating Officer

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If to Tenant prior to the Rent Commencement Date:

Spacehab, Incorporated

1595 Springhill Road

Suite 360

Vienna, Virginia 22182

Attention: Director, Human Resources; and

If to Tenant after the Rent Commencement Date:

Spacehab, Incorporated

300 D Street, S.W.

Suite 814

Washington, D.C. 20024

Attention: Director, Human Resources.

(b) A Notice shall be deemed received: (1) if delivered, as of the date of delivery as indicated by affidavit, if personally delivered, or return receipt, if delivered by mail or overnight courier, or (2) if not delivered because of a changed address of which no Notice was given or a refusal to accept delivery, as of the date such delivery was attempted but unsuccessful as indicated by affidavit, if personal delivery was attempted, or return receipt, if delivery by mail or overnight courier was attempted.

(c) Where this Lease provides for a specified period of time for providing notice, taking action, etc., and the end of such period, as specified, would occur on a day that is a holiday, the end of such period shall be deemed to occur on the immediately following business day that is not a holiday.

19.05 Interpretation.

(a) “Person” means any individual or entity, private or governmental, having substance under any applicable law. “Including” means “including without limitation.” “Landlord” means only the owner, the mortgagee in possession or the lessor, for the time being, of the Building. “Tenant” means the party executing this Lease as tenant and each transferee pursuant to a permitted Leasehold Transfer. “Hereof,” “herein” and “hereunder” and other compounds of “here” refer to this Lease in its entirety, unless otherwise expressly specified. The “end of the Term,” the “expiration of the Term,” and “termination of this Lease” are used interchangeably to mean the termination of this Lease, whether pursuant hereto, by agreement or by operation of law. The captions appearing herein are for convenience and identification only and shall not define or limit the scope of any provision hereof. Words and pronouns shall be deemed to include any gender and number as the context may require. The Addendum and all exhibits attached hereto are incorporated herein by reference and made a part hereof.

(b) Except as expressly set forth herein, neither Landlord nor its employees nor agents has made any representations or warranties concerning the Premises, the Building, the operation thereof, the surrounding vicinity, or Tenant’s ability or prospects for carrying out any business by virtue of Tenant’s occupancy of the Premises. This Lease contains the entire agreement between the parties as of the date hereof. This Lease cannot be modified, or any term or condition hereof waived, except by a written instrument executed by the party against whom enforcement of the modification or waiver is sought.

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(c) The laws of the District of Columbia shall govern the validity, enforcement and interpretation of this Lease. If any provision of this Lease or the application thereof is held invalid or unenforceable, the other provisions hereof shall not be affected thereby and shall be enforced to the extent possible.

19.06 Successors and Assigns. This Lease shall not give rise to any rights for the benefit of any persons other than the parties hereto. This Lease shall bind and inure to the benefit of the parties hereto and their respective heirs, administrators, successors and assigns; provided, however, that no transferee of Tenant’s interest herein or in the Premises shall be entitled to any benefit of this Lease except pursuant to a permitted Leasehold Transfer.

19.07 Cumulative Rights and Remedies. The rights and remedies provided for hereunder are cumulative, and the exercise of any one right or remedy by a party hereto shall not preclude or waive such party’s recourse to any or all other rights and remedies available at law or in equity.

19.08 Counterparts. This Lease may be executed in one or more counterparts, each of which shall be fully effective as an original, and together all such counterparts shall constitute the same instrument.

19.09 Rule Against Perpetuities. If this Lease has not been previously terminated pursuant to the terms and provisions contained herein, and if the term of this Lease and/or the Commencement Date has not occurred within five (5) years from the date hereof, then and in that event this Lease shall thereupon become null and void and have no further force and effect.

19.10 Authority/Limitation of Landlord’s Liability.

(a) Landlord has appointed Merchandise Mart Properties, Inc. (“MMPI”), as its authorized signatory to execute this Lease. Tenant acknowledges that MMPI will not be acting in a personal capacity, but rather in a representative capacity as the authorized signatory for Landlord. Tenant agrees that it shall look only to Landlord, subject to the provisions of Section 19.10(b), for the performance of Landlord’s obligations under this Lease and for the satisfaction of any right of Tenant for the collection of any claim, judgment or other judicial determinations (whether at law or in equity) or arbitration award requiring the payment of money, and neither MMPI nor any of its agents, incorporators, shareholders, beneficiaries, trustees, officers, directors, employees, partners, principals (disclosed or nondisclosed) or affiliates or any of their respective assets or property shall be subject to any claim, judgment, levy, lien, execution, attachment or other enforcement procedure (whether at law or in equity) for the satisfaction of Tenant’s rights and remedies under or with respect to this Lease or under law, or Tenant’s use and occupancy of the Premises or any liability or obligation of Landlord to Tenant. The limitation of MMPI’s liability under this Lease, including any waiver of subrogation rights, shall apply with equal force and effect to, and as a limitation on and a waiver of any liability of MMPI.

(b) Tenant agrees to look solely to Landlord’s interest in the Property for the enforcement or payment of any judgment, award, order or other remedy under or in connection with this Lease or any related agreement, instrument or document or in respect of any matter whatsoever relating to this Lease, the Premises or the Property. No other assets of Landlord (or any assets of any partners, beneficiaries, managers, members, stockholders, officers, employees or agents of Landlord) shall be subject to levy, execution or other procedures for the satisfaction of Tenant’s remedies. No personal liability is assumed by, nor shall at any time be asserted or enforceable against Landlord, its

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members, any successor owner or their respective successors or assigns or the members, partners, beneficiaries, officers, directors, employees, shareholders or partners thereof, or the agents or employees of any of them on account of this Lease or any covenant, undertaking or agreement of Landlord in this Lease contained.

19.11 Affirmative Action Program. Tenant acknowledges receipt of a copy of Section III of the Affirmative Action Program submitted with respect to the Building (the same being attached hereto as Exhibit J). Tenant is not a party to this program and this Lease is not subject to the terms thereof. Nonetheless, Landlord encourages Tenant to utilize the procedures contained in said Section III regarding the dissemination of employment information.

IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized representative to execute this Lease under seal as of the date first written above.

LANDLORD
WASHINGTON DESIGN CENTER L.L.C.
By:	Merchandise Mart Properties, Inc., agent
By:	/s/    Illegible
TENANT
SPACEHAB, INCORPORATED
By	/s/    Illegible	[SEAL]
	General Counsel
BROKER
Accepted and agreed to only for the purposes of Section 19.02 hereof
CUSHMAN & WAKEFIELD OF WASHINGTON, D.C., INCORPORATED
By:	/s/    Illegible	[SEAL]
	Director

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SPAULDING & SLYE
By:	/s/    Illegible	[SEAL]

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EXHIBIT A-1

FLOOR PLAN OF PREMISES

[to be attached prior to execution]

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EXHIBIT A-2

LAND

Lot 53

Square 536

Washington, D. C.

Being all that parcel of land lying and being situate in the District of Columbia shown as Lot 53, Square 536, on a plat of subdivision recorded in the District of Columbia’s Surveyor’s Office in subdivision Book 183, Page 33; said plat being a re-subdivision of Lots 51 and 52 and recorded in the aforesaid office of Subdivision Book 175, Page 148;

Beginning at the intersection of the easterly right-of-way line of 4th Street, S.W. and the southerly right-of-way line of “D” Street, S. W., thence, running with and binding on the southerly line of “D” Street,

1. Due East, 347.27 feet to a point; thence leaving “D” Street and running with and binding on the western Line of Lot 54 as shown on the aforesaid plat,

2. South 00’ 00’ 54” East, 207.36 feet to a point along the northerly right-of-way line of Virginia Avenue, S.W.; thence running with and binding on the northerly line of Virginia Avenue,

3. North 70’ 24’ 30” West, 368.67 feet to a point along the easterly right of way Line of 4th Street, S.W.; thence running with and binding on the easterly line of 4th Street,

4. Due North, 83.75 feet to the place of beginning and containing 50,549.50 square feet.

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EXHIBIT C

DECLARATION AS TO DATE OF DELIVERY

AND ACCEPTANCE OF POSSESSION OF PREMISES

This Declaration and Acceptance is attached to and incorporated in the lease dated                                 , 1998 between Washington Design Center L.L.C. (“Landlord”) and SPACEHAB, Incorporated (“Tenant”) (the “Lease”).

Landlord and Tenant hereby declare:

(i) On                  , 19         Tenant accepted possession of the Premises.

(ii) The Commencement Date is established as                     , 19        .

(iii) The Lease is in full force and effect.

LANDLORD		TENANT
Washington Design Center L.L.C.		SPACEHAB, Incorporated
By:	Merchandise Mart Properties, Inc., agent
By		By
			President

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EXHIBIT E

CLEANING SERVICES

Cleaning will be performed after Business Hours. If Tenant requires special attention or other cleaning hours, Landlord may charge Tenant for time and materials.

1. Generally:

NIGHTLY - Monday through Friday (holidays excluded)

• Dust mop, using a treated mop, all vinyl, asphalt, rubber, and similar types of flooring. This includes removal of gum and other similar substances using a scraping device.

• Vacuum all common carpeted area within the Premises.

• Remove spots from carpeted areas, as possible.

• Hand dust and wipe clean with a chemically treated cloth all furniture, file cabinets, cleared desk tops, counter tops, and horizontal surfaces.

• Remove spots from all painted surfaces, entrance doors, glass walls, and wall covering (except fabric) as necessary.

• Remove all gum and foreign matter in sight.

• Empty all waste receptacles and remove waste paper and waste materials to a designated area.

• Spot mop floors for spillages, etc.

• Empty and damp wipe all ash trays.

• Upon completion of work, all slop sinks are to be thoroughly cleaned and cleaning equipment and supplies stored neatly in locations designated by the Building manager.

• Clean elevator cabs, including floors.

• Sweep clean loading dock areas.

• In Building lobby, dust and wipe clean mail chutes, mail depository door glass, metal door knobs, kick plates, and directional signs.

WEEKLY

• Completely vacuum all carpeted areas.

• Dust all baseboards, low level ledges, sills and moldings (under 8 feet).

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• In high traffic resilient tile areas, damp mop if necessary.

• Wash all glass entrance doors side panels and glass walls inside and out.

MONTHLY

• Dust all picture frames, charts, and venetian blinds which are not reached in nightly cleaning.

• Buff all tile floor areas.

QUARTERLY

• Dust exterior of lighting fixtures.

• Dust all air conditioning vents, grills, etc.

• Vacuum upholstered furniture.

SEMI-ANNUALLY

• Vacuum all vertical partitions and fabric.

2. Lavatories:

NIGHTLY - Monday through Friday (holidays excluded)

• Clean and sanitize all toilet bowls, urinals, and wash basins.

• Clean and polish all chrome and stainless steel fittings.

• Clean and sanitize toilet seats.

• Clean and polish all glass and mirrors.

• Empty trash receptacles and insert new liners where required.

• Wash and sanitize counter tops and exteriors of all trash receptacles.

• Spot clean all partitions and remove graffiti.

• Spot clean walls, doors, and trim.

• Damp mop and sanitize tile floors.

• Refill all dispensers to normal limits.

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QUARTERLY

• Machine scrub tile floors.

• Wash partitions.

• Dust or vacuum all vents and grills.

• Wash ceramic tile walls.

• Clean high level ledges and sill.

ANNUALLY

• Strip, seal and refinish floor.

3. Lobbies, Corridors, Stairwells and Elevators:

NIGHTLY - Monday through Friday (holidays excluded)

• Vacuum all carpeted areas, including edges.

• Remove spots from carpet, as possible.

• Spot clean all doors, trim, and walls.

• Clean and sanitize drinking fountains.

• Spot clean and vacuum/mop all elevators.

• Damp mop all hard surface floors.

• Clean building directly.

• Dust low level ledges, sills and moldings.

• Empty trash receptacles and remove waste.

• Empty ash trays.

WEEKLY

• Clean elevator walls.

• Spray and buff all ledges, sills and moldings (under 8 feet).

• Mop/sweep interior stairways.

• Dust stairway railings.

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MONTHLY

• Completely clean glass doors, partitions and trim.

• Sweep and damp mop stairways.

QUARTERLY

• Clean carpeted areas.

• Dust/vacuum vents and grills.

4. Miscellaneous:

• Cleaning kitchens and computer rooms is Tenant’s responsibility.

• Sidewalks, roadways which service the Building and parking entrances will be kept clear of ice and snow.

• Sidewalks, entrances, and loading docks will be kept clear of debris.

• Lobby floor mats will be placed in the Building lobby during inclement weather.

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EXHIBIT G

FORM OF ESTOPPEL CERTIFICATE

The undersigned,                                          (“Tenant”), in consideration of One Dollar ($1.00) and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby certifies to Washington Design Center L.L.C. (“Landlord”), [the holder of any mortgage covering the property (the “Mortgagee”) and the vendee under any contract of sale with respect to the property or any of the partnership interests in Landlord (the “Purchaser”)] as follows:

1. Tenant executed and exchanged with Landlord the lease dated as of                     , 1998, covering the premises identified on Exhibit A-1 and Exhibit A-3 attached hereto (the “Premises”) in the building located in the District of Columbia on land identified in the legal description attached hereto as Exhibit A-2, known by street address as 300 D Street, S.W., Washington, D.C., (the “Building”), for a term commencing [or which commenced] on                     , 19     and ending on                     , 19     (the “Lease”).

2. The Lease is in full force and effect and, except as set forth on Exhibit B hereto, has not been modified, changed, altered or amended in any respect.

3. Tenant has accepted and is now in possession of the Premises and is paying the full rental under the Lease.

4. The annual Base Rent currently payable under the Lease is $                    . The annual Operating Expense and Tax Adjustment currently payable under the Lease is $                    . The annual CPI Adjustment currently payable under the Lease is $                        . All rents (including all additional rent) required to be paid under the Lease have been paid for the period up to and including ,                     , 19    . Tenant has received no notice of any sale, transfer, pledge or assignment of the Lease or the rent thereunder by Landlord, and Tenant understands that the Lease has been assigned to Lender as security for a loan and that rent may not be prepaid nor modifications made to the Lease without, in certain circumstances, Lender’s prior consent.

5. Tenant commenced paying Base Rent on                      and has paid Base Rent through                     . No rent under the Lease has been paid for more than thirty (30) days in advance of the date such rent is due.

6. Except as set forth on Exhibit B hereto, all work required under the Lease to be performed by Landlord (if any) has been completed to the full satisfaction of Tenant.

7. Except as set forth on Exhibit B hereto, there are no defaults existing under the Lease on the part of either Landlord or Tenant, nor any event which, but for the passage of time or the delivery of notice or both, would constitute a default under the Lease by Landlord or Tenant. Except as set forth on Exhibit B hereto, no amounts have been advanced to or on behalf of Landlord which have not been reimbursed.

8. There is no existing basis for Tenant to cancel or terminate the Lease, nor has Tenant or Landlord commenced any action or given or received any notice for the purpose of terminating the Lease.

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9. Tenant has one five year option to renew under the Lease.

10. The security deposit held by Landlord under the Lease is none.

11. Except as set forth on Exhibit B hereto, as of the date hereof, there exists no valid defense, offsets, credits, deductions in rent or claims against the enforcement of any of the agreements, terms, covenants or conditions of the Lease.

12. Tenant affirms that any dispute with Landlord giving rise to a claim against Landlord is a claim under this Lease only, and is subordinate to the rights of the [holder of the mortgage of the fee or leasehold of the Building] [Purchaser pursuant to any contract of sale] and shall be subject to all the terms, conditions and provisions thereof. Any such claims are not offsets to or defense against enforcement of this Lease.

13. Tenant affirms that any claims pertaining to matters in existence at the time Tenant took possession of the Premises and which were then known to, or which were then readily ascertainable by, Tenant shall be enforced solely by money judgment and/or specific performance against the Landlord named in the Lease, and may not be enforced as an offset to or defense against enforcement of this Lease.

14. There are no actions, whether voluntary or otherwise, pending against the Tenant under the bankruptcy laws of the United States or any state thereof.

15. There has been no material adverse change in Tenant’s financial condition between the date hereof and the date of the execution and delivery of the Lease.

16. Tenant acknowledges that Landlord has informed Tenant that [an assignment of Landlord’s interest in the Lease has been or will be made to the Mortgagee] [Landlord has entered into a contract to sell the Building or partnership interests in Landlord to Purchaser] and that rent may not be prepaid and that no modification, revision, or cancellation of the Lease or amendment thereto shall be effective unless a written consent thereto of the [Mortgagee] [Purchaser] is first obtained, and that until further notice payments under the Lease may continue as heretofore.

17. This certification is made to induce [Purchaser to consummate a purchase of the Property or partnership interests in Landlord] [Mortgagee to make and maintain a mortgage loan secured by the Property], knowing that the [Purchaser] [Mortgagee] are relying upon the truth of this certification in making and/or maintaining such [purchase] [mortgage].

18. Tenant’s current address for the purpose of giving any notice under this Lease is:

__________________________

__________________________

__________________________

19. Except as modified herein, all other provisions of this Lease are hereby ratified and confirmed.

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IN WITNESS WHEREOF, the undersigned has caused its duly authorized representative to execute this instrument as of                     , 19        .

SPACEHAB, Incorporated
By
	Its

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EXHIBIT H

RULES AND REGULATIONS

1. Tenant shall not obstruct the sidewalks, entrances, passages, courts, elevators, vestibules, stairways, corridors or halls or other parts of the Building not occupied by any tenant (collectively, the “Common Areas”) or use them for any purpose other than ingress and egress to and from the Premises. Landlord shall control and operate the Common Areas and the facilities furnished for the common use of Tenant in such manner as Landlord in its sole discretion deems best for the benefit of the tenants generally. Tenant shall not permit persons to visit the Premises in such numbers or under such conditions as to interfere with the use and enjoyment by other tenants of the Common Areas.

2. Tenant shall attach no awnings or other projections to the outside walls of the Building. Tenant shall not attach, hang or use any drapes, blinds, shades or screens in connection with any window or door of the Premises.

3. Tenant shall exhibit, inscribe, paint or affix no sign, advertisement, notice or other lettering or materials on any part of the outside or, if visible outside the Premises, inside of the Premises, the Building or elevators except as specifically provided for under the Lease. If Tenant violates the foregoing, Landlord may remove same without any liability and at Tenant’s expense. Landlord shall inscribe, paint or affix all signs on the suite entry doors and directory table for Tenant at Tenant’s expense, in a size, color and style acceptable to Landlord.

4. Tenant shall not put in front of or affix any show cases or other articles to any part of the exterior of the Building or place in such items in the Common Areas.

5. Tenant shall not use the water and wash closets and other plumbing fixtures for any purposes other than those for which they were constructed, and Tenant shall not throw or place therein any sweepings, rubbish, rags or other substances. Tenant shall be responsible for all damages to water and wash closets and other plumbing fixtures caused by Tenant’s employees, agents, visitors or licensees.

6. Tenant shall not mark, paint, drill into or otherwise deface or damage any part of the shell or core of the Building. Tenant shall not construct, maintain, use or operate in or around the Building any electrical device, wiring or apparatus in connection with a loud speaker system or other sound system if the sound can be heard outside of the Premises.

7. Tenant shall not disturb or interfere with, nor permit its employees or agents, its contractors working in the Premises, or its licensees operating in the Premises to disturb or interfere with the occupants of the Building or neighboring buildings or their visitors or licensees, whether by making noises (including the use of musical instruments, radio or tape recorder or whistling or singing) or any other way. Tenant shall be responsible for all damages resulting from Tenant’s employees or agents, its contractors working in the Premises, or its licensees operating in the Premises, throwing anything out of the doors or windows, off the balconies or down the corridors or stairs.

8. Tenant shall permit no bicycles, vehicles or animals, birds or pets of any kind to be brought into or kept in or about the Premises. Tenant shall permit no cooking on the Premises, except

in connection with facilities permitted in accordance with Article VIII of the Lease. Tenant shall permit no unusual or objectionable odors to originate from the Premises. Tenant shall maintain sanitary conditions in any area approved by Landlord for food and beverage preparation and consumption.

9. Tenant shall use no space in or about the Building for the manufacture of merchandise, goods or property of any kind or, unless Tenant is a retail tenant, for the storage, sale or auction of the same.

10. Tenant shall permit no inflammable, combustible, explosive, hazardous or toxic fluid, chemical or substance to be brought into or stored within the Premises, except in accordance with the Lease.

11. Tenant shall place no additional locks or bolts of any kind upon any of the doors or windows, nor change any existing locks or locking mechanisms. Tenant shall keep all doors between the Premises and the Common Areas closed during Business Hours, except for ingress and egress. Upon the end of the Term, Tenant shall return to Landlord all keys for the Building, the Premises and every part thereof furnished by Landlord or otherwise procured by Tenant, and disclose to Landlord the combination of each combination lock in the Premises. If Tenant loses any keys or combinations to such locks, Tenant shall reimburse Landlord for the cost of replacing such locks.

12. All deliveries and removals and the carrying in or out of the Building or the Premises of any safes, freight, furniture or bulky matter or material of any description shall take place in such manner and during such hours as Landlord may reasonably require. Landlord may inspect all freight, furniture or bulky matter or materials to be brought into the Building and exclude any of which violates the Lease. Without limiting the generality of the foregoing, the Building’s loading docks may not be used by Tenant or on Tenant’s behalf, except by prior appointment made with the Building manager. In each instance, the Building’s loading docks shall be available to Tenant only for the period specified in the appointment approved by the Building manager, and Tenant shall insure that its employees are continuously present during such use of the loading docks. Landlord shall not supervise loading and unloading at the Building’s loading docks, and Tenant shall be solely responsible for deliveries to and removals from the Building’s loading docks made for Tenant’s benefit.

13. Any person that Tenant employs to do janitorial work within the Premises shall obtain Landlord’s written consent (not to be unreasonably withheld or delayed) before commencing such work. When in the Building outside the Premises, such person shall comply with all instructions issued by the Building manager. Tenant shall not hire or pay within the Premises any employees, except Tenant’s employees actually working within the Premises.

14. Tenant shall purchase no spring water, ice, coffee, soft drinks, towels or similar merchandise or service from any person whose repeated violations of Building regulations have caused in Landlord’s reasonable opinion a hazard or nuisance to the Building or its occupants.

15. Landlord may prohibit any advertising by Tenant which in Landlord’s reasonable opinion tends to impair the reputation of the Building or its desirability as a building for offices, and upon written notice from Landlord Tenant shall refrain from or discontinue such advertising.

16. Landlord may exclude from the Building any person who is not known or properly identified to the Building manager or its agents. Landlord may require all persons to register, who are admitted to or leave the Building between the hours of 6:00 p.m. and 8:00 a.m., Monday through Friday, or at any time on Saturdays, Sundays or holidays. Tenant shall be responsible for all persons

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for whom it authorizes entry into the Building, and shall be liable to Landlord for all acts of such persons (including any breach of these Rules and Regulations).

17. Intentionally Omitted.

18. The Building manager will attend to any of Tenant’s requests only upon application at the office of the Building manager. Tenant shall not request Building employees to take any action, and Building employees shall not be obligated to do anything outside of their regular duties, unless under special instructions from the Building manager.

19. Neither Tenant nor its employees or agents, contractors working in the Premises, or licensees operating in the Premises, shall canvass, solicit or peddle in the Building, and Tenant shall cooperate with Landlord to preclude such activities.

20. Tenant shall install no water cooler, plumbing or electrical fixtures, except in accordance with Article VIII of the Lease.

21. Tenant shall not use, or permit anyone present in the Building on Tenant’s behalf to use, any hand trucks in the Building, unless equipped with rubber tires and side guards.

22. Tenant shall place no mats, trash or other objects in the Common Areas.

23. Landlord shall not be obligated to maintain or repair non-standard suite finishes or fixtures, such as kitchens, bathrooms, wallpaper, special lights, etc. If Tenant requests Landlord’s assistance in effecting such maintenance or repair, Landlord shall use reasonable efforts to arrange for the work to be done at Tenant’s expense.

24. Tenant shall not permit the Premises to be used for lodging, sleeping or any immoral or illegal purpose.

25. None of Landlord’s employees shall receive any packages or other articles delivered to the Building for Tenant’s benefit, unless expressly authorized by Landlord to do so. If any of Landlord’s employees receives any such item without such authority, in so doing such employee shall be deemed to be Tenant’s agent, not Landlord’s.

26. Except as expressly permitted pursuant to the Lease, Tenant shall not install any antenna on the roof or exterior of the Building, and Tenant shall not permit the installation of any antenna in the windows or upon the exterior of the Premises.

27. Tenant shall not permit any tie-ins to the electrical or water supply on the Premises, except in accordance with Article VIII of the Lease.

28. Tenant shall not remove, alter or replace the ceiling, light diffusers or air conditioning terminals in any portion of the Premises, except in accordance with Article VIII of the Lease.

29. Tenant shall not place or install vending machines in any part of the Building other than the Premises. Landlord may place or install vending machines in any of the Common Areas of the Building.

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30. If any business machines or mechanical equipment installed or operated within the Premises causes vibration or noise which is discernible outside the Premises or which may damage the Building, or causes other annoyance to other tenants of the Building, Landlord may require Tenant to install such vibration and/or noise suppresses as are required to ensure that such vibration or noise does not damage the Building and cannot be discerned outside the Premises, and to take such other action as may be required to cure such other annoyance.

31. Landlord hereby designates the following days as holidays (on the dates observed by the federal government) on which services will not be provided and Business Hours will not be in effect:

New Year’s Day

President’s Day

Martin Luther King’s Birthday

Memorial Day

Independence Day

Labor Day

Columbus Day

Veterans Day

Thanksgiving Day

Christmas Day

32. Tenant shall not affix any floor covering to any floor of the Premises or Building with adhesive or glue of any kind, except in accordance with Article VIII of the Lease.

33. Landlord may rescind, amend, alter or waive any of the foregoing rules and regulations at any time when Landlord in its reasonable judgment deems it necessary, desirable or proper for the best interest of the Building or tenants; provided that in taking such actions Landlord shall not discriminate against Tenant. No rescission, amendment, alteration or waiver of any rule or regulation in favor of another tenant shall operate in favor of Tenant. Landlord shall not be responsible to Tenant for the non-observance or violation by another tenant of any of these rules and regulations at any time.

34. In the event of any conflict between these rules and regulations and the Lease, the Lease shall control.

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EXHIBIT I

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (“License Agreement”) is made as of the          day of                     , 1998, by and between WASHINGTON DESIGN CENTER L.L.C. (“Licensor”) and SPACEHAB, INCORPORATED (“Licensee”).

WITNESSETH:

WHEREAS, Licensor is the owner of that certain mixed use building located at 300 D Street, S.W., Washington, D.C. (the “Building”);

WHEREAS, Licensee has requested that Licensor permit Licensee to utilize a portion of the roof of the Building as shown on the attached Exhibit A (the “License Area”);

WHEREAS, Licensor is willing to grant Licensee a license to utilize the License Area upon the terms, conditions, covenants and agreements hereinafter set forth.

NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) cash in hand paid and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Licensor and Licensee do hereby covenant and agree as follows:

1. License. Subject to the terms hereof, Licensor hereby grants to Licensee a revocable license (the “License”) to enter onto and utilize the License Area, solely for the use permitted pursuant to Section 5 hereof. Licensee’s rights pursuant to this License Agreement shall be non-exclusive and in common with any similar rights that Licensor may grant to other tenants of the Building.

2. Term.

(a) The License granted hereby shall commence upon                     , 199     (the “Commencement Date”), and shall, subject to the terms hereof, continue in full force and effect until                     ,             , and thereafter on a month-to-month basis unless sooner terminated by Licensor (the “License Term”).

(b) Notwithstanding anything herein contained to the contrary, Licensor may revoke this License at any time upon the occurrence of any default or breach of the terms of any other agreement between Licensor and Licensee.

(c) Upon the expiration or sooner termination of this License, Licensee shall have no right, title or interest with respect to the License Area. There shall be no renewal of this License by operation of law or otherwise.

3. License Fee.

(a) Subject to the terms hereof, Licensee shall pay to Licensor a monthly license fee (the “Monthly License Fee”) in the amount of Five Hundred Dollars ($500.00) per month. The Monthly License Fee shall be paid monthly in advance on the first (1st) day of each month throughout the License Term, without deduction, demand, notice or offset, and in lawful money

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of the United States.

(b) Effective on the third (3rd) anniversary of the Commencement Date and on the first (1st) day of each third (3rd) year thereafter (each an “Adjustment Date”), the Monthly License Fee shall be adjusted to equal to the then-current fair market rental for the License Area, as determined by mutual agreement between Licensor and Licensee or by appraisal by one or more commercial real estate brokers in the manner provided below. If Licensor and Licensee fail to mutually agree on the then-current fair market rental for the License Area at least thirty (30) days prior to any Adjustment Date, this License shall cease and terminate on the day preceding such Adjustment Date. In no event shall the Monthly License Fee payable for any month be less than the Monthly License Fee payable for the immediately preceding month.

(c) In the event the payment of any Monthly License Fees, additional fees or other payments set forth herein are not paid within ten (10) calendar days after such payment is due, Licensee shall pay to Licensor, as an additional fee, a late payment fee equal to five (5%) percent of such delinquent payment to compensate Licensor for the administrative expenses associated with collection of late payments. In addition, Licensee shall pay to Licensor interest on such delinquent payment from the due date thereof until paid, at the lesser of (i) eighteen percent (18%) or (ii) the maximum lawfully permissible interest rate.

(d) In addition to the Monthly License Fee payable by Licensee hereunder, Licensee has, upon the execution and delivery of this License Agreement, paid to Licensor a one time non-refundable administration fee in the amount of                                          Dollars and a one time non-refundable engineering fee in the amount of                                          ($                    ) Dollars, the receipt and sufficiency of which Licensor hereby acknowledges.

(e) All sums payable hereunder by Licensee, including, but not limited to, the Monthly License Fee, any administration fee and any engineering fee payable pursuant to the terms hereof, shall be payable to Licensor at c/o Merchandise Mart Properties, Inc., 222 Merchandise Mart Plaza, Room 470, Chicago, Illinois 60654, or to such other party or at such other address as Licensor may designate from time to time by written notice to Licensee.

4. Utilities; Taxes.

(a) Licensee acknowledges that the Monthly License Fee is exclusive of charges for utilities consumed by the Equipment (as herein defined). Licensee agrees to cause all utilities consumed by the Equipment to be separately metered, and to reimburse Licensor upon demand for all costs, expenses and fees incurred by or on behalf of Licensor for the same.

(b) Without limiting the foregoing, Lessee shall reimburse Lessor upon demand for all electrical consumption and demand charges attributable to electricity provided through the submeter installed to monitor the electrical consumption of the Equipment. Without limiting the foregoing, Lessee shall reimburse Lessor for all such electrical usage, including demand and consumption charges attributable to such usage (Lessee hereby acknowledging and agreeing that Lessee shall bear demand charges attributable to electricity consumption during summer peak months, even though a portion of such demand charges may be imposed during the nine (9) months after such summer peak months) based on a sub-metered calculation of such usage.

(c) Licensee hereby acknowledges that the existence of the Equipment and Licensee’s other improvements may result in an increase in the assessed valuation of the Building. Upon

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receipt of documentation showing that the Equipment or Licensee’s other improvements caused such increase, Licensee shall reimburse Licensor for any increase in the real estate taxes payable by Licensor as consequence of the increase in assessed valuation. In the event any sales, use or other tax shall be payable by Licensor in connection with this Agreement, Licensee shall reimburse Licensor on demand for such payments.

5. Permitted Use: Subject to (i) Licensee’s receipt of all applicable governmental approvals and permits (the same to be obtained by the Licensee and a copy thereof provided to Licensor, all at the Licensee’s sole expense), (ii) Licensor’s structural and roofing requirements (consistent with the structural limitations of the Building as determined by the Licensor’s structural engineer at the Licensee’s expense), and (iii) the other provisions of this License Agreement, Licensor agrees to permit Licensee to install and operate in the License Area one (1) meter satellite dish antenna and related equipment specified on the attached Exhibit B (collectively referred to as the “Equipment”). Use of the Equipment shall be solely for the convenience of Licensee in the normal conduct of Licensee’s business. In no event shall the Equipment be used for a commercial purpose separate from Licensee’s normal business as an independent means of producing income separate from the Licensee’s normal business.

6. Equipment Requirements:

(a) The nature, type, weight and location of the Equipment and plans and specifications for the installation thereof shall be subject to the Licensor’s prior written approval. Without limiting the foregoing, the aggregate weight of the Equipment shall not exceed                                          (            ) pounds, inclusive of all mounting structures. Licensor shall have no obligation to install or maintain any barriers between the Equipment and the equipment of any other tenant.

(b) All installations, modifications or changes of or to the Equipment shall conform to Licensor’s technical requirements, including but not limited to, design and installation specifications, interference control device and weight and windload requirements. Complete technical characteristics for all contemplated Equipment (including, but not limited to, response curves) shall be furnished to Licensor and approved for use prior to Licensee’s installation of the Equipment.

(c) The Equipment shall be clearly marked to show Licensee’s name, address, telephone number, the name of the person to contact in case of emergency, FCC call sign, frequency and location. All transmission lines and other cables and lines installed as part of the Equipment shall be identified at the points of origination and connection.

(d) In the event Licensee requires an electric power supply (or usage difference from that currently at the License Area, Licensee shall, at Licensee’s sole cost and expense, obtain and install such power supply subject to Licensor’s approval. Licensee shall be solely responsible for supplying electricity and other utility service to the License Area, subject to Licensor’s restrictions pertaining thereto.

(e) In the event a zoning variance is required in connection with the installation or modification of the Equipment, Licensor shall have the right, at its discretion, to either (i) cancel this Agreement, or (ii) allow Licensee to obtain such variance at Licensee’s sole cost and expense, but in such event the terms of such variance shall be subject to Licensor’s approval in Licensor’s sole discretion.

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7. Installation of Equipment:

(a) The Equipment shall be installed, in compliance with all applicable codes, law and regulations and at Licensee’s sole expense, by a properly licensed and insured contractor approved by Licensor. Prior to installation of the Equipment, Licensee shall provide Licensor with evidence that all necessary licenses, permits and approvals have been obtained.

(b) The installation and location of any Equipment which is not located exclusively within the License Area shall be subject to the approval of the Licensor at the Licensor’s sole discretion.

(c) Prior to commencing installation of the Equipment, Licensee’s contractors and subcontractors shall submit to Licensor a Certificate of Insurance showing that all insurance requirements set forth on the attached Exhibit D have been met. If any policy expires during the term of the contract, Licensee shall ensure that such policy is automatically renewed (or a replacement policy is issued) and a new Certificate of Insurance sent to Licensor not less than ten (10) days in advance of expiration of the then-current policy term.

(d) No penetration of the roof surface of the Building will be allowed except upon the prior written consent of the Licensor and the written agreement of the entity (or, if more than one (1), all entities) providing a warranty on the roof of the Building, that such penetration will not invalidate, in whole or part, the warranty(ies) provided by such entity(ies). The Equipment shall be shielded from public view in a manner acceptable to the Licensor. In no event shall Licensee permit the Equipment to be visible from surrounding locations on the ground.

(e) After initial installation of the Equipment, Licensor may require Licensee to relocate the Equipment, on reasonable Notice to Licensee; provided, however, that no relocation shall be required to a location which will not permit the Equipment to function properly or which would not allow for necessary transmission paths.

(f) Licensee agrees that, in the event that Licensee installs a structure for the mounting of the Equipment and such structure will permit, without interference with the Equipment, the mounting of other Building tenant’s equipment, Licensee will permit, without charge (other than a pro-rata contribution to the cost of maintaining and repairing such structure), die mounting of other Building tenant’s equipment on such structure(s).

8. No Interference:

(a) Licensee agrees not to install or modify any of the Equipment in any manner which will or may interfere, electronically or otherwise, with the operation of the Building or any equipment installed on the roof from time to time by Licensor or any other tenant or licensee, or adversely impact the financability or marketability of the Building. Licensee shall take all steps necessary to ensure that the installation and operation of the Equipment does not adversely affect the operation of the Building or its basic systems or the systems used by any tenants of the Building, including, but not limited to, the measures specified on the attached Exhibit C.

(b) If the operation of any portion of the Equipment causes any adverse effect, Licensee, at its sole expense, shall immediately cease its operation of the Equipment and take all steps necessary to eliminate such adverse effect(s). If such adverse effect(s) cannot be eliminated

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by Licensee, Licensee shall, upon Licensor’s request and at Licensee’s sole expense, remove the Equipment in accordance with the terms hereof.

(c) Licensee shall and hereby agrees to defend, indemnify and hold Licensor, Licensor’s Agent and all other licensees and tenants having facilities located at the Building harmless, from and against any and all costs of any damage to their respective facilities or equipment located as a result of the installation, operation or maintenance of Licensee’s Equipment.

9. Condition and Suitability of the Property:

(a) Licensor makes no representations or warranties regarding the suitability or condition of the roof for installation or operation of the Equipment, and Licensor shall have no liability to Licensee on account thereof. The installation and operation of the Equipment on the roof by Licensee shall be at the Licensee’s sole risk. Without limiting the foregoing, Licensee waives any and all claims against Licensor for any interference caused to Licensee’s Equipment by any present or future equipment or facilities of Licensor or any of its tenants or licensees.

(b) Licensee hereby assumes the risk of the inability to operate as a result of any structural or power failures at the License Area or failure of Licensee’s Equipment for any reason whatsoever and agrees to defend, indemnify and hold Licensor harmless from and against any and all damages and costs of defending any claim or suit for damages of any kind (including, but not limited to, any claim for damages due to business interruption, and attorney’s fees) asserted against Licensor by reason of such failure.

10. Repairs and Maintenance: Licensee shall repair and maintain the Equipment throughout the Term in compliance with all applicable codes, laws and regulations. Licensee and/or its contractor shall bear all expenses in connection with the installation, operation, maintenance and repair of the Equipment and the removal thereof. All maintenance work shall be performed by Licensee’s employees or by certified contractors, previously approved in writing by Licensor, such approval in writing by Licensor. In the event Licensor makes the determination that any structural modification or substantial repair is needed to any portion of the License Area to permit the installation or continuing operation of the Equipment, Licensor shall have the right to terminate this Agreement on thirty (30) days’ prior notice to Licensee.

11. Compliance with Laws.

(a) Licensee shall, at the Licensee’s expense, comply with all present and future governmental laws, regulations or requirements and obtain and maintain in full force and effect throughout the Term all permits and other governmental approvals as may be required in connection with the Equipment. In addition, Licensee agrees that Licensee shall, at Licensee’s sole expense, comply with all other laws, statutes, ordinances, and governmental rules, regulations and requirements now in force or which may hereafter be in force, and with the requirements of any board of fire underwriters or other similar body now or hereafter constituted, relating to or affecting the Licensee’s Equipment, access to the roof, and/or the activities of Licensee or Licensee’s agents, employees, officers, contractors, licensees, invitees and/or others for whose actions Licensee is responsible at law in, on or upon the roof.

(b) Licensee acknowledges that, depending on the location, nature and size of the Equipment, review by the Office of Planning and approval of the Zoning Administrator or review

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and approval by the Board of Zoning Adjustment may be required. In the event any review by or proceeding before local planning or zoning authorities is required in order to obtain approval for installation of the Equipment, the Licensor agrees to cooperate in connection therewith, provided that the same is at no cost, expense or risk to the Licensor. Upon installation of the Equipment, the Licensee shall provide the Licensor with such evidence as the Licensor may reasonably require of compliance with laws, including (if appropriate), but not limited to, regulations of the Federal Communications Commission and Federal Aviation Administration.

12. Access to the License Area: Upon reasonable prior notice, Licensor agrees to permit Licensee and its contractors reasonable access during normal working hours (unless otherwise consented to by the Licensor) to the License Area to facilitate the installation, operation and maintenance of the Equipment and the removal thereof. If required after normal operating hours, or if such access becomes excessive, the Licensee shall reimburse the Licensor for its reasonable costs associated with such after-hours or excessive access. Access to and activities in, on or upon the roof by Licensee and/or Licensee’s agents, employees, officers, contractors, licensees, invitees and/or others for whose actions Licensee is responsible, shall be subject to such rules and regulations as Licensor may promulgate in connection with such access and/or activities.

13. Indemnity: To the fullest extent permitted by applicable law, Licensee hereby agrees to indemnify and hold Licensor and Licensor’s agents, contractors and employees (collectively, the “Indemnitees”) harmless from and against any and all costs, damages, claims, expenses, fees, suits, awards and liabilities incurred or suffered by or claimed against any Indemnitee (including, but not limited to, court costs and reasonable attorneys fees), directly or indirectly, based on, arising out of or resulting from (i) Licensee’s use of the License Area, (ii) any act or omission by Licensee or its employees, agents or invitees within the License Area, or (iii) any breach or default by Licensee in the performance or observance of its covenants or obligations under this License Agreement. Without limiting the foregoing, Licensee shall be responsible for, and shall defend, indemnify and hold Licensor harmless from and against, any damage caused to the roof structure by the installation, operation, maintenance, repair and/or removal of the Equipment, and any injury or death, or loss or damage to any of the Equipment or involving any equipment of any other licensee or tenant.

14. Insurance: In furtherance of Licensee’s indemnity of Licensor as contained in the preceding Section 13, Licensee hereby agrees to maintain in full force and effect throughout the Term comprehensive general liability insurance, including contractual liability coverage and tenant’s legal liability coverage, with combined single limits of not less than One Million Dollars ($1,000,000.00) per occurrence and not less than Two Million Dollars ($2,000,000.00) in the aggregate per location, and broad-form property damage insurance, utilizing insurers reasonably acceptable to Licensor, with respect to personal injury, death or property damage arising out of or in connection with Licensee’s Equipment, Licensee’s right of access to the roof pursuant to this License Agreement, and any activities conducted in, on or upon the roof by the Licensee or the Licensee’s agents, employees, officers, directors, contractors, licensees, invitees and/or others for whose actions Licensee is responsible. In addition, Licensee shall require all contractors and subcontractors engaged for installation or maintenance of the Equipment to provide to Licensor a certificate of insurance evidencing the insurance coverages set forth on the attached Exhibit D.

15. Damage or Destruction. In the event the License Area or any part thereof is damaged or destroyed by the elements or any other cause, Licensor may elect to restore or not to restore the License Area to the condition existing immediately prior to such casualty. If Licensor

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elects to restore the License Area, Licensee’s obligation to pay the Monthly License Fee and any additional fees required herein shall abate as of the date of such casualty until the License Area is reasonably susceptible of use by Licensee for the operation of the Equipment. If Licensor elects not to restore the License Area, Licensor shall notify Licensee of such decision within thirty (30) days of such casualty, in which event this Agreement shall cease and terminate with the Monthly License Fee prorated to the date of casualty.

16. Termination of License: In the event (i) Licensee fails to comply with, fulfill or observe any of the covenants, conditions, or obligations made by or imposed on the Licensee pursuant to the terms of this License or, with respect to the Equipment or the License Area (each of the foregoing being herein referred to as an “Antenna Breach”), or (ii) removal of the Equipment shall be required by any governmental authority, this License may, without demand or Notice, be terminated by the Licensor without payment of penalty or compensation to Licensee, and Licensee shall promptly (immediately, if so required by a governmental authority) remove the Equipment from the Building at the Licensee’s expense. In all events, Licensee shall at its sole cost and expense remove the Equipment and all screening therefor upon the expiration or sooner termination of the License and restore the area affected by the installation, operation and/or removal of the Equipment and/or such screening to its original condition. Such removal shall be performed by a certified contractor, pursuant to a Licensor-approved removal plan and without causing any interference or damage to the structures, equipment, or operations of Licensor or any of its licensees or tenants at the Building. Should any interference, damage or destruction occur, it shall be immediately remedied by Licensee at Licensee’s sole cost and expense (failing which, Licensor may perform the necessary work at Licensee’s cost and expense and such amount shall be paid by Licensee as an additional fee hereunder within ten (10) days of Licensee’s receipt of an invoice therefor).

17. Damages: In the event Licensee fails to fully vacate the License Area when required by Licensor to do so, or fails otherwise to comply with the terms of this License Agreement, Licensor shall have the right, inter alia, to institute suit for wrongful detainer of the License Area against Licensee, IN WHICH EVENT LICENSEE VOLUNTARILY AND FREELY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY ISSUE ARISING FROM OR IN ANY WAY RELATING TO THIS LICENSE AGREEMENT TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND LICENSEE FURTHER VOLUNTARILY AND FREELY WAIVES THE RIGHT TO RECEIVE ANY NOTICE, INCLUDING ANY NOTICE OF TERMINATION OF THIS LICENSE, AND LICENSEE FURTHER VOLUNTARILY AND FREELY AUTHORIZES AND EMPOWERS THE CLERK OR ANY ATTORNEY OF ANY COURT OF RECORD IN THE DISTRICT OF COLUMBIA TO APPEAR BEFORE IT AND TO POST JUDGMENT ACKNOWLEDGING TERMINATION OF THIS LICENSE ON THE FIRST COURT RETURN DATE OR ON THE DATE A RESPONSIVE PLEADING IS DUE, AND TO IMMEDIATELY THEREAFTER DISCONTINUE USE OF THE LICENSE AREA, AND LICENSEE DOES HEREBY FURTHER CONSENT TO THE IMMEDIATE EXECUTION OF ANY SUCH JUDGMENT.

18. No Lease: The parties hereto acknowledge and agree that this License Agreement is an arms-length transaction between disinterested parties, creates only a License terminable as set forth herein and not a lease or other estate in the License Area, and shall not be deemed or construed in any way to create a relationship of landlord/tenant between the parties hereto. Licensee expressly acknowledges that Licensee is not a tenant of the License Area. Licensee further acknowledges that this License Agreement shall in no way amend or modify any existing agreement between Licensor and Licensee.

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19. Binding Effect; Assignment:

(a) This License Agreement and the terms and conditions contained herein are binding on and may be legally enforced by the parties hereto and their successors and assigns; provided, however, this Section 19(a) shall not be deemed to permit any transfer or assignment of this License Agreement not otherwise permitted hereunder.

(b) The Licensee shall not assign or otherwise transfer this License Agreement, or any of Licensee’s rights hereunder, nor permit the use or occupancy of the License Area by any person or entity other than Licensee.

(c) Licensor reserves the right to assign, transfer, mortgage or otherwise encumber the License Area and/or Licensor’s interest in this Agreement. Licensee acknowledges that this License Agreement is and shall be subject and subordinate to any mortgage, deed or trust or other covenant, condition, encumbrance or restriction of record. Licensee shall execute and deliver to Licensor upon demand such further instruments subordinating this Agreement, as may be required by Licensor.

(d) Limitation of Licensor’s Liability: It is expressly agreed by the parties hereto that Licensee’s sole recourse for satisfaction of any judgment against Licensor shall be against Licensor’s equity in the Building.

20. Miscellaneous:

(a) Severability. Each covenant, agreement, term or condition of this License Agreement shall be valid and enforceable to the fullest extent permitted by law. If any part of this License Agreement or the application thereof in any circumstance or to any person or entity shall to any extent be held invalid or unenforceable by a court of competent jurisdiction, the remainder of this License Agreement or the application of such part to circumstances or to a person or entity other than those to which it has been held invalid shall be and remain in full force and effect.

(b) Governing Law. This License Agreement shall be governed by and construed in accordance with the laws of the District of Columbia, without regard to the conflict of laws principles thereof.

(c) Licensor’s Approval. In all matters where Licensor’s approval is required and where Licensor makes a determination that interference or other disruption with the business of Licensor or other existing licensees is likely to result from Licensee’s contemplated action, Licensor shall have the right to withhold such approval.

(d) Application of Laws. This Agreement is subject to all local, State and Federal laws and regulations, now or hereafter in force.

(e) Modification. This Agreement may not be modified, extended or terminated except by an instrument duly signed by Licensor and Licensee.

(f) Waiver. Waiver of a breach of any provision hereof shall not constitute a waiver of any subsequent breach of such provision, or of a breach of any other provision of this Agreement.

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(g) Brokers. Licensor and Licensee represent and warrant to each other that no broker was involved in connection with this transaction and each party agrees to indemnify and hold the other harmless from and against the claims of any broker made in connection with this transaction.

(h) Entire Agreement. The parties agree that this instrument contains the entire agreement between them as of this date, that there are no representations, promises or undertakings not expressed herein, and that there are no collateral agreements, stipulations, promises or undertakings whatsoever by the respective parties in any way affecting the subject matter of this Agreement which are not expressly contained in this instrument.

(i) Authority. Each party hereby represents and warrants to the other that the execution and performance of this Agreement by the undersigned individuals on their respective behalf has been authorized by all necessary partnership, corporate or limited liability company actions, and that neither entering into this Agreement nor the performance hereof will violate any other agreement to which it is a party or by which it is bound.

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IN WITNESS WHEREOF, the said parties have hereunto set their hands and affixed their seals, all done as of the day and year first hereinbefore written.

WITNESS:		LICENSOR:
		WASHINGTON DESIGN CENTER L.L.C., a                                           limited liability company
ATTEST:		LICENSEE:
		SPACEHAB, INCORPORATED, a                                           corporation
Name:		By:
Title:	[Asst.] Secretary	Its:	[Vice] President

[Corporate Seal]

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EXHIBIT A

LOCATION OF LICENSE AREA

[TO BE ATTACHED PRIOR TO EXECUTION]

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EXHIBIT B

PERMITTED EQUIPMENT

[TO BE ATTACHED PRIOR TO EXECUTION]

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EXHIBIT C

MINIMUM EQUIPMENT REQUIREMENTS

All transmitters and/or repeater systems installed as part of the Equipment shall be equipped with, at a minimum, a single stage isolator and a bandpass filter or bandpass/reject type duplexer. No notch type duplexers will be allowed. Without limiting the foregoing, Licensee shall install a bandpass filter on the output of any transmitter included as part of the Equipment, providing a minimum of 40dB attenuation at 896-901 MHz. The filter shall be a TX/RX Model 89-95-90210 or equivalent. All transmitting equipment operating above 130 MHz shall be equipped with an isolator/circulator device providing a minimum of 50dB of transmitter to antenna isolation.

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EXHIBIT D

CONTRACTOR INSURANCE REQUIREMENTS

All contractors and subcontractors shall, at their sole expense, carry and maintain throughout the term or the contract the following insurance:

Worker’s Compensation -	Statutory Limits
Employer’s Liability -	$100,000 each accident
	$500,000 policy-limit disease
	$100,000 disease-each employee
Commercial General liability -
Primary:	$1,000,000 each occurrence(BI/PD)
	$2,000,000 aggregate per location
	$1,000,000 aggregate. Products liability - completed operations
	$1,000,000 personal injury and advertising injury
	$5,000 medical expense
Limits Excess:	$5,000,000
Automobile Liability and Property Damage -	$1,000,000 combined single limit
Professional Liability -	$2,000,000

Notes:

(1) Commercial general liability shall include all major divisions of coverage and be on a commercial occurrence form. It shall include premises operations, products and completed operations, contractual, personal injury, and advertising injury, owner’s and contractor’s protective and broad form property damage.

(2) Excess liability policies must follow form with primary liability policies.

(3) Contractor and subcontractors doing installation work only must carry completed operations coverage for two years following completion of their work. Contractors and subcontractors providing maintenance service must carry completed operations coverage continuously.

(4) Automobile liability shall be written on an occurrence basis. It shall include all automobiles owned, leased, hires non-owned.

(5) Each provider of design or engineering services shall provide evidence of professional liability insurance covering all design or engineering aspect of the work.

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(6) Each insurance policy set forth above shall be primary over any that may be carried by Licensor or its Agent.

(7) Except for workers’ compensation and professional liability, each policy shall name Licensor, Agent and, if requested by Licensor, Licensor’s mortgagee, as additional insureds.

(8) Policies must be with carriers licensed to do business in the jurisdiction where the Building is located, and approved by Licensor. The form of each policy shall at all times be subject to the Licensor’s reasonable approval.

(9) Each policy shall contain a provision pursuant to which the insurer agrees to provide to Licensor not less than thirty (30) days prior written notice of any cancellation or material modification.

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EXHIBIT J

AFFIRMATIVE ACTION PROGRAM FOR THE DESIGN CENTER, D. C.

SUBMITTED MARCH 19, 1981, AS AMENDED.

III. Employment Opportunities for Low-Income and Minority District Residents

Employment opportunities for low-income and minority residents of the neighborhood and the District of Columbia will be provided in the development and operation of the Project The primary resource for job referrals shall be the District of Columbia Department of Employment Services At the time the general contractor has determined the composition of the construction team, an estimate of the probable number of employment opportunities during the construction phase of the Project which can be made available to District of Columbia residents will be made and provided to the CCO. Opportunities for employment of such persons in the construction of the Project were outlined in Section II above.

At this stage of the Project, the Redeveloper anticipates that approximately 200 permanent jobs will be created when the Project is completed and fully operational. Of this total, it is estimated that the non-sales employment needs of the tenants leasing showroom space will account for 140-150 of the new jobs. The Redeveloper shall ensure that each prospective tenant leasing showroom space is aware of the Redeveloper’s commitment to the requirements and goals of this Plan and Redeveloper will encourage each tenant to utilize the following procedures to disseminate employment information about jobs within the Project:

(1) List their employment needs, including the requisite work experience and professional qualifications, with the District of Columbia Department of Employment Services and advertise in the Washington Post, the Washington Afro-American and community newspapers in the neighborhood, the area and the District Of Columbia.

(2) Provide notice of the availability of job opportunities to the community groups and organizations that are part of the Community Participation Program. In particular, the ANC-2D can serve as an effective vehicle for the dissemination of employment information.

(3) Inform the Redeveloper when they are having difficulty in meeting their employment needs and locating minority employees.

Of the remaining 50-60 new jobs over which the Redeveloper will have some control, the majority will be employees of the building service contractors and concession operators discussed more fully below and in Part IV of this Program. The Redeveloper will itself have approximately six management and clerical personnel in the Washington Design Center. The Redeveloper recognizes the importance of hiring local minority employees and adopts the goal of employing minority residents of the District of Columbia in at least fifty percent (50%) of the Redeveloper’s full-time employment positions.

The wholesale showrooms in the Project will require ongoing renovation and remodeling, and construction-related work will not end after completion of the building. There will be continuing needs for painters, carpenters, electricians, carpet installers, wallpaper hangers, laborers and other employees. The Redeveloper expects that substantial employment for minorities resident in the District of Columbia will be generated by these contracting opportunities. To ensure this outcome for construction work performed for the Redeveloper, the Redeveloper adopts the goal of awarding seventy-five percent (75%) of the dollar amount of the contracts for the ongoing interior remodeling of the Project to District of Columbia minority businesses. In the event that suitable minority businesses cannot be found to perform this contracting, the Redeveloper will seek to use non-minority contractors with minority apprenticeship programs after informing the CCO of the circumstances which make such a step necessary. In fulfilling Redeveloper’s responsibilities under this paragraph, the Redevelopers shall seek to use terms with a minority work force on this Project of no less than 50% of the term’s work force on this Project.

Moreover, the Redeveloper will work with local school officials and other educators to encourage the development of special programs to expand educational opportunities related to the design industry which the Project will serve. Such special programs may include tours of the Project and cooperation with local school officials in the development of educational programs in marketing, interior design, architecture and related skills.

EX-10.9

Exhibit 10.9

SUBLEASE AGREEMENT

THIS SUBLEASE AGREEMENT made this          day of July, 2002 is entered into by and between SPACEHAB, INCORPORATED (hereinafter referred to as “Sublandlord”) and THE BOEING COMPANY (hereinafter referred to as “Subtenant”).

WITNESSETH:

WHEREAS, Sublandlord desires to sublease to Subtenant, and Subtenant wishes to sublease from Sublandlord, all of the space let under that certain Deed of Lease dated as of December 16, 1998 between Washington Design Center L.L.C. as the “Landlord” and Spacehab, Incorporated as the “Tenant”, which is attached hereto as Exhibit A (hereinafter referred to as the “Lease”) in accordance with the terms hereof (hereinafter the rentable space covered under the Lease and this Sublease Agreement shall be referred to as the “Premises”); and

WHEREAS, Section 10.02 of the Lease requires the consent of the Landlord prior to the sublease of all or any portion of the Premises and Sublandlord and Subtenant desire to obtain the Landlord’s consent to such sublease and to set forth their understandings with respect to the terms of the sublease as more particularly described herein.

NOW THEREFORE, the parties hereto agree as follows:

1. SUBLEASE

Sublandlord agrees to sublease to Subtenant and Subtenant agrees to sublease from Sublandlord the Premises in accordance with all the terms and conditions contained in the Lease, except as otherwise specifically provided for herein; and the terms and conditions of the Lease (except for those otherwise provided in this Section 1 or otherwise in this Sublease) are hereby incorporated herein as terms and conditions of this Sublease Agreement, with each reference to Landlord and Tenant in the Lease to be deemed to refer to Sublandlord and Subtenant, respectively, as the same relates to the Premises; and together with all the following paragraphs set forth in this Sublease Agreement, shall constitute the complete terms and conditions of this Sublease Agreement. In the event of any conflict between the Sublease Agreement and the Lease, the specific provisions of the Sublease Agreement shall govern. Notwithstanding the foregoing, the following provisions of the Lease are not applicable to or binding on Subtenant and are not incorporated into this Sublease: Sections 2.01, 2.02, 2.03, 2.04, 2.05, 4.02, 4.04 (with respect to the address, for payments), 5.01, 5.02, and 5.03 (it being understood with respect to 5.01, 5.02, and 5.03, that Subtenant’s obligations are as set out in Section 5 of this Sublease), 6.01, 11.01, 15.01 (provided that 15.01 shall be binding on Subtenant vis-à-vis the Landlord), 16.01 16.02, 16.03, 16.04,16.05 ,19.04,19.10 (except that 19.10 shall be binding on Subtenant vis-à-vis the Landlord).

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2. PREMISES

For purposes of this Sublease Agreement, the “Premises” shall be comprised of approximately 15,499 rentable square feet located on the southwest side of the eighth (8th) floor of that certain office building located at 300 D Street, SW, Washington, D.C. (the “Building”) as more particularly described in Exhibit B, which is attached hereto and incorporated herein by this reference.

3. TERM

Subject to prior written consent hereto by Landlord, the term of the Sublease Agreement (the “Sublease Term”) shall be for a period running concurrently with the Initial Term of the Lease, commencing on August 1, 2002 (the “Commencement Date”) and terminating on January 19, 2008 (the “Termination Date”). For the purposes of this Sublease Agreement, a “Sublease Year” shall be the period from January 1 through and including December 31, except that (i) the first (1^st) Sublease Year shall be a period of the Commencement Date through and including December 31, 2002; and (ii) the final Sublease Year shall be the period of January 1, 2007 through and including January 19, 2008. Sublandlord’s renewal option and Sublandlord’s right of first offer, respectively contained in Section 2.05 and Article XI of the Lease, shall not inure to Subtenant.

4. BASE RENT

Subtenant agrees to pay to Sublandlord Base Rent at a rate of Twenty-eight and 75/100 Dollars ($28.75) per rentable square foot ($445,596.24 per annum/$37,133.02 per month) on a full service basis, inclusive of Real Estate Taxes and Operating Expenses during the first (1^st) Sublease Year. Beginning with the second (2^nd) Sublease Year and with each Sublease Year thereafter during the term of this Sublease Agreement, Subtenant’s Base Rent shall be increased by three (3%) over the previous Sublease Year’s Base Rent, and Subtenant shall pay such Additional Rent as set forth in Section 5 of this Sublease Agreement.

5. INCREASES IN BASIC COST

Commencing with the second (2^nd) Sublease Year and for each Sublease Year thereafter, Subtenant shall pay to Sublandlord all Additional Rent, including Tax Adjustments and Operating Expense Adjustments calculated pursuant to and payable consistent with the terms of the Lease; provided however that Subtenant’s Percentage Share of Real Estate Tax Increases and Subtenant’s Percentage Share of Operating Expense Increases shall be calculated utilizing a Tax Base Year and Operating Expense Base Year of 2002.

6. CONDITION OF SPACE AT OCCUPANCY

Except as otherwise provided in Section 12 hereof hereto, Subtenant agrees to sublease the Premises in its “as is” condition and configuration, as substantially

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shown in Exhibit B hereto. The parties confirm that Paragraph 7.01 of the Lease, as incorporated into this Sublease Agreement, is intended to refer to the condition of the Premises as of the commencement of the Sublease Term.

7. FURNITURE, FIXTURES AND EQUIPMENT

Subtenant shall lease the furniture, fixtures and equipment owned or leased by Sublandlord, as described more particularly in Exhibit C, which is attached hereto and incorporated herein by this reference (hereinafter referred to as the “Furnishings”), during the term of the Sublease Agreement at the annual rate of $23,248.50, which shall be paid as Additional Rent in monthly installments of $1,937.38 on the first day of each month during the Sublease Term. To the extent that any of the Furnishings are leased or licensed by Sublandlord, Sublandlord provides no representations or warranties as to transferability of software licenses or manufacture’s warranties relating to any of the Furnishings. Subtenant shall exercise reasonable care in maintaining the Furnishings in good repair and shall not remove the Furnishings from the Premises. At the end of the Sublease Term Subtenant may purchase all or any part of the Furnishings for the aggregate purchase price of Ten Dollars ($10.00). Any Furnishings so purchased shall thereupon become the property of Subtenant and shall be removed by Subtenant. Any Furnishings not so purchased shall remain the property of Sublandlord and shall be removed or abandoned in place at Sublandlord’s risk and expense.

8. CONDITION OF SPACE AT TERMINATION

Upon expiration or termination of the term of this Sublease Agreement, Subtenant shall deliver possession of the Premises, together with the Furnishings to Sublandlord in the same general condition as the Commencement Date of the Sublease Agreement, subject to reasonable wear and tear and to loss or damage caused by condemnation or any matter covered by the mutual waiver of claims set out in Section 16.1 of this Sublease Agreement. To the extent that Subtenant makes additions or improvements to the Premises pursuant to Section 12 of this Sublease Agreement, those improvements shall become the property of the Landlord upon the expiration or termination of this’ Sublease Agreement, unless otherwise directed by Landlord at the time of its approval of such additions or improvements. The parties confirm that the reference in Paragraph 12.01 of the Lease to the “Commencement Date”, as incorporated into this Sublease Agreement, is intended to refer to the commencement of the Sublease Term.

9. COVENANTS AND WARRANTIES OF SUBLANDLORD AND SUBTENANT

As relates to the Premises, Subtenant agrees that it shall, at all times, keep, observe, and perform the obligations to be performed by Sublandlord as Tenant under the Lease, except as provided herein. Sublandlord covenants that it will make all payments of Base Rent and Additional Rent provided for in the Lease and will perform all other obligations of the Tenant under the Lease, except to the

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extent that Subtenant has agreed to perform such obligations pursuant to Section 1 of this Sublease. If timely requested by Subtenant, Sublandlord shall exercise its rights under Section 5.04 of the Lease (at the expense of and for the account of Subtenant with respect to any portion of the Term of the Lease that falls within the Sublease Term).

Sublandlord warrants and covenants that it will not amend, cancel, or terminate (except by expiration) the Lease without the prior written consent of Subtenant, which Subtenant may withhold in its sole discretion.

Sublandlord warrants that the copy of the Lease Agreement set forth in Exhibit A is a true and correct copy of the Lease Agreement as amended, that the Lease Agreement is in full force and effect in accordance with its terms, and that Sublandlord is not aware of any default by Sublandlord or Landlord nor of any event which with notice or lapse of time would be an event of default thereunder.

Sublandlord covenants, so long as Subtenant is not in default of its obligations under this Sublease Agreement, that Subtenant shall have the right to quietly enjoy the Subleased Premises without hindrance by any person claiming by or through Sublandlord.

10. ASSIGNMENT AND SUBLETTING

Subtenant agrees that it will not assign or encumber, or permit to be encumbered, all or any part of its right, title, interest or estate under this Sublease, nor sublet the whole or any part of the Premises, in any such cases directly or indirectly, voluntarily or involuntarily, without the prior written consent of Sublandlord in each case. In the event that Subtenant is not, nor has ever been in default of any obligation under this Sublease, Sublandlord shall pot unreasonably withhold, condition or deny a request to assign this Sublease or to sublet the Premises, subject to Subtenant’s compliance with, and Landlord consent pursuant to, Section Article X of the Lease.

11. PARKING

Subtenant may contract directly with the parking garage operator for the Building for up to fifteen (15) parking spaces as permitted under the Lease at the then applicable prevailing rates, as adjusted from time to time by the parking garage operator.

12. SUBTENANT IMPROVEMENTS

Subtenant may design and install additions, and improvements to the Premises at Subtenant’s sole cost and expense and subject to prior written consent of Sublandlord and Landlord in accordance with Article VIII of the Lease.

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13. SECURITY PAYMENT

The value of two (2) months rent in an aggregate sum of $76,203.42- shall be paid by Subtenant to Sublandlord concurrently with the execution of this Sublease Agreement. One (1) month’s rent ($39,070.40) shall be applied to the first (1^st) month’s Base Rent and Additional Rent for Furnishings when due and one (1) month’s rent ($37,133.02), (hereinafter referred to as the “Security Deposit”) shall be held by Sublandlord as security with respect to the Premises and the Furnishings, if applicable, without interest throughout the Sublease Term. Within thirty (30) days after the expiration of the term of this Sublease Agreement, Sublandlord shall (provided that Subtenant is not in default under the terms hereof) refund the Security Deposit to Subtenant, less such portion thereof as Sublandlord shall have applied to cure any default by Subtenant with respect to any of Subtenant’s obligations, covenants, conditions or agreements under this Sublease Agreement.

14. USE OF PREMISES

Subtenant shall use and occupy the Premises solely for general office purposes and not in violation of any Legal Requirements.

15. INSURANCE

15.1 Subtenant Indemnity. Subtenant shall indemnify and hold Sublandlord and Landlord harmless from and against any and all claims or liability for bodily injury to or death of any person or loss of or damage to any property arising out of Subtenant’s use of the Premises, the Furnishings or the Property or from the conduct of Subtenant’s business or from any activity, work or thing done, permitted or suffered by Subtenant, its agents, employees, contractors or invitees in or about the Premises or the Property except:

(a) claims and liabilities to the extent caused by any negligence on the part of Sublandlord, Landlord, the irrespective agents, employees, contractors or invitees, or

(b) claims and liabilities for property damage addressed in Paragraph 16.

In the absence of any negligence on the part of the Sublandlord or Landlord, or their respective agents, employees, contractors or invitees, such indemnity shall include all reasonable costs, attorneys’ fees and expenses incurred in the defense of any such claim or any action or proceeding brought thereon. In the event any action or proceeding is brought against Sublandlord or Landlord by reason of any claim falling within the scope of the foregoing indemnity, and in the absence of any negligence on the part of Sublandlord or Landlord, Subtenant upon written notice from Sublandlord or Landlord to Subtenant within sixty (60) days after

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Sublandlord or Landlord receives notice of the claim or, if earlier, within ten (10) days after they are served with process with respect to any such claim, shall defend same at Subtenant’s expense by counsel reasonably satisfactory to Sublandlord or Landlord, respectively.

The foregoing indemnity is conditioned upon Sublandlord or Landlord providing notice to Subtenant within sixty (60) days after either of them receives notice of any claim or, if earlier, within ten (10) days after they are served with process with respect to any such claim, that will fall within the scope of the foregoing indemnity and cooperating fully with Subtenant in any defense or settlement of the claim or liability.

15.2 Subtenant’s Insurance. Subtenant, at Subtenant’s own cost and expense, will provide and keep in full force and effect during the Lease Term, commercial general liability insurance with limits of not less than $3,000,000 covering bodily injury to any person, including death, and loss of or damage to real and personal property, or shall self-insure for the same. Insurance provided hereunder may be provided under Subtenant’s blanket liability insurance policy. During the Sublease Term Sublandlord and Landlord shall be named as an additional insured under insurance carried pursuant to this Paragraph 15.2 to the extent of Subtenant’s undertaking set forth in Paragraph 15.1 and a certificate evidencing such insurance coverage shall be delivered to Sublandlord and Landlord not later than the date when Subtenant shall enter into possession of the Subleased Premises. Such certificate of insurance will provide for thirty (30) days’ advance notice in the event of cancellation.

15.3 Sublandlord’s Liability and Insurance. Notwithstanding any thing in this Sublease, Sublandlord shall continue to be liable to the Landlord pursuant to the indemnity obligation set out in Paragraph 16.05 of the Lease and shall maintain all insurance that it is required to maintain pursuant to the Lease.

16. WAIVER OF CLAIMS; WAIVER OF SUBROGATION

16.1 Mutual Waiver of Claims. Sublandlord and Subtenant each hereby release the other from, and waive, their entire claim of recovery for loss of or damage to property arising out of or incident to fire, lightning or any other perils to the extent such perils are normally included in an “all risk” property insurance policy when such property constitutes the Premises or the Building or is in, on or about the Premises, Building or the Property, whether or not such loss or damage is due to the negligence of Landlord or Subtenant or their respective agents, employees, guests, licensees, invitees or contractors.

16.2 Mutual Waiver of Subrogation. Each of Landlord and Subtenant shall cause its insurance carriers to waive all rights of subrogation against the other party hereto to the extent of Sublandlord’s or Subtenant’s undertakings set forth in Paragraphs 15.1 and 16.2.

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17. NOTICES

All notices, demands, or requests between Sublandlord and Subtenant shall be in writing and delivered by hand delivery or express overnight delivery service with all charges for next business day delivery prepaid, addressed as follows, unless such address is changed by written notice by one party to the other:

SUBLANDLORD:

Spacehab, Incorporated

12130 Galveston Road

Building 1

Webster, TX 77598

Attn:	Julia A. Pulzone
	Senior Vice President and Chief Financial Officer

SUBTENANT:

The Boeing Company

C/o Boeing Realty Corporation

MC: C095-0500

3760 Kilroy Airport Way, Suite 500

Long Beach, CA 90806

Attn:	Mark E. Villagomez
	Director, Corporate Real Estate

18. CONSENT

The effectiveness of this Sublease Agreement is conditioned upon the endorsement by Landlord of the consent set forth below or as otherwise evidenced by a separate written instrument executed by an authorized representative of Landlord, a copy of which may be attached hereto as Exhibit D. If such consent is not obtained by August 31, 2002, Subtenant may, at its option, terminate this Sublease and upon such termination shall have no further liability hereunder, except to the extent that it has moved any furniture or equipment into the Premises prior to such date, in which base, Subtenant shall immediately remove such furniture and equipment and repair any damages caused to the Premises as a result of the installation or removal of said furniture and equipment.

19. ENTIRE AGREEMENT

This Sublease Agreement embodies the entire agreement of Sublandlord and Subtenant with respect to the subject matter of this Sublease Agreement, and it supersedes any prior agreements, whether written or oral, with respect to the subject matter of this Sublease Agreement. There are no agreements or understandings with respect to the subject matter of this Sublease Agreement

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which are not set forth herein. This Sublease Agreement may be modified only by a written instrument duly executed by Sublandlord and Subtenant.

20. BINDING EFFECT; RECORDING

The terms and provisions of this Sublease Agreement shall be binding on each of the parties hereto and shall inure to the benefit of, and will be binding upon, their respective successors and assigns. To the extent permitted by the Landlord, a memorandum of this Sublease may be recorded by either party where necessary to give notice of this Sublease to persons without actual knowledge of it. Each party agrees to execute in recordable form a memorandum in the form customarily used in the District of Columbia for such purpose setting out the identification of the premises, the parties, and the term of this Sublease and such other terms as may be customary or otherwise agreed by the parties. Except for the foregoing and only to the extent permitted by the Landlord, neither party shall record this Sublease.

21. SEVERABILITY

If any term, provision, covenant or condition of this Sublease Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, then such term, provision, covenant or condition shall be interpreted so as to be enforceable to the fullest extent permitted by law, and the remaining terms, provisions, covenants and conditions contained herein shall not be affected hereby.

22. HEADINGS

The headings of the sections and subsections used in this Sublease Agreement are inserted for the convenience of reference only and are not intended to affect the meaning or interpretation of this Sublease Agreement.

23. WAIVER

No waiver whatsoever shall be valid unless in writing and signed by the party so waiving and then only to the extent in such writing specifically set forth. No failure or delay on the part or any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude, any other or further exercise hereunder.

24. GOVERNING LAW

This Sublease Agreement shall be governed by and construed in accordance with the laws of the District of Columbia.

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25. RECITALS

The recitals contained at the beginning of this Sublease Agreement shall be incorporated herein by this reference as if set forth in full herein.

26. DEFINITIONS

Capitalized terms that are not expressly-defined in this Sublease Agreement shall have the meanings ascribed to them in the Lease.

27. BROKERS

Sublandlord and Subtenant both represent and warrant that they have not employed any brokers in carrying on the negotiations of this Sublease Agreement except Equis Corp., as Sublandlord’s broker, and CB Richard Ellis, as Subtenant’s broker.

28. ROOF LICENSE

Sublandlord and Landlord entered into a License Agreement dated May 1, 2000, permitting Sublandlord access to and upon certain License Area on the roof of the Building (the “License Agreement”). The License Agreement is non-assignable. Sublandlord revokes the License Agreement. Subtenant may negotiate directly with Landlord and enter into a separate agreement if it desires any rights to the Licensed Area.

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

	SUBTENANT:
	THE BOEING COMPANY
	By:	/s/ Stephen J. Barker
	Name:	Stephen J. Barker
	Title:	Authorized Signatory
	SUBLANDLORD:
	SPACEHAB, INCORPORATED
/s/ Felicia E. Marin	By:	/s/ Julia Pulzone
	Name:	Julia Pulzone
	Title:	Chief Financial Officer

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EX-10.17

LEASE AGREEMENT

LESSOR:	CANAVERAL PORT AUTHORITY (CPA) Post Office Box 267 Cape Canaveral, Florida 32920 (407) 783-7831
LESSEE:	EASTERN AMERICAN TEAK CORPORATION 770 Mullet Drive Cape Canaveral, Florida 32920

EFFECTIVE DATE: February 1, 1991

1. LEASED PROPERTY: The Lessor leases to the Lessee real property as more particularly described in attached Exhibit “A”.

2. TERM: The term of this lease shall be for a period of fifty (50) years commencing February 1, 1991 and ending November 30, 2040.

3. RENT:

(a) Base Rental: The base rental shall be Five Thousand Six Hundred Sixty-Two Dollars and Eighty Cents ($5,662.80) per month plus any applicable State of Florida sales tax that applies and any other tax that may be levied by the State of Florida on commercial leases.

(b) Payment of Rent: Rent shall be paid monthly in advance. The first lease payment shall be due on December 1, 1990. All subsequent lease payments shall be paid on the first day of each month throughout the lease term.

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(c) Adjustments to Rent:

(1) The base rental shall apply for the first three (3) years of the lease term.

(2) The base rental shall be increased or decreased for each succeeding three (3) year term of the lease based upon the United States Department of Labor Consumer Price Index for All Urban Consumers for all Items, 1967 base (herein called CPI Index), or any subsequent replacement of an equivalent index by Lessor.

(3) The CPI Index for October, 1990, will be the base figure. The adjustment factors will be determined by comparing the CPI Index for October of each third year with the base figure to determine the adjustment to rent for the succeeding three year term. If the CPI Index has increased the rental will be increased proportionately, and if the CPI Index has decreased the rent will be decreased proportionately.

(4) On December 1, 2015, the base rental shall be adjusted to the current appraised value for the leased property to be effective for the last twenty-five years of the lease term. The appraised value shall be determined by the Lessor’s designated appraiser. The base rental for the last twenty-five years of the lease term shall be adjusted as provided in 3(c)(1), (2) and (3) except that the CPI Index for October, 2015, will be the base figure.

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4. SECURITY DEPOSIT:

(1) Lessee shall pay to Lessor Five Thousand Six Hundred Sixty-Two Dollars and Eighty Cents ($5,662.80) as a security deposit. The security deposit shall be held by the Lessor without liability for interest to the Lessee. The security deposit shall be returned to the Lessee at the expiration of the lease term.

(2) Lessor shall have the right during the lease term to apply the security deposit to delinquent rent or to damages resulting from any breach of the lease by Lessee. In the event Lessor is required to expend any portion or all of the security deposit, the Lessee shall pay to the Lessor within five (5) days after written demand all amounts expended by Lessor from the security deposit.

5. USE OF LEASED PREMISES: The leased premises shall be used for the construction of a building or buildings to provide a space shuttle module preparation and processing facility together with office space utilized in support of said facility. The facility will be used to process United States government and commercial space shuttle modules which have no propulsion capabilities of their own and other such uses as may be approved by Lessor and incorporated in this lease by written amendment executed by Lessor and Lessee.

6. SITE PREPARATION REQUIREMENTS: The leased premises require some site preparation. The intent of this paragraph is to provide a level site suitable for construction with

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appropriate drainage at elevation +13.0 and a mechanism to reimburse the Lessee for this construction effort. The existing elevations are shown on a soil boring map prepared by Gee and Jenson dated November 7, 1988. Locations of the leased premises, the spoil site and the borrow area are shown on attached Exhibit “B”.

(a) The final grade for the leased premises will be approximately +13.

(b) The site work will require removal of approximately 5,000 cubic yards of surface clay and scum to disposal site ADA-1.

(c) It is estimated that approximately 19,000 cubic yards of material will require redistribution on the site of which 5,000 yards is unsuitable for use beneath the building structure and must be replaced with clean borrow material.

(d) The estimated cost of site improvements is $55,000.00 plus $5,000.00 for engineering and contract administration costs.

(e) It is further agreed that reimbursement for site preparation costs shall not exceed $65,000.00.

7. ACCESS ROAD: The leased premises are to be accessed from Grouper Road on the West by means of a road contiguous to the south border line. This road will be constructed by the Lessee, with design subject to the Canaveral Port Authority Engineer’s review, and will remain open and available for public use. The lessor will share in the cost of construction of 300 feet of this road for an amount not to exceed $20,000.00.

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8. PROCEDURE FOR SITE PREPARATION AND ROAD CONSTRUCTION: The site preparation and road construction work will be done in the following manner:

(a) Lessee will submit a site and drainage plan and a road construction plan to the Canaveral Port Authority Engineer for review and approval. Site preparation will be based on an average elevation of approximately +13. The road shall have two traffic lanes, L.O.S. - D, and be capable of supporting HS-20 truck loading.

(b) After approval of the site and road construction plans the Lessee will prepare plans and specifications for a lump sum contract with unit price adjustments for the above mentioned site and road construction work for approval by the CPA Engineer.

(c) Lessee will advertise for bids to perform said work in accordance with the statutory bid requirements that govern construction work performed by Lessor.

(d) The bids will be reviewed by the CPA Engineer. The CPA Engineer will authorize Lessee to award the bid to the lowest responsible bidder. In the event the lowest responsible bid is in excess of $75,000.00 the bid award must be approved and authorized by the Lessor.

(e) All unit price change orders will be reviewed and approved by the CPA Engineer prior to the Lessee authorizing a notice to proceed or a change order to the contract.

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(f) Lessor will provide spoil site ADA-1 for disposal of the unsuitable clay material located on the leased premises.

(g) Lessor will provide Lessee with sand to be used for fill material on the leased premises from the area designated BORROW. The amount of fill provided is estimated to be 5,000 cubic yards.

9. ABATEMENT OF RENT AND RENT CREDIT: Lessee will bear all of the costs of the site preparation and road construction which costs shall be credited against the rent payments due herein.

(a) Lessee will pay rent as provided in paragraph 3. until a contract is issued for the site work described in paragraph 6. and site work is in progress having a value equal to or greater than the monthly rent.

(b) Lessee will provide Lessor with supporting documentation for all site preparation expenditures on a monthly and cumulative basis. Lessee will be entitled to a rent credit for the total amount expended for site preparation (including the $5,000.00 allowance for engineering and contract administration), provided the maximum credit shall not exceed $85,000.00. At such time as Lessee has received full rental credit for the total cost of site preparation, the rent payments to the Canaveral Port Authority shall continue.

10. USE OF FUELS: No fuels, other than gasoline, diesel, and l.p. gas, will be allowed on the leased premises unless approved by the Lessor and incorporated in this lease by written amendment executed by the Lessor and Lessee.

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11. HAZARDOUS WASTE: In the handling of any substances classified as hazardous materials or waste under any federal, state or local law, Lessee, its agents, invitees and any contractor employed by it, must comply with all applicable laws and regulations. If Lessee or its agents causes the discharge or release of hazardous waste materials in violation of any federal, state or local law, and that discharge or release results in damage to the environment, Lessee, at its sole expense, shall restore the affected premises in accordance with acceptable engineering, scientific and construction principles and practices and in accordance with existing laws and regulations.

Lessee shall comply with the following procedure in the event removal of hazardous waste is required:

(a) Lessee, at its expense, shall furnish Lessor a surety bond in an amount necessary to provide all costs of removal of the hazardous waste from the premises. This amount shall be determined by Lessor following an environmental determination, the costs of which shall be paid by Lessee.

(b) During the term of this lease if the leased premises or adjacent premises are contaminated by any substances or their derivatives classified as hazardous waste handled by Lessee, the contamination will be presumed to have been caused by Lessee.

(c) Lessee understands and agrees that it is responsible for complete restoration of the premises and any area

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it has contaminated before the expiration of this lease. If for any reason such restoration has not been completed before such expiration date, then Lessee is obligated to pay Lessor compensation during such restoration period as determined by the diminution in value of the fair market value of the land or the actual cost of restoration, whichever is greater.

(d) Lessee agrees to indemnify and hold harmless Lessor for any damage or threat of damage to the environment or public health and safety which may arise as a result of each existing pollutant or contaminant. Lessee agrees to indemnify and hold harmless Lessor for any damage or threat of damage to the environment or public health and safety which may arise from the use of the property by Lessee during the term of this lease.

12. COMPLETION OF IMPROVEMENTS: Lessee shall complete the construction of the proposed improvements within five (5) years. If not completed by that date, Lessor shall have the option to extend the time for completion; to cancel the Lease; or to continue the Lease.

13. INDEMNITY: The parties recognize that the Lessee’s use of the property involves operations that are potentially hazardous to other persons and property. In addition to the liability insurance required by this lease, the Lessee agrees to indemnify and hold harmless the Lessor from any and all liability, claims, damages, expenses (including court costs and attorney’s fees), and causes of action of every kind and nature resulting from the actions of the Lessee, its sub-lessees,

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tenants, employees, agents, contractors, assigns, or successors relative to the operations conducted on the leased premises. The Lessee agreed to defend any and all legal actions which may be brought against the Lessor resulting from Lessee’s use of the leased premises. The Lessee agrees to satisfy, pay and discharge any and all judgments that may be entered against the Lessor resulting from Lessee’s use of the leased premises.

14. SUB-LEASE OR RENTAL: Lessee may not sub-lease or rent the leased premises without the written consent of the Lessor. As a condition of any sub-lease or rental to any legal entity involved in the preparation and processing of satellites on the leased premises, the Lessor will require an indemnity agreement containing provisions similar to paragraph 13. herein. If the sub-lessee or tenant is a subsidiary corporation, the Lessor will require indemnification from the parent corporation. The Lessor will have the sole discretion to determine the financial responsibility of any proposed sub-lessee or tenant and can withhold the consent provided herein if it determines the financial responsibility of any such entity or its parent corporation is inadequate.

15. TERMS AND CONDITIONS OF LEASE: The additional terms of this Lease are set forth in the attached LEASE COVENANTS AND CONDITIONS and incorporated herein by reference.

16. LEASE AMENDMENT: This lease supersedes and replaces the lease dated December 1, 1990, between Lessor and Lessee for a ten (10) year term.

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LESSOR:		CANAVERAL PORT AUTHORITY
		By:	/s/ Illegible
			Its Chairman/Vice Chairman
ATTEST:	/s/ Illegible
	Secretary (CORPORATE SEAL)
STATE OF FLORIDA COUNTY OF BREVARD

The foregoing instrument was acknowledged before me this 20 day of February, 1991, by JERRY W. ALLENDER and THOMAS L. NEWBERN, Chairman and Secretary, respectively, of the CANAVERAL PORT AUTHORITY.

	/s/ Illegible
My commission expires: 8/1/94	NOTARY PUBLIC
(SEAL)

LESSEE:	EASTERN AMERICAN TEAK CORPORATION
	By:	/s/ Illegible
		Athorized Officer
STATE OF FLORIDA COUNTY OF BREVARD

The foregoing instrument was acknowledged before me this 21 day of February, 1991, by Henry Happel of EASTERN AMERICAN TEAK CORPORATION, a, Florida corporation, on behalf of the corporation.

	/s/ Illegible
My commission expires: 8/1/94	NOTARY PUBLIC
(SEAL)

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PLAT OF SURVEY FOR

EASTERN AMERICAN TEAK CORPORATION

SURVEYOR’S NOTES:

1. BEARINGS DEPICTED; HEREON REFER TO CANAVERAL HARBOR CRID SYSTEM.

2. NO ENCROACHMENTS NOTED.

3. SUBJECT TO EASEMENTS.

LEGAL DESCRIPTION (SPACEHAB)

A PARCEL OF LAND LYING IN SECTION 10, TOWNSHIP 24 SOUTH, RANGE 37 EAST, TALLAHASEE BASE MERIDIAN, BREVARD COUNTRY, FLORIDA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

COMMENCE AT THE SOUTHEAST CORNER OF SAID SECTION 10 (A DEPARTMENT OF NATURAL RESOURCES CERTIFIED SECTION CORNER); THENCE N 90’00’00” W, A DISTANCE OF 3632.33 FEET, THENCE N 00”00’00”E, ALONG THE EASTERLY RIGHT-OF-WAY LINE AND EXTENSION OF GROUPER ROAD, A DISTANCE OF 4600.90 FEET TO THE SOUTHERLY RIGHT-OF-WAY LINE OF STATE ROAD NO. 401; THENCE N 89’59’11” E, ALONG SAID SOUTHERLY RIGHT-OF-WAY LINE, A DISTANCE OF 460.00 FEET TO THE POINT-OF-BEGINNING, (SAID POINT HAVING A STATION OF 264+70 AND A RANGE OF -364.43, CANAVERAL HARBOR GRID SYSTEM), THENCE CONTINUE N 89’59’11” E, ALONG SAID LINE, A DISTANCE OF 580.80 FEET); THENCE S 00’00’00” W, A DISTANCE OF 300.14 FEET, THENCE N 90’00’00” W, A DISTANCE OF 580.80 FEET, THENCE N 00’00’00” E, A DISTANCE OF 300.00 FEET TO THE POINT-OF-BEGINNING.

CONTAINING 4.00 ACRES (174,240 SQUARE FEET) MORE OR LESS AND BEING SUBJECT TO A 10 FOOT EASEMENT FOR A COAST GUARD COMMUNICATIONS BURIED CABLE AND ANY OTHER EASEMENTS AND/OR RIGHTS-OF-WAY OF RECORD.

CERTIFICATE:, I HEREBY CERTIFY THAT THE SURVEY DEPICTED HEREON IS TRUE AND CONNECT AND MEETS MINIMUM TECHNICAL STANDARDS PURSUANT TO CHAPTER 21 HH-G, F.A.C. /s/ V. GOWIN MILLS, P.L.S.	DATE OF SURVEY 6.14.90 SCALE _______ _______	BEACH MAPPING AND SURVEYING 707 MULLETT DRIVE SUIT: 800 P. O. BOX ____ CAPE CANAVERAL, FLORIDA 08020 ________________________
V. GOWIN MILLS, P.L.S. FLORIDA CERTIFICATE NO. 3807	_______ _______

Exhibit “A”

Exhibit “B”

LEASE COVENANTS AND CONDITIONS

1. TAXES: Lessee shall pay all taxes levied upon the leased premises during the lease term including ad valorem real or personal property taxes, intangible taxes and privilege taxes.

2. UTILITIES: Lessee shall be responsible for the payment of all utilities furnished to the leased premises during the lease term, including but not limited to, water, sewer, electricity, telephone, gas and garbage and trash collection.

3. INSPECTION OF LEASED PROPERTY: Prior to the commencement of the lease term, the Lessee shall inspect the leased premises. The Lessee shall be deemed to have accepted the leased premises as improved in its present state without any warranties, express or implied, and the Lessor shall in no event be liable for any latent defects.

4. MAINTENANCE OF LEASED PREMISES:

(a) Lessee shall maintain the leased premises in a clean, safe and sanitary condition. Lessee agrees that all trash and garbage shall be destroyed or otherwise disposed of promptly, and there shall be no family wash displayed on the premises at any time.

(b) Any diesel oil or other petroleum products stored on the leased premises shall be placed in receptacles approved in advance by the Lessor. Any input or discharge from the receptacles on the leased premises shall be subject to such operational control and safeguards as the Lessor and other governmental agencies having jurisdiction may require.

5. REPAIRS AND RENEWAL: The Lessee will, at its own expense and risk, make all repairs and renewals necessary to keep the leased premises and all improvements in a reasonably safe condition and to keep them free from deterioration in value or condition.

6. IMPROVEMENTS:

(a) Prior to the construction of any building or other improvement by the Lessee, plans and specifications including

1

such matters as type of construction, location of improvements and fire clearance must be submitted to the Lessor for approval. No work shall be undertaken without the Lessor’s approval. All construction must comply with the Lessor’s rules and regulations.

(b) Lessee agrees to connect its improvements on the leased premises with the central sewage collection system provided by the Lessor to the boundary line of the leased premises. Lessee shall provide sewage collection lines and pumps at its own expense. The Lessee further agrees to pay the initial impact fees and sewage collection charges during the lease term as directed by the Lessor and the City of Cape Canaveral, Florida. Lessee acknowledges that sewer service is provided by the City of Cape Canaveral, Florida.

(c) The Lessee shall also connect the leased premises and facilities located thereon with the potable water supply from the City of Cocoa, Florida, and pay all water service charges as to said leased premises. No cross water connection shall be permitted. The Lessee shall arrange for electric utility services to the leased premises. Lessee agrees that none of its improvements shall interfere with the overall surface and subsurface drainage required by the Lessor.

7. SIGNS: Lessee shall obtain Lessor’s approval of the copy, design, material, type of construction and location of proposed sign before erecting the sign on the leased premises. Lessor’s approval shall not be unreasonably withheld.

8. MECHANICS LIENS: Lessee covenants and agrees to protect Lessor’s reversionary interest in the leased premises from any mechanic liens incurred in connection with erected improvements or other operations by the Lessee or those acting under it upon the leased premises. Lessor shall not be liable for any labor, material or services furnished to Lessee or anyone acting under Lessee upon credit. No mechanic or other liens for such labor, materials or services shall attach to or affect any interest of the Lessor in or to said leased premises.

2

9. INSURANCE:

(a) Lessee agrees to maintain insurance fully indemnifying the Lessor from any damage to life or property which may occur on the leased premises and from any liability established against the Lessor as a result of any tortious act or omission by the Lessee or its independent contractors, servants, agents, Invitees or licensees in the construction, maintenance or use of the leased premises. Lessee shall maintain adequate public liability and property damage insurance subject to the approval of the Lessor.

(b) Lessee shall maintain comprehensive general liability insurance including all broad form provisions, blanket contractual liability, and personal injury liability with minimum limits of One Million ($1,000,000) Dollars combined single limits issued by a company authorized to do business in the State of Florida.

(c) Lessor shall be named as an additional insured on all insurance policies required by this paragraph. Lessee shall promptly furnish Lessor a current insurance certificate reflecting said insurance at all times during the term of this lease with Lessor to receive from the carrier any cancellation notice. The insurance certificate shall designate Lessor as an additional insured providing primary coverage on behalf of the Lessor.

10. WORKMEN’S COMPENSATION: In the construction, repair, alteration or removal of improvements on the leased premises by the Lessee, the Lessee shall comply with all requirements as to workmen’s compensation, public liability insurance, permits and the like as required by the Lessor and the laws of the State of Florida.

11. PERMITTING: The Lessee shall be solely responsible for obtaining and paying for all costs of permitting and complying with such permitting conditions as the Lessee’s use of the leased premises requires, including payment to the Lessor of all costs incurred by it at the instance of the Lessee in any and all such permitting procedures.

3

12 . NUISANCE: Lessee agrees not to permit to be carried on, upon, in or about said leased premises a public or private nuisance, or any activity which may tend to cause, by increasing the hazard of risk, the increase of insurance premium rates of any kind upon said premises.

13. HABITATION: The leased premises shall not be used as a place of habitation. The Lessee shall not construct or place on the premises any residence, mobile home trailer, tent, or other improvement or shelter to be used for living accommodations, except with the express, prior written permission of the Lessor.

14. RULES AND REGULATIONS: The Lessee agrees to comply with all applicable rules and regulations of the Lessor and other authorized governmental agencies affecting the leased property, including but not limited to those relating to delinquent charges, water pollution, air pollution, sewage disposal, garbage collection and surface water drainage. In the event the Lessor shall require all tenants upon its land to pay any charges for public utilities or other services determined by the Lessor to be mutually beneficial to the Lessee and to the Port, the Lessee shall pay its equitable portion of such charges in accordance with the rules and regulations enacted by the Lessor for that purpose.

15. ASSIGNMENT: It is agreed that the Lessee shall not assign in whole or in part or sublet the rights of the Lessee under this Lease without first having received the written consent of Lessor. Lessor hereby reserves the right to condition approval of any lease assignment or sublease upon the adjustment of rent to the current fair market rate as determined by Lessor at the time of the requested assignment or sublease.

16. REMOVAL OF PROPERTY AFTER LEASE TERMINATION:

(a) Lessee shall not remove any personal property or fixtures from the leased premises if there is any monetary amount due Lessor from Lessee upon expiration or termination of the

4

Lease. Such property and fixtures shall be security to the Lessor for payment of any monies due Lessor.

(b) In the event the Lessor does not elect to retain as its property any such improvements and fixtures, the Lessor shall notify the Lessee in writing within the thirty (30) day period following the termination date of the lease to remove all fixtures and improvements and restore the premises to the condition it was in prior to the beginning of Lessee’s initial lease term, normal wear and use excepted. Upon Lessee receiving notice to remove all fixtures and improvements, the Lessee shall have thirty (30) days to complete the removal and restoration of the premises. The Lessee shall leave the sewage facilities on the leased premises in good working order at the termination of this lease.

17. LOSS OR DAMAGE TO LEASED PREMISES: Lessor shall not be responsible for or liable for loss or damage to property of the Lessee located on the leased premises.

18. ENTRY BY LESSOR: The Lessee shall permit the Lessor and its agents to enter the leased premises any day during reasonable hours for the purpose of inspections. It is understood by the Lessee that the Lessor shall have the right, but no obligation, to come on said premises during emergency conditions existing at Port Canaveral for the purpose of eliminating or otherwise mitigating such conditions which imperil the leased premises, adjacent premises or vessels in Port Canaveral.

19. EASEMENTS AND UTILITY USES: The Lessor reserves all existing easements and utility uses on the leased premises whether or not such easements and uses are recorded.

20. EMINENT DOMAIN: It is understood by the parties that this lease does not deprive the Lessor of its powers of eminent domain under State or Federal laws in the event the United States of America should require the exercise of such powers in the use and development of Canaveral Harbor, its channels and canals.

5

21. QUIET ENJOYMENT: Lessor covenants that Lessee, upon paying the rent and abiding by the covenants, terms, conditions and stipulations undertaken on its part shall peaceably hold and enjoy the remainder of the leased premises during the lease term, without interruption by the Lessor or any person claiming by, through or under the Lessor, except as to any portion of the leased premises subject to the easement rights granted by the Lessor to the United States of America and its agencies for construction and maintenance of Port Canaveral.

22. DEFAULT: The following shall constitute a default by Lessee:

(a) Failure to pay rent when due and payable.

(b) Failure to correct any breach or default in the terms and condition of the lease with thirty (30) days after written notification by Lessor.

(c) Adjudication of Lessee as a bankrupt, making an assignment for the benefit of creditors, appointment of a receiver for the benefit of creditors, or appointment of a receiver for the leased premises.

(d) Lessor shall have the right to terminate and cancel the lease for any of the defaults enumerated in (a), (b), and (c) after giving Lessee thirty (30) days written notice to correct such default.

(e) Lessor, in addition to the other rights and remedies it has in this lease or in any statute or rule of law, may retain as liquidated damages any rent, security, deposit or monies received by it from Lessee or from others in behalf of Lessee.

(f) It is stipulated and agreed that in the event of the termination of this lease under the provisions of this paragraph, Lessor shall be entitled to recover from Lessee as and for liquidated damages an amount equal to the future unpaid rentals and the future unpaid portions of the annual guaranteed dockage and wharfage to and until the Lessor can cause, by the exercise of reasonable diligence, said leased premises to again

6

produce revenue for the Lessor. The Lessee shall be and remain responsible for any deficit between the income contracted for or under this lease and the amount of revenue realized from the leased premises from others.

23. TIME: Time is of the essence.

24. COMPLIANCE WITH LAWS: Lessee shall comply with all laws, ordinances, rules and regulations of all Federal, state, county and municipal governments now in force or that may be enacted hereafter applicable to Lessee’s use and occupancy of the leased premises. Lessee shall have the right, however, to contest any such law, ordinance, rule or regulation by appropriate legal action provided that such contest is conducted without cost, expense or prejudice to Lessor.

25. NOTICES: All notices shall be in writing and delivered to the addressees listed in this agreement. In the event of any change of address, each party agrees to promptly notify the other party in writing.

26. WAIVER: No waiver of any default or breach of any covenant by either party shall be implied from any omission by either party to take action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the waiver and then said waiver shall be operative only for the time and to the extend stated. Waiver of any covenant, term or condition contained herein by either party shall not be construed as a waiver of any subsequent breach of the same covenant, term or condition.

27. INTERPRETATION OF AGREEMENT: This agreement shall be interpreted and construed with and in accordance with the laws of the State of Florida.

28. INVALIDITY OF PORTIONS OF THIS AGREEMENT: In the event any portion of this agreement shall be declared invalid, then the remaining portions of the agreement shall survive such invalidity and be valid and enforceable.

7

29. ATTORNEY’S FEES: Should either party commence an action against the other to enforce any obligation hereunder or for a determination of its rights or duties hereunder or in connection herewith or in any way relating to the leased premises, the prevailing party shall be entitled to recover a reasonable attorney’s fee and all costs and expenses incurred in such action.

30. DUPLICATE ORIGINALS: This agreement is executed in duplicate, each constituting an original.

31. RECORDING: The Lessee shall promptly record this lease in the public records of Brevard County, Florida, and furnish the recording information to the Lessor. It is agreed that the rights of the Lessee of record shall be terminated upon the Lessor recording in the public records a notice of cancellation of this lease, however, the contractual rights and responsibilities between the Lessor and the Lessee shall remain in full force without creating any lien or claim as to the real property.

32. CAPTIONS: The captions used in this agreement are used for convenience and are not to be construed in interpreting any succeeding portion of the agreement following such caption.

33. ALCOHOLIC BEVERAGES: The sale of alcoholic beverages, including beer and wine, is prohibited on the leased premises.

LESSOR:	CANAVERAL PORT AUTHORITY
LESSEE:	EASTERN AMERICAN TEAK CORPORATION

8

MODIFICATION OF FIFTY YEAR LEASE

LESSOR:	CANAVERAL PORT AUTHORITY Post Office Box 267 Cape Canaveral, Florida 32920 (407) 783-7831
LESSEE:	EASTERN AMERICAN TEAK CORPORATION 770 Mullet Drive Cape Canaveral, Florida 32920

The Canaveral Port Authority, a body politic and a body corporate, as Lessor, and Eastern American Teak Corporation, as Lessee, under that certain Fifty (50) Year Lease between them dated February 1, 1991, and recorded in Official Records Book 3121, Page 4396, Public Records of Brevard County, Florida, stipulate and agree to modify paragraph 3.(b) of said lease as follows:

3. RENT:

(b) Payment of Rent: Rent shall be paid monthly in advance. The first lease payment shall be due on February 1, 1991. All subsequent lease payments shall be paid on the first day of each month throughout the lease term.

Except as herein modified, all the terms and conditions of the said Fifty (50) Year Lease shall remain in full force and effect.

LESSOR:	CANAVERAL PORT AUTHORITY
	By:	/s/ JERRY W. ALLENDER
ATTEST		JERRY W. ALLENDER, Chairman
/s/ THOMAS L. NEWBERN
THOMAS L. NEWBERN, Secretary
STATE OF FLORIDA COUNTY OF BREVARD

The foregoing instrument was acknowledged before me this 30 day of December, 1991 by JERRY W. ALLENDER and THOMAS L. NEWBERN, Chairman and Secretary, respectively, of the CANAVERAL PORT AUTHORITY.

	/s/ Illegible
My commission expires: 8/1/94	NOTARY PUBLIC-STATE OF FLORIDA
(SEAL)

LESSEE:	EASTERN AMERICAN TEAK CORPORATION
	By:	/s/ Illegible
		Authorized Officer
STATE OF FLORIDA COUNTY OF BREVARD

The foregoing instrument was acknowledged before me this 10^th day of December, 1991 by Henry Happel of EASTERN AMERICAN TEAK CORPORATION on behalf of the corporation.

	/s/ Illegible
My commission expires:	NOTARY PUBLIC-STATE OF FLORIDA
(SEAL)	NOTARY PUBLIC; STATE OF FLORIDA AT LARGE MY COMMISSION EXPIRES MARCH 15, 1995 BONDED THRU HUCKLEBERRY & ASSOCIATES

This instrument prepared by:

Leonard Spielvogel, Esq., of

Dean, Mead, Spielvogel, Goldman & Boyd

Attorneys-at-Law

101 S. Courtenay Parkway

Merritt Island, Florida 32952

File No. 15105/27086

ASSIGNMENT OF LEASE

I.	ASSIGNOR:	EASTERN AMERICAN TECHNOLOGIES CORPORATION
		a Florida corporation, formerly known as
		Eastern American Teak Corporation
		720 Mullet Drive
		Cape Canaveral, Florida 32920
II.	ASSIGNEE:	SPACEHAB, INCORPORATED
		a Washington Corporation
		1595 Spring Hill Road
		Vienna, VA 22182
III.	DESCRIPTION OF LEASE ASSIGNED:

Lease Agreement between Canaveral Port Authority, as Lessor, and Eastern American Teak Corporation, a Florida corporation, now known as Eastern American Technologies Corporation, as Lessee, dated February 1, 1991, recorded in Official Records Book 3121, at Page 4396, as amended by Modification of Fifty Year Lease, recorded in Official Records Book 3171, at Page 1458, both of the Public Records of Brevard County, Florida.

IV. PRIOR ASSIGNMENTS: None

Assignor assigns to Assignee all of Assignor’s right, title and interest in the above-described leasehold interest. Assignee, from and after date of consent by Canaveral Port Authority, will be liable for performance of all terms and conditions of said Lease and hereby accepts assignment of the Lease and agrees to comply with all of its terms and conditions.

Execution of this instrument will serve to terminate and make of no further force or effect that certain Agreement of Sublease between Assignor and Assignee, dated April 9, 1991, recorded in Official Records Book 3123, at Page 1776, Public Records of Brevard County, Florida.

STATE OF FLORIDA:

COUNTY OF BREVARD:

The foregoing instrument was acknowledged before me this 29 day of August, 1997, by Henry Happel, as _____ President of EASTERN AMERICAN TECHNOLOGIES CORPORATION, a Florida corporation, formerly known as Eastern American Teak Corporation, on behalf of said corporation. He or she is x personally known to me or who ¨ has produced _______________________ identification.

/s/ Illegible

Notary Public, State of Florida

Print Name:

Commission No.

My Commission Expires:

(Seal)

STATE OF VIRGINIA:

COUNTY OF ________ :

The foregoing instrument was acknowledged before me this 28^th day of August, 1997, by Margaret _____, as _______ Corporate Secretary of SPACEHAB, Inc. a Washington corporation, on behalf of said corporation. He or she is x personally known to me or who ¨ has produced _______________________ identification.

/s/ Illegible

Notary Public, State of Virginia

Print Name: Illegible

Commission No.

My Commission Expires:

(Seal)

Date: August 29th, 1997
(Corporate Seal) Signed, Sealed and Delivered in the Presence of	EASTERN AMERICAN TECHNOLOGIES CORPORATION, formerly known as Eastern American Teak Corporation
/s/ Illegible	By	/s/ Henry Happel
Witness as to Assignor		Henry Happel, President

Print Name:  Leonard Spielvogel Address  720 Mullet Drive Cape Canaveral, Fl. 32920

/s/ Illegible
Witness as to Assignor
Print Name:	Darlene D. Jones	(“Assignor”)
(Corporate Seal)		SPACEHAB, INCORPORATED
/s/ Illegible		By	/s/ Illegible
Witness as to Assignee			Vice President 1595 ____ Hill Rd

Print Name:	RODNEY HERTZ	Address	Vienna VA 221_2
/s/ Illegible
Witness as to Assignee

Print Name:  William Dawson (“Assignee”)

CONSENT TO ASSIGNMENT

LESSOR CANAVERAL PORT AUTHORITY, consents to the foregoing Assignment of Lease.

________ 1997

(Corporate Seal)

	CANAVERAL PORT AUTHORITY
/s/ Raymond P. Sharkey	By	/s/ Ralph J. Kennedy
Raymond P. Sharkey, Secretary		Ralph J. Kennedy, Chairman
		200 George King Blvd. Cape Canaveral, Fl. 32920

STATE OF FLORIDA:

COUNTY OF BREVARD:

The foregoing instrument was acknowledged before me this 2^nd day of Sept 28, 1997, by RALPH & KENNEDY, Chairman of CANAVERAL PORT AUTHORITY, who is ¨ personally known to me or x who has produced _______ as identification.

/s/ J. Garry Rooney

Notary Public, State of Florida

Print Name:

Commission No.

My Commission Expires:

(Seal)

STATE OF FLORIDA:

COUNTY OF BREVARD:

The foregoing instrument was acknowledged before me this 3^rd day of Sept. 1997, by Raymond P. Sharkey, Secretary of CANAVERAL PORT AUTHORITY, who is þpersonally known to me or ¨ who has produced _____________________ as identification.

/s/ Diane Denig

Notary Public, State of Florida

Print Name:

Commission No.

My Commission Expires:

(Seal)

ASSIGNMENT OF LEASE

THIS ASSIGNMENT, made this 25 day of April, 2005, by and between SPACEHAB, INCORPORATED, herein after called “ASSIGNOR” and TAMIR SILVERS, LLC, a Florida limited liability company, hereinafter called “ASSIGNEE”.

WITNESSETH

For and in consideration of Ten Dollars ($10.00) and other good and valuable considerations paid by ASSIGNEE to ASSIGNOR, ASSIGNOR does hereby assign, convey, sell and transfer to ASSIGNEE all of the ASSIGNOR’S right, title and interest in and to that certain Fifty Year Lease from the CANAVERAL PORT AUTHORITY to EASTERN AMERICAN TEAK CORPORATION dated February 1, 1991 recorded in Official Records Book 3121, Page 4396, Public Records of Brevard County, as amended by Modification of Fifty Year Lease recorded in Official Records Book 3171, Page 1458, Public Records of Brevard County, as assigned to SPACEHAB INCORPORATED, recorded in Official Records Book 3705, Page 1829, Public Records of Brevard County together with all of ASSIGNOR’S interest in the personal property situate on said leased premises that is and stands as security for the payment of rentals under the same. This assignment shall be effective as of April 25, 2005.

For and in consideration of the forgoing assignment, the ASSIGNEE does hereby agree to assume all of the rights and responsibilities and abide by all of the terms and conditions of the aforesaid Lease in its capacity as LESSEE of same.

Signed, sealed and delivered in our presence by ASSIGNOR:	ASSIGNOR:
/s/ Illegible	/s/ Illegible
Illegible	SPACEHAB INCORPORATED
/s/ Illegible
Illegible

Signed, sealed and delivered in our presence by ASSIGNOR:	ASSIGNEE:
/s/ Illegible	/s/ Illegible
Illegible	TAMIR SILVERS, LLC
/s/ Illegible
Illegible

STATE OF FLORIDA

COUNTY OF BREVARD

The foregoing instrument was acknowledged before ___ this 25 day of April, 2005, by ________ of SPACEHAB, INCORPORATED, a Washington corporation, on behalf of the corporation.

/s/ Illegible

Notary Public

My Commission No.

STATE OF FLORIDA

COUNTY OF BREVARD

The foregoing instrument was acknowledged before me this 25 day of April, 2005, by __________ of TAMIR SILVERS. LLC, a Florida limited liability company, on behalf of the company.

/s/ Illegible

Notary Public

My Commission No.

CONSENT TO ASSIGNMENT

The undersigned, Carnaveral Port Authority, hereby comments to the above and foregoing Assignment of Lease and Assumption of Lease without release of the Assignor from the same and without limitation of Lessor’s recourse under said lease.

CANAVERAL PORT AUTHORITY
By:	/s/ Illegible
	Its Chairman Vice Chairman

STATE OF FLORIDA

COUNTY OF BREVARD

The foregoing instrument was acknowledged before me this 25^th day of April, 2005, by Raymond P Sharkey of CANAVERAL PORT AUTHORITY.

/s/ Diane Denig

Notary Public

My Commission No.

EX-10.18

Exhibit 10.18

COMMERCIAL CONTRACT

1. PURCHASE AND SALE Tamir Silvers, LLC (“BUYER”) agrees to buy and Spacehab, Inc., (“SELLER”) agrees to sell the property described as: 620 Magellan Road, Cape Canaveral, FL 32920.

Legal Description: PT OF SEC LYING N OF CANAL AS DESC IN ORB 3121 PG 4396 (PORT AUTHORITY LEASE ACCT #117) Parcel ID #24-37-10-00-00252.0 Totaling approximately 57,856 sq. ft. of building and 4 acres (Illegible)

and the following Personal Property

none

(all collectively referred to as the “Property”) on the terms and conditions set forth below. The “Effective Date” of this Contract is the date on which the last of the Parties signs the latest offer. Time is of the essence in this Contract. Time periods of 5 days or less shall be computed without including Saturday, Sunday, or national legal holidays and any time period ending on a Saturday. Sunday or national legal holiday shall be extended until 5:00 p.m. on the next business day.

2. PURCHASE PRICE:	$	4,800,000.00
(a) Deposit to be held in escrow by (Illegible)	$	50,000.00
(b) Additional deposit to be make within 3 days from Effective Date	$
(c) Total mortgages (as referenced in Paragraph 3)	$	2,880,000.00
(d) Other	$
(e) Balance to close, subject to adjustments and prorations, to be make with cash, locally drawn certified or cashier’s check or wire transfor	$	1,870,000.00

3. THIRD PARTY FINANCING: Within N/A days from Effective Date (“Application Period”), BUYER shall, at BUYER’S expenses, apply for third party financing in the amount of up to $3,360,000.00 or 70% of the purchase price to be amortized over a period of (to be determined) years and due in no less than (to be determined) years and with a fixed interest rate not to exceed to be determined per year or variable interest rate not to exceed to be determined % at origination with a lifetime cap not to exceed to be determined % from initial rate, with additional terms as follows:

BUYER shall pay for the mortgagee title insurance policy and for all loan expenses. BUYER shall timely provide any and all credit, employment, financial, and other information reasonably required by any lender. BUYER shall notify SELLER immediately upon obtaining financing or being rejected by a lender. If BUYER, after diligent effort, fails to obtain a written commitment within _ from Effective Date (“Financing Period”), BUYER may cancel the Contract by giving prompt notice to SELLER and BUYER’S deposit(s) will be returned to BUYER in accordance with Paragraph 9.

4. TITLE: SELLER has the legal capacity to and shall convey marketable title to the Property by              statutory warranty deed x                      , free of liens, easements and encumbrances of record or known to SELLER, but subject to property taxes for the year of closing; covenants, restrictions and public utility easements of record; and (list any other matters to which title will be subject)                                         ; provided there exists a; closing no violation of the foregoing and none of them prevents BUYER’S intended use of the Property as commercial real estate investment.

(a) Evidence of Title: SELLER shall at Seller’s expense within thirty (30) days from Effective Date deliver to BUYER a title insurance commitment by a Florida licensed title insurer and, upon BUYER recording the deed, an owner’s policy in the amount of the purchase price for fee simple title subject only to exceptions stated above.

         an abstract of title, prepared or brought current by an existing abstract firm or certified as correct by an existing firm. However, if such an abstract is not available to SELLER, then a prior owner’s title policy acceptable to the proposed insurer as a base for reissuance of coverage. The prior policy will include copies of all policy exceptions and an update in a format acceptable to BUYER from the policy effective date and certified to BUYER or BUYER’S closing agent together with copies of all documents recited in the prior policy and in the update.

(b) Title Examination: BUYER shall, within 15 days from receipt of the evidence of title deliver written notice to SELLER of title defects. Title shall be deemed acceptable to BUYER if (1) BUYER fails to deliver proper notice of defects or (2) BUYER delivers proper written notice and SELLER cures the defects within 30 days from receipt of the notice (“Curative Period”). If the defects are cured within the Curative Period, closing shall occur within 10 days from receipt by BUYER of notice of such curing SELLER may elect not to cure defects if SELLER reasonably believes any defect cannot be cured within the Curative Period. If the defects are not cured within the Curative Period, BUYER shall have 10 days from receipt of notice of SELLER’S inability to cure the defects to elect whether to terminate this Contract or accept title subject to existing defects and close the transactions without reduction in purchase price. The party who pays for the evidence of title will also pay related title service fees including title and abstract charges and title examination.

(c) Survey: (check one)

x SELLER shall, within ten (10) days from Effective Date, deliver to BUYER copies of surveys, plans, specifications, and engineering documents, if any, and the following documents relevant to this transaction:                                         , prepared for SELLER or in SELLER’S possession, which show all currently existing structures.

x BUYER shall, at ¨ SELLER’S x BUYER’S expense and within the time period allowed to deliver and examine title evidence, obtain a current certified survey of the Property from a registered surveyor. If the survey reveals encroachments on the Property or that the improvements encroach on the lands of another, ¨ BUYER shall accept the Property with existing encroachments, x such encroachments shall constitute a title defect to be cured within the Curative Period.

(d) Ingress and Egress: SELLER warrants that the Property presently has ingress and egress.

(e) Possession: SELLER shall deliver possession and keys for all locks and alarms to BUYER at Closing. In accordance with terms defined in the attached (Illegible)

5. CLOSING DATES AND PROCEDURE: This transaction shall be closed in Brevard County, Florida on or before April 30, 2005, or within sixty (60) days from Effective Date (“Closing Date”), unless otherwise extended herein. x SELLER ¨ BUYER shall designate the closing agent. BUYER and SELLER shall, within ten (10) days from Effective Date, deliver to Escrow Agent signed instructions which provide for closing procedures. If an institutional lender is providing purchase funds, lender requirements as to place, time of day and closing procedures will control over any contrary provisions in this Contract.

(a) Costs: BUYER shall pay taxes and recording fees on notes, mortgages and financing statements and recording fees for the deed. SELLER shall pay taxes on the deed and recorded

2

fees for documents needed to cure title defects. If SELLER is obligated to discharge any encumbrance at or prior to closing and fails to do so, BUYER may use purchase proceeds to satisfy the encumbrances.

(b) Documents: SELLER shall provide the deed, bill of sale, mechanics lien affidavit, assignments of leases, updated rent roll, tenant and lender estoppel letters, assignments of permits and licenses, corrective instruments and letters notifying tenant of the change in ownership/rental agent. If any tenant refuses to execute an estoppel letter, SELLER shall certify that information regarding the tenant’s lease is correct. If SELLER is a corporation, SELLER shall deliver a resolution of its Board of Directors authorizing the sale and delivery of the deed and certification by the corporate Secretary certifying the resolution and setting forth acts showing the conveyance conforms with the requirements of local law. SELLER shall transfer security deposits to BUYER. BUYER shall provide the closing statement mortgages, and notes, security agreements and financing statements.

(c) Taxes, Assessments, and Prorations: The following items shad be made current and prorated x as of Closing Date         as of                     : real estate taxes, bond and assessment payments assumed by BUYER, interest, rents, association dues, insurance premiums acceptable to BUYER, operational expenses and                                         .

If the amount of taxes and assessments for the current year cannot be ascertained, rates for the previous year shall be used with due allowance being make for improvements and exemptions. SELLER is aware of the following assessments affecting or potentially affecting the Property: none                                                                                   .

BUYER shall be responsible for all assessments of any kind which become due and owing on or after Effective Date, unless the improvement is substantially completed as of Closing Date, in which case SELLER shall be obligated to pay the entire assessment.

(d) FIRPTA Tax Withholding: The Foreign Investment in Real Property Act (“FIRPTA”) requires BUYER to withhold at closing a portion of the purchase proceeds for remission to the Internal Revenue Service (“IRS”) if” SELLER” is a “foreign person” as defined by the Internal Revenue Code. The parties agree to comply with the provisions of FIRPTA and to provide, at or prior to closing, appropriate documentation to establish any applicable exemption from the withholding requirement. If withholding is required and BUYER does not have cash sufficient at closing to meet the withholding requirement. SELLER shall provide the necessary funds and BUYER shall provide proof to SELLER that such funds were properly remitted to the IRS.

6. ESCROW: BUYER and SELLER (Illegible)

Telephone (Illegible)	Facsimile (Illegible)
Address: (Illegible)

to act as “Escrow Agent” to receive funds and other items and, subject to clearance, disburse them in accordance with the terms of this Contract. Escrow Agent will deposit all funds received in x a non-interest bearing escrow account          an interest bearing escrow account with interest accruing to                                                         . If Escrow Agent receives conflicting demands or has a good faith doubt as to Escrow Agent’s duties or liabilities under this Contract, he/she may (a) hold the subject matter of the escrow until the parties mutually agree to its disbursement or until issuance of a court order or decision of arbitrator determining the parties’ rights regarding the escrow or (b) deposit the subject matter of the escrow with the clerk of the circuit court having jurisdiction over the dispute. Upon notifying the parties of such action, Escrow Agent shall be released from all liability except for the duty to account for items previously delivered out of escrow. if a licensed real estate broker. Escrow Agent shall comply with applicable provisions of Chapter 475. Florida Statutes. In any suit or arbitration in which Escrow Agent is make a party because of

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acting as agent hereunder or interpleads the subject matter of the escrow, Escrow Agent shall recover reasonably attorney’s fees and costs, which such fees and costs to be paid from the escrowed funds or equivalent and charged and awarded as court or other costs in favor of the prevailing party. The parties agree that Escrow Agent shall not be liable to any person for misdelivery to BUYER or SELLER of escrowed items, unless the misdelivery is due to Escrow Agent’s willful breach of this Contract or gross negligence.

7. PROPERTY CONDITION: SELLER shall deliver the Property to BUYER at the time agreed in its present “as is” condition, ordinary wear and tear excepted, and shall maintain the landscaping and grounds in a comparable condition. SELLER makes no warranties other than marketability of title. By accepting the Property “as is”. BUYER waives all claims against SELLER for any defects in the property.

¨(a) As Is: BUYER has inspected the Property or waives any right to inspect and accepts the Property in its “as is” condition.

x(b) Due Diligence Period: BUYER will, at BUYER’S expense and within forty-five (45) days from Effective Date (“Due Diligence Period”), determine whether the Property is suitable, in BUYER’S sole and absolute discretion, for BUYER’S intended use and development of the Property as specified in Paragraph 4. During the Due Diligence period. BUYER may conduct any tests, analyses, surveys and investigations (“Inspections”) which BUYER deems necessary to determine to BUYER’S satisfaction the Property’s engineering, architectural, environmental properties; zoning and zoning restrictions; flood zone designation and restrictions; subdivision regulations; soil and grade: availability of access to public roads, water and other utilities; consistency with local, state and regional growth management and comprehensive land use plans; availability of permits, government approvals and Iicenses; compliance with American with Disabilities Act; absence of asbestos, soil and ground water contamination; and other inspections that BUYER deem appropriate to determine the suitability of the Property for BUYER’S intended use and development BUYER shall deliver written notice to SELLER prior to the expiration of the Due Diligence Period of BUYER’S determination of whether or not the Property is acceptable. BUYER’S failure to comply with this notice requirement shall constitute acceptance of the Property in its present “as is” condition. SELLER grants to BUYER, its agents, contractors and assigns, the right to enter the Property at any time during the Due Diligence Period for the purpose of conducting Inspections; provided, however, that BUYER, its agents, contractors and assigns enter the Property and conduct inspections at their own risk. BUYER shall indemnify and hold SELLER harmless from losses, damages, costs, claims and expenses of any nature. Including attorney’s fees at all levels, and from liability to any person, arising from the conduct of inspections or work authorized by BUYER. BUYER shall not engage in any activity that could result in a mechanics lien being filed against the Property without SELLER’S prior written consent. In the event this transaction does not close, (1) BUYER shall repair all damages to the Property resulting from the Inspections and return the Property to the condition it was in prior to conduct of the Inspections, and (2) BUYER shall, at BUYER’S expense, release to SELLER all reports and other work generated as a result of the Inspections. Should BUYER deliver timely notice that the Property is not acceptable, SELLER agrees that BUYER’S deposit shall be immediately returned to BUYER and the Contract terminated.

(c) Walk-through Inspection: BUYER may, on the day prior to closing or any other time mutually agreeable to the parties, conduct a final “walk through” inspection of the Property to determine compliance with this paragraph and to ensure that all Property is on the premises.

(d) Disclosures:

1. Radon Gas: Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in building in

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Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit.

2. Energy Efficiency: BUYER may have determined the energy efficiency rating of the building, if any is locating on the Real Property.

8. OPERATION OR PROPERTY DURING CONTRACT PERIOD: SELLER shall continue to operate the Property and any business conducted on the Property in the manner operated prior to Contract and shall take no action which would adversely impact the Property, tenants, lenders, or business if any. Any changes, such as renting vacant space, which materially affect the Property or BUYER’S intended use of the Property shall be permitted x only with BUYER’S consent ¨ without BUYER’S consent

9. RETURN OF DEPOSIT: Unless otherwise specified in the Contract, in the event any condition of this Contract is not met and BUYER has timely given any required notice regarding the condition having not been met, BUYER’S deposit shall be returned in accordance with applicable Florida laws and regulations.

10. DEFAULT:

(a) In the event the sale is not closed due to any default or failure on the part of SELLER other than failure to make the title marketable after diligent effort, BUYER may either (1) receive a refund of BUYER’S deposit(s) or (2) seek specific performance. If BUYER elects a deposit refund, SELLER shall be liable to Broker for the full amount of the brokerage fee.

(b) In the event the sale is not closed due to any default or failure on the part of BUYER, SELLER may retain all deposit(s) paid or agreed to be paid by BUYER as agreed upon liquidated damages, consideration for the execution of the Contract, and in full settlement of any claims, upon which this Contract shall terminate. If SELLER retains the deposit, SELLER will pay the Listing and Cooperating Brokers named in Paragraph 12 fifty percent of all forfeited deposits retained by SELLER (to be split equally among the Brokers) up to the full amount of the brokerage fee.

11. ATTORNEY’S FEES AND COSTS: In any claim or controversy arising out of relating to the Contract, the prevailing party, which for purposes of this provision shall include BUYER, SELLER, and Broker, shall be awarded reasonable attorney’s fees, costs and expenses.

12. BROKERS: Neither BUYER and SELLER has utilized the services of, or for any other reason owes compensation to, a licenses real estate Broker other than:

(a) Listing Broker: (Illegible)

who is an agent of x SELLER ¨both parties ¨neither party and who will be compensated by x SELLER ¨ BUYER ¨ both parties pursuant to ¨ a listing agreement ¨ other (specify)

(b) Cooperating Broker: JM Real Estate, Inc.

who is an agent of x BUYER ¨ SELLER ¨ both parties ¨ neither party and who will be compensated by ¨ BUYER x SELLER ¨ both parties pursuant to ¨ an MLS or other offer of compensation to a cooperating broker ¨ other (specify)                                     (collectively referred to as “Broker”) in connection with any act relating to the Property, including but not limited to inquiries, introductions, consultations and negotiations resulting in this transaction. SELLER and BUYER agree to indemnify and hold Broker harmless from and against losses, damages, costs and expenses of any kind, including reasonable attorney’s fees, and from liability to

5

any person, arising from (1) compensation claimed which is inconsistent with the representation in this Paragraph, (2) enforcement action to collect a brokerage fee pursuant to Paragraph 10, (3) any duty accepted by Broker at the request of BUYER or SELLER, which duty is beyond the scope of services regulated by Chapter 475, F.S., as amended, or (4) recommendations of or services provided and expenses incurred by any third party whom Broker refers, recommends or retains for or on behalf of BUYER or SELLER.

13. ASSIGNABILITY; PERSONS BOUND: This Contract x is not assignable ¨ is assignable. The terms “BUYER”, “SELLER” and “Broker” may be singular or plural. This Contract is binding upon BUYER, SELLER, and their heirs, personal representatives, successors, and assigns (if assignment is permitted).

14. OPTIONAL CLAUSES: (Initial if any of the following clauses are applicable and are attached as an addendum to this Contract):

¨	Arbitration	¨	SELLER Warranty	¨	Coastal Construction Control Line
¨	Section 1031 Exchange	¨	SELLER Financing	¨	Flood Area Hazard Zone
¨	Property Insp. & Repair	¨	Existing Mortgage	¨	Property Located in
					Brevard County
¨	SELLER Representations	¨	Feasibility Study	x	Other Addendum #1 to Commercial Contract

15. MISCELLANEOUS: The terms of the Contract constitute the entire agreement between BUYER and SELLER. Modifications to this Contract shall not be binding unless in writing, signed and delivered by the party to be bound. Signatures, initials, documents referenced in this Contract, counterparts and written modifications communicated electronically or on paper will be acceptable for all purposes, including delivery, and will be binding. Handwritten or typewritten terms inserted in or attached to this Contract prevail over preprinted terms. If any provision of this Contract is or becomes invalid or unenforceable, all remaining provisions will continue to be fully effective. This Contract shall be construed under Florida law and shall not be recorded in any public records. Delivery of any written notice to any party’s agent shall be deemed delivery to that party.

THIS IS INTENDED TO BE A LEGALLY BINDING CONTRACT. IF NOT FULLY UNDERSTOOD SEEK THE ADVICE OF AN ATTORNEY PRIOR TO SIGNING. BROKER ADVISES BUYER AND SELLER TO VERIFY ALL FACTS AND REPRESENTATIONS THAT ARE IMPORTANT TO THEM AND TO CONSULT AN APPROPRIATE PROFESSIONAL FOR LEGAL ADVICE (FOR EXAMPLE, INTERPRETING CONTRACTS, DETERMINING THE EFFECTS OF LAWS ON THE PROPERTY AND TRANSACTION, STATUS OF TITLE, FOREIGN INVESTOR REPORTING REQUIREMENTS, ETC.) AND FOR TAX, PROPERTY CONDITION, ENVIRONMENTAL AND OTHER SPECIALIZED ADVICE, BUYER ACKNOWLEDGES THAT BROKER DOES NOT OCCUPY THE PROPERTY AND THAT ALL REPRESENTATIONS (ORAL, WRITTEN OR OTHERWISE) BY BROKER ARE BASED ON SELLER REPRESENTATIONS OR PUBLIC RECORDS UNLESS BROKER INDICATES PERSONAL VERIFICATION OF THE REPRESENTATION. BUYER AGREES TO RELY SOLELY ON SELLER, PROFESSIONAL INSPECTORS AND GOVERNMENTAL AGENCIES FOR VERIFICATION OF THE PROPERTY CONDITION, SQUARE FOOTAGE AND FACTS THAT MATERIALLY AFFECT PROPERTY VALUE.

DEPOSIT RECEIPT: Deposit of $50,000.00 by Simon & Simon TA Trust Account x check other                                          received on                                         , 2005.

Signature of Escrow Agent

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OFFER: Buyer offers to purchase the Property on the above terms and conditions. Unless acceptance is signed by SELLER and a signed copy delivered to BUYER or BUYER’S agent no later than                               a.m.          p.m. on                                         , 20    . BUYER may revoke this offer and receive a refund of all deposits.

Date:	______________________	BUYER:	/s/ Illegible
			Tamir Silvers, LLC

Title:                                  Telephone (305) 688-6360         Facsimile: (305) 688-2344

Address: 4600 NW 128^th Street, Miami, Florida 33054

Date: _______________________ BUYER: ________________________________________________________________________

Title:                                  Telephone:                                      Facsimile:                                 

Address:                                                                                                                                                                                       

ACCEPTANCE: SELLER accepts BUYER’S offer and agrees to sell the Property on the above terms and conditions (         subject to the attached counter offer).

Date:	3/3/05	SELLER:	/s/ Illegible
			Illegible

Title: Vice President         Telephone (321) ___________         Facsimile (321) 868-74__

Address: [Illegible]

Date: SELLER:

Title:                                      Telephone:                                      Facsimile:                                 

Address:                                                                                                                                                                                       

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ADDENDUM

to Commercial Contract for 620 Magellan Road, Cape Canaveral, Florida 32920

SELLER: Spacehab, Inc.

BUYER: Tamir Silvers, LLC

SUBJECT PROPERTY: 620 Magellan Road, Cape Canaveral, Florida 32920

DATE: February 24, 2005

1. The Buyer shall have Forty Five (45) Days from the last date of execution by either of the parties known as the Effective Date of the Contract to make surveys, conduct feasibility studies, verify utility locations, inspection of septic tank, conduct soil tests and other tests or studies, as may be desired by the Buyer during this Inspection Period. Buyer shall have the right of access to the property for said surveys, tests or studies. In the event that results of the surveys, tests and studies are not to the satisfaction of the Buyer. In Buyer’s sole discretion, the Buyer may either:

a) void this Contract by written notice to Seller via certified mail on or before the date set forth above in this paragraph, or;

b) automatically extend the Inspection Period for an additional 30 days with consent of Seller provided the Buyer has been diligent in due diligence and has given Seller written notification of extension, or;

c) waive this contingency and proceed with closing.

In the event the Buyer properly voids this contract in accordance to a above (or as it may be extended by b above), all earnest money will be returned to the Buyer and neither party will have any further liability to one another and this contract shall be null and void.

Buyer may at anytime during the Inspection Period, waive his rights to the Inspection Period and proceed with closing.

2. Seller represents and warrants that it is unaware of any spills or leaks of petroleum products or other environmental contamination, endangered species, or wetlands that would prevent the use or development of the property. Seller represents and warrants that it is unaware of any endangered species or designated wetlands found on the property. Seller represents that it is unaware of any claims, formal or informal, by any federal, state, or local environmental or other agency, or any person relating to environmental contamination of the property, wetlands, or endangered species found on the property. This warranty shall survive the closing.

3. Buyer shall, at Buyer’s expense and sole discretion, obtain a Phase I Environmental Report. Endangered Species Survey and/or Wetlands Delineation Survey prepared by a competent environmental engineering firm stating the subject property is free from hazardous wastes and that the asbestos levels, if any, are in compliance with all national, state and local government standards. In lieu of Buyer obtaining a new Phase I Environmental report. Endangered Species Survey, and/or Wetlands Delineation Survey. Buyer may, in their sole discretion, accept recent

8

reports prepared for Seller. If available, Seller agrees to deliver copies of its most recent Phase I Environmental Report, Endangered Species Survey and Wetlands Delineation Survey to Buyer immediately after full execution of a contract. The Environmental Report, Endangered Species Survey and Wetlands Delineation Survey is to be satisfactory to Buyer in all respects to be determined by Buyer during the Inspection Period. If it is determined that the site has environmental contamination, wetlands or endangered species, it shall be the sole responsibility of the Seller, and prior to closing, to have all contamination removed from the site, wetlands mitigated, and/or endangered species mitigation, and receive a clean environmental report and surveys.

4. JM Real Estate, Inc., is a licensed real estate broker in the State of Florida representing the Buyer this transaction. The broker of JM Real Estate, Inc., is Jewel McDonald, CPM. The purchase price includes a commission equal to two and  ¹/2 (2.5%) percent of the total agreed upon sale price, to be paid in full at closing to JM Real Estate, Inc.,

5. Any controversy or claim arising out of or relating to this Contract, or the breach thereof, shall be settled by neutral binding arbitration in Brevard County. Florida, in accordance with the rules of American Arbitration Association and not by any court action except as provided by Florida law for judicial review of arbitration proceedings. Any court having appropriate jurisdiction may enter judgment upon the award rendered by the arbitrator(s). Filing a judicial action to enable the recording of a notice of pending action, for order of attachment, receivership, injunction or other provisional remedies shall not constitute a waiver of the right to arbitrate under this paragraph. Any claims or disputes with or against real estate agents participating in this transaction shall be submitted to arbitration under this provision only with the written consent and joinder of the agent’s Broker. In connection with any arbitration or litigation between the parties, the prevailing party shall be entitled to recover all fees, costs, and expenses, including reasonable attorney’s fees, arbitrators’ fees and administrative fees of arbitration.

6. Radon gas is a naturally occurring radioactive gas that when it has accumulated in a building in sufficient quantities, may result in health risks to persons who are exposed to it over time. Levels or radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit, pursuant to 404.056 (8). Florida Statutes.

7. Lease Agreement: This Contract is subject to the full execution of a Lease Agreement for the entire building (outside wall to outside wall) for a five (5) year term at a rental rate of $7.78 per sq.ft., or $450,119/year, NNN (totally net of all building operating expenses, real estate taxes, insurance, all maintenance including HVAC, plumbing, electrical, etc., roof repairs / maintenance, Florida state sales tax, etc.) flat for Years 1 through 5. In addition, Buyer will also provide 1 each 5-year renewal option with annual CPI increase over the option period.

a) Upon review of the Lease Agreement proposed by Tenant, the following modifications shall be made:

a. Page 4 Compensation. Paragraph 3(a)3) Tenant’s late to be changed from 1% to 5%.

b. Page 4 Operations/Maintenance. This paragraph shall be deleted in its entirety and shall be replaced by standard NNN CAM type language. Language to be provided.

c. Page 12 Assignment and Subletting, Paragraph C shall be deleted in its entirety as it is the intent of Tenant to occupy the entire premises during the length of the term of the Lease.

8. Financial Information: This Contract is subject to review and satisfaction of Buyer of the financial information to be provided by Spacehab, Inc.

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9. Representations and Warranties of Seller. Seller hereby represents and warrants to Buyer as follows, which representations and warranties shall be deemed made by Seller to Buyer now and also as of the Closing Date.

(a) Seller is the fee simple owner of the title to the Property and is duly authorized and empowered to sell the Property and improvements. By such deed Seller shall insure that Buyer is receiving 100% fee simple title to the subject property. Buyer will acquire hereunder good, marketable, and insurable title to the Property, free and clear of all liens, encumbrances, liabilities, agreements, leases, claims, rights, easements, and restrictions except approved permitted exceptions, and recorded easements. If a deed is needed from any other entities, Seller shall obtain same.

(b) ________________ parties in possession of any portion of the Property or Improvements except Seller, existing sub-tenants & Port Canaveral Authority.

(c) To the best of Sellers knowledge without inquiry, other than disclosed in the Due Diligence Materials, there is no hazardous substance, as defined by applicable statue, ordinance, rule or agency guideline, in on or under the Project in violation of any applicable statute, ordinance, rule or agency guideline.

(d) The Seller is a “United States person” within the meaning of Section 1445(f) (3) and 7701(a) 30 of the Internal Revenue Code of 1986, as amended;

(e) Seller has no knowledge of any underground storage tanks affecting the Property.

(f) It is the intent of the parties not to encumber the Property with any tenant lease obligations other than the leaseback described above.

(g) Neither this Agreement nor anything provided to be done hereunder violates or shall violate any agreement to which Seller is party or law which otherwise affects the Property. If the sale of the Property does require the consent of other parties, Seller shall obtain all consents which Buyer’s counsel deems appropriate and necessary.

(h) Seller and the persons making up the Seller have not made a general assignment for the benefit of creditors; filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by its creditors; suffered the appointment of a receiver to take possession of all, or substantially all, of its assets suffered the attachment or judicial seizure of all, or substantially all, of its assets; admitted in writing its inability to pay its debts as they come due, or made an offer of settlement, extension or composition to its creditors generally.

(i) That there are not and will not be on the Closing Date any agreements or understandings relating to the Property which would affect Seller’s ability to convey title hereunder. The performance of this Agreement by Seller and the sale of the Property do not require the consent or approval of any public or private authority, which has not already been obtained by Seller or will be obtained by Seller prior to the closing of the Sale and Purchase of the Property.

(j) Other than as disclosed in this Agreement, any and all leasing commissions, management fees, or other sums due to any one concerning the tenants or the tenants’ lease, shall be paid for by Seller on or before Closing. Seller shall remain liable for any and all sales taxes that may be due and owing concerning the period of time while it was the owner of the Property.

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10. Warranties and Representations of Buyer. Buyer hereby represents and warrants to Seller as follows, which representations and warranties shall be deemed made by Buyer to Seller also as of the Closing Date:

(a) Buyer has full legal power and authority to enter into and perform this Agreement in accordance with its terms, and this Agreement constitutes the valid and binding obligation of Buyer, enforceable in accordance with its terms, except as such enforcement may be affected by bankruptcy, insolvency and other laws affecting the rights of creditors generally. The execution, delivery and performance of this Agreement is not in contravention of or in conflict with any Agreement or undertaking to which Buyer is a party or by which Buyer may be bound or affected.

(b) The execution and delivery of this Agreement and the payment and performance by Buyer of its payments and obligations hereunder require no further action or approval in order to constitute this Agreement as a binding and enforceable obligation of Buyer.

11. Survival of Representation, Covenants and Warranties. The representations, warranties and covenants made by Seller and Buyer herein, unless otherwise provided shall survive the Closing Date.

12. Due Diligence Materials. On or prior to ten (10) Calendar days after the Effective Date and to the extent that such materials are within the control of the Seller or its agents. Seller shall provide to Buyer for inspection and copying the following materials (“Due Diligence Materials”):

a. Reports prepared by third parties: any engineering, environmental tests or studies, soil tests or studies, and any other pertinent materials relating to the Property.

b. The most recent building plans, including “as builts” and any engineering plans, and any other pertinent materials relating to the development and improvements on the Property.

c. Seller’s operating expenses for the last year for the building and the property.

d. Copies of all contracts and agreements that affect the Property.

e. All paid tax bills of the Property for years 2002 and 2003 and 2004.

f. List of all personal property including all building materials, fixtures, equipment, and other items of personal property now or hereafter affixed to or used in the operation by Seller in the subject property.

SELLER:
Spacehab, Inc.
/s/    Illegible		3/3/05
By:	Illegible	Date

BUYER:
Tamir Silvers, LLC
/S/    OFER TAMIR		3/3/05
By:	Ofer Tamir	Date

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EXHIBIT “C”

TO COMMERCIAL CONTRACT

LEASE AGREEMENT

TAMIR SILVERS, LLC

LANDLORD

SPACEHAB, INCORPORATED,

TENANT

TABLE OF CONTENTS

1.	Leased Premises	3
2.	Term of Lease	3
3.	Rent	3
4.	Taxes	5
5.	Net Lease	6
6.	Option to Renew	7
7.	Intended Use	7
8.	Tenant’s General Agreements	7
9.	Deposit	8
10.	Fixtures	8
11.	Failure of Tenant to Maintain Premises	9
12.	Alterations and Additions	9
13.	Insurance and Third Party Liability	9
14.	Replacement of Premises	11
15.	Condemnation of Leased Premises	11
16.	Personal Property Taxes	12
17.	Entry by Landlord	12
18.	Assignment and Subletting	12
19.	Default	13
20.	Quiet Enjoyment	16
21.	Estoppel Certificate	16
22.	Subordination	17
23.	Non-Disturbance	17
24.	Notices	17
25.	Authority of Parties	18
26.	Leasing Commissions or Brokerage Fees	18
27.	[Intentionally Omitted]	18
28.	Environmental Matters	18
29.	Termination by Landlord	20
30.	[Intentionally Omitted]	20
31.	General Provisions	21

EXHIBITS TO LEASE

A Legal Description of Real Property

Second Addendum to Purchase and Sale Agreement and to Lease

2

LEASE AGREEMENT

THIS LEASE is made and entered into this 17 of March 2005, by and between Tamir Silvers, LLC a Florida Corporation, hereinafter called “Landlord”, and SPACEHAB, INCORPORATED, a Washington corporation, hereinafter called “Tenant.” This Lease Agreement shall be effective upon execution by Landlord and Tenant.

WITNESSETH, THAT FOR AND IN CONSIDERATION of the mutual entry into this Lease, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Landlord and Tenant agree as follows:

1. Leased Premises: Underlying Lease.

A. In consideration of the payment of the rent and the performance of the agreements of Tenant and Landlord hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord the following described premises (collectively, the “Premises” or the “Building”), situated in Brevard County, Florida subject to the provision of paragraphs 1.C. and 18.C below.

The building located at 620 Magellan Road, Cape Canaveral, Florida and situated on that certain parcel of real property described in Exhibit “A” attached hereto and made a part hereof by this reference (the “Real Property”).

B. Landlord and Tenant acknowledge that this Lease is subject and subordinate to that certain Lease Agreement naming Canaveral Port Authority as Lessor (the “Ground Lessor”), having an effective date of February 1, 1991, filed April 21, 1991 and recorded in Official Records Book 3121, Page 4396, as modified by that certain Modification of Fifty Year Lease filed January 5, 1992 and recorded in Official Records Book 3171, Page 1458, all in the Public Records of Brevard County, Florida (the “Underlying Lease”). Tenant agrees not to do or fail to do or allow to be done any act or action that will cause a default under the Underlying Lease.

C. Tenant shall lease from Landlord one hundred percent (100%) of the Building.

2. Term of Lease. The term of this Lease (the “Term”) shall be for a period commencing on, May 1, 2005, or upon the date of the close of the sale of the building (the “Commencement Date”) and terminating on December 31, 2010, unless extended pursuant to Paragraph 6 below.

3. Compensation.

A. Rent:

1) Rent shall be $37509.92 per month or $450,119 per year plus total operating costs plus applicable sales taxes subject to paragraph 18 hereof (“Rent”). In         

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2) Rent during the full Term aforesaid shall be payable in advance on the first day of each calendar month during said Term at the office of Landlord set forth herein, or at such other place as Landlord may designate from time to time in writing. In the event that Rent due under this Lease shall commence on any day other than the first day of a calendar month, the Rent for the partial month shall be prorated to reflect the actual number of days the Premises were under Lease. All Rent shall be paid in lawful money of the United States of America without deduction or offset, prior notice or demand.

3) Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent or other sums hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, additional processing and accounting expenses. Accordingly, should any installment of Rent shall not be paid by Tenant within five (5) days after written notice of non-payment, then Landlord may charge Tenant a late charge equal to five percent (5%) of such past due amount, but in no event more than $1,100 per occurrence during the initial lease Term. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of a late payment by Tenant.

B. Operations/Maintenance:

It is the intent of the parties that the Rent payable to Landlord is absolutely net of all expenses associated with the operation, maintenance, real estate taxes, ground lease taxes and expenses, insurance, and upkeep of the Property and all sales or use taxes imposed on the rent. “Operations & Maintenance” means, in addition to Base Rent, Tenant shall pay the following sums plus any sales or use taxes imposed thereon:

(a) Insurance. Tenant’s Pro Rata Share of the total cost of all fire, extended coverage, storm and hurricane coverage, loss of rents coverage, liability, and workmen’s compensation, and other insurance coverage with respect to the Property. If Tenant’s approved use of occupancy of the Premises shall cause any increase in the premiums for the insurance coverage of the Property.

(b) Tenant’s Pro Rata Share. Tenant’s Pro Rata Share is 100%. Tenant’s Pro Rata Share is determined by dividing the approximate square footage of the Premises by the approximate square footage of the total leasable area of the Property. Tenant’s Pro Rate Share is subject to adjustment by Landlord based on the foregoing formula if the leasable area of the Property is diminished by casualty, condemnation or similar takings or other events reducing the leasable area or if the leasable area is increased by additions to the Property.

(c) Repairs and Maintenance:

(i) Unless otherwise expressly provided, Landlord shall not be required to make any improvements, replacements or repairs of any kind or character to the Leased Premises during the term of this Lease. Tenant shall maintain the roof, foundation, parking area, and structural soundness of the exterior walls (including all overhead

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doors, if any, and entrance doors, if any) of the building in good repair and condition except for reasonable wear and tear. Tenant shall repair and pay for any damage caused by Tenant’s negligence or default. Tenant shall maintain, repair, and replace, if necessary all equipment and/or monitoring as related to fire sprinklers/fire alarm monitoring, air conditioning and heating equipment, and shall be responsible for maintaining current code requirements regarding same. Landlord is not responsible for any maintenance nor repair during the term of this Lease.

(ii) The Tenant shall pay for all sewage disposal services, water, gas, heat, electric current and other utilities furnished it or consumed by it, in or upon the Leased Premises at rates set by local public utility as approved by Public Authority having jurisdiction, and will keep the interior of the Leased Premises and appurtenances, in good order and repair, and in a clean, safe, and healthy condition (excepting, however, all repairs made necessary by reason of fire or other unavoidable casualty) at its own cost and expense.

(iii) All glass, both exterior and interior of said Premises is at the sole risk of Tenant, and any glass broken during the term of this Lease is to be promptly replaced with glass of the same kind and quality at the expense of Tenant.

(iv) Tenant shall also be responsible for all interior maintenance including interior walls, cleaning, and pest control. Tenant shall also be responsible for routine maintenance, and replacement if necessary, of the heating ventilation and air conditioning (HVAC) system and shall maintain it at all times at Tenant’s expense. Landlord shall have the right, from time to time, to request a copy of said HVAC routine maintenance agreement. Tenant also shall be responsible for replacement of all interior lights which burn out including ballasts, if necessary, repair of plumbing fixtures and cleaning stopped-up drains.

(v) Tenant shall, at its own cost and expense, repair or replace any damage or injury to all or any part of the Leased Premises caused by Tenant or Tenant’s agents, employees, invitees, licensees or visitors; provided, however, if Tenant fails to make repairs or replacements promptly, Landlord may, at its option, make the repairs or replacements and Tenant shall reimburse the cost thereof to Landlord on demand.

(vi) Tenant shall not allow any damage to be committed on any portion of the Leased Premises, and at the termination of this Lease, by lapse of time or otherwise. Tenant shall deliver the Leased Premises to Landlord in as good condition as at the first possession of Tenant, ordinary wear and tear excepted. The cost and expense of any repairs necessary to restore the condition of the Leased Premises shall be borne by Tenant, and if Landlord undertakes to restore the Leased Premises, it shall have a right of reimbursement against Tenant.

4. Taxes.

A. Real Property Taxes. At all times during the Term of this Lease, Tenant shall pay to Landlord a pro rata share equal to Tenant’s percentage of the total leased space on the

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Property (i.e., unless otherwise agreed, after the first two (2) months, 65%) of all Real Property Taxes, as hereafter defined, assessed against the Premises no later than thirty (30) days after written notice from Landlord. Landlord shall pay all Real Property Taxes to the governmental agency levying such taxes. At all times during the Term of this Lease, Tenant shall pay its pro rata share of all other taxes assessed against the Premises or imposed upon the leasehold estate hereby created and any other tax assessed on an annual basis, and will pay when due one hundred percent (100%) of any and all other taxes and assessments levied or assessed during the Term hereof, upon or against: (i) all fixtures, equipment and any personal property of Tenant installed or located within the Premises; (ii) all alterations, additions, betterments or improvements of whatsoever kind or nature made by Tenant to the Premises; and (iii) the Rent payable hereunder by Tenant to Landlord (other than Landlord’s Federal and State income taxes thereon, if any). As used in this Lease “Real Property Taxes” shall mean all taxes, assessments and charges levied upon or with respect to the Premises in the nature of real property taxes, now or hereafter levied or assessed against Landlord by the United States of America, the State of Florida, the county wherein the Premises are located, or any political subdivision, public corporation, district or other political or public entity; and shall also include any other tax to the extent that such tax is imposed in lieu of or in addition to such Real Property Taxes.

B. Other Taxes. Should any governmental agency require that a tax (including, but not limited to, a sales or use tax) be remitted .by Landlord, for and on behalf of said governmental authority and from time to time forwarded by Landlord to said governmental authority, the same shall be paid by Tenant to Landlord, and be collectible by Landlord, and payment thereof enforced in the same fashion as provided for the enforcement of payment of Rent hereunder.

C. Proration of Taxes. At the beginning of the Term, taxes and assessments to be paid by Tenant shall be prorated so that, with respect to any taxes and assessments levied or assessed for a calendar year beginning before the beginning of the Term, Tenant shall pay only such proportion of said taxes and assessments as the portion of the calendar year occurring after the beginning of the Term bears to the entire calendar year. At the end of the Term, taxes and assessments to be paid by Tenant shall be prorated so that at the end of the Term, with respect to any taxes and assessments levied or assessed for a calendar tax year extending beyond the end of the Term, Tenant shall pay only such proportion of said taxes and assessments as the portion of the calendar tax year preceding the end of the Term bears to the entire calendar tax year.

5. Net Lease. It is the purpose and intent of Landlord and Tenant that the Rent payable hereunder shall be net to Landlord so that this Lease shall yield, net, to Landlord the Rent as herein above provided, free of any charges, assessments, or impositions of any kind charged, assessed, or imposed on or against the Premises, and without abatement, deduction or setoff by Tenant, and Landlord shall not be expected or required to pay any such charge, assessment or imposition, or be under any obligation or liability hereunder except as herein expressly set forth, and that all costs, expenses and obligations of any kind relating to the maintenance,

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preservation, care, and operation of the Premises, including all alterations, and additions as hereinafter provided, which may arise or become due during the Term of this Lease or any Extended Term as hereinafter defined shall be paid by Tenant, and Landlord shall be indemnified and held harmless by Tenant from and against such costs, expenses and obligations.

6. Option to Renew. Tenant shall have the option to renew and extend this Lease for an additional term of five (5) years (“Extended Term”). The Extended Term shall be upon the same terms, conditions and provisions contained in this Lease, provided that Rent then in effect shall be adjusted as set forth hereafter. In no event shall any percentage increase in Rent exceed the percentage increase in the Consumer Price Index as hereafter defined. For purposes of this Lease, the Consumer Price Index shall mean the most recent Consumer Price Index for Urban Wage Earners and Clerical Workers Revised (1982-84=100), published by the Bureau of Labor Statistics of the United States Department of Labor, all items, reported for the month prior to the Commencement Date of the Term shall be considered as the base Index in effect. The price Index in effect for the month prior to the beginning of the Extended Term shall be compared with this base Index figure. The Rent then in effect shall be increased                     , if appropriate, by the percentage of increase                      in the price Index in effect for the month prior to the first day of the Extended Term over the base Index. Tenant shall give Landlord preliminary written notice (the “Preliminary Notice”) of its intention to exercise the option to renew and extend this Lease for the Extended Term no less than one hundred twenty (120) days prior to the expiration of the initial Term. The Preliminary Notice does not commit the Tenant to renew or extend the Lease. No later than forty five (45) days after receipt of said notice, Landlord shall submit to Tenant its proposed lease price for the Extended Term. The parties shall promptly enter into negotiations to establish the firm price for the Extended Term. Tenant shall exercise its option to renew and extend this Lease for the Extended Term by delivering written notice to Landlord (the “Notice of Renewal”) no less than thirty (30) days prior to the expiration of the initial Term. Once given, the Notice of Renewal for the Extended Term shall be irrevocable by Tenant, except as may be otherwise provided in this Lease and the rent shall be the amount negotiated and agreed to by the parties or failing agreement by the parties the prior rent increased                      by the percentage increase or decreased in the price index as described above. Notwithstanding anything to the contrary contained in the foregoing, Tenant shall be entitled to exercise its option to renew only if Tenant shall not then be in default after notice and the expiration of any applicable grace period under any of the material terms, provisions, covenants or conditions of this Lease. In no event shall the Consumer Price Index increase on the Rent be less than a minimum of 3% per year or a maximum of 5% per year.

7. Intended Use. Tenant is leasing the Premises for the uses (the “Intended Use”) set forth in the Underlying Lease, as hereafter defined. Tenant will not use the Premises for any use other than the Intended Use without Landlord’s prior written consent, which shall not be unreasonably withheld.

8. Tenant’s General Agreements. For and in consideration of the leasing of said Premises aforesaid, Tenant does covenant and agree as follows, to-wit:

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A. To pay the Rent and all other sums due for said Premises hereinabove provided promptly when due and payable;

B. To pay all assessments for water and sewer charges levied against such Premises and all charges for heating, cooling, gas, power, light, and all other services and utilities supplied to the Premises, telecommunication and information technology will be provide by the Tenant and the Tenant may provide those services to sublet or Landlord tenants, together with any taxes thereon, promptly when due and payable;

C. [Intentionally Omitted]

D. To keep all exterior and interior improvements and fixtures upon said Premises (including landscaping and blacktop or its equivalent) clean and neat in appearance and in good order and repair, ordinary wear and tear excepted, and to maintain all equipment and fixtures in accordance with applicable warranty maintenance schedules, and to replace same as the need arises;

E. To order no improvements or repairs at the expense of Landlord (with Tenant expressly waiving the right to make improvements and repairs at Landlord’s expense under any law, statute or ordinance now or hereafter in effect) and, at the expiration of this Lease, to surrender and deliver up said Premises in as good order and condition as when the same were entered upon, ordinary wear and tear excepted;

F. To use said Premises for no purposes prohibited by the ordinances of the city and county in which said Premises are located or by the laws of the United States or the State of Florida, now in force or hereafter enacted; to comply, at Tenant’s sole cost and expense, with all laws, statutes, ordinances and other governmental rules, regulations or requirements now in force or which may hereafter be in force and with the requirements of any Board of Fire Underwriters, occupational safety and health, administrators or other similar bodies now or hereafter constituted relating to or affecting the condition, use or occupancy of the Premises; and

G. To surrender and deliver up the possession of the Premises promptly at the expiration of this Lease or the Extended Term.

9. Deposit. None required in lieu of PM 2 (see attached Addendum).

10. Fixtures. Tenant, at its expense, shall have the right, but not the obligation, to remove all furniture, equipment, and trade fixtures installed by Tenant or Government owned property at the expiration or termination of this Lease; provided, however, that Tenant shall repair any damage to the Premises caused by its removal of such furniture, equipment and trade fixtures. In the event that Tenant shall fail to make such repairs, Landlord shall have the right but not the obligation to make such repairs on behalf of Tenant. Landlord shall provide Tenant notice of the costs and expenses of such repairs and Tenant shall have thirty (30) days

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to approve the same. If Tenant fails to approve the costs and expenses of such repairs within such thirty (30) days, Tenant agrees to commence such repairs within thirty (30) days thereafter and proceed with due diligence to completion of such repairs. If Tenant fails to commence such repairs as aforesaid, Landlord shall have the right but not the obligation to make such repairs and Tenant shall be liable for and agrees to pay Landlord’s reasonable costs and expenses in making such repairs, which obligations shall survive the termination of the Lease.

11. Failure of Tenant to Maintain Premises. If Tenant refuses or neglects to repair or maintain the Premises, as required hereunder, to the reasonable satisfaction of Landlord within thirty (30) days after written demand, Landlord may make such repairs or perform such maintenance without liability to Tenant for any loss or damage that may accrue to Tenant’s merchandise, fixtures or other property, or to Tenant’s business by reason thereof, and upon completion thereof, Tenant shall pay Landlord’s reasonable cost for making such repairs or performing such maintenance upon presentation of a bill therefor.

12. Alterations and Additions.

A. Tenant shall not make or allow to be made any alterations, additions or improvements to or of the Premises or any part thereof, without the prior written consent of Landlord, which shall not be unreasonably withheld. If Landlord’s written response to Tenant’s written request is not received by Tenant within thirty (30) days, Landlord’s failure to respond will be deemed as consent and Tenant may proceed with alterations, additions or improvements submitted to Landlord for approval. Any alterations, additions, or improvements to or of the Premises, but excepting furniture, equipment, and trade fixtures, shall become a part of the realty and belong to Landlord and shall be surrendered with the Premises at the expiration of this Lease.

B. In the event Landlord consents to the making of any alterations, additions or improvements to the Premises by Tenant, the same may be made by Tenant at Tenant’s sole cost and expense in accordance with all applicable codes’, ordinances and other governmental regulations.

C. Tenant shall keep the Premises free of mechanics’ and material men’s liens (construction liens), judgment, tax and all other liens arising out of any construction or other work done for or debts incurred by Tenant, unless the same are being contested in good faith by Tenant. Not less than seven (7) days prior to the commencement of any construction, alteration or addition to the Premises, Tenant shall notify Landlord in writing of its intention to commence the same and Landlord shall have the right to post and maintain on the Premises such notices of non-responsibility as are provided for under applicable law.

13. Insurance and Third Party Liability.

A. Each party shall be solely responsible for any and all third party liability caused by it in connection with the performance of this Lease and shall defend, indemnify and save the other party harmless from all such liability, claims, judgments, costs and

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attorneys’ fees. This provision shall survive the expiration or termination of this Lease.

B. Tenant agrees to provide comprehensive general liability insurance with combined single limits of not less than $1,000,000 per occurrence and shall name Landlord or its assigns under said insurance policy as additional insureds. Tenant shall furnish to Landlord a certificate of insurance indicating that said policy is in full force and effect, that Landlord and its assigns as their interests may appear have been named as additional insureds and that Tenant’s insurance company will provide thirty (30) days prior written notice of the proposed cancellation of said policy to Landlord.

C. Tenant shall obtain and provide fire, extended coverage and property damage insurance in an amount equal to the replacement value of Tenant’s personal property on the Premises attributable to all perils and casualties insured against under the standard fire and extended coverage policy form. Tenant shall furnish Landlord a certificate of insurance indicating that said policy is in full force and effect, and that Tenant’s insurance company will provide thirty (30) days prior written notice of the proposed cancellation of said policy to Landlord.

D. [Intentionally Omitted]

E. [Intentionally Omitted]                    

F. Landlord and Tenant each agree to obtain in any insurance policy required hereunder a waiver of any right of subrogation any such insurer of either party may acquire or claim against the other party by reason of the payment of any loss under any insurance obtained by either party pursuant to this Lease.

G. If Landlord or Tenant fails to maintain the insurance required under this Paragraph 13, Landlord or Tenant, as the case may be, may order such insurance at the expense of the non-performing party and such amounts shall be payable by the non-

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performing party upon demand.

H. All insurance policies maintained by Landlord and Tenant pursuant to this Paragraph 13 shall be obtained from nationally-reputable insurance companies licensed to do business in the State of Florida. It is understood and agreed that any such policy may contain deductibles or self-insured retentions which are usual and customary for the types of insurance involved, in which case the respective policyholder shall be fully responsible for the portion of any loss within such deductible or self-insured retention.

14. Replacement of Premises.

A. Generally. In the event the Premises or a portion thereof shall become untenantable (as mutually determined by Landlord and Tenant) on account of damage by fire, act of God, or other casualty, Landlord shall be given the option to correct the deficiency or condition which shall render the Premises untenantable or to terminate this Lease.

B. Termination. Within twenty (20) calendar days after the date of any casualty to the Premises, Landlord shall notify Tenant in writing as to whether or not it elects to repair same. If, in the reasonable opinion of Landlord, it is not feasible to repair or rebuild the same, then Landlord shall have the option to terminate this Lease. In the event Landlord elects to repair said Premises, it shall have one hundred eighty (180) calendar days from the date of its notice to Tenant to effect such repairs.

C. Abatement of Rent and Termination by Tenant. During the period from Landlord’s notice to Tenant of damage to the Premises preventing reasonable access to the Premises until the Premises are restored to their prior condition and possession thereof given to Tenant, the Rent due hereunder shall be abated in an amount proportionate to the percentage of the Premises that are rendered untenantable. In the event said repairs have not been completed within the period specified, then Tenant, at its option, which must be exercised in writing within twenty (20) calendar days from the expiration of the time period specified and prior to completion of reconstruction, may terminate this Lease. If either Landlord or Tenant terminates this Lease as above provided in this Paragraph, any moneys due and owing to Landlord shall be paid by Tenant up to the date of termination specified in the applicable notice, whereupon all future obligations on the part of both parties hereto shall cease and neither Landlord nor Tenant shall incur any further obligations whatsoever from and after such termination of this Lease.

15. Condemnation of Leased Premises.

A. If the entire Premises or any portion thereof which leaves the Premises reasonably unfit for the normal conduct of the business of Tenant, at any time during the Term of this Lease or any extension thereof, shall be taken by the exercise of a power of eminent domain, this Lease shall then terminate as of the date of title vesting in such proceeding, all Rent shall be paid up to that date, and Tenant shall have no claim against Landlord or the condemning authority for the value of the unexpired Term of

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this Lease, nor shall Landlord have any claim against Tenant for obligations relating to the unexpired portion of the Term.

B. In the event of any condemnation or taking as aforesaid, whether whole or partial, Tenant shall not be entitled to any part of the award paid for such condemnation except as set forth below; Tenant hereby expressly waiving any right or claim to any part thereof. Although all such damages awarded in the event of any condemnation are to belong to Landlord, whether such damages are awarded as compensation for diminution in value of the leasehold or to the fee of the leased Premises, Tenant shall have the right to claim and recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant in Tenant’s own right on account of Tenant’s merchandise, furniture, fixtures, leasehold improvements and equipment or any and all damage to Tenant’s business by reason of the condemnation and for or on account of any cost or loss to which Tenant might be subject in removing Tenant’s merchandise, furniture, fixtures, leasehold improvements and equipment.

16. Personal Property Taxes. Tenant shall pay, or cause to be paid, when due any and all taxes levied or assessed and which become payable during the Term or any Extended Term hereof upon Tenant’s equipment, furniture, fixtures, and other personal property located at the subject Premises. In the event any or all of Tenant’s equipment, furniture, fixtures, and other personal property shall be assessed and taxed with the real property, Tenant shall pay to Landlord its share of such taxes within thirty (30) days after delivery to Tenant by Landlord of a statement in writing setting forth the amount of such taxes applicable to Tenant’s personal property.

17. Entry by Landlord. Subject to Tenant’s reasonable security, safety, and export control requirements, Landlord reserves, and shall during reasonable business hours have, the right to enter the Premises to inspect the same, to post notices of non-responsibility, to post signs, to make repairs, alterations, improvements and additions to the Premises that are reasonably necessary or desirable, without abatement of Rent, and may for that purpose erect scaffolding and other necessary structures where reasonably required by the character of the work to be performed, always providing that the entrances to and exits from the Premises shall not be blocked thereby, and further providing that the business of Tenant or any of its subtenants shall not be interfered with unreasonably. Unless in an emergency, Landlord shall first give notice of its intent to enter the Premises and obtain Tenant’s consent thereto. In the event of an emergency, Landlord shall have the right to use any and all means which Landlord may reasonably deem proper to open said doors in order to obtain entry to the Premises without liability to Tenant or any of its subtenants except for any failure to exercise due care for Tenant’s or any subtenant’s personal property located on such Premises.

18. Assignment and Subletting.

A. Except as provided under Paragraph 18.B., below, Tenant shall not voluntarily assign, transfer, mortgage, pledge, hypothecate or encumber this Lease or any interest

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therein, and shall not sublet the Premises or any part thereof, or any right or privilege appurtenant thereof, or allow any person (the employees, agents, servants, customers, and invitees of Tenant excepted) to occupy or use the Premises or any portion thereof, without the prior written consent of Landlord, which consent shall not be unreasonably withheld. If Landlord’s written response to a written request to sublet or assign is not received by Tenant within thirty (30) days after receipt of such request by Landlord, Landlord’s failure to respond will be deemed as consent. A consent to one assignment, subletting, occupation or use by another person shall not be deemed to be a consent to any subsequent assignment, subletting, occupation or use by another person. Consent to any such assignment or subletting shall not relieve Tenant or any Guarantor of any liability under this Lease. Any such assignment or subletting without Landlord’s consent shall be void.

B. Notwithstanding, Paragraph 18.A., above, Tenant may assign or sublet this Lease to any corporate parent, subsidiary or successor in interest through merger, reorganization or the like; provided, however, that any such assignment or subletting, shall not relieve Tenant of any liability under this Lease, unless approved by Landlord in writing which shall not be unreasonably conditioned, delayed or withheld if the creditworthiness of such assignee or sublessee is acceptable to Landlord and Landlord’s assignees.

19. Default.

A. Default of Tenant and Remedies of Landlord:

1) Tenant shall be in default of this Lease if any of the following events occur:

a) The failure of Tenant to make payment of any Rent or other sums required to be paid by Tenant under this Lease when and as the same shall become due and payable where such failure shall continue for a period of ten (10) days after receipt of written notice thereof from Landlord to Tenant;

b) The failure of Tenant to comply with any material covenants, agreements, terms or conditions contained in this Lease other than those referred to in the foregoing Paragraph, provided such default continues for a period of thirty (30) days after written notice thereof from Landlord is received by Tenant; provided further that Tenant’s time to cure such default shall be extended for such additional time as shall be reasonably required for the purpose if Tenant shall proceed with due diligence during such thirty (30) day period to cure such default and is unable by reason of the nature of the work involved to cure the same within the said thirty (30) days;

c) If a petition is filed by or against Tenant seeking a bankruptcy reorganization, arrangement, composition, readjustment, liquidation,

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dissolution or similar relief under any present or future federal, state or other statute, law or regulation, and remains undismissed for an aggregate of sixty (60) days, or if any trustee, receiver, or liquidator of Tenant of all or any substantial part of its properties or of the Premises shall be appointed with or without the consent or acquiescence of Tenant and such appointment remains unvacated for an aggregate of sixty (60) days; or if Tenant shall be adjudicated bankrupt or adjudged to be insolvent, or Tenant shall make an assignment or other conveyance in trust for the benefit of creditors; or

d) If Tenant vacates and abandons the Premises during the Term hereof, without payment of Rent, except in accordance with the terms hereof.

2) If Tenant is in default as provided in subparagraphs 1)(a), (b), (c), or (d) above, Landlord shall have the option, without further notice to Tenant or further demand for performance:

a) To institute suit against Tenant to collect each installment of Rent or other sums as it becomes due or to enforce any other obligation under this Lease;

b) As a matter of right, to procure the appointment of a receiver by any Court of competent jurisdiction. All rents, issues, and profits, income and revenue from the leased Premises shall be applied by such receiver to the payment of the Rent, together with any other obligations of Tenant under this Lease; or

c) Upon receipt of proper authorization from a court of competent jurisdiction, to re-enter and take possession of the leased Premises and to remove Tenant and Tenant’s agents and employees there from after Tenant has had adequate time (a maximum of one-hundred eighty [180] days) to remove its personal property or Government owned property from the Premises, and either:

(i) Terminate this Lease and sue Tenant for damages for breach of the obligations of Tenant under this Lease; or

(ii) Without terminating this Lease, to relet, assign or sublet the Premises as the agent and for the account of Tenant in the name of Landlord or otherwise, upon the best terms and conditions Landlord may make with the new tenant for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the Term of this Lease) and on such conditions as Landlord, in its reasonable discretion, may determine and may collect and receive the Rent therefore, provided Landlord shall in no way be responsible or liable for any failure to relet the Premises or

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any part thereof, or for any failure to collect any Rent due upon any such reletting. In this event, the rents received on any such reletting shall be applied first to the reasonable expenses of reletting and collecting, including, without limitation, all repossession costs, and any real estate commission paid, reasonable alteration costs and reasonable expenses of preparing said Premises for reletting, and thereafter toward payment of the rental and of any other amounts payable by Tenant under this Lease. If the sum realized shall not be sufficient to pay such Rent and other charges, within five (5) days after demand, Tenant will pay to Landlord any such deficiency as it accrues. Landlord may sue Tenant therefore as each deficiency shall arise, if Tenant shall fail to pay such deficiency within said time allowed.

3) In the event that Tenant is in default under subparagraph 1) a) by virtue of its failure to make payment of any Rent under this Lease and the failure to cure within the prescribed time, in addition to any remedies available under 2) above, Landlord may, at its option, accelerate all rent due under this Lease for the remainder of the Term or the Extended Term for which Tenant has exercised its option to renew.

4) In the event Landlord elects to re-enter or take possession of the Premises, Tenant shall quit and peaceably surrender the Premises to Landlord after Tenant has had adequate time (a maximum of one hundred eighty [180] days) to remove its personal property or Government-owned property, and Landlord may enter upon and re-enter the Premises and possess and repossess itself thereof, and may dispossess Tenant and remove Tenant and may have, hold and enjoy the Premises and the right to receive all rental income of and from the same. Landlord shall exercise due care for property so removed.

5) No such re-entry or taking of possession by Landlord shall be construed as an election on Landlord’s part to terminate or surrender this Lease unless a written notice of such intention is served on Tenant.

B. Default of Landlord and Remedies of Tenant:

1) Landlord shall be in default of this Lease if any of the following events occur:

a) The failure of Landlord to make payment of any sums required to be paid by Landlord under this Lease when and as the same shall become due and payable, or as to payments to be made to Tenant, failure of Landlord to make payment within ten (10) days after receipt of written notice from Tenant.

b) The failure of Landlord to comply with any of the covenants, agreements, terms or conditions contained in this Lease other than

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those referred to in the foregoing Paragraph provided such default continues for a period of thirty (30) days after written notice thereof from Tenant is received by Landlord; provided further that Landlord-s time to cure such default shall be extended for such additional time as shall be reasonably required for the purpose if Landlord shall proceed with due diligence during such thirty (30) day period to cure such default and is unable by reason of the nature of the work involved to cure the same within the said thirty (30) days.

2) If Landlord is in default as provided above, Tenant shall continue this Lease without termination and nonetheless recover from Landlord all such damages, costs and expenses, including reasonable attorneys’ fees and court costs incurred as a result of such default. Rent shall not be subject to abatement, reduction, or offset for recovery of Tenant’s damages, costs and expenses resulting from Landlord’s breach or for any other reason.

C. General Provisions Upon Default:

1) The enumeration of the foregoing remedies does not exclude any other remedy, but all remedies are cumulative and shall be in addition to every other remedy now or hereafter existing at law or in equity subject to the terms and conditions of this Lease.

2) No failure by either party to insist upon the strict performance of any covenant, agreement, term or condition of this Lease or to exercise any right or remedy consequent upon a breach thereof, and no acceptance of full or partial rent during the continuance of any such breach, shall constitute a waiver of any such breach or of such covenant, agreement, term or condition. No covenant, agreement, term or condition of this Lease to be performed or complied with by either party, and no breach thereof, shall be waived, altered, modified or terminated except by written instrument executed by the party entitled to enforcement. No waiver of any breach shall affect or alter this Lease, but each and every covenant, agreement, term and condition of this Lease shall continue in full force and effect with respect to any other then existing or subsequent breach thereof.

20. Quiet Enjoyment. Landlord covenants that if, and so long as, Tenant pays the Rent as herein provided and performs the covenants hereof, Landlord shall do nothing to affect Tenant’s right to peaceably and quietly have, hold and enjoy the Premises for the Term herein mentioned, subject to the provisions of this Lease.

21. Estoppel Certificate. Landlord and Tenant shall, without charge, at any time and from time to time hereafter, within thirty (30) days after receipt of a request therefore from the other, certify by written instrument, duly executed and acknowledged, as to the validity and force and effect of this Lease, in accordance with its tenor, as then constituted, as to the fact that this Lease is unmodified, or, if there has been any modification thereof, as to the nature of the modification or modifications and as to the validity and force and effect of such

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modification, as to the existence of any default on the part of any party hereunder, as to the existence of any offsets, counterclaims, or defenses thereto, and as to any other matters which may be reasonably requested.

22. Subordination. Provided that Landlord shall secure a non-disturbance agreement reasonably satisfactory in form and substance to Tenant from the holder of the first mortgage on the Premises, Tenant agrees that this Lease is and shall be, at all times, subject and subordinate to the lien of the first mortgage which Landlord or its assigns have entered or may enter into covering said Premises and to any and all advances to be made thereunder and to the interest granted thereby. This Lease shall not be subject and subordinate to the lien of any subsequent mortgages or deeds of trust which Landlord or its assigns shall make covering said Premises. Tenant hereby acknowledges the right of Landlord to assign the Rent to be received by Landlord hereunder and Landlord’s rights to enforce Tenant’s obligation to pay Rent under this Lease.

23. Non-Disturbance. Such non-disturbance agreement shall provide in substance that so long as Tenant performs all covenants and conditions of this Lease, Tenant’s rights under the Lease shall not be disturbed or diminished by Landlord or any mortgage holder, and so long as Tenant performs all covenants and conditions of this Lease, and continues to pay rent to whomsoever may be lawfully entitled to same, this Lease and Tenant’s possession thereunder shall not be disturbed by any mortgagee(s) or anyone claiming under or through them. Tenant hereby acknowledges that Landlord may at any time assign its rights and obligations under this Lease to a lender providing financing for construction of the improvements on the Premises by Landlord, and in the event that such lender shall invoke the remedies provided in such assignment of lease so that such lender is entitled to receive any rents from Tenant, Landlord hereby requests that Tenant make, and Tenant hereby covenants and agrees to make such payments directly to such lender as directed by such lender.

24. Notices. All notices, demands, requests or other instruments required in this Lease to be given by Tenant to Landlord or Landlord to Tenant shall be in writing, hand delivered or sent by prepaid certified or registered mail of the United States, or by overnight courier such as Federal Express at the address listed below or such other place as the parties may designate from time to time by written notice.

Landlord:	Tamir Silvers, LLC
	4600 NW 128th Street
	Miami, FL 33054
	Attn: Ofer Tamir
	Facsimile: (305) 688-2344
w/copy to:	Gary P. Simon, Esquire
	9100 South Dadeland Blvd., Suite 504
	Miami, Florida 33156
	Facsimile: (305) 670-6776

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Tenant:	SPACEHAB, Incorporated 12130 Highway 3, Building 1 Webster, TX 77598 Attn: Brian Harrington Facsimile:
With a copy to:	Dewey Ballantine, LLP 1301 Avenue of the Americas New York, NY 10019 Attention: Frederick W. Kanner, Esquire Facsimile: (212) 259-7302
With a copy to:	NAI Realvest Partners, Inc. 2200 Lucien Way, Suite 350 Maitland, Florida 32751 Attention: Paul P. Partyka Facsimile: (407) 875-3137

25. Authority of Parties.

A. Each party hereto represents and warrants that the individual executing this Lease on its behalf is duly authorized to execute and deliver this Lease on behalf of said party and that upon such execution this Lease will be fully binding and enforceable against the respective parties.

B. Landlord, as a subdivision of the government of the State of Florida, warrants and represents that it has the power and authority to carry out the responsibilities of this Lease.

26. Leasing Commissions or Brokerage Fees. Tenant and Landlord warrant and represent that neither has engaged any real estate broker or agent in connection with this Lease or its negotiation, except for JM Real Estate, Inc., on behalf of Landlord, and NAI Realvest Partners, Inc., on behalf of Tenant. Landlord and Tenant agree to indemnify and hold the other harmless from and against any and all claims for any such compensation, commissions or fees arising from or out of any breach of the foregoing representation and warranty. No commissions shall be payable to either party on the Lease.

27. [Intentionally Omitted].

28. Environmental Matters.

A. For purposes of this Lease, “Hazardous Substances” shall mean (i) any “hazardous waste” as defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. 6901 et seq.), as amended from time to time, and regulations promulgated

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thereunder; (ii) any “hazardous substance” as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601 et seq.), as amended from time to time, and regulations promulgated thereunder; (iii) any “hazardous materials” as defined by Florida Statutes, rules or regulations as amended from time to time, and regulations promulgated thereunder; (iv) any substance, the presence of which in, on, or about the Premises, in the quantity(ies) present, is prohibited, regulated or restricted by any law or regulation similar to those set forth in this definition; (v) crude oil or fractions thereof, gasoline or any petroleum product or by-product, asbestos, and radon; and (vi) any other substance which by law or regulation requires special handling in its generation. The term “to generate” means to use, collect, generate, store, transport, treat or dispose of. The term “Environmental Laws” means any existing federal, state or local statute, regulation, rule, code or ordinance or any existing judicial or administrative decree or decision relating to the public health and safety or the protection of the environment including, without limitation, the following statutes, all amendments thereto and the regulations promulgated thereunder, in each case as presently in effect: (a) the Comprehensive Environmental Response Compensation and Liability Act of 1980 (codified in scattered sections of 26 U.S.C., 33 U-S-C, 42 U.S.C. and 42 U.S.C. ‘9601 et seq., “CERCLA”); (b) the Resource Conservation and Recovery Act of 1976 (42 U.S.C. ‘6901, et seq., (“RCRA”); (c) the Hazardous Materials Transportation Act (49 U.S.C. ‘1801 et seq., (“H MTA”); (d) the Toxic Substances Control Act (15 U.S.C. ‘ 2061, et seq., “TSCA”), (e) the Clean Water Act (33 U. S. C.’7401, et seq.); (f) the Clean Air Act (42 U.S.C. 7401 et seq.); (g) the Safe Drinking Water Act (21 U.S.C. ‘349; 42 U.S.C. ‘201 and ‘ 300f et seq, (h) the National Environmental Policy Act of 1969 (42 U.S.C. ‘4321); (1) the Superfund Amendment and Reauthorization Act of 1986 (codified in scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C. (“SARA”); (j) Title III of the Superfund Amendment and Reauthorization Act (40 U.S.C ‘1101 et seq.); (k) Occupational Safety and Health Act (29 U.S.C. ‘651 et seq.).

B. Tenant will not cause or permit the Premises or Tenant to be in violation of, or do anything or permit anything to be done which will subject the Premises to any remedial obligations under, any Environmental Laws, as each of said laws may be amended from time to time, assuming disclosure to the applicable governmental authorities of all relevant facts, conditions and circumstances, if any, pertaining to the Premises. Tenant will promptly notify Landlord in writing of any existing, pending or, to the best knowledge of Tenant, threatened investigation or inquiry by any governmental authority in connection with any applicable Environmental Laws. Tenant will not cause or permit the disposal or other release of any Hazardous Substance or solid waste on or to the Premises in violation of any Environmental Law and Tenant covenants and agrees to keep or cause the Premises to be kept free of any Hazardous Substance or solid waste used or generated by Tenant so as not to cause any violation of any Environmental Law, and to remove the same (or if removal is prohibited by law, to take whatever action is required by law) promptly upon discovery, at Tenant’s sole expense. Without limitation of Landlord’s rights to declare a default hereunder and to exercise all remedies available by reason thereof, if Tenant fails to comply with or perform any of the foregoing covenants and

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obligations, Landlord may under this Paragraph. Landlord and Tenant further agrees to indemnify, hold harmless, and defend                      each other, its officers, employees, agents and/or invitees (with legal counsel reasonably acceptable to Tenant or Landlord) from and against any claims, third party judgments (including judgments in favor of any employees, agents, invitees, servants, licensees, officers or directors of Tenant or Landlord), damages, governmental penalties, third party fines, costs, liabilities (including sums paid in settlement of third party claims including claims brought by any employees, agents, invitees, servants, licensees, officers or directors of Tenant or Landlord), and expenses relating to the foregoing (including, but not limited to, reasonable attorneys’ fees, court costs and out-of-pocket expenses of consultants and experts), which arise during or after the Lease Term in connection with the presence of Hazardous Substances at, on, in, under, to or from the Premises and which are caused by, in whole or in part, the acts and omissions of Landlord or Tenant, its officers, employees, agents, or invitees, or which existed prior to the Commencement Date, except if such presence was caused by Tenant, its officers, employees, agents or invitees. This indemnity specifically covers costs incurred in connection with any investigation of site conditions, any cleanup, remediation, removal or restorative work conducted pursuant to any federal, state, or local rule, regulation, ordinance, or any order, directive, decree, permit, requirement, or citation issued under federal, state, or local environmental laws and third party claims arising under common law or Environmental Laws in connection with the recovery of environmental substances.

C. Tenant will not cause or permit the Premises or Tenant to be in violation of, or do anything or permit anything to be done which will subject the Premises to any remedial obligations under, any Environmental Laws, as each of said laws may be amended from time to time, assuming disclosure to the applicable governmental authorities of all relevant facts, conditions and circumstances, if any, pertaining to the Premises. Tenant will promptly notify Landlord in writing of any existing, pending or, to the best knowledge of Tenant, threatened investigation or inquiry by any governmental authority in connection with any applicable Environmental Laws. Tenant will not cause or permit the disposal or other release of any Hazardous Substance or solid waste on or to the Premises in violation of any Environmental Law and Tenant covenants and agrees to keep or cause the Premises to be kept free of any Hazardous Substance or solid waste used or generated by Tenant so as not to cause any violation of any Environmental Law, and to remove the same (or if removal is prohibited by law, to take whatever action is required by law) promptly upon discovery, at Tenant’s sole expense. Without limitation of Landlord’s rights to declare a default hereunder and to exercise all remedies available by reason thereof, if Tenant fails to comply with or perform any of the foregoing covenants and obligations, Landlord may continue, survive and remain in full force and effect notwithstanding the expiration or termination of this Lease.

29. Termination by Landlord or Tenant. Intentionally omitted.

30. [Intentionally Omitted].

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31. General Provisions.

A. Legal Costs and Expenses. The prevailing party shall recover from the other party all costs and expenses, including reasonable attorneys’ fees in any court action brought to recover any rent or other sums due and unpaid under the terms hereof, or for the breach of any material terms and conditions herein contained, or to recover possession of the leased Premises, whether or not such court action shall proceed to judgment.

B. Severability of Provisions. If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws effective during the Term or any Extended Term of this Lease, then and in that event, it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby and it is also the intention of the parties to this Lease that if any clause or provision is illegal, invalid or unenforceable, there be added as a part of this Lease a clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible and be legal, valid and enforceable.

C. Right-Of-Way. Landlord reserves the right to grant or devise rights-of-way, easements, and rights of passage for utility and public purposes over, on, and through the Real Property, provided, however, that such grant shall not unreasonably interfere with Tenant’s use and occupancy of the Premises. Tenant shall be given reasonable advance written notice prior to the start of any construction work in connection with such grant.

D. Definition of Terms. Whenever the words “Landlord” and “Tenant” are used in this Lease, they are applied to persons, both men and women, companies, partnerships, limited liability companies, and corporations, and in reading this Lease, the necessary grammatical changes of words required to make the provisions hereof mean and apply as aforesaid shall be made in the same manner as if written into this Lease.

E. Marginal Headings. The Marginal headings and Paragraph titles to the Paragraphs of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof.

F. Prior Agreement and Amendments. This Lease contains all the agreements of the parties hereto with respect to any matter covered or mentioned in this Lease, and no prior agreements or understanding pertaining to any such matters shall be effective for any purpose. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest. This Lease shall not be effective or binding on any party until fully executed by both parties hereto.

G. Successors and Assigns. The obligations and rights under this Lease shall be binding upon and inure to the benefit of the heirs, administrators, executors, personal representatives, successors and assigns of the parties; provided, however, that any assignment or subletting by Tenant in violation of the terms of this Lease shall not

21

vest any rights whatsoever in the assignee or subtenant.

H. Time. Time is of the essence of this Lease and of each and all of its provisions in which performance is a factor.

I. Short Form Lease. The parties agree, at the request of either of them, to execute a Short Form Lease for recording, containing the names of the parties, the legal description of the Premises, and the Term of the Lease.

J. Law Governing. This Lease shall be construed and enforced in accordance with the laws of the State of Florida.

K. Laws. Those limitations on the recovery of damages which are specifically provided by Florida Statute apply to this Lease (see Section 331.328, Florida Statutes). Such limitations include, but are not limited to, the following:

1) As a subdivision of the government of the State of Florida, the Landlord is liable for damages only to the extent provided by Section 768.28, Florida Statutes, as amended from time to time, and any other applicable statute or regulation of the State of Florida.

2) Except as may be otherwise provided herein, the Landlord is not bound to indemnify the Tenant, or its agents, for liquidated damages or third party claims arising from this Lease.

The parties hereto recognize that (a) Landlord is subject to various statutes of the State of Florida which govern its operations; (b) many of such statutory provisions are referenced herein for disclosure purposes; and (c) while every effort has been made to make the provisions of this Lease consistent with the referenced statutes and other statutes or regulations to which the Landlord is subject, any inconsistencies between the terms of the Lease and such statutes or regulations should be resolved in favor of the statutory or regulatory provisions.

L. No Waiver. No provision of this Lease shall be construed as a waiver by either party of any right, defense, or claim which either party may have in any litigation arising under this Lease, in addition, no such provision shall be construed as a waiver by the State of Florida.

M. Waiver of Rights of Recovery. Landlord and Tenant each hereby waive any and all rights of recovery against the officers, directors, partners, shareholders, employees, agents and representatives of such other party for loss of or damage to such waiving party or its property or the property of others under its control, arising from any cause.

N. Limitation of Liability. Notwithstanding anything contained herein to the contrary, the liability of Tenant for any breach or default of this Lease is expressly limited to

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the Tenant’s obligations under the Lease and no other obligations of any kind are assumed hereby.

O. Radon Gas. Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal or state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit.

IN WITNESS WHEREOF, this Lease is hereby executed the day and year first above written, in three (3) counterparts, each of which shall be deemed an original document.

		LANDLORD
Signed, sealed & delivered
in the presence of:		Tamir Silvers, LLC,
		a Florida Limited Liability Company
		By:	/s/    OFER TAMIR
	/s/    THELMA I. VALOY	Name:	Ofer Tamir
Print Name:	Thelma I. Valoy	Title:	Vice President
	/s/    Illegible		[SEAL]
Print Name:	Illegible

		TENANT
		SPACEHAB, INCORPORATED,
		a Washington corporation
	/s/    ROY PAYZANT	By:	/s/     MARTIN MCLELLAN
Print Name:	Roy Payzant	Name:	Martin McLellan
		Title:	Vice President
	/s/    Illegible		[CORPORATE SEAL]
Print Name:	Illegible

23

Second Addendum to Purchase and Sale Agreement and to Lease

Whereas Tamir Silvers, LLC (“BUYER”) agrees to buy and Spacehab, Inc., (“SELLER”) agrees to sell the Buildings and all fixtures and improvements on the land described as and lessee’s leasehold interest in ground lease at property described as: 620 Magellan Road, Cape Canaveral, FL 32920, as more fully described in the P & S Agreement, and Seller agrees to leaseback the property under a lease, but this addendum shall supersede conflicting terms and conditions in the P & S Agreement and in the lease back agreement.

1. As part of the Purchase Price, Seller agrees to take back a purchase money 2^nd (PM 2) mortgage, in the amount of $675,178.50. It earns interest at the rate of 6.75% per annum. It is payable interest only monthly (determined as $45,574.56 /12 = $3,797.88 monthly payment). The Seller shall carry the PM2 mortgage through the end of the 5 year lease back. If the lease back is extended, the tenant shall submit a 3 month base rent security deposit.                                                                                                                . The note is to be a non-negotiable promissory note (Note shall be “paid to Seller” and NOT “pay to the order of Seller”), so if Seller as tenant has any defaults Buyer as landlord shall have the right to offset such defaults against the note as of the date of the default without prior notice to tenant. Interest shall abate as to such offset amounts. Such right of offset is in lieu of a security deposit.

2. The PM 2 note mortgage shall have a 15 day grace period for monthly mortgage payments, a late charge of 5% for late payments, no tax and insurance escrow.

3. The first mortgage will be in the amount of $2,475,000, and Seller agrees to subordinate its’ PM 2 note and mortgage to a first mortgage of Buyer’s from time to time, as long as the principal amount does not exceed this amount, excluding accrued interest, attorneys fees and costs, taxes and other reasonable amounts such first mortgage lender may advance to protect its interest.

4. The lease back shall be layered in behind the existing ground lease, which ground tenant’s interest is being assigned to Buyer. Seller has 2 existing sub-tenants, which will be layered in also as such sub-tenants will remain and become subtenants of Seller.

SELLER/TENANT:
Spacehab, Inc.
By:	/s/    Illegible	3/17/05
		Date

BUYER/LANDLORD:
Tamir Silvers, LLC
By:	/s/    Illegible	3/18/05
		Date

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EX-10.19

Exhibit 10.19

AIR COMMERCIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE – NET

(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1. Basic Provisions (“Basic Provisions”).

1.1 Parties: This Lease (“Lease”), dated for reference purposes only February 18, 2005, is made by and between R & H Investments, a California Partnership (“Lessor”) and Spacehab, Inc., a Washington Corporation (“Lessee”) (collectively the “Parties,” or individually a “Party”).

1.2 Premises: That certain real property, including all improvements therein or to be provided by Lessor under the terms of this Lease, and commonly known as 12130 Highway 3, Building 1, Webster, located in the County of Harris, State of Texas, and generally described as (describe briefly the nature of the property and, if applicable, the “Project”, if the property is located within a Project) an industrial building approximately 90,987 square feet in size. (“Premises”). (See also Paragraph 2)

1.3 Term: ten (10) years and zero (0) months (“Original Term”) commencing (date) (“Commencement Date”) and ending (date) (“Expiration Date”). (See also Paragraph 3)

1.4 Early Possession: N/A (“Early Possession Date”). (See also Paragraphs 3.2 and 3.3)

1.5 Base Rent: $26,537.83 per month (“Base Rent”), payable on the First day of each month commencing                                                                                                                                                                                                     . (See also Paragraph 4)

þ If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted.

1.6 Base Rent and Other Monies Paid Upon Execution:

(a) Base Rent: $26,537.83 for the period                                                                                                                                                                                                                                                                                                                                                      .

(b) Security Deposit: $53,075.66 (“Security Deposit”). (See also Paragraph 5)

(c) Association Fees: $-0- for the period                                                                                                                                    

(d) Other: $-0- for                                                                                                                                                                                                                                                                                                                                                                                           .

(e) Total Due Upon Execution of this Lease: $79,613.49.

1.7 Agreed Use: Corporate Headquarters and Product Development. (See also Paragraph 6)

1.8 Insuring Party: Lessor is the “Insuring Party” unless otherwise stated herein. (See also Paragraph 8)

1.9 Real Estate Brokers: (See also Paragraph 15)

(a) Representation: The following real estate brokers (the “Brokers”) and brokerage relationships exist in this transaction (check applicable boxes):

¨ N/A represents Lessor exclusively (“Lessor’s Broker”);

¨ N/A represents Lessee exclusively (“Lessee’s Broker”); or

¨          represents both Lessor and Lessee (“Dual Agency”).

(b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor shall pay to the Broker the fee agreed to in their separate written agreement (or if there is no such agreement, the sum of N/A or N/A% of the total Base Rent) for the brokerage services rendered by the Brokers.

1.10 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by N/A (“Guarantor”). (See also Paragraph 37)

1.11 Attachments. Attached hereto are the following, all of which constitute a part of this Lease:

¨ an Addendum consisting of Paragraphs                              through                             ;

¨ a plot plan depicting the Premises;

¨ a current set of the Rules and Regulations;

¨ a Work Letter;

¨ other (specify):                                                                                                                                                                                             

                                                                                                                                                                                                                                                                                                                                                                                                                                                                   .

2. Premises.

2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein, any statement of size set forth in this Lease,

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or that may have been used in calculating Rent, is an approximation which the Parties agree is reasonable and any payments based thereon are not subject to revision whether or not the actual size is more or less. Note: Lessee is advised to verify the actual size prior to executing this Lease.

2.2 Lessee is currently occupying the Premises and acknowledges that the condition of the Premises is satisfactory and that they comply with all laws appropriate for the uses that Lessee intends to put them.

2.3 Compliance. The building codes, applicable laws, regulations and ordinances applicable to the Premises are hereinafter referred to as the “Applicable Requirements”. If the Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of an addition to or an alteration of the Premises and/or Building, the remediation of any Hazardous Substance, or the reinforcement or other physical modification of the Unit, Premises and/or Building (“Capital Expenditure”),                     Lessee shall be responsible.                                          

2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for Lessee’s intended use, (b) Lessee has made such investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to its occupancy of the Premises, and (c) neither Lessor, Lessor’s agents, nor Brokers have made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have made no representations, promises or warranties concerning Lessee’s ability to honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor’s sole responsibility to investigate the financial capability and/or suitability of all proposed tenants.

2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the Premises. In such event, Lessee shall be responsible for any necessary corrective work.

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3. Term.

3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3.

3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early possession. All other terms of this Lease (including but not limited to the obligations to pay Real Property Taxes and insurance premiums and to maintain the Premises) shall, however, be in effect during such period. Any such early possession shall not affect the Expiration Date.

4. Rent.

4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease (except for the Security Deposit) are deemed to be rent (“Rent”).

4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States on or before the day on which it is due, without offset or deduction (except as specifically permitted in this Lease). Rent for any period during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor’s rights to the balance of such Rent, regardless of Lessor’s endorsement of any check so stating. In the event that any check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any reason. Lessee agrees to pay to Lessor the sum of $25 in addition to any Late Charge                                                                                                                                                                                          . Payments will be applied first to accrued late charges and attorney’s fees, second to accrued interest, then to Base Rent and Operating Expense Increase, and any remaining amount to any other outstanding charges or costs.

4.3 Association Fees. In addition to the Base Rent, Lessee shall pay to Lessor each month an amount equal to any owner’s association or condominium fees levied or assessed against the Premises. Said monies shall be paid at the same time and in the same manner as the Base Rent.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee’s faithful performance of its obligations under this Lease. If Lessee is in Breach of                                                                                   this Lease, Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall within 10 days after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease.

Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within 14 days after the expiration or termination of this Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within 30 days after the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease.

6. Use.

6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises or properties. Lessor shall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed Use, so long as the same will not impair the structural integrity of the improvements on the Premises or the mechanical or electrical systems therein, and/or is not significantly more burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after such request give written notification of same, which notice shall include an explanation of Lessor’s objections to the change in the Agreed Use.

6.2 Hazardous Substances.

(a) Reportable Uses Require Consent. The term “Hazardous Substance” as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials

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expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and timely compliance (at Lessee’s expense) with all Applicable Requirements. “Reportable Use” shall mean (i) the installation or use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so long as such use is in compliance with all Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. Notwithstanding any provision contained herein to the contrary, Lessee will not be responsible for any Hazardous Substances placed, disposed of, generated or otherwise caused by Lessor.

(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shall immediately give written notice of such fact to Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it has concerning the presence of such Hazardous Substance.

(c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee’s expense, comply with all Applicable Requirements and take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lessee, or any third party.

(d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys’ and consultants’ fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee, or any third party (provided, however, that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from adjacent properties not caused or contributed to by Lessee). Lessee’s obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of such agreement.

(f) Investigations and Remediations. Lessee shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to Lessee’s occupancy, unless such remediation measure is required as a result of Lessee’s use (including “Alterations”, as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such payment. Lessee shall cooperate fully in any such activities at the request of Lessor, including allowing Lessor and Lessor’s agents to have reasonable access to the Premises at reasonable times in order to carry out Lessor’s investigative and remedial responsibilities.

(g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case Lessee shall make the investigation and remediation thereof required by the Applicable Requirements and this Lease shall continue in full force and effect, but subject to Lessor’s rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or $100,000, whichever is greater, give written notice to Lessee, within 30 days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to terminate this Lease as of the date 60 days following the date of such notice. In the event Lessor elects to give a termination notice, Lessee may, within 10 days thereafter, give written notice to Lessor of Lessee’s commitment to pay the amount by which the cost of the remediation of such Hazardous Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days following such commitment. In such event, this Lease shall continue in full force and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time provided, this Lease shall terminate as of the date specified in Lessor’s notice of termination.

6.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Lessee shall, at Lessee’s sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessor’s engineers and/or consultants which relate in any manner to the such Requirements, without regard to whether such Requirements are now in effect or become effective after the Commencement Date. Lessee

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shall, within 10 days after receipt of Lessor’s written request, provide Lessor with copies of all permits and other documents, and other information evidencing Lessee’s compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable Requirements.

6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and consultants shall have the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable notice, for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or a Hazardous Substance Condition (see paragraph 9.1) is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority. In such case, Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such inspection is reasonably related to the violation or contamination. In addition, Lessee shall provide copies of all relevant material safety data sheets (MSDS) to Lessor within 10 days of the receipt of a written request therefor.

6.5 It is understood that Lessee is responsible for existing conditions and any future remediation that may be required.

7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.

7.1 Lessee’s Obligations.

(a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises, Utility Installations (intended for Lessee’s exclusive use, no matter where located), and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior use, the elements or the age of such portion of the Premises), including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior), foundations, ceilings, roofs, roof drainage systems, floors, windows, doors, plate glass, skylights, landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways located in, on, or adjacent to the Premises. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below. Lessee’s obligations shall include restorations, replacements of renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. Lessee shall, during the term of this Lease, keep the exterior appearance of the Building in a first-class condition (including, e.g. graffiti removal) consistent with the exterior appearance of other similar facilities of comparable age and size in the vicinity, including, when necessary, the exterior repainting of the Building.

(b) Service Contracts. Lessee shall, at Lessee’s sole expense, procure and maintain contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke detection, (iv) landscaping and irrigation systems, (v) roof covering and drains, (vi) clarifiers (vii) basic utility feed to the perimeter of the Building, and (viii) any other equipment, if reasonably required by Lessor. However, Lessor reserves the right, upon notice to Lessee, to procure and maintain any or all of such service contracts, and if Lessor so elects, Lessee shall reimburse Lessor, upon demand, for the cost thereof.

(c) Failure to Perform. If Lessee fails to perform Lessee’s obligations under this Paragraph 7.1, Lessor may enter upon the Premises after 10 days’ prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee’s behalf, and put the Premises in good order, condition and repair, and Lessee shall promptly pay to Lessor                  the cost thereof.

(d) Replacement. Subject to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of liability resulting from Lessee’s failure to exercise and perform good maintenance practices, if an item described in Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of 50% of the cost of replacing such item, then such item shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease, on the date on which Base Rent is due, an amount equal to the product of multiplying the cost of such replacement by a fraction, the numerator of which is one, and the denominator of which is 144 (ie. 1/144th of the cost per month). Lessee shall pay interest on the unamortized balance at a rate that is commercially reasonable in the judgment of Lessor’s accountants. Lessee may, however, prepay its obligation at any time.

7.2 Lessor’s Obligations. Subject to the provisions of                                      9 (Damage or Destruction) and 14 (Condemnation), it is intended by the Parties hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises, or the equipment therein, all of which obligations are intended to be that of the Lessee. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties as to maintenance and repair of the Premises, and they expressly waive the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease.

7.3 Utility Installations; Trade Fixtures; Alterations.

(a) Definitions. The term “Utility Installations” refers to all floor and window coverings, air and/or vacuum lines, power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can be removed without doing material damage to the Premises. The term “Alterations” shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion “Lessee Owned Alterations and/or Utility Installations” are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).

(b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Lessee may, however, make non-structural Utility Installations to the                     Premises                     without such consent but upon notice to Lessor, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls, will not materially adversely affect the electrical, plumbing, HVAC and/or life safety systems, and the cumulative cost thereof during this Lease as extended does not exceed a sum equal to 3 month’s Base Rent

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in the aggregate or a sum equal to one month’s Base Rent in any one year.                                                                                                                                                                                             Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee’s: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials.                                                                                               

(c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic’s or materialmen’s lien against the Premises or any interest therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof.                                                                                                                                                                        If Lessor elects to participate in any such action, Lessee shall pay Lessor’s attorneys’ fees and costs.

7.4 Ownership; Removal; Surrender; and Restoration.

(a) Ownership. Subject to Lessor’s right to require removal or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or termination of this Lease, become the property of Lessor and be surrendered by Lessee with the Premises.

(b) Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 and not later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease unless Lessee obtains Lessor’s written consent that Lessor shall not require the removal of such Lessee Owned Alterations and/or Utility Installations. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent.

(c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition and state of repair, ordinary wear and tear excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would have been prevented by good maintenance practice.                                                                                                                                                                                                          Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except Hazardous Substances which were deposited via underground migration from areas outside of the Premises, or if applicable, the Project) even if such removal would require Lessee to perform or pay for work that exceeds statutory requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before the Expiration Date or any earlier termination date shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below.

8. Insurance; Indemnity.

8.1 Payment For Insurance. Lessee shall pay for all insurance required under Paragraph 8 except to the extent of the cost attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per occurrence. Premiums for policy periods commencing prior to or extending beyond the Lease term shall be prorated to correspond to the Lease term. Payment shall be made by Lessee to Lessor within 10 days following receipt of an invoice.

8.2 Liability Insurance.

(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000, an “Additional Insured-Managers or Lessors of Premises Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement” for damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an “insured contract” for the performance of Lessee’s indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder.                                                                                                                                                                                         

8.3 Property Insurance - Building, Improvements and Rental Value.

(a) Building and Improvements.                                    Lessee shall obtain and keep in force a policy or policies                                                                           insuring loss or damage to the Premises and naming Lessor as an additional insured. The amount of such insurance shall be equal to the full replacement cost of the Premises, as the same shall exist from time to

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time, or the amount required by any Lender, but in no event more than the commercially reasonable and available insurable value thereof.                                                                                                                                                                                                  If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause; and waiver of subrogation.                                                                                                                                                                                                                                 

(b) Rental Value. The Insuring Party shall obtain and keep in force a policy or policies                                                                  insuring the loss of the full Rent for one year                                                                   (“Rental Value insurance”). Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause,                                                                                                                                           Lessee shall be liable for any deductible amount in the event of such loss.

(c) Adjacent Premises. If the Premises are part of a larger building, or of a group of buildings owned by Lessor which are adjacent to the Premises, the Lessee shall pay for any increase in the premiums for the property insurance of such building or buildings if said increase is caused by Lessee’s acts, omissions, use or occupancy of the Premises.

8.4 Lessee’s Property; Business Interruption Insurance.

(a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee’s personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage.                      The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee shall provide Lessor with written evidence that such insurance is in force.

(b) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lessee or attributable to prevention of access to the Premises as a result of such perils.

(c) No Representation of Adequate Coverage. Lessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee’s property, business operations or obligations under this Lease.

8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or admitted to transact business in the state where the Premises are located, and maintaining during the policy term a “General Policyholders Rating” of at least B+, V, as set forth in the most current issue of “Best’s Insurance Guide”, or such other rating as may be required by a Lender. Lessee shall not do or permit to be done anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor                                                               certificates evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to Lessor. Lessee shall, at least 30 days prior to the expiration of such policies, furnish Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same.

8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby.

8.7 Indemnity. Except for Lessor’s gross negligence or willful misconduct or breach of this Lease, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arising out of, involving, or in connection with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified.

8.8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places. Lessor shall not be liable for any damages arising from any act or neglect of any other tenant of Lessor nor from the failure of Lessor to enforce the provisions of any other lease in the Project. Notwithstanding Lessor’s negligence or breach of this Lease, Lessor shall under no circumstances be liable for injury to Lessee’s business or for any loss of income or profit therefrom.

8.9 Failure to Provide Insurance. Lessee acknowledges that any failure on its part to obtain or maintain the insurance required herein will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease,                                                if Lessee does not maintain the required insurance and/or does not provide Lessor with the required binders or certificates evidencing the existence of the required insurance, then Lessor shall be entitled to purchase insurance on behalf of Lessee and Lessee shall pay Lessor the reasonable cost thereof within ten (10) days following receipt of an invoice.                                                                                                                                                                                                          Such remedy by

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Landlord                              shall in no event                                                                                                            prevent the exercise of any of the other rights and remedies granted hereunder, nor relieve Lessee of its obligation to maintain the insurance specified in this Lease.

9. Damage or Destruction.

9.1 Definitions.

(a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be repaired in 6 months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.

(b) “Premises Total Destruction” shall mean damage or destruction to the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 6 months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.

(c) “Insured Loss” shall mean damage or destruction to improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved.

(d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation.

(e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the Premises which requires repair, remediation, or restoration.

9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor’s election, make the repair of any damage or destruction the total cost to repair of which is $10,000 or less, and, in such event, Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds (except as to the deductible which is Lessee’s responsibility) as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of the unique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said 10 day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received. Lessor may nevertheless elect by written notice to Lessee within 10 days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or (ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.

9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by a              willful act of Lessee (in which event Lessee shall make the repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective as of the date of the damage.                                                       In the event Lessor elects to terminate this Lease, Lessee shall have the right within 10 days after receipt of the termination notice to give written notice to Lessor of Lessee’s commitment to pay for the repair of such damage without reimbursement from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not make the required commitment, this Lease shall terminate as of the date of the damage.                               

9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate 60 days following such Destruction.                                                                                                                                                                           

9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is damage for which the cost to repair exceeds one month’s Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective as of the date of                                               such damage by giving a written termination notice to Lessee within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a) exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is 10 days after Lessee’s receipt of Lessor’s written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds. Lessor shall, at Lessor’s commercially reasonable expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee’s option shall be extinguished.

9.6 Abatement of Rent; Lessee’s Remedies.

(a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period required for the repair, remediation or restoration of such

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damage shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value insurance. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage, destruction, remediation, repair or restoration except as provided herein.

(b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of Lessee’s election to terminate this Lease on a date not less than 60 days following the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30 days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force and effect. Notwithstanding the foregoing, if the restoration is not completed within two hundred and seventy (270) days after the date of the damage, Lessee shall have the right to terminate this Lease upon written notice to Lessor at any time before the completion of such restoration. “Commence” shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs.

9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor.

9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the effect of any damage to or destruction of the Premises with respect to the termination of this Lease and hereby waive the provisions of any present or future statute to the extent inconsistent herewith.

10. Real Property Taxes.

10.1 Definition. As used herein, the term “Real Property Taxes” shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Premises or the Project, Lessor’s right to other income therefrom, and/or Lessor’s business of leasing, by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Building address and where the proceeds so generated are to be applied by the city, county or other local taxing authority of a jurisdiction within which the Premises are located. Real Property Taxes shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Premises, and (ii) levied or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease.

10.2 Payment of Taxes. In addition to Base Rent, Lessee shall pay to Lessor an amount equal to the Real Property Tax installment due at least 20 days prior to the applicable delinquency date. If any such installment shall cover any period of time prior to or after the expiration or termination of this Lease, Lessee’s share of such installment shall be prorated. In the event Lessee incurs a late charge on any Rent payment, Lessor may estimate the current Real Property Taxes, and require that such taxes be paid in advance to Lessor by Lessee monthly in advance with the payment of the Base Rent. Such monthly payments shall be an amount equal to the amount of the estimated installment of taxes divided by the number of months remaining before the month in which said installment becomes delinquent. When the actual amount of the applicable tax bill is known, the amount of such equal monthly advance payments shall be adjusted as required to provide the funds needed to pay the applicable taxes. If the amount collected by Lessor is insufficient to pay such Real Property Taxes when due, Lessee shall pay Lessor, upon demand, such additional sum as is necessary Advance payments may be intermingled with other moneys of Lessor and shall not bear interest. In the event of a Breach by Lessee in the performance of its obligations under this Lease, then any such advance payments may be treated by Lessor as an additional Security Deposit.

10.3 Joint Assessment. If the Premises are not separately assessed, Lessee’s liability shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be conclusively determined by Lessor from the respective valuations assigned in the assessor’s work sheets or such other information as may be reasonably available.

10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all taxes assessed against and levied upon Lessee Owned Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee. When possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee’s said property shall be assessed with Lessor’s real property, Lessee shall pay Lessor the taxes attributable to Lessee’s property within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee’s property.

11. Utilities and Services. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered or billed to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor, of all charges jointly metered or billed. There shall be no abatement of rent and Lessor shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Lessor’s reasonable control or in cooperation with governmental request or directions.

12. Assignment and Subletting.

12.1 Lessor’s Consent Required.

(a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, “assign or assignment”) or sublet all or any part of Lessee’s interest in this Lease or in the Premises without Lessor’s prior written consent.

(b) Unless Lessee is a corporation and its stock is publicly traded on a national stock exchange, a change in the control of Lessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis, of      50% or more of the voting control of Lessee shall constitute a change in control for this purpose.

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(d) An assignment or subletting without consent shall, at Lessor’s option, be a Default curable after notice per Paragraph 13.1 (b)

(e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.

12.2 Terms and Conditions Applicable to Assignment and Subletting.

(a) Regardless of Lessor’s consent, no assignment or subletting shall: (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be performed by Lessee.

(b) Lessor may accept Rent or performance of Lessee’s obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Lessor’s right to exercise its remedies for Lessee’s                  Breach.

(c) Lessor’s consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting.

(d) In the event of any            Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of Lessee’s obligations under this Lease, including any assignee or sublessee, without first exhausting Lessor’s remedies against any other person or entity responsible therefor to Lessor, or any security held by Lessor.

(e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor’s determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a fee of $500 as consideration for Lessor’s considering and processing said request. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. (See also Paragraph 36)

(f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment or entering into such sublease, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to in writing.

(g) Lessor’s consent to any assignment or subletting shall not transfer to the assignee or sublessee any Option granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in writing. (See Paragraph 39.2)

12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:

(a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee’s obligations under this Lease; provided, however, that until a Breach shall occur in the performance of Lessee’s obligations, Lessee may collect said Rent. In the event that the amount collected by Lessor exceeds Lessee’s obligations any such excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee’s obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee’s obligations under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary.

(b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior                        Breaches of such sublessor.

(c) Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor.

(d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor’s prior written consent.

(e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.

Lessee shall have the right without the consent of Lessor and without otherwise being subject to or complying with the provisions of this Section 12 to: (a) permit occupancy of the Premises by, assignment of this Lease to or sublet the Premises or any portion thereof to, any entity that controls, is controlled by, or is under common control with Lessee, or (b) assignment of this Lease to the surviving entity in any merger, consolidation or reorganization including Lessee, or to the purchaser of all or substantially all of the assets of Lessee at the Premises; provided that Lessee promptly provides Lessor with a fully executed copy of such assignment or sublease and that Lessee is not released from liability under the Lease. The transfers described in this Section 12 are referred to herein as “Permitted Transfers”.

13. Default; Breach; Remedies.

13.1 Default; Breach. A “Default” is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A “Breach” is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period:

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    (a) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor or to a third party, when due,                                                                                          where such failure continues for a period of     five (5) business days following written notice to Lessee.

     (b) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42, (viii) material safety data sheets (MSDS), or (ix) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period of thirty (30) days following written notice to Lessee,                                                                                                                                                                                                                             provided, however, that if the nature of Lessee’s Default is such that more than 30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereafter diligently prosecutes such cure to completion.

     (c) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the event that any provision of this subparagraph (e) is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions.

(f) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false.

(g) If the performance of Lessee’s obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor’s liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a Guarantor’s breach of its guaranty obligation on an anticipatory basis, and Lessee’s failure, within 60 days following written notice of any such event, to provide written alternative assurance or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease.

13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations,              and such failure Continues for 10 days after written notice (or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee’s behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. Lessee shall pay to Lessor an amount equal to                      the reasonable costs and expenses incurred by Lessor in such performance upon receipt of an invoice therefor. In the event of and during the Continued existence of a Breach, Lessor may, with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach:

(a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the fair market value of the Premises for the same period                                                                                                                                                     ; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the fair market value of the Premises for the same period                                                           ; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of                                                       repairing the Premises to the condition otherwise required by this Lease, reasonable attorneys’ fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease provided, that in no event will Lessee’s liability exceed the amount of Rent Lessee would have otherwise been required to pay pursuant to this Lease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of eight percent (8%).                                                                                                                    Efforts by Lessor to mitigate damages caused by Lessee’s Breach of this Lease shall not waive Lessor’s right to recover damages under Paragraph 12. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute.

(b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor’s interests, shall not constitute a termination of the Lessee’s right to possession.

(c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee’s right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee’s occupancy of the Premises.

13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration for Lessee’s entering into this Lease, all of which concessions are hereinafter referred to as “Inducement Provisions,” shall be deemed conditioned upon Lessee’s full and faithful performance of all of the terms, covenants and conditions

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of this Lease Upon Breach of this Lease by Lessee, any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in writing by Lessor at the time of such acceptance.

13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within 5 days after such amount shall be due and such failure shall continue for five (5) days after written notice by Lessor, provided however, that Lessor shall only be obligated to provide written notice of any late payment by Lessee during the initial Six (6) months of the Lease, then, without any requirement for notice to Lessee, Lessee shall immediately pay to Lessor a one-time late charge equal to five percent (5%) of each such overdue amount or $100, whichever is greater. The Parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor’s option, become due and payable quarterly in advance.

13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due as to scheduled payments (such as Base Rent) or within 30 days following the date on which it was due for non-scheduled payment, shall bear interest from the date when due, as to scheduled payments, or the 31st day after it was due as to non-scheduled payments. The interest (“Interest”) charged shall be computed at the rate of 10% per annum but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4.

13.6 Breach by Lessor.

(a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor’s obligation is such that more than 30 days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion.

(b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Lessee may elect to cure said breach at Lessee’s expense and offset from Rent the actual and reasonable cost to perform such cure, provided however, that such offset shall not exceed an amount equal to the greater of one month’s Base Rent or the Security Deposit, reserving Lessee’s right to seek reimbursement from Lessor. Lessee shall document the cost of said cure and supply said documentation to Lessor.

14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this Lease shall terminate as to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the Building, or more than 25% of that portion of the Premises not occupied by any building, is taken by Condemnation, Lessee may, at Lessee’s option, to be exercised in writing within 10 days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Lessee shall be entitled to any compensation for Lessee’s relocation expenses, loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation.

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16. Estoppel Certificates.

(a) Each Party (as “Responding Party”) shall within twenty (20) days after written notice from the other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current “Estoppel Certificate” form published by the AIR Commercial Real Estate Association, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party.

(b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such twenty (20) day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance, and (iii) if Lessor is the Requesting Party, not more than one month’s rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon the Requesting Party’s Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate.

(c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof. Lessee and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such unaudited financial statements as may be reasonably required by such lender or purchaser, including but not limited to Lessee’s financial statements for the past 3 years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.

17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the time in question of the fee title to the Premises. or, if this is a sublease, of the Lessee’s interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined.

18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.

19. Days. Unless otherwise specifically indicated to the contrary, the word “days” as used in this Lease shall mean and refer to calendar days.

20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor or its partners, members, directors, officers or shareholders, and Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against Lessor’s partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction.

21. Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease.

22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the use, nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party. The liability (including court costs and attorneys’ fees), of any Broker with respect to negotiation, execution, delivery or performance by either Lessor or Lessee under this Lease or any amendment or modification hereto shall be limited to an amount up to the fee received by such Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker’s liability shall not be applicable to any gross negligence or willful misconduct of such Broker.

23. Notices.

23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be that Party’s address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice                                                                                                     . A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing.

23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given 48 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered upon telephone confirmation of receipt (confirmation report from fax machine is sufficient), provided a copy is also delivered via delivery or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day.

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24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment.

26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over, then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee.

27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.

28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.

30. Subordination; Attornment; Non-Disturbance.

30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, “Security Device”), now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as “Lender”) shall have no liability or obligation to perform any of the obligations of Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof.

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30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises are acquired by another upon the foreclosure or termination of a Security Device to which this Lease is subordinated (i) Lessee shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn to such new owner, and upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the election of such new owner, this Lease shall automatically become a new Lease between Lessee and such new owner, upon all of the terms and conditions hereof, for the remainder of the term hereof, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new owner shall assume all of Lessor’s obligations hereunder, except that such new owner shall not: (a) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (b) be subject to any offsets or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more than one month’s rent, or (d) be liable for the return of any security deposit paid to any prior lessor.

30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee’s subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement”) from the Lender which Non-Disturbance Agreement provides that Lessee’s possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises. Further, within 60 days after the execution of this Lease, Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and attempt to negotiate for the execution and delivery of a Non-Disturbance Agreement.

30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be entitled to attorneys’ fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence for such services and consultation).

32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect to Lessee’s use of the Premises. All such activities shall be without abatement of rent or liability to Lessee.

33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessor’s prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction.

34. Signs. Lessor may place on the Premises ordinary “For Sale” signs at any time and ordinary “For Lease” signs during the last 6 months of the term hereof. Except for ordinary “for sublease” signs, Lessee shall not place any sign upon the Premises without Lessor’s prior written consent. All signs must comply with all Applicable Requirements.

35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessor’s failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor’s election to have such event constitute the termination of such interest.

36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor’s actual reasonable costs and expenses (including but not limited to architects’, attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor’s consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessor’s consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within 10 business days following such request.

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37. Guarantor.

37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most recently published by the AIR Commercial Real Estate Association, and each such Guarantor shall have the same obligations as Lessee under this Lease.

37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses, upon request to provide: (a) evidence of the execution of the guaranty, including the authority of the party signing on Guarantor’s behalf to obligate Guarantor, and in the case of a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the making of such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d) written confirmation that the guaranty is still in effect.

38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee’s part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof.

39. Options. If Lessee is granted an Option, as defined below, then the following provisions shall apply:

39.1 Definition. “Option” shall mean: (a) the right to extend the term of or renew this Lease or to extend or renew any lease that Lessee has on other property of Lessor; (b) the right of first refusal or first offer to lease either the Premises or other property of Lessor; (c) the right to purchase or the right of first refusal to purchase the Premises or other property of Lessor.

39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is personal to the original Lessee and Permitted Transferees, and cannot be assigned or exercised by anyone other than said original Lessee and only while the original Lessee is in full possession of the Premises                                                                                                                                         .

39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew this Lease, a later Option cannot be exercised unless the prior Options have been validly exercised.

39.4 Effect of Default on Options.

(a) Lessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default and continuing until said Default is cured, (ii) during the period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii) during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or more notices of separate Default, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the Option.

(b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of Paragraph 39.4(a).

(c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s due and timely exercise of the Option, if, after such exercise and prior to the commencement of the extended term or completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii) if Lessee commits a Breach of this Lease.

39.5 Lessor hereby grants to Lessee the Option to extend the term of this Lease on the same terms, conditions and provisions as contained in this Lease, except as otherwise provided herein, for two (2) five (5) year periods (the “Option Periods”). Lessee’s option to extend shall be exercisable by written notice from Lessee to Lessor delivered no later than nine (9) months prior to the expiration of the initial term of this Lease or the first Option Period, as applicable, time being of the essence. Upon the valid exercise by Lessee of an Option, Lessor and Lessee shall enter into a written amendment to the Lease confirming the terms, conditions and provisions applicable to the Option Period as determined in accordance with the provisions of this Section 39.5, with applicable revision to the Base Rent as set forth herein.

For purposes hereof, “Market Rental Rate” during an Option Period means the base rental rate which a willing renewal tenant would pay to a willing landlord for a comparable building in the Webster, Texas market at the time in question for comparable space. Lessor shall give written notice to Lessee of Lessor’s proposed market Rental Rate within thirty (30) days following Lessor’s receipt of Lessee’s renewal notice. Upon receipt of such written notice by Lessor, Lessor and Lessee shall endeavor in good faith to agree upon the Market Rental Rate within fifteen (15) days after Lessee’s receipt of such written notice. If Lessor and Lessee fail to agree upon the Market Rental Rate by the expiration of such fifteen (15) day period, Lessee shall be entitled to rescind Lessee’s exercise of the Option, or at Lessee’s option, Market Rental Rate shall be determined as follows: within ten (10) days after the expiration of such fifteen (15) day period, Lessor and Lessee shall endeavor in good faith to agree upon a single qualified local real estate appraiser (“Appraiser”) to determine the Market Rental Rate. If Lessor and Lessee are unable to agree upon a single qualified Appraiser within ten (10) days after the expiration of such fifteen (15) day period, each shall then, by written notice to the other, given within five (5) days after said ten (10) day period, appoint one qualified Appraiser. Within ten (10) days after the two Appraisers are appointed, they shall appoint a third qualified Appraiser. If either Lessor or Lessee fails to appoint its Appraiser within the prescribed time period, the single Appraiser appointed shall determine the Market Rental Rate. Otherwise, the three Appraisers shall determine the Market Rental Rate; provided, that if any appraisal differs from both of the others by more than twenty percent (20%), that appraisal shall be disregarded and the average of the other two (2) appraisals shall be averaged and used for purposes of determining the Market Rental Rate. Each party shall bear the cost of the Appraiser appointed by it and the parties shall share equally the cost of the third Appraiser. For purposes hereof, a “qualified” appraiser shall mean a person with both MAI and CCIM certifications. If Landlord and Tenant agree upon such Market Rental Rate or if Market Rental Rate is otherwise determined as provided above, this Lease shall be automatically extended for the applicable renewal term in question with the same force and effect as if such renewal term had been originally included in the lease term, upon the same terms and conditions as in this Lease, except that ninety-five percent (95%) of the Market Rental Rate shall be substituted for the Base Rent, provided however, that under no circumstances will the Option Period(s) Rent be less than the immediately preceding Base Rent payable during the prior Term.

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40. Multiple Buildings. If the Premises are a part of a group of buildings controlled by Lessor, Lessee agrees that it will abide by and conform to all reasonable rules and regulations which Lessor may make from time to time for the management, safety, and care of said properties, including the care and cleanliness of the grounds and including the parking, loading and unloading of vehicles, and to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessee also agrees to pay its fair share of common expenses incurred in connection with such rules and regulations.

41. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties.

42. Reservations. Lessor reserves to itself the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights, dedication, map or restrictions.

43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay.

44. Authority; Multiple Parties; Execution.

(a) If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity,                                        such entity represents and warrants that the individual executing this Lease                          duly authorized to execute and deliver this Lease on its behalf. Each party shall, within 30 days after request, deliver to the other party satisfactory evidence of such authority.

(b) If this Lease is executed by more than one person or entity as “Lessee”, each such person or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the named Lessees had executed such document.

(c) This Lease may be executed by the Parties in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

45. Conflict. Any conflict between the printed provisions of this Lease and typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.

46. Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto.

47. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. As long as they do not materially change Lessee’s obligations hereunder. Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises.

48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.

49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease ¨ is þ is not attached to this Lease.

50. Americans with Disabilities Act. Since compliance with the Americans with Disabilities Act (ADA) is dependent upon Lessee’s specific use of the Premises, Lessor makes no warranty or representation as to whether or not the Premises comply with ADA or any similar legislation. In the event that Lessee’s use of the Premises requires modifications or additions to the Premises in order to be in ADA compliance. Lessee agrees to make any such necessary modifications and/or additions at Lessee’s expense.

51. Each year of the term of this Lease, the then current monthly rent shall be increased by two and one-half percent (2.5%) on the anniversary date of the lease for the following twelve (12) months.

52. The Insuring Party is the Lessee.

53. Right of First Refusal. If Lessor receives a bona fide written offer (“Purchase Offer”) acceptable to Lessor to purchase the Premises, Lessor shall comply with the terms and provisions of this Section 53.

(a) Lessor shall send written notice (“Lessor’s Purchase Notice”) to Lessee notifying Lessee of its receipt of the Purchase Offer including a copy of the Purchase Offer.

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(b) Lessee shall have the right to exercise a right of first refusal with respect to the Purchase Offer by giving written notice to Lessor within ten (10) business days after receipt of Lessor’s Purchase Notice. In the event Lessee elects to exercise its right of first refusal, Lessee shall be required to purchase the Premises upon the same terms as contained in the Purchase Offer, and shall execute an earnest money contract containing the business terms contained in the Purchase Offer within twenty (20) business days after Lessee’s receipt of Lessor’s Purchase Notice. If Lessee fails to execute an earnest money contract within the time period set forth above, or if Lessee executes the earnest money contract but defaults under the terms of the earnest money contract, the right of first refusal contained herein shall be void and of no further force and effect and Lessor may thereafter sell the Premises without providing Lessee any further right of first refusal. In addition, Lessee shall forfeit any earnest money deposited under the earnest money contract.

(c) If Lessee fails to give Lessee’s Purchase Notice within the ten (10) business days described in paragraph (b) above, such failure shall be conclusively deemed a rejection of the Purchase Offer, and upon rejection, Lessor shall be free to sell the Premises to the offering party upon substantially the same terms contained in the Purchase Offer, provided that such sale occurs within a nine (9) month period. In the event the sale does not occur within nine (9) months of Lessee’s receipt of Lessor’s Purchase Notice upon substantially the same terms as contained in the Purchase Offer, the Premises shall again become subject to the first right of refusal contained herein.

(d) The right of first refusal contained herein shall be extinguished by the sale of the Premises pursuant to the provisions of paragraph (c) above.

54. The shared easement as noted in the Declaration of Easement dated January 15, 1998 filed of record under Harris County Clerk’s file number W196792 shall be the responsibility of the Tenant to maintain and administer. The costs of maintaining and administering the easement shall be allocated as provided for in the Declaration of Easement, Article 2, and all responsibilities and costs associated will be paid for as if Tenant is the “Owner” as provided therein. The Landlord shall have no responsibility for any costs relating to the maintenance of this easement during Tenant’s occupancy of the premises.

55. Henceforth from the activation of this Lease, should the Tenant execute a third party Security Device for the acquisition of personal property and should the Tenant’s lender require the Landlord to execute a Landlord Waiver in favor of Tenant’s lender, Landlord agrees to do so within twenty (20) days of request thereof, providing that Landlord is not prohibited from doing so by the terms of Landlord’s loan agreements.

56. Tenant and Landlord are executing this Lease in advance of the close of escrow on Landlord’s purchase of the Premises with the understanding that all provisions, responsibilities and representations contained herein, including the requirement for the payment of a security deposit or advance rent, shall only become effective upon said closing of escrow and this Lease is expressly contingent upon Landlord’s actual purchase of the Premises, otherwise, this agreement shall have no force or effect of any kind.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED USE.

WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED.

The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.

Executed at: Los Angeles, CA	Executed at: Webster, Texas
On: 3/2_/05	On: 3/24/05

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By LESSOR:		By LESSEE:
R & H Investments		Spacehab, Inc.
By:	/s/    STANLEY ROGERS	By:	/s/ Illegible
Name Printed:	Stanley Rogers	Name Printed:	Illegible
Title:	Partner	Title:	Vice President
By:	/s/    MICHAEL HARRIS	By:
Name Printed:	Michael Harris	Name Printed:
Title:	Partner	Title:
Address:	9200 Sunset Blvd., #404 Los Angles, CA 90069	Address:
Telephone:	(310) 278-3142	Telephone:	(713) 558-5172
Facsimile:	(____) _________________________________	Facsimile:	(713) 558-5954
Federal ID No.		Federal ID No.	91-1273737
BROKER:		BROKER:
Attn:		Attn:
Title:		Title:
Address:		Address:
Telephone:	(____) _________________________________	Telephone:	(____) ________________________________
Facsimile:	(____) _________________________________	Facsimile:	(____) ________________________________
Federal ID No.		Federal ID No.

NOTE: These forms are often modified to meet the changing requirements of law and industry needs. Always write or call to make sure you are utilizing the most current form: AIR COMMERCIAL REAL ESTATE ASSOCIATION, 700 So. Flower Street, Suite 600, Los Angeles, California 90017. (213) 687-8777. Fax No. (213) 687-8616

^© Copyright 2001 - By AIR Commercial Real Estate Association. All rights reserved.

No part of these works may be reproduced in any form without permission in writing.

New Forms/Chuck Gardner/12130 Hwy 3/12130 Hwy 3, Bldg. l_SICSTLN_R&H_2 18 05

/s/ Illegible	PAGE 19 OF 19	/s/ Illegible
INITIALS		INITIALS
©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION		FORM STN-7-4/01E

EX-10.20

Exhibit 10.20

Subcontract No. 889208

Revision 0

18 January 2005

FIXED PRICE SUBCONTRACT

889208

Between

BOEING SATELLITE SYSTEMS, INC.

El Segundo, California

And

ASTROTECH SPACE OPERATIONS, INC.

Titusville, Florida

For

WIDEBAND GAPFILLER SATELLITE (WGS) PROGRAM

LAUNCH SITE

PAYLOAD PROCESSING FACILITIES AND SERVICES

Subcontract No. 889208

Revision 0

18 January 2005

AGREEMENT

This Firm Fixed Price (FFP) Subcontract by mutual agreement of the parties hereto, is entered into between Astrotech Space Operations, Inc. (hereinafter referred to as “Astrotech,” “ASO,” Subcontractor,” “Supplier,” or “Seller”) by Boeing Satellite Systems, Inc., located at 2260 E Imperial Hwy, El Segundo, California 90245 (hereinafter referred to as “BSS” or “Buyer”) (each a “Party” and together the “Parties”) for the goods and services described herein, and is subject to the terms and conditions set forth thereto.

This Subcontract and the attachments and documents incorporated herein constitutes the entire understanding and agreement between the parties with respect to the subject matter hereof and supersedes all prior representations Subcontract, communications and agreements. The invalidity, in whole or in part, of any provisions of this Subcontract shall not affect the validity of other provisions. The failure by either party to insist, in any one or more instances, upon the performance of any terms or requirements of this Subcontract shall not be construed as a waiver or relinquishment of such party’s right to such performance of such terms or future performance of such terms or requirements, and the other party’s obligation in respect thereto shall continue in full force and effect.

Sections A through I are an integral part of this Subcontract and are incorporated herein by this reference. Furthermore, all documents cited and referred to in this Subcontract are incorporated herein by this reference and made an integral part hereof.

IN WITNESS WHEREOF, the Parties hereto have executed this Subcontract effective as of the date executed by BSS below:

ASTROTECH SPACE OPERATIONS, INC.		BOEING SATELLITE SYSTEMS, INC.
By:	/s/    JOHN B. SATROM	By:	/s/    JON CONNOR
Typed Name:	John B. Satrom	Typed Name:	Jon Connor
Title:	Senior VP & General Manager	Title:	Subcontract Manager
Date: 20 January, 2005		Date: January 19, 2005

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CONTENTS OF SUBCONTRACT

COVER/SIGNATURE PAGE

CONTENTS OF SUBCONTRACT

SECTION A	SPECIAL AGREEMENTS AND OTHER IMPORTANT PROVISIONS AND NOTIFICATIONS
	A.1	ORDER OF PRECEDENCE
	A.2	SUBCONTRACT MODIFICATIONS
SECTION B	GOODS/SERVICES AND PRICES
	B.1	TYPE OF SUBCONTRACT
	B.2	STATEMENT OF REQUIREMENTS
	B.3	SERVICES, PRICES AND LINE ITEM NUMBERS (SCLINs)
	B.4	PAYMENT AND BILLING (Receipt of Goods/Services)
SECTION C	SUPPLIER WORK STATEMENT /SPECIFICATIONS
	C.1	SUPPLIER WORK STATEMENT
SECTION D	INSPECTION AND ACCEPTANCE/QUALITY ASSURANCE
	D.1	INSPECTION AND ACCEPTANCE
SECTION E	DELIVERY/PERFORMANCE
	E.1	DELIVERY/PAYLOAD PROCESSING SERVICES - FLORIDA
SECTION F	SUBCONTRACT ADMINISTRATION DATA
	F.1	TECHNICAL AND ADMINISTRATIVE REPRESENTATIVES
	F.2	COMMUNICATIONS
	F.3	SUBMISSION OF INVOICES
	F.4	PAYMENT TERMS
SECTION G	SPECIAL PROVISIONS
	G.1	PLACE OF PERFORMANCE
	G.2	BUYER/GOVERNMENT FURNISHED SPECIAL TOOLING, SPECIAL TEST EQUIPMENT, MATERIAL, AND/OR FACILITIES
	G.3	IDENTIFICATION OF RESTRICTIONS ON GOVERNMENT RIGHTS IN TECHNICAL DATA AND COMPUTER SOFTWARE
	G.4	FACILITY ACCESS AND MANIFEST COORDINATION
	G.5	DAMAGE TO PERSONS OR PROPERTY INVOLVED IN PAYLOAD PROCESSING ACTIVITY
	G.6	SCHEDULE AND FACILITY ASSIGNMENTS
	G.7	TERMINATION
SECTION H	GENERAL PROVISIONS
	H.1	TERMS AND CONDITIONS GUIDE
	H.2	TERMS AND CONDITIONS TAILORING
	H.3	SUBCONTRACT ASSIGNMENT
SECTION I	LIST OF DOCUMENTS, EXHIBITS AND ATTACHMENTS APPLICABLE TO THIS SUBCONTRACT

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SECTION A - SPECIAL AGREEMENTS AND OTHER IMPORTANT PROVISIONS AND NOTIFICATIONS

A.1 ORDER OF PRECEDENCE

In the event of an inconsistency between any of the provisions of this Subcontract, the inconsistency shall be resolved by giving precedence to the provisions of the Subcontract in the following order:

1. Subcontract Terms and Conditions, Sections A, B, D, E, F, and G

2. WGS Contract Security Classification Specification, DD Form 254 (Section I, Exhibit D)

3. Supplier Work Statement, Section C

4. Payload Processing Requirements Documents (Section I, Exhibits A and B)

5. Proprietary Information Agreement (Section I, Exhibit C)

6. All Other Attachments, Exhibits and Documents listed in Section H

A.2 SUBCONTRACT MODIFICATIONS

Modifications to this subcontract shall be made through the issuance of subcontract change notices and in accordance with the Changes clause of GP2 (see Section H, General Provisions).

SECTION B - GOODS/SERVICES AND PRICES

B.1 TYPE OF SUBCONTRACT

This subcontract is a firm fixed price (FFP), type contract. Under FFP contracting, the Seller shall provide goods/services, including access to the Astrotech Florida facilities, weekend and overtime support as required, at a price that is not subject to any adjustment on the basis of the Seller’s cost experience. In FFP contracting, the Seller bears the entire risk of cost and performance.

B.2 STATEMENT OF REQUIREMENTS

In accordance with the Subcontract, Seller shall provide all materials, labor, services, equipment and facilities, as well as Buyer’s access to the Astrotech Florida Facilities, except as specified herein to be furnished by the Buyer and/or Government, and shall do all that is necessary or incident to the satisfactory and timely performance of the SCLINs listed below in accordance with the requirements of this Subcontract.

B.3 SERVICES, PRICES AND LINE ITEM NUMBERS (SCLINs)

(a) Buyer will purchase the Basic Services described hereunder from Astrotech for each of the first three Wideband Gapfiller Satellites (hereinafter called “WGS Spacecraft” or “Payload”), identified as WGS-1, WGS-2, and WGS-3. The total price of the Mission Services due to Seller by Buyer for the Payloads shall be $2,507,500.00.

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(b) Price. BSS shall pay Astrotech a firm fixed price (hereinafter called “Mission Services Fee”) for all materials, labor, services, equipment and facilities provided at the Astrotech Florida Facilities under this Subcontract for each WGS Spacecraft.

Payload Mission Pricing

SCLIN	Payload	Mission Services Fee		Valid Through
1	WGS-1	$	835,834.00	12/31/2006
2	WGS-2	$	835,833.00	12/31/2006
3	WGS-3	$	835,833.00	12/31/2007
Total Missions:		$	2,507,500.00

(c) Price Escalation for Mission Launch Delays. If the Occupancy Periods for any of the Guaranteed Payloads defined above are postponed by BSS beyond the validity dates indicated, price escalation shall apply at a rate of 4% per calendar year increment. Seller recognizes this is the sole remedy for any schedule delay, so long as the materials, labor, services, equipment, and facilities provided for each WGS Spacecraft remain within the scope of work described in the Supplier Work Statement.

B.4 PAYMENT AND BILLING (Receipt of Goods/Services)

(a) The Parties agree that the basis for payment under this Subcontract is the performance of acceptable services in support of BSS Payload processing activities at the Astrotech Florida facilities.

(b) Seller shall bill Buyer for the services provided for under this Subcontract. Buyer shall pay Seller upon receipt of the following: a properly prepared Seller’s invoice and acceptable contract performance as defined in Section B.4, Part (a). Seller shall prepare and submit the aforementioned invoice in accordance with Subcontract Section F.3.

(c) Payments. All payments shall be (i) in United States Dollars, (ii) payable to Astrotech Space Operations, Inc., and (iii) delivered, at BSS expense, to the office of Astrotech Space Operations, Inc. at 1515 Chaffee Drive, Titusville, FL 32780 (or other address specified by Astrotech in writing) within thirty (30) days of receipt of the invoice by BSS. All payments shall reference the Astrotech invoice number.

(d) Billing Schedule.

Each Mission Exhibit executed by the Parties under this Subcontract shall set forth the billing schedule for payment of the Mission Services Fee applicable to that particular Payload. The amount and billing dates of the scheduled Mission Services Fee partial payments are per the table below. All invoices shall be submitted in accordance with Sections F.2 and F.3. Payment terms shall be in accordance with Section F.4.

Milestone	Payload	Milestone Value		Payment Billing Schedule
1	WGS-1	$	835,834.00	Effective date of contract
2	WGS-2	$	416,667.00	30 days prior to start of occupancy
3	WGS-2	$	419,166.00	30 days after end of occupancy
4	WGS-3	$	416,667.00	30 days prior to start of occupancy
5	WGS-3	$	419,166.00	30 days after end of occupancy
Total:		$	2,507,500.00

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(1) Final Billing. As soon as practicable, but not later than sixty (60) days after the customer vacates the facility for each particular WGS Spacecraft, BSS will be invoiced for any additional charges agreed to for each particular Payload.

SECTION C - STATEMENT OF WORK/SPECIFICATIONS

C.1 SUPPLIER WORK STATEMENT

Supplier Work Statement No. 889208, Payload Processing Services for the WGS Program, is incorporated into Section C by reference.

SECTION D - INSPECTION AND ACCEPTANCE/QUALITY ASSURANCE

D.1 INSPECTION AND ACCEPTANCE

(a) All goods and services shall be subject to in-process inspection/test by the Buyer at the Seller’s facility at all times during the period of performance and, in any event, prior to shipment. If the Buyer performs inspection or evaluation on the premises of the Seller or its subcontractor(s), the Seller shall furnish and require its subcontractor(s) to furnish, without additional charge, all reasonable facilities and assistance for the safe performance of these duties.

(b) The provisions of Section D are in addition to any other inspection and acceptance provisions of this Subcontract. In the event of a conflict between Section D and any other inspection and acceptance provisions of this Subcontract, including the inspection and acceptance provisions set forth by the Statement of Work and the General Provisions, the full text provisions of Section D shall prevail.

SECTION E - DELIVERY/PERFORMANCE

E.1 DELIVERY/PAYLOAD PROCESSING SERVICES - FLORIDA

Payload processing services period of performance shall begin with the execution of this Subcontract by BSS and shall continue through the end of the Occupancy Period of the last Payload processed under the terms of this Subcontract at the Astrotech Florida facilities.

SECTION F - SUBCONTRACT ADMINISTRATION DATA

F.1 TECHNICAL AND ADMINISTRATIVE REPRESENTATIVES

(a) The following technical and administrative representatives of the Buyer and Seller are hereby designated for this Subcontract:

Seller’s Representatives are:	Buyer’s Representatives are:
Dwayne Light Technical Manager	Larry Glass or Greg Reynolds Technical Manager
John B. Satrom Contract Representative	Jon Connor Subcontract Manager

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(b) The Buyer’s Technical Manager is responsible for day-to-day clarifications, guidance and technical direction as may be required within the scope of the technical work requirements.

(c) Contact with the Buyer regarding prices, terms, quantities, deliveries, and financial adjustments shall be made only between the Buyer’s Subcontract Representative and the Seller’s Contract Representative. Actions taken by the Seller, which by their nature effect a change to this Subcontract, shall only be binding upon the Buyer when such action is specifically authorized in writing by the Buyer’s Subcontract Representative. Unless specified otherwise in this Subcontract, all written communications between Seller and Buyer shall be addressed and directed to the Buyer’s Subcontract Representative and Seller’s Contract Representative.

(d) The Buyer shall be responsible for all liaison and communications with the Buyer’s customer (US Air Force and their consultants) as well as the Buyer’s other subcontractors (e.g., Saab Ericsson) for the term of this Subcontract. The Seller shall not communicate with the Buyer’s customer nor the Buyer’s other subcontractors regarding this Subcontract except with the prior consent of the Buyer. The Seller shall communicate directly with the Launch Vehicle Technical Manager regarding execution of launch vehicle processing tasks covered within the scope of this Subcontract and associated documents.

(e) No verbal or written request, notice, authorization, direction or order received by the Seller shall be binding upon the Buyer, or serve as the basis for a change in the Subcontract, unless issued (or confirmed) in writing by the Buyer’s Subcontract Representative.

(f) The Seller shall immediately notify the Buyer’s Subcontract Representative whenever a verbal or written change notification has been received from an employee of the Buyer (other than the Subcontract Representative), which would affect any of the terms, conditions, cost, schedules, etc., of this Subcontract, and the Seller is to perform no work or make any changes in response to any such notification or make any claim on Buyer unless the Buyer’s Subcontract Representative directs the Seller, in writing, to implement such change notification.

F.2 COMMUNICATIONS

(a) All notices and other binding communications shall be in writing and sent by cable, telex, U.S. mail, telefax, or other customary means, addressed as follows:

Seller:	Buyer:
Astrotech Space Operations, Inc.	Boeing Satellite Systems, Inc.
1515 Chaffee Drive	P.O. Box 92919, MC W-S05-P200
Titusville, Florida 32780	Los Angeles, CA 90009-2919
Attn: Mr. John B. Satrom	Attn: Mr. Jon Connor

or to such other address as the Seller’s Contract Representative or Buyer’s Subcontract Representative shall designate by written notice. All correspondence, data and reports submitted by the Seller shall reference Subcontract number 889208.

F.3 SUBMISSION OF INVOICES

(a) Seller shall submit invoices addressed as follows:

Original and one (1) copy to:

Boeing Satellite Systems, Inc.

P.O. Box 92919

MC W-S05-P200

Los Angeles, CA 90009-2919

Attn: Mr. Jon Connor

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(b) Seller’s invoices and attachments thereto shall contain the following information, as applicable: Seller’s name and business address, date of invoice, the Subcontract number, name of Buyer’s designated Contract Representative, description of services, and Seller’s signature.

(c) Invoices submitted without the above information may be returned to the Seller for correction.

F.4 PAYMENT TERMS

Payments are due no later than 30 days after receipt of invoice.

SECTION G - SPECIAL PROVISIONS

G.1 PLACE OF PERFORMANCE

The work under this Subcontract shall be performed at the Seller’s Facility located at Titusville, Florida, Cape Canaveral Force Air Station, Kennedy Space Center, and points in between.

G.2 BUYER/GOVERNMENT FURNISHED SPECIAL TOOLING (ST), SPECIAL TEST EQUIPMENT (STE), PLANT EQUIPMENT (PE), MATERIAL, AND/OR FACILITIES

(a) Pursuant to the Property Clause of this Subcontract, the Buyer shall furnish for use in the performance of this Subcontract, the following Buyer and/or Government-furnished ST, STE, PE, material, and/or facilities identified in paragraphs (b) and (c) below on or before the date(s) specified.

(b) Buyer Furnished ST, STE, PE, material, and/or facilities: None

(c) Government Furnished ST, STE, PE, material, and/or facilities: None

G.3 IDENTIFICATION OF RESTRICTIONS ON GOVERNMENT RIGHTS IN TECHNICAL DATA AND COMPUTER SOFTWARE

(a) In accordance with the Section H General Provisions pertaining to data rights, the Seller has identified the technical data and/or computer software listed in paragraph (b) below, that may be delivered by Seller with other than unlimited rights: None

G.4 FACILITY ACCESS AND MANIFEST COORDINATION

During the period of performance specified in Section E.1, Astrotech will coordinate with BSS on a regular basis, but no less than once per quarter, the facility manifest for the Astrotech facilities in order to ensure the availability to BSS of the facilities required to support the WGS Spacecraft processing.

G.5 DAMAGE TO PERSONS OR PROPERTY INVOLVED IN PAYLOAD PROCESSING ACTIVITY

This section is reserved for an inter-party waiver of liability for property damage and/or personal injury that might occur during Payload processing activities. A mutually acceptable inter-party waiver of liability will be incorporated within 3 months after Subcontract award. In the event that the Parties are unable to reach agreement on the provision related to the inter-party waiver of liability and the associated indemnification terms, either Party may cancel this Subcontract without prejudice.

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G.6 SCHEDULE AND FACILITY ASSIGNMENT

(a) Occupancy Period. The period of time agreed to by BSS and Astrotech during which BSS will have the right to occupy the Astrotech Facility or otherwise receive Services for each WGS Spacecraft to be processed under this Subcontract (hereinafter called “Occupancy Period”) and the launch date upon which the Occupancy Period is based shall be determined and set forth in the Mission Exhibit of this Subcontract applicable to the particular WGS Spacecraft. Such Mission Exhibit shall also contain the schedules and assignments for the use of the facilities within Astrotech Florida, by BSS.

(b) Key Dates. Key milestone dates relating to all critical events that could affect the Occupancy Period or Services to be performed for each WGS Spacecraft under this Subcontract shall be exchanged between the BSS Technical Manager and the Astrotech Technical Manager. Each party shall advise the other, in a timely manner, of any event which occurs that would significantly alter the agreed to Occupancy Period or Services.

(c) Schedule Changes. BSS and Astrotech recognize that the nature of spaceflight activity is such that schedules must sometimes be changed, often for reasons beyond the control or reasonable predictive ability of BSS or Astrotech. In the event that a change in the Occupancy Period or in the schedules for the use of the respective Astrotech facilities for a particular WGS Spacecraft becomes necessary by BSS or Astrotech, the Parties agree to work together to accommodate the particular rescheduling request (including, if necessary, changes in the assignments for the use of the respective Astrotech facilities, and overtime and weekend work by Astrotech and BSS, and their respective contractors and subcontractors), in a manner that will be mutually acceptable, satisfy the established launch schedules, and be compatible with the established or changed schedules of the other customers of Astrotech. Once the need for such a change has been recognized by either Party, that Party shall promptly notify the other party of the particular rescheduling or reassignment request, and the related circumstances. Any officially announced change (by letter, press release, or other formal means) in the launch date for a particular WGS Spacecraft that is more than two weeks from the launch date upon which the current Occupancy Period is based shall be deemed to be notification to Astrotech of a request to change the Occupancy Period, unless BSS otherwise notifies Astrotech in writing.

(d) Schedule Changes Requested or Caused by BSS. In the event that BSS requests or causes a change (including that resulting from an officially announced change in launch date) in the Occupancy Period or the schedule for the use of the respective Astrotech Florida facilities for a particular WGS Spacecraft, as long as the resulting change does not result in a total mission Occupancy Period in excess of 14 calendar weeks, such change shall not affect the Mission Services Fee other than those provisions previously described in Section B.3, Parts (b) and (c).

(e) Schedule Changes Requested by Astrotech. In the event that Astrotech requests and BSS agrees to a change in the Occupancy Period for a particular WGS Spacecraft, such change shall not affect the Mission Services Fee.

(f) Program Priority Rating. This is a DO-A2 rated order certified for national defense use. Astrotech shall follow the requirements of the Defense Priorities and Allocations System regulation (15 CFR Part 700).

G.7 TERMINATION

(a) Termination by BSS.

(1) Termination for Convenience. BSS shall only have the right to terminate for convenience its obligation to obtain Astrotech Services under this Subcontract for one or all of the Guaranteed Payloads in the event that the manufacture and/or launch of one or all of the

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Guaranteed Payloads is not completed under the terms of its contract with the U.S. Government. BSS shall provide such notice to Astrotech in writing.

(2) Termination for Cause. Buyer may, by written notice to Seller, cancel all or part of this Subcontract (i) if Seller fails to deliver the Services within the time specified by this or any written extension; (ii) if Seller fails to perform any other provision of this Subcontract or fails to make progress, so as to endanger performance of this Subcontract, and, in either of these two circumstances, does not implement a mutually-acceptable corrective action within 15 days after receipt of notice from Buyer specifying the failure; or (iii) in the event of Seller’s actual or anticipated bankruptcy, suspension of business, or financial insolvency. Seller shall continue work not canceled.

(3) Termination Charge. In the event of termination by BSS pursuant to Section G.7, Parts (a)(1), (a)(2) or (a)(3), BSS shall pay Astrotech a Termination Charge as determined below. In the event of an overpayment, Astrotech shall refund the amount of such overpayment to BSS. All payments shall be due within 30 days of notification by either party.

a) Termination for Convenience. Should BSS terminate this Subcontract for one or more WGS Spacecraft, BSS shall pay Astrotech as liquidated damages a pro-rated share of the Mission Services Fee applicable for that particular WGS Spacecraft based on the portion of the contracted Occupancy Period elapsed as of the date BSS vacates the Astrotech Facility, computed on a daily basis, but not less than ten percent (10%) of the Mission Services Fee for that WGS Spacecraft, plus any additional charges agreed to or otherwise due and payable under this Subcontract as of the date BSS vacates the Astrotech Facility. The minimum 10% termination fee also applies if termination by BSS occurs prior to the start of facility Occupancy Period for the Payload or Payloads.

b) Termination for Cause. Should BSS exercise its rights to terminate this Subcontract under the provisions of Section G.7, Part (a)(2) above, BSS shall not be required to pay Astrotech any termination charges associated with that particular WGS Spacecraft.

(b) Termination by Astrotech.

(1) Inability to Perform. Astrotech shall have the right to terminate, in whole or in part, its commitment to furnish the services under this Subcontract, only to the extent that Astrotech is prevented from performing said Services, (i) in the event of riot, civil strife, war, damage to or destruction of the Astrotech facility, natural disaster or other Act of God beyond the control of Astrotech, or (ii) in the event the United States Government terminates or fails to provide support it has committed to Astrotech which is necessary for Astrotech to perform certain Services to be provided hereunder, and Astrotech cannot reasonably provide other means whereby to perform such Services. Prior to considering termination pursuant to this Section G.7, Part (b)(1), Astrotech shall consult with BSS in order to seek alternative means of providing Services acceptable to BSS.

(2) Termination Charge. In the event of a termination of Services for a Payload by Astrotech pursuant to Section G.7, Part (b)(1), BSS shall not be required to pay Astrotech any termination charge. In the event of overpayment, Astrotech shall refund the amount of such overpayment to BSS within 30 days of termination notice.

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SECTION H - GENERAL PROVISIONS

The below-noted terms and conditions, full text clauses, provisions and modifications thereto are the General Provisions of the Subcontract.

H.1 TERMS AND CONDITIONS GUIDE

This Subcontract incorporates by reference the below-listed clauses with the same force and effect as if they were set forth in full text. Unless indicated elsewhere in this Subcontract, the version of each incorporated clause will be the version identified in the following table.

NUMBER	TITLE
GP2	Fixed Price Services - General Provisions (07/09/2004)
3000	Dangerous Goods and Hazardous Materials (10/15/2002)
3002	Hazardous Material – Material Safety Data Sheet (10/15/2002)
3003	Seller Compliance with Occupational Safety & Health Act of 1970 (10/15/2002)
3029	Safety and Accident Prevention (10/15/2002)
3062	Rights in Patents and Inventions (Other than Government Contracts) (10/15/2002)
3063	Right in Software Documentation, and Other Forms of Authorship Generated in Effort Not Supporting Government Contracts (10/15/2002)
4007	Additional General Provisions (11/12/2004)
40-0135B	Rights in Technical Data/Cost or Pricing Information (07/01/2003)

Applicable FAR Clauses: 52.222.26, 52.222.35, and 52.222.36

H.2 TERMS AND CONDITIONS TAILORING

The following tailoring shall apply to the Boeing standard Terms and Conditions delineated in Section H.1.

GP2, Paragraph 6, is not applicable.

GP2, Paragraph 5, is superseded by the following:

5. WARRANTY: Seller warrants that all Services performed hereunder shall be performed by employees or agents of Seller who are experienced and skilled in their profession and in accordance with industry standards. Seller further warrants that all Services performed under this contract, at the time of acceptance, shall be free from defects in workmanship and conform to the requirements of this contract. Buyer shall give written notice of any defect or nonconformance to Seller within one year from the date of acceptance by Buyer. Buyer may, at its option, either (a) require correction or reperformance of any defective or nonconforming services, or (b) make an equitable adjustment in the price of this contract. If Seller is required to correct or reperform the Services, such correction or reperformance shall be at Seller’s expense. Any Services corrected or reperformed shall be subject to this article to the same extent as Services initially performed. If Seller fails or refuses to correct or reperform, Buyer may correct or replace with similar services and charge Seller for any cost to Buyer or make an equitable adjustment in the price of this contract. In no case shall the total value of damages due to Buyer by Seller under this Warranty exceed the total value of the Services performed by Seller to date under the terms of this subcontract agreement.

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GP2, Paragraph 34, is superseded by the following:

34. REJECTION

a. If Seller delivers nonconforming Services, Buyer may require Seller to promptly correct or replace the nonconforming Services. Redelivery to Buyer of any corrected or replaced Services shall be at Seller’s expense.

b. In addition Buyer may (i) correct the nonconforming Services or (ii) obtain replacement Services from another source at Seller’s expense. In no case shall the cost to Seller of Buyer’s expenses related to the rework/replacement of nonconforming Services using alternate sources/suppliers exceed the total value of Services performed to date by Seller for Buyer under the terms of this subcontract agreement.

c. Seller shall not redeliver corrected or rejected Services without disclosing the former rejection or requirement for correction. Seller shall disclose any corrective action taken. All repair, replacement and other correction and redelivery shall be completed within the original delivery schedule or such later time as Buyer may reasonably direct.

GP2, Paragraph 38, is superseded by the following:

38. RECORDS AND AUDIT. Seller shall retain all records and documents pertaining to the Services for a period of no less than three years after final payment. Such records and documents shall date back to the time this contract was issued and shall include, without limitation, catalogs, price lists, invoices and inventory records for purposes of verification of prices or rates charged by Seller for Services procured by Buyer. Buyer shall have the right to examine, reproduce and audit all such records related to pricing and performance to evaluate the accuracy, completeness and currency of cost data related to “Changes” or “Cancellation for Default” articles of this contract.

4007, Paragraph 10, is not applicable.

H.3 SUBCONTRACT ASSIGNMENT

Neither Party shall assign any of its rights or interest in this Subcontract all or substantially all of its performance of this Subcontract, without the other Party’s prior written consent. Such consent shall not unreasonably be withheld. Neither Party shall delegate any of its duties or obligations under this Subcontract. No assignment, delegation or subcontracting by either Party, with or without the other Party’s consent, shall relieve either Party of any of its obligations under this Subcontract. This article does not limit either Party’s ability to purchase standard commercial supplies or raw materials. Either Party may assign its right to monies due or to become due.

SECTION I- LIST OF DOCUMENTS, EXHIBITS AND ATTACHMENTS

APPLICABLE TO THIS SUBCONTRACT

1. Exhibit A, Payload Processing Requirements Document/WGS/Atlas EELV (see SWS paragraph 2.2).

2. Exhibit B, Payload Processing Requirements Document/WGS/Delta EELV, (see SWS paragraph 2.2).

3. Exhibit C, Proprietary Information Agreement No. 2004-4246 dated 1 December 2004, between Astrotech Space Operations, Inc. and Boeing Satellite Systems, Inc.

4. Exhibit D, WGS Contract Security Classification Specification, DD Form 254.

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SUPPLIER WORK STATEMENT

PAYLOAD PROCESSING SERVICES

FOR THE WGS PROGRAM

APPROVALS

BOEING SATELLITE SYSTEMS		ASTROTECH SPACE OPERATIONS, INC.
By:	/s/    JON CONNOR	By:	/s/    JOHN B. SATROM
	Jon Connor		John B. Satrom
	Subcontract Manager		Senior VP & General Mgr
Date:	January 19, 2005	Date:	20 January 2005

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CHANGE TABLE

NO. DATE
AUTHORITY
APPENDIX
DESCRIPTION

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CONTENTS

Section 1.0	PAYLOAD PROCESSING SERVICES	1
	1.1 General	1
	1.2 Description of Services	1
	1.3 Basic Services	1
Section 2.0	DOCUMENTATION REQUIREMENTS	2
	2.1 General	2
	2.2 Payload Processing Requirements Document	2
	2.3 Hazardous Procedures	2
	2.4 Liquid Propellant Operations Crew Certification	3
	2.5 Heavy Equipment Training Certification	3
Section 3.0	COORDINATION	3
	3.1 Agreement Coordinators and Technical Managers	3
	3.2 Launch Vehicle Technical Managers	3
	3 3 Coordination With U. S. Government	4
	3.4 Additional Coordination	4

Appendix A	MISSION EXHIBITS	A-1
Appendix B	WGS SPACECRAFT PROCESSING SERVICES	B-1
Appendix C	ATLAS V LAUNCH VEHICLE PROCESSING SERVICES	C-1
Appendix D	DELTA IV LAUNCH VEHICLE PROCESSING SERVICES	D-1

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1. Payload Processing Services.

1.1 General. The description and specifications of the Astrotech facilities, as they pertain to this Agreement, are those contained in the document titled “Astrotech Space Operations Florida (ASOFL) Facility Accommodations Manual” dated April 2001, as amended by the April 2002 update to Chapter 13 that reflects the as-built configuration of Building 9. Subsequent revisions to this document are incorporated upon release to the extent that they expand the Astrotech capabilities.

1.2 Description of Services. Services shall consist of Basic Services as defined below. It is recognized by BSS and Astrotech (i) that certain of the Services to be provided to BSS shall be obtained by Astrotech from the United States Air Force (hereinafter called “USAF”) and the National Aeronautics and Space Administration (hereinafter called “NASA”) under the terms of Astrotech’s commercialization agreements with the USAF and NASA respectively, and (ii) that BSS, or their respective contractors or subcontractors other than Astrotech, shall perform all activity involving assembly, servicing and checkout of the Payload and use of its associated ground support equipment, unless otherwise expressly provided for in this Agreement.

1.3 Basic Services. Under this Agreement, BSS shall utilize the applicable Astrotech Florida facilities as provided for herein, for payload processing support of the first three WGS Spacecraft. In addition to operating and maintaining the Astrotech Facility, Astrotech shall provide to BSS for each WGS Spacecraft to be processed under this Agreement (i) the package of Spacecraft Processing Services set forth in Appendix B of this SWS, (ii) for each ATLAS V mission the package of ATLAS V Launch Vehicle Processing Services set forth in Appendix C of this SWS, and (iii) for each DELTA IV mission the package of DELTA IV Launch Vehicle Processing Services set forth in Appendix D of this SWS.

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2. Documentation Requirements.

2.1 General. BSS shall provide Astrotech the documentation described in Sections 2.2, 2.3 and 2.4 below applicable to the activities planned to occur at the Astrotech Florida facilities. While it is essential that the required content of this documentation be complete as defined below, Astrotech shall accept the documentation in any format convenient to BSS. In particular, to the extent the required documentation has been prepared for and approved by NASA or USAF for activity in Government facilities, such documentation shall be fully accepted by Astrotech, except to the extent additional information may be required to adequately define a planned activity at the Astrotech Florida facilities. Astrotech shall evaluate such BSS provided documentation only from the standpoint of facility compatibility and safety, and shall not attempt to evaluate, in any way, the probability of Payload success. All such documentation shall be written in the English language.

2.2 Payload Processing Requirements Document. A Payload Processing Requirements Document for each Payload shall be submitted to Astrotech nominally six months prior to the beginning of the Occupancy Period set forth in Annex A below for each respective Payload, unless otherwise requested by Boeing and agreed to in writing by Astrotech. This document shall provide a description of the Payload (including a description of each hazardous system), outline all Payload activities planned to occur at the Astrotech Florida facilities, and detail ail services and support requested by BSS to be provided by Astrotech. The hazardous systems description shall include drawings, schematics, summary test data, and any other available information which shall aid in appraising the respective systems. Hazardous systems shall be those defined in the heritage USAF Range Safety Requirements Document, EWR 127-1, including ordnance devices, propellants, pressurized systems, toxic material, and radio frequency (RF) radiation, and any other system which is a source of danger either to personnel or equipment. Astrotech shall review the Payload Processing Requirements Document, which, when mutually agreed to by Astrotech and BSS, shall constitute the detailed definition of the Services to be provided by Astrotech for the particular Payload and associated payload fairing encapsulation. For repeat payload processing operations, to the extent that identical spacecraft processing operations or identical payload fairing encapsulation operations are to be performed, a one-time submittal shall suffice for all such operations.

2.3 Hazardous Procedures. Detailed procedures must be prepared for all operations at the Astrotech Florida facilities involving hazardous systems, as defined in Section 2.2 above. All such procedures shall be clearly labeled as “Hazardous” and shall be submitted to Astrotech for review no

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later than sixty (60) days prior to the first planned use at the Astrotech Florida facilities. Once mutually agreed to by Astrotech and BSS, hazardous procedures shall be followed without exception. Any changes to a mutually agreed to hazardous procedure must be mutually agreed to by the Astrotech and BSS Technical Managers prior to use.

2.4 Liquid Propellant Operations Crew Certification. BSS shall submit to Astrotech written notification designating the liquid propellant operations crew for the Payload no later than one week prior to the beginning of liquid propellant operations for each WGS Payload. This Liquid Propellant Operations Crew Designation shall identify all personnel who shall be directly involved in handling liquid propellants at the Astrotech Florida facilities and shall indicate that each individual is properly trained and physically qualified to perform such activity.

2.5 Heavy Equipment Training Certification. BSS shall submit to Astrotech written notification designating the BSS personnel who shall be operating the Astrotech Florida facilities bridge cranes and/or forklifts in support of the planned payload processing operations for each Payload. Such notification shall be submitted no later than one week prior to the start of the Occupancy Period for the Payload, and shall certify that the named individuals have met all BSS training requirements to operate overhead bridge cranes, forklifts, or both as appropriate. Astrotech personnel shall provide equipment familiarization training regarding the use of the Astrotech cranes and forklifts to those individuals named by BSS as certified in these functions.

3. Coordination.

3.1 Contract Representatives and Technical Managers. BSS and Astrotech shall each designate a Contract Representative who shall be responsible for coordinating with the Contract Representative of the other party all financial, general scheduling, and other contractual matters related to this Subcontract. In addition, BSS and Astrotech shall each designate a Technical Manager who together shall be responsible for coordinating all technical activities, including the day-to-day activity schedules, to be performed under this Subcontract. Either party may replace their Agreement Coordinator or Technical Manager by informing the other party in writing of such action and the effective date of such redesignation, in accordance with Section F.2 of the contract Terms and Conditions.

3.2 Launch Vehicle Technical Manager. A Launch Vehicle Point of Contact shall be identified by BSS no later than 90 days prior to the start of each Occupancy Period. Astrotech shall

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coordinate all launch vehicle processing matters, for either Atlas V and Delta IV, directly with the Launch Vehicle Technical Manager.

3.3 Coordination With U.S. Government. The Astrotech Technical Manager shall provide all coordination with USAF or NASA for any U.S. Government support provided to BSS at the Astrotech Facility under this Subcontract and for delivery of the Payload to the designated launch site facility following completion of processing at the Astrotech Florida facilities.

3.4 Additional Coordination. The Astrotech Technical Manager and the BSS Technical Manager shall, through consultation, coordinate the activities of Astrotech and BSS related to the furnishing of Services provided under this Subcontract, and, at each parties own expense, shall call upon individuals from their respective organizations, including contractors and consultants, to participate as necessary and appropriate in such consultations.

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APPENDIX A-1

MISSION EXHIBIT

FOR THE WGS-1 PAYLOAD

This Mission Exhibit sets forth the Payload-specific details and requirements for the services to be provided by Astrotech to BSS under this subcontract in support of the launch of WGS-1.

Launch Planning Window. For planning purposes, the WGS-1 Payload launch is projected to occur between December 31, 2005 and June 30, 2006.

Occupancy Period, Launch Date and Launch Vehicle. The Occupancy Period, Launch Date and Launch Vehicle assignment shall be specified by BSS to Astrotech no later than 6 months prior to the anticipated launch date. Once established, modifications to these dates shall be communicated and coordinated as per Section G.6 of the subcontract General Terms and Conditions.

OCCUPANCY START	OCCUPANCY END	TARGET LAUNCH DATE	LAUNCH VEHICLE (ATLAS OR DELTA)
25 NOV 2005	3 MAR 2006

Facility Assignments. Facility assignments for this mission shall be mutually established no later than 3 months prior to the start of the Occupancy Period. Modifications to these dates and assignments shall be communicated and coordinated as per Section G.6 of the subcontract General Terms and Conditions.

BUILDING/ROOM	ENTRY DATE	DEPARTURE DATE
Building 1/High Bay Complex (“A”, “B”, “C” or “D”)
Building 5/Customer Office Space (Receptionist Area & 4 Offices)
Building 9/(“East” or “West”) High Bay Complex
Building 9/Conditioned Storage Area (Atlas missions)
Building 9/Fairing Processing Bay (Delta missions)
Building 9/Payload Encapsulation Bay
Buildings 3, 4 and 6/ Warehouse Storage	Shared space, as required and available.

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APPENDIX A-2

MISSION EXHIBIT

FOR THE WGS-2 PAYLOAD

This Mission Exhibit sets forth the Payload-specific details and requirements for the services to be provided by Astrotech to BSS under this subcontract in support of the launch of WGS-2.

Launch Planning Window. For planning purposes, the WGS-2 Payload launch is projected to occur between July 1, 2006 through December 31, 2006.

Occupancy Period, Launch Date and Launch Vehicle. The Occupancy Period, Launch Date and Launch Vehicle assignment shall be specificed by BSS to Astrotech no later than 6 months prior to the anticipated launch date. Once established, modifications to these dates shall be communicated and coordinated as per Section G.6 of the subcontract General Terms and Conditions.

OCCUPANCY
START OCCUPANCY
END
TARGET LAUNCH
DATE
LAUNCH VEHICLE
(ATLAS OR DELTA)

Facility Assignments. Facility assignments for this mission shall be mutually established no later than 3 months prior to the start of the Occupancy Period. Modifications to these dates and assignments shall be communicated and coordinated as per Section G.6 of the subcontract General Terms and Conditions.

BUILDING/ROOM	ENTRY DATE	DEPARTURE DATE
Building 1/High Bay Complex (“A”, “B”, “C” or “D”)
Building 5/Customer Office Space (Receptionist Area & 4 Offices)
Building 9/(“East” or “West”) High Bay Complex
Building 9/Conditioned Storage Area (Atlas missions)
Building 9/Fairing Processing Bay (Delta missions)
Building 9/Payload Encapsulation Bay
Buildings 3, 4 and 6/Warehouse Storage	Shared space, as required and available.

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APPENDIX A-3

MISSION EXHIBIT

FOR THE WGS-3 PAYLOAD

This Mission Exhibit sets forth the Payload-specific details and requirements for the services to be provided by Astrotech to BSS under this subcontract in support of the launch of WGS-3.

Launch Planning Window. For planning purposes, the WGS-3 Payload launch is projected to occur between November 1, 2006 through April 30, 2007.

Occupancy Period, Launch Date and Launch Vehicle. The Occupancy Period, Launch Date and Launch Vehicle assignment shall be specified by BSS to Astrotech no later than 6 months prior to the anticipated launch date. Once established, modifications to these dates shall be communicated and coordinated as per Section G.6 of the subcontract General Terms and Conditions.

OCCUPANCY
START OCCUPANCY
END
TARGET LAUNCH
DATE
LAUNCH VEHICLE
(ATLAS OR DELTA)

Facility Assignments. Facility assignments for this mission shall be mutually established no later than 3 months prior to the start of the Occupancy Period. Modifications to these dates and assignments shall be communicated and coordinated as per Section G.6 of the subcontract General Terms and Conditions.

BUILDING/ROOM	ENTRY DATE	DEPARTURE DATE
Building 1/High Bay Complex (“A”, “B”, “C” or “D”)
Building 5/Customer Office Space (Receptionist Area & 4 Offices)
Building 9/(“East” or “West”) High Bay Complex
Building 9/Conditioned Storage Area (Atlas missions)
Building 9/Fairing Processing Bay (Delta missions)
Building 9/Payload Encapsulation Bay
Buildings 3, 4 and 6/ Warehouse Storage	Shared space, as required and available.

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APPENDIX B

WGS SPACECRAFT PROCESSING SERVICES

This Appendix B describes the scope of Basic Services available from Astrotech in conjunction with the processing of each WGS Spacecraft for the Service Fee under this Subcontract at the Astrotech Florida facilities. The specific Basic Services to be provided by Astrotech shall be as detailed in the Payload Processing Requirements Document pursuant to Section 2.2 of this Supplier Work Statement.

1. Arrival and Departure Transportation. Astrotech shall provide equipment and manpower support needed to unload and transport crated flight hardware and associated ground support equipment by commercially available ground transportation vehicles from and to terminals within a 50 mile radius of the Astrotech Facility. This service shall accommodate shipment by air to and from commercial or Government airports in the vicinity of the Astrotech Florida facilities. Astrotech shall arrange for and obtain the necessary permits and licenses (Wide Load, HazMat, etc.) as required by the State of Florida Department of Transportation in support of the Payload arrival and departure operations.

2. Local Transportation. By means of commercially available ground transportation vehicles, Astrotech shall provide transportation and delivery of the crated Payload or Payload elements, spacecraft propellants, and ground support equipment, within the Astrotech Facility and to and from the Astrotech Florida facilities and designated facilities at the Kennedy Space Center (KSC) or Cape Canaveral Air Force Station (CCAFS).

3. Use of Astrotech Facilities. Astrotech shall provide use of the following portions of the applicable Astrotech Facility for the duration stated:

(a) In Building 1: up to 14 weeks use of one High Bay Complex, consisting of the High Bay, adjacent Control Room, and one contiguous Office Area, and Conference Room;

(b) In Buildings 3, 4 and 6: storage, on a shared space basis, of flight hardware elements, shipping containers, ground support equipment, etc.;

(c) In Building 5: use of up to 4 offices and shared use of conference rooms and reception area; and

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(d) In Building 9: up to six weeks use of one Satellite Processing Cell, its associated Garment Change Room, and adjacent Control Room for handling and loading of liquid propellants, spacecraft final testing and closeout operations.

4. Propellant and Ordnance Handling and Storage. Astrotech shall provide receiving, inspection, and storage of propellants, ordnance items; and bridge-wire checks.

5. Communications. Astrotech shall provide a fiber-optic communications systems for spacecraft command/ telemetry communications, associated data circuits, and voice communications between the Astrotech Florida facilities and KSC/CCAFS, and between Building 1 and Building 9, in accordance with the defined Astrotech capabilities; closed-circuit television, with video recording capability, in and between Buildings 1, 5 and 9; and local and long distance telephone service. Astrotech shall accommodate data drops that can be connected to a BSS-furnished offsite communications circuit for data transmission back to El Segundo and an Internet access point in the Building 1 control room.

6. Electrical Power. Astrotech shall provide 60Hz electrical power, as defined in the Facility Accommodation Handbook, for electrical ground support equipment.

7. USAF/NASA Coordination. Astrotech shall provide coordination with USAF and NASA/Kennedy Space Center for any Services requiring U.S. Government support.

8. Security. Astrotech shall provide 24 hour-a-day perimeter security at the Astrotech Florida Facilities. Periodic security patrols shall be conducted throughout the Astrotech Florida facilities during non-work hours; digital cypher locks are on all internal and external doors leading into the Payload processing areas; and all buildings are electronically monitored 24 hours-a-day for smoke/fire detection. Doors to all BSS work areas shall have hasps to accommodate BSS-furnished security seals.

9. Solvents and Gases. Astrotech shall provide gaseous nitrogen, liquid nitrogen, gaseous helium, isopropyl alcohol, deionized water, and other general purpose cleaning agents and solvents in support of the planned spacecraft processing operations.

10. Hazardous Waste Disposal. Astrotech shall provide disposal of hazardous materials, such as propellants and solvents, resulting from the payload processing activity.

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11. Sampling and Analysis. Astrotech shall provide sampling and analysis of up to 25 samples of gases, propellants, and cleaning materials.

12. Emergency Medical and Fire Protection. Emergency medical assistance and fire protection at the Astrotech Florida facilities are provided on a 24-hour per day basis by Brevard County and the City of Titusville, Florida.

13. Test Equipment. Astrotech shall provide test equipment and tools, as available and on a non-interference basis.

14. Calibration. Astrotech shall provide standard equipment calibration services for up to ten (10) items of scientific equipment. Astrotech shall provide calibrated (Class F) weights for use during spacecraft fueling operations.

15. Personnel Protective Suits. Astrotech shall provide air hose-type personnel protective suits, splash suits, and related training and support for up to five personnel for Payload propellant handling, transfer, and fueling operations.

16. Technical Shop Support. Astrotech shall provide unplanned shop support, as available and on a non-interference basis.

17. Telephone and Facsimile Service. Astrotech shall provide commercial local and long distance telephone service in all areas used, and shall provide facsimile machines in the Building 1 Office Area and Control Room, and the Building 5 Office Area.

18. Cellphones and Pagers. Astrotech shall provide 10 local cellphones and 10 local area pagers for BSS use throughout the Occupancy Period.

19. Photocopiers. Astrotech shall provide copy machines and paper supplies in the Building 1 Office Area and Control Room, and the Building 5 Office Area (shared asset).

20. Document Destruction. Astrotech shall provide a means of destruction or safe disposal of sensitive and classified paper documentation (e.g., industrial shredding services for company proprietary information and a compliant shredder in the BSS office area for classified destruction).

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21. Weather Reports. Astrotech shall provide weather warning information, as appropriate, to the BSS Technical Manager, at all times during the Occupancy Period.

22. Facility Access. Personnel supporting the WGS program shall be granted access to all authorized work areas on a 24-hour basis throughout the Occupancy Period. BSS and the launch service providers shall provide Astrotech with access lists as appropriate.

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APPENDIX C

ATLAS V LAUNCH VEHICLE PROCESSING SERVICES

This Appendix C describes the scope of Basic Services to be provided by Astrotech to the Atlas V launch services provider in conjunction with the processing of each Atlas V payload fairing and Payload encapsulation activity associated with the WGS Spacecraft for the Service Fee under this Subcontract at the Astrotech Florida facilities. The specific Basic Services to be provided by Astrotech shall be as detailed in the Payload Processing Requirements Document pursuant to Section 2.2 of this Supplier Work Statement.

1. Arrival and Departure Assistance. Astrotech shall assist with loading and off-loading of Atlas V payload fairing components and the associated support equipment at the Astrotech Florida facilities.

2. Transportation of Base Module and Encapsulated Payload. Astrotech shall arrange for and obtain the necessary permits and licenses (Wide Load, HazMat, etc.) as required by the State of Florida Department of Transportation for transport of the encapsulated Payload from the Astrotech Florida facilities to Space Launch Complex – 41 at CCAFS. Astrotech shall not be responsible for providing the transport vehicle(s) and for conduct of the transportation operation.

3. Use of Astrotech Facilities. Astrotech shall provide use of the following portions of the applicable Astrotech Florida facilities for the duration stated:

(a) In Buildings 3, 4 and 6: storage, on a shared space basis, of flight hardware elements, shipping containers, ground support equipment, etc.;

(b) In Building 7: use of Atlas Technical Support/Break Area for the duration of the mission Occupancy Period for the WGS Spacecraft; and

(d) In Building 9: for fairing processing, use for up to four weeks of the Conditioned Storage Area, Encapsulation Bay, and outside paved storage for PLF shipping containers. Astrotech will provide the facility data necessary to certify the specified work areas for

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use, to include: temperature, relative humidity, particle counts (from airborne particle counters), non-volatile residue (NVR) and crane proofload/inspection data.

(e) In Building 1: for office accommodations, the D4 Office Area (or equivalent) from PLF arrival through launch plus one week.

4. Communications. Astrotech shall provide local and long distance telephone service.

5. Electrical Power. Astrotech shall provide 60Hz electrical power, as defined in the Facility Accommodation Handbook, in Building 9 for electrical ground support equipment.

6. USAF/NASA Coordination. Astrotech shall provide coordination with USAF and NASA/Kennedy Space Center for any Services requiring U.S. Government support.

7. Security. Astrotech shall provide 24 hour-a-day perimeter security at the Astrotech Florida facilities. Periodic security patrols shall be conducted throughout the Astrotech Florida facilities during non-work hours; digital cypher locks are on all internal and external doors leading into the Payload processing areas; and all buildings are electronically monitored 24 hours-a-day for smoke/fire detection.

8. Solvents and Gases. Astrotech shall provide gaseous nitrogen, isopropyl alcohol, deionized water, and other general purpose cleaning agents and solvents in support of the planned payload fairing/payload adapter processing and spacecraft encapsulation operations. Astrotech will provide the certification data on the gaseous nitrogen (GN2) supply used to purge the payload fairing.

9. Hazardous Waste Disposal. Astrotech shall provide disposal of hazardous materials, such as propellants and solvents, resulting from the payload fairing preparation and encapsulation activities.

10. Emergency Medical and Fire Protection. Emergency medical assistance and fire protection at Astrotech Florida facilities are provided by Brevard County and the City of Titusville, Florida.

11. Technical Shop Support. Astrotech shall provide unplanned shop support, as available and on a non-interference basis.

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12. Facility Orientation. Astrotech shall provide the necessary facility orientation and heavy equipment familiarization training to the Atlas V launch services provider personnel required for unescorted access to the Astrotech facilities and for unsupervised use of Astrotech heavy equipment (i.e., bridge cranes and forklifts).

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APPENDIX D

DELTA IV LAUNCH VEHICLE PROCESSING SERVICES

This Appendix D describes the scope of Basic Services to be provided by Astrotech to the Delta IV launch services provider in conjunction with the processing of each Delta IV payload fairing and Payload encapsulation activity associated with the WGS Spacecraft for the Service Fee under this Subcontract at the Astrotech Florida facilities. The specific Basic Services to be provided by Astrotech shall be as detailed in the Payload Processing Requirements Document pursuant to Section 2.2 of this Supplier Work Statement.

1. Arrival and Departure Assistance. Astrotech shall assist with loading and off-loading of Delta IV payload fairing components and the associated support equipment at the Astrotech Florida facilities.

2. Transportation of Encapsulated Payload. Astrotech shall arrange for and obtain the necessary permits and licenses (Wide Load, HazMat, etc.) as required by the State of Florida Department of Transportation for transport of the encapsulated Payload from the Astrotech Florida facilities to Space Launch Complex – 37 at CCAFS. Astrotech shall not be responsible for providing the transport vehicle(s) and for conduct of the transportation operation.

3. Use of Astrotech Facilities. Astrotech shall provide use of the following portions of the applicable Astrotech Florida facilities for the duration stated:

(a) In Buildings 3, 4 and 6: storage, on a shared space basis, of flight hardware elements, shipping containers, ground support equipment, etc.;

(b) In Building 7: use of Delta Technical Support/Break Area for the duration of the mission Occupancy Period for the WGS Spacecraft; and

(c) In Building 9: for fairing processing, use for up to four weeks of the Fairing Processing Bay and Encapsulation Bay.

4. Communications. Astrotech shall provide local and long distance telephone service.

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5. Electrical Power. 60Hz electrical power, as defined in the Facility Accommodation Handbook, in Building 9 for electrical ground support equipment.

6. USAF/NASA Coordination. Astrotech shall provide coordination with USAF and NASA/Kennedy Space Center for any Services requiring U.S. Government support.

7. Security. Astrotech shall provide 24 hour-a-day perimeter security at the Astrotech Florida facilities. Periodic security patrols shall be conducted throughout the Astrotech Florida facilities during non-work hours; digital cypher locks are on all internal and external doors leading into the Payload processing areas; and all buildings are electronically monitored 24 hours-a-day for smoke/fire detection.

8. Solvents and Gases. Astrotech shall provide gaseous nitrogen, isopropyl alcohol, deionized water, and other general purpose cleaning agents and solvents in support of the planned payload fairing/payload adapter processing and spacecraft encapsulation operations.

9. Hazardous Waste Disposal. Astrotech shall provide disposal of hazardous materials, such as propellants and solvents, resulting from the payload fairing preparation and encapsulation activities.

10. Emergency Medical and Fire Protection. Emergency medical assistance and fire protection at Astrotech Florida facilities are provided by Brevard County and the City of Titusville, Florida.

11. Technical Shop Support. Astrotech shall provide unplanned shop support, as available and on a non-interference basis.

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International Launch Services

CLSB-0501-0013

07 January 2005

Mr. John Satrom

Senior Vice President and General Manager

Astrotech Space Operations, Inc.

1515 Chaffee Drive

Titusville, FL 32780

Voice	(321) 268-3830
Fax	(321) 360-1908
Subject:	ASO Direct Contracting for Atlas Missions
Reference:	Agreement No. 48801

Dear Mr. Satrom:

The purpose of this letter is to set forth our agreement on the subject, whereby Astrotech Space Operations, Inc. (ASO) will be able to contract directly with an entity other than Lockheed Martin Commercial Launch Services (LMCLS) for payload processing services and credit LMCLS for the associated Atlas missions.

Wideband Gap-filler Satellite (WGS) Program (for Atlas WGS missions only)

LMCLS hereby grants to ASO the right, subject to the terms set forth herein, to enter into an agreement(s) with Boeing Launch Services (BLS) or Boeing Satellite Systems (BSS) for the payload processing of WGS missions that utilize Atlas launch services (Atlas WGS missions.) Each Atlas WGS mission processed by ASO will count as one of the four (4) missions that LMCLS guarantees per year to ASO under the terms of the referenced Agreement, provided no more than four (4) Atlas missions utilizing ASO services have been processed in that calendar year including the Atlas WGS mission(s). The terms of this letter shall only apply to the three (3) WGS missions currently under contract by the U.S. Air Force with BSS, designated WGS1, WGS2 and WGS3.

For each Atlas WGS mission, the following shall apply:

1) Credit Amount: The credit amount for each mission shall be calculated by adding one quarterly Facilities Services Fee (FSF) plus one Mission Services Fee (MSF) for the contract calendar year in which the mission is launched:

a. For CY2005, $563K + $290K = $853K

b. For CY2006, $567K + $304K = $871K

1660 International Drive Suite 800 - McLean Virginia 22102 USA Ÿ Tel 571 633 7400 Ÿ Fax 571 633 7500

CLSB-0501-0013

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2) Timing of Payments and Credits:

LMCLS shall continue paying SouthTrust Bank the quarterly Facilities Services Fee(s) per the terms of the referenced Agreement. ASO shall apply any credits owed to LMCLS as a result of the WGS Atlas mission(s) against any guaranteed Mission Services Fee(s) due and payable by LMCLS to ASO in the fourth quarter of CY2005 and/or CY2006. Credits associated with the ASO processing of WGS Atlas missions scheduled for launch after 31 December 2006 shall be applied against the CY2006 guarantees. Payment for any remaining credit balance owed LMCLS by ASO, if any, will be made as follows:

a. Fifty percent (50%) of cash credit payable to LMCLS on or before 01 August 2006 (tollable by LMCLS on 01 July 2006 with terms of Net 30 days)

b. Fifty-percent (50%) of cash credit payable to LMCLS on or before 01 November 2006 (tollable by LMCLS on 01 October 2006 with terms of Net 30 days)

For example, should the WGS2 and WGS3 utilize Atlas launch services, ILS will not be responsible for paying ASO the $1,216K ($304K x 4 MSF) in the fourth quarter 2006 that would otherwise be due. The remaining $526K (please refer to attached spreadsheet) would be paid by ASO to LMCLS in two installments of $263K as set forth above.

Other CY 2005 & CY2006 Atlas Missions

In the event one or two non-WGS missions are contracted for by LMCLS and processed at ASO and launch before 30 June 2007, then those non-WGS missions shall be processed by ASO at no additional cost to LMCLS.

Subject to LMCLS approval, other non-WGS Atlas missions contracted for by ASO and processed at the Astrotech Florida facilities for launch on or before 30 June 2007, shall be subject to the same credit terms as specified for the WGS Atlas missions above.

Enclosed please find a spreadsheet attachment that illustrates the credit calculations for the WGS and unassigned 2006 missions as described above based upon the projected Atlas launch manifest and the current launch vehicle assignments for the WGS program.

If the approach set forth in this letter is acceptable to ASO, please provide your signature concurrence and return this letter to my attention at fax 571-633-7536.

Sincerely,	Concurrence:
/s/    PAULO KLÜBER	/s/    JOHN SATROM
Paulo Klüber	John Satrom
Contracts Specialist	Senior Vice-President and General Manager
	Date 19 January 2005

Attachment to CLSB-0501-0013

ASO/LMCLS Payments and Credits

2006	Facilities Fees	Mission Fees	Total /Mission
WGS-2	567,063	303,938	871,001
WGS-3	567,063	303,938	871,001
Mission # 3	567,063	303,938	871,001
Mission # 4	567,063	303,938	871,001
ILS Payments to Bank on behalf of ASO	2,268,252
Amount that ILS owes to ASO (waived)		1,215,752
Amount that ASO owes to ILS ($871K x 2 WGS Missions)			1,742,002
Payment due from ASO to ILS			526,250
(calculated as $1,742,002 due less $1,215,752 waived)
50% paid on or before 01 August 2006
50% paid on or before 01 November 2006

ILS Proprietary and Confidential 07 January 2005

EX-10.21

Exhibit 10.21

	Purchase Order
THE BOEING COMPANY	3H03105
13100 Space Center Blvd	Date: 07/14/2003
Houston, TX 77059	Ref Contract:

To: SPACEHAB INCORPORATED 12130 HIGHWAY 3, BLDG. 1 WEBSTER, TX 775981504	Contact: Nelda Wilbanks Phone: (713) 558-5000 FAX: (713) 558-5960	Buyer: Annette M. Henson IX Phone: (281) 226-4371 Mail Code: HB2-30
	Payment Terms Net 30 Days	Total Value: $0.00
FOB: DESTINATION	Resale: l Yes O No 1-91-0425694-6	Funded Value: $0.01
Ship To: Boeing, 13150 Space Center Blvd., Houston, TX 77059
Ship Via:

Mail Invoice To: The Boeing Company, PO BOX 61014, Anaheim, CA 92803

Prime Contract No: NAS15-10000 DPAS Priority: DOC9

This is a rated order certified for national defense use, and you are required to follow all of the Provisions of the Defense Priorities and Allocations System regulation (15 CFR Part 700). You are required to acknowledge this order in writing or electronically within 10 working days of a DX- rated order and 15 working days of a DO- rated order. If you reject the order, you must give reasons in writing (not electronically) for the rejection. When the priority rating on the face of this order is “NTD,” DPAS ratings are specified in the 5000-series clause incorporated in this order.

Terms and Conditions clauses applicable to this contract are from the IDS Common Terms and Conditions Guide and are incorporated here in by reference. Unless indicated otherwise elsewhere in this contract, the version of each incorporated clause applicable to this contract is the latest dated version as of the confirming date of this contract. The Guide is on the Internet at: http://www.boeing.com/company offices/doingbiz/sccommon/flash.html. Note: Representations and Certifications required by U.S. Government contracts have been incorporated into clause 4001,4002,4003 and 4004, as applicable. Referenced attachments are incorporated herein by reference.

Clauses Applicable to All Items: EXH. A SCHEDULE, EXH. B T’S & C’S

Purchase Order Comments / Additional Provisions / Information:

Exhibit A, Schedule; and Exhibit B, Terms & Conditions, are attached hereto and incorporated herein by reference.

“Information furnished to Seller under this solicitation/purchase contract may contain data subject to U.S. Export Laws and Regulations. Seller is advised that such data may not be exported or re-exported to foreign persons, employed by or associated with, or under contract to Seller or Seller’s lower-tier suppliers, without the prior written consent of Boeing and under authority of an export license or applicable license exemption. If such data is marked as Export Controlled, Seller shall indemnify and hold Buyer harmless from and against any and all claims, liabilities and expenses resulting from Seller’s failure to comply with the export laws and regulations of the United States.”

“Seller’s acceptance of this Purchase Contract, confirms that:

l) it is not a foreign corporation,

2) it is not a Representative of a Foreign Interest (RFI), and

Seller agrees to notify Boeing of any change in status set forth above.”

Seller agrees to comply fully with all applicable U.S. laws and regulations as they may apply to the export of any hardware, software, defense service or technical data (collectively “Data”) provided by, through or with the cooperation of Seller in the performance of this subcontract in the U.S. or abroad or under any export license or exemption issued to Boeing. Seller agrees that it will not permit the re-export of Data, including to foreign nationals, employed by or associated with, or under contract to Seller or Seller’s lower-tier suppliers, without the prior written consent of Boeing and under authority of an export license or applicable license exemption.

Period of Performance: 05/19/2003 to 12/31/2003

Page 1 of 2

Purchase Order number 3H03105

Item	Quantity	U/M	Part Number/Name	Unit Price		U/M	Extended Price
000	1	LT	NPN	$	0.00		$	0.00

Basic Ordering Agreement

Line Item Text: Establish a BOA w/Spacehab to perform NASA, customer directed, activities to be implemented via Task Order. All Tasks should be associated with a Spacehab carrier or module as provided by Spacehab.

Requisition Number: ******* Item Number: 0

Qty	Activity ID	Qty	Activity ID	Qty	Activity ID
	GTQDSHAB

		Acknowledgement
Buyer Signature:		Seller Signature:
/s/    ANNETTE HENSON	7/15/03	/s/    NELDA WILBANKS	7/15/03
Authorized Agent	Date		Date

Page 2 of 2

Purchase Order 3H03105

Dated: 01 May 2003

Exhibit A

SCHEDULE

1.0 STATEMENT OF WORK

It should be understood that any time “Seller” is mentioned it is referring to SPACEHAB, Inc., and any time “Buyer” is mentioned it is referring to The Boeing Company.

Seller shall provide, as directed by the Buyer’s Technical Representative (BTR), all labor, transportation, supervision, and materials necessary to furnish engineering, technical and administrative support for Buyer’s internal technical support activities for the International Space Station (ISS) Program.

Seller shall provide support with qualified personnel having Space Station experience to support general tasks, which may include, but not be limited to the following:

• Conduct Buyer’s approved trade studies

• Develop Buyer’s approved presentation material including graphics and illustrations

• Provide Buyer analytical tools/models developed for approved tasks

• Provide Buyer approve Project Coordination

• Support Knowledge Capture activities

• Provide Buyer approved evaluation of existing data such as White papers, Trade Studies, RFP’s and contract generated by NASA and/or contractors

• Provide Buyer approved evaluation of essential facilities, test beds and support equipment

• Provide Buyer approved evaluation of current mission requirements and the rational for limitations on the International Space Station

Each set of direction provided by the BTR shall be in the form of a task order similar to Exhibit A-1. Each task order will identify the Supplier Data Requirements Lists (SDRL) and other information as required.

Seller shall be required to provide Buyer with a firm fixed price for each task order requirement as submitted.

2.0 TECHNICAL DIRECTION

A. Performance of the work under this contract is subject to the written task order provided by the Buyer. “Technical direction” means a directive to the Seller that relates approaches, solutions, designs, or refinements, fills in details or otherwise completes the general description of work or documentation items, shifts emphasis among work areas or tasks, or furnishes similar instruction to the Seller. Technical direction includes requiring studies and pursuit of certain lines of inquiry regarding matters within the general tasks and requirements of this contract as noted above.

Purchase Order 3H03105

Dated: 01 May 2003

B. The BTR does not have the authority to, and shall not, issue any instruction purporting to be technical direction that –

1) Constitutes an assignment of additional work outside the scope of this Schedule without revision to the Task Order,

2) In any manner causes an increase or decrease in the total estimated contract cost, or the time required for contract performance without revision to the Task Order, or

3) Changes any of the expressed terms, conditions, or specifications of the contract, without revision to this Exhibit, or

4) Interferes with the Seller’s rights to perform the terms and conditions of the contract.

C. All technical direction shall be issued in writing by the BTR.

1) The Seller shall proceed promptly with the performance of technical direction dully issued by the BTR in the manner prescribed by this clause and within the BTR’s authority.

2) If, in the Seller’s opinion, any instruction or direction by the BTR falls within any of the categories defined in paragraph B. above, the Seller shall not proceed but shall notify the Buyer in writing within 5 working days after receiving such instruction and shall request the Buyer to take action as described in this clause. Upon receiving this notification, the Buyer shall either issue an appropriate task modification within a reasonable time or rescinded in its entirety.

D. Any action(s) taken by the Seller in response to any direction given by any person other than the Buyer or the BTA shall be at the Seller’s risk.

3.0 TASK ORDERING PROCEDURE

Performance under this Exhibit A is subject to the following procedure:

A. Seller shall incur costs under this contract in the performance of task order(s) and/or modifications issued in accordance with this ordering procedure. No other costs are authorized without the express written consent of the Buyer.

B. From time to time during the term of this contract, the Buyer will issue task orders and/or modifications in writing to Seller, providing specific information on work to be performed within the scope of the contract.

1) Task orders will contain, at a minimum, the following information:

a) Signature of the Buyer

b) Contract number, order number and date

c) Description of work

d) Maximum (Not to Exceed) dollar amount authorized (price)

Purchase Order 3H03105

Dated: 01 May 2003

e) Documentation requirements

f) Delivery performance schedule

g) Quality assurance standards, as appropriate

h) Travel authorized

i) Any other necessary information

2) Unless otherwise directed by the Buyer, Seller shall submit the following information for each task order:

a) Estimated date of commencement of work, and any changes proposed to the schedule of performance

b) Direct labor hours, by applicable labor category, and the total direct labor hours estimated to complete the task.

c) The total firm fixed price, where appropriate for completion of the task order, including:

1) The travel and Material estimates

2) An estimate for subcontractors and consultants, including the direct labor hours, if applicable.

3) Each task order shall require Seller to acknowledge receipt and acceptance of the order within five (5) calendar days after receipt. If Seller cannot comply with a task order requirement, Seller shall indicate in its acknowledgment, the changes required before its acceptance. Any differences must be resolved between the parties and the order modified to reflect the agreement.

4.0 BUYER’S REPRESENTATIVES

Notwithstanding anything contained in this Order to the contrary, the parties hereto agree that “Buyer’s Technical Representative” (BTR) or designated alternate is authorized to call for, and is responsible for directing, all within the scope of this Order, the service(s) to be performed hereunder. Seller agrees that while its representatives are at the service(s) location, actions of such representatives while performing said service(s) shall be under the direction and control of BTR. Except as authorized pursuant to the “Changes” clause of this Order, the parties hereto agree that in no event will actions of the BTR result in any adjustment in the terms and provisions of this Order.

For the purposes of this Order, Buyer’s Technical Representatives (BTR) are:

Charles Chassay

The Boeing Company

3700 Bay Area Boulevard

Houston, Texas 77058

Department: J320, Mail Code: HB6-20

Telephone: (281) 244-4245

Purchase Order 3H03105

Dated: 01 May 2003

Alternate Technical Representative:

Ian Falkinham

Department: J320, Mail Code: HB6-20

Telephone: (281) 244-4412

Buyer’s Subcontract Management & Procurement Representative shall be Annette Henson, Department J240, mail stop HB2-30, (281) 226-4371. Seller shall contact Ms. Henson on all contractual issues.

5.0 SELLER’S TECHNICAL REPRESENTATIVE

Buyer’s Technical Representative will coordinate all technical issues with Seller’s Technical Representative, Pete Gadsby, at (713)558-5099.

6.0 PAYMENT AND BILLING

Seller shall submit a firm fixed price for each task order issued under this Basic Ordering Agreement and shall submit invoices upon completion of each task and payment will be made net 30 days upon receipt of invoice.

Exhibit B

Negotiated Terms and Conditions

General Provisions (GP2)(Rev 02/01/2001)

1. FORMATION OF CONTRACT.

This proposed contract is Buyer’s offer to purchase the goods and services (Services) described in this offer. Acceptance is strictly limited to the terms and conditions included in this offer. Unless specifically agreed to in writing by Buyer’s Authorized Procurement Representative, Buyer objects to, and is not bound by, any term or condition that differs from or adds to this offer. Seller’s commencement of performance or acceptance of this offer in any manner shall conclusively evidence acceptance of this offer as written. In the event Buyer and Seller agree that Seller should begin performance prior to complete agreement on all terms and conditions, Buyer shall incorporate a document detailing Seller’s exceptions (objections and desired wording) into the letter, change or order authorizing Seller to proceed. Such incorporation of Seller’s exceptions shall not indicate Buyer’s agreement with such exceptions, but shall indicate that the specific clauses or articles listed remain subject to negotiation. Buyer and Seller shall in this event negotiate promptly and in good faith to resolve these exceptions. Seller’s commencement of performance or acceptance of this offer in any manner shall conclusively evidence acceptance of this offer as written with the exception of those clauses under negotiation.

2. SCOPE OF SERVICES.

During the term of this Agreement, Seller shall furnish the Services set forth in the Amendments of this Agreement.

3. INDEPENDENT CONTRACTOR.

Seller is an independent contractor for all purposes. Seller shall have complete control over the performance of, and the details for accomplishing, the Services. In no event shall Seller or its agents, representatives or employees be deemed to be agents, representatives or employees of Buyer. Seller’s employees shall be paid exclusively by Seller for all services performed. Seller shall comply with all requirements and obligations relating to such employees under federal, state and local law (or foreign law, if applicable). Such compliance shall include, but not be limited to, laws regarding minimum wages, social security, unemployment insurance, federal and state income taxes and workers’ compensation insurance.

4. STANDARDS.

At any time for acts prohibited by law or regulation, lack of performance, or conduct deemed inappropriate by Buyer or Buyer’s customer, Buyer may require Seller to withdraw the services of any person who has direct contact with Buyer or Buyer customer personnel and require that Seller provide replacements for such persons reasonably satisfactory to Buyer within a reasonable time. In addition to the other indemnification provisions within this contract, Seller specifically agrees to indemnify and hold harmless Buyer from and against any liabilities, claims, charges or suits for alleged losses, costs, damages or expenses arising from Buyer’s reasonable exercise of its rights hereunder. The indemnification in the prior sentence does not apply to indemnification against charges or suits brought by the Federal Government or any state or local government.

5. WARRANTY.

Seller warrants that all Services performed hereunder shall be performed by employees or agents of Seller who are experienced and skilled in their profession and in accordance with industry standards. Seller further warrants that all Services performed under this contract, at the time of acceptance, shall be free from defects in workmanship and conform to the requirements of this contract. Buyer

Page 1 of 20

Exhibit B

Negotiated Terms and Conditions

shall be free from defects in workmanship and conform to the requirements of this contract. Buyer shall give written notice of any defect or nonconformance to Seller within 45 days from the date of acceptance by Buyer. Seller shall make timely and reasonable efforts, within the scope of the existing contract, to correct or re-perform services as necessary to satisfy the requirements of this contract.

6. TAXES.

Unless this contract specifies otherwise, the price of this contract includes, and Seller is liable for and shall pay, all taxes, impositions, charges and exactions imposed on or measured by this contract except for applicable sales and use taxes that are separately stated on Seller’s invoice. Prices shall not include any taxes, impositions, charges or exactions for which Buyer has furnished a valid exemption certificate or other evidence of exemption.

7. INVOICE AND PAYMENT

As compensation for services to be performed by Seller, Buyer shall pay Seller as set forth in this contract. Buyer shall have no liability for any other expenses or costs incurred by Seller. Payment due date, shall be computed from the date of the later of the actual delivery date or the date of receipt of a correct invoice. Payment shall be deemed to have been made on the date the Buyer’s check is mailed or payment is otherwise tendered. Seller shall promptly repay to Buyer any amounts paid in excess of amounts due Seller.

8. CHANGES

a. Buyer’s Authorized Procurement Representative may, without notice to sureties and in writing, direct changes within the general scope of this contract in any of the following: (i) technical requirements and descriptions, specifications, statement of work, drawings or designs; (ii) shipment or packing methods; (iii) place of delivery, inspection or acceptance; (iv) reasonable adjustments in quantities or delivery schedules or both; (v) amount of Buyer- furnished property, and, if this contract includes services, (vi) description of services to be performed; (vii) the time of performance (e.g., hours of the day, days of the week, etc.); (viii) place of performance, and (ix) terms and conditions of this contract required to meet Buyer’s obligations under Government prime contracts or subcontracts. Seller shall comply immediately with such direction.

b. If such change increases or decreases the cost or time required to perform this contract, Buyer and Seller shall negotiate an equitable adjustment in the price or schedule, or both, to reflect the increase or decrease. Buyer shall modify this contract in writing accordingly. Unless otherwise agreed in writing, Seller must assert any claim for adjustment to Buyer’s Authorized Procurement Representative in writing within 25 days and deliver a fully supported proposal to Buyer’s Authorized Procurement Representative within 60 days after Seller’s receipt of such direction. Buyer may, at its sole discretion, consider any claim regardless of when asserted. If Seller’s proposal includes the cost of property made obsolete or excess by the change, Buyer may direct the disposition of the property. Buyer may examine Seller’s pertinent books and records to verify the amount of Seller’s claim. Failure of the parties to agree upon any adjustment shall not excuse Seller from performing in accordance with Buyer’s direction.

c. If Seller considers that Buyer’s conduct constitutes a change, Seller shall notify Buyer’s Authorized Procurement Representative immediately in writing as to the nature of such

Page 2 of 20

Exhibit B

Negotiated Terms and Conditions

conduct and its effect upon Seller’s performance. Pending direction from Buyer’s Authorized Procurement Representative, Seller shall take no action to implement any such change.

9. DISPUTES.

Any dispute that arises under or is related to this contract that cannot be settled by mutual agreement of the parties may be decided by a court of competent jurisdiction. Pending final resolution of any dispute, Seller shall proceed with performance of this contract according to Buyer’s instructions so long as Buyer continues to pay amounts not in dispute.

10. FORCE MAJEURE.

Seller shall not be liable for the excess re-procurement costs pursuant to the “Cancellation for Default” article of this contract incurred by Buyer 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 Seller. Examples of these causes are (a) acts of God or of the public enemy, (b) acts of the Government in either its sovereign or contractual capacity, (c) fires, (d) floods, (e) epidemics, (f) quarantine restrictions, (g) strikes, (h) freight embargoes and (i) unusually severe weather. In each instance, the failure to perform must be beyond the control and without the fault or negligence of Seller. If the delay is caused by a delay of a subcontractor of Seller and if such delay arises out of causes beyond the reasonable control of both, and without the fault or negligence of either, Seller shall not be liable for excess costs unless the goods or services to be furnished by the subcontractor were obtainable from other sources in sufficient time to permit Seller to meet the required delivery schedules. Seller shall notify Buyer in writing within 10 days after the beginning of any such cause.

11. TERMINATION FOR CONVENIENCE

Buyer reserves the right to terminate this contract, or any part hereof, for its sole convenience. In the event of such termination, Seller shall immediately cease all work hereunder and shall immediately cause any and all of its suppliers and subcontractors to cease work. In case of termination for convenience by Buyer of all or any part of this contract, Seller may submit a claim to Buyer within 60 days after the effective date of termination. In no event shall Buyer be obligated to pay Seller any amount in excess of the contract price. The provisions of this article shall not limit or affect the right of Buyer to cancel this contract for default.

12. CANCELLATION FOR DEFAULT

a. Buyer may, by written notice to Seller, cancel all or part of this contract (i) if Seller fails to deliver the Services within the time specified by this contract or any written extension; (ii) if Seller fails to perform any other provision of this contract or fails to make progress, so as to endanger performance of this contract, and, in either of these two circumstances, does not cure the failure within 10 days after receipt of notice from Buyer specifying the failure; or (iii) in the event of Seller’s bankruptcy, suspension of business, insolvency, appointment of a receiver for Seller’s property or business, or any assignment, reorganization or arrangement by Seller for the benefit of its creditors.

b. Seller shall continue work not canceled.

13. ASSIGNMENT, DELEGATION AND SUBCONTRACTING

Seller shall not assign any of its rights or interest in this contract or subcontract all or substantially all of its performance of this contract without Buyer’s prior written consent. Seller shall not delegate any of its duties or obligations under this contract. Seller may assign its right to monies due or to

Page 3 of 20

Exhibit B

Negotiated Terms and Conditions

become due. No assignment, delegation or subcontracting by Seller, with or without Buyer’s consent, shall relieve Seller of any of its obligations under this contract or prejudice any of Buyer’s rights against Seller whether arising before or after the date of any assignment. This article does not limit Seller’s ability to purchase standard commercial supplies or raw materials.

14. INDEMNIFICATION, INSURANCE AND PROTECTION OF PROPERTY

a. Indemnification Negligence of Seller or Subcontractor. Seller shall indemnify and hold harmless The Boeing Company, its subsidiaries, and their directors, officers, employees and agents from and against all actions, causes of action, liabilities, claims, suits, judgments, liens, awards and damages of any kind and nature whatsoever for property damage, personal injury or death (including without limitation injury to or death of employees of Seller or any subcontractor thereof) and expenses, costs of litigation and counsel fees related thereto or incident to establishing the right to indemnification, arising out of or in any way related to this contract, the performance thereof by Seller or any subcontractor thereof or other third parties, including, without limitation, the provision of services, personnel, facilities, equipment, support, supervision or review. The foregoing indemnity shall apply only to the extent of the negligence of Seller, any subcontractor thereof or their respective employees. In no event shall Seller’s obligations hereunder be limited to the extent of any insurance available to or provided by Seller or any subcontractor thereof. Seller expressly waives any immunity under industrial insurance, whether arising out of statute or source, to the extent of the indemnity set forth in this paragraph (a).

b. Commercial General Liability. If Seller or any subcontractor thereof will be performing work on Buyer’s premises, Seller shall carry and maintain, and ensure that all subcontractors thereof carry and maintain, throughout the period when work is performed and until final acceptance by Buyer, Commercial General Liability insurance with available limits of not less than one million dollars ($1,000,000) per occurrence for bodily injury and property damage combined. Such insurance shall contain coverage for all premises and operations, broad form property damage, contractual liability (including, without limitation, that specifically assumed under paragraph (a) herein) and goods and completed-operations insurance with limits of not less than one million dollars ($1,000,000) per occurrence for a minimum of 24 months after final acceptance of the work by Buyer. Such insurance shall not be maintained on a per-project basis unless the respective Seller or subcontractor thereof does not have blanket coverage.

c. Automobile Liability. If licensed vehicles will be used in connection with the performance of the work, Seller shall carry and maintain, and ensure that any subcontractor thereof who uses a licensed vehicle in connection with the performance of the work carries and maintains, throughout the period when work is performed and until final acceptance by Buyer, Business Automobile Liability insurance covering all vehicles, whether owned, hired, rented, borrowed or otherwise, with available limits of not less than one million dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage.

d. Workers’ Compensation. Throughout the period when work is performed and until final acceptance by Buyer, Seller shall, and ensure that any subcontractor thereof shall, cover or maintain insurance in accordance with the applicable laws relating to Workers’ Compensation with respect to all of their respective employees working on or about Buyer’s premises. If Buyer is required by any applicable law to pay any Workers’ Compensation premiums with respect to an employee of Seller or any subcontractor, Seller shall reimburse Buyer for such payment.

Page 4 of 20

Exhibit B

Negotiated Terms and Conditions

e. Certificates of Insurance. Prior to commencement of the work, Seller shall provide for Buyer’s review and approval certificates of insurance reflecting full compliance with the requirements set forth in paragraphs (b) Commercial General Liability, (c) Automobile Liability and (d) Workers’ Compensation. Such certificates shall be kept current and in compliance throughout the period when work is being performed and until final acceptance by Buyer, and shall provide for 30 days advance written notice to Buyer in the event of cancellation. Failure of Seller or any subcontractor thereof to furnish certificates of insurance, or to procure and maintain the insurance required herein or failure of Buyer to request such certificates, endorsements or other proof of coverage shall not constitute a waiver of Seller’s or subcontractor’s obligations hereunder.

f. Self-Assumption. Any self-insured retention, deductibles and exclusions in coverage in the policies required under this article shall be assumed by, for the account of and at the sole risk of Seller or the subcontractor which provides the insurance and to the extent applicable shall be paid by such Seller or subcontractor. In no event shall the liability of Seller or any subcontractor thereof be limited to the extent of any of the minimum limits of insurance required herein.

g. Protection of Property. Seller assumes, and shall ensure that all subcontractors thereof and their respective employees assume, the risk of loss or destruction of or damage to any property of such parties whether owned, hired, rented, borrowed or otherwise. Seller waives, and shall ensure that any subcontractor thereof and their respective employees waive, all rights of recovery against Buyer, its subsidiaries and their respective directors, officers, employees and agents for any such loss or destruction of or damage to any property of Seller, any subcontractor or their respective employees.

h. At all times Seller shall, and ensure that any subcontractor thereof shall, use suitable precautions to prevent damage to Buyer’s property. If any such property is damaged by the fault or negligence of Seller or any subcontractor thereof, Seller shall, at no cost to Buyer, promptly and equitably reimburse Buyer for such damage or repair or otherwise make good such property to Buyer’s satisfaction. If Seller fails to do so, Buyer may do so and recover from Seller the cost thereof.

15. Reserved

16. ACCESS TO PLANTS AND PROPERTIES

Seller shall comply with all the rules and regulations established by Buyer for access to and activities in and around premises controlled by Buyer or Buyer’s customer.

17. Reserved

18. PATENT, TRADEMARK AND COPYRIGHT INDEMNITY

Seller will indemnify, defend and hold harmless Buyer and its customer from all claims, suits, actions, awards (including, but not limited to, awards based on intentional infringement of patents known at the time of such infringement, exceeding actual damages and/or including attorneys’ fees and/or costs), liabilities, damages, costs and attorneys’ fees related to the actual or alleged infringement of any United States or foreign intellectual property right (including, but not limited to, any right in a patent, copyright, industrial design or semiconductor mask work, or based on misappropriation or wrongful use of information or documents) and arising out of the manufacture, sale or use of Seller’s products by either Buyer or its customer. Buyer and/or its customer will duly

Page 5 of 20

Exhibit B

Negotiated Terms and Conditions

notify Seller of any such claim, suit or action; and Seller will, at its own expense, fully defend such claim, suit or action on behalf of indemnities. Seller will have no obligation under this article with regard to any infringement arising from (a) Seller’s compliance with formal specifications issued by Buyer where infringement could not be avoided in complying with such specifications or (b) use or sale of goods in combination with other items when such infringement would not have occurred from the use or sale of those goods solely for the purpose for which they were designed or sold by Seller. For purposes of this article only, the term Buyer will include The Boeing Company and all Boeing subsidiaries and all officers, agents and employees of Boeing or any Boeing subsidiary.

19. CONFIDENTIAL, PROPRIETARY AND TRADE SECRET INFORMATION AND MATERIALS

Buyer and Seller shall each keep confidential and protect from unauthorized use and disclosure all (a) confidential, proprietary and/or trade secret information; (b) tangible items containing, conveying or embodying such information; and (c) tooling identified as being subject to this clause and obtained, directly or indirectly, from the other in connection with this contract or other agreement referencing this contract (collectively referred to as “Proprietary Information and Materials”). Buyer and Seller shall each use Proprietary Information and Materials of the other only in the performance of and for the purpose of this contract Buyer shall have the right to use, disclose and reproduce Seller’s Proprietary Information and Materials, and make derivative works thereof, for the purposes of testing, certification, use, sale or support of any product delivered under this contract. Any such use, disclosure, reproduction or derivative work by Buyer shall, whenever appropriate, include a restrictive legend suitable for the particular circumstances. The restrictions on disclosure or use of Proprietary Information and Materials by Seller shall apply to all materials derived by Seller or others from Buyer’s Proprietary Information and Materials. Upon Buyer’s request at any time, and in any event upon the completion, termination or cancellation of this contract, Seller shall return to Buyer all of Buyer’s Proprietary Information and Materials and all materials derived there from, unless specifically directed otherwise in writing by Buyer. Seller shall not, without the prior written authorization of Buyer, sell or otherwise dispose of (as scrap or otherwise) any parts or other materials containing, conveying, embodying or made in accordance with or by reference to any Proprietary Information and Materials of Buyer. Prior to disposing of such parts or other materials as scrap, Seller shall render them unusable. Buyer shall have the right to audit Seller’s compliance with this article. Seller may disclose Proprietary Information and Materials of Buyer to its subcontractors as required for the performance of this contract, provided that each such subcontractor first agrees in writing to the same obligations imposed upon Seller under this article relating to Proprietary Information and Materials. Seller shall be liable to Buyer for any breach of such obligation by such subcontractor. The provisions of this article are effective in lieu of any restrictive legends or notices applied to Proprietary Information and Materials. The provisions of this article shall survive the performance, completion, termination or cancellation of this contract.

20. PUBLICITY

Without Buyer’s prior written approval, Seller shall not, and shall require that its subcontractors at any tier shall not, release any publicity, advertisement, news release or denial or confirmation of same regarding this contract or the Services or program to which it pertains. Seller shall be liable to Buyer for any breach of such obligation by any subcontractor.

Page 6 of 20

Exhibit B

Negotiated Terms and Conditions

21. EVIDENCE OF CITIZENSHIP OR IMMIGRANT STATUS

Buyer may be required to obtain information concerning citizenship or immigrant status of Seller’s personnel or Seller’s subcontractor personnel entering the premises of Buyer. Seller agrees to furnish this information before commencement of work and at any time thereafter before substituting or adding new personnel to work on Buyer’s premises. Information submitted by Seller shall be certified by an authorized representative of Seller as being true and correct.

22. GRATUITIES

Seller warrants that neither it nor any of its employees, agents or representatives have offered or given, or will offer or give, any gratuities to Buyer’s employees, agents or representatives for the purpose of securing this contract or securing favorable treatment under this contract.

23. Reserved

24. Reserved

25. RIGHTS AND REMEDIES

Any failures, delays or forbearances of either party in insisting upon or enforcing any provisions of this contract, or in exercising any rights or remedies under this contract, shall not be construed as a waiver or relinquishment of any such provisions, rights or remedies; rather, the same shall remain in full force and effect. Except as otherwise limited in this contract, the rights and remedies set forth herein are cumulative and in addition to any other rights or remedies that the parties may have at law or in equity. If any provision of this contract is or becomes void or unenforceable by law, the remainder shall be valid and enforceable.

26. COMPLIANCE WITH LAWS

Seller shall comply with all applicable statutes and government rules, regulations and orders, including those pertaining to United States Export Controls.

27. GOVERNING LAW

This contract shall be governed by and construed in accordance with the laws of the state of Washington. No consideration shall be given to Washington’s conflict of laws rules. This contract excludes the application of the 1980 United Nations Convention on Contracts for the International Sale of Goods.

28. Reserved

29. PACKING AND SHIPPING

a. Seller shall pack the materials to prevent damage and deterioration. Seller shall comply with carrier tariffs. Unless this contract specifies otherwise, the price includes shipping charges for materials sold F.O.B. destination. Unless otherwise specified in this contract, materials sold F.O.B. place of shipment shall be forwarded collect. Seller shall make no declaration concerning the value of the materials shipped except on the materials where the tariff rating is dependent upon released or declared value. In such event, Seller shall release or declare such value at the maximum value within the lowest rating. Buyer may charge Seller for damage to or deterioration of any materials resulting from improper packing or packaging.

b. Unless this contract specifies otherwise, Seller will ship the materials in accordance with the following instructions: (i) Shipments by Seller or its subcontractors must include packing sheets containing Buyer’s contract number, line item number, description and quantity of

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Exhibit B

Negotiated Terms and Conditions

materials shipped, part number or size, if applicable, and appropriate evidence of inspections. A shipment containing hazardous and non-hazardous materials must have separate packing sheets for the hazardous and non-hazardous materials. Seller shall not include vermiculite or other hazardous substance in any packing material included with the Goods. Items shipped on the same day will be consolidated on one bill of lading or airbill unless Buyer’s Authorized Procurement Representative authorizes otherwise. The shipping documents will describe the material according to the applicable classification and/or tariff. The total number of shipping containers will be referenced on all shipping documents. Originals of all Government bills of lading will be surrendered to the origin carrier at the time of shipment. (ii) Seller will not insure any FOB origin shipment unless authorized by Buyer. (iii) Seller will label each shipping container with the contract number and the number that each container represents of the total number being shipped (e.g., box 1 of 2, box 2 of 2). (iv) Buyer will select the carrier and mode of transportation for all shipments where freight costs will be charged to Buyer. (v) Seller will include copies of documentation supporting prepaid freight charges (e.g., carrier invoices or UPS shipping log/manifest), if any, with its invoices. (vi) If Seller is unable to comply with the shipping instructions in this contract, Seller will contact Buyer’s Traffic Management Department referenced elsewhere in this contract or Buyer’s Authorized Procurement Representative.

30. Reserved

31. Reserved

32. Reserved

33. ACCEPTANCE

Buyer shall accept the Services or give Seller written notice of rejection within 45 days after delivery, unless otherwise stated in the purchase order, notwithstanding any payment or prior test or inspection. No inspection, test, delay or failure to inspect or test or failure to discover any defect or other nonconformance shall relieve Seller of any of its obligations under this contract or impair any rights or remedies of Buyer or Buyer’s customers.

34. REJECTION

a. If Seller delivers nonconforming Services, Buyer may require Seller to promptly correct or replace the nonconforming Services.

b. Seller shall not redeliver corrected or rejected Services without disclosing the former rejection or requirement for correction. Seller shall disclose any corrective action taken. All repair, replacement and other correction and redelivery shall be completed within the original delivery schedule or such later time as Buyer may reasonably direct.

35. SELLER NOTICE OF DISCREPANCIES

Seller shall immediately notify Buyer in writing when discrepancies in Seller’s process or materials are discovered or suspected which may affect the Services delivered or to be delivered under this contract.

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Exhibit B

Negotiated Terms and Conditions

36. SCHEDULE

a. Seller shall strictly adhere to the shipment or delivery schedules specified in this contract. In the event of any anticipated or actual delay, Seller shall promptly notify Buyer in writing of the reasons for the delay.

b. Seller may deliver Services prior to the scheduled delivery date(s) unless otherwise directed by Buyer.

37. SUSPENSION OF WORK

a. Buyer’s Authorized Procurement Representative may, by written order, suspend all or part of the work to be performed under this contract for a period not to exceed 100 days. Within such period of any suspension of work, Buyer shall (i) cancel the suspension of work order; (ii) terminate this contract in accordance with the “Termination for Convenience” article of this contract; (iii) cancel this contract in accordance with the “Cancellation for Default” article of this contract; or (iv) extend the stop work period.

b. Seller shall resume work whenever a suspension is canceled. Buyer and Seller shall negotiate an equitable adjustment in the price or schedule or both if (i) this contract is not canceled or terminated; (ii) the suspension results in a change in Seller’s cost of performance or ability to meet the contract delivery schedule; and (iii) Seller submits a claim for adjustment within 20 days after the suspension is canceled.

38. ENTIRE AGREEMENT

This contract contains the entire agreement of the parties and supersedes any and all prior agreements, understandings and communications between Buyer and Seller related to the subject matter of this contract. No amendment or modification of this contract shall bind either party unless it is in writing and is signed by Buyer’s Authorized Procurement Representative and an authorized representative of Seller.

BOEING CORPORATE CREDIT OFFICE

The Boeing Corporate Credit Office shall obtain Seller’s financial data made available through the Securities and Exchange Commission (SEC) via 10-Q and 10-K reporting requirements. In the event that Seller is no longer required to file forms 10-Q and 10-K with the SEC, Seller shall provide the same financial data, on a quarterly basis, as requested by the Boeing Corporate Credit Office. In the event of deterioration in Supplier’s financial condition or performance, supplementary financial data required to assess the level of risk may be requested by the Boeing Corporate Credit Office. This type of business data typically includes - but is not always limited to - schedules of accounts receivable and payable, major lines of credit, creditors, firm backlog and projected operating results. Copies of information that is prepared in the Seller’s normal course of business will be made available within 5 business days of any written request by Boeing’s Corporate Credit Office or upon their completion if that timeframe is greater than 5 business days. Information that is not prepared in the normal course of business will be made available within 10 working days of any written request. Boeing shall treat all such information as confidential.

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Exhibit B

Negotiated Terms and Conditions

General Terms and Conditions 863. - Additional General Provisions (Fixed Price Services Contract)

The following terms and conditions are in addition to the terms and conditions in GP2, The Boeing Company General Provisions (Fixed Price Services Contract). In some cases, they modify or supplement terms and conditions with the same or similar titles as in GP2.

1. INSPECTIONS

Seller will keep records evidencing inspections, if required, and their results and will make these records available to buyer and the Government, where applicable, during contract performance and for four years after final payment. This requirement, if applicable, will be identified in each request for proposal, and specifically stated in the resultant Amendment to this Agreement.

2. INVOICE AND PAYMENT

For each shipment of materials or completed item of services, Seller will submit an original invoice marked “Original” and one copy marked “Copy” to Buyer’s appropriate Accounts Payable.

3. Reserved

4. Reserved

5. SUBCONTRACTING

(A) Seller agrees that no subcontract placed under this contract will provide for payment on a cost-plus-a-percentage-of-cost basis.

6. SHIPPING INSTRUCTIONS

Seller will ship the goods in accordance with the instructions set forth below and the specific routing terms incorporated in this contract.

(A) Buyer’s contract number will be referenced on all shipping documents.

(B) Notwithstanding article 3(b)(v) in GP1, “Prepay and Add” is not authorized.

(C) Third Party/Direct Shipments must adhere to the instructions set forth herein and, if Buyer is responsible for the freight costs, must be shipped “Third Party Collect” to Buyer.

(D) Seller will contact Buyer’s Traffic Management Department referenced elsewhere in this contract or Buyer’s Authorized Procurement Representative prior to shipping the following types of shipments:

(i) Classified Shipments

(ii) Electronics

(iii) Shipments of hazardous materials, including explosives

(iv) Oversize shipments

(v) Refrigeration shipments

(vi) Shipments exceeding 1000 pounds in gross weight

(vii) Shipments requiring special handling or equipment (i.e., air ride equipment, fragile items,  heavy haul trailers, etc.)

(viii) Same-day or courier deliveries

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Negotiated Terms and Conditions

(ix) Counter-to-counter airfreight

(x) Truckload shipments

(E) Reserved

(F) Seller will contact Buyer’s Traffic Management Department referenced elsewhere in this contract or Buyer’s Authorized Procurement Representative with inquiries or requests for special instructions.

7. REPRESENTATIONS AND CERTIFICATIONS

This article includes representations and certifications that Buyer generally is required to obtain from Seller in order to comply with various provisions of its Government contracts. They have been stated in such a way as to allow Seller’s acceptance of this contract to serve as representations and certifications that will present no bar to Buyer’s award of this contract. If, upon receipt of a solicitation that precedes a contract that will incorporate these terms and conditions, Seller believes it is not prepared to make these representations and certifications, it will so notify Buyer as part of its response to the solicitation.

By the acceptance of this order, Seller makes the following representations and certifications:

(A) Certification of Non-segregated Facilities

(i) “Segregated facilities,” as used in this provision, means any waiting rooms, work areas, rest rooms and wash rooms, restaurants and other eating areas, time clocks, locker rooms and other storage or dressing areas, parking lots, drinking fountains, recreation or entertainment areas, transportation, and housing facilities provided for employees, that are segregated by explicit directive or are in fact segregated on the basis of race, color, religion, or national origin because of habit, local custom, or otherwise.

(ii) Seller certifies that it does not and will not maintain or provide for its employees any segregated facilities at any of its establishments, and that it does not and will not permit its employees to perform their services at any location under its control where segregated facilities are maintained. The Seller agrees that a breach of this certification is a violation of the Equal Opportunity clause in the contract.

(iii) Seller further agrees that (except where it has obtained identical certifications from proposed subcontractors for specific time periods) it will –

(a) Obtain identical certifications from proposed subcontractors before the award of contracts under which the subcontractor will be subject to the Equal Opportunity clause;

(b) Retain the certifications in the files; and

(c) Forward the following notice to the proposed subcontractors (except if the proposed subcontractors have submitted identical certifications for specific time periods).

Notice to Proposed Subcontractors of Requirement for Certifications of Non-segregated Facilities. A Certification of Non-segregated Facilities must be submitted before the award of a subcontract under which the subcontractor will be subject to the Equal Opportunity clause. The certification may be submitted either for each subcontract or for all subcontracts during a period (i.e., quarterly, semiannually, or annually).

NOTE: The penalty for making false statements in bids is prescribed in 18 U.S.C. 1001.

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Negotiated Terms and Conditions

(B) Previous Contracts and Compliance Reports

Seller represents that:

(i) It has participated in a previous contract or subcontract subject to the Equal Opportunity clause of this solicitation, the clause originally contained in Section 301 of Executive Order No. 10925, or the clause contained in Section 201 of Executive Order No. 11114.

(ii) It has filed all Compliance Reports.

(iii) Representations indicating submission of required compliance reports, signed by proposed subcontractors, will be obtained.

(C) Affirmative Action Compliance (applicable if Seller has 50 or more employees)

Seller represents that:

(i) If required to do so by the rules and regulations of the Secretary of Labor (41 CFR 60-1 and 60-2), it has developed and has on file a written Affirmative Action Compliance Program at each of its establishments, or

(ii) In the event such a program does not presently exist, and this contract is for $50,000 or more, that it will develop and place in operation such a written Affirmative Action Compliance Program within 120 days from the award of this contract.

(D) Certification Regarding Debarment, Suspension, Proposed Debarment, and Other Responsibility Matters

Seller certifies that, to the best of its knowledge and belief, it is not presently debarred, suspended, proposed for debarment, or ineligible from entering into contracts with the Executive Branch of the Federal Government.

(E) Clean Air and Water Certification

(i) Seller certifies that at the time it submitted its proposal none of the facilities to be used in the performance of this contract were listed on the Environmental Protection Agency (EPA) List of Violating Facilities.

(ii) Seller further certifies that subsequent to submittal of its proposal and prior to award of this contract it has not received any communication from the Administrator, or a designee, of the EPA, indicating that any facility that Seller proposes to use for the performance of this contract is under consideration to be listed on the EPA List of Violating Facilities

(iii) Seller will include a certification substantially the same as this certification, including this paragraph (iii), in every nonexempt subcontract.

8. Reserved

9. Reserved

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Exhibit B

Negotiated Terms and Conditions

NOTE: ARTICLES 10 THROUGH 12 APPLY ONLY IF THIS CONTRACT REQUIRES SELLER TO WORK ON FACILITIES OWNED OR CONTROLLED BY BUYER OR BUYER’S CUSTOMERS.

10. SECURITY

All employees, agents, and representatives of Seller or its subcontractors who are expected to enter premises owned or controlled by Buyer or the Government may, at Buyer’s discretion, be required to provide Buyer’s Security personnel birth certificates and/or other evidence of citizenship satisfactory to Buyer before being allowed within any restricted area. All such employees, agents, and representatives are bound by the provisions of the United States Criminal Code relating to espionage and sabotage and will conform to the standards and requirements established by the Government and Buyer’s Security. The name, social security number, and birth certificate and/or other satisfactory evidence of citizenship of each such employee, agent, or representative will be submitted by Seller, if requested by Buyer, prior to the time for reporting to work. Selected positions and assignments of Seller’s employees may require a security clearance.

11. SAFEGUARDS

If this contract requires work to be performed on property owned or controlled by Buyer or the Government, Seller will provide suitable and adequate protection of the work, property adjacent to the work, and persons in the immediate vicinity of the work.

12. BADGING REQUIREMENTS FOR FOREIGN PERSONS

(A) An employee of Seller who is not a U.S. citizen and does not have a permanent-resident-alien “green” card on his or her person may not be admitted to Buyer’s or Buyer’s customer’s facilities for purposes of performing work without special arrangements.

(B) If foreign persons are to be used for work at Buyer’s or Buyer’s customer’s facilities, advance notice must be provided to Buyer’s Authorized Procurement Representative at least three weeks prior to the scheduled need for access to Buyer’s or Buyer’s customer’s facilities.

(C) The following specific information must be provided for each such foreign national:

(i) Complete name and address of employee

(ii) Company name and address

(iii) Contract number

(iv) Detailed description of employee’s duties

(v) Nationality

(vi) Date and place of birth (country of origin)

(vii) Passport number and expiration date

(viii) Employment authorization and/or work permit number issued by the Immigration and Naturalization Service

(ix) Access requirements (i.e., facility locations, building number(s), controlled access areas, automated information systems, etc.)

(x) Duration of need for access to Buyer’s or Buyer’s customer’s facilities.

(D) Buyer’s Authorized Procurement Representative will make arrangements for appropriate badging for Seller’s foreign national employees, or will notify Seller if unescorted access is denied or delayed.

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Negotiated Terms and Conditions

(E) Seller agrees that it will not employ for the performance of work at Buyer’s or Buyer’s customer’s facilities any individuals who are not legally authorized to work in the United States.

(F) Nothing in this clause shall be construed as requiring or encouraging violation of the labor laws of the United States, including without limitation, those pertaining to equal employment opportunity.

13. Reserved

949. Government Flow Downs (9/20/01)

(a) FAR CLAUSES

The following contract clauses are incorporated by reference from the Federal Acquisition Regulation and apply to the extent indicated. Unless provided for elsewhere in this contract, only subparagraphs (22), (23), (24), and (389) of this paragraph (a) shall apply to any portion of this contract that is for commercial items or commercial components, as those terms are defined at FAR 52.202-1. In all of the following clauses, unless otherwise indicated, “Government” and “Contracting Officer” shall mean Buyer, “Contractor” and “Offeror” shall mean Seller, and all reference to “disputes”, the “disputes clause”, or the “Contract Disputes Act” shall be references to the Disputes clause of the General Provisions of this contract.

(22) 52.222-26 Equal Opportunity (FEB 1999) [subparagraphs (b)(l) through (11) only.] In accordance with FAR 22.807(b)(2), this clause does not apply to work performed outside the United States by employees who were not recruited within the United States. In accordance with FAR 22.801, United States means the several states, the District of Columbia, the Virgin Islands, the Commonwealth of Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and Wake Island.

(23) 52.222-35 Affirmative Action for Special Disabled and Vietnam Era Veterans (APR 1998). This clause applies only if this contract is for $10,000 or more. In accordance with FAR 22.1308(a)(l)(i), this clause does not apply to work performed outside of the United States by employees recruited outside of the United States. United States includes the States, the District of Columbia, the Virgin Islands, the Commonwealth of Puerto Rico, and Guam.

(24) 52.222-36 Affirmative Action for Handicapped Workers (JUN 1998). This clause applies only if this contract exceeds $10,000. In accordance with FAR 22.1408(a)(l), this clause does not apply to work performed outside the United States by employees recruited outside of the United States. United States includes the several states, the District of Columbia, the Virgin Islands, the Commonwealth of Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and Wake Island.

(39) 52.244-6 Subcontracts for Commercial Items and Commercial Components (OCT 1998)

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Exhibit B

Negotiated Terms and Conditions

(b) NASA FAR SUPPLEMENT CLAUSES

The following contract clauses are incorporated by reference from the National Aeronautics and Space Administration Federal Acquisition Regulation Supplement and apply to the extent indicated. Unless provided for elsewhere in this contract, only subparagraphs (8), (10) and (12) of this paragraph (b) shall apply to any portion of this contract that is for commercial items or commercial components, as those terms are defined at FAR 52.202-1. In all of the following clauses, unless otherwise indicated, “Government” and “Contracting Officer” shall mean Buyer, and “Contractor” and “Offeror” shall mean Seller, and all reference to “disputes”, the “disputes clause”, or the “Contract Disputes Act” shall be references to the Disputes clause of the General Provisions of this contract.

(10) 18-52.227-86 Commercial Computer Software Licensing (DEC 1987). This clause only applies if technical data or computer software will be generated or delivered.

(12) 18-228-76 Cross Waiver of Liability for Space Station Activities (SEP 1993). For the purposes of NASA clause 18-52.228-76 “Cross-Waiver of Liability for Space Station Activities”, Russia shall be considered a “Partner State” even though they have not yet signed the International Governmental Agreement (IGA) since Russia has agreed to a Space Station cross-waiver of liability under the Interim Agreement for Space Station between the United States and Russia, dated June 23, 1994. This clause applies only if this contract exceeds $100,000.

(c) MANNED SPACE FLIGHT ITEM (JFS 18-52.246-73) (OCT 1986)

The Supplier 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 subcontract level:

“FOR USE IN HUMAN 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.”

(e) HAZARDOUS MATERIAL IDENTIFICATION AND MATERIAL SAFETY DATA (ALTERNATE I) (NOV 1991)

This clause applies only if hazardous or toxic materials or chemicals are to be delivered under this contract.

(1) “Hazardous material”, as used in this clause, includes any material defined as hazardous under the latest version of Federal Standard No. 313 (including revisions adopted during the term of the contract).

(2) The offeror must list any hazardous material, as defined in paragraph (a) of this clause, to be delivered under this contract. The hazardous material shall be properly identified and include any applicable identification number, such as National Stock Number or Special Item Number.

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Negotiated Terms and Conditions

This information shall also be included on the Material Safety Data Sheet submitted under this contract.

(3) The apparently successful offeror, by acceptance of the contract, certifies that the list in paragraph (b) of this clause is complete. This list must be updated during performance of the contract whenever the Contractor determines that any other material to be delivered under this contract is hazardous.

(4) The apparently successful offeror agrees to submit, for each item as required prior to award, a Material Safety Data Sheet, meeting the requirements of 29 CFR 1910.1200(g) and the latest version of Federal Standard No. 313, for all hazardous material identified in paragraph (b) of this clause. Data shall be submitted in accordance with Federal Standard No. 313, whether or not the apparently successful offeror is the actual manufacturer of these items. Failure to submit the Material Safety Data Sheet prior to award may result in the apparently successful offeror being considered non-responsible and ineligible for award.

(5) If, after award, there is a change in the composition of the item(s) or a revision to Federal Standard No. 313, which renders incomplete or inaccurate the data submitted under paragraph (d) of this clause or the certification submitted under paragraph (c) of this clause, the Contractor shall promptly notify the Contracting Officer and resubmit the data.

(6) Neither the requirements of this clause nor any act or failure to act by the Government shall relieve the Contractor of any responsibility or liability for the safety of Government, Contractor, or subcontractor personnel or property.

(7) Nothing contained in this clause shall relieve the Contractor from complying with applicable Federal, State, and local laws, codes, ordinances, and regulations (including the obtaining of licenses and permits) in connection with hazardous material.

(8) The Government’s rights in data furnished under this contract with respect to hazardous material are as follows:

(A) To use, duplicate and disclose any data to which this clause is applicable. The purposes of this right are to—

(i) Apprise personnel of the hazards to which they may be exposed in using, handling, packaging, transporting, of disposing of hazardous materials;

(ii) Obtain medical treatment for those affected by the material; and

(iii) Have others use, duplicate, and disclose the data for the Government for these purposes.

(B) To use, duplicate, and disclose data furnished under this clause, in accordance with subparagraph (h)(1) of this clause, in precedence over any other clause of this contract providing for rights in data.

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Negotiated Terms and Conditions

(C) The Government is not precluded from using similar or identical data acquired from other sources.

(9) Except as provided in paragraph (i)(2), the Contractor shall prepare and submit a sufficient number of Material Safety Data Sheets (MSDS), meeting the requirements of 29 CFR 1910.1200(g) and the latest version of Federal Standard No. 313, for all hazardous materials identified in paragraph (b) of this clause.

(A) For items shipped to consignees, the Contractor shall include a copy of the MSDS with the packing list or other suitable shipping document that accompanies each shipment. Alternatively, the Contractor is permitted to transmit MSDS to consignees in advance of receipt of shipments by consignees, if authorized in writing by the Contracting Officer.

(B) For items shipped to consignees identified by mailing address as agency depots, distribution centers or customer supply centers, the Contractor shall provide one copy of the MSDS in or on each shipping container. If affixed to the outside of each container, the MSDS must be placed in a weather resistant envelope.

(g) EXPORT OF TECHNICAL DATA, COMPUTER SOFTWARE, OR HARDWARE IN THE CONDUCT OF SPACE STATION RELATED ACTIVITIES

This clause applies under the conditions specified in paragraph 5.

(1) During the conduct of Space Station related activities, including Shuttle/Mir activities, NASA may have a need to deliver, disclose, or transfer to a foreign entity or person (“export”) technical data, computer software, or hardware developed, used, or required to be delivered by the Contractor in the performance of this contract. When such a need arises, NASA or the Buyer may exercise the applicable exemptions, general licenses, existing NASA export licenses or other approvals available to a Federal agency under the U.S. export control laws, and may effect the export of such technical data, computer software, or hardware for NASA or the Buyer by direction to the Seller.

(2) When directed in writing by the Contracting Officer, or designated representative, or the Buyer’s Authorized Purchasing Representative, the Seller, acting as an agent of NASA for the purposes of export control, shall export on behalf of NASA specifically identified technical data, computer software, or hardware to a named foreign entity or person, in the manner and under the conditions provided for in the direction.

(3) Any export made in accordance with this clause shall be limited to only that technical data, computer software, and hardware which NASA or the Buyer’s Authorized Purchasing Representative specifically identifies and authorizes the Seller to export, in the manner and under the conditions provided in the authorization. All other exports of technical data, computer software and hardware by the Contractor, whether related to the performance of this contract or otherwise, are subject to the applicable requirements of the U.S. export control laws and regulations.

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Negotiated Terms and Conditions

(4) Nothing contained in this clause shall affect the protection or allocation of rights to technical data or computer software between Buyer and Seller or any Seller lower tier subcontractors as provided for in this subcontract or subcontract hereunder; nor shall this clause imply any license or affect the scope of any license otherwise granted to the Government or the Buyer or the recipient of the transferred or disclosed technical data or computer software.

(5) The Seller agrees to include this clause in all subcontracts at any tier (suitably modified to reflect the relationship of the parties), the performance of which may require the development, delivery, or use of technical data, computer software, or hardware. If there is any question as to such a need by the Seller or a prospective lower tier subcontractor, the Seller shall promptly notify the Buyer’s Authorized Purchasing Representative, and not proceed with subcontract award without further instruction.

(6) When this clause is included in a subcontract, the Buyer and Seller agree that any direction given by the Contracting Officer or designated representative or by the Buyer’s Authorized Representative to the Seller under this clause will be given by the Seller to a Seller lower tier subcontractor when required to effect the export for NASA in accordance with this clause.

(o) PRECEDENCE

(1) If the various parts of this contract are inconsistent, the following order of precedence will apply: (i) terms and conditions on the face of the purchase order, contract, or agreement, (ii) this clause 949, (iii) special terms and conditions not listed elsewhere, (iv) Clause 862, 863, 864, or 865; (iii) General Provisions GP1, GP2, GP3, or GP4, (v) Buyer or NASA drafted or controlled drawings and specifications; (v) Boeing Quality System documents, (vi) all other Buyer or NASA drafted or controlled documents incorporated in this contract by reference, and lastly, with lowest precedence, (vii) all other documents incorporated in this contract by reference.

(2) Buyer’s drawings and specifications will prevail over any subsidiary documents referenced therein. Seller will not use any specification in lieu of those contained in this contract without the written consent of Buyer’s Authorized Procurement Representative.

(3) Seller should promptly bring any perceived inconsistency in this contract to the attention of Buyer’s Authorized Purchasing Representative, even if that inconsistency can be resolved through the use of this clause.

Technical Clauses

206. Reporting of Discrepancies in Buyer Drawings (10/1/96)

Discrepancies, omissions, and the need for clarifications or interpretations of any nature encountered by Seller in respect of Buyer-furnished drawings or engineering data will be brought to the attention of Buyer’s authorized purchasing representative for resolution.

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Exhibit B

Negotiated Terms and Conditions

207. Technical Direction (10/1/96)

Performance of the work hereunder will be subject to the technical direction of Buyer’s Program Technical Representative. As used herein, technical direction is direction to Seller within the scope and price of this contract. Direction that involves a change in price, period of performance, scope of work, or other provisions of this contract will be issued in accordance with the terms of the Changes clause of this contract, and Buyer will not be liable for any adjustment in price, period of performance, or any other provision of this contract by reason of any direction from said Technical Representative or any other person unless such direction is issued in writing by Buyer’s authorized purchasing representative under the Changes clause.

209. Right to Use Technical Information (10/1/96)

Except where prohibited by Seller’s appropriate restrictive-use markings or legends, Buyer shall be free to use technical data delivered to the Buyer by the Seller in response to delivery orders duly placed under this contract for any purpose whatsoever. In this regard, Buyer may duplicate, distribute, disclose, resell, or incorporate delivered data in any manner desired for any use desired, except as may constitute patent infringement. Where unrestricted use of data is required by the Buyer, it will be specified as a requirement of the specific purchase order. In such cases, Seller’s deliverable data shall be free of associated restrictive use markings or legends.

Administrative Clauses

312.– Seller Compliance With Occupational Safety & Health Act of 1970 (10/1/96)

(a) Seller agrees to periodically review and identify any hazardous substance, within the meaning of the Occupational Safety and Health Act of 1970 (Public Law 91-596), which constitutes a deliverable item or is incorporated in an end item for delivery hereunder and to advise Buyer at least 30 days in advance of (i) any shipment requiring the warning label proposed to be affixed to any container utilized to transport the hazardous substance or (ii) the temporary storage of such substances on the premises of Seller after completion of manufacture but prior to eventual delivery. Specific approval of the proposed warning label design is a necessary prerequisite to any shipment authorization or certification for payment of completed goods purchased by Buyer.

(b) Seller agrees to comply with the provisions of the Occupational Safety and Health Act of 1970 (P.L. 91-596) and the standards and regulations issued thereunder and certifies that all goods furnished under this contract will conform to and comply with said standards and regulations. Seller agrees to indemnify, save harmless, and defend Buyer and its directors, officers, employees, agents, successors, and assigns from and against any and all liabilities, claims, losses, damages, fines, penalties, forfeitures, and the costs and expenses incident thereto (including costs of defense, settlement, and reasonable attorney’s fees) which it or they may hereafter incur, become responsible for, or pay out as a result of, or arising out of, Seller’s breach of any of its duties addressed in this clause.

316. Audit Rights(I0/l/96). This clause will apply only in the event SPACEHAB makes a claim to Boeing.

(a) In the event of a claim, Seller will maintain books, records, documents, other supporting data, and accounting procedures and practices sufficient to properly reflect all direct and indirect costs of whatever nature claimed.

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(b) In the event of a claim, Seller’s books, records, documents, and other supporting data will be made available a US Government audit agency, for inspection and audit as required by Buyer in conjunction with the negotiation of, any claims, including termination claims and claims for equitable adjustment (c) In the event of a claim Seller will, upon request by a US Government audit agency, furnish a statement of related historical cost experience by cost element or in such form as stipulated by a US Government audit agency, together with applicable projections and supporting data.

(d) Seller agrees to include this clause, including this paragraph (d), in all lower-tier subcontracts when certified cost or pricing data is required.

328. – Release Void (10/1/96)

Neither Buyer nor Seller will require waivers or releases of any personal rights from employees or representatives of the other in connection with visits to its premises, and Buyer and Seller agree that no such releases or waivers will be pleaded by them or third persons in any action or proceeding.

329. Plant Rules and Government Clearance (10/1/96)

Employees and agents of Buyer and Seller will, while on premises of the other, comply with all plant rules and regulations, including, where required by Government regulations, submission of appropriate clearance from the U.S. Department of Defense or other concerned federal agency.

331. Prime Contract Flow Down Provisions (10/1/96)

This contract may be amended to the extent necessary to incorporate additional provisions required to meet Buyer’s obligations under the prime contract to which this order is charged.

354. Safety and Accident Prevention (10/1/96)

In performing work under this contract on a Government installation, Seller will (i) conform to the specific safety requirements contained in this contract, (ii) for those related activities not directly addressed by this contract, conform to the applicable safety rules prescribed by the Government installation, and (iii) take such additional precautions as Buyer or the Contracting Officer under Buyer’s Government contract may reasonably require for safety and accident prevention purposes. Any violation of such rules and requirements, unless promptly corrected as directed by Buyer or the Contracting Officer, will be grounds for termination of this contract in accordance with the default provisions hereof. Buyer may, by written order, direct additional safety and accident standards as may be required under Buyer’s Government contract, and any adjustments resulting from such direction will be in accordance with the Changes clause of this contract.

374. Payment in U.S. Dollars (10/1/96)

The price of this contract is based on a fixed exchange rate and no adjustments will be made for fluctuations in the foreign currency exchange rate.

Quality Clauses

Applicable Quality Clauses will be incorporated on individual Amendments, which will be specific to the Task/Product being performed/delivered. Quality Clauses which may be applicable can be found at the Boeing Terms and Conditions website, 600 series clauses.

http://www.boeing.com/companyoffices/doingbiz/tscs/

Page 20 of 20

EX-10.23

Exhibit 10.23

	Letter Contract
SPACEHAB, Inc.	Date: February 18, 2004
12130 Highway 3, Bldg. 1
Webster, TX 77598	Prime Contract No.: NNJ04AA03C

Subject:     LOCKHEED MARTIN CORPORATION-(Integrated Systems) Letter Contract No. GF80726B11

1. Authorization is hereby given to proceed with the work against the subject letter contract, as follows:

Deliveries listed in Attachment A in accordance with Commercial Carrier Services Statement of Work (Appendix 1 of proposal For SPACEHAB Module and ICC Services dated January 2004)

2. The target definitization date for the letter contract is June 15, 2004.

3. Reserved

4. This letter contract is incrementally funded. Lockheed Martin’s limitation of obligation to pay under this authorization is $8,501,136.00. The funds are expected to be adequate for performance of the Work until June 15, 2004.

5. Payment Terms are: Net 45 days.

6. Lockheed Martin anticipates executing a Firm Fixed Price type subcontract. Contractual provisions applicable to this authorization are incorporated by reference, as follows:

A. General Provisions:

i. Lockheed Martin CORPDOC Nos. 2 and 2B, dated October 2003 and Supplement C dated November 2002.

ii. Terminations. If this authorization is terminated for any reason before executing the definitive contract, the termination will be accomplished according to the ‘Termination’ clause of the CORPDOC incorporated above. A definitive contract will be issued for the work accomplished up to the point of termination.

iii. The terms and conditions incorporated by subparagraph 6 A (i) include self-certification statements including but not limited to Certification Regarding Debarment, Suspension, Proposed Debarment and Other Responsibility Matters, Previous Contracts and Compliance Reports, and Affirmative Action Compliance. SPACEHAB has previously acknowledged receipt and affirmative acceptance of the self-certification requirements.

B. Special Provisions:

i. TBD

7. SPACEHAB and Lockheed Martin agree to continue to negotiate in good faith to establish a subcontract for Commercial Carrier Services. SPACEHAB understands and agrees that the payment schedule is provisional and subject to change as a result of contract definitization and payments made under the letter contract may be adjusted after subcontract definitization to conform to the terms of the subcontract. If SPACEHAB and Lockheed Martin, negotiating in good faith, fail to reach agreement on terms and conditions of a definitive subcontract, this letter contract will be terminated in accordance with the provisions of Paragraph 6. Issuance of the definitive subcontract is also subject to written consent from NASA.

8. This is a rated contract certified for National Defense. The Subcontractor is required to follow all provisions of the Defense Priorities and Allocations System (DPAS) regulations (15 CFR 700). The rating on this order is DO-C9.

9. This authorization is subject to your prompt acceptance. Please return a signed copy by FAX no later than February 23, 2004, confirming your acceptance of the contents herein and acknowledging that the effort authorized has been initiated.

SPACEHAB, INC.		LOCKHEED MARTIN CORPORATION
By:	/s/    KATHY WHITAKER	By:	/s/    Illegible
Title:	Director, Business Management	Title:	Director of Material
Date:	2/20/04	Date:	February 19, 2004

Letter Contract No. GF80726B11

Attachment A

For Mission ULF1.1, with an assumed launch date of Nov 2004, these are the mission milestones and deliverables and payment schedule authorized under the letter contract. All work shall be performed in accordance with the proposed Statement of Work for Commercial Carrier Services (Appendix 1 of SPACEHAB proposal dated January 2004)

Mission ULF1.1	Feb	Mar	Apr	May
ICC ASSET SERVICE	300,000	300,000	300,000	300,000
ICC I&O	169,432	0	0	345,432
ICC TOTAL	469,432	300,000	300,000	645,432
Mission Performance Analysis (DR 4)
Mission Performance Analysis Baseline				05/19/04
Carrier Integration Plan (CIP)
CIP Annex 5 Input		03/20/04
CIP Annex 8 Initial Input		03/20/04
CIP Annex 9 (OMRS) Input - Generic	02/19/04
Flight Safety (PSRP) - (DR 7)
Phase 0/I Flight Safety Data Package Submittal	02/19/04
Ground Safety (DR 7)
Phase 0/I Ground Safety Data Package Submittal	02/19/04
Loads Analysis
Structural Math Model delivery			04/19/04
Thermal Analysis
Thermal Model and Report Delivery	02/19/04
Mission Training (DR 2)
Mission Training Plan	02/19/04
Payload ICA Baseline (DR 6)
Complex ICD	02/19/04
Simple ICD

Letter Contract No. GF80726B11

Attachment A

For Mission 12A.1, with an assumed launch date of Apr 2005, these are the mission milestones and deliverables and payment schedule authorized under the letter contract. All work shall be performed in accordance with the proposed Statement of Work for Commercial Carrier Services (Appendix 1 of SPACEHAB proposal dated January 2004)

Mission 12A.1	Feb		Mar		Apr		May
ICC ASSET SERVICE		0		0		0		0
ICC I&O				0		361,834		0
ICC TOTAL		0		0		361,834		0
LSM ASSET SERVICE		1,132,000		1,132,000		1,132,000		1,132,000
LSM ASSET TRANSITION		200,000		200,000		200,000		100,000
LSM I&O		0		0		1,196,438		0
LSM I&O TRANSITION		0		0		0		0
LSM TOTAL		1,332,000		1,332,000		2,528,438		1,232,000
MISSION TOTAL	$	1,332,000	$	1,332,000	$	2,890,272	$	1,232,000
ICD-A
ICD-A Inputs						04/20/04
Data Interface and Requirements Transfer
Initial Baseline				03/21/04
MRAD (DR 14)
Initial Baseline						04/20/04
Carrier Integration Plan (CIP)
CIP Addendum Initial Input						04/20/04
CIP Addendum Baseline								05/20/04
CIP Annex 1 Initial Input								05/20/04
CIP Annex 2 Part 1 Initial Input								05/20/04
CIP Annex 4 Initial Input						04/20/04
Loads Analysis
Design Loads Report								05/20/04

February 24,2005

Results of Meeting with Gary Moeller, LM Sr. Subcontract Adminis________

SPACEHAB EXCEPTIONS TO:

COMMERCIAL CARRIER SERVICES SUBCONTRACT

D.2 NFS 1852.211-70 Packaging, Handling and Transportation (2000)

Please define the applicability of this clause to SHI’s Commercial Carrier Services subcontract.

Final Agreement: This clause does not appear to significantly impact SHI. SHI accepts.

E.3 Inspection and Acceptance

Please define the applicability of this clause to SHI’s Commercial Carrier Services subcontract. SHI defines the applicability as contract deliverables as incorporated in the deliverables list in the final negotiated subcontract.

Final Agreement: LM confirmed that this clause is applicable only to contract deliverables as defined in the contract. LM will inspect final product at KSC, in deemed necessary by LM/NASA.

F.1 - 52.242-15 Stop Work Order and Alternate 1.

Alternate 1 is applicable to Cost Reimburseable contracts

Final Agreement: LM will change to reflect Fixed Price Contract

F.5 Period of Performance

Please change the period of performance from February 19, 2004 through June 30, 2006 to February 1, 2004 through August 31, 2006.

Although our letter subcontract was not issued until February 19th, SHI was performing effort beginning February 1st for the contracted missions under LM, not NASA. The expiration date should reflect return plus 2 months as SHI proposed 2 months of close out costs following the last mission.

Final Agreement: LM will change Period of Performance wording to state “in accordance with contract schedule”.

G.5 Technical Direction

Please change subcontractor notice from 3 days to 10 days.

Final Agreement: LM will change to 4 days because they have a 5 day contract requirement.

G.15 Work Eligibility

Please revise this clause as follows:

All subcontractor personnel performing under this subcontract within the United States shall be U.S. Citizens....

SHI’s contract with EADS includes tasking that is performed in Brehman.

Final Agreement: LM will incorporate “within the United States” in the clause. LM will add a reference to export provisions in the subcontract to clarify and emphasize that compliance to law for export of technical data is required (this is the intent and does not change the meaning.)

H.19 Associate Contractor Agreement for ISS Operations and Utilization Activities

Please define the scope of this clause. SHI did not propose costs to support activities associated with this clause.

Final Agreement: LM to change H. 19 B to state: “The subcontractor agrees to provide reasonable support to Buyer to implement the stated objectives.”

H.26 Additional Export Control Requirements

Please delete this clause from our subcontract

Final Agreement: SHI accepts clause because it is a mandatory flow down and because SHI does not believe this has a significant impact on SHI business processes.

1.2 Modifications of incorporated terms and conditions

SHI does not accept the incorporation of 52.222-41 Service Contract Act of 1965, as Amended (May 1989), into the Lockheed CORPDOC2 Terms and Conditions.

Final Agreement: LM agrees to remove clause because by statute the act applies to contracts, the principle purpose of which is to furnish services in the US through the

use of service employees - LM believes the principle purpose of our subcontract is to furnish carrier and related hardware.

LOCKHEED MARTIN’S SUPPLEMENT -C

6. Publicity, Promotion or Advertising. SPACEHAB is bound by law to quickly disclose material events that require SEC disclosure and this may not fit within your approval schedule Please revise. Please modify the language to say “without prior notification” for those activities that are considered “material events”. The advertising and media items can still say “without prior consent.”

Final Agreement: LM agrees to incorporate wording “except as bound by law” in this clause.

8. Additional Subcontracting.

Please delete. SFS has on-going subcontracts that will be performing work for the CMC contract. SHI will disclose all proposed subcontractors and subcontractor cost in its proposals to contract change orders. SHI will not seek approval for material vendors associated with its module or SPPF operations.

Final Agreement: LM agrees to remove clause because this is not a mandatory requirement for fixed price contracts.

10. Payments, Taxes, and Duties:

Please revise this clause to reflect the months LM will pay SHI net 30. Also, please delete (a) ii, as SHI has no control over when the Buyer will enter the invoice into LM’s accounts payable system.

Final Agreement: LM cannot revise terms and conditions of this clause because it is applicable to all LM business units.

LOCKHEED MARTN CORPORATION – CORPDOC 2: General Provisions and FAR flowdown provisions for subcontracts for Commercial Items Under a U.S. Government Prime Contract

Section I. General Provisions:

5. SHI requests that this term be amended to reflect the interfaces to be negotiated in the SPACEHAB subcontract.

Final Agreement: LM will reference DIRT in this clause.

7. DEFAULT: SHI requests that this clause be amended as follows:

a. – Extend cure term to 30 days.

Final Agreement: LM will extend cure term to 30 days.

b. – Remove the 2^nd sentence of this clause.

Final Agreement: LM will modify the clause from “terminated portions of this contract” to “terminated deliverables under this contract”. This applies to the documents that must be turned over to LM in case of SHI default.

18. SHI requests that this clause be removed in its entirety and substituted with the following terms that were incorporated in our subcontract with the Boeing Company:

ACCEPTANCE

Buyer shall accept the Services or give Seller written notice of rejection within 45 days after delivery, unless otherwise stated in the purchase order, notwithstanding any payment or prior test or inspection. No inspection, test, delay or failure to inspect or test or failure to discover any defect or other nonconformance shall relieve Seller of any of its obligations under this contract or impair any rights or remedies of Buyer or Buyer’s customers.

REJECTION

a. If Seller delivers nonconforming Services, Buyer may require Seller to promptly correct or replace the nonconforming Services.

b. Seller shall not redeliver corrected or rejected Services without disclosing the former rejection or requirement for correction. Seller shall disclose any corrective action taken. All repair, replacement and other correction and redelivery shall be completed within the original delivery schedule or such later time as Buyer may reasonably direct.

Final Agreement: LM will leave clause as is but add “The parties agree to negotiate in good faith to establish a supplemental agreement to define the scope of the inspections.”. The Supplemental Agreement will define the scope of inspection and acceptance as it pertains to SHI processes, release of information and use of SHI facilities and provision of administrative support.”

20. SHI requests that 20.b be removed in its entirety.

Final Agreement: LM will remove 20.b

32. SHI requests that 32.a.1. be amended as follows:

- Lockheed Martin may terminate this part or all of this Contract for its convenience by giving written notice to Seller, provided that the part(s) terminated were terminated by the Government in Lockheed Martin’s prime contract.

Final Agreement: LM will incorporate requested wording

33. SHI from time to time delivers its products early. Please define the process of seeking approval for early delivery.

Section II: FAR Flowdown Provisions

SHI is a small business providing a commercial service. Therefore all clauses incorporated in the contract are to be interpreted using these assumptions. The following changes are requested removed/modified for this reason.

F. 1.

(a) Change to 52.215-20 Alt IV

(b) Change to 52.215-21 Alt IV

Final Agreement: These cost and pricing clauses are mandatory flow downs. However, SHI was exempt from 52.215.20 because our service was determined to be a commercial service by DCAA. 52.215-21 applies to contract change orders and SHI will have to apply for exemption for changes unless a separate contract is entered into with LM for change orders, i.e. GSA/Commercial PO.

LOCKHEED MARTIN CORPORATION – CORPDOC 2B: NASA Flowdown Provisions for Subcontract/Purchase Orders for Commercial Items under a U.S. Government Prime Contract:

SHI is a small business providing a commercial service. Therefore all clauses incorporated in the contract are to be interpreted using these assumptions. The following changes are requested removed/modified for this reason.

F. 1.

(a) Change clause from 52.227-14 to 52.227-14 Alt II.: Section C. Notes – does not apply to this clause.

Final Agreement: LM agrees to changes.

Add: 52.227-11 – Section C. Notes - does not apply to this clause.

Final Agreement: LM agrees to add 52.227-11, and stated that Section C does not apply to these clause types.

G. 1

(f) 18-52.227-14 (Remove applicability of Section C Note 5)

Final Agreement: SHI accepts clause and LM stated that Section C does not apply to these clause types

(h) Remove 18-52.242-73

Final Agreement: LM agrees to remove clause (applies to cost reporting)

G. 4

(a) Replace 18-52.223-70 with 18-52-223.73

Final Agreement: SHI accepts 18-52.223-70

(d) Remove 18-52.227-11

Final Agreement: SHI accepts clause

(e) Remove 18-52.227-70

(f) Remove 18-52.227-71

Final Agreement: LM agrees to remove clauses.

(g) Remove 18-52.227-72

Final Agreement: SHI accepts clause - goes with 18-52-227-11

(m) Remove 18.52.231-71

(n) Remove 18.52.237-71

(o) Remove 18-52.242-71

Final Agreement: LM agrees to remove clauses because they are not applicable to firm fixed price contracts.

(s) 18-52.246-70 Lockheed Martin to define when this clause is applicable.

Final Agreement: SHI accepts clause because it poses no material impact.

LOCKHEED MARTIN CORPORATION CORPDOC 2

GENERAL PROVISIONS AND FAR FLOWDOWN PROVISIONS FOR SUBCONTRACTS/PURCHASE ORDERS FOR COMMERCIAL ITEMS UNDER A U.S. GOVERNMENT PRIME CONTRACT

SECTION I: GENERAL PROVISIONS

1	Acceptance of Contract/Terms and Conditions
2	Applicable Laws
3	Assignment
4	Changes
5	Communication With Lockheed Martin Customer
6	Contract Direction
7	Default
8	Definitions
9	Disputes
10	Electronic Contracting
11	Export Control
12	Extras
13	Furnished Property
14	Gratuities/Kickbacks
15	Independent Contractor Relationship
16	Information of Lockheed Martin
17	Information of Seller
18	Inspection and Acceptance
19	Insurance/Entry on Lockheed Martin Property
20	Intellectual Property
21	New Materials
22	Offset Credit/Cooperation
23	Packing and Shipment
24	Payments, Taxes, and Duties
25	Precedence
26	Priority Rating
27	Quality Control System
28	Release of Information
29	Severability
30	Stop Work
31	Survivability
32	Termination For Convenience
33	Timely Performance
34	Waivers, Approvals, and Remedies
35	Warranty

SECTION II: FAR FLOWDOWN PROVISIONS

A	Incorporation of FAR Clauses
B	Government Subcontract
C	Notes
D	Amendments Required by Prime Contract
E	Preservation of the Government’s Rights
F	FAR Flowdown Clauses
G	Certifications and Representations

SECTION I: GENERAL PROVISIONS

1. ACCEPTANCE OF CONTRACT/TERMS AND CONDITIONS

(a) This Contract integrates, merges, and supersedes any prior offers, negotiations, and agreements concerning the subject matter hereof and, together with Exhibits, Attachments, and any Task Order(s) issued hereunder, and constitutes the entire agreement between the parties.

(b) SELLER’s acknowledgment, acceptance of payment, or commencement of performance, shall constitute SELLER’s unqualified acceptance of this Contract.

(c) Additional or differing terms or conditions proposed by SELLER or included in SELLER’s acknowledgment are objected to by LOCKHEED MARTIN and have no effect unless expressly accepted in writing by LOCKHEED MARTIN.

2. APPLICABLE LAWS

(a) This Contract shall be governed by and construed in accordance with the laws of the State from which this Contract is issued, excluding its choice of law rules, except that any provision in this Contract that is (i) incorporated in full text or by reference from the Federal Acquisition Regulation (FAR); or (ii) incorporated in full text or by reference from any agency regulation that implements or supplements the FAR or; (iii) that is substantially based on any such agency regulation or FAR provision, shall be construed and interpreted according to the federal common law of government contracts as enunciated and applied by federal judicial bodies, boards of contracts appeals, and quasi-judicial agencies of the federal Government.

(b)     (1) SELLER agrees to comply with all applicable laws, orders, rules, regulations, and ordinances. SELLER shall procure all licenses/permits, and pay all fees, and other required charges, and shall comply with of all applicable guidelines and directives of any local, state, and/or federal governmental authority.

(2) If: (i) LOCKHEED MARTIN’s contract price or fee is reduced; (ii) LOCKHEED MARTIN’s costs are determined to be unallowable; (iii) any fines, penalties, or interest are assessed on LOCKHEED MARTIN; or (iv) LOCKHEED MARTIN incurs any other costs or damages; as a result of any violation of applicable laws, orders, rules, regulations, or ordinances by SELLER, its officers, employees, agents, suppliers, or subcontractors at any tier, LOCKHEED MARTIN may proceed as provided for in (3) below.

(3) Upon the occurrence of any of the circumstances identified in (2) above, LOCKHEED MARTIN may make a reduction of corresponding amounts (in whole or in part) in the price of this Contract or any other contract with SELLER, or may demand payment (in whole or in part) of the corresponding amounts. SELLER shall promptly pay amounts so demanded.

(4) In the event it is determined that the Work is not a Commercial Item as defined at FAR 2.101, then SELLER agrees that CORPDOC 3, General Provisions and FAR Flowdown Provisions for Subcontracts/Purchase Orders (All Agencies) for Non-Commercial Items under a U.S. Governmental Prime Contract, and the corresponding agency flowdowns shall be applicable to this Contract, in lieu of these terms and conditions, effective as of the date of this Contract.

(c) SELLER represents that each chemical substance constituting or contained in Work sold or otherwise transferred to LOCKHEED MARTIN hereunder is on the list of chemical substances compiled and published by the Administrator of the Environmental Protection Administration pursuant to the Toxic Substances Control Act (15 U.S.C. Sec. 2601 et seq.) as amended.

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(d) SELLER shall provide to LOCKHEED MARTIN with each delivery any Material Safety Data Sheet applicable to the Work in conformance with and containing such information as required by the Occupational Safety and Health Act of 1970 and regulations promulgated there under, or its State approved counterpart.

3. ASSIGNMENT

Any assignment of SELLER’s Contract rights or delegation of SELLER’s duties shall be void, unless prior written consent is given by LOCKHEED MARTIN. SELLER may assign rights to be paid amounts due, or to become due, to a financing institution if LOCKHEED MARTIN is promptly furnished a signed copy of such assignment reasonably in advance of the due date for payment of any such amounts. Amounts assigned shall be subject to setoff or recoupment for any present or future claims of LOCKHEED MARTIN against SELLER. LOCKHEED MARTIN shall have the right to make settlements and/or adjustments in price without notice to any assignee.

4. CHANGES

(a) The LOCKHEED MARTIN Procurement Representative may at any time, by written notice, and without notice to sureties or assignees, make changes within the general scope of this Contract in any one or more of the following: (i) drawings, designs, or specifications; (ii) method of shipping or packing; (iii) place of inspection, acceptance, or point of delivery; and (iv) delivery schedule.

(b) If any such change causes an increase or decrease in the cost of, or the time required for, performance of any part of this Contract, LOCKHEED MARTIN shall make an equitable adjustment in the Contract price and/or delivery schedule, and modify this Contract accordingly. Changes to the delivery schedule will be subject to a price adjustment only.

(c) SELLER must assert its right to an equitable adjustment under this paragraph within thirty (30) days from the date of receipt of the written change order. If the SELLER’s proposal includes the cost of property made obsolete or excess by the change, LOCKHEED MARTIN shall have the right to prescribe the manner of disposition of the property.

(d) Failure to agree to any adjustment shall be resolved in accordance with the “Disputes” clause of this Contract. However, nothing contained in this “Changes” clause shall excuse SELLER from proceeding without delay in the performance of this Contract as changed.

5. COMMUNICATION WITH LOCKHEED MARTIN CUSTOMER

LOCKHEED MARTIN shall be solely responsible for all liaison and coordination with the LOCKHEED MARTIN customer, including the U. S. Government, as it affects the applicable prime contract, this Contract, and any related contract.

6. CONTRACT DIRECTION

(a) Only the LOCKHEED MARTIN Procurement Representative has authority to make changes in or amendments to this Contract. Changes and amendments must be in writing.

(b) LOCKHEED MARTIN engineering and technical personnel may from time to time render assistance or give technical advice or discuss or effect an exchange of information with SELLER’s personnel concerning the Work hereunder. No such action shall be deemed to be a change under the “Changes” clause of this Contract and shall not be the basis for equitable adjustment.

(c) Except as otherwise provided herein, all notices to be furnished by the SELLER shall be sent to the LOCKHEED MARTIN Procurement Representative.

7. DEFAULT

(a) LOCKHEED MARTIN, by written notice, may terminate this Contract for default, in whole or in part, if SELLER fails to comply with any of the terms of this Contract, fails to make progress so as to endanger performance of this Contract, or fails to provide adequate assurance of future performance. SELLER shall have ten (10) days (or such longer period as LOCKHEED MARTIN may authorize in writing) to cure any such failure after receipt of notice from LOCKHEED MARTIN. Default involving delivery schedule delays shall not be subject to the cure provision.

(b) SELLER shall be compensated only for Work actually delivered and accepted. LOCKHEED MARTIN may require SELLER to deliver to LOCKHEED MARTIN any supplies and materials, manufacturing materials, and manufacturing drawings that SELLER has specifically produced or acquired for the terminated portion of this Contract. LOCKHEED MARTIN and SELLER shall agree on the amount of payment for these other deliverables.

(c) SELLER shall continue all Work not terminated.

(d) If after termination under paragraph (a), it is determined that SELLER was not in default, such termination shall be deemed a Termination for Convenience.

8. DEFINITIONS

The following terms shall have the meanings set forth below:

(a) “Contract” means the instrument of contracting, such as “PO”, “Purchase Order” or “Task Order” or other such type designation, including all referenced documents, exhibits and attachments. If these terms and conditions are incorporated into a “master” agreement that provides for releases, (in the form of a Purchase Order or other such document) the term “Contract” shall also mean the Release document for the Work to be performed.

(b) “FAR” means the Federal Acquisition Regulation, issued as Chapter 1 of Title 48, Code of Federal Regulations.

(c) “LOCKHEED MARTIN” means LOCKHEED MARTIN CORPORATION, acting through its companies or business units as identified on the face of this Contract. If a subsidiary or affiliate of LOCKHEED MARTIN CORPORATION is identified on the face of this Contract, then “LOCKHEED MARTIN” means that subsidiary or affiliate.

(d) “LOCKHEED MARTIN Procurement Representative” means a person authorized by LOCKHEED MARTIN’s cognizant procurement organization to administer and/or execute this Contract.

(e) “PO” or “Purchase Order” means this Contract.

(f) “SELLER” means the party identified on the face of this Contract with whom LOCKHEED MARTIN is contracting.

(g) “Task Order” means a separate order issued under this Contract.

(h) “Work” means all required labor, articles, materials, supplies, goods, and services constituting the subject matter of this Contract.

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9. DISPUTES

All disputes under this Contract which are not disposed of by mutual agreement may be decided by recourse to an action at law or in equity. Until final resolution of any dispute hereunder, SELLER shall diligently proceed with the performance of this Contract as directed by LOCKHEED MARTIN.

10. ELECTRONIC CONTRACTING

The parties agree that if this Contract is transmitted electronically neither party shall contest the validity of this Contract, or any Acknowledgement thereof, on the basis that this Contract or Acknowledgement contains an electronic signature.

11. EXPORT CONTROL

(a) SELLER agrees to comply with all applicable U.S. export control laws and regulations, specifically including, but not limited to, the requirements of the Arms Export Control Act, 22 U.S.C.2751-2794, including the International Traffic in Arms Regulation (ITAR), 22 C.F.R. 120 et seq.; and the Export Administration Act, 50 U.S.C. app. 2401-2420, including the Export Administration Regulations, 15 C.F.R. 730-774; including the requirement for obtaining any export license or agreement, if applicable. Without limiting the foregoing, SELLER agrees that it will not transfer any export controlled item, data, or services, to include transfer to foreign persons employed by or associated with, or under contract to SELLER or SELLER’s lower-tier suppliers, without the authority of an export license, agreement, or applicable exemption or exception.

(b) SELLER agrees to notify LOCKHEED MARTIN if any deliverable under this Contract is restricted by export control laws or regulations.

(c) SELLER shall immediately notify the LOCKHEED MARTIN Procurement Representative if SELLER is, or becomes, listed in any Denied Parties List or if SELLER’s export privileges are otherwise denied, suspended or revoked in whole or in part by any U.S. Government entity or agency.

(d) If SELLER is engaged in the business of either exporting or manufacturing (whether exporting or not) defense articles or furnishing defense services, SELLER represents that it is registered with the Office of Defense Trade Controls, as required by the ITAR, and it maintains an effective export/import compliance program in accordance with the ITAR.

(e) Where SELLER is a signatory under a LOCKHEED MARTIN export license or export agreement (e.g., TAA, MLA), SELLER shall provide prompt notification to the LOCKHEED MARTIN Procurement Representative in the event of changed circumstances including, but not limited to, ineligibility, a violation or potential violation of the ITAR, and the initiation or existence of a U.S. Government investigation, that could affect the SELLER’s performance under this Contract.

(f) SELLER shall be responsible for all losses, costs, claims, causes of action, damages, liabilities and expense, including attorneys’ fees, all expense of litigation and/or settlement, and court costs, arising from any act or omission of SELLER, its officers, employees, agents, suppliers, or subcontractors at any tier, in the performance of any of its obligations under this clause.

12. EXTRAS

Work shall not be supplied in excess of quantities specified in this Contract. SELLER shall be liable for handling charges and return shipment costs for any excess quantities.

13. FURNISHED PROPERTY

(a) LOCKHEED MARTIN may provide to SELLER property owned by either LOCKHEED MARTIN or its customer (Furnished Property). Furnished Property shall be used only for the performance of this Contract.

(b) Title to Furnished Property shall remain in LOCKHEED MARTIN or its customer. SELLER shall clearly mark (if not so marked) all Furnished Property to show its ownership.

(c) Except for reasonable wear and tear, SELLER shall be responsible for, and shall promptly notify LOCKHEED MARTIN of, any loss or damage. Without additional charge, SELLER shall manage, maintain, and preserve Furnished Property in accordance with good commercial practice.

(d) At LOCKHEED MARTIN’s request, and/or upon completion of this Contract, the SELLER shall submit, in an acceptable form, inventory lists of Furnished Property and shall deliver or make such other disposal as may be directed by LOCKHEED MARTIN.

(e) The Government Property clause contained in Section II shall apply in lieu of paragraphs (a) through (d) above with respect to Government Furnished Property, or property to which the Government takes title under this Contract.

14. GRATUITIES/KICKBACKS

(a) No gratuities (in the form of entertainment, gifts, or otherwise) or kickbacks shall be offered or given by SELLER, to any employee of LOCKHEED MARTIN for the purpose of obtaining or rewarding favorable treatment as a supplier.

(b) By accepting this Contract, SELLER certifies and represents that it has not made or solicited and will not make or solicit kickbacks in violation of FAR 52.203-7 or the Anti-Kickback Act of 1986 (41 USC 51-58), both of which are incorporated herein by this specific reference, except that paragraph (c)(1) of FAR 52.203-7 shall not apply.

15. INDEPENDENT CONTRACTOR RELATIONSHIP

(a) SELLER is an independent contractor in all its operations and activities hereunder. The employees used by SELLER to perform Work under this Contract shall be SELLER’s employees exclusively without any relation whatsoever to LOCKHEED MARTIN.

(b) SELLER shall be responsible for all losses, costs, claims, causes of action, damages, liabilities, and expenses, including attorneys’ fees, all expenses of litigation and/or settlement, and court costs, arising from any act or omission of SELLER, its officers, employees, agents, suppliers, or subcontractors at any tier, in the performance of any of its obligations under this Contract.

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16. INFORMATION OF LOCKHEED MARTIN

Information provided by LOCKHEED MARTIN to SELLER remains the property of LOCKHEED MARTIN. SELLER agrees to comply with the terms of any proprietary information agreement with LOCKHEED MARTIN and to comply with all proprietary information markings and restrictive legends applied by LOCKHEED MARTIN to anything provided hereunder to SELLER. SELLER agrees not to use any LOCKHEED MARTIN provided information for any purpose except to perform this Contract and agrees not to disclose such information to third parties without the prior written consent of LOCKHEED MARTIN.

17. INFORMATION OF SELLER

SELLER shall not provide any Proprietary Information to LOCKHEED MARTIN without prior execution of a proprietary information agreement by the parties.

18. INSPECTION AND ACCEPTANCE

(a) LOCKHEED MARTIN and its customer may inspect all Work at reasonable times and places, including, when practicable, during manufacture and before shipment. SELLER shall provide all information, facilities, and assistance necessary for safe and convenient inspection without additional charge.

(b) No such inspection shall relieve SELLER of its obligations to furnish all Work in accordance with the requirements of this Contract. LOCKHEED MARTIN’s final inspection and acceptance shall be at destination.

(c) If SELLER delivers non-conforming Work, LOCKHEED MARTIN may: (i) accept all or part of such Work at an equitable price reduction; (ii) reject such Work; or (iii) make, or have a third party make, all repairs, modifications, or replacements necessary to enable such Work to comply in all respects with Contract requirements and charge the cost incurred to SELLER.

(d) SELLER shall not re-tender rejected Work without disclosing the corrective action taken.

19. INSURANCE/ENTRY ON LOCKHEED MARTIN PROPERTY

(a) In the event that SELLER, its employees, agents, or subcontractors enter the site(s) of LOCKHEED MARTIN or its customers for any reason in connection with this Contract then SELLER and its subcontractors shall procure and maintain for the performance of this Contract worker’s compensation, comprehensive general liability, bodily injury and property damage insurance in reasonable amounts, and such other insurance as LOCKHEED MARTIN may require. In addition, SELLER and its subcontractors shall comply with all site requirements. SELLER shall provide LOCKHEED MARTIN thirty (30) days advance written notice prior to the effective date of any cancellation or change in the term or coverage of any of SELLER’s required insurance, provided however such notice shall not relieve SELLER’s of its obligations to procure and maintain the required insurance. If requested, SELLER shall send a “Certificate of Insurance” showing SELLER’s compliance with these requirements. SELLER shall name LOCKHEED MARTIN as an additional insured for the duration of this Contract. Insurance maintained pursuant to this clause shall be considered primary as respects the interest of LOCKHEED MARTIN and is not contributory with any insurance, which LOCKHEED MARTIN may carry. “Subcontractor” as used in this clause shall include SELLER’s subcontractors at any tier. SELLER’s obligations for procuring and maintaining insurance coverages are freestanding and are not affected by any other language in this Contract.

(b) SELLER shall indemnify and hold harmless LOCKHEED MARTIN, its officers, employees, and agents from any losses, costs, claims, causes of action, damages, liabilities, and expenses, including attorneys’ fees, all expenses of litigation and/or settlement, and court costs, by reason of property damage or loss or personal injury to any person caused in whole or in part by the actions or omissions of SELLER, its officers, employees, agents, suppliers, or subcontractors.

20. INTELLECTUAL PROPERTY

(a) SELLER warrants that the Work performed or delivered under this Contract will not infringe or otherwise violate the intellectual property rights of any third party in the United States or any foreign country. SELLER agrees to defend, indemnify, and hold harmless LOCKHEED MARTIN and its customers from and against any claims, damages, losses, costs, and expenses, including reasonable attorneys’ fees, arising out of any action by a third party that is based upon a claim that the Work performed or delivered under this Contract infringes or otherwise violates the intellectual property rights of any person or entity.

(b) All data, copyrights, reports, and works of authorship developed in performance of this Contract shall be the sole property of LOCKHEED MARTIN, shall be used by SELLER solely in work for LOCKHEED MARTIN. To the extent that any of the deliverable items may not, by operation of law, be works made for hire, SELLER hereby assigns to LOCKHEED MARTIN the ownership of copyright in the deliverable items and LOCKHEED MARTIN shall have the right to obtain and hold in its own name copyrights, registrations, and similar protection which may be available in the deliverable items. SELLER agrees to give LOCKHEED MARTIN or its designees all assistance reasonably required to perfect such rights. SELLER certifies the originality of all deliverable items and states that no portion is protected by any copyright or similar right vested in any third party.

21. NEW MATERIALS

The Work to be delivered hereunder shall consist of new materials, as defined in FAR 52.211-5, not used, or reconditioned, remanufactured, or of such age as to impair its usefulness or safety.

22. OFFSET CREDIT/COOPERATION

This Contract has been entered into in direct support of LOCKHEED MARTIN’s international offset programs. All offset benefit credits resulting from this Contract are the sole property of LOCKHEED MARTIN to be applied to the offset program of its choice. SELLER agrees to assist LOCKHEED MARTIN in securing appropriate offset credits from the respective country government authorities.

23. PACKING AND SHIPMENT

(a) Unless otherwise specified, all Work is to be packed in accordance with good commercial practice.

(b) A complete packing list shall be enclosed with all shipments. SELLER shall mark containers or packages with necessary lifting, loading, and shipping information, including the LOCKHEED MARTIN Contract number, item number, dates of shipment, and the names and addresses of consignor and consignee. Bills of lading shall include this Contract number.

(c) Unless otherwise specified, delivery shall be FOB Place of Shipment.

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24. PAYMENTS, TAXES, AND DUTIES

(a) Unless otherwise provided, terms of payment shall be net thirty (30) days from the latest of the following: (i) LOCKHEED MARTIN’s receipt of the SELLER’s proper invoice; (ii) Scheduled delivery date of the Work; or (iii) Actual delivery of the Work. LOCKHEED MARTIN shall have a right of setoff against payments due or at issue under this Contract or any other contract between the parties.

(b) Each payment made shall be subject to reduction to the extent of amounts which are found by LOCKHEED MARTIN not to have been properly payable, and shall also be subject to reduction for overpayments.

(c) Payment shall be deemed to have been made as of the date of mailing LOCKHEED MARTIN’s payment or electronic funds transfer.

(d) Unless otherwise specified, prices include all applicable federal, state, and local taxes, duties, tariffs, and similar fees imposed by any government, all of which shall be listed separately on the invoice.

25. PRECEDENCE

Any inconsistencies in this Contract shall be resolved in accordance with the following descending order of precedence: (i) Face of the Purchase Order and/or Task Order, release document or schedule, (including any continuation sheets), as applicable, including any special provisions; (ii) This CORPDOC; and (iii) Statement of Work.

26. PRIORITY RATING

If so identified, this Contract is a “rated order” certified for national defense use, and the SELLER shall follow all the requirements of the Defense Priorities and Allocation System Regulation (15 C.F.R. Part 700).

27. QUALITY CONTROL SYSTEM

(a) SELLER shall provide and maintain a quality control system to an industry recognized Quality Standard and in compliance with any other specific quality requirements identified in this Contract.

(b) Records of all quality control inspection work by SELLER shall be kept complete and available to LOCKHEED MARTIN and its customers.

28. RELEASE OF INFORMATION

Except as required by law, no public release of any information, or confirmation or denial of same, with respect to this Contract or the subject matter hereof, will be made by SELLER without the prior written approval of LOCKHEED MARTIN.

29. SEVERABILITY

Each paragraph and provision of this Contract is severable, and if one or more paragraphs or provisions are declared invalid, the remaining paragraphs and provisions of this Contract will remain in full force and effect.

30. STOP WORK

(a) SELLER shall stop Work for up to ninety (90) days in accordance with any written notice received from LOCKHEED MARTIN, or for such longer period of time as the parties may agree and shall take all reasonable steps to minimize the incurrence of costs allocable to the Work during the period of Work stoppage.

(b) Within such period, LOCKHEED MARTIN shall either terminate in accordance with the provisions of this Contract or continue the Work by written notice to SELLER. In the event of a continuation, an equitable adjustment in accordance with the principles of the “Changes” clause shall be made to the price, delivery schedule, or other provision(s) affected by the Work stoppage, if applicable, provided that the claim for equitable adjustment is made within thirty (30) days after date of notice to continue.

31. SURVIVABILITY

(a) If this Contract expires, is completed, or is terminated, SELLER shall not be relieved of those obligations contained in the following provisions:

Applicable Laws

Electronic Contracting

Export Control

Independent Contractor Relationship

Information of Lockheed Martin

Insurance/Entry on Lockheed Martin Property

Intellectual Property

Release of Information

Warranty

(b) Those U.S. Government flowdown provisions that by their nature should survive.

32. TERMINATION FOR CONVENIENCE

(a) For specially performed Work:

(i) LOCKHEED MARTIN may terminate part or all of this Contract for its convenience by giving written notice to SELLER.

(ii) Upon termination, in accordance with LOCKHEED MARTIN written direction, SELLER will immediately: (i) Cease work; (ii) Prepare and submit to LOCKHEED MARTIN an itemization of all completed and partially completed deliverables and services; (iii) Deliver to LOCKHEED MARTIN deliverables satisfactorily completed up to the date of termination at the agreed upon prices in the relevant Statement of Work; and (iv) Deliver upon request any Work in process. In the event LOCKHEED MARTIN terminates for its convenience after performance has commenced, LOCKHEED MARTIN will compensate SELLER for the actual, allowable, and reasonable expenses incurred by SELLER for Work in process up to and including the date of termination provided SELLER uses reasonable efforts to mitigate LOCKHEED MARTIN’s liability under this clause.

(iii) In no event shall LOCKHEED MARTIN be liable for lost or anticipated profits, unabsorbed indirect costs or overhead, or for any sum in excess of the total Contract price. SELLER’s termination claim shall be submitted within ninety (90) days from the effective date of the termination.

(b) For other than specially performed Work: LOCKHEED MARTIN may terminate part or all of this Contract for its convenience by giving written notice to SELLER and LOCKHEED MARTIN’s only obligation to SELLER shall be payment of a mutually agreed-upon restocking or service charge.

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(c) In either case, SELLER shall continue all Work not terminated.

TIMELY PERFORMANCE

(a) SELLER’s timely performance is a critical element of this Contract.

(b) Unless advance shipment has been authorized in writing by LOCKHEED MARTIN, LOCKHEED MARTIN may store at SELLER’s expense, or return, shipping charges collect, all Work received in advance of the scheduled delivery date.

(c) If SELLER becomes aware of difficulty in performing the Work, SELLER shall timely notify LOCKHEED MARTIN, in writing, giving pertinent details. This notification shall not change any delivery schedule.

(d) In the event of a termination for convenience or change, no claim will be allowed for any manufacture or procurement in advance of SELLER’s normal flow time unless there has been prior written consent by LOCKHEED MARTIN.

34. WAIVERS, APPROVALS, AND REMEDIES

(a) Failure by LOCKHEED MARTIN to enforce any of the provisions of this Contract shall not be construed as a waiver of the requirements of such provisions, or as a waiver of the right of LOCKHEED MARTIN thereafter to enforce each such provision.

(b) LOCKHEED MARTIN’s approval of documents shall not relieve SELLER of its obligation to comply with the requirements of this Contract.

(c) The rights and remedies of LOCKHEED MARTIN in this Contract are cumulative and in addition to any other rights and remedies provided by law or in equity.

35. WARRANTY

SELLER warrants that all Work furnished pursuant to this Contract shall strictly conform to applicable specifications, drawings, samples, descriptions, and other requirements of this Contract and be free from defects in design, material, and workmanship. This warranty shall begin upon final acceptance and extend for a period of one (1) year. If any non-conforming Work is identified within the warranty period, SELLER, at LOCKHEED MARTIN’s option, shall promptly repair, replace, or reperform the non-conforming Work. Transportation of replacement Work, return of non-conforming Work, and re-performance of Work shall be at SELLER’s expense. If repair, or replacement, or reperformance of Work is not timely, LOCKHEED MARTIN may elect to return, reperform, or repair, replace, or reprocure the Work at SELLER’s expense. All warranties shall run to LOCKHEED MARTIN and its customers.

SECTION II: FAR FLOWDOWN PROVISIONS

A. INCORPORATION OF FAR CLAUSES

The Federal Acquisition Regulation (FAR) clauses referenced below are incorporated herein by reference, with the same force and effect as if they were given in full text, and are applicable, including any notes following the clause citation, to this Contract. If the date or substance of any of the clauses listed below is different from the date or substance of the clause actually incorporated in the Prime Contract referenced by number herein, the date or substance of the clause incorporated by said Prime Contract shall apply instead. The Contracts Disputes Act shall have no application to this Contract. Any reference to a “Disputes” clause shall mean the “Disputes” clause of this Contract.

B. GOVERNMENT SUBCONTRACT

This Contract is entered into by the parties in support of a U.S. Government contract.

As used in the FAR clauses referenced below and otherwise in this Contract:

1. “Commercial Item” means a commercial item as defined in FAR 2.101.

2 “Contract” means this contract.

3. “Contracting Officer” shall mean the U.S. Government Contracting Officer for LOCKHEED MARTIN’s government prime contract under which this Contract is entered.

4. “Contractor” and “OFFEROR” means the SELLER, as defined in this CORPDOC 2, acting as the immediate (first tier) subcontractor to LOCKHEED MARTIN.

5. “Prime Contract” means the contract between LOCKHEED MARTIN and the U.S. Government or between LOCKHEED MARTIN and its higher-tier contractor who has a contract with the U.S. Government.

6. “Subcontract” means any contract placed by the contractor or lower-tier subcontractors under this Contract.

C. NOTES

1. Substitute “LOCKHEED MARTIN” for “Government” or “United States” throughout this clause.

2. Substitute “LOCKHEED MARTIN Procurement Representative” for “Contracting Officer”, “Administrative Contracting Officer”, and “ACO” throughout this clause.

3. Insert “and LOCKHEED MARTIN” after “Government” throughout this clause.

4. Insert “or LOCKHEED MARTIN” after “Government” throughout this clause.

5. Communication/notification required under this clause from/to the Contractor to/from the Contracting Officer shall be through LOCKHEED MARTIN.

6. Insert “and LOCKHEED MARTIN” after “Contracting Officer”, throughout the clause.

7. Insert “or LOCKHEED MARTIN PROCUREMENT REPRESENTATIVE” after “Contracting Officer”, throughout the clause.

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D. AMENDMENTS REQUIRED BY PRIME CONTRACT

Contractor agrees that upon the request of LOCKHEED MARTIN it will negotiate in good faith with LOCKHEED MARTIN relative to amendments to this Contract to incorporate additional provisions herein or to change provisions hereof, as LOCKHEED MARTIN may reasonably deem necessary in order to comply with the provisions of the applicable Prime Contract or with the provisions of amendments to such Prime Contract. If any such amendment to this Contract causes an increase or decrease in the cost of, or the time required for, performance of any part of the Work under this Contract, an equitable adjustment shall be made pursuant to the “Changes” clause of this Contract.

E. PRESERVATION OF THE GOVERNMENT’S RIGHTS

If LOCKHEED MARTIN furnishes designs, drawings, special tooling, equipment, engineering data, or other technical or proprietary information (Furnished Items) which the U.S. Government owns or has the right to authorize the use of, nothing herein shall be construed to mean that LOCKHEED MARTIN, acting on its own behalf, may modify or limit any rights the Government may have to authorize the Contractor’s use of such Furnished Items in support of other U.S. Government prime contracts.

F. FAR FLOWDOWN CLAUSES

REFERENCE    TITLE

1. The following FAR clauses apply to this Contract:

(a)	52.215-20	REQUIREMENTS FOR COST OR PRICING DATA OR INFORMATION OTHER THAN COST OR PRICING DATA (OCT 1997) ( Note 2 applies.)
(b)	52.215-21	REQUIREMENTS FOR COST OR PRICING DATA OR INFORMATION OTHER THAN COST OR PRICING DATA – MODIFICATIONS (OCT 1997) (Note 2 applies.)
(c)	52.219-8	UTILIZATION OF SMALL BUSINESS CONCERNS (OCT 2000)
(d)	52.222-21	PROHIBITION OF SEGREGATED FACILITIES (FEB 1999)
(e)	52.222-26	EQUAL OPPORTUNITY (APR 2002) (Only paragraphs (b)(l)-(11) applies.)
(f)	52.225-13	RESTRICTION ON CERTAIN FOREIGN PURCHASES (OCT 2003)
(g)	52.244-6	SUBCONTRACTS FOR COMMERCIAL ITEMS (APR 2003)
(h)	52.247-64	PREFERENCE FOR PRIVATELY OWNED U.S. FLAG COMMERCIAL VESSELS (APR 2003)

2. The following FAR clauses apply to this Contract if the value of this Contract equals or exceeds $10,000:

(a) 52.222-36 AFFIRMATIVE ACTION FOR WORKERS WITH DISABILITIES (JUNE 1998)

3. The following FAR clauses apply to this Contract if the value of this Contract equals or exceeds $25,000:

(a) 52.222-35 EQUAL OPPORTUNITY FOR SPECIAL DISABLED VETERANS, VETERANS OF THE VIETNAM ERA, AND OTHER ELIGIBLE VETERANS (DEC 2001)

4. The following FAR clauses apply to this Contract if the value of this Contract equals or exceeds $500,000:

(a) 52.219-9 SMALL BUSINESS SUBCONTRACTING PLAN (JAN 2002) (Applicable if the Contractor is not a small business. Note 2 is applicable to paragraph (c) only; the Contractors subcontracting plan is incorporated herein by reference.)

5. The following FAR clauses apply to this Contract as indicated:

(a)	52.204-2	SECURITY REQUIREMENTS (AUG 1996) (Applicable if the Work requires access to classified information.)
(b)	52.223-11	OZONE-DEPLETING SUBSTANCES (MAR 2001) (Applicable if the Work was manufactured with or contains ozone-depleting substances.)
(c)	52.225-1	BUY AMERICAN ACT—SUPPLIES (JUN 2003) (Applicable if the Work contains other than domestic components. Note 2 applies to the first time “Contracting Officer” is mentioned in paragraph (c).)
(d)	52.225-5	TRADE AGREEMENTS (OCT 2003) (Applicable if the Work contains other than U.S. made, designated country, Caribbean or NAFTA country end products.)
(e)	52.227-19	COMMERCIAL COMPUTER SOFTWARE-RESTRICTED RIGHTS (JUN 1987) (Applicable only if existing computer software is to be delivered under this Contract.)
(f)	52.245-2	GOVERNMENT PROPERTY (FIXED PRICE CONTRACTS) (JUN 2003) (Applicable if Government property is furnished in the performance of this Contract. Note 1 applies except in the phrases “Government property”, “Government-furnished property”, and in references to title to property. The second time “Government appears in paragraph (b) (ii) “Government” stays “Government”. Note 2 applies. The following is added as paragraph (m): “Contractor shall provide to LOCKHEED MARTIN immediate notice of any disapproval, withdrawal of approval, or non-acceptance by the Government of its property control system.”)

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G. CERTIFICATIONS AND REPRESENTATIONS

1. This clause contains certifications and representations that are material representations of fact upon which LOCKHEED MARTIN will rely in making awards to Contractor. By submitting its written offer, or providing oral offers/quotations at the request of LOCKHEED MARTIN, or accepting any Contract, Contractor certifies to the representations and certifications as set forth below in this clause. These certifications shall apply whenever these terms and conditions are incorporated by reference in any Contract, agreement, other contractual document, or any quotation, request for quotation (oral or written), request for proposal or solicitation (oral or written), issued by LOCKHEED MARTIN. Contractor shall immediately notify LOCKHEED MARTIN of any change of status with regard to these certifications and representations.

(a) FAR 52.209-5 Certification Regarding Debarment, Suspension, Proposed Debarment, and Other Responsibility Matters.

(1) Contractor certifies that, to the best of its knowledge and belief, that Contractor and/or any of its Principals, (as defined in FAR 52.209-5,) are not presently debarred, suspended, proposed for debarment, or declared ineligible for the award of contracts by any Federal agency.

(2) Contractor shall provide immediate written notice to LOCKHEED MARTIN if, any time prior to award of any contract, it learns that its certification was erroneous when submitted or has become erroneous by reason of changed circumstances.

(b) FAR 52.222-22 Previous Contracts and Compliance Reports. Contractor represents that if Contractor has participated in a previous contract or subcontract subject to Equal Opportunity clause (FAR 52.222-26): (i) Contractor has filed all required compliance reports, and (ii) that representations indicating submission of required compliance reports, signed by proposed subcontractors, will be obtained before subcontract awards.

(c) FAR 52.222-25 Affirmative Action Compliance. Contractor represents: (i) that Contractor has developed and has on file at each establishment, Affirmative Action programs required by the rules and regulations of the Secretary of Labor (41 CFR 60-1 and 60-2), or (ii) that in the event such a program does not presently exist, Contractor will develop and place in operation such a written Affirmative Action Compliance Program within one-hundred twenty (120) days from the award of this Contract.

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LOCKHEED MARTIN CORPORATION

CORPDOC 2B

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) FLOWDOWN PROVISIONS FOR SUBCONTRACTS/PURCHASE ORDERS FOR COMMERCIAL ITEMS UNDER A U.S. GOVERNMENT PRIME CONTRACT

A. INCORPORATION OF FAR/NASA FAR SUPP CLAUSES

The Federal Acquisition Regulation (FAR) and National Aeronautics and Space Administration (NASA) FAR Supplement (NASA FAR Supp) clauses referenced below are incorporated herein by reference, with the same force and effect as if they were given in full text, and are applicable, including any notes following the clause citation, to this Contract. If the date or substance of any of the clauses listed below is different from the date or substance of the clause actually incorporated in the Prime Contract referenced by number herein, the date or substance of the clause incorporated by said Prime Contract shall apply instead. The Contracts Disputes Act shall have no application to this Contract. Any reference to a “Disputes” clause shall mean the “Disputes” clause of this Contract.

B. GOVERNMENT SUBCONTRACT

This Contract is entered into by the Parties in support of a U.S. Government contract.

As used in the clauses referenced below and otherwise in this Contract:

1. “Administrator” means the Administrator or Deputy Administrator of NASA; and the term “his duly authorized representative” means any person or persons or board “other than the Contracting Officer” authorized to act for the Administrator.

2. “Commercial Item” means a commercial item as defined in FAR 2.101.

3. “Contract” means this contract.

4. “Contracting Officer” shall mean the U.S. Government Contracting Officer for LOCKHEED MARTIN’s government prime contract under which this Contract is entered.

5. “Contractor” or “Offeror” means the SELLER, as defined in CORPDOC 2, acting as the immediate (first-tier) subcontractor to LOCKHEED MARTIN.

6. “Prime Contract” means the contract between LOCKHEED MARTIN and the U.S. Government or between LOCKHEED MARTIN and its higher-tier contractor who has a contract with the U.S. Government.

7. “Subcontract” means any contract placed by the Contractor or lower-tier subcontractors under this Contract.

C. NOTES

1. Substitute “LOCKHEED MARTIN” for “Government” or “United States” throughout this clause.

2. Substitute “LOCKHEED MARTIN Procurement Representative” for “Contracting Officer”, “Administrative Contracting Officer”, and “ACO” throughout this clause.

3. Insert “and LOCKHEED MARTIN” after “Government”, throughout this clause.

4. Insert “or LOCKHEED MARTIN” after “Government” throughout this clause.

5. Communication/notification required under this clause from/to the Contractor to/from the Contracting Officer shall be through LOCKHEED MARTIN.

6. Insert “and Lockheed Martin” after “Contracting Officer” throughout the clause.

7. Insert “or Lockheed Martin Procurement Representative” after “Contracting Officer” throughout the clause.

D. AMENDMENTS REQUIRED BY PRIME CONTRACT

Contractor agrees that upon the request of LOCKHEED MARTIN it will negotiate in good faith with LOCKHEED MARTIN relative to amendments to this Contract to incorporate additional provisions herein or to change provisions hereof, as LOCKHEED MARTIN may reasonably deem necessary in order to comply with the provisions of the applicable Prime Contract or with the provisions of amendments to such Prime Contract. If any such amendment to this Contract causes an increase or decrease in the cost of, or the time required for, performance of any part of the Work under this Contract, an equitable adjustment shall be made pursuant to the “Changes” clause of this Contract

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E. PRESERVATION OF THE GOVERNMENT’S RIGHTS

If LOCKHEED MARTIN furnishes designs, drawings, special tooling, equipment, engineering data, or other technical or proprietary information (Furnished Items) to which the U. S. Government owns or has the right to authorize the use of, nothing herein shall be construed to mean that LOCKHEED MARTIN, acting on its own behalf, may modify or limit any rights the Government may have to authorize the Contractor’s use of such Furnished Items in support of other U. S. Government prime contracts.

F. FAR FLOWDOWN CLAUSES

REFERENCE TITLE

1. The following FAR clauses apply to this Contract:

(a) 52.227-14 RIGHTS IN DATA - GENERAL (JUN 1987)

G. NASA FAR SUPPLEMENT FLOWDOWN CLAUSES

1. The following NASA FAR Supp clauses apply to this Contract:

(a)	18-52.208-81	RESTRICTIONS ON PRINTING AND DUPLICATING (OCT 2001) (Note 2 applies.)
(b)	18-52.211-70	PACKAGING, HANDLING, AND TRANSPORTATION (JUN 2000) (Note 2 applies.)
(c)	18-52.219-74	USE OF RURAL AREA SMALL BUSINESSES (SEP 1990)
(d)	18-52.219-76	NASA 8 PERCENT GOAL (JUL 1997)
(e)	18-52.225-70	EXPORT LICENSES (FEB 2000)
(f)	18-52.227-14	RIGHTS IN DATA - GENERAL (undated) (Modifies FAR 52.227-14. Note 5 applies.)
(g)	18-52.227-19	COMMERCIAL COMPUTER SOFTWARE-RESTRICTED RIGHTS (undated) (Modifies FAR 52.227-19. Note 6 applies.)
(h)	18-52.242-73	NASA CONTRACTOR FINANCIAL MANAGEMENT REPORTING (JUL 2000) (Note 2 applies.)

2. The following NASA FAR Supp clauses apply to this Contract if the value of this Contract equals or exceeds $100,000:

(a) 18-52.244-70 GEOGRAPHIC PARTICIPATION IN THE AEROSPACE PROGRAM (APR 1985)

3. The following NASA FAR Supp clauses apply to this Contract if the value of this Contract equals or exceeds $500,000:

(a) 18-52.219-75 SMALL BUSINESS SUBCONTRACTING REPORTING (MAY 1999) (Applicable if FAR 52.219-9 applies to this Contract.)

4. The following NASA FAR Supp clauses apply to this Contract as indicated:

(a)	18-52.223-70	SAFETY AND HEALTH (APR 2002) (Applicable when any of the conditions in NASA FAR Supp 1823.7001 (a) exist. Note 2 applies to paragraphs (d), (e), (f) and (h). Notes 3 and 6 apply to paragraph (i). Note 4 applies to paragraphs (c) and (g)(1).)
(b)	18-52.223-71	FREQUENCY AUTHORIZATION (DEC 1988) (Applicable if this Contract requires the development, production, test or operation of a device for which a radio frequency is required. Note 2 applies)
(c)	18-52.223-74	DRUG AND ALCOHOL FREE WORKFORCE (MAR 1996) (Applicable if Work is performed by an employee in a sensitive position as defined in the clause.)
(d)	18-52.227-11	PATENT RIGHTS - RETENTION BY THE CONTRACTOR (SHORT FORM) (undated) (Applicable if this Contract is for experimental, developmental, or research Work and Contractor is a small business concern or domestic nonprofit organization. Reports required by this clause shall be filed with the agency identified in this Contract. If no agency is identified, contact the LOCKHEED MARTIN Procurement Representative identified on the face of this Contract.)
(e)	18-52.227-70	NEW TECHNOLOGY (MAY 2002) (Applicable if this Contract is for experimental, developmental, or research work to be performed by other than a small business firm or non-profit organization. Note 2 applies to (g)(1) the first time “Contracting Officer” appears, (g)(4) and (h). Note 4 applies to (g)(4).)
(f)	18-52.227-71	REQUESTS FOR WAIVER OF RIGHTS TO INVENTIONS (APR 1984) (Applicable if 18-52.227-70 applies.)
(g)	18-52.227-72	DESIGNATION OF NEW TECHNOLOGY REPRESENTATIVE AND PATENT REPRESENTATIVE (JUL 1997) (Applicable if this Contract contains either of the clauses at FAR 52.227-11 or 18-52.227-70. The respective representatives referenced in the clause are identified in the Schedule.)
(h)	18-52.227-86	COMMERCIAL COMPUTER SOFTWARE - LICENSING (DEC 1987) (Applicable for the purchase of existing computer software in accordance with FAR 27.405(b)(2). Replaces FAR 52.227-19. Note 6 applies.)
(i)	18-52.227-87	TRANSFER OF TECHNICAL DATA UNDER SPACE STATION INTERNATIONAL AGREEMENT (APR 1989) (Applicable if this Contract supports Space Station Freedom Program activities that may involve transfer of technical data subject to the International Traffic in Arms Regulations (ITAR), 22 CFR Parts 120-130, or the Export Administration Regulations (EAR), 15 CFR Parts 730-774, in accordance with the NASA Export Control Program.)

2

OMB Approval 2700-0042

SOLICITATION, OFFER AND AWARD 1.      THIS CONTRACT IS A RATED ORDER UNDER DPAS (15 CFR 350) Ø       RATING DO-C9 PAGE i of 52

2. CONTRACT NO. NNJ04AA03C	3. SOLICITATION NO.	4. TYPE OF SOLICITATION ¨ SEALED BID (IFB) x NEGOTIATED (RFP)	5. DATE ISSUED	6. REQUISITION/PURCHASE NO. GF80726B11
7. ISSUED BY	CODE		8. ADDRESS OFFER TO (If other than Item 7)

LOCKHEED MARTIN INTEGRATED SYSTEMS

595 GEMINI

HOUSTON, TX 77058

NOTE: In sealed bid solicitations “offer” and “offeror” mean “bid” and “bidder”

SOLICITATION

9. Sealed offers in original and (See Provision L.15)         copies for furnishing the supplies or services in the Schedule will be received at the place specified in Item 8, or if handcarried, in the depository located in See Provision L.14 until 11:00 a.m. local time, on See Provision L.14 (date).

CAUTION - LATE Submissions, Modifications, and Withdrawals: See Section L, Provision No. 52.214-7 or 52.215-1. All offers are subject to all terms and conditions contained in this solicitation.

10. FOR INFORMATION CALL: Ø	A. NAME Gary Moeller	B. TELEPHONE NO. (NO COLLECT CALLS)			C. EMAIL ADDRESS
		AREA CODE 281	NUMBER 283-4375	EXT.

11. TABLE OF CONTENTS

(X).	SEC.	DESCRIPTION	PAGE(S)	(X)	SEC.	DESCRIPTION	PAGE(S)
PART I – THE SCHEDULE				PART II – CONTRACT CLAUSES
x	A	SOLICITATION/CONTRACT FORM	6	x	I	CONTRACT CLAUSES	3
x	B	SUPPLIES OR SERVICES AND PRICES/COSTS	2	PART III – LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH.
x	C	DESCRIPTION/SPECS./WORK STATEMENT	1	x	J	LIST OF ATTACHMENTS	1
x	D	PACKAGING AND MARKING	2	PART IV – REPRESENTATIONS AND INSTRUCTIONS
x	E	INSPECTION AND ACCEPTANCE	2	¨	K	REPRESENTATIONS, CERTIFICATIONS AND
x	F	DELIVERIES OR PERFORMANCE	2			OTHER STATEMENTS OF OFFERORS
x	G	CONTRACT ADMINISTRATION DATA	11	¨	L	INSTRS., CONDS., AND NOTICES TO OFFERORS
x	H	SPECIAL CONTRACT REQUIREMENTS	22	¨	M	EVALUATION FACTORS FOR AWARD

OFFER (Must be fully completed by offeror)

NOTE: Item 12 does not apply if the solicitation includes the provisions at 52.214-16, Minimum Bid Acceptance Period.

12. In compliance with the above, the undersigned agrees, if this offer is accepted within         calendar days (60 calendar days unless a different period is inserted by the offeror) from the date for receipt of offers specified above, to furnish any or all items upon which prices are offered at the price set opposite each item, delivered at the designated point(s), within the time specified in the schedule.

13.    DISCOUNT FOR PROMPT PAYMENT
(See Section I, clause No. 52-232-8) Ø       10 CALENDAR DAYS
% 20 CALENDAR DAYS
% 30 CALENDAR DAYS
% CALENDAR DAYS
%

14.    ACKNOWLEDGMENT OF AMENDMENTS (The offeror acknowledges receipt of amendments to the SOLICITATION). For offerors and related documents numbered and dated: AMENDMENT NO DATE AMENDMENT NO DATE

15.    NAME AND ADDRESS OF OFFEROR	CODE                      FACILITY	16.    NAME AND TITLE OF PERSON AUTHORIZED TO SIGN OFFER (Type or print)
	SPACEHAB, Inc. 12130 Highway 3, Bldg 1 Webster, TX 77598

15B.TELEPHONE NO. (Include area code) 15C. CHECK IF REMITTANCE ADDRESS IS DIFFERENT FROM ABOVE – ENTER ¨ SUCH ADDRESS IN SCHEDULE 17. SIGNATURE 18. OFFER DATE

AWARD (To be completed by Lockheed Martin)

19.    ACCEPTED AS TO ITEMS NUMBERED 20. AMOUNT $53,271,651 21. ACCOUNTING AND APPROPRIATION

22.    AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION ¨10 U.S.C. 2304(c) (        )            ¨ 41 U.S.C. 253(c)(        ) 23.    SUBMIT INVOICES TO ADDRESS SHOWN IN: (4 copies unless otherwise specified) Ø ITEM

24.    ADMINISTERED BY (If other than Item 7) CODE                      25. PAYMENT WILL BE MADE BY CODE                     

26.    NAME OF AUTHORIZED REPRESENTATIVE (Type or______	27.    LOCKHEED MARTIN CORPORATION	28.    AWARD DATE
	(Signature of Authorized Representative)

IMPORTANT - Award will be made on this Form, or on Standard Form 26, or by other authorized official written notice.

Purchase Order No. GF80726B11
SECTION A	CARGO MISSION	ii

SECTION A

SUBCONTRACT FORM

This firm fixed price subcontract is entered into between Lockheed Martin Integrated Systems, hereinafter referred to as Lockheed Martin, LMIS, or Buyer (interchangeably) and SPACEHAB, Inc., herein after referred to as SPACEHAB, SHI, subcontractor or seller.

This subcontract is issued in support of U.S. Government Prime Contract

NNJ04AA03C.

A.1 DETAILED TABLE OF CONTENTS

This subcontract consists of the following Sections:

		PAGE
SECTION A - SOLICITATION/CONTRACT FORM, SF33
A.1	DETAILED TABLE OF CONTENTS	ii
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS
B.1	TOTAL FIRM FIXED PRICE	B-1
B.2	ITEM PRICES	B-1
B.3	PAYMENT SCHEDULE	B-2
B.4	RESERVED	B-2
B.5	AVAILABLE SUBCONTRACT FUNDING	B-2
	EXHIBIT B-1 (PAYMENT SCHEDULE)
SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENTS
C.1	SCOPE OF WORK	C-1
SECTION D - PACKAGING AND MARKING
D.1	LISTING OF CLAUSES INCORPORATED BY REFERENCE	D-1
D.2	PACKAGING, HANDLING & TRANSPORTATION	D-1
D.3	JSC MARKING INSTRUCTIONS	D-1
D.4	KSC 52.247-92 KSC MARKING INSTRUCTIONS	D-2

Purchase Order No. GF80726B11
SECTION A	CARGO MISSION	iii

SECTION E - INSPECTION AND ACCEPTANCE
E.1	LISTING OF CLAUSES INCORPORATED BY REFERENCE	E-1
E.2	RESERVED	E-1
E.3	INSPECTION AND ACCEPTANCE	E-1
E.4	SUBMISSION OF MATERIAL INSPECTION AND RECEIVING REPORTS	E-1
SECTION F - DELIVERIES OR PERFORMANCE
F.1	LISTING OF CLAUSES INCORPORATED BY REFERENCE	F-1
F.2	FLIGHT ITEM	F-1
F.3	KSC SHIPPING INSTRUCTIONS	F-1
F.4	PLACE OF PERFORMANCE	F-2
F.5	PERIOD OF PERFORMANCE	F-2
F.6	DELIVERIES	F-2
F.7	OPTION FOR EAS	F-2
F.8	OPTION FOR ADDITIONAL FRAM SITES	F-2

Purchase Order No. GF80726B11
SECTION A	CARGO MISSION	iv

SECTION G - CONTRACT ADMINISTRATION DATA
G.1	LISTING OF CLAUSES INCORPORATED BY REFERENCE	G-1
G.2	RESERVED	G-1
G.3	SUBMISSION OF VOUCHERS FOR PAYMENT	G-1
G.4	RESERVED	G-2
G.5	TECHNICAL DIRECTION	G-2
G.6	RESERVED	G-2
G.7	INSTALLATION-ACCOUNTABLE GOVERNMENT PROPERTY	G-2
G.8	LIST OF INSTALLATION-ACCOUNTABLE PROPERTY AND SERVICES	G-5
G.9	RESERVED	G-6
G.10	JSC 52.204-91 SECURITY/BADGING REQUIREMENTS FOR FOREIGN NATIONAL VISITORS AND EMPLOYEES/REPRESENTATIVES OF FOREIGN CONTRACTORS	G-6
G.11	IDENTIFICATION OF EMPLOYEES	G-7
G.12	KSC 52.204-90 SECURITY CONTROLS AT KSC	G-7
G.13	PROPERTY MANAGEMENT OF THE UNITED STATES ON-ORBIT SEGMENT (USOS) VEHICLE: ON-ORBIT ACCOUNTABILITY	G-9
G.14	JSC HAZARDOUS MATERIALS USE	G-9
G.15	WORK ELIGIBILITY	G-11
SECTION H - SPECIAL CONTRACT REQUIREMENTS
H.1	LISTING OF CLAUSES INCORPORATED BY REFERENCE	H-1
H.2	RESERVED	H-1
H.3	REPRESENTATIONS, CERTIFICATIONS, AND OTHER STATEMENTS OF OFFERORS	H-1
H.4	SUPERSEDING OF LETTER CONTRACT	H-2
H.5	JSC 52.227-91 (LIMITED) RELEASE OF CONTRACTOR CONFIDENTIAL BUSINESS INFORMATION (CBI)	H-2
H.6	KSC 52.223-97 HAZARDOUS WASTES	H-3
H.7	KSC 52.223-94 HAZARD COMMUNICATION	H-7

Purchase Order No. GF80726B11
SECTION A	CARGO MISSION	v

H.8	KSC 52.242-90 CONTROLS APPLICABLE TO CONTRACTOR’S ACTIVITIES	H-7
H.9	FLIGHT INSURANCE	H-8
H.10	RESERVED	H-10
H.11	RESERVED	H-10
H.12	RESERVED	H-10
H.13	RESERVED	H-10
H.14	DATA RIGHTS NOTICE	H-10
H.15	RESTRICTED RIGHTS NOTICE	H-10
H.16	LIMITED RIGHTS DATA NOTICE	H-11
H.17	MANAGEMENT AND PROTECTION OF DATA OF THIRD PARTIES	H-12
H.18	SPECIAL COMPUTER SOFTWARE PROVISION	H-13
H.19	ASSOCIATE CONTRACTOR AGREEMENT FOR ISS OPERATIONS AND UTILIZATION ACTIVITIES	H-13
H.20	INFORMATION INCIDENTAL TO CONTRACT ADMINISTRATION	H-13
H.21	RESERVED	H-14
H.22	RESERVED	H-14
H.23	GOVERNMENT-PROVIDED RUSSIAN LANGUAGE AND LOGISTICS SERVICES (RLLS)	H-14
H.24	RESERVED	H-15
H.25	RESERVED	H-15
H.26	ADDITIONAL EXPORT CONTROL REQUIREMENTS	H-15
H.27	SUBCONTRACTING WITH RUSSIAN ENTITIES FOR GOODS OR SERVICES	H-17
H.28	FLEXIBILITY IN OPERATIONS	H-18

Purchase Order No. GF80726B11
SECTION A	CARGO MISSION	vi

SECTION I – CONTRACT CLAUSES

I.1	CLAUSES INCORPORATED BY REFERENCE	I-1
I.2	MODIFICATION OF INCORPORATED TERMS AND CONDITIONS	I-1

SECTION J – LIST OF ATTACHMENTS

J.1 LIST OF ATTACHMENTS J-1

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION B	COMMERCIAL CARRIER SERVICES	B-1
	SECTION B
	SUPPLIES OR SERVICES AND PRICES/COSTS

B.1 TOTAL FIRM FIXED PRICE

The total firm fixed price of this subcontract is $53,271,651.00.

(End of Clause)

B.2 ITEM PRICES

The subcontractor shall provide commercial carrier services in accordance with the Statement of Work. The firm fixed price for each line item is set forth in Table B-2 below. The price of this subcontract includes the SHOSS-ED On-Orbit stay for the period through September 2008 and extended on-call support through December 2009. The price of this subcontract includes the increase of the LSM’s mass capability from 5400 pounds to 6000 pounds once the JSC ISS Structures Working Group approves this mass capability.

Table B-2
Line Item No.	Description	Total Price
001	LSM Asset Services	$	24,942,956
002	ICC Asset Services	$	8,400,000
003	Transition Asset Services	$	2,655,044
004	12A.1 LSM I & O Services	$	5,688,461
005	13A.1 LSM I & O Services	$	5,879,461
006	12A.1 ICC I & O Services	$	1,722,918
007	13A.1 ICC I &O Services	$	1,678,135
008	ULF1.1 ICC I & O Services	$	1,954,681
009	ULF1.1 Adjustment	$	349,995
010	Early Ammonia Servicer (EAS) [Option]	$	454,795
011	Additional FRAM Sites (each) [Option]	$	38,928

(End of Clause)

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION B	COMMERCIAL CARRIER SERVICES	B-2

B.3 PAYMENT SCHEDULE

Payment shall be made in accordance with the attached Exhibit B-l payment schedule.

(End of Clause)

B.4 RESERVED

(End of Clause)

B.5 AVAILABLE SUBCONTRACT FUNDING

There is presently available for payment and allotted to this subcontract the amount of $23,697,713.00. It is estimated that this amount will cover payments through March 31, 2005. The parties contemplate that the Buyer will allot additional funds incrementally to the subcontract up to the full amount specified in the payment schedule.

If, after notification, additional funds are not allotted by the end of the period funded or another agreed-upon date, upon the seller’s written request the Buyer will issue a stop work order for this subcontract in accordance with the provisions of the Stop Work Order clause of this subcontract.

Buyer is not obligated to pay seller amounts in excess of the total amount allotted to this subcontract by this clause. Seller agrees that failure to allot funds in accordance with the payment schedule will not change any of the prices therein. Nothing in this clause shall affect the right of Buyer to terminate this subcontract.

(End of Clause)

[END OF SECTION]

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION C	COMMERCIAL CARRIER SERVICES	C-1

SECTION C

DESCRIPTION/SPECIFICATIONS/WORK STATEMENTS

C.1 SCOPE OF WORK

The subcontractor shall provide all personnel, materials, and facilities (except as otherwise provided for in this subcontract) necessary to perform those functions set forth in the attached Statement of Work for Commercial Carrier Services.

(End of Clause)

[END OF SECTION]

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION D	COMMERCIAL CARRIER SERVICES	D-1

SECTION D

PACKAGING AND MARKING

D.1 LISTING OF CLAUSES INCORPORATED BY REFERENCE

I. FEDERAL ACQUISITON REGULATION (48 CHAPTER 1) CLAUSES:

None included by reference.

II. NASA FAR SUPPLEMENT (48 CFR CHAPTER 18) CLAUSES:

Clause Number	Title
None included by reference

D.2 NFS 1852.211-70 PACKAGING, HANDLING, AND TRANSPORTATION (JUN 2000)

(a) The subcontractor shall comply with NPG 6000.1E, “Requirements for Packaging, Handling, and Transportation for Aeronautical and Space Systems, Equipment, and Associated Components”, dated April 26, 1999, as may be supplemented by the statement of work or specifications of this subcontract, for all items designated as Class I, II, or III.

(b) The subcontractor’s packaging, handling, and transportation procedures may be used, in whole or in part, subject to the written approval of Lockheed Martin, provided (1) the subcontractor’s procedures are not in conflict with any requirements of this subcontract, and (2) the requirements of this subcontract shall take precedence in the event of any conflict with the subcontractor’s procedures.

(c) The subcontractor must place the requirements of this clause in all subcontracts for items that will become components of deliverable Class I, II, or III items.

(End of Clause)

D.3 JSC MARKING INSTRUCTIONS

Transportation Officer, Building 421, NASA Johnson Space Center, 2101 NASA Road 1, Houston, TX 77058-3696

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION D	COMMERCIAL CARRIER SERVICES	D-2

In addition, special marks or ultimate consignment will be shown as:

Mark for:	Accountable Property Officer                          {subcontractor fill in}
Mark with:	Purchase Request No.:                      {subcontractor fill in}
	Contract Number: {subcontractor fill in}

For re-issue to:                      {subcontractor fill in}         

(End of Clause)

D.4 KSC 52.247-92 MARKING INSTRUCTIONS (NOV 2000)

Transportation Officer, NASA J-BOSC Warehouse, Building M6-744 Kennedy Space Center, Florida 32899

In addition, special marks or ultimate consignee will be shown as:

Marked For:

NASA Transportation Office

CAPPS Warehouse, Building M6-698

Kennedy Space Center, FL 32899

Contract # {subcontractor fill in}

(End of Clause)

[END OF SECTION]

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION E	COMMERCIAL CARRIER SERVICES	E-1

SECTION E

INSPECTION AND ACCEPTANCE

E.1 LISTING OF CLAUSES INCORPORATED BY REFERENCE

I. FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSES:

Clause Number	Title
None included by reference

II. NASA FAR SUPPLEMENT (48 CFR CHAPTER 18) CLAUSES:

Clause Number	Title
1852.246-73	Human-Space Flight Item (MAR 1997)

E.2 Reserved

(End of Clause)

E.3 INSPECTION AND ACCEPTANCE

Final inspection and acceptance shall be accomplished by Lockheed Martin at any of the locations specified in the statement of work where services shall be provided. Acceptance of flight and ground hardware and integration and operations services shall be by individual flight.

(End of Clause)

E.4 SUBMISSION OF MATERIAL INSPECTION AND RECEIVING REPORTS

Material Inspection and Receiving Reports (DD Form 250) are only required for equipment and hardware deliveries and system turnovers to the government. DD Form 250s will normally be signed by the government within 30 days of contractor submission. If Lockheed Martin is required to submit any DD Form 250 in relation to this subcontract, subcontractor agrees to furnish any necessary assistance and information to complete the DD Form 250(s).

(End of Clause)

[END OF SECTION]

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION F	COMMERCIAL CARRIER SERVICES	F-1

SECTION F

DELIVERIES OR PERFORMANCE

F.1 LISTING OF CLAUSES INCORPORATED BY REFERENCE

I. FEDERAL ACQUISITON REGULATION (48 CHAPTER 1) CLAUSES:

Clause Number	Title
52.242-15	Stop-Work Order (AUG 1989)

II. NASA FAR SUPPLEMENT (48 CFR CHAPTER 18) CLAUSES:

1852.247-73 Bills of Lading (JUN 2002)

F.2 JSC 52.247-95 FLIGHT ITEM (SEP 1989)

Block 16 of each DD Form 250 prepared for hardware or equipment to be shipped under this contract must be annotated as follows in 1/4-inch letters or larger by handprinting or rubber stamp:

“THIS IS A FLIGHT ITEM” or “THIS IS MISSION ESSENTIAL GROUND SUPPORT EQUIPMENT”, as applicable.

(End of Clause)

F.3 KSC SHIPPING INSTRUCTIONS

Ship to:

Transportation Office, NASA

CAPPS Warehouse, Bldg. M6-698

Kennedy Space Center, FL 32899

For re-issue to:              {subcontractor fill in}             

(Name) (Mail Code) (Bldg.) (Rm.)

Note: See Section D for special marking instructions that may be required.

(End of Clause)

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION F	COMMERCIAL CARRIER SERVICES	F-2

F.4 PLACE OF PERFORMANCE

This contract may be performed at:

(1) Johnson Space Center and the immediate surrounding geographical area

(2) John F. Kennedy Space Center and the immediate surrounding geographical area

(3) Other work locations in and outside the United States in support of the statement of work requirements.

(End of Clause)

F.5 PERIOD OF PERFORMANCE

The period of performance of this subcontract shall be in accordance with the schedule in Section B.

(End of Clause)

F.6 DELIVERIES

Deliverable items in accordance with the Statement of Work

(End of Clause)

F.7 OPTION FOR EAS

Buyer may exercise the option Line Item 10 of Table B-2 for Early Ammonia Servicer (EAS) by providing written notice to the seller at least 20 calendar days prior to the start of the EAS integration template.

(End of Clause)

F.8 OPTION FOR ADDITIONAL FRAM SITES

Buyer may exercise an option Line Item 11 of Table B-2 for additional FRAM sites by providing written notice to seller at least 20 calendar days prior to the start of the FRAM site integration template.

(End of Clause)

[END OF SECTION]

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION G	COMMERCIAL CARRIER SERVICES	G-1

SECTION G

CONTRACT ADMINISTRATION DATA

G.1 LISTING OF CLAUSES INCORPORATED BY REFERENCE

I. FEDERAL ACQUISITION REGULATION (48 CHAPTER 1) CLAUSES:

None included by reference.

II. NASA FAR SUPPLEMENT (48 CFR CHAPTER 18) CLAUSES:

CLAUSE Number	Title
1852.245-70	Contractor Requests for Government-Owned Equipment (JUL 1997)
1852.245-73	Financial Reporting of NASA Property in the Custody of Contractors (OCT 2003)

(End of Clause)

G.2 RESERVED

(End of Clause)

G.3 SUBMISSION OF VOUCHERS FOR PAYMENT

(a) The designated billing office for invoices is the following:

Lockheed Martin Integrated Systems

Accounts Payable

P O Box 57639

Webster, Texas 77598

(b) In the event that amounts are withheld from payment in accordance with provisions of this subcontract, a separate voucher for the amount withheld will be required before payment for that amount may be made.

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION G	COMMERCIAL CARRIER SERVICES	G-2

(c) It is the responsibility of the subcontractor to notify Lockheed Martin immediately upon discovery of an overpayment made by Lockheed Martin. Subcontractor agrees to work with Lockheed Martin to arrive at a schedule for repayment.

(End of Clause)

G.4 RESERVED

(End of Clause)

G.5 TECHNICAL DIRECTION

If, in the subcontractor’s opinion, any instruction or direction provided by the Buyer constitutes a change to the subcontract, the subcontractor shall not proceed and shall notify the Buyer in writing within 4 working days after receiving it and shall request the Buyer to take action as described in this clause. Upon receiving this notification, the Buyer shall either issue an appropriate contract modification within a reasonable time or advise the subcontractor in writing within 30 days that the instruction or direction is—

(1) Rescinded in its entirety; or

(2) Within the requirements of the subcontract and does not constitute a change under the changes clause, and that the subcontractor should proceed promptly with its performance.

(End of Clause)

G.6 Reserved

(End of Clause)

G.7 INSTALLATION-ACCOUNTABLE GOVERNMENT PROPERTY

(a) Government property described in the clause at 1852.245-77, List of Installation-Accountable Property and Services, may be made available to the subcontractor on a no-charge basis for use in performance of this subcontract. This property shall be utilized only within the physical confines of the NASA installation that provided the

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION G	COMMERCIAL CARRIER SERVICES	G-3

property. Under this clause, the Government retains accountability for, and title to, the property, and the subcontractor assumes the following user responsibilities:

PROPERTY CUSTODIAN RESPONSIBILITIES: REFERENCE NPG 4200.2

Chapter 2: Responsibilities

Section 2.3. Property Custodians

Section 2.4 Full Time Property Custodians

Paragraphs 2.4.1 and 2.4.2

Chapter 4: Operational Procedures

Section 4.2 Identification of Equipment

Paragraphs 4.2.8, 4.2.9, 4.2.10,

Section 4.3. Standard NEMS Reports for Property Custodians.

Paragraphs 4.3.1 through 4.3.4.5

Section 4.4. Inventory Procedures.

Paragraphs 4.4.1 through 4.4.5

Chapter 5. (Entire Content)

User Responsibilities: Reference Document (NPG 4200.2)

Chapter 2.

2.7. Responsibility of the Individual. The subcontractor shall ensure that each of its employees are responsible for Government property as follows: An employee has a duty to protect and conserve Government property and shall not use such property, or allow its use, for other than authorized purposes. Additional responsibilities include the following:

2.7.1. Reporting any missing or un-tagged (meeting the criteria for control) equipment, transfer, location change, or user change of equipment to the property custodian immediately.

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION G	COMMERCIAL CARRIER SERVICES	G-4

2.7.2. Notifying the property custodian, supervisor, and the Center security officer immediately if theft of Government property is suspected.

2.7.3. Ensuring that equipment is used only in pursuit of approved NASA programs and projects.

2.7.4. Notifying the property custodian of equipment not actively being used for determination of proper disposition.

2.7.5. Ensuring that equipment is returned through the property custodian when no longer needed. Under no circumstances will an employee throw away Government equipment.

2.7.6. Assigned users retain all responsibilities including notifying property custodians of all activity associated with the user’s assigned equipment.

2.8. The subcontractor must ensure that all on-site subcontractor employees notify the Buyer, property custodian, and SEMO upon termination of employment.

Chapter 4.

4.2.11. The user will assist the custodian in completing NF 1618 and sign in the designated block.

The subcontractor shall establish and adhere to a system of written procedures for compliance with these user responsibilities.

(b)(1) The official accountable record keeping, physical inventory, financial control, and reporting of the property subject to this clause shall be retained by the Government and accomplished by the installation Supply and Equipment Management Officer (SEMO) and Financial Management Officer. Center Administrative requirements are spelled out in JPG 5151.2, JSC Support Contractor Procedures & Guidelines. If this subcontract provides for the subcontractor to acquire property, title to which will vest in the Government, the following additional procedures apply:

(i) The subcontractor’s purchase order shall require the vendor to deliver the property to the installation central receiving area;

(ii) The subcontractor shall furnish a copy of each purchase order, prior to delivery by the vendor, to the installation central receiving area:

Document No.	Acquisition Title	Page No.
Purchase Order No. GF80726B11
SECTION G	COMMERCIAL CARRIER SERVICES	G-5

(iii) The subcontractor shall establish a record of the property as required by FAR 45.5 and 1845.5 and furnish to the Industrial Property Officer a DD Form 1149 Requisition and Invoice/Shipping Document (or installation equivalent) to transfer accountability to the Government within 5 working days after receipt of the property by the subcontractor. The subcontractor is accountable for all contractor-acquired property until the property is transferred to the Government’s accountability.

(iv) Subcontractor use of Government property at an off-site location and off-site second tier subcontractor use require advance approval of the Buyer and notification of the SEMO. The subcontractor shall assume accountability and financial reporting responsibility for such property. The subcontractor shall establish records and property control procedures and maintain the property in accordance with the requirements of FAR Part 45.5 until its return to the installation.

(2) After transfer of accountability to the Government, the subcontractor shall continue to maintain such internal records as are necessary to execute the user responsibilities identified in paragraph (a) and document the acquisition, billing, and disposition of the property. These records and supporting documentation shall be made available, upon request, to the SEMO and any other authorized representatives of the Buyer.

(End of Clause)

G.8 LIST OF INSTALLATION-ACCOUNTABLE PROPERTY AND SERVICES

In accordance with the clause Installation - Accountable Government Property the subcontractor is authorized use of the types of property and services listed below, to the extent they are available, in the performance of this subcontract within the physical borders of the installation which may include buildings and space owned or directly leased by NASA in close proximity to the installation, if so designated by Buyer.

(a) Reserved.

(b) General - and special-purpose equipment.

(1) Equipment to be made available is TBD. The Government retains accountability for this property under the clause Installation-Accountable Government Property, regardless of its authorized location.

(2) If the subcontractor acquires property, title to which vests in the Government pursuant to other provisions of this subcontract, this property also shall become

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accountable to the Government upon its entry into Government records as required by the clause Installation-Accountable Government Property.

(3) The subcontractor shall not bring to the installation for use under this subcontract any property owned or leased by the subcontractor, or other property that the subcontractor is accountable for under any other Government contract, without the Buyer’s prior written approval.

(c) The user responsibilities of the subcontractor are defined in paragraph (a) of the clause Installation-Accountable Government Property.

(End of Clause)

G.9 RESERVED

(End of Clause)

G.10  JSC 52.204-91 SECURITY/BADGING REQUIREMENTS FOR FOREIGN NATIONAL VISITORS AND EMPLOYEES/REPRESENTATIVES OF FOREIGN CONTRACTORS (MAR 2002)

(a) An employee of a domestic Johnson Space Center (JSC) contractor or its subcontractor who is not a U.S. citizen (foreign national) may not be admitted to the JSC site for purposes of performing work without special arrangements. In addition, all employees or representatives of a foreign JSC contractor/subcontractor may not be admitted to the JSC site without special arrangements. For employees as described above, advance notice must be given to the Security Office of the host installation [JSC or White Sands Test Facility (WSTF)] at least 3 weeks prior to the scheduled need for access to the site so that instructions on obtaining access may be provided.

(b) All visit/badge requests for persons described in (a) above must be entered in the NASA Request for Request (RFR) and Foreign National Management System (NFNMS) for acceptance, review, concurrence and approval purposes. When an authorized company official requests a JSC or WSTF badge for site access, he/she is certifying that steps have been taken to ensure that its contractor or subcontractor employees, visitors, or representatives will not be given access to export-controlled or classified information for which they are not authorized. The authorized company officials shall serve as the contractor’s representative(s) in certifying that all visit/badge request forms are processed in accordance with JSC and WSTF security and export control procedures. No foreign national, representative, or resident alien contractor/subcontractor employee shall be granted access into JSC or WSTF until a completed RFR has been approved and processed through the NFNMS. Unescorted

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access will not be granted unless a favorable National Agency Check (NAC) has been completed by the JSC Security Office.

(c) The subcontractor agrees that it will not employ for the performance of work onsite at the JSC or WSTF any individuals who are not legally authorized to work in the United States. If the JSC or WSTF Industrial Security Specialist or the contracting officer has reason to believe that any employee of the contractor may not be legally authorized to work in the United States and/or on the subcontract, the subcontractor may be required to furnish copies of Form I-9 (Employment Eligibility Verification), U.S. Department of Labor Application for Alien Employment Certification, and any other type of employment authorization document.

The subcontractor agrees to provide the information requested by the JSC or WSTF Security Office in order to comply with NASA policy directives and guidelines related to foreign visits to NASA facilities so that (1) the visitor/employee/ representative may be allowed access to JSC or other NASA Centers for performance of this subcontract, (2) required investigations can be conducted, and (3) required annual or revalidation reports can be submitted to NASA Headquarters. All requested information must be submitted in a timely manner in accordance with instructions provided by JSC or any other Center to be visited.

(End of Clause)

G.11   JSC 52.242-92 IDENTIFICATION OF EMPLOYEES (MARCH 2002)

At all times while on Government property, the contractor, subcontractors, their employees and agents shall wear badges which will be issued by the NASA Contract and Pass Office, located in Building No. 110. Badges will be issued only between the hours of 7 a.m. and 4 p.m., Monday through Friday. Each individual who wears a badge will be required to sign personally for the badge. The subcontractor will be held accountable for these badges, and immediately after completion of the work they shall be returned to the NASA Contract Badge and Pass Office. Failure to turn in badges upon completion of the work may result in final payment being delayed.

(End of Clause)

G.12   KSC 52.204-90 SECURITY CONTROLS AT KSC (NOV 2000)

A. Identification of Employees

1. The subcontractor shall require each employee engaged on the work site to display NASA-furnished identification badges and special access badges at all times. The

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subcontractor shall obtain and submit badging request forms for each person employed or to be employed by the subcontractor under this subcontract. The subcontractor shall designate its own security and badging officials to act as points-of-contact for the KSC Security Office. Prior to proceeding with onsite performance, the subcontractor shall submit the following information to the Protective Services Branch, Code TA-E2, Kennedy Space Center:

• Contract number and location of work site(s)

• Contract commencement and completion dates

• Status as prime or subcontractor

d. Names of designated security and badging officials

2. Identification and badging of employees shall be accomplished as soon as practicable after award of the subcontract. During performance of the subcontract, the subcontractor shall, upon termination of an employee, immediately deliver badges and/or passes issued to the employee to the NASA Security Office. It is agreed and understood that all NASA identification badges/passes remain the property of NASA, and the Government reserves the right to invalidate such badges/passes at any time.

B. Access to Controlled Areas within KSC

1. Certain areas within KSC have been designated as Controlled Areas. These are normally surrounded by fencing and have an entrance gate monitored by a guard or monitoring device. Access into such areas is classified into “escorted” or “unescorted” access. For each employee for which the subcontractor desires to have unescorted access, the prescribed forms must be submitted to the responsible NASA Center Security Office. Due to the time required to process requests for unescorted access, the subcontractor is advised to complete and submit the required forms as soon as practicable after subcontract award. Within 14 working days after the receipt of the forms, the responsible NASA Center Security Office will determine whether the person is eligible for unescorted access.

2. The prime contractor is responsible for providing escort services for any of his employees and/or any subcontractor employees who are not eligible for unescorted access.

All requests for unescorted access by subcontractors will be submitted through the prime contractor for forwarding to the NASA Security Office.

(End of Clause)

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G.13  PROPERTY MANAGEMENT OF THE UNITED STATES ON-ORBIT SEGMENT (USOS) VEHICLE: ON-ORBIT ACCOUNTABILITY

The parties agree that the USOS Acceptance and ISS Vehicle Sustaining Contract will be accountable for the USOS Vehicle, as defined by the Government as Government Furnished Equipment (GFE), in connection with that contract. For purposes of this clause, USOS Vehicle GFE is defined as hardware: 1) installed on-orbit as part of the on-orbit vehicle configuration, 2) warehoused on-orbit, 3) warehoused on-ground (via Government depots, warehouses, storage facilities, etc.) that is destined for permanent operation in space, and 4) to be returned to earth for repair and refurbishment for subsequent storage and or re-manifest to the ISS.

Property subject to this clause is identified in TBD of this subcontract. The Cargo Mission contractor must report any loss, damage, or destruction of said property in their possession, or in the possession of its subcontractors, to the USOS Acceptance and ISS Vehicle Sustaining Contract Property Manager and the delegated NASA or DOD Government Property Administrator cognizant of the Integration Prime Contractors’ when the property is accountable to the NAS 15-10000 Contract. The parties agree to cooperatively communicate any such incidents or related issues to the NAS15-10000 Property Manager.

This clause does not add to or diminish the subcontractor’s rights, responsibilities, or obligations with respect to ISS property accountable to the USOS Acceptance and ISS Vehicle Sustaining Contract (NAS 15-10000) in their possession. In addition, this clause does not relieve the subcontractor from any other property provisions set forth in this subcontract.

(End of Clause)

G.14  JSC 52.223-92 JSC HAZARDOUS MATERIALS USE (DEC 1999)

(a) This clause is JSC-unique, and the requirements are in addition to any U.S. Environmental Protection Agency, U.S. Occupational Safety and Health Administration, or other state or Federal regulation or statute. Therefore, the following requirements do NOT supercede any statutory or regulatory requirements for any entity subject to this clause.

(b) “Hazardous materials,” for the purposes of this clause, consist of the following:

(1) Those materials defined as “highly hazardous chemicals” in Occupational Safety and Health Administration Process Safety Management Regulation, 29 Code of Federal Regulation 1010.119, without regard for quantity.

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(2) Those “extremely hazardous substances” subject to the emergency planning requirements in the Environmental Protection Agency Emergency Planning and Community Right-to-Know Regulation, 40 Code of Federal Regulation 355, Part 355, without regard for quantity.

(3) Those “hazardous substances” subject to the release notification requirements under Environmental Protection Agency’s Emergency Planning and Community Right-to-Know Regulation, 40 Code of Federal Regulation 302.4, without regard for quantity.

(4) Any radioisotope material or device that produces ionizing radiation.

(5) Any Class II, III, or IV laser as defined by the American National Standards Institute No. Z136.1 (1986)

(6) Any explosive or any pyrotechnics.

(7) Any pesticide.

(c) The subcontractor shall develop and maintain an inventory listing the identity and quantity of hazardous materials stored or used onsite at JSC for the performance of the subcontract.

(d) The subcontractor shall ensure that the proper training of its employees in the use and inherent hazards of these materials is accomplished prior to use.

(e) The subcontractor shall notify the JSC Occupational Health and Test Support Office (SD13) prior to any initial use or different application of these materials.

(f) The subcontractor shall use all hazardous materials properly and take all necessary precautions to ensure no harm is done to humans or the environment.

(g) The subcontractor shall insert the substance of this clause, including this Paragraph g with appropriate changes of designations of the parties, in subcontracts under which hazardous materials will be utilized, or may reasonably be expected to be utilized, onsite at JSC.

(h) In the event the subcontractor fails or refuses to comply with any aspect of this clause, such failure or refusal may be considered a material breach of this subcontract.

(End of Clause)

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G.15  WORK ELIGIBILITY

All subcontractor personnel performing under this subcontract within the United States shall be U. S. Citizens or permanent legal residents of the United States who possess valid documentation issued by the appropriate U. S. Government Agency. Transfer of data to foreign persons shall be in accordance with the provisions of Clause H.26, NFS 1852.225-70 incorporated by Section H and Corpdoc 2B of Section I, and Paragraph 11 of Corpdoc 2 incorporated by Section I.

(End of Clause)

[END OF SECTION]

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SECTION H

SPECIAL CONTRACT REQUIREMENTS

H.1 LISTING OF CLAUSES INCORPORATED BY REFERENCE

I. FEDERAL ACQUISITION REGULATION (48 CHAPTER 1) CLAUSES:

None included by reference.

II. NASA FAR SUPPLEMENT (48 CFR CHAPTER 18) CLAUSES:

Clause Number	Title
1852.208-81	Restrictions on Printing and Duplicating (OCT 2001)
1852.223-70	Safety and Health (APR 2002)
1852.225-70	Export Licenses (FEB 2000) and (Alternate 1) (FEB 2000) and Para (b) insert: Kennedy Space Center, Johnson Space Center or Marshall Space Flight Center
1852.228-72	Cross-Waiver of Liability for Space Shuttle Services (SEP 1993)
1852.228-76	Cross-Waiver of Liability for Space Station Activities (DEC 1994)
1852.244-70	Geographic Participation in the Aerospace Program (APR 1985)
1852.246-70	Mission Critical Space System Personnel Reliability Program (MAR 1997)

(End of Clause)

H.2 Reserved

(End of Clause)

H.3 REPRESENTATIONS, CERTIFICATIONS, AND OTHER STATEMENTS OF OFFERORS

The General Provisions incorporated in Section I of this subcontract include self-certification statements including but not limited to Certification Regarding

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Debarment, Suspension, Proposed Debarment and Other Responsibility Matters, Previous Contracts and Compliance Reports, and Affirmative Action Compliance. Subcontractor has previously acknowledged receipt and affirmative acceptance of the self-certification requirements.

(End of Clause)

H.4 SUPERSEDING OF LETTER CONTRACT

This subcontract supersedes Letter Contract No. GF80726B11 dated 18 February 2004 and all modifications thereto in its entirety, except the Service Module Debris Panel (SMDP) and Change Requests (CR’s). All effort performed and payments made under the letter contract are considered effort performed and payments made under this subcontract. This subcontract is the definitive subcontract contemplated by Lockheed Martin and subcontractor in the letter contract. The SMDP and CR’s are not definitized by this subcontract.

(End of Clause)

H.5 JSC 52.227-91 (LIMITED) RELEASE OF CONTRACTOR CONFIDENTIAL BUSINESS INFORMATION (CBI) (MAY 2002)

(a) NASA may find it necessary to release information submitted by the subcontractor pursuant to the provisions of this subcontract, to individuals not employed by NASA. Business information that would ordinarily be entitled to confidential treatment may be included in the information released to these individuals. Accordingly, by signature on this subcontract, the subcontractor hereby consents to a limited release of its Confidential Business Information (CBI).

(b) Possible circumstances where the Agency may release the subcontractor’s CBI include the following:

(1) To other Agency contractors and subcontractors, and their employees tasked with assisting the Agency in handling and processing information and documents in the administration of Agency contracts, such as providing post-award audit support and specialized technical support to NASA.

(2) To NASA contractors and subcontractors, and their employees engaged in information systems analysis, development, operation, and maintenance, including performing data processing and management functions for the Agency.

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(c) NASA recognizes its obligation to protect the subcontractor from competitive harm that could result from the release of such information to a competitor. Except where otherwise provided by law, NASA will permit the limited release of CBI under subparagraphs (1) or (2) only pursuant to non-disclosure agreements signed by the assisting contractor or subcontractor, and their individual employees who may require access to the CBI to perform the assisting contract.

(d) NASA’s responsibilities under the Freedom of Information Act are not affected by this clause.

(e) The subcontractor agrees to include this clause, including this paragraph (e), in all subcontracts at all levels awarded pursuant to this subcontract that require the furnishing of CBI by the subcontractor.

(End of Clause)

H.6 KSC 52.223-97 HAZARDOUS WASTES (FEB 1999)

Hazardous and controlled waste shall be managed in accordance with all applicable statutes, rules, orders and regulations which may include but are not limited to 40 CFR Parts 260 - 268, 273, 279, and 761, KHB 8800.7 “Hazardous Waste Management,” and as outlined below. In no case shall hazardous waste be transported from KSC by the subcontractor or his representatives

A. The subcontractor will be responsible for identifying processes and operations, and the location and nature of all potentially hazardous and controlled waste including any chemicals, paints, solvents, petroleum, oil and lubricant (POL) products, and their containers, as defined in 40 CFR Parts 261, 273, 279, or 761. Copies of Material Safety Data Sheets and a completed KSC Form 25-551 “Process Waste Questionnaire” shall be prepared by the subcontractor for each material which may be generated as a waste and be provided to the Buyer 14 days prior to the start of the waste generation process. No substances shall be delivered to KSC without the appropriate Material Safety Data Sheets.

B. The Buyer will obtain a “Technical Response Package” (TRP) containing a hazard determination, and analytical, packaging, labeling, and disposal requirements per KHB 8800.7 (as revised). This information will be forwarded to the subcontractor within 30 calendar days after receipt of a Process Waste Questionnaire. The TRP will also provide any site specific waste management requirements generated because of the contractors work plan.

C. An on-site satellite waste accumulation area will be established by the subcontractor within 50 ft. and within sight of any point where hazardous or controlled wastes maybe generated. If a satellite accumulation area must be

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more than 50 ft. from the point of generation, or out of sight of the generator, a written request must be provided to the Buyer 14 days prior to the start of the waste generating process. The subcontractor must receive written approval of the variance prior to placing the satellite site in service. Potential or identified hazardous and/or controlled wastes will be stored in the appropriate containers and properly labeled inside the accumulation area in accordance with KHB 8800.7 (as revised). The Environmental Protection Agency has set the following standards for wastes collected at satellite accumulation areas:

1. Hazardous wastes at satellite accumulation areas must be collected in containers.

2. No more than 55 gallons of hazardous waste or 1 quart of acutely hazardous wastes may be accumulated.

3. If more than 55 gallons of waste or 1 quart of acutely hazardous waste is generated, the container holding the excess waste must be marked with the date the excess waste began accumulating. Within three days, the excess waste will be transferred to a 90-day accumulation point or a permanent treatment, storage, and disposal facility in accordance with paragraph’s “F” and “G” below.

4. Containers must be labeled with either the words “Hazardous Waste” or with other words which identify the contents of the drum in accordance with KHB 8800.7 (as revised).

5. The waste being placed in the container must be compatible with the container.

6. A container holding hazardous waste must always be kept closed during accumulation except when it is necessary to add or remove waste.

D. DOT compliant storage containers will be provided to the subcontractor, by the government, as required during the subcontract performance period. The Buyer will arrange for the containers to be available at the J-BOSC Supply Building, M6-744, at the request of the construction contractor. The subcontractor will request storage containers in writing from the Buyer a minimum of 3 days prior to the required need date. The subcontractor will be responsible for transporting the containers from building M6-744 to the project site.

E. At the request of the subcontractor, the Buyer will provide any analytical support required by the TRP. The Buyer will arrange for all sampling and testing of potentially hazardous or controlled waste.

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F. Within 48 hours of having waste ready for disposal, the subcontractor shall notify the Buyer to arrange for pick-up and removal. Documentation including the waste type, quantity, locations, and organization responsible for the waste will be provided on KSC Form 26-541, “Hazardous Waste Manifest,” to the Buyer when requesting disposal services and to the disposal personnel at the time of the waste pick-up.

G. If more than 55 gallons of hazardous waste are generated at a satellite accumulation site, the subcontractor will be responsible for delivering the accumulated waste to a 90 day staging site within 3 days of the date on which the excess waste began to accumulate. A 90 day staging site will be made available to the subcontractor, at KSC, as required. The subcontractor shall notify the Buyer a minimum of 24 hours prior to delivering a drum to a 90 day staging site. The subcontractor will provide KSC Form 26-541, “Hazardous Waste Manifest”, to the Buyer and to the manager of the 90 day staging site, when delivering the waste.

H. The subcontractor will be responsible to ensure all personnel involved in the management of hazardous or controlled wastes have been properly trained in accordance with 40 CFR 265.16. A list of all properly trained individuals involved in the performance of this subcontract will be provided to the Buyer prior to the start of any waste generating processes. The Buyer may at any time during the course of the subcontract performance period require the subcontractor to provide individual training records for any employee involved in the performance of this subcontract, and the contents of the course or courses completed to satisfy the training requirements. Attendance at KSC Training Course QG-211 “Hazardous Waste Management” will satisfy these training requirements.

I. The subcontractor shall make all reasonable and safe efforts to contain and control any spills that may occur. Any occurrence of a pollution incident or spill will be reported immediately (by phone) to the Emergency 911 (861-7911 from a non 867/861 exchange), then to the Buyer. The subcontractor will document the incident or spill on KSC Form 21-555, “Pollution Incident Report” and submit it to the Buyer within 24 hours of the incident.

J. The following is a partial list of hazardous and controlled waste that may occur on a construction project. This list is NOT to be considered all inclusive but merely for example. Hazardous wastes are defined and listed in the detail in the Resource Conservation and Recovery Act of 1976 and are to be determined in accordance with 40 CFR 261.

EXAMPLES OF CONTROLLED AND HAZARDOUS WASTES:

1. Discarded products or process wastes exhibiting the following characteristics

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a. Ignitability; flash point less than or equal to 140 deg F (e.g. paints, alcohols, petroleum naptha)

b. Corrosivity; pH less than or equal to 2 or greater than or equal to 12.5 (e.g. etching acids, battery electrolytes, caustic cleaners)

c. Reactivity; (e.g. cyanide bearing products, water reactive materials or explosives)

d. Toxicity; containing heavy metals, chlorinated solvents, or pesticides above regulatory limits (e.g chromium > 5 ppm, lead > 5 ppm, trichloroethylene > 0.5 ppm)

2. Spent toxic solvents and solvent contaminated materials (e.g. solvent 113, MEK, 1, 1, 1- trichloroethane)

3. Unused commercial chemical products, or spill residues thereof, listed by the USEPA (e.g benzene, carbon tetrachloride, trichlorofluoromethane)

4. Empty aerosol cans

5. Used oils, petroleum products containing dirt or water

6. Filters, rags and absorbents containing petroleum product residues

7. Asbestos containing materials

8. Detergent solutions or process rinse water

9. Lighting ballasts

10. Abrasive blast materials containing paint particulates

11. Wastewater containing ethylene glycol, alcohol, Freon 113, chlorine, etc.

12. Waste solvents and mixtures, wipes, rags, and applicators used with solvents (alcohol, Freon, MEK, acetone, trichloroethene, etc.)

13. Welding or soldering fluxes

14. Electrolytes, acids, corrosives, etchants and associated equipment and debris

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15. Paint strippers

16. Paint and primer liquids and clean up thinners

17. Unused/defective catalysts

18. Uncured or improperly mixed sealants and adhesives

19. Fluorescent light bulbs

(End of Clause)

H.7 KSC 52.223-94 HAZARD COMMUNICATION (JUL 2002)

A. In order to comply with Federal, OSHA, and State Regulations, the subcontractor shall participate in the KSC Chemical Hazard Communication Program as implemented by KNPD 1800.2, KSC Hazard Communication Program.

B. The subcontractor shall coordinate submission of hazardous material safety data, to the NASA/KSC Materials Safety Data Sheet Archive, with the Joint Base Operations Support Contract MSDS Program Administrator.

(End of Clause)

H.8 KSC 52.242-90 CONTROLS APPLICABLE TO CONTRACTOR’S ACTIVITIES (AUG 2002)

The below listed Kennedy Space Center publications and subsequent revisions thereof are applicable to this subcontract and are incorporated herein by reference. These publications prescribe regulatory procedural criteria, which are applicable to the subcontractor. The subcontractor, upon receipt of notice of noncompliance with any provisions of the below listed publications from the Contracting Officer or his representatives or Buyer, shall promptly take corrective action.

JHB 2000	Consolidated Comprehensive Emergency Management Plan
KHB 1200.1	Facilities, Systems, And Equipment Management Handbook
KHB 1610.1	KSC Security Handbook
KHB 1710.2	Kennedy Space Center Safety Practices Handbook
KMI 1710.18	KSC Safety Assurance Policy
KNPD 1800.2	Hazard Communication Program

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KMI 1810.1	KSC Occupational Medicine Program On-site Contractors shall comply with Attachment D, KSC Skin Cancer Prevention Program
KMI 1860.1	KSC Radiation Protection Program
KHB 1870.1	KSC Sanitation Handbook
KHB 2570.1	KSC Radio Frequency Spectrum Management Handbook
KHB 4000.1	Supply Support System Manual, Part 5, Equipment Management
KHB 8800.6	KSC Environmental Control Handbook
KHB 8800.7	Waste Management Handbook
KMI 8800.8	KSC Environmental Management

(End of Clause)

H.9 FLIGHT INSURANCE

A. The Government recognizes that in order to fulfill certain of its obligations under the Cargo Mission Contract, Lockheed Martin intends to subcontract with the subcontractor for lease of its carrier hardware for use during ISS assembly missions. The parties agree that the space flight insurance market is volatile and that the subcontractor will be desirous of protecting its carrier hardware from total loss through insurance.

B. In order for any space flight insurance costs incurred by the subcontractor to be allowable as part of the subcontract price under the Cargo Mission Contract, the subcontractor will provide a copy of its insurance policy for Government review and will include a statement, executed by a corporate official of the subcontractor with binding contractual authority, of all insurance coverage applicable to the flight asset hardware to be flown on contracted missions. The NASA Contracting Officer’s written approval is a condition precedent to the allowability of the subcontractor’s space flight insurance costs as part of the subcontract price under the Cargo Mission Contract or any other Government contract. The insurance policy shall contain the information as required below:

Identification of the subcontractor’s insurance broker along with the name and phone number of an authorized representative that is available for discussion regarding any aspect of the submission.

The name of the insurance company and broker contacted together with the phone number of a point of contact.

The date of the contacts.

The amount of insurance discussed, the point of contact for those discussions and the items to which all insurance was to relate.

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The quoted cost and amount of insurance being offered, if any, and a full description of the policies being offered as described below.

A description of the types of insurance provided (including the extent to which the subcontractor is self-insured or intends to self-insure), with emphasis on identifying the risks insured against and the coverage extended to persons and property;

Dollar limits per occurrence and annually, as well as any other limits, for relevant segments of the total insurance coverage;

Deductibles, if any, applicable to losses under the policies;

Any exclusions from coverage under such policies for unusually hazardous or nuclear risks; and

The controlling or limiting factors for determining the amount of financial protection the subcontractor is to provide and maintain, with information regarding the availability, cost, and terms of additional insurance or other forms of financial protection.

C. In the event the subcontractor is able to obtain space flight insurance, allowability of the cost as part of the subcontract price under the Cargo Mission Contract is subject to the written approval of the NASA Contracting Officer. In no event may the allowable cost for such insurance exceed eight percent (8%) of the carrier hardware replacement costs listed in Table 1 “Carrier Hardware Replacement Cost” below. This limitation will only be in effect for contracted mission launches through December 31, 2006. Should one or more of the subcontractor’s missions be delayed beyond this date, Lockheed Martin will propose a new limitation for allowable insurance costs for consideration by the Government.

The subcontractor agrees to a waiver of liability pursuant to which the subcontractor waives all claims against NASA, Lockheed Martin and its other Cargo Mission Contract subcontractors, and other NASA prime contractors and subcontractors based on loss or damage to SPACEHAB hardware arising out of Shuttle or International Space Station activities on Earth, in outer space, or in transit between Earth and outer space performed in furtherance of the Cargo Mission Contract whatever the legal basis for such claims, including, but not limited to, delict and tort.

D. TABLE 1 Carrier Hardware Replacement Cost

Carrier Hardware	Replacement Cost
ICC-G	$	1,000,000.00
KYA	$	2,000,000.00
SHOSS Box	$	561,456.00
PFAP	$	674,445.00
LSM	$	43,896,873.00
Tunnel	$	1,375,000.00

(End of Clause)

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H.10  Reserved

H.11  Reserved

H.12  Reserved

H.13  Reserved

H.14  DATA RIGHTS NOTICE

A. Any proposal submitted during the course of subcontract performance must expressly identify any computer software or technical data that is to be provided with less than unlimited data rights. The subcontractor shall notify the Buyer in writing prior to incorporating any item, component, subcomponent, process, or software, wherein the related technical data or computer software qualifies as limited rights data or restricted computer software in accordance with Alternate II and III of FAR 52.227-14 and NFS 1852.227-86. This notification does not apply to commercial off-the-shelf (shrink-wrapped) computer software, and corresponding documentation, that has a standard commercial license unless the software is to be incorporated as a subcomponent in a developmental effort.

B. Technical data and computer software delivered shall not be marked with restrictive legends unless the Buyer has given prior written consent.

C. All license agreements shall be compliant with Federal laws, regulations and the terms and conditions of this subcontract and shall be transferable to the government upon completion of the subcontract without additional cost to the Government. One copy of the final negotiated license agreement shall be forwarded to Buyer within 20 days of agreement to ensure compliance.

(End of Clause)

H.15  RESTRICTED RIGHTS NOTICE

A. Alternate III of FAR 52.227-14, Rights in Data – General.

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SECTION H	COMMERCIAL CARRIER SERVICES	H-11

1. Paragraph (b)(1) of Alternate III of FAR 52.227-14, Rights in Data – General, is hereby deleted and the following paragraph (b)(1) is substituted in lieu thereof:

(b)(1) Used or copied for use in or with multiple computers provided they are not used simultaneously, including use at any government installation to which such computers may be transferred.

2. The following is added as paragraph (b)(7) of Alternate III of FAR 52.227-14:

(b)(7) Used on multiple computers for network applications.

B. NASA FAR Supplement (NFS) 1852.227-86, Commercial Computer Software –Licensing.

1. Paragraph (d)(2)(i) of NFS 1852.227-86, is hereby deleted and the following paragraph (d)(2)(i) is substituted in lieu thereof:

(d)(2)(i) Used or copied for use in or with multiple computers provided they are not used simultaneously, including use at any government installation to which such computers may be transferred.

2. The following is added as paragraph (d)(2)(v) of NFS 1852.227-86:

(d)(2)(v) Used on multiple computers for network applications.

(End of Clause)

H.16  LIMITED RIGHTS DATA NOTICE

A. Notwithstanding any other terms and conditions of this subcontract, the Government shall have the right to disclose technical data marked as limited rights data outside of the Government, without obtaining permission from the subcontractor, under the following circumstances:

1. Use (except for manufacture) by support service contractors.

2. Evaluation by non-government evaluators.

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3. Use (except for manufacture) by other contractors participating in the Government’s program of which the specific contract is a part, for information and use in connection with the work performed under each contract.

4. Emergency repair or overhaul work.

5. Release to a foreign government, or instrumentality thereof, as the interests of the United States Government may require, for information or evaluation, or emergency repair or overhaul work by such government.

B. Prior to disclosure, except in emergency circumstances as identified in paragraphs 4 and 5 above, the Government shall require the recipient to sign an agreement, provided by and acceptable to the subcontractor, to protect the data from unauthorized use and disclosure. The subcontractor shall provide a copy of the acceptable nondisclosure agreement to the Buyer upon request.

(End of Clause)

H.17  MANAGEMENT AND PROTECTION OF DATA OF THIRD PARTIES

A. It is possible that the subcontractor may have access to, be furnished, or use, the following types of data (recorded information) in performance of this subcontract:

1. Data of third parties bearing limited rights or restricted rights notices submitted either to NASA or directly to the Buyer or subcontractor: or

2. Other data of third parties, which NASA has agreed to handle under protective arrangements;

B. In order to protect the interests of the government and the interests of other owners of such data, the subcontractor agrees with respect to data in category 1 above, and with respect to any data in category 2 when so identified by NASA or Buyer, to:

1. Use and disclose such data only to the extent necessary to perform the work required under this subcontract, with particular emphasis on restricting the data to employees having a “need to know”;

2. Preclude disclosure of such data outside subcontractor’s organization performing work under this subcontract without written consent of the Buyer. The subcontractor’s organization includes support contractors to

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SECTION H	COMMERCIAL CARRIER SERVICES	H-13

the extent they are subject to the same requirements regarding protection of 3^rd party data; and

3. Return or dispose of such data as directed by the Buyer or the furnishing third party owner when such data is no longer needed for subcontract performance.

(End of Clause)

H.18  SPECIAL COMPUTER SOFTWARE PROVISION

A. In addition to any restricted or unrestricted computer software specified elsewhere to be delivered under this subcontract, the subcontractor, upon request of the Buyer, shall deliver to the Government any computer software, including its documentation and available source code, which was created in performance of this subcontract.

B. The restricted and unrestricted rights in computer software acquired or created during the performance of this subcontract shall remain in the custody of the subcontractor until such time as the Buyer calls for the delivery thereof under paragraph A.

(End of Clause)

H.19  ASSOCIATE CONTRACTOR AGREEMENT FOR ISS OPERATIONS AND UTILIZATION ACTIVITIES

A. The success of the International Space Station (ISS) Program is dependent on the efforts of multiple contractors. The Cargo Mission contractor is a key participant.

B. In order to achieve efficient and effective implementation of the operation and utilization phase of the ISS, the Buyer shall establish the means for coordination and exchange of information with associate contractors. The subcontractor agrees to provide reasonable support to Buyer to implement the stated objectives.

(End of Clause)

H.20  INFORMATION INCIDENTAL TO CONTRACT ADMINISTRATION

A. With the exception of financial information, the Government shall have unlimited rights to use and distribute to third parties any administrative or

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Purchase Order No. GF80726B11
SECTION H	COMMERCIAL CARRIER SERVICES	H-14

management information developed by the subcontractor or a subcontractor at any tier in whole or in part for the performance of the subcontract or first produced in the performance of the subcontract, whether or not said information is specified as a subcontract deliverable, if created in whole or in part at Government expense. The Contracting Officer may, at any time during the subcontract performance or within a period 3 years after Government acceptance of all items to be delivered under this subcontract, order any administrative or management information developed by the subcontractor or a subcontractor at any tier in whole or in part for the performance of the subcontract or first produced in the performance of the subcontract.

B. The Contracting Officer may release the subcontractor from the requirements of this clause for specifically identified information at any time during the 3-year period set forth in paragraph A of this clause.

(End of Clause)

H.21  Reserved

(End of Clause)

H.22  Reserved

(End of Clause)

H.23  GOVERNMENT-PROVIDED RUSSIAN LANGUAGE AND LOGISTICS SERVICES (RLLS)

The subcontractor is authorized use of the following RLLS in performance of this subcontract or any subcontract entered into under this subcontract:

1. Russian Translations

2. Russian Interpretations

3. Russian Language training

4. Russian Logistics services (both in the U.S. and in Russia), including a) Ground Services (e.g. airport pickup/drop-off, transportation between hotels and meeting locations); b) Meeting Services (e.g. coordination of schedules, agendas, and protocols); c) Hotel Reservations at the Penta Hotel in Russia; and d) Visa Coordination.

The subcontractor upon identification of a need for RLLS shall promptly notify the Buyer. The Buyer shall provide instructions as to the point of contact for

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Purchase Order No. GF80726B11
SECTION H	COMMERCIAL CARRIER SERVICES	H-15

submitting a request for RLLS. Failure of the Government to provide adequate or timely RLLS shall entitle the subcontractor to an equitable adjustment in all affected contract terms and conditions, exclusive of any adjustment to fee. This provision, including this flow-down requirement, shall be inserted in all subcontracts where it is anticipated that RLLS may be necessary for contract performance.

(End of Clause)

H.24  Reserved

(End of Clause)

H.25  Reserved

(End of Clause)

H.26  ADDITIONAL EXPORT CONTROL REQUIREMENTS

In addition to the requirements established by NFS 1852.225-70 EXPORT LICENSES, the subcontractor is also required to perform the following tasks to ensure compliance with Department of Commerce and Department of State export control regulations.

1. Provide to the Johnson Space Center (JSC) Export Services Team (EST), in writing, an advanced “notification to ship” for all program related exports (hardware, software and technical data) where NASA is considered the “U.S. Principal Party”. The following requirements shall be met by the subcontractor and its subcontractors, respectively, to use Department of Commerce or Department of State export licenses obtained by NASA and to use any NASA export license exceptions or exemptions as they apply to the International Space Station Program.

For all program related exports (hardware, software and technical data), submit the equivalent information described below to the Center Export Administrator (CEA) at the geographically closest NASA Space Flight Center (JSC, Marshall Space Flight Center (MSFC) or Kennedy Space Center (KSC)) according to the policies and procedures of that center. A courtesy copy of equivalent information submitted to MSFC or KSC shall be provided to the JSC CEA’s office. Provide copies of shipping documents for shipments made under a NASA Export License, exemption or exception to the appropriate CEA within two weeks after the shipment.

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SECTION H	COMMERCIAL CARRIER SERVICES	H-16

a. A minimum of 15 working days prior to export, the subcontractor or its subcontractors who are exporting on behalf of NASA must obtain approval from the CEA’s office by following an Advance Notification of Shipment (ANS) process.

b. Before effecting an export on behalf of NASA, the subcontractor and its subcontractors shall determine the classification recommendation of the item(s) or document(s) and whether it needs a license. The subcontractor or its subcontractors shall provide a more technical rationale supporting the classification, if requested by NASA.

c. Formal letter, fax or email is sufficient, addressed to the CEA’s office, and must include the details listed below.

(1) NASA license number (include date of expiration) or license exception or other exception.

(2) Quantity and description as it appears on the applicable license.

(3) Date of planned export (and expected date of return if not a permanent export).

(4) Origin of export (Company and city).

(5) Destination of export (Country, city and company).

(6) Point of contact (for technical questions – must be a representative of the originating exporter).

(7) Export Classification Control Number (ECCN) or category under Export Administration Regulations or United States Munitions List regulations.

(8) Rationale for classification.

(9) Requirement to export (i.e., MOU, contract number, meeting minutes). You may be asked to provide copy of the requirement.

(10) Additional information as necessary to clarify the export.

d. A copy of the completed Pro Forma Invoice (JSC Form 1735) attached to an email is sufficient to meet this requirement as long as all required information above is also included.

e. After all the information is submitted, the CEA’s office will respond to the subcontractor or its subcontractor within ten (10) working days. Once approved, NASA will provide the destination control statement to use on all export documentation.

2. Included in the applicable export exceptions, the subcontractor or its subcontractors are authorized to export hardware, software or data to ISS International Partner (IP) governmental offices that meet the conditions of license exception GOV (15 CFR 740.11 (b)(2)(iii)(A)).

3. For Verification of End Use, subcontractor or its subcontractors exporting on behalf of NASA using a license or license exception or exemption shall provide a copy of all shipping documentation within two business weeks of the shipment date to the CEA’s office.

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SECTION H	COMMERCIAL CARRIER SERVICES	H-17

4. For temporary exports, subcontractor or its subcontractors shipping on behalf of NASA shall notify the CEA in writing within five 5. business days of the date that the item was actually returned.

5. The subcontractor or its subcontractors shall keep those records required by Department of Commerce and Department of State regulations for all exports and make them available upon request to NASA and its representatives.

6. These requirements do not apply to subcontractor or its subcontractors’ commercial contract related exports or exports pursuant to Technical Assistance Agreements or other license authorizations received by the subcontractor or its subcontractors and for which the subcontractor or its subcontractors will be the exporter of record.

7. The subcontractor and its subcontractors shall perform self annual audits of their export control processes and provide written audit results to the CEA in accordance with DRD C-II-02.

8. The subcontractor and its subcontractors shall report to the NASA JSC EST, in writing, any potential export issues (including those related to support of sustaining engineering and operations of ISS) that cannot be resolved by the subcontractor or its subcontractors, respectively. Such report and/or notification of issues and technical tasks should be reported to the NASA JSC EST at least three (3) months in advance of requested action.

9. Upon discovery of unforeseen adverse export issues, the subcontractor shall immediately notify NASA JSC EST by telephone or e-mail of said issue and shall report to the NASA JSC EST, in writing, as the facts become known.

10. When directed in writing by the Contracting Officer or designated representative, the subcontractor shall export on behalf of NASA, NASA specifically identified technical data, computer software, hardware, or defense services to a named foreign entity or person, in the manner and under the conditions for in the direction.

(End of Clause)

H.27    SUBCONTRACTING WITH RUSSIAN ENTITIES FOR GOODS OR SERVICES

(a) The subcontractor shall not subcontract with

(1) the Russian Aviation and Space Agency (Rosaviakosmos),

(2) any organization or entity under the jurisdiction or control of Rosaviakosmos, or

(3) any other organization, entity, or element of the Government of the Russian Federation.

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SECTION H	COMMERCIAL CARRIER SERVICES	H-18

(b) “Organization or entity under the jurisdiction or control of Rosaviakosmos” means an organization or entity that

(1) was made part of the Russian Space Agency upon its establishment on February 25, 1992;

(2) was transferred to the Russian Space Agency by decree of the Russian Government on July 25, 1994, or May 12, 1998;

(3) was or is transferred to the Russian Aviation and Space Agency or Russian Space Agency by decree of the Russian Government at any other time before, on, or after March 14, 2000; or

(4) is a joint stock company in which the Russian Aviation and Space Agency or Russian Space Agency has at any time held controlling interest.

(c) The subcontractor shall obtain Buyer’s permission to subcontract with any Russian entity or with any other entity performing any part of the subcontract in the Russian Federation. The subcontractor shall support such a request with facts (and, if requested, supporting documentation) sufficient to establish to Buyer’s satisfaction that the entity with which the subcontractor seeks permission to subcontract is not an entity described in paragraphs (a) and (b).

(d) Buyer may direct the subcontractor to provide the information required under paragraph (c) for any other prospective or existing subcontract at any tier. Buyer may direct the subcontractor to terminate for the convenience of the government any subcontract at any tier with an entity described in paragraphs (a) and (b), subject to an equitable adjustment.

(e) The subcontractor shall include the substance of this clause in all its subcontracts, and shall require such inclusion in all other subcontracts of any tier.

(End of Clause)

H.28    FLEXIBILITY IN OPERATIONS

This clause, Flexibility In Operations, sets forth the procedures for making equitable adjustments in the subcontract in the event of certain specified changes in requirements. This clause is established to define the conditions under which an equitable adjustment may be allowable. This clause sets out the exclusive basis for determining equitable adjustments arising from or associated with launch date or manifest changes involving the SPACEHAB carrier hardware. Nothing herein shall be construed as creating a contractual relationship between the Government and SPACEHAB.

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Purchase Order No. GF80726B11
SECTION H	COMMERCIAL CARRIER SERVICES	H-19

An equitable adjustment (either an increase or decrease) will be made in the price provided for in this subcontract, under the following conditions related to SPACEHAB carriers:

a. The addition or deletion of an Integrated Cargo Carrier (ICC) or Logistics Single Module (LSM) carrier; or

b. A change is instituted within the specified schedule range as defined in Table 1 SPACEHAB Carrier Decision Point; or

c. For I&O services, if the cumulative launch date changes (based on a per mission basis) for 12A.1 or 13A.1 sixty-one (61) calendar days or more from the current working launch dates established as of 8 December 2004 or from the working launch dates established at the time the flight enters the L-14 month template, whichever is later. Changes thereafter will be in accordance with the contract baseline, or as directed by the NASA ISS Program Manager and communicated to the subcontractor by Buyer. For consecutive missions, the launch delay(s) change allows SPACEHAB at least 45 working days to process the hardware in the SPACEHAB Integration facility between missions or an adjustment may be required.

d. For Flight Asset services, if the 13A.1 launch date slips greater than zero (0) calendar days from the current working launch dates established as of 8 December 2004. Changes thereafter will be in accordance with the subcontract baseline, or as directed by the NASA ISS Program Manager and communicated to the subcontractor by Buyer. No Flight Asset services will be paid for launch date slips of ULF1.1 or 12A.1 unless the assembly sequence changes such that the last flight of a ICC or LSM asset required past the current 13A.1 flight.

In the case of any equitable adjustment under paragraph c above, there shall be no adjustments for the first sixty (60) calendar days.

In the case of any equitable adjustment, the subcontractor shall provide credit for all work previously done that can be applied to the change that has initiated the equitable adjustment, (e.g., the reuse of analytical work done when a manifested item moves from one flight to another, sub-system training plans, past experience (learning curve))

A. SPACEHAB CARRIERS – DECISION POINTS

There are schedule times when decisions can be made resulting in changes to the flight schedules and the detailed manifest. If changes are made within the schedule range specified below, the subcontractor shall accommodate the

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SECTION H	COMMERCIAL CARRIER SERVICES	H-20

changes with no entitlement to an equitable adjustment. These schedule times are identified as decision points. These SPACEHAB Carriers decision points are shown in the following table:

TABLE 1 - SPACEHAB CARRIER DECISION POINTS

Change Category	Schedule Range Critical Decision Point up to which the subcontractor shall accommodate changes
Flight Schedule - Launch Date	L-15 months or earlier
Cargo manifest changes with no new Flight Support Equipment development required: - ICC manifest changes impacting integration products - LSM manifest changes impacting integration products - LSM manifest changes w/o impacts to integration products or KSC processing requirements Cargo manifest changes with new Flight Support Equipment development required: - ICC - LSM	L-12 months L-12 months Anytime L-12 months or earlier L-12 months or earlier

B. SPACEHAB CARRIERS – I&O EQUITABLE ADJUSTMENT

If a launch date change occurs within the L-14 range, Table 2 – “Launch Delay Decision Points” defines the monthly delay Not-to-Exceed price for Integration and Operations (I&O) for each carrier. For the purpose of establishing an equitable adjustment to the prices of the subcontract as a result of a launch delay, the SPACEHAB Subcontract price will be revised in accordance with the NTE prices in Table 2. Should a carrier launch be delayed more than one time within the L-14 range, the monthly delay Not-to-Exceed price is not intended to be additive for each of the decision point ranges.

TABLE 2 – LAUNCH DELAY DECISION POINTS

LSM I&O Launch Delay Decision Point	Monthly EA NTE Price ($)
Prior to L-14	—
L-14 thru L-13	198,873

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SECTION H	COMMERCIAL CARRIER SERVICES	H-21

L-12 thru L-10	266,117
L-9 thru L-7	314,610
L-6 thru L-4	418,415
L-3 thru Launch	728,707
ICC I&O Launch Delay Decision Point	Monthly EA NTE Price ($)
Prior to L-14	—
L-14 thru L-13	88,913
L-12 thru L-9	132,552
L-8 thru L-5	148,313
L-4 thru Launch	217,122
SHOSS I&O Launch Delay Decision Point	Monthly EA NTE Price ($)
Prior to L-14	—
L-14 thru L-13	10,023
L-12 thru L-9	14,960
L-8 thru L-5	18,614
L-4 thru Launch	22,338

C. SPACEHAB CARRIERS – FLIGHT ASSET EQUITABLE ADJUSTMENT

For Flight Asset services, if the 13A.1 launch date slips greater than zero (0) calendar days from the baseline launch date, Table 3 – “Flight Asset Services Price” defines the not-to-exceed Flight Asset Services price for each carrier. For the purpose of establishing an equitable adjustment to the prices of the subcontract as a result of a launch delay, the SPACEHAB Subcontract price will be revised in accordance with the NTE prices in Table 3.

TABLE 3 – FLIGHT ASSET SERVICES PRICE

Carrier	NTE Monthly Flight Asset Services Price
LSM	$	893,000/mo
ICC	$	300,000/mo

D. SPACEHAB CARRIERS – ADMINISTRATION OF CLAUSE

The subcontractor is responsible for: keeping current, complete, and accurate records that track the performance of work in each area which is subject to variations in decision points; making such records available to the Government as may be requested from time to time; and submitting an adjustment proposal if the conditions above are met, or if requested by Buyer.

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SECTION H	COMMERCIAL CARRIER SERVICES	H-22

When initiated by the subcontractor, the subcontractor’s proposal for an equitable adjustment shall be submitted within 50 calendar days of the assessment that conditions above have been met. If requested by Buyer, the proposal for an equitable adjustment shall be submitted within 20 calendar days of the request.

The adjustment provisions of this clause shall not be construed as a limitation of Buyer’s rights under the Termination clause of this subcontract. In addition, this clause is fully subject to the Limitation of Funds clause of this subcontract and shall not be construed as authorization to perform work beyond what can be accomplished in accordance with the Limitation of Funds.

(End of Clause)

[END OF SECTION]

Purchase Order No. GF80726B11
SECTION I	COMMERCIAL CARRIER SERVICES	I-1

SECTION I

CONTRACT CLAUSES

I.1 CLAUSES INCORPORATED BY REFERENCE

This subcontract incorporates the following Lockheed Martin standard terms and conditions by reference, with the same force and effect as if they were given in full text.

CORPDOC 2 (10/03)

CORPDOC 2B (10/03)

SUPPLEMENT – C (11/02)

(End of Clause)

I.2 MODIFICATION OF INCORPORATED TERMS AND CONDITIONS

Refer to CORPDOC 2 and make the following changes:

Paragraph 5 – add the following: “ISS, CMC and Seller interfaces are defined in the Data Interface and Requirements Transfer Document (DIRT).”

Paragraph 7 (a) – change the cure period to thirty (30) days.

Paragraph 7 (b) – change the word “portion” in the last line of the second sentence to “deliverables.”

Paragraph 18 (a) – add the following: “The parties agree to negotiate in good faith to establish a supplemental agreement to define the scope of inspections.”

Paragraph 20 (b) – delete in its entirety.

Paragraph 32 (a) (i) – add the following: “provided that the part(s) terminated were terminated by the Government in Buyer’s prime contract.”

Purchase Order No. GF80726B11
SECTION I	COMMERCIAL CARRIER SERVICES	I-2

Refer to Section II Paragraph F of CORPDOC 2 and add the following FAR Flowdown clauses:

52.227-16	Additional Data Requirements (JUN 1987)
52.245-19	Government Property Furnished “As Is” (APR 1984)
52.227-23	Rights to Proposal Data (Technical) (JUN 1987)

Refer to CORPDOC 2B and make the following changes:

F 1 (a) – change FAR 52.227-14 to 52.227-14 Alt II

F 1 (b) – add FAR 52.227-11 as this subparagraph

G 1 – delete 1852.242-73

G 4 – delete the following NFS Clauses:

1852.227-70

1852.227-71

1852.231-71

1852.237-71

1852.242-71

Refer to Paragraph G of CORPDOC 2B and add the following NASA FAR Supplement Flowdown clauses:

1852.204-76 Security Requirements for Unclassified Information Technology Resources (July 2002)

1852.242-78 Emergency Medical Services and Evacuation (April 2001)

Refer to SUPPLEMENT – C and make the following changes:

Paragraph 6 – add the following: “...except as required by law.”

Purchase Order No. GF80726B11
SECTION I	COMMERCIAL CARRIER SERVICES	I-3

Paragraph 8 – delete in its entirety.

Paragraph 10 (a) – change the terms of payment time period to net forty-five (45) days for invoices for January, May, August, November and December for any year (these invoices are to be submitted on or about the last day of the month). The terms of payment time period for all other invoices during any year shall be net thirty (30) days.

(End of Clause)

[END OF SECTION]

EX-10.24

Exhibit 10.24

COST PLUS AWARD FEE SUBCONTRACT NO. SGS-0311403.00

for

PROGRAM INTEGRATION AND CONTROL

between

ARES Corporation, hereinafter “ARES”

1440 Chapin Ave., Suite 390

Burlingame, CA. 94010

and

SPACEHAB Government Services Inc., hereinafter “SPACEHAB.” or “Subcontractor”

a wholly owned subsidiary of SPACEHAB, Inc.

12130 Highway 3, Building 1

Webster, TX. 77598-2708

EFFECTIVE DATE: This subcontract is effective as of the date signed by both parties below.

This Subcontract constitutes the entire understanding and agreement between the parties with respect to the subject matter hereof and supersedes all prior representations and agreements. It shall not be varied except by an instrument in writing of subsequent date duly executed by authorized representatives of the parties. The laws of the State of Texas shall govern the validity, construction, scope and performance of the Subcontract agreement.

This is a rated order (DO-C9) certified for national defense use and placed under U.S. Government Prime Contract No. NNJ04AA01C. You are required to follow all the provisions of the Defense Priorities and Allocations System regulation (15 CFR 700).

IN WITNESS WHEREOF, the parties hereto have, through duly authorized officials, executed this Subcontract agreement effective as of the day and year indicated on this cover page.

SPACEHAB Government Services, Inc.		ARES Corporation (ARES)
By:	/s/    Illegible	By:	/s/    Illegible
	(Signature)		(Signature)
	05 Dec. 2003		29 Dec. 03
	(Date)		(Date)

Michael E. Kearney	Stanley Lynch
President and Chief Executive Officer	ARES Vice President
(Typed Name & Title)	(Typed Name & Title)

Contract No.: SGS-0311403.00

SECTION A -TABLE OF CONTENTS

TITLE		PAGE
SECTION A - AWARD FORM, CONTENTS, AND STRUCTURE
TABLE OF CONTENTS		A-1
PART I – THE SCHEDULE
SECTION B - SUPPLIES OR SERVICES AND PRICE/COSTS
B.1	LISTING OF CLAUSES INCORPORATED BY REFERENCE	B-1
B.2	ESTIMATED COST AND AWARD FEE (NFS 1852.216-85)	B-1
B.3	INDEFINITE DELIVERY/INDEFINITE QUANTITY (IDIQ) ORDERS	B-2
B.4	CONTRACT FUNDING (NFS 18-52.232-81)	B-3
SECTION C - STATEMENT OF WORK		C-1
SECTION D - PACKAGING AND MARKING
D.1	LISTING OF CLAUSES INCORPORATED BY REFERENCE	D-1
D.2	PACKAGING, HANDLING, AND TRANSPORTATION (NFS 1852.211-70)	D-l
SECTION E - INSPECTION AND ACCEPTANCE
E.1	LISTING OF CLAUSES INCORPORATED BY REFERENCE	E-1
E.2	HIGHER-LEVEL CONTRACT QUALITY REQUIREMENT (FAR 52.246-11)	E-1
E.3	MATERIAL INSPECTION AND RECEIVING REPORT (NFS 1852.246-72)	E-2
E.4	INSPECTION AND ACCEPTANCE	E-2
E.5	SURVEILLANCE PLAN	E-2
SECTION F - DELIVERIES OF PERFORMANCE
F.1	LISTING OF CLAUSES INCORPORATED BY REFERENCE	F-1
F.2	PERIOD OF PERFORMANCE	F-1
F.3	PLACE OF PERFORMANCE	F-1
F.4	INDEFINITE DELIVERY INDEFINITE QUANTITY (IDIQ) – LIMITATIONS	F-1
F.5	LEVEL-OF-EFFORT – LIMITATIONS	F-2
F.6	TASK ORDERING PROCEDURES	F-3
F.7	OPTION FOR THE INCREMENTAL INCREASE OF LEVEL OF EFFORT (LOE)	F-4
F.8	OPTION TO EXTEND COMPLETION DATE (JSC 52.217-90)	F-5
F.9	BILLS OF LADING (NFS 1852.247-73)	F-7
F.10	SHIPPING INSTRUCTIONS	F-8

Section A

2

Contract No.: SGS-0311403.00

SECTION A - TABLE OF CONTENTS (Continued)

TITLE		PAGE
SECTION G - CONTRACT ADMINISTRATION DATA
G.1	LISTING OF CLAUSES INCORPORATED BY REFERENCE	G-1
G.2	ADVANCED AGREEMENT ON PAYMENT OF PHASE-IN COSTS	G-1
G.3	SECURITY/BADGING REQUIREMENTS FOR FOREIGN NATIONAL VISITORS AND EMPLOYEES/REPRESENTATIVES OF FOREIGN CONTRACTORS	G-2
G.4	AWARD FEE FOR SERVICE CONTRACTS	G-3
G.5	SUBMISSION OF VOUCHERS FOR PAYMENT	G-4
G.6	DESIGNATION OF NEW TECHNOLOGY REPRESENTATIVE AND PATENT REPRESENTATIVE (NFS 1852.227-72)	G-5
G.7	TECHNICAL DIRECTION	G-6
G.8	TRAVEL OUTSIDE OF THE UNITED STATES (NASA 1852.242-71)	G-7
G.9	RUSSIAN TRAVEL	G-7
G.10	IDENTIFICATION OF EMPLOYEES	G-8
G.11	INSTALLATION-ACCOUNTABLE PROPERTY (NASA 18-52.245-71)	G-8
G.12	LIST OF INSTALLATION-ACCOUNTABLE PROPERTY AND SERVICES (NASA 18-52.245-77)	G-10
G.13	FINANCIAL REPORTING OF NASA PROPERTY IN THE CUSTODY OF CONTRACTORS	G-12
G.14	REPAIR OF GOVERNMENT PROPERTY (JSC 52.245-91)	G-12
G.15	ADMINISTRATIVE PROVISIONS RELATING TO INSTALLATION-ACCOUNTABLE GOVERNMENT PROPERTY AND SERVICES	G-13
G.16	TECHNICAL AND SUBCONTRACT REPRESENTATIVES	G-13
SECTION H - SPECIAL CONTRACT REQUIREMENTS
H.1	LISTING OF CLAUSES INCORPORATED BY REFERENCE	H-1
H.2	REPRESENTATIONS, CERTIFICATIONS, AND OTHER STATEMENTS OF OFFERORS (JSC 52.209-90) (SEP 1988)	H-1
H.3	ISS CONTRACT STRATEGY CONFLICT OF INTEREST AGREEMENT	H-1
H.4	ASSOCIATE CONTRACTOR AGREEMENT FOR ISS	H-2
H.5	ADDITIONAL EXPORT CONTROL REQUIREMENTS	H-3
H.6	GOVERNMENT INSIGHT	H-5
H.7	HANDLING OF SENSITIVE DATA	H-6
H.8	(LIMITED) RELEASE OF CONTRACTOR CONFIDENTIAL BUSINESS INFORMATION (CBI) (JSC 52.227-91)	H-6
H.9	MANAGEMENT AND PROTECTION OF DATA OF THIRD PARTIES	H-7
H.10	REPROCUREMENT DATA PACKAGE	H-8
H.11	KEY PERSONNEL AND FACILITIES (NASA 1852.235-71)	H-8
H.12	GOVERNMENT-PROVIDED RUSSIAN LANGUAGE AND LOGISTICS SERVICES (RLLS)	H-9

Section A

3

Contract No.: SGS-0311403.00 MOD3

SECTION A -TABLE OF CONTENTS (Continued)

TITLE		PAGE
H.13	ADJUSTMENT FOR IDIQ TASK ORDERS	H-19
H.14	GENERAL PROVISIONS and FLOW-DOWN REQUIREMENTS	H-10
H.15	PI&C SAFETY AND HEALTH PLAN	H-11
H.16	SPACEHAB PROPERTY SYSTEM	H-11
H.17	SPACEHAB CONTRACTOR PURCHASING SYSTEM	H-11
H.18	SUBCONTRACTING WITH RUSSIAN ENTITIES FOR GOODS OR SERVICES	H-11
PART II – CONTRACT CLAUSES
SECTION I - CONTRACT CLAUSES
I.1	LISTING OF CLAUSES INCORPORATED BY REFERENCE	I-1
I-2	RESERVED	I-5
I.3	CLAUSES INCORPORATED BY REFERENCE (FAR 52.252-2)	I-6
I.4	AUTHORIZED DEVIATIONS IN CLAUSES (FAR 52.252-6)	I-6
I.5	SECURITY REQUIREMENTS FOR UNCLASSIFIED AUTOMATED INFORMATION RESOURCES	I-6
I.6	PAYMENT OF OVERTIME PREMIUMS (52.222-2)	I-8
I.7	STATEMENT OF EQUIVALENT RATES FOR FEDERAL HIRES (52.222-42)	I-9
I.8	RESERVED	I-10
I.9	INFORMATION INCIDENTAL TO CONTRACT ADMINISTRATION	I-10
I.10	TECHNICAL INFORMATION RELEASES AND PUBLICATIONS	I-11
I.11	DATA RIGHTS NOTICE	I-11
I.12	ACCESS TO CONTRACTOR DATA	I-12
I.13	LIMITED RIGHTS DATA NOTICE	I-13
I.14	RESERVED	I-13

[END OF SECTION]

Section A

4

Contract No.: SGS-0311403.00

SECTION A -TABLE OF CONTENTS (Continued)

TITLE	PAGE
PART III – LIST OF DOCUMENTS, EXHIBITS, AND OTHER ATTACHMENTS
SECTION J - LIST OF ATTACHMENTS
ATTACHMENT J-l: PI&C TEAM - STATEMENT OF WORK (SOW)	J-1-1
Appendix A: Key Terms
Appendix B: Acronym List
Appendix C: Applicable and Reference Documents List
Appendix D: Government Furnished Data
Appendix E: Government Furnished IT Systems
Appendix F: List of Installation Accountable Property and Services
Appendix G: SOW PWBS Map
Appendix H: ISS Specifications/ ICD’s / IRD’s Documents List
Appendix I: PIRN’s / DCN’s Document List
ATTACHMENT J-2: AWARD FEE EVALUATION PLAN	J-2-1
ATTACHMENT J-3: DATA REQUIREMENTS LIST/DATA REQMT. DESCRIPTIONS	J-3-1
ATTACHMENT J-4: DOL WAGE DETERMINATIONS	J-4-1
ATTACHMENT J-5: PI&C TEAM - SAFETY AND HEALTH PLAN	J-5-1
ATTACHMENT J-6: PI&C TEAM - IT SECURITY PLAN	J-6-1
ATTACHMENT J-7: GENERAL PROVISIONS – ARES CORPORATION FOR SVCS.	J-7-1

Section A

5

Contract No.: SGS-0311403.00 MOD8

1/1/2004 - 9/30/2005 Contract Value Recapitulation

Previous Value - as of Mod 7
	Cost		Fee		TOTAL
Phase-In					$	18,729
LOE	$	1,703,001	$	136,240	$	1,839,241
IDIQ	$	8,442,461	$	665,461	$	9,107,922
TOTAL	$	10,145,462	$	801,701	$	10,965,892
This Action - Mod 8
	Cost		Fee		TOTAL
Phase-In
LOE
IDIQ
TOTAL	$	—	$	—	$	—
Cumulative
	Cost		Fee		TOTAL
Phase-In					$	18,729
LOE	$	1,703,001	$	136,240	$	1,839,241
IDIQ	$	8,442,461	$	665,461	$	9,107,922
TOTAL	$	10,145,462	$	801,701	$	10,965,892
1/1/2004-6/30/2005 Contract Funding Recapitulation
Previous Value as of Mod 7
	Cost		Fee		TOTAL
Phase-In					$	18,729
LOE	$	259,777	$	16,152	$	275,929
LOE ODC’s	$	1,645
IDIQ	$	6,355,351	$	462,118	$	6,817,469
IDIQ ODC’s
TOTAL	$	6,615,128	$	478,270	$	7,112,127
This Action - Mod 8
	Cost		Fee		TOTAL
Phase-In
LOE	$	36,481	$	2,335	$	38,816
LOE ODC’s
IDIQ	$	801,046	$	50,625	$	851,671
IDIQ ODC’s
TOTAL	$	837,527	$	52,960	$	890,487
Cumulative
	Cost		Fee		TOTAL
Phase-In					$	18,729
LOE	$	296,258	$	18,487	$	314,745
LOE ODC’s	$	1,645
IDIQ	$	7,156,397	$	512,743	$	7,669,140
IDIQ ODC’s
TOTAL	$	7,452,655	$	531,230	$	8,002,614

3

Contract No.: SGS-0311403.00 MOD7

PART I - THE SCHEDULE

SECTION B - SUPPLIES OR SERVICES AND PRICE/COSTS

B.1 LISTING OF CLAUSES INCORPORATED BY REFERENCE

The following contract clauses pertinent to this section are hereby incorporated by reference:

“None”

B.2 ESTIMATED COST AND AWARD FEE (NFS 1852.216-85) (SEP 1993)

The subcontractor shall provide products and/or services that support International Space Station Program (ISSP) functions related to Program Integration and Control in accordance with Section C and Attachment J-1, Statement of Work and specific task/delivery orders issued within the scope of this subcontract.

The estimated costs and available award fee for this subcontract are as follows:

	ESTIMATED COST		FEE		PRICE
PHASE-IN					$	18,729
BOE*	$	1,703,001	$	136,240	$	1,839,241
TDIQ**	$	8,442,461	$	665,461		9,107,922
TOTAL	$	10,087,516	$	801,701	$	10,965,892

* Note: LOE Costs include $ 367,200 for Non-Labor Resources Pool.

** Note: To be modified by Task Orders.

(End of clause)

Section B

1

Contract No.: SGS-0311403.00

B.3 INDEFINITE DELIVERY/INDEFINITE QUANTITY (IDIQ) ORDERS

ARES may order IDIQ services at any time after subcontract start, in accordance with the procedures set forth in this subcontract. The subcontractor shall utilize the rates shown in the following table for the pricing of IDIQ task orders.

Labor Category	FY1			FY2			FY3			FY4			FY5			FY6			FY7
Program Manager	$			$			$			$			$			$			$
Manager	$	97.18		$	95.72		$	96.91		$	99.76		$	103.26		$	106.24		$	109.55
Supervisor	$	51.93		$	51.14		$	51.78		$	53.31		$	55.17		$	56.77		$	58.55
IT Professional III	$	91.84		$	89.97		$	90.47		$	92.42		$	94.99		$	96.98		$	99.22
IT Professional II	$	63.29		$	62.00		$	62.36		$	63.69		$	65.46		$	66.83		$	68.38
IT Professional I	$	54.61		$	53.49		$	53.80		$	54.95		$	56.48		$	57.66		$	59.00
Analyst III	$	51.22		$	50.46		$	51.09		$	52.60		$	54.44		$	56.02		$	57.76
Analyst II	$	37.19		$	36.63		$	37.09		$	38.18		$	39.52		$	40.67		$	41.93
Analyst I	$	28.74		$	28.31		$	28.67		$	29.51		$	30.54		$	31.43		$	32.41
Data/Documents Management Specialist	$	30.48		$	30.03		$	30.40		$	31.29		$	32.39		$	33.32		$	34.36
Maximum Fee — % of total proposed cost for estimating purposes		8	%		8	%		8	%		8	%		8	%		8	%		8	%

(End of clause)

Section B

2

Contract No.: SGS-0311403.00 MOD8

B.4 CONTRACT FUNDING (NFS 1852.232-81) (JUN 1990)

(a) For purposes of payment of cost, exclusive of fee, in accordance with the Limitation of Funds clause, the total amount allotted by ARES to this subcontract is:

PHASE-IN:	$ 18,729
IDIQ:	$ 7,156,397
LOE:	$ 296,258 (1,645 for ODC Pool)
TOTAL:	$ 7,452,655

This allotment is for activities performed within the scope of the Statement of Work in Section C and Attachment J-1 of this subcontract and covers the following estimated period of performance:

January 1, 2004 through June 30, 2005

(b) An additional amount of $ 531,230 is obligated under this subcontract for payment of fee as follows:

IDIQ:	$	512,743
LOE:	$	18,487

(c) The total amount of funds obligated to this subcontract for the payment of cost and fee is: $ 8,002,614

3

Contract No.: SGS-0311403.00 MOD8

This modification makes the following changes to the ARES–SPACEHAB Subcontract # SGS-0311403.00:

MODIFICATION AND HISTORY PAGE
MOD NO.	Description	DATE
	Basic Contract	12/29/03
1	Modification 1 – Administrative Corrections, Changes to J-1 and J-3; Increases to Funding Value	2/10/04
2	Increases to Funding Value	2/17/04
3	Changes to Section H, I, Attachment J-1 and J-3; Increases to Funding Value	3/8/04
4	Changes to Section B, Appendix I, Attachment J-1, and Contract Recapitulation table	8/6/04
5	Changes to Section B and Contract Recapitulation table	9/2/04
6	Increases to Funding Value	9/15/04
7	Increases to Contract Value (including addition of fee from Mod 5 contract value change), Funding Value, Changes to Section B, Attachment J-1 PI&C SOW, Attachment J-1 Appendix C, D, E, F, H, I and Attachment J-3 DRDs	11/8/04
8	Changes to Section B, Sections H & I, Attachment J-1 PI&C SOW, Attachment J-1 Appendix C, Attachment J-1 Appendix G, Attachment J-2 Award Fee Evaluation Plan, Attachment J-4, DOL Wage Determination	4/20/05

Approvals

ARES Approval	Name/Signature	Date
	/S/     MARCY LINEBARGER	5/10/05
Contracts Administrator	Marcy Linebarger
Subcontractor Approval	Name/Signature	Date
	/S/     RICHARD J. HARMON	5/5/05
Manager of Contracts	Richard J. Harmon

1

Contract No.: SGS-0311403.00 MOD8

This modification makes the following changes to the ARES – SPACHEAB Subcontract # SGS-0311403.00:

1. Section B – Supplies or Services and Price/Costs

a. Clause B.4(a) increased funding for Cost by $837,527, and covers the period of January 1, 2004 through June 30, 2005.

b. Clause B.4(b) increased funding for fee by $52,960

c. Clause B.4(c) increased the total amount of funds obligated to this contract by $890,487

2. Section H, Special Contract Requirements:

Clause H.5 ADDITIONAL EXPORT CONTROL REQUIREMENTS is replaced in its entirety to reflect revisions to the clause.

3. Section I, Contract Clauses:

Clause I.8 OMBUDSMAN is revised to update the appointed ombudsman to Randy K. Gish.

4 Attachment J-1, Statement of Work (SOW)

Attachment J-1, Statement of Work (SOW) is replaced in its entirety to reflect updates to the document.

5. Appendix C – Applicable and Reference Document List

Appendix C – Applicable and Reference Document List is revised to reflect the replacement of Table C-l: Applicable Documents List in its entirety.

6. Appendix G – Statement of Work Program Work Breakdown Structure Map

Appendix G – Statement of Work Program Work Breakdown Structure Map is replaced in its entirety.

7. Attachment J-2, Award Fee Evaluation Plan

Attachment J-2, Award Fee Evaluation Plan is revised to reflect the change to page J2-4 paragraph one of the Contractor’s Self Evaluation and Submission section. The AWARD FEE SCHEDULE, Appendix IV to Attachment J-2, the Award Fee Plan, is hereby deleted in its entirety

8. Attachment J-4, DOL WAGE DETERMINATION

Attachment J-4, DOL Wage Determination is replaced in its entirety to incorporate the new wage determination number W094.2516 Rev. 245, effective January 1, 2005.

2

Contract No.: SGS-0311403.00 MOD7

1/1/2004 - 9/30/2005 Contract Value Recapitulation
Previous Value - as of Mod 6
	Cost		Fee		TOTAL
Phase-In					$	18,729
LOE	$	1,703,001	$	136,240	$	1,839,241
IDIQ	$	3,765,376	$	292,582	$	4,057,958
TOTAL	$	5,468,377	$	428,822	$	5,915,928
This Action - Mod 7
	Cost		Fee		TOTAL
Phase-In
LOE
IDIQ	$	4,677,085	$	372,879	$	5,049,964
TOTAL	$	4,677,085	$	372,879	$	5,049,964
Cumulative
	Cost		Fee		TOTAL
Phase-In					$	18,729
LOE	$	1,703,001	$	136,240	$	1,839,241
IDIQ	$	8,442,461	$	665,461	$	9,107,922
TOTAL	$	10,145,462	$	801,701	$	10,965,892
1/1/2004-4/30/2005 Contract Funding Recapitulation
Previous Value as of Mod 6
	Cost		Fee		TOTAL
Phase-In					$	18,729
LOE	$	137,609	$	8,333	$	145,942
LOE ODC’s	$	1,645
IDIQ	$	3,662,562	$	292,582	$	3,955,144
IDIQ ODC’s
TOTAL	$	3,800,171	$	300,915	$	4,119,815
This Action - Mod 7
	Cost		Fee		TOTAL
Phase-In
LOE	$	122,168	$	7,819	$	129,987
LOE ODC’s
IDIQ	$	2,692,789	$	169,536	$	2,862,325
IDIQ ODC’s
TOTAL	$	2,814,957	$	177,355	$	2,992,312
Cumulative
	Cost		Fee		TOTAL
Phase-In					$	18,729
LOE	$	259,777	$	16,152	$	275,929
LOE ODC’s	$	1,645
IDIQ	$	6,355,351	$	462,118	$	6,817,469
IDIQ ODC’s
TOTAL	$	6,615,128	$	478,270	$	7,112,127

5

Contract No.: SGS-0311403.00 MOD7

B.4 CONTRACT FUNDING (NFS 1852.232-81) (JUN 1990)

(a) For purposes of payment of cost, exclusive of fee, in accordance with the Limitation of Funds clause, the total amount allotted by ARES to this subcontract is:

PHASE-IN:	$18,729
IDIQ:	$6,355,351
LOE:	$ 259,777 ($ 1,645 for ODC Pool)
TOTAL:	$6,615,128

This allotment is for activities performed within the scope of the Statement of Work in Section C and Attachment J-1 of this subcontract and covers the following estimated period of performance:

January 1, 2004 through April 30, 2005

(b) An additional amount of $ 478,270 is obligated under this subcontract for payment of fee as follows:

IDIQ:	$462,118
LOE:	$16,152

(c) The total amount of funds obligated to this subcontract for the payment of cost and fee is: $7,112,127

(End of clause)

Section B

3

Contract No.: SGS-0311403.00

(b) In order to achieve efficient and effective implementation of the operation and utilization phase of the ISS, the subcontractor shall fully support ARES’ efforts to establish the means for coordination and exchange of information with associate contractors. The information to be exchanged shall be that required by the contractors in the execution of their respective contract requirements. The subcontractors are strongly encouraged to seek out and foster cooperative efforts that will benefit the ISS Program with increased safety, efficiency, and productivity.

(c) Given the unique role of this subcontract, and interrelations with the development, operation, maintenance and utilization of the ISS, the subcontractor will engage in cooperative relationships that facilitate effective management of the overall ISS effort. This joint cooperation will be evaluated as part of the subcontract award fee process, as defined in the Award Fee Plan for the subcontract.

(d) To ensure successful implementation and utilization of the ISS, the subcontractors shall support ARES’ efforts to establish formal guidelines to address coordination, cooperation and communication. All program elements shall work in a coordinated fashion. Each subcontractor shall establish the means for the exchange of such data as needed to keep other project elements fully informed.

(End of clause)

H.5 ADDITIONAL EXPORT CONTROL REQUIREMENTS

In addition to the requirements set forth in NFS 1852.225-70 Export Licenses, the Subcontractor shall perform the following tasks. The subcontractor’s Export Control System and Procedures shall be used by the ARES PI&C Team until such time as ARES has established its own approved system. The subcontractor shall process all “export Control Requirements” through the ARES Export Control Officer.

The following requirements shall be met by the Contractor and its Subcontractors, respectively, to use Department of Commerce or Department of State export licenses obtained by NASA and to use any NASA export license exceptions or exemptions as they apply to the International Space Station Program.

For exports (hardware, software, technical data) originating from Houston, Huntsville, AL or Cape Canaveral, FL, submit the equivalent information described below to the Center Export Administrator (CEA) at the geographically closes NASA Space Flight Center (Johnson Space Center (JSC), Marshall Space Flight Center (MSFC) or Kennedy Space Center (KSC)) according to the policies and procedures of that center. A courtesy copy of equivalent information submitted to MSFC or KSC shall be provided to the JSC CEA’s office. Provide copies of shipping documents for shipments made under a NASA Export License, exemption or exception to the appropriate CEA within two weeks after the shipment.

a. A minimum of 15 working days prior to export, the Contractor or its subcontractors who are exporting on behalf of NASA must obtain approval from the Center Export Administrator’s (CEA) office by following an Advance Notification of Shipment (ANS) process.

Section H

3

Contract No.: SGS-0311403.00

b. Before effecting an export on behalf of NASA, the Contractor or its subcontractors shall determine the classification recommendation of the item(s) or document(s) and whether it needs a license. If required, the contractor or its subcontractors shall provide a more technical rationale supporting the classification, if requested by NASA

c. Formal letter, fax or email is sufficient, addressed to the CEA’s office, and must include the details listed below.

• NASA license number (include date of expiration) or license exception/exception.

• Quantity and description as it appears on the applicable license.

• Date of planned shipment (and expected date of return if not a permanent export).

• Origin of shipment (Company and city).

• Destination of shipment (Country, city and company).

• Point of contact (for technical questions – must be a representative of the originating shipper).

• Export Classification Control Number (ECCN) or category under Export Administration Regulations or United States Munitions List regulations.

• Rationale for classification.

• Requirement to export (i.e., MOU, contract number, meeting minutes). You may be asked to provide copy of the requirement.

• Additional information as necessary to clarify the export.

d. A copy of the completed Pro Forma Invoice (JSC Form 1735) attached to an email is sufficient to meet this requirement as long as all required information above is also included.

e. After all the information is submitted, the CEA’s office will respond to Contractor or its subcontractor within ten working days. Once approved, NASA will provide the destination control statement to use on all export documentation.

Included in the applicable export exceptions, the Contractor or its subcontractors are authorized to export hardware, software or data to ISS International Partner (IP) governmental offices that meet the conditions of license exception GOV (15 CFR 740.1l(b)(2)(iii)(A)).

For Verification of End Use, Contractor or its subcontractors shipping on behalf of NASA using a license or license exception or exemption, shall provide a copy of all shipping documentation within two business weeks of the shipment date to the CEA’s office.

For temporary exports, Contractor or its subcontractors shipping on behalf of NASA, shall notify the CEA in writing within five business days of the date that the item was actually returned.

The Contractor or its subcontractors shall keep those records required by Department of Commerce and Department of State regulations for all exports and make them available upon request to NASA and its representatives. These requirements, do not apply to Contractor or subcontractor commercial contract related exports or exports pursuant to Technical Assistance

Section H

4

Contract No.: SGS-0311403.00

Agreements or other license authorizations received by the Contractor or its subcontractors and for which the Contractor or its subcontractors will be the exporter of record.

The Contractor and its subcontractors shall perform self-annual audits of their export control processes and provide written audit results to the CEA in accordance with DRD A-II-02, Export Control Audit Results.

The Contractor and its subcontractors shall report to the NASA JSC EST, in writing, any potential export issues (including those related to support of sustaining engineering and operations of ISS) that cannot be resolved by the Contractor or its subcontractors, respectively. Such report and/or notification of issues and technical tasks should be reported to the NASA JSC EST at least three months in advance of requested action.

Upon discovery of unforeseen adverse export issues, the Subcontractor shall immediately notify NASA JSC EST and ARES Export Control Officer by telephone or email of said issue and shall report to the NASA JSC EST, in writing, as the facts become known.

When directed in writing by the ARES Contracts Administrator or designated representative, the Subcontractor, shall export on behalf of NASA, NASA specifically identified technical data, computer software, hardware, or defense services to a named foreign entity or person, in the manner and under the conditions provided for in the direction.

(End of clause)

H.6 GOVERNMENT INSIGHT

(a) Definitions. For the purpose of this subcontract, the following definitions apply:

“Insight,” as used in this clause, means technical visibility into the Program, maintained through audit, surveillance, assessment of trends and metrics, software independent verification and validation, the flight readiness review process, and review or independent assessment of out-of-family anomalies occurring in any phase of the program.

“Surveillance,” as used in this clause means continual monitoring and verification of the status of manufacturing, testing, and processing of Station hardware, software and operations preparations to ensure that requirements are being fulfilled. Items to be monitored and verified are selected—this is not an all inclusive activity.

“Audit,” as used in this clause, means the implementation of procedures and requirements of the NASA Engineering Quality Audit (NEQA) or other equivalent audit techniques used to perform periodic audit of all aspects of processes and procedures required to manufacture, assemble, test, and process hardware for flight. Audits may include an examination of all disciplines and tasks which are involved with or support ISS, hardware and software production and maintenance, safety and quality assurance, logistics, procurements and operations. These descriptions are illustrative only and shall not be construed as any limitation on the

Section H

5

Contract No.: SGS-0311403.00

(2) By indirect-labor employees such as those performing duties in connection with administration, protection, transportation, maintenance, standby plant protection, operation of utilities, or accounting;

(3) To perform tests, industrial processes, laboratory procedures, loading or unloading of transportation conveyances, and operations in flight or afloat that are continuous in nature and cannot reasonably be interrupted or completed otherwise; or

(4) That will result in lower overall costs to the Government.

(b) Any request for estimated overtime premiums that exceeds the amount specified above shall include all estimated overtime for contract completion and shall-

(1) Identify the work unit; e.g., department or section in which the requested overtime will be used, together with present workload, staffing, and other data of the affected unit sufficient to permit the ARES Contracts Administrator to evaluate the necessity for the overtime;

(2) Demonstrate the effect that denial of the request will have on the subcontract delivery or performance schedule;

(3) Identify the extent to which approval of overtime would affect the performance or payments in connection with other Government contracts, together with identification of each affected subcontract; and

(4) Provide reasons why the required work cannot be performed by using multi-shift operations or by employing additional personnel.

* The inserted figure does not apply to the exceptions in paragraph (a)(1) through (a)(4) of the clause.

An additional amount of $1,120 will be added to paragraph (a) above for each option year, as shown in Section F, Clause F.8, Option to Extend the Completion Date, should these option years be contractually authorized.

(End of clause)

I.7 STATEMENT OF EQUIVALENT RATES FOR FEDERAL HIRES (FAR 52.222-42) (MAY 1989)

In compliance with the Service Contract Act of 1965, as amended, and the regulations of the Secretary of Labor (29 CFR part 4), this clause identifies the classes of service employees expected to be employed under the subcontract and states the wages and fringe benefits payable to each if they were employed by the contracting agency subject to the provisions of 5 U.S.C. 5341 or 5332. This Statement is for Information Only. It is not a Wage Determination.

Section I

9

Contract No.: SGS-0311403.00

Employee Class	Monetary Wage-Fringe Benefits
Engineering Technician V	GS-9 $20.19
Engineering Technician III	GS-5 $13.32
Engineering Technician II	GS-4 $11.91
Computer Programmer IV	GS-11 $24.42
Computer Programmer II	GS-7 $16.50
Computer Programmer I	GS-5 $13.32
Computer Systems Analyst III	GS-12 $29.27
Computer Systems Analyst II	GS-11 $24.42
Computer Systems Analyst I	GS-9 $20.19
Secretary I	GS-4 $11.91
General Clerk I	GS-1 $8.65
Document Preparation Clerk	GS-3 $10.61

(End of clause)

I.8 RESERVED

I.9 INFORMATION INCIDENTAL TO CONTRACT ADMINISTRATION

(a) With the exception of financial information, the Government shall have unlimited rights to use and distribute to third parties any administrative or management information developed by the contractor or a subcontractor at any tier in whole or in part for the performance of the subcontract or first produced in the performance of the subcontract, whether or not said information is specified as a subcontract deliverable, if created in whole or in part at Government expense. The ARES Contracts Administrator/Contracting Officer may, at any time during the subcontract performance or within a period 3 years after acceptance of all items to be delivered under this subcontract, order any administrative or management information developed by the contractor or a subcontractor at any tier in whole or in part for the performance of the subcontract or first produced in the performance of the subcontract.

(b) The ARES Contracts Administrator/Contracting Officer may release the subcontractor from the requirements of this clause for specifically identified information at any time during the 3-year period set forth in paragraph A of this clause.

(End of clause)

Section I

10

Contract No.: SGS-0311403.00

ATTACHMENT J-1

ARES PI&C TEAM

STATEMENT OF WORK

Section J-1

1

Contract
NNJ04AA01C PROGRAM INTEGRATION AND CONTROL ATTACHMENT J-1

Attachment J-1

Statement of Work

For

International Space Station

Program Integration and Control Contract

J1-1

Contract NNJ04AA01C PROGRAM INTEGRATION AND CONTROL ATTACHMENT J-1

TABLE OF CONTENTS

1.0 MANAGEMENT INTEGRATION AND CONTROL	5
1.1 PROGRAM MANAGEMENT	5
1.1.1 Program Management and Administration	5
1.1.1.1 Planning and Reviews	5
1.1.2 Internal/External Program Review Support	7
1.2 BUSINESS MANAGEMENT	7
1.2.1 RESERVED	7
1.2.2 RESERVED	7
1.2.3 Resource Management	7
1.2.3.1 Financial Management	7
1.2.3.2 Performance Management	7
1.2.3.3 Organizational Management	8
1.2.3.4 PI&C Contract Work Breakdown Structure (WBS)	8
1.2.4 ISSP Budget Support / Assessments (LOE)	8
1.2.4.1 ISSP Budget Database Support	8
1.2.4.2 ISSP Reserves/Changes Management Database Support	8
1.2.4.3 Assessments	9
1.2.5 Program Scheduling	9
1.2.5.1 Schedule Management	9
1.2.5.2 Scheduling System Support	10
1.2.5.3 Team Schedule Support	11
1.2.5.4 Common Schedules Database (CSD) Support	11
1.2.5.5 ISSP Planning Calendar	11
1.2.5.6 Schedule Risk Assessment	12
1.2.5.7 Special Schedule Trade Studies	12
1.2.5.8 Integrated Schedule Risk Analysis	12
1.3 CONFIGURATION MANAGEMENT (CM) / DATA INTEGRATION (DI)	12
1.3.1 Configuration Management	12
1.3.1.1 Management and Administration	12
1.3.1.2 Configuration Status Accounting (CSA) and Verification	13
1.3.1.3 Configuration Control	13
1.3.1.4 Data Management (DM)	14
1.3.1.5 Software Configuration Management Requirements	15
1.3.2 Program Data Integration	15
1.3.2.1 Program Technical Data Access	15
1.4 PROGRAM INFORMATION TECHNOLOGY (IT)	17
1.4.1 IT Management and Administration	17
1.4.2 IT Systems Management and Operations	18
1.4.2.1 IT Life Cycle Management	18
1.4.2.2 Work Authorization and User Support	25
1.5 INTERNATIONAL INTEGRATION	26
1.5.1 RESERVED	26

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1.5.2 RESERVED	26
1.5.3 IP Elements Integration Management (LOE)	27
1.5.3.1 Systems Engineering and Integration of IP Elements	27
15 3.2 IP Milestone Reviews	29
1.5.3.3 ISS & Mission Integration	29
1.6 HUMAN SPACE FLIGHT COLLABORATION	31
2.0 SYSTEMS ENGINEERING, ANALYSIS, AND INTEGRATION	32
2.1 RESERVED	32
2.2 SYSTEMS ANALYSIS AND INTEGRATION	32
2.2.1 Program Requirements and Interfaces	32
2.2.2 System Performance Analysis and Integration	34
2.2.2.1 Mission Analysis and Integration	34
2.2.2.2 Mission Requirements and Support	37
2.2.2.3 System Analysis and Integration	38
2.2.3 Assembly and Configuration Definition/Analysis	39
2.2.3.1 Assembly Sequence Analysis and Definition	39
2.2.3.2 External Configuration Analysis and Definition	41
3.0 SPACECRAFT	44
3.1 RESERVED	44
3.1.1 Vehicle Management and Administration	44
3.1.1.1 Engineering and Technical Services (LOE)	44
4.0 RESERVED	49
5.0 RESERVED	49
6.0 SAFETY AND MISSION ASSURANCE (S&MA)	50
6.1 S&MA MANAGEMENT AND ADMINISTRATION	50
6.1.1 Mission Assurance and Risk Management (MA&RM) Plan	50
6.1.2 Quality Record Maintenance	50
6.1.3 AS9100	50
6.1.4 Audit/Surveillance	50
6.1.5 Mishap Investigating and Reporting	51
6.1.6 Safety and Health	51
6.1.7 Lessons Learned	51
6.1.8 Document Maintenance	52
6.2 S&MA INTEGRATION	52
6.2.1 IP Integration	52
6.2.2 Change Request Integration	53
6.3 PROGRAM RISK	53
6.3.1 Risk Process Management	53
6.3.2 Risk Management	53
6.3.3 Corrective Action/Preventative Action	53
6.3.4 Risk Management Integration	53

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6.3.5 Probabilistic Risk Assessment (PRA)	53
6.3.5.1 Probabilistic Risk Assessment Process	54
6.3.5.2 Probabilistic Risk Assessment Analyses	54
6.3.5.3 Probabilistic Risk Identification Results	54
6.4 RESERVED	54
6.5 RESERVED	54
6.6 QUALITY ASSURANCE	54
6.6.1 Problem Reporting System	54
6.6.1.1 Problem Reporting System Maintenance	54
6.6.1.2 Problem Reporting System Participation	54
6.6.2 Element Hardware / Software Acceptance	55

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1.0 MANAGEMENT INTEGRATION AND CONTROL

The Program Integration and Control (PI&C) contractor shall provide all necessary program, business management, engineering, technical, administrative skills to accomplish the objectives and outcomes described within this contract. The contractor shall perform the services and deliver the products described in this Statement of Work (SOW), contract terms and conditions, applicable documents, Data Requirements Descriptions (DRDs), and other plans and sections contained within this contract. These products and services will be in direct support of the International Space Station Program (ISSP) to manage and integrate the implementing organizations (NASA Center institutions, other contractors, and International Partners/Participants) and ISSP customers. This includes the continued development, maintenance, and implementation of top-level research and development (R&D) requirements, which flow to the implementing organizations to enable the continued operation and utilization of the ISS R&D facility.

1.1 PROGRAM MANAGEMENT

1.1.1 Program Management and Administration

(a) The contractor shall accomplish program management and administration, including risk management, in order to develop and deliver the required ISSP products and services as defined for this contract.

(b) The contractor shall develop and maintain program management systems, as outlined below, for the planning, organization, control, and reporting of all activities required by this contract.

These products and services will include the development and operation of systems necessary for providing assessments and analysis for the overall R&D, integration, and status (e.g., cost, technical, and schedules for the ISSP) and for providing inputs to the ISSP for overall strategic planning, policy and risk management of the ISSP and its R&D of experiments and projects to facilitate the ISSP in accomplishing its mission.

These systems will assure accomplishment of all outcomes and deliverable products required by this contract.

1.1.1.1 Planning and Reviews

1.1.1.1.1 PI&C Plans

(a) The contractor shall develop, maintain, and implement a PI&C Management Plan in accordance with DRD A-PM-01.

(b) The contractor shall provide a PI&C Closeout Plan in accordance with DRD A-PR-02

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1.1.1.1.2 Performance Management Reviews (PMRs)

(a) The contractor shall support monthly and quarterly Performance Management Reviews (PMRs) with NASA.

(b) The contractor shall provide, in the PMRs, insight into the contractors’, subcontractors’, and vendors’ overall technical, schedule and cost performance and status to the ISSP.

(c) The contractor shall present at the PMRs metrics that effectively indicate the level of success in the execution of contract requirements and the status of the contractor’s achievement against the performance standards contained within this statement of work or elsewhere in this contract.

(d) The contractor shall depict in PMR presentations a correlation of the metrics to the requirements, and measurements of contractor management responsiveness to the performance indicated by the metrics.

(e) The contractor shall depict in PMR presentations performance measurement, accomplishments, issues and corrective actions, company financial status, including rates and any other data necessary to status the ISSP.

(f) The contractor shall provide Integrated Management Review Products (IMRP) in accordance with DRD A-PM-02 for the work performed on this contract, and present the data in the PMR.

1.1.1.1.3 Management Information System (MIS) Data Requirements

ISSP MIS is a web-based data repository designed to keep ISSP management and personnel aware of the most current ISSP technical, financial, workforce, schedules, and operational information, including issues and risks. MIS links ISSP core business issues and goals with the technical aspects of the ISSP. To accomplish this, ISSP managers will identify contractor provided financial planning, costs, workforce data, schedules, metrics, technical performance, and other contractor provided information to be linked to the MIS. The contractor provided information will be a subset of data that is required by the PI&C contract in existing DRDs. NASA will identify the DRD data to be linked to the MIS. The contractor shall implement mechanisms for linking this data to the MIS; identify and implement changes to the DRDs with contractor defined formats; provide compatibility to the MIS; and maintain the DRDs electronically in such a manner as to support electronic linkage to the MIS.

1.1.1.1.4 PI&C Certification of Flight Readiness

The contractor shall develop, update and implement a PI&C Certification of Flight Readiness (CoFR) Plan per DRD A-PM-03 in accordance with SSP 50108, Certification of Flight Readiness Process Document for ISS. The contractor shall develop and implement an auditable approach to verify and ensure that flight preparation responsibilities and requirements are met and all issues dispositioned.

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1.1.2 Internal/External Program Review Support

(a) The contractor shall develop briefing materials and analyses for ISSP presentations and meetings with various internal and external review groups. These groups include the Aerospace Safety Advisory Panel (ASAP), Space Station Utilization Advisory Subcommittee (SSUAS), Stafford/Anfimov committee, Inspector General/General Accounting Office (IG/GAO), Space Flight Advisory Committee (SFAC), ISS Management and Cost Evaluation/NASA Advisory Council (IMCE/NAC), Independent Implementation Review (IIR), and Cost Assessments Teams.

(b) The contractor shall prepare and present various topics, such as ISSP technical, cost, and schedule status, specific safety or risk issues, and responses to external inquiries.

1.2 BUSINESS MANAGEMENT

1.2.1 RESERVED

1.2.2 RESERVED

1.2.3 Resource Management

As part of the program management for this contract, including risk management, the contractor shall perform the following tasks in support of resources management:

1.2.3.1 Financial Management

(a) The contractor shall develop, implement, maintain, and update a contract financial system which tracks resources by fund source, contract Work Breakdown Structure (WBS) and elements of cost including, but not limited to, labor, overhead, other direct cost, (e.g. travel and subcontracts) and indirect cost.

(b) The contractor’s financial planning system shall support the Government budget process (e.g. Program Operating Plan (POP) budget calls), and to support special requests for budget impacts. NASA will, in accordance with the budget or special request guidelines and reporting format, specify the format and content of the contractor’s inputs and supporting rationale.

(c) The contractor shall provide financial reporting in accordance with DRD A-PC-01.

1.2.3.2 Performance Management

1.2.3.2.1 The contractor shall develop, implement and maintain a Performance Measurement System (PMS) that provides management visibility into all aspects of contractor, interdivisional, subcontractor and vendor activities and integrates with other required management systems and reporting requirements.

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1.2.3.2.2 The contractor shall provide Cost Performance Reports (CPRs) in accordance with DRDs A-PC-02 and A-PC-05.

1.2.3.2.3 The contractor shall report performance measurement on subcontracts that, based on risk, schedule criticality, or dollar value, have the potential to impact the successful fulfillment of this contract.

1.2.3.2.4 The contractor shall provide a summary of the PMS report in the monthly PMR. The contractor shall provide technical issues, accomplishments, analysis of cost and schedule performance, and corrective actions in problem areas within this report.

1.2.3.3 Organizational Management

The contractor shall develop and provide Organizational/Workforce Reports in accordance with DRD A-PC-03.

1.2.3.4 PI&C Contract Work Breakdown Structure (WBS)

The contractor shall develop and provide a contract PI&C Work Breakdown Structure (WBS) and Dictionary in accordance with DRD A-PC-04. The WBS and Dictionary shall indicate the mapping of the contractor WBS to the contract SOW WBS and SSP 50659, ISS WBS at the lowest levels of the ISSP WBS.

1.2.4 ISSP Budget Support / Assessments (LOE)

1.2.4.1 ISSP Budget Database Support

The contractor shall utilize the Space Program Integrated Contract Environment (SPICE) and the Integrated Financial Management (IFM) databases to accomplish the following:

(a) The contractor shall maintain the ISSP budget database to include tracking of all approved changes

(b) The contractor shall answer queries from CO, NASA business managers and resource analysts and provide reports.

1.2.4.2 ISSP Reserves/Changes Management Database Support

The contractor shall use the SPICE, the IFM, and the Integrated Risk Management Application (IRMA) database to accomplish the following:

(a) The contractor shall maintain the data in the ISSP Reserves/Changes Management database to include tracking of all changes,

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(b) The contractor shall answer queries from NASA business managers and Resource analysts and provide reports.

1.2.4.3 Assessments

The contractor shall support the ISSP Assessments and Cost Estimating Office (ACEO) in identifying, evaluating, analyzing, tracking, and reporting planning and assessment issues and risks along with providing recommendations to the ISSP managers. The contractor shall coordinate content and formats of all assessments and analyses with the ISSP prior to delivery of all final products.

(a) The contractor shall support the ACEO in integrating data from the ISSP’s earned value and cost performance reports, including risks, to assess ISSP performance. These assessments will be used by the ACEO for the development of overall ISSP analyses and status.

(b) The contractor shall support the ACEO in identifying, evaluating, and reporting risk issues in a monthly early warning report to the ISS Program Manager. This report provides detailed status of the ISSP’s performance against the ISSP plan and impact of cost, schedule, and technical variances against the plan; and shall recommend actions to abate potential ISSP impacts.

(c) Prior to the ISSP quarterly PMRs, the contractor shall support the ACEO in identifying, evaluating, and reporting a preview assessment of the ISSP status and technical health to the ACEO based on the assessment of the most current earned value, technical, cost, and schedule reports.

(d) Upon completion of the quarterly PMRs, the contractor shall support the ACEO in providing an updated evaluation of the ISSP’s status and technical health, based on the results of the data provided and presented as part of the quarterly PMR.

(e) The contractor shall support the ACEO in performing Ad-hoc analyses and assessments including, but not limited to, parametric cost estimates, schedule, cost, requirements, and workforce correlations and analyses, life cycle cost (LCC) estimates, and trade studies.

1.2.5 Program Scheduling

The contractor shall perform the following tasks to accomplish overall ISSP schedule management and integration for the entire ISSP for the continued development and operation of the ISS.

1.2.5.1 Schedule Management

(a) The contractor shall develop and provide schedules and schedule analysis for the ISSP.

(b) The contractor shall prepare and report program schedule metrics, in accordance with DRD A-PC-06.

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(c) The contractor shall provide month end reporting and schedule analysis in accordance with DRD A-PC-06.

1.2.5.1.1 Integrated Program Schedule Management

The contractor shall integrate resource-loaded and critical path and external interface linked schedules from all ISSP contractors and performing organizations, in accordance with DRD A-PC-06, into a single master ISSP schedule.

(a) The contractor shall provide schedule development and analysis for all flights and program level activities.

(b) The contractor shall provide schedules updates and status reports every other week, for the entire effort of the ISSP.

(c) The contractor shall provide monthly metrics analysis, and metrics, for the entire effort of the ISSP.

(d) The contractor shall provide monthly critical path schedules, for the entire effort of the ISSP.

(e) The contractor shall maintain, and update monthly, the integrated ISSP schedules.

(f) The contractor shall maintain and update monthly the Program Management Information on the ISSP Web site for the Integrated Program Schedule and the Key Program Performance Indicators (KPPIs) for schedules in the ISSP Management Information System (MIS).

1.2.5.1.2 The contractor shall provide deliverables to ISSP to meet the requirements as defined in DRD A-PC-06 for issue identification, schedule status analyses, and special agenda topics. The contractor shall provide these deliverables to the Integrated Program Schedule Panel (IPSP) in support of the ISSP.

1.2.5.1.3 Program Level Schedule Data Management

The contractor shall lead the ISSP schedule data acquisition effort from all ISSP participants on an every other week basis. This shall include development and preparation of reports regarding participant data input status and products for assessments, providing updates, reporting of trends, and identification of items to report out to the ISSP management.

1.2.5.2 Scheduling System Support

(a) The contractor shall operate a scheduling system identified in Appendix D, Table 1 in support of the ISSP.

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(b) The contractor shall review other ISSP contractors’ schedules to ensure compliance with DRD A-PC-06. The contractor shall work through the Integrated Program Schedules Panel (IPSP) to identify and resolve schedule process and data issues.

1.2.5.3 Team Schedule Support

The contractor shall generate and maintain top level and lower level schedules and analyses in accordance with DRD A-PC-06 for ISSP International Partner (IP) Elements and Systems Engineering Analysis and Integration teams. The contractor shall ensure these schedules meet DRD A-PC-06 paragraph 8g, as a minimum.

(a) The contractor shall provide updates and status reports for all tasks three days per week. The contractor shall provide weekly status for all tasks for their respective teams.

(b) The contractor shall provide monthly updates, analysis and reports for all tasks.

(c) The contractor shall create hardware delivery matrices, delivery schedules and delivery burn-down charts.

(d) The contractor shall provide status/analysis for international hardware and software deliveries and receipts of ISSP commitments.

1.2.5.4 Common Schedules Database (CSD) Support

(a) The contractor shall maintain the existing ISSP CSD for the entire ISSP.

(b) The contractor shall obtain updates to schedule data status in the database.

(c) The contractor shall evaluate the data to identify and resolve delinquencies, discrepancies, and issues.

(d) Upon NASA review and approval and when authorized by the Contracting Officer, the contractor shall develop and implement a plan for transitioning the CSD to an alternative database. The plan shall include the technical approach for transitioning the CSD and an integrated assessment of impacts that may be incurred across the ISSP.

1.2.5.5 ISSP Planning Calendar

The contractor shall maintain the ISSP Planning Calendar.

(a) The contractor shall participate in meetings to prepare updates. The contractor shall make copies and deliver them to the customer in support of program office organizational staff meetings and the Integrated Program Schedule Panel.

(b) The contractor shall maintain the ISSP Planning Calendar on the ISSP Web site and provide updates twice weekly.

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(c) The contractor shall provide maintenance of the Certification of Flight Readiness (CoFR) Meeting Matrix by participating in meetings and providing updates and electronic status to Program participants of the CoFR matrix for baselines and working versions.

1.2.5.6 Schedule Risk Assessment

(a) The contractor shall perform independent assessments of hardware development and software schedules to identify ISSP schedule risks.

(b) The contractor shall provide schedule risk mitigation plans.

1.2.5.7 Special Schedule Trade Studies

The contractor shall perform Special Schedule Trade Studies in support of the ISSP.

1.2.5.8 Integrated Schedule Risk Analysis

The contractor shall perform schedule risk assessment, which can be integrated into the overall program schedule Risk assessment, in order to address overall schedule risk status.

1.3 CONFIGURATION MANAGEMENT (CM) / DATA Management and INTEGRATION (DMI)

1.3.1 Configuration Management

The contractor shall develop, implement, and administer configuration management operations across the ISSP as specified in this contract and in accordance with SSP 41170, Configuration Management (CM) Requirements, SSP 50010, Documentation, Standards & Guidelines and SSP 50123-01, Configuration Management Handbook. Additionally, the contractor shall be responsible for contract specific CM functions as described in each of the functional CM areas described below.

1.3.1.1 Management and Administration

The contractor shall provide for continued establishment and maintenance of the ISSP CM policies, procedures and requirements, including maintaining an infrastructure for the continued development and base lining of hardware, software, and other products under the ISSP control. The contractor shall provide book coordination functions for SSP 41170, SSP 50010, SSP 50123, and SSP 50172, which contain the ISSP CM/DMI requirements, policies, standards, and procedures.

1.3.1.1.1 The contractor shall develop and implement a CM Plan in accordance with DRD A-CM-01.

1.3.1.1.2 The contractor shall participate in Technical Interchange Meetings (TIMs) and ISSP Milestone Reviews by providing inputs regarding CM.

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1.3.1.2 Configuration Status Accounting (CSA) and Verification

The contractor shall maintain Configuration Status Accounting requirements in accordance with SSP 41170 and assure the requirements and processes are implemented across the ISSP. The PI&C contractor shall perform the following CSA functions across the ISSP:

1.3.1.2.1 Participate in ISS hardware and software Functional Configuration Audits (FCA) and Physical Configuration Audits (PCA) by acting as the co-chair of the CM panel as defined in D684-10097-01, “Guidelines and Procedures for the conduct of Functional Configuration Audit (FCA) / Physical Configuration Audit (PCA)”.

1.3.1.2.2 Participate in ISSP acceptance reviews and readiness reviews to ensure CM issues are addressed and dispositioned.

1.3.1.2.3 Conduct CM audits of other ISSP contracts to ensure compliance with CM requirements and processes pursuant to SSP 41170, SSP 50010, SSP 50123 and the CM Plan.

1.3.1.2.4 Audit and validate the data residing in the program status accounting systems (e.g., CSAS, SSAV, and COSMOS) to ensure accuracy and completeness.

1.3.1.2.5 Validate the ISS program baseline including the review and evaluation of changes to ensure proper baseline maintenance.

1.3.1.3 Configuration Control

The PI&C contractor shall perform the following Configuration Control activities across the ISSP:

1.3.1.3.1 Ensure execution of the Change Process in accordance with SSP 50123 and individual ISSP contractor Configuration Management plans.

1.3.1.3.2 Maintain all CM blank forms/templates required for change processing and maintain a quality control function to provide uniform change paper across the program.

1.3.1.3.3 Provide CM Secretariats for all ISSP Control Boards and Panels. CM Secretariat functions are to be performed in accordance with ISSP PPD 552, Space Station Control Board/Panel Operations Policy and SSP 50123.

1.3.1.3.4 Provide administrative support such as, but not limited to, meeting logistics, administration, agendas, action item management, minutes, and archival of all presentation material and decisional paper for all ISSP Configuration Control Boards and Panels, Acceptance Reviews, IP Assessment Reviews, and Certification of Flight Readiness (CoFR) reviews.

1.3.1.3.5 Conduct a program Joint Team Review (JTR), as described in SSP 50123-01, to screen all new change requests.

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1.3.1.3.6 The contractor shall develop a Change Engineer (CE) Handbook in accordance with DRD A-CM-02.

The PI&C contractor shall perform the following Configuration Control activities for changes specific to the PI&C contract:

1.3.1.3.7 Process changes specific to the PI&C contract in accordance with SSP 50123. Review and evaluate ISSP changes originating from outside the PI&C contract to determine if those changes have potential impacts to the PI&C contract.

1.3.1.3.7.1 Maintain and process Program Directives (Management Directives, Joint Program Directives, and Partner Program Directives) in accordance with procedures established in SSP 50123.

1.3.1.3.8 Input, maintain, and validate the Configuration Status Management Operations System (COSMOS) database to assign Change Request (CR) numbers, track/status changes, and provide accurate information, reports, and monthly metrics.

1.3.1.4 (blank)

1.3.1.5 Software Configuration Management Requirements

The contractor shall maintain the software configuration management requirements and assure the configuration identification, control, status accounting, and verification of software products and processes as specified in SSP 41170 are implemented across the ISSP.

1.3.2 Program Data Management and Integration

1.3.2.1 Programmatically, the contractor shall maintain and implement an AS9100 compliant data management system in accordance with SSP 50010 and SSP 41170, and assure the requirements and processes are implemented across the program. The contractor shall:

1.3.2.1.1 Update and maintain the SSP 50573, Program Documentation Tree.

1.3.2.1.2 Update and maintain the ISSP technical documentation baseline in PALS (or equivalent) and COSMOS.

1.3.2.1.3 Maintain the ISSP Master List of work instructions, processes, and procedures in accordance with AS9100, Quality Systems - Aerospace - Model for Quality Assurance in Design, Development, Production, Installation, and Servicing.

1.3.2.1.4 Provide Data Requirement (DR) receipt, tracking, monitoring, reporting, validation, evaluation, distribution, status, and storage of ISSP contracts deliverables and IP/P data deliverables incoming to the ISSP as identified in the following Bilateral Data Exchange Agreements, Lists and Schedules (BDEALS) and Bilateral Hardware and Software Exchange Agreements, List, and Schedules (BHSEALS) documents: SSP 50124, NASA/7 CSA BDEALS;

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SSP 50126, NASA/NASDA BDEALS; SSP 50127, NASA/ESA BDEALS; SSP 50137, NASA/RSA BDEALS; SSP 50407, NASA/ESA BDEALS for Cupola 1; SSP 50611, NASA/ESA BDEALS for ATV; SSP 50614, NASA/HTV BDEALS for HTV; and SSP 50617, NASA/NASDA BDEALS for CAM; and ; SSP 50352, NASA/AEB BDEALS; and SSP 50648, NASA/AEB BHSEALS.

1.3.2.1.5 Manage and operate the International Partner library (IOMS or equivalent). Contents of the library shall include, but are not limited to, the following: translated Russian documents; Bilateral Data Exchange Agreements and Lists (BDEALS) data; NAS15-10110 Contract deliverables; Government Furnished Data (GFD) deliverables; IP protocols; IP safety data packages; hazard reports; drawings; film; videos; photos; faxes; and letters. The contractor shall be able to access and provide requested materials/information within two business days.

The PI&C contractor shall perform the following Data Management activities in accordance with SSP 41170 and SSP 50010 specific to the PI&C contract:

1.3.2.1.6 Provide an Engineering Release Unit (ERU) in accordance with SSP 50123 for release of ISSP baseline documentation.

1.3.2.1.7 Operate a Configuration Management Receipt Desk (CMRD) in accordance with SSP 50123.

1.3.2.1.8 Provide Document Quality Assurance (DQA) in accordance with SSP 50010 for all ISSP controlled documentation identified under this contract.

1.3.2.2 Program Technical Data Access

(a) The contractor shall integrate and maintain the Orbital Replacement Unit (ORU) data and Flight Support Equipment (FSE) data (provided by Logistics & Maintenance and the hardware providers) in the Orbital Replacement Unit Data Directory (ORUDD) or equivalent. The ORUDD provides a user-friendly single access point for retrieving technical data regarding ORUs & FSEs . (Reference Orbital Replacement Unit Data Directory (ORUDD) Release 1.0.4 Requirements Document and ORUDD Release 1.0.4 Release Contents Document).

(b) The contractor shall develop an approach and plan in accordance with DRD A-DI-01 to expand the functionality of the ORUDD to provide a Program-wide single point access interface for the ISSP which will allow ISSP data users access to sources of existing technical ISSP data available in ISSP authorized repositories.

1.3.2.2.1 Centralized Program Data Requirements

The contractor shall develop and maintain Blank Books that centralize ISSP data requirements from each of the functional areas defined in the SSP 50200 series of documents (Volumes 1 -Volume 10). These Blank Books will provide specific data requirements, including data formats, attribute definitions, generic delivery templates and data flow processes. (Reference, as examples, SSP 50622-02, Mission Integration Data Set Blank Book and SSP 50622-03,

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Operations Data Set Blank Book. The contractor shall develop the Blank Books in accordance with SSP 41170 and SSP 50010. The contractor shall extract technical content for inclusion into the initial draft Blank Books from the appropriate SPIP Volumes (1-10) Appendix AA (SSP 50200 through 50200-10).

1.3.2.2.2 Book Coordination

(a) The contractor shall provide book coordination functions for Blank Books, to include the preparation, distribution and processing of Document Change Notices (DCNs).

(b) The contractor shall provide book coordination functions for the following Bilateral Data Exchange Agreements, List, and Schedules (BDEALS) and Bilateral Hardware and Software Exchange Agreements, List, and Schedules (BHSEALS) documents, to include the preparation, distribution, and processing of Notification of Document Changes (NDCs): SSP 50124, SSP 50126, SSP 50127, SSP 50137, SSP 50407, SSP 60614, and SSP 50617, SSP 50352, and SSP 50648.

(c) The contractor shall provide book coordination functions for SSP 50622-02 and SSP 50622-03 to include the preparation, distribution, and processing of Document Change Notices (DCNs).

1.3.2.2.3 The contractor shall respond to requests for resolving data workflow process issues that cross ISSP contractual interfaces and are impacts to work performance. Responding to and resolving request for issues with data work flow processes shall include:

(a) Identification and documentation of the issue or problem

(b) Investigation, analysis and documentation of the data workflow processes involved and the associated interfaces

(c) Development of a resolution plan and schedule

(d) Facilitation of the implementation of the proposed resolution

(e) A three-month follow-up to verify resolution is working and provide rework as identified

(f) Provision of closeout documentation addressing sub-paragraphs (a) thru (e).

1.3.2.2.4 Support to ISSP Data Users

(a) The contractor shall respond to and resolve inquiries regarding ISSP data.

(b) The contractor shall locate data, identify, and resolve data discrepancies and document data processes associated with ensuring accessibility to available technical ISSP data for all Program data users.

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1.3.2.2.5 Review of Change Request for Data

The contractor shall assess and concur on ISSP change requests (CRs) that contain requests for data in order to ensure no duplication and that delivery of the data is specified to a Program authorized repository.

1.4 PROGRAM INFORMATION TECHNOLOGY (IT)

The ISSP contract strategy decentralizes the implementation of IT except where program integration and control is necessary for appropriate program management and communication.

The contractor shall provide the IT infrastructure for use by ISSP participants to support the mission of the ISSP. The other contracts within the ISSP contract strategy will provide the IT necessary to perform the requirements as stated in their respective contracts; since their contract intent is to not specifically contract for generalized IT products and services. The other contractors may choose to utilize the ISSP IT infrastructure provided by the PI&C contract when common products and services provide for increase of supportability, promote commonality, or efficiencies. The contractor shall provide the IT necessary to meet the requirements, as defined in this contract, in accordance with SSP 50013, ISS Information Systems Plan.

1.4.1 IT Management and Administration

Any of the existing ISSP IT tools defined in Appendix D, Table 1 are available as GFD and can be utilized by the contractor in fulfilling the contract requirements.

(a) The contractor shall employ a methodology which demonstrates consistency with the Software Engineering Institute (SEI) Level 3 Capability Maturity Model (CMM), or other comparable industry standard, to sustain any modifications to GFD tools. CMMI certification is not required.

(b) The contractor shall develop and maintain unique ISSP software tools and applications to support the continued development and operation of the ISSP, as defined in this contract.

1.4.1.1 The contractor shall report all IT delivered or direct costed to this contract by developing, maintaining and implementing the PI&C Information Technology (IT) Capital Investment Plan (CIP) and associated reports in accordance with SSP 50222, ISS Program Capital Investment Process (CIP).

The contractor shall gather fiscal information, and maintain an ISSP IT Capital Investment Plan and associated reports in accordance with the ISS IT Capital Investment Process.

1.4.1.2 The contractor shall develop, maintain and implement an IT Security Plan in accordance with NFS 1852.204-76. Upon approval, the IT Security Plan shall be incorporated into the contract as Attachment J-6.

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1.4.1.3 The contractor shall develop, maintain and implement the IT Management Plan in accordance with DRD A-IT-01 for reportable IT. The IT Management Plan shall, at a minimum, address the following functions: system management and operations, including project management, configuration management, technology infusion, procurement, work authorization, and Metrics.

1.4.1.4 If the contractor implements Public Key Infrastructure system, the contractor system shall be interoperable with the NASA Public Key Infrastructure system.

1.4.1.5 The contractor shall develop and implement IT project plans in accordance with DRD A-IT-02 for the following activities:

• implementation of new hardware and software capabilities,

• conducting studies, market surveys, and system tests, and

• developing and supporting proposed system hardware relocation plans as required.

1.4.1.6 The contractor shall maintain an IT Performance Management and Capacity Plan in support of performance planning, analysis (e.g., log review, trend analysis, and system utilization), and design activities for new or modified systems capabilities; or for providing system and component-level capacity planning and monitoring to ensure adequate capacity and performance margins. The plan shall be prepared on a quarterly basis and include the following where applicable:

(a) By system, a summary of systems performance, including charts depicting observations for the current and previous 3 quarters, and a trend line reflecting anticipated performance for the coming 4 quarters. Performance will be quantified in terms of large and small transactions, as well as end-to-end transaction performance as measured from the end-user workstation to the host or data system.

(b) By system, a summary of resource utilization, including CPU, Disk, Memory, related Equipment (e.g., backup tape systems, off-line/near-line storage systems, physical storage space), and network bandwidth where applicable, with charts depicting observations for the current and previous 3 quarters and a trend line reflecting anticipated improvements or degradation during the coming 4 quarters.

(c) A discussion of the analysis and findings for any systems that have experienced significant performance anomalies or an increase or decrease in resource utilization relative to the previous month’s baseline.

(d) Recommendations for improving any outstanding performance issues or capacity shortfalls.

(e) Recommendations for systems reconfiguration or consolidation that reduce operating costs or improve resource availability.

1.4.1.7 The contractor shall develop and implement an IT Technology Infusion Proposal Plan to propose new technology and service concepts for the Government’s consideration. The proposal

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will give the government the ability to view the contractor(s) innovative ideas for solving the technical challenges outlined within this SOW and will address proposed skill mix and personnel.

1.4.1.7.1 Concept

(a) The contractor shall assess the state of technology and the Program’s requirements and infrastructure, and propose new technology and service concepts for the Government’s consideration. In this assessment the contractor shall solicit inputs from customers/users. These proposed concepts may be driven by one or more of the following reasons:

• New customer requirements

• Upgrades to other systems that affect the primary systems functional capabilities, e.g., upgrades to a web browser not compatible with primary systems

• New product releases

• Complying with safety requirements

• New agency or center policies

• Conforming to current standards and formats

• Reducing operating costs

• Limited system enhancements to produce higher quality products

• System components become obsolete or non-repairable

(b) The contractor shall obtain approval for proposed concepts and associated estimated proposal costs prior to initiating a full technology infusion proposal effort.

(c)If the proposal is approved by the government, then an approved IT Project Plan, to be developed in accordance with A-IT-02, shall accomplish the implementation.

1.4.1.7.2 Content

The proposals shall address at a minimum and as applicable:

• List price pages (catalog price)

• Description of proposed technology, including integration test results to date

• Contractor product identification number

• Model number

• GSA and commercial catalog unit number, if available

• Hardware and Software items to be replaced by the new technology product

• Changes/impacts to ISSP customers/users and other ISSP IT providers, and to NASA and Center(s) IT architectures and standards

• Changes to Agency or Center specific Strategic Plans

• Implementation plan and schedule

• System performance improvements as a benefit to the Government

• Known and anticipated impact on ISSP and non-ISSP contractors

• Proposed adjustment to transition charges

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• Impacts on contractor performance

• Estimated return on investment.

1.4.2 IT Systems Management and Operations

(a) The contractor shall provide the ISSP customer community with full life cycle system support for ISSP IT systems, applications (e.g., web, mainframe, workstation, client/server, utility), platform systems, services, equipment, etc., as defined in Appendix E and Appendix F, Table 1, Table 2, and Table 3. The life cycle includes planning, requirements definition, design, programming, prototyping, testing, documentation, deployment, training, sustaining engineering and operations.

(b) The contractor shall provide a life cycle methodology consistent with Software Engineering Institute (SEI) Level 3 Capability Maturity Model (CMM), or other comparable industry standard. CMMI certification is not required.

(c) The contractor shall streamline the life cycle methodology to accommodate rapid development of new tools or updates to supported tools.

(d) The contractor shall address IT security in each phase of the life cycle.

(e) The contractor shall implement IT system performance standards in accordance with the requirements set forth in Appendix E.

(f) The contractor shall provide “book coordination” for SSP 50013 and SSP 50222.

(g) The contractor shall function as the property custodian for the government property assigned to this contract, identified in Appendix F, Table 3.

1.4.2.1 IT Life Cycle Management

The contractor shall manage designated production systems, ongoing and new projects, and functions and activities required to provide products and services to the ISSP customer community. The contractor shall adhere to policies and standards, and support information exchange and decision making forums. In support of this effort, the contractor shall provide the following activities.

1.4.2.1.1 The contractor shall assist the Government by reviewing Government-provided policies, architectures, standards, and procedures affecting this contract and recommending appropriate modifications and implementation strategies.

1.4.2.1.2 The contractor shall support key recurring Government-sponsored meetings, such as the ISD Configuration Board, the Chief Information Office’s Network Access Control Board, Chief Information Officer’s IT Steering Council and the ISS IT Working Group.

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1.4.2.1.3 The contractor shall procure and deliver commercial off-the-shelf (COTS) software, hardware, and associated maintenance agreements as approved by the Government. The contractor shall provide all consumables used in operating the systems associated with this contract

1.4.2.1.4 The contractor shall develop, implement, and maintain IT Standard Operating Procedures in order to sustain products and services defined in this SOW. These procedures shall provide guidance for interfacing with other organizations and specific tasks required in the process of meeting customer requirements, and shall instruct technicians, production personnel, and other users in the proper setup and operations of systems. These procedures are not intended to document the details of how the tasks or interfaces are to be accomplished. These procedures shall:

(a) Describe each system in terms of the requirements it fulfills, the equipment comprising the system, and any interconnection to other systems

(b) Reference system engineering drawing numbers

(c) Reference manufacturers’ operations manuals

(d) Give specific details on setup configurations related to the intended equipment functions

(e) Give step-by-step system check instructions that, when performed, verify the system is functioning as designed

(f) Give step-by-step instructions on how to operate the system equipment to achieve every stated purpose of the system, including references to manufacturers’ manuals when appropriate

(g) List the required customer interfacing tasks

(h) List other procedures applicable to performing a specific system operation

(i) Cross reference any corresponding Standard Operating Procedures

(j) Reference preventive maintenance procedures

1.4.2.1.7 The contractor shall develop, implement, and maintain an IT Configuration Management Plan as defined below in order to maintain hardware and software specifications and baseline control of IT systems.

1.4.2.1.7.1 Concept

(a) The contractor shall establish, implement, and comply with a stringent process of configuration management for all systems defined under this contract.

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(b) The contractor shall not change, modify, or relocate Government equipment or systems without prior approval unless otherwise stated in the configuration management plan.

(c) The contractor shall provide, revise, and maintain a complete set of engineering and exhibit drawings, hardware and software configurations, and specifications and associated change documentation for all IT systems defined in this contract.

(d) Where baseline configuration information does not exist, the contractor shall define the baseline.

(e) The contractor shall provide current configuration documentation for all systems under this contract within 6 months after contract phase-in.

1.4.2.1.7.2 Content

The IT Configuration Management Plan shall prescribe the process to be implemented for control of both engineering (design) configuration, and operational configuration. The IT Configuration Management Plan will include the following:

• Define how configuration control will be recorded and documented

• Identify the specific part of the organization responsible for maintaining the configuration control records

• Identify the documentation and data systems required to provide configuration control for both hardware and software

• Identify the specific equipment, systems, and operational interfaces which are subject to configuration control

• Describe the procedures to be used to coordinate, define, test, monitor, and control all technical and operational interfaces

• Identify individuals responsible for writing and for approving configuration control procedures, and

• Define how NASA will be involved with final decisions in the change process.

1.4.2.1.8 The contractor shall develop IT configuration reports that contain information and status on all equipment and software, which are maintained by and/or operated by the contractor. The information fields required for each category of equipment or software in the system shall include information on the category’s description, location, user, manufacturer, external connections to other systems, maintenance support, and other fields normally contained in a IT configuration management system.

1.4.2.1.10 IT Sustaining Engineering and Operation

The contractor shall provide sustaining engineering, including preventative maintenance, and operations for IT systems. At a minimum support will include the following activities.

1.4.2.1.10.1 The contractor shall provide sustaining engineering for multimedia, computer, and network systems defined in Appendix E and Appendix F, Table 1, Table 2, and Table 3.

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Sustaining engineering for applications shall include developing limited new capabilities, bug fixes, and coordination and testing support in response to new operating system and program product. For hardware systems and stand-alone equipment, sustaining engineering includes preventive and remedial maintenance, ordering of replacement parts, sparing, end-of life (EOL), and system software and firmware updates and patches.

1.4.2.1.10.2 The contractor shall manage third party maintenance and license agreements.

1.4.2.1.10.3 The contractor shall ensure that all IT systems are functionally and operationally performing at the lowest possible operating cost and in accordance with NASA requirements, including safety and schedules; industry best practices; and applicable standards, such as ANSI (American National Standards Institute).

1.4.2.1.10.4 IT sustaining engineering shall minimize disruption to system availability during normal working hours. Most supported applications require no contingency staffing or procedures for outages during nonworking hours. The contractor shall coordinate and schedule changes that require production outages with the customer in advance of the outage. In the event the outage is an emergency, the contractor shall immediately notify the ISS CIO and shall provide continuous status of the progress and expected time of availability.

1.4.2.1.10.5 The contractor shall establish and conduct a preventive maintenance and operational readiness program as defined below to ensure that all identified systems are functioning within required specifications.

1.4.2.1.10.5.1 Remedial Maintenance

The contractor shall repair or replace failed equipment and restore it to operating condition. The repair and restoration may involve the temporary replacement of the equipment with a like item to allow continuation of the provided service. When failed equipment cannot be removed, the repairs will be accomplished in a way that minimizes disruption of other operational activities. When repair of a specific item of equipment is not cost effective (when repair costs exceed one third of replacement costs), the contractor shall replace the equipment. For equipment used to meet mission requirements, immediately after being notified that equipment is out of service the contractor shall initiate repair and notify theISS CIO.

1.4.2.1.10.5.2 Maintenance Agreements and License Management

The contractor shall create, maintain, and implement plans and schedules for maintenance agreement and license management. For Government-funded renewals, the contractor shall inform the ISS CIO a minimum of 90 days prior to expiration of agreements.

1.4.2.1.10.5.3 COTS Maintenance

The contractor shall ensure defects in COTS products are fixed and version upgrades to COTS software are obtained. The contractor shall coordinate with the Government and application vendors. The contractor shall assess and implement each new patch or update to be applied for

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all supported platforms within 90 days of vendor release of the updates or patches. The contractor shall request a waiver if they find that a release or patch is incompatible with the current institutional environment, would impact data integrity or system stability, or would otherwise cause undue disruption to the user community. The contractor shall evaluate and update critical security patches within 24 hours of the patches being released by the vendor.

1.4.2.1.10.6 The contractor shall operate and provide system administration for all systems identified in Appendix E. System administration processes and procedures shall adhere to NASA and JSC policies and procedures. The contractor shall ensure that system administration support is provided within schedule guidelines. Operation and system administration shall include:

• ID administration and folder setup for access,

• Data transmission among systems,

• Creation/deletion of network printer queues,

• System backups,

• Virus scans,

• Problem identification and resolution,

• Technology upgrades.

1.4.2.1.10.6.1 The Contract shall provide Return to Service for IT systems as identified in Appendix E.

1.4.2.1.10.6.2 The Systems Administration functions (excluding facility, network outages, IT incident investigations, and maintenance service not under control of the contractor) shall be performed to minimize disruption to system availability, with the exception of scheduled outages.

1.4.2.1.10.6.3 The contractor’s system administrators shall acquire IT security training in accordance with the JPG 2810.1, JSC Information Technology Security Handbook.

1.4.2.1.10.7 IT Security Support

The contractor shall advise ISSP customers and users on IT security policies, provide technical representation to the Network Access Control Board (NACB) as required, implement approved firewall and networking solutions monitor production capabilities, and respond to requests for firewall and other IT security support by providing consultation and direct technical assistance to assist customers with the development of requirements for secure firewall and networking solutions.

1.4.2.1.10.7.1 The contractor shall maintain a knowledge base of security issues, problems, and resolutions.

1.4.2.1.10.7.2 The contractor shall perform periodic technical assessments, security testing of computer systems, and provide inputs to updates for JSC Computer Security Plans in support of NASA computer security officials.

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1.4.2.1.10.7.3 The contractor shall process security-related incidents, including identifying network attacks (denial of service, viruses, worms, etc.), identifying and analyzing cases of misuse of IT resources, securing computing resources as required, and provide around the clock response to computer security incidents and notification of appropriate personnel.

1.4.2.1.10.7.4 The contractor shall provide analysis of security incidents relating to incorrectly configured systems, and work with system owners to properly reconfigure these systems.

1.4.2.1.10.7.5 The contractor shall provide real time incident status reports as required as soon as an incident is discovered. The contractor shall provide an incident report within 24 hours of any security or system configuration-related incident investigation being concluded.

1.4.2.2 Work Authorization and User Support

1.4.2.2.1 The contractor shall gather, organize, and disseminate IT information to the customer community in formats appropriate to the media. Subject matter content will vary but will always focus on keeping the ISSP community informed in a timely and accurate manner, providing them ready knowledge of products and services available, the mechanisms for acquiring those services, and information intended to help the customer. Services also entail reviewing and coordinating responses to e-mail traffic received in centralized electronic mailboxes intended for customer communication.

1.4.2.2.2 User Requirements/Analysis

(a) The contractor shall perform data gathering, entry, and analysis of requests to ensure that the customer requirement for products and services is documented and handled.

(b) The contractor shall document and coordinate implementation of IT requirements requested for implementation by the institutional and international IT providers.

(c) The contractor shall serve as the primary point of contact for IT services required to support end users.

1.4.2.2.3 Loan Pool

(a) The contractor shall serve as the primary point of contact for loan pool services required to support end users.

(b) The contractor shall develop and maintain user guides/desktop instructions for services that require user self-installation.

(c) The contractor shall provide procedures for appropriate property management of the ISSP loan pool products for check-in/check-out and regular inventorying.

(d) The contractor shall report property losses on an as occurred basis (as soon as possible).

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(e) The contractor shall develop, implement, and maintain a standard load consistent with the approved JSC laptop load and any related policies and practices for the loan pool laptops.

(f) The contractor shall augment standard load configuration in order to support specific user requirements. Activities typical include configuration for tunneling, data transfers, and loading requested software.

1.4.2.2.4 The contractor will receive work authorizations via the Customer Service System, loan pool requests, and external access requests in addition to the IT project plans. The contractor shall ensure that its internal work management and tracking systems interface seamlessly with the Customer Service System for the purpose of receiving work authorizations and providing order status and tracking information.

1.4.2.2.5 The contractor shall track, resolve, and report on problems associated with systems, products, and services. Problem resolution includes accepting transferred calls from the various JSC Help Desks or ISSP Help Desks for systems under this contract and reporting resolutions back to the appropriate Help Desk. The contractor shall develop and maintain on line problem reports.

1.4.2.2.6 The contractor shall provide desktop support services for ISSP IT not supported by other institutional providers. Desktop support are those services which support the users desktop environment; such as, but not limited to, loading/configuring local and network software, drivers, printers, peripherals, and data migration.

1.4.2.2.7 The contractor shall provide assistance in space utilization, coordination / facilitation, and planning for ISSP physical space requirements at JSC. This includes assessing requests, coordinating with the requestor(s), making recommendation, facilitating request through the implementing organization, tracking requirements through closure, and reporting.

1.5 INTERNATIONAL INTEGRATION

1.5.1 RESERVED

1.5.2 RESERVED

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1.5.3 IP Elements Integration Management (LOE)

The contractor will perform the tasks identified below to support of IP Element Integration Management. For the purposes of this contract, “IP Elements” are defined as: JEM, CAM/CR, Columbus, Cupola, HTV, ATV, MSS, SPDM, SPP, MTsM, UDM, SM, DC, Soyuz, and Progress. The US will assume ownership of the CAM/CR and Cupola after the IPs have completed development and turned over possession of the element to NASA. All other IP elements will remain owned and be sustained by their respective IPs.

The NASA IP Element Integration Manager (EIM) provides overall management and oversight of the tasks that are necessary to integrate the IP Element into the ISS. The primary goal of IP Element Integration is to confirm the IP Element meets its ISSP requirements (e.g., system- and segment-level specifications, IRDs, ICDs) and is ready for flight. The IP EIM also ensures that NASA meets applicable ISS requirements in support of the integration of the IP Element and complies with bilateral agreements.

The Mission Integration, Cargo Integration, and Vehicle sustaining engineering teams provide the technical expertise and resources required to execute the tasks associated with IP Element integration (e.g., subsystem-level technical review of IP Element designs) and support the Element Integration Manager in performing the tasks necessary to integrate the IP Element and deliver on-orbit to the ISS.

1.5.3.1 Systems Engineering and Integration of IP Elements

1.5.3.1.1 Engineering Integration and Communication

(a) The contractor shall work with the Program Data Integration team, which provides the book coordination function, to facilitate the technical development, coordination with IPs, management approval, and implementation of the following IP BDEALS documents:

SSP 50124, NASA/CSA Bilateral Data Exchange Agreements, Lists and Schedules (BDEALS); SSP 50126, NASA/NASDA BDEALS; SSP 50127, NASA/ESA BDEALS; SSP 50137, NASA/RSA BDEALS; SSP 50407, NASA/ESA BDEALS for Cupola 1; SSP 50611, NASA/ESA BDEALS for ATV; SSP 50614, NASA/HTV BDEALS for HTV; and SSP 50617, NASA/NASDA BDEALS for CAM; and SSP 50352, NASA/AEB BDEALS. The data submittals provided by the IPs via these BDEALS documents will be made available as GFD to the contractor as defined in Appendix D, Table 2.

(b) The contractor shall work with the Mission Integration team, which provides the book coordination function, to facilitate the technical development, coordination with IPs, management approval, and implementation of the following IP BHSEALS documents:

SSP 50136, NASA/RSA Bilateral Hardware and Software Agreements, List and Schedules (BHSEALS); SSP 50219, NASA/ASI Bilateral Hardware and Software Exchange Agreements, Lists, & Schedules (BHSEALS); SSP 50220, NASA/CSA Bilateral Hardware and Software Exchange Agreements, Lists and Schedules (BHSEALS); SSP 50264, NASA/NASDA BHSEALS; SSP 50289, NASA/ESA Bilateral Hardware and Software Exchange Agreements, Lists, and Schedules (BHSEALS); SSP 50408, NASA/ESA Bilateral Hardware and Software Exchange Agreements, Lists, and Schedules (BHSEALS) For Cupola; SSP 50615, NASA/NASDA BHSEALS for the H II Transfer Vehicle (HTV); SSP 50616, NASA/NASDA BHSEALS for the Centrifuge Element (Main Body); and SSP 50648, NASA/AEB BHSEALS

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Exchange Agreements, Lists, and Schedules (BHSEALS) For Cupola; SSP 50615, NASA/NASDA BHSEALS for the H II Transfer Vehicle (HTV); SSP 50616, NASA/NASDA BHSEALS for the Centrifuge Element (Main Body).

(c) The contractor shall distribute Element technical, programmatic and operations data for review by ISSP teams identified in the IP Element Integration Team Lists.

(d) The contractor shall collect assessments and comments to the above distributed Element data to ensure application of engineering and programmatic expertise in all aspects of the integration process: evaluation and definition of bilateral documentation, interfaces, requirements changes, exchanges of data and hardware/software, development and testing, special information requests.

(e) The contractor shall facilitate ISSP teams communications with IPs and their contractors.

(f) The contractor shall maintain cognizance and technical knowledge of Element design, associated issues, and planning and schedule status.

(g) The contractor shall provide responses to communications and data requests from IP and ISSP teams in accordance with teams’ schedules.

(h) The contractor shall coordinate shipment of items to and from the IPs with the ISSP shipping coordinator in the Mission Integration team.

1.5.3 1.2 Issue Resolution

The contractor shall coordinate issue resolution with the IP Element Integration teams as follows:

(a) Collect information for issue definition and document integration and compatibility issues and actions.

(b) Provide inputs to teams, and track issue resolution and action items closure for all phases of IP Element integration activities through on-orbit activation and checkout.

(c) Develop proposals, assess risks and recommend schedule for technical issues resolution.

(d) Chair technical forums, telecons and meetings required for issue resolution.

(e) Provide regular technical status inputs to Action Items database for open actions;

(f) Provide regular technical status inputs to Schedule management team;

(g) Provide regular technical status inputs to NASA EIM; and

(h) Provide regular technical status inputs to other teams, boards and panels in support of the EIM.

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1.5.3.1.3 Change Engineering

The contractor shall initiate CRs to maintain and update the ISS design and requirements baseline for IP Elements. The contractor shall perform Change Engineering functions for IP-related CRs and other activities necessary to maintain and update the ISS design and requirements baseline for IP Elements.

1.5.3.1.4 IP Elements Acceptance and CoFR

The contractor shall support development, coordination and maintenance of the Program Integration office IP CoFR implementation plans. The contractor shall review and provide inputs to IP Element Acceptance Review Plans defined in DRD A-SA-06 for IP Elements for which NASA takes ownership and provide inputs to Assessment Review Plans for all other IP Elements. The contractor shall coordinate and implement the Acceptance Review Plans and Assessment Review Plans with IPs and within the ISSP.

1.5.3.2 IP Milestone Reviews

1.5.3.2.1 Milestone Review Planning and Coordination

The contractor shall plan and track the ISSP teams’ participation in the IP design, qualification, certification, and pre-shipment reviews to ensure compliance with ISSP requirements and policies. The contractor shall develop ISSP Support Plans for IP Milestone Reviews in accordance with DRD A-II-01. The contractor shall obtain concurrences for scheduling and support of the Milestone reviews from ISSP disciplines, teams and organizations and present for NASA approval. The contractor shall track the implementation of the approved ISSP Support Plan.

1.5.3.2.2 IP Milestone Review Participation

The contractor shall participate in all stages of the Milestone Review, including:

(a) Development of the Milestone Review Plan to be bilaterally concurred by NASA and the IP and post-review action closure.

(b) Review of IP Design, Qualification and Certification Review data packages for compliance with ISSP requirements and policies defined in IP Elements Specifications, IRDs/ICDs and other applicable bilateral and multilateral documentation.

(c) Identification and documentation of non-compliance issues.

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1.5.3.3 ISS & Mission Integration

1.5.3.3.1 Participation in ISSP Reviews

The contractor shall participate in the ISSP Milestone and Launch Package reviews identified in SSP 50200-02 and SSP 50489, ISS Mission Integration Template, by providing inputs to reviews and planning documentation. The contractor shall coordinate implementation of NASA Element team functions in support of these reviews.

1.5.3.3.2 Launch Package and Increment Teams Support

The contractor shall provide consolidated Element team inputs to mission requirements, increment definition requirements, and manifest requirements for IP Element flights. The contractor shall review the IP Element applicable flight and increment documentation (e.g. IDRDs, manifest) and coordinate with the LPM and IM teams to ensure incorporation of these requirements. The contractor shall participate in LPM and IM teams negotiations of the requirements with the IP. For data that supports the IDRD PP development, the contractor shall provide inputs to the Mission Integration team via Requirements Request Forms as defined in SSP 50622-02. For data that supports the IP flight manifest development, the contractor shall provide inputs to the Mission Integration team via Manifest Requests as defined in SSP 50622-02.

1.5.3.3.3 Element Ground Processing Coordination

The contractor shall coordinate with KSC and IP regarding IP Element hardware processing in the SSPF, to provide programmatic coordination including review of integrated IP Element schedules, status of Hardware processing, status of action items, and development and coordination of meeting agendas. After handover of the IP Element hardware to Shuttle Integration, the contractor shall support the Launch Package Management teams to coordinate element related processing issues.

1.5.3.3.4 Element Flight Operations Support

The contractor shall coordinate with ISSP and IP Operations teams the planning and implementation of IP Elements flight operations, which includes participation in ISSP SIRs and review of the IP Element operations documentation, such as operational timelines, procedures and flight rules.

1.5.3.3.5 Mission Support

1.5.3.3.5.1 Increment Management Center (IMC) Support

The contractor shall staff the ISS Increment Management Center console during IP Elements assembly flights, flights involving CSA robotics missions, and first-time IP visiting vehicle flights (e.g. HTV & ATV) to provide a single point of contact for element team coordination and resolution of mission related issues on a real time basis. The contractor shall meet the process requirements identified in the ISS Management Center Operations Handbook (IMCOH.)

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1.5.3.3.5.2 Mission Evaluation Room (MER) Support

The contractor shall staff an ISS Mission Evaluation Room (MER) console during IP assembly flights, flights involving CSA robotics missions, and first-time IP visiting vehicle flights (e.g. HTV & ATV) to provide a single point of contact for Element team coordination and resolution of mission related issues on a real time basis. The contractor shall also staff an ISS MER console on an as-needed basis after the initial IP assembly flights and first-time IP visiting vehicle flights to facilitate Element team coordination in resolving in-flight anomalies associated with the IP Element. The contractor shall meet the process requirements identified in OB-MER-006, ISS MER Handbook.

1.6 HUMAN SPACE FLIGHT COLLABORATION

The contractor shall accomplish all work necessary to accommodate commercial customers to the ISS. The work will be the same or similar scope already required elsewhere in this contract SOW but will be performed in support of a NASA Reimbursable Space Act Agreement.

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2.0 SYSTEMS ENGINEERING, ANALYSIS, AND INTEGRATION

2.1 RESERVED

2.2 SYSTEMS ANALYSIS AND INTEGRATION

The contractor shall perform the tasks below in accomplishing ISS systems analysis and integration. The contractor shall use the coordinate systems defined in SSP 30219, ISS Reference Coordinate Systems Document, for analysis, products, or data that is produced for ISSP and requires the use of coordinate systems.

2.2.1 Program Requirements and Interfaces

2.2.1.1 ISS Specifications and ICDs Maintenance

(a) The contractor shall provide book coordination functions for ISS Specifications, Interface Control Documents (ICDs), and Interface Requirements Document (IRDs) identified in Appendix H, in accordance with DRDs A-SI-01, A-SI-02, and A-SI-03. The contractor shall provide book coordination functions for SSP 30459, ISS Interface Control Plan, SSP 50135, ISS Interface Control Plan – NASA/RSA, and SSP 41174, ISS Interface Control Working Group (ICWG) Operating Procedures.

(b) The contractor shall maintain the contents of the Master File for all Specifications and ICDs/Interface Requirements Documents (IRDs).

(c) The contractor shall maintain tracking logs of Specifications, CRs and ICD/IRD revisions and history.

(d) The contractor shall perform requirements traceability for SSP 41000, System Specification For The International Space Station; SSP 41160, ESA Segment Specification For Columbus; SSP 41162, Segment Specification For The United States On-Orbit Segment; SSP 41165, Segment Specification For The Japanese Experiment Module; SSP 50273, HTV Segment Specification; SSP 50312, CAM Segment Specification; SSP 50333, Cupola Segment Specification; and SSP 50439, ESA Segment Specification For The Automated Transfer Vehicle (ATV) in accordance with DRD A-SI-04 utilizing the Requirements Traceability Management (RTM) application identified in Appendix F, Table 1.

(e) The contractor shall identify and track non-incorporated CRs to all retired, or no longer actively maintained, ISS specifications and ICDs.

(f) The contractor shall review and evaluate ISSP changes to determine if those changes impact the documents supported in paragraph 2.2.1.1.a. When impacted, appropriate change description text shall be provided to the CM function.

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2.2.1.2 Coordination and Review of ISS Specifications, ICDs, and IRDs.

(a) The contractor shall provide technical review of Specifications, ICDs, and IRDs identified in Appendix H during ISSP Milestone Reviews to ensure the requirements reflect the current ISSP baseline.

(b) The contractor shall provide technical review and coordination of Preliminary Interface Notices (PIRNs) for the documents identified in Appendix I and Document Change Notices (DCNs) for SSP 41150, IRD SSMB To Columbus APM; SSP 41151, IRD SSMB To JEM; SSP 41151-Appendix D, IRD SSMB To JEM, Appendix D; and SSP 41152, IRD ISPR ICD in accordance with SSP 30459, SSP 50135, and SSP 41174.

2.2.1.3 ICWG

The contractor shall perform the following ICWG technical administrative functions in accordance with SSP 41174, SSP 30459, and SSP 50135.

2.2.1.3.1 The contractor shall maintain and update Hardware Interfaces Tracking System (HITS) database (or equivalent) identified in Appendix D, Table 1 to develop PIRNs status reports as follows:

(a) The contractor shall track and provide “ICD metrics” reports to include issue resolution plans on a monthly basis.

(b) The contractor shall track and provide “Element Manager Open PIRNs” reports on a weekly basis.

(c) The contractor shall track and provide reports identifying “TBDs” on a monthly basis.

(d) The contractor shall track and provide “Open Issues” reports on a monthly basis.

2.2.1.3.2 The contractor shall provide administrative support for Milestone Reviews to include: meeting logistics, administration, agenda preparation and distribution, action item tracking, meeting minutes preparation and archival of all presentation material related to ICWG products.

2.2.1.3.3 The contractor shall prepare, distribute, maintain and track Interface Memorandums to document official correspondence.

2.2.1.3.4 PIRN and DCN Development and Maintenance

The contractor shall process and maintain ICD PIRNs and IRD DCNs as follows:

(a) The contractor shall prepare, distribute, process, maintain, and track Preliminary Interface Revision Notices (PIRNs) for the documents identified in Appendix I to update ICDs.

(b) The contractor shall prepare, distribute, process, maintain, and track Document Change Notices (DCNs) for SSP 41150, SSP 41151, SSP 41151-Appendix D, and SSP 41152 to update IRDs.

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2.2.2 System Performance Analysis and Integration

The contractor shall provide recommendations to the ISSP management on the strategic implications of the ISSP launch schedules, manifests, and ISS on-orbit operations, and assist in NASA’s development of strategic requirements. To meet the full scope of this requirement, the contractor shall provide systems engineering and integration support for development of the ISSP strategic planning as described below, and shall report the results in accordance with DRD A-SI-05.

2.2.2.1 Mission Analysis and Integration

2.2.2.1.1 Attitude Requirements

(a) The contractor shall develop, coordinate and obtain ISSP approval of the flight attitude requirements for the ISS operations. These requirements balance the needs of power, thermal, propellant, guidance, navigation, and control (GN&C) momentum management capability, micro-gravity, natural and induced environmental factors, communications, visiting vehicle, and other factors. The GFD tools Channelized Energy Balance Tool and Integrated Energy Balance Tool are available to support this function.

(b) The contractor shall input and maintain approved attitude requirements in the Space Station Certification Baseline Document (SSP 50699-03).

2.2.2.1.2 Altitude Strategy

The contractor shall develop and coordinate the ISS altitude strategy. The altitude strategy will include:

• analysis for inadvertent entry risk,

• projected on-orbit lifetime,

• ISS propellant availability,

• ISS propellant delivery requirements and capabilities,

• Micro-gravity environment,

• natural and induced environmental factors (including crew radiation exposure) as analyzed by NASA institutional resources and by the Vehicle sustaining engineering team

• launch vehicle performance.

Such analysis will also verify that ISS performs within hardware certifications, through consultation with the Vehicle sustaining engineering team and the Cargo Mission team.

The ISS Altitude Strategy is documented in SSP 50110, Multi-Increment Manifest Document and SSP 50112, Operations Summary Document and is implemented through the individual Increment Definition Requirements Document for each increment. If strategic conditions change after the base lining of the OSD, the contractor shall update the OSD and provide the applicable ISS Altitude Strategy data to the Mission Integration team via Requirement Request Forms as defined in SSP 50622-02, Section 4. The GFD tools TRAM, STRAP and Total Propellant Summary (TPS) are available to support this function.

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2.2.2.1.3 The contractor shall integrate the rendezvous, proximity, and other special operations requirements and constraints (e.g.: contamination issues from liquid or gas venting) related to attitudes and system configurations for joint operations between the ISS and all ISS Visiting Vehicles, including but not limited to the Russian Progress and Soyuz, US Space Shuttle, ESA’s Automated Transfer Vehicle (ATV) and the NASDA’s H-II Transfer Vehicle (HTV). “Integrate” is defined as the coordination (between visiting vehicle providers and the ISSP) of requirements for attitudes for docking, undocking, and special operations, array and radiator positioning, resultant power balances, visiting vehicle power demands from the ISS, operations restrictions for contamination & structural loads, and other similar issues.

2.2.2.1.4 The contractor shall provide predictions for the ISS solar beta angle, based on the ISS altitude strategy and atmospheric variations bounded by the MSFC 5% and 95% atmospheres. In addition the contractor shall develop and maintain the BASEPLATE report using the atmospheric variation bounded by the Russian Planning Atmosphere.

2.2.2.1.5 The contractor shall develop, track, and maintain the strategic allocation of Vehicle technical resources, including establishment of program technical reserves of propellant, water, oxygen, and nitrogen.

2.2.2.1.5.1 Taking into account the strategic needs of the ISSP and the predicted flight sequence, the contractor shall coordinate projected water delivery and usage rates with ISSP suppliers and users of water, including the Vehicle sustaining engineering team and the ISS Payloads Integration team.

2.2.2.1.6 Applications and Data Systems

The contractor shall maintain the applications identified below to support strategic planning and in response to differences or anomalies between the expected performance data and on-orbit performance data as provided by the Vehicle sustaining engineering team.

• Station Reboost Analysis Program (STRAP)

• Total Propellant Summary (TPS)

• Integrated Energy Balance Tool

• Channelized Energy Balance Tool

• External Configuration Tracking Tool (ExCATT)

• Traffic Resource Analysis Model (TRAM) or any upgraded traffic modeling tool

• Schedule of Crew Rotation, On-orbit Assembly, Logistics, and EVA (SCROALE)

• Sir Issue Tracking (SIT) database

2.2.2.2 Mission Requirements and Support

2.2.2.2.1 The contractor shall provide strategic mission requirements, concepts, constraints, and resource allocations to the ISS Mission Integration team and NASA Mission Operations Directorate (MOD) to support development of mission planning, flight rules, and training.

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2.2.2.2.2 Review of Operations Products

(a) The contractor shall review (via ongoing technical interactions and reviews of change requests) the ISS operations plans and procedures to ensure that all ISSP strategic technical constraints are satisfied, such as equipment operating and non-operating thermal limits, time phased power generation and demands, fault tolerance and recovery capability, structural loads, control authority of the attitude control systems, and mechanical interferences.

(b)The contractor shall review crew procedures that are related to systems activation or rechannelization, or to environment interactions including (but not limited to) plasma, plumes, contamination, or meteoroid debris to ensure that all strategic technical constraints are satisfied.

(c) The contractor shall review flight rules to ensure that all strategic technical constraints are satisfied.

2.2.2.2.3 Stage Integration Reviews (SIRs)

(a) The contractor shall coordinate the planning for and conduct the ISS SIRs as defined in SSP 50200-01, coordinating technical input from the Cargo Mission team, the Mission Integration team, the Vehicle sustaining engineering team, and other technical stakeholders. Such reviews are to be conducted no later than 18 months prior to an ISS assembly flight. Such reviews include detailed review plans and objectives published in advance to all participants. Such reviews include a Multi- Segment Operations (MSO) discussion, review, agreements and/or protocols between IP affected by the operations or plans during the assembly flight or stage operations covered during the SIR. The reviews shall include generation and closure of actions resulting from formal review of assembly and operations plan for each assembly flight and all pertinent ICDs.

(b) The contractor shall report to ISSP Management the issues and closure plans identified during SIRs.

2.2.2.2.4 The contractor shall provide technical support as needed to Mission Operations Directorate and to the ISSP through assessment of strategic ISSP (including International Partner and Participant) impacts during resolution of significant in-flight anomalies. Such support includes provision of technical assessments that individual specialists within the contractor’s employ may be able to provide to the Mission Evaluation Room, working with the Vehicle Sustaining Engineering team on a temporary basis to resolve mission or life-critical issues.

2.2.2.3 System Analysis and Integration

The contractor shall provide overall system analysis and integration of the ISS and associated interfaces, as described below, including: the United States On-Orbit Segment (USOS), International Partners and Participants (IP/Ps), GFE and ISS ground systems. This includes the ISS external interfaces, such as the ISS/National Space Transportation System (NSTS), other visiting vehicles, and the ISS/Payloads interfaces (does not penetrate beyond the interface to the Space Shuttle for the payloads).

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2.2.2.3.1 The contractor shall facilitate and coordinate the development of ISS, Shuttle, and EVA operational procedures that ensure each external component’s or payload’s thermal survivability from launch to its activation on the ISS.

2.2.2.3.2 The contractor shall provide recommendations to ISSP management for approval in the development and prioritization of tasks performed by NASA institutional resources for the following analyses, as warranted by changing conditions or assumptions:

• Shuttle/ISS induced loads

• Plume heating analyses

2.2.2.3.3 The contractor shall develop and provide strategic assessments of ISS Thermal System Performance (TSP) throughout assembly phases and other significant ISS operations.

2.2.2.3.4 The contractor shall develop and provide heat load allocations for the ISSP end-user community, based upon active heat rejection margin analysis.

2.2.2.3.5 The contractor shall develop and provide power allocations for the ISSP end-user community, based upon Integrated Energy Balance margin analysis.

2.2.3 Assembly and Configuration Definition/AnalysisAssembly and Configuration Definition/Analysis

2.2.3.1 Assembly Sequence Analysis and Definition

The NASA Assembly team function is responsible for the evaluation and integration of the total set of programmatic, schedule, technical, and cost factors impacting the Strategic Flight Program (SFP); document the resulting SFP requirements and constraints; and develop a flight plan in consideration of the aforementioned factors. The strategic flight planning activity includes all tasks associated with the definition of a viable assembly sequence.

The contractor will maintain a technical knowledge of the requirements, capabilities, and constraints and their interrelationships necessary to develop the Strategic Flight Program (SFP). The requirements, constraints, and allocations include:

• Up-mass and down-mass requirements and strategic mass and volume allocations for propellant, crew support (food, water, air, etc.), research, and maintenance;

• Capabilities and scheduling constraints of visiting vehicles that berth robotically or dock to the ISS vehicle;

• Top-level manifesting requirements and constraints of pressurized and unpressurized cargo carriers;

• Crew rotation requirements and constraints;

• Cargo element assembly and manifest requirements and constraints;

• Flight and increment EVA content, quantity, and scheduling constraints;

• Other operational requirements and constraints such as robotics, viewing, clearances, etc.;

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• On-orbit vehicle assembly flows and the associated on-orbit hardware configuration for flight, intermediate, and stage configurations.

The detailed tasks necessary to implement the function described above are defined below.

2.2.3.1.1 The contractor shall develop and maintain the Integrated Flight Schedule (IFS) showing the baseline (per SSP 54100, IDRD Flight Program, and SSP 50110 ) and planned (as documented in open SSP 54100 and SSP 50110 ISSP CRs) launch, dock, undock and landing dates for all tactical and strategic flights to the ISS vehicle. This product documents the increment definition, durations and the baseline directive numbers.

2.2.3.1.2 The contractor shall develop and maintain the ISSP Crew Rotation Plan assessments in accordance with SSP 50261, Generic Ground Rules, Requirements, and Constraints Part I: Strategic and Tactical Planning document. The Crew Rotation Plan assessments trade the documented crew rotation requirements against mission manifest and operational impacts.

2.2.3.1.3 The contractor shall utilize the SCROALE (Schedule of Crew Rotation, On-orbit Assembly, Logistics, and EVA) or equivalent. The detailed SCROALE shall graphically shows the day-by-day timeline of all flights to ISS vehicle, Shuttle mission and increment EVAs (calling out Russian Segment and US Segment assembly, maintenance and science EVAs), launch and landing days (flight duration), dock and undock days (docked mission duration), robotics, Increment definition, Crew Rotation, and ISS vehicle major reconfigurations, including ISS assembly and visiting vehicle relocations. This product will assess the viability of the flight sequence plan and is developed in parallel with the baseline flight plan for the tactical and strategic timeframe. The contractor shall maintain a SCROALE for the baseline ISSP plan and perform trade studies of assembly sequence options under consideration. The contractor shall deliver the detailed SCROALE electronically. The contractor shall develop and maintain a summary Flight Program Figure that is an overview of the detailed SCROALE. The Flight Program Figure shall be capable of incorporation into Microsoft Word and PowerPoint.

2.2.3.1.4 The contractor shall maintain and update the Reference Assembly Sequence Overview. This product a combination of the tactical (as defined by SSP 54100) and strategic base lined assembly sequences (as defined by SSP 50110) that provides an integrated ISSP schedule. This product also shows the proposed updates to all flights, which are contained, in open ISSP Change Requests (CRs) under review.

2.2.3.1.5 Strategic Flight Program (SFP) Development

(a) The contractor shall collect requirements and constraints and develop a SFP implementing the requirements for ISSP approval. The contractor shall identify issues and requirement conflicts and develop options for ISSP resolution.

(b) SSP 50110 is the document that baselines the SFP. For Multi-Increment Manifest (MIM) development, the contractor shall collect inputs, develop the revised document, conduct document reviews, resolve technical issues and actions, prepare the ISSP Change Request (CR) and board presentations, and prepare the final document for approval. The MIM baselines the strategic assembly sequence, docking port utilization, crew rotation plan, flight schedule, top-level launch and return manifest, sub-element number, altitude, crew rotation, and launch vehicle.

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(c) The contractor shall revise and maintain the Assembly Sequence Overview. This is the strategic assembly sequence that is sometimes developed prior to the MEM development or as part of an Interim Assembly Sequence update to the MIM.

2.2.3.1.6 The contractor shall coordinate and resolve issues and actions that impact the strategic assembly sequence manifest, configuration, and flight sequence that do not occur during the MIM development timeframe.

2.2.3.1.7 The contractor shall assess proposed tactical and strategic mission updates and identify issues and/or impacts to the SFP.

2.2.3.1 8 The contractor shall integrate the inputs and provide the ISSP approved Flight Overview Guidelines to the Mission Operations Directorate for development of Flight Overviews to support Stage Integration Reviews (SIRs), Multi-Segment Operations (MSO) Reviews, and SFP development.

2.2.3.1.9 The contractor shall provide the integration and coordination of strategic ISSP/SSP flight inputs to the Space Shuttle Program (SSP).

2.2.3.1.10 The contractor shall represent the Assembly and Configuration Team as a technical expert at boards and panels.

2.2.3.1.11 The contractor shall provide technical inputs and review assessments for other ISSP documents or reviews such as:

• SSP 50112;

• SSP 50261-01;

• Planning Period Increment Definition and Requirements Documents (PP IDRDs);

• SSP 50200-01 and SSP 50200-02;

• SSP 54100 FP;

• Flight Specific Data Files (PDRS/EVA and Rendezvous) for Flight Operations Review (FOR); and

• Post-Increment Evaluation Reports (PIERs).

2.2.3.2 External Configuration Analysis and Definition

The NASA External Configuration team function is responsible for managing the definition and documentation of the integrated strategic and tactical external vehicle configuration plans and assessing any changes to the baseline. This responsibility includes working with the Vehicle sustaining engineering team which develop, validate and maintain detailed 3D CAD Models for launch and on-orbit stage docking configurations, develop the ISS System Top-Level Assembly drawings for each stage of the ISS vehicle and prepare, maintain, and submit engineering drawings.

2.2.3.2.1 The contractor shall maintain a technical understanding of the on-orbit vehicle assembly flows and the associated on-orbit hardware configuration for flight, intermediate, and stage configurations. The contractor shall also maintain a technical understanding of the assembly and

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configuration constraints necessary to manage the strategic, tactical, and real-time external Vehicle configuration.

2.2.3.2.2 The contractor shall assess, integrate, and coordinate requirements associated to the ISS external vehicle’s configuration, including evaluating change requests that impact the external configuration for flight, intermediate, and/or stage configurations.

2.2.3.2.3 The contractor shall maintain and update SSP 50504, ISS Configuration Document and Assembly Matrix. The contractor shall collect inputs, develop the revised document, conduct document reviews, resolve technical issues and actions, prepare the ISSP Change Request (CR) and board presentations, and prepare the final document for approval.

The ISS Configuration document contains data describing how the ISS is assembled. The document also contains physical configuration data that is not captured elsewhere in the ISSP. The Multi-Increment Manifest provides the strategic assembly sequence and manifest. The IDRD Flight Program contains the tactical assembly sequence.

2.2.3.2.4 The contractor shall maintain and update SSP 30219, which documents the ISS reference coordinate systems for major elements and robotically handled items. The contractor shall collect inputs, develop the revised document, conduct document reviews, resolve technical issues and actions, prepare the ISSP Change Request (CR) and board presentations, and prepare the final document for approval.

2.2.3.2 5 CAD Model Development Support

(a) The contractor shall participate in the CAD Model User Technical Interchange Meetings (TIMs) and the Measurement Technical Interchange Meetings (TIMs) hosted by the ISS Vehicle Segment Sustaining Contract. These TIMs determine which element and cargo element components in the 3D CAD models, in the launch and on-orbit configurations, are validated to drawings and determine the required as-built measurements. The contractor shall provide inputs necessary to get validated and as-built CAD models.

(b) The contractor shall ensure that the external physical configuration data needed by the ISSP/SSP users is provided by working with the Vehicle sustaining engineering team to gather physical configuration data from detailed CAD models.

2.2.3.2.6 The contractor shall develop and gain concurrence of external configuration protocols with the International Partners and any other affected teams.

2.2.3.2.7 The contractor shall develop and review the mission-specific ISS/SSP On-Orbit Interface Control Document (ICD), Section 3, Physical Configuration for each Shuttle flight. The ISSP/SSP ICD documents the ISS and Shuttle data from the Orbiter rendezvous through the Orbiter departure. The blank book format is contained in NSTS-21000-IDD-ISS, Section S.3. The contractor shall update the Section S.3 blank book to incorporate the mission specific configuration data and figures.

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2.2.3.2.8 The contractor shall develop and distribute the Vehicle Configuration Joint Working Group (JTWG) mission-specific vehicle configuration data sources letters to the ISSP/SSP community. These letters are produced at the L-9/10 months, in support of the SSP Cargo Integration Review (CIR), and L-4 months.

2.2.3.2.9 The contractor shall track the location of external configuration items. The contractor shall track the current and planned locations, as well as the historical hardware movement of needed configuration items such as external Logistics & Maintenance ORUs (spares stowed on orbit), EVA equipment/hardware, visiting vehicles, attach point utilization, standard and non-standard external stowage, utilization, and internal items that stowed externally.

2.2.3.2.10 The contractor shall utilize the External Configuration Analysis and Tracking Tool (ExCATT), or equivalent, and provide web-based reports accessible by the ISSP.

2.2.3.2.11 The contractor shall develop revisions of the On-orbit Assembly Modeling and Mass Properties Data Book (Blue Book) in accordance with DRD A-SI-06.

2.2.3.2.12 The contractor shall convert launch and return mass properties provided by the Vehicle sustaining engineering team to on-orbit mass properties for the development of the Blue Book.

2.2.3.2.13 The contractor shall review the Vehicle sustaining engineering team L-30 day delivery of pre-flight on-orbit ISSP mass properties prior to every ISS flight docking, undocking and redocking. The contractor shall coordinate and resolve issues due to mass properties differences between the L-30 day data delivery and the Blue Book.

2.2.3.2.14 The contractor shall perform ISS clearance and external stowage analysis using approved 3D CAD models.

2.2.3.2.15 The contractor shall perform clearance analysis for docking vehicles assessing the clearance of dynamic docking envelopes and verifying docking requirements.

2.2.3.2.16 The contractor shall develop and deliver simplified 3D CAD models to the RSC-E in .igs and .step formats. These models shall be delivered to other parties such as universities, NASA centers, other International Partners, and other commercial interests, as required. The files shall be delivered in the user’s format using the contractor’s 3D CAD tool capability.

2.2.3.2.17 The contractor shall perform 3D CAD model analysis to determine stowage of new or relocated external configuration items and determine any impact to follow-on assembly or flight activities.

2.2.3.2.18 The contractor shall provide electronic dimensioned and non-dimensioned hidden line or shaded drawings to support the development of ISSP documentation. These drawings shall be provided in .tif, .gif, and/or .pic formats.

2.2.3.2.19 The contractor shall collect and track mass properties of the cargo elements and ORUs for flights scheduled in the strategic timeframe.

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2.2.3.2.20 The contractor shall provide launch vehicle ascent and descent weight assessments to support manifest assessments in the strategic timeframe.

2.2.3.3 Internal Volume Configuration (IVC)

2.2.3.3.1 The contractor shall update and maintain Section 3.12, Interior Volume Configuration, of SSP 50261-01, Generic Ground rules, Requirements, and Constraints Part 1: Strategic and Tactical Planning (GGR&C Part 1). The contractor shall provide criteria for evaluating and prioritizing ISS internal volume demands in accordance with these requirements. Such criteria are put into practice in cooperation with the Internal Volume Configuration Working Group (IVCWG), Mission Integration team, and International Partners / Participants and in accordance with SSP 50005, ISS Flight Crew Integration Standards. Examples of such volume criteria include minimum IVA translation path clearance, worksite operational volumes, emergency module safing and crew health stabilization requirements, access to routine maintenance locations, and the clearance around air duct openings and utility outlets when selecting nominal on-orbit locations for ISS cargoes.

2.2.3.3.2 The contractor shall update and maintain the planned ISS IVA topology in SSP 50564, ISS Interior Volume Configuration Document, to include Vehicle, payloads, systems, racks and select GFE items. The contractor shall coordinate and provide modified topologies, as required, to allow for IVC studies due to changes to the ISS assembly sequence or changes to the ISS configuration.

2.2.3.3.3 The contractor shall develop and maintain a unified and validated 3D CAD model of the ISS interior, in accordance with DRD A-SI-07, to support graphic analysis of the ISS interior configuration at every stage documented in SSP 50564.

2.2.3.3.4 The contractor shall graphically analyze the acceptability of the ISS planned configurations based on the documented pass/fail criteria identified in SSP 50261-01. The contractor shall document the results, including any exception closures, and review with the IVCWG and the ISSP.

2.2.3.3.5 The contractor shall provide and maintain an IVC stage analysis verification plan via coordination of the ISS graphic analysis with the IP/P community and with the Mission Integration team and the IVCWG.

2.2.3.3.6 The contractor shall develop situation unique analyses, as required, to provide inputs to ISSP planning and issue resolution.

2.2.3.3.7 The contractor shall maintain the IVCWG website to record and communicate IVC activities to the NASA community.

2.2.3.3.8 The contractor shall participate in hardware design reviews to ensure identification and resolution of potential issues regarding design features that, if not resolved, would result in SSP 50261-01 IVC exceptions. This activity includes review of hardware design drawings, volume envelopes, and assessment of protrusions into the crew and/or other hardware operational volumes as defined in SSP 50261-01.

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2.2.3.3.9 The contractor shall provide management and support to ISSP to maintain an ISS IVA physical environment integration function. This includes chairing the Internal Volume Configuration Working Group (IVCWG) and documenting the IVC Program processes.

2.2.6.6 Strategic Analysis & Integration

2.2.6.1 The contractor shall perform ISS strategic studies by identifying issues and developing the technical strategic plans, resolution plans, and conducting necessary trade studies and analyses required for formulating recommended solutions to complex multidiscipline and programmatic issues.

2.2.6.2 The contractor shall maintain and update SSP 50112 and provide inputs to the specific Increment Definition and Requirements Document to establish strategic allocations of resources for operations planning. The contractor shall provide updates to the Mission Integration team for inclusion in the appropriate IDRD via Requirements Request Forms as defined in SSP 50622-02, Section 4. Details of the contents of this task are outlined in subordinate paragraphs.

2.2.6.3 The contractor shall develop and provide launch vehicle ascent and descent strategic mass and volume allocations to the ISSP end-user community.

2.2.6.4 The contractor shall perform the ISS strategic resupply/logistics (traffic model) analyses, which are the integrated feasibility assessments to ensure strategic resupply, payload, and return cargo requirements using the planned international fleet of vehicles.

2.2.6.5 Applications and Data Systems

The contractor shall maintain the applications identified below in response to differences or anomalies between the expected performance data and on-orbit performance data as provided by the Vehicle sustaining engineering team.

• Traffic Resource Analysis Model (TRAM).

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3.0 SPACECRAFT

3.1 RESERVED

3.1.1 Vehicle Management and Administration

3.1.1.1 Engineering and Technical Services (LOE)

The contractor shall perform the following services to support the offices within the ISSP.

3.1.1.1.1 Technical Integration Support

3.1.1.1.1.1 Meeting Support

3.1.1.1.1.1.1 The contractor shall coordinate and schedule meetings and telecons for the ISSP Offices. The contractor shall coordinate meeting logistics, including:

(a) scheduling conference rooms,

(b) notifying attendees,

(c) requesting interpretation and translation services,

(d) requesting local transportation services for Russian Foreign Nationals, when necessary,

(e) scheduling and set-up of equipment, and

(f) preparation of meeting materials.

3.1.1.1.1.1.2 The contractor shall develop and distribute meeting agendas and minutes. The contractor shall submit the meeting minutes to the meeting chair for approval within 2 business days following the meeting.

3.1.1.1.1.1.3 The contractor shall maintain and track action items for each meeting and meeting series. The contractor shall capture any assigned actions items and the associated actionees and notify the actionees. The contractor shall document action closure and provide status and disposition of actions.

3.1.1.1.1.1.4 The contractor shall develop and maintain Points of Contact (POC) lists, distribution lists and team calendars of events. The contractor shall distribute event notifications, and other pertinent information.

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3.1.1.1.1.2 CoFR Process Support

The contractor shall aid in the development of, and update, the specified Offices’ Certification of Flight Readiness (CoFR) review plans and processes to reflect changes and process improvements. The contractor shall develop a mission-unique schedule of Office CoFR activities to support the ISS milestones. The contractor shall generate and maintain flight-specific checklists for implementation by Office technical personnel during the execution of the CoFR process.

The contractor shall support and implement the specified Offices’ Certification of Flight Readiness (CoFR) review plans, reference SSP 50108, Certification of Flight Readiness Process Document for ISS. This shall include participation in all of the certification reviews (e.g., Station Cargo Certification Reviews (SCCR), Stage Operations Readiness Reviews (SORR), Acceptance Requirements Board (ARB) meetings, Launch Package Assessment (LPA) Reviews, and Flight Readiness Reviews).

The contractor shall serve as the Office CoFR custodian whose responsibilities include consolidating, organizing, and maintaining the Office’s official CoFR records (i.e., presentations, endorsement packages, and all supporting back-up data). For the specified ISSP Offices, the contractor shall generate an integrated CoFR presentation with supporting subsystem and technical discipline data and compile endorsement packages.

3.1.1.1.1.3 Program Review Support

(a) The contractor shall track and report open paper/actions in support of configuration audits, acceptance reviews, and other major ISSP milestones. The contractor shall collect all open actions, open VCNs, and open issues for each assigned element/end-item and provide a summary report of open items and their status for each review to support the ISS Program Office engineering acceptance of the end item.

(b) The contractor shall coordinate review of data packages, coordinate action item development and acquisition from the ISSP teams, and coordinate and track action item dispositions and closures. The contractor shall provide open action status during reviews. The contractor shall track action item status and closure. The contractor shall prepare in-brief and out-brief presentations for ISSP management.

3.1.1.1.1.4 Coordinate Office CR Evaluations

The contractor shall serve as points of contact for Change Request (CR) processes and evaluations and manage the Office-specific CR review process including tracking of evaluations, comments and issues. The contractor shall facilitate processing of CRs originating from, or evaluated by, the Office. The contractor shall:

(a) identify appropriate Office evaluators and distribute the evaluation packages for internal review,

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(b) contact evaluators to obtain status of their review and inform them of overdue evaluations,

(c) consolidate completed evaluations, comments, and issues and submit to the Office signatory for approval, and

(d) forward approved evaluation packages to CM Receipt Desk

3.1.1.1.1.5 Office Metrics

The contractor shall gather specified data on a weekly basis to assist in the development of an integrated office metrics package for the specified Office for reporting to NASA management.

3.1.1.1.1.6 Office Web Content

The contractor shall develop and maintain web page content for specified ISSP teams and offices. The contractor shall provide web site administration, web site design, and post new information to the websites. The contractor shall develop and provide web pages in accordance with the requirements and guidelines defined in Section 1.4, Information Technology.

3.1.1.1.2 Engineering Services

3.1.1.1.2.1 Issue Resolution

The contractor shall represent assigned functional areas at the ISSP boards and panels and provide reviews, assessments, and recommendations in resolution of issues. The contractor shall coordinate the resolution of system integration issues with the necessary subsystem and technical discipline teams within the ISSP.

3.1.1.1.2.2 Engineering Evaluation and Integration

The contractor shall provide technical capabilities as requested to:

(a) recommend approval and acceptance of integration, operations, and system performance plans, procedures, analyses, tests, and reports,

(b) review documents, procedures, plans, and reports for discrepancies,

(c) provide assessments of the products to ensure they are in accordance with the program baseline, and

(d) perform impact assessments of ISS Change Requests against the program baseline.

3.1.1.1.2.3 Integrated Test and Verification (IT&V) Support

The contractor shall develop, implement, and oversee IT&V products and processes as defined in

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D684-10020, ISS Program Master Integration and Verification Plan. The contractor shall support the development and maintenance, including the book coordination, of the following Bilateral Integration and Verification Plans (BIVPs): SSP 50033, NASA/CSA Bilateral Integration and Verification Plan (BIVP), SSP 50034, NASA/ESA Bilateral Integration and Verification Plan (BIVP), SSP 50035, NASA/NASDA Bilateral Integration and Verification Plan (BIVP), SSP 50101, NASA/RSA Bilateral Integration and Verification Plan (BIVP), SSP 50102, NASA-ASI Bilateral Integration and Verification Plan (BIVP), SSP 50281, Node 2 NASA/ASI Bilateral Integration and Verification Plan (BIVP), SSP 50334, ESA/RSA Bilateral Integration and Verification Plan (BIVP) For ATV, SSP 50406, NASA/ESA Bilateral Integration & Verification Plan (BIVP) For Cupola, SSP 50420, NASA/NASDA Bilateral Integration & Verification Plan (BIVP) For HTV, and SSP 50544, NASA/NASDA Bilateral Integration & Verification Plan (BIVP) For CAM. Support to T&V shall include, but is not limited to, the following:

(a) Coordination of ISS Specification, Section 4 requirements updates with subsystem teams and requirement owners.

(b) Development, review, and issue resolution for the IT&V related specifications, Bilateral Integration and Verification Plans, and BDEALS. Support the definition, review, and approval of IP/P test requirements, plans, and closure criteria.

(c) Development and approval of the IP/P requirements and test of the BIVP joint tests, integrated systems tests, and element leak tests.

(d) Participation in Test Readiness Reviews and assessment of test readiness.

(e) Generation of rationale pertaining to IT&V risk abatement.

(f) Development, review, and approval of Operations and Maintenance Requirements and Specifications (OMRS) and Assembly, Checkout, Operations, Maintenance and Configuration (ACOMC) requirements used to document test requirements at KSC.

(g) Coordination with subsystems teams and IP/P to achieve agreement on OMRS and ACOMC requirements definitions, test execution, requirements variances, changes, waivers, deviations, exceptions, interpretation agreements, and BIVP test sheets.

(h) Assessment of BDEALS data deliveries and incorporation of VCM/VCD data into RTM/PVIS.

(i) Review of verification data provided by IP/Ps to show that Specification section 3 requirements have been met or that appropriate waivers, deviations, or exceptions have been approved.

(j) Incorporation of IP/P verification data into Stage VCNs for closure of ISS Stage and System requirements.

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3.1.1.1.2.4 Cable and Fluid Assessment

The contractor shall provide oversight of the cable and fluid assessment activities performed by the Vehicle sustaining engineering team. The contractor shall evaluate and audit test reports and procedures for compliance to ISS requirements and to the cable and fluid assessment detailed verification objectives (DVOs) and verification logic network (VLN). These DVOs/VLNs address the set of cable and fluid assessment activities including Design Audits, Physical (As-Built) Audits, Mate/Fit-checks, and On-Orbit Constraint Tests for extra-vehicular activity and intra-vehicular activity. The contractor shall assist NASA in coordinating test and audit activities with the IP/Participants. The contractor shall recommend approval of the Verification Closure Notice (VCN) in support of CoFR.

3.1.1.1.2.5 Project Management Support

The contractor shall support the development of hardware and software systems by providing project management support to ensure that ISSP needs are met; these needs include technical, cost, and schedule requirements. The contractor shall ensure that assigned projects are developed in accordance with ISSP processes. The contractor shall produce project documentation as requested. The contractor shall evaluate and track development issues and schedule issues from project inception through initial flight of the hardware/software system. The contractor shall work closure of technical and schedule issues with the hardware/software providers. The contractor shall coordinate processes and lead issue resolutions between the provider organizations, launch integration organizations, and the ISSP. The contractor shall identify threats to key milestone completions and corresponding ISSP impacts. The contractor shall prepare a weekly status report of technical issues and schedule compliance. The contractor shall assist with risk management, including the coordination of budget, schedule, metrics, risks associated with individual development projects, and the rollup and trend analysis associated with the set of all development projects.

3.1.1.1.2.6 Hardware Delivery Support

The contractor shall support NASA in the acceptance of hardware purchased through the Vehicle sustaining engineering team and hardware purchased under other contracts for the External Carriers Office. Tasks shall include providing concurrence for certification and DD250 prior to shipment of hardware to the flight preparation facility (typically KSC), monitoring and participating in schedule and manufacturing reviews related to the delivery schedule of hardware, and participating in design and requirement reviews to ensure that hardware needs to support ISS carriers are properly identified. The contractor shall maintain a database to track all hardware deliverables between the ISSP and its contractors that support ISS carriers. The contractor shall review ISSP CRs involving ISS carriers to ensure that equipment requirements are properly identified and meet ISSP requirements.

The contractor shall coordinate deliveries of Government Furnished Equipment, including hardware supplied by the JSC EVA Projects Office, and ensure that deliveries meet manufacturing, assembly, and test schedules. The contractor shall implement requests and justify needs for EVA hardware deliveries to support ISS carriers.

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3.1.1.1.2.7 Book Coordination Support

The contractor shall provide Book Coordinator functions to support the NASA Book Managers in the development and maintenance of assigned documentation. This support includes:

(a) coordinating inputs and tracking communications from the International Partners regarding the documents.

(b) coordinating and conducting meetings to evaluate the changes, documenting and distributing the minutes and actions, and tracking action closures.

(c) developing and making presentations to the appropriate control board/panel as required to obtain approvals for document release.

3.1.1.1.3 Special Studies

The contractor shall conduct special studies within the scope of the PI&C SOW as requested. The scope of the study, products, and schedule will be defined in a LOE task order.

4.0 RESERVED

5.0 RESERVED

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6.0 SAFETY AND MISSION ASSURANCE (S&MA)

The Agency Safety Initiative establishes the NASA safety hierarchy, which is the order NASA will use to prioritize its safety efforts. The safety hierarchy is as follows:

(a) Safety for the public - NASA absolutely must protect the public from harm.

(b) Safety for astronauts and pilots - NASA has to protect them as they expose themselves to risk in high hazard flight regimes.

(c) Safety for NASA workforce - NASA is responsible for providing a safe and healthful workplace.

(d) Safety for high-value equipment and property - NASA is a steward of the public’s trust.

By focusing on the safety of NASA’s mission and operations, NASA will improve quality and decrease cost and schedule.

6.1 S&MA MANAGEMENT AND ADMINISTRATION

6.1.1 Mission Assurance and Risk Management (MA&RM) Plan

The contractor shall develop, maintain, and implement the Mission Assurance and Risk Management (MA&RM) Plan in accordance with DRD A-SA-01.

6.1.2 Quality Record Maintenance

The contractor shall maintain the ISSP S&MA quality records system in accordance with SSP41173 and AS9100.

6.1.3 AS9100

The contractor shall establish and maintain a Quality Management System (QMS) that complies with AS9100. Third party certification/registration is not required. If the contractor is AS9100 registered and subsequently changes registrars, loses registration status, or is put on notice of losing registration status, the contractor shall notify the NASA Contracting Officer within three (3) days of receiving such notice from the registrar.

6.1.4 Audit/Surveillance

The contractor shall provide access to data, personnel, and facilities for government audit/surveillance of the contractor’s plans, procedures, and processes when deemed necessary by the Government. The contractor shall provide written responses to audit/surveillance findings that are delivered to and accepted by the government.

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6.1.5 Mishap Investigating and Reporting

(a) The contractor shall investigate and report mishaps, in accordance with NPG 8621.1, NASA Procedures and Guidelines for Mishap Reporting, Investigating, and Record keeping, and NPG 8715.3, NASA Safety Manual. All investigation reports shall include a human factors assessment, root cause analysis and any remedial/corrective actions performed. These reports shall encompass mishaps occurring during the contracted period as follows:

• All mission failures and type A and B mishaps resulting in injury to contractor personnel or equipment damage occurring onsite at NASA facilities and offsite at contractor facilities.

• Type C mishaps resulting in equipment damage onsite at NASA facilities and offsite at contractor facilities.

• Type C mishaps resulting in injury to contractor personnel located onsite at NASA facilities.

• Incidents and close calls occurring onsite at NASA facilities.

(b) The contractor shall develop and implement a call tree with government contacts for the reporting of a mishap, near-miss incident, equipment problem or a system going out of specification. The contractor shall report incidents and problems within four hours of the occurrence. Type C injury mishaps occurring offsite at contractor facilities shall be reported in a monthly summary of such injuries.

(c) The contractor shall enter mishap reporting and provide summary data into the Incident Reporting Information System (IRIS) per NPG 8621.1.

6.1.6 Safety and Health

The contractor shall develop and implement a process to identify how personnel and property will be protected from injury or harm and ensure the safety of all working conditions throughout the performance of the contract. The process shall provide for hazardous operation surveillance, hazardous procedure review, and risk assessments associated with deviations from procedures or safety and health requirements. The contractor shall comply with NASA-Installation safety and health requirements and related processes when performing contractor work onsite at NASA installations. The contractor shall develop, implement and maintain a Safety and Health (S&H) Plan in accordance with DRD A-SA-02. Upon approval, the S&H Plan shall be incorporated into the contract as Attachment J-5. The contractor shall document the assessments in monthly safety and health metrics in accordance with DRD A-SA-03 and perform an annual self-evaluation in accordance with DRD A-SA-04.

6.1.7 Lessons Learned

The contractor shall develop, update and implement a process to capture, disseminate, and implement lessons learned, both positive and negative, in accordance with NPG 8621.1,

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NPG 7120.5, and AG-CWI-001, JSC Lessons Learned Process. The contractor shall enter the lessons learned into the government provided Lessons Learned Information System (LLIS) per AG-CWI-001.

6.1.8 Document Maintenance

The contractor shall provide book coordination functions for the following ISSP S&MA documents: JPD 306; JPD; 315; JPD 328; SSP 30223, Problem Reporting and Corrective Action (PRACA) for Space Station Program; SSP 30234, Failure Modes and Effects Analysis and Critical Items List (FMEA/CIL) Requirements for Space Station; SSP 30309, Safety Analysis and Risk Assessment Requirements Document; SSP 30524, Problem Reporting and Corrective Action (PRACA) Data System (PDS) Requirements Definition Document (RDD) for ISSP; SSP 30599, Safety Review Process; SSP 30695, Acceptance Data Package Requirements Specification; SSP 41173, Space Station Quality Assurance Requirements; SSP 50021, Safety Requirements Document;, SSP 50038, Computer-Based Control System Safety Requirements; SSP 50175, ISS Risk Management Plan; SSP 50231, Safety and Mission Assurance Certificate Of Flight Readiness Implementation Plan; SSP 50287, Hardware/Software Acceptance Process; and SSP 50437, Safety and Mission Assurance/Program Risk Mission Evaluation Room Console Operations Handbook for ISSP.

6.2 S&MA INTEGRATION

6.2.1 IP Integration

(a) The contractor shall provide book coordination functions for the documents listed below to assist NASA in the development and maintenance of IP bilateral agreements to ensure implementation of the overall S&MA Program for the IP elements, including visiting vehicles, cargo, and payloads: SSP 50062, NASA/CSA Bilateral S&MA Requirements, SSP 50145, NASA/NASDA Bilateral S&MA Requirements, SSP 50146, NASA/RSA Bilateral S&MA Process Requirements for ISS, SSP 50182, SSP 50191, NASA/ESA Bilateral S&PA Requirements, SSP 50346, NASA/ASI Nodes Bilateral S&PA Requirements.

(b) The contractor shall perform S&MA technical integration in accordance with the IP bilateral agreements of IP Elements, visiting vehicles, cargo, and payloads, including participation in Milestone Reviews and TIMs. Technical integration includes participating in the identification and resolution of technical issues affecting S&MA, receiving and distributing S&MA data between NASA and IPs, tracking of open issues and actions resulting from the Milestone Reviews and TIMs that impact the safety, reliability, and quality assurance aspects for each flight and supplying the data to the Mission Integration team.

(c) The contractor shall periodically status S&MA issues and open action items for the IP Elements, vehicles, cargo and payloads to ISSP boards and panels.

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6.2.2 Change Request Integration

The contractor shall coordinate and facilitate S&MA review of ISSP Change Requests.

6.3 PROGRAM RISK

6.3.1 Risk Process Management

The contractor shall maintain the risk management process and the Integrated Risk Management Application (IRMA) in accordance with SSP 50175, ISS Risk Management Plan, JPD 306, and NPG 8000.4. This will include ensuring the integration of all data and data integrity of the Risk Management Database and associated linkage with the MIS for identification of risks.

6.3.2 Risk Management

The contractor shall identify S&MA risks and provide input to the risk process utilizing the Integrated Risk Management Application (IRMA) in accordance with SSP 50175 and JPD 306 as well as coordinate risks with NASA counterparts.

6.3.3 Corrective Action/Preventative Action

The contractor shall facilitate any ISSP S&MA corrective action/preventative action responses in accordance with JPD 328, including coordinating responses and entering updates into the JSC Quality Process Improvement Database. The process requires the identification and mitigation of adverse trends, potential events, or significant anomalies that may adversely affect multiple programs, projects, or divisions.

6.3.4 Risk Management Integration

The contractor shall coordinate risks in support of risk advisory boards in accordance with JPD 306 and SSP 50175.

6.3.5 Probabilistic Risk Assessment (PRA)

The contractor shall perform the PRA modeling and trade studies in accordance with NPG 8705, PRA Guidelines for NASA Programs and Projects. Modeling and trade studies may include the ISS and any visiting vehicle, including those that are in a conceptual design phase. The contractor shall use SAPHIRE PRA modeling/development application identified in Appendix F, Table 2.

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6.3.5.1 Probabilistic Risk Assessment Process

The contractor shall develop a PRA process capable of tracking the safety of flight issues through program maturity in accordance with DRD A-SA-05.

6.3.5.2 Probabilistic Risk Assessment Analyses

The contractor shall perform trade and sensitivity analyses using the Probabilistic Risk Assessment and make recommendations as appropriate. Trade studies and analyses will include (i) background on problem, (ii) assumptions and constraints, (iii) scope of analysis, (iv) methodology, (v) detailed analysis and results, and (vi) conclusion.

6.3.5.3 Probabilistic Risk Identification Results

The contractor shall identify and disclose as appropriate any instance of a detected disconnect or flaw regarding the connectivity of the Government supplied hazard analysis, failure modes and effects analysis, or other engineering data which leads to the identification of an unidentified catastrophic hazard.

6.4 RESERVED

6.5 RESERVED

6.6 QUALITY ASSURANCE

6.6.1 Problem Reporting System

6.6.1.1 Problem Reporting System Maintenance

The contractor shall maintain the ISS Program Reporting and Corrective Actions process and database in accordance with SSP 30524 and SSP 30223. This activity includes coordination of the PRACA process and database improvements with problem resolution teams and facilitate issue resolution.

6.6.1.2 Problem Reporting System Participation

The contractor shall coordinate reporting and ensure dispositioning and reporting of applicable problems by the IP/P representatives in support of NASA in the implementation of bilateral agreements, and in accordance with the ISS Problem Reporting and Corrective Actions process and maintenance (SSP 30524 and SSP 30223).

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6.6.2 Element Hardware / Software Acceptance

(a) The contractor shall develop, maintain, and implement an IP Element Acceptance Review Plan as defined in DRD A-SA-06 and in accordance with bilateral agreements for the CAM/CR.

(b) The contractor shall report on Acceptance Review audits of deliverable hardware and software to ensure compliance with bilateral agreements. The contractor shall track open RIDs and/or action items to satisfactory closures.

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Table C-1: Applicable Documents List

Document Number	Title	Book Coordination Required
	Government Info Security Reform Act of 2000
	Section 508, Rehabilitation Act of 1974
	Service Contract Act of 1965
AG-CWI-001	JSC Lessons Learned Process
AS9100	Quality Systems - Aerospace - Model for Quality Assurance in Design, Development, Production, Installation, and Servicing
IMCOH	ISS Management Center Operations Handbook (IMCOH)
ISSP-MD-114	Guidelines for Travel to Russia and from Russia to Support Meetings
D684-10020	Program Master Integration and Verification Plan (PMI&VP)
D684-10097-01	Guidelines and Procedures for the conduct of Functional Configuration Audit (FCA)/ Physical Configuration Audit (PCA)
JHB 8800.6	Asbestos Control Manual
JPD 306	Establishment of the Program Risk Management Plan (PRMS)	X
JPD 328	ISS Corrective Action Plan/Preventative Action Process	X
JPG 1700.1	JSC Safety and Health Handbook
JPG 2810.1	JSC Information Technology Security Handbook
JPG 5151.2	Johnson Space Center Support Contractor Procedures and Guidelines
NPG 1620.1	NASA Security Procedures and Guidelines
NPG 4100.1	NASA Materials Inventory Management Manual
NPG 4200.1	NASA Equipment Management Manual
NPG 4200.2	NASA Equipment Management Procedures and Guidelines for Property Custodians
NPG 4300.1	NASA Personal Property Disposal Procedures and Guidelines
NPG 6000.1E	Requirements for Packaging, Handling, and Transportation for Aeronautical and Space Systems, Equipment, and Associated Components
NPG 8000.4	Risk Management Procedures and Guidelines
NPG 8621.1	NASA Procedures and Guidelines for Mishap Reporting, investigating, and Record keeping
NPG 8705	PRA Guidelines for NASA Programs and Projects

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Contract No.: SGS-0311403.00 MOD3

Document Number	Title	Book Coordination Required
NPG 8715.3	NASA Safety Manual
NSTS-21000-IDD-ISS	Shuttle Orbiter/International Space Station Interface Definition Document
OB-MER-006	ISS Mission Evaluation Room (MER) Handbook
PPD 522	Space Station Control Board/Panel Operations Policy	X
SSP 30219	ISS Reference Coordinate Systems Document	X
SSP 30223	Problem Reporting and Corrective Action (PRACA) for Space Station Program	X
SSP 30459	ISS Interface Control Plan	X
SSP 30524	Problem Reporting and Corrective Action (PRACA) Data System (PDS) Requirements Definition Document (RDD) for ISSP	X
SSP 41000	System Specification For The International Space Station	X
SSP 41160	ESA Segment Specification For Columbus	X
SSP 41162	Segment Specification For The United States On-Orbit Segment
SSP 41163	Russian Segment Specification	X
SSP 41165	Segment Specification For The Japanese Experiment Module	X
SSP 41167	Mobile Servicing System Segment Specification	X
SSP 41170	Configuration Management Requirements	X
SSP 41171	Preparation Of Program-Unique Specification
SSP 41173	Space Station Quality Assurance Requirements	X
SSP 41174	ISS Interface Control Working Group (ICWG) Operating Procedures	X
SSP 50005	ISS Flight Crew Integration Standards
SSP 50010	Document Requirements, Standards & Guidelines, Vol. 1, Requirement Standards	X
SSP 50013	ISS Information Systems Plan	X
SSP 50108	Certification of Flight Readiness for ISS
SSP 50112	Operations Summary Document	X
SSP 50123	Configuration Management Handbook	X
SSP 50124	NASA/CSA Bilateral Data Exchange Agreements, Lists and Schedules (BDEALS)	X
SSP 50126	NASA/NASDA Bilateral Data Exchange Agreements, Lists and Schedules (BDEALS)	X
SSP 50127	NASA/ESA Bilateral Data Exchange Agreements, Lists and Schedules (BDEALS)	X
SSP 50135	ISS Interface Control Plan – NASA/RSA	X

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Contract NNJ04AA01C PROGRAM INTEGRATION AND CONTROL Attachment J-1 Appendix C Mod 7

SSP 50127	NASA/ESA Bilateral Data Exchange Agreements, Lists, and Schedules (BDEALS)	X
SSP 50135	ISS Interface Control Plan – NASA/RSA	X
SSP 50137	NASA/RSA Bilateral Data Exchange Agreements, Lists and Schedules (BDEALS)	X
SSP 50175	ISS Risk Management Plan	X
SSP 50200-01	Station Program Implementation Plan (SPIP) Volume 1: Station Program Management Plan
SSP 50222	ISS Program Capital Investment Process (CIP)	X
SSP 50261-01	Generic Ground rules, Requirements, and Constraints Part 1: Strategic and Tactical Planning (GGR&C Part 1)
SSP 50273	HTV Segment Specification	X
SSP 50312	CAM Segment Specification	X
SSP 50318	Prime Item Development Specification for Node 3	X
SSP 50333	Cupola Segment Specification	X
SSP 50352	NASA/AEB Bilateral Data Exchange Agreements, list and Schedules (BDEALS)	X
SSP 50407	NASA/ESA Bilateral Data Exchange Agreements, Lists, and Schedules (BDEALS) for Cupola 1	X
SSP 50439	ESA Segment Specification For The Automated Transfer Vehicle (ATV)	X
SSP 50564	ISS Interior Volume Configuration Document	X
SSP 50573	Program Documentation Tree	X
SSP 50648	NASA/AEB Bilateral Hardware and Software Exchange Agreements, Lists and Schedules (BHSEALS)	X
SSP 50611	NASA/ESA Bilateral Data Exchange Agreements, Lists and Schedules (BDEALS) for ATV	X
SSP 50614	NASA/HTV Bilateral Data Exchange Agreements, Lists, and Schedules (BDEALS) for HTV	X
SSP 50617	NASA/NASDA Bilateral Data Exchange Agreements, Lists, and Schedules (BDEALS) for CAM	X
SSP 50622-02	Mission Integration Data Sets Blank Book (MIDSBB)	X
SSP 50659	ISS Program Work Breakdown Structure (WBS)
SSP 54100 FP	IDRD Flight Program

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Contract No.: SGS-0311403.00 MOD3

Table C-2: Reference Documents List

Document Number	Title	Book Coordination Required
45 SPW HBS-100/KHB 1700.7	Space Transportation System Payload Ground Safety Handbook
A91-P318-JLD-A00014	SSPF Utilization Document
ANSI/EIA Std 748	Industry Guidelines for Earned Value Management Systems
Clinger-Cohn Act of 1996	The IT Management Reform Act
D683-96059-02	Light Weight Adapter Plate Assembly IDD
D683-96059-03	Medium Adapter Plate Assembly IDD
D683-96059-04	Large Adapter Plate Assembly IDD
D683-96061-03	BCDU ORU To FSE ICD
D683-96061-04	UTA ORU To FSE ICD
D683-96061-08	Pump Module ORU To FSE ICD
D683-96061-09	Battery ORU To FSE ICD
D683-96061-10	CMG ORU To FSE ICD
D683-96061-11	Linear Drive Unit ORU To FSE ICD
D683-96061-12	MT/TUS Reel ORU To FSE ICD
D683-96061-14	SGANT ORU To FSE ICD
D683-96063-03	BCDU FSE Installation Kit To Small APA Plate Assembly ICD
D683-96063-04	UTA FSE Installation Kit To Small APA Plate Assembly ICD
D683-96063-08	Pump Module FSE Installation Kit To Small APA Plate Assembly ICD
D683-96063-09	Battery FSE Installation Kit To Small APA Plate Assembly ICD
D683-96063-10	CMG FSE Installation Kit To Small APA Plate Assembly ICD
D683-96063-11	Linear Drive Unit FSE Installation Kit To Small APA Plate Assembly ICD
D683-96063-12	MT/TUS Reel FSE Installation Kit To Small APA Plate Assembly ICD
D683-96063-14	SGANT FSE Installation Kit To Small APA Plate Assembly ICD
D684-10058-01-01	On Orbit Integrated Thermal Analysis Report, Vol. 1 Book 1

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Document Number	Title	Book Coordination Required
D684-10058-01-02	On Orbit Integrated Thermal Analysis Report, Vol. 1 Book 2
D684-10058-02	Plume Impingement Heat Rate Report, Volume 2
D684-10822-01	FRAM IDD
D684-11074-01	ISS Product Support Group Inventory Management System Plan
D684-11081	ESP2 PIDS
D684-11118-01	UTA FSE Certification and Acceptance Requirements Document (CARD)
D684-11119-01	Pump Module FSE Certification and Acceptance Requirements Document (CARD)
D684-11122-01	BCDU FSE Certification and Acceptance Requirements Document (CARD)
D684-11123-01	PCU FSE Certification and Acceptance Requirements Document (CARD)
D684-11124-01	Battery FSE Certification and Acceptance Requirements Document (CARD)
D684-11125-01	CMG FSE Certification and Acceptance Requirements Document (CARD)
D684-11126-01	MT/TUS Reel FSE Certification and Acceptance Requirements Document (CARD)
D684-11127-01	Linear Drive Unit FSE Certification and Acceptance Requirements Document (CARD)
D684-11180-01	Anti-Rotation Device For E-UTAS Certification and Acceptance Requirements Document (CARD)
D684-11181-01	FHRC FSE Certification and Acceptance Requirements Document (CARD)
D684-11185-01	ESPAD Certification and Acceptance Requirements Document (CARD)
D684-11216-01	FHRC ORU To FSE ICD
D684-11232-01	E-UTAS Certification and Acceptance Requirements Document (CARD)
D684-11277-01	PVR FSE Certification and Acceptance Requirements Document (CARD)
D684-11318-01	Light Weight Adapter Plate Assembly Certification and Acceptance Requirements Document (CARD)
D684-11319-01	Medium Adapter Plate Assembly Certification and Acceptance Requirements Document (CARD)
D684-11322-01	Large Adapter Plate Assembly Certification and Acceptance Requirements Document (CARD)

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Contract No.: SGS-0311403.00 MOD3

Document Number	Tide	Book Coordination Required
DoD 5000.2-R	Mandatory Procedures for Major Defense Acquisition Programs and Major Automated Information Systems Acquisition Programs
Executive Order 12845	Energy-efficient Microcomputers
Executive Order 13011	Federal IT
ISAC-314	ORUDD Release 1.0.4 Release Requirements Document
ISPPD	Integrated Schedule Process and Planning Document (ISPPD)	X
ISS MPLM IDD 006	MPLM Interface Definition Document
ISS OC letter OC-01-001, Jan 2, 2001	Increment definition and Requirements Plan (IDRP)
JESA 30000, Sec. 9	Product Assurance Requirements
JPD 2800.1A	JSC IT Program
JPD 2800.4	JSC IT Program Management
JPD 315	Limited Life Item (LLI) Tracking and Control	X
JSC 17773	Preparing of Hazard Analyses for JSC Ground Operations
JSC 26557	On-Orbit Assembly Modeling and Mass Properties Data Book (Blue Book) Volumes 1 & 2	X
K-CM-05.3.2-BL	Guide for Space Station Processing at KSC
K-CM-06.1	Payload Master Definition List
KDP-P-2835	ISS/Payload Processing Launch Site Support Plan Development
KHB1700.7	Space Shuttle Payload Ground Safety Handbook
KHB-1710.2	Kennedy Space Center Safety Practices Handbook
KHB-8800.6	KSC Environmental Control Handbook
KHB-8800.7	Waste Management Handbook
K-PSM-11.04-BL-REVB-ATTACHED	Attached LSSP Boilerplate
K-PSM-11.235-BL-ADD101-ICC	Integrated Cargo Carrier (ICC) LSSP
K-PSM-11.235-BL-ADD106-ICC	Integrated Cargo Carrier (ICC) LSSP
K-PSM-11.235-BL-ICC	Integrated Cargo Carrier (ICC) LSSP
KSC-PRD-PSP Volume 3-Annex-SAQ	Launch and Landing Program Requirements Document/Program Support Plan Volume III: Payloads. Annex SAQ: Multi-Purpose Logistics Module (MPLM)

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Contract No.: SGS-0311403.00 MOD3

Document Number	Title	Book Coordination Required
MIL-STD-882	General Requirements for System Safety Program for Systems and Associated Subsystems and Equipment
NPD 9501.1G	NASA Contractor Financial Management Reporting System
NPD 9501.3A	Earned Value Management
NPG 1620.1	NASA Security Procedures and Guidelines
NPG 2810.1	Security of Information Technology
NPG 7120.5	NASA Program and Project Management Processes and Requirements
NPG 9501.3	Earned Value Management Implementation on NASA Contracts
NSTS 07700 Vol. III	Flight Definition and Requirements Directive
NSTS 07700 Vol. XIV	Space Shuttle System Payload Accommodations
NSTS 13830	Payload Safety Review and Data Submittal Requirements for Payloads Using the Space Shuttle and ISS
NSTS 1700.7B	Safety Policy and Requirements for Payloads Using the Space Transportation System
NSTS 1700.7BAD	Safety Policy and Requirements for Payloads Using the International Space Station (ISS Addendum)
NSTS 17462-XX	STS XX Flight Requirements Document
NSTS 21000-SIP-MIP (ISS)	(ISS) Shuttle/Launch Package Standard Integration Plan for International Space Station Missions
NSTS 21458	Standard Integration Agreement for all Space Shuttle Program and International Space Station Program Missions
NSTS 22254	Methodology for Conduct of Space Shuttle Program Hazard Analyses
NSTS 37329	Structural Integration Analysis Responsibility Definition for Space Shuttle Vehicle and Cargo Element Developers
NSTS 5300.4 1D-2	Safety, Reliability, Maintainability, and Quality Provisions for the Space Shuttle Program
NSTS-12820-VOL B	ISS Generic Operational Flight Rules Volume B (PCN-2)
OMB Circular A-11	Preparation, Submission, and Execution of the Budget
OMB Circular A-130	Management of Federal Information Resources, Appendix III, Security of Federal Automated Information Resources
OMB Circular Al30 Appendix III	Management of Federal Information Resources, Appendix III provides guidance on “Security of Federal Automated Information Systems”

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Document Number	Title	Book Coordination Required
OSHA Reg 29 CFR 1910.119, Appendix A	Process safety management of highly hazardous chemicals
OSHA Reg 29 CFR 1910.120	Hazardous waste operations and emergency response
OSHA Reg 29 CFR 1910.1200	Hazard Communications
OSHA TED 8.4, Appendix H	Voluntary Protection Program (VPP): Policies and Procedures Manual
Public Law 100-235	Computer Security Act of 1987
Public Law 104-13	Paperwork Reduction Act of 1995
RTM Users Manuals	Requirements Traceability Management Users Manuals
SODB	Shuttle Operations Data Book
S-Pub. 101-9	Government Printing and Binding Regulations, Joint Committee on Printing, Congress of the United States
SSODB	Power Architecture Document
SSP 30234	Failure Modes and Effects Analysis and Critical Items List (FMEA/CIL) Requirements for Space Station	X
SSP 30309	Safety Analysis and Risk Assessment Requirements Document	X
SSP 30550	Space Station Robotic Systems Integration Standards Volume 1: Robotic Accommodation Requirements
SSP 30575	Space Station Interior and Exterior Operational Location Coding System
SSP 30599	Safety Review Process	X
SSP 30695	Acceptance Data Package Requirements Specification	X
SSP 42004 PART 1	Mobile Servicing System (MSS) To User (Generic) Interface Control Document Part 1
SSP 42004 PART 2	Mobile Servicing System (MSS) To User (Generic) Interface Control Document Part 2
SSP 42011 PART 1	Integrated Truss Segment S0 To United States Laboratory Interface Control Document Part 1
SSP 42120-PART 1	Androgynous Peripheral Assembly System To Pressurized Mating Adapter Interface Control Document Part 1
SSP 42120-PART 1-App A	Androgynous Peripheral Assembly System To Pressurized Mating Adapter Interface Control Document Part 1 - App A

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Contract No.: SGS-0311403.00 MOD3

Document Number	Title	Book Coordination Required
SSP 42120-PART 2 Core	Androgynous Peripheral Assembly System To Pressurized Mating Adapter Interface Control Document, Part 2, Core (APAS To PMA-2 & 3)
SSP 42120-PART 2-App A	Androgynous Peripheral Assembly System To Pressurized Mating Adapter Interface Control Document, Part 2, Appendix A (APAS To PMA-1)
SSP 42125	Integrated Truss Segment P1 To Integrated Truss Segment P3 Interface Control Document Part 1
SSP 42126	Integrated Truss Segment S0 To Integrated Truss Segment P1 ICD Part 1
SSP 42127	Integrated Truss Segment S0 To Integrated Truss Segment S1 ICD Part 1
SSP 42132	Mobile Transporter To Integrated Truss Segments S0, S1, S3, P1, P3, Interface
SSP 44030	Integrated Truss Segment Z1 To Node 1 Interface Control Document Part 1
SSP 44033	Integrated Truss Segment Z1 To Integrated Truss Segment S0 ICD Part 1
SSP 50011-01	ISSA Concept of Operation and Utilization (Principles) Volume 1
SSP 50011-01-ANX-1	Concept of Operation and Utilization, Annex 1: Crew Return Vehicle Baseline Operation Plan
SSP 50011-02	ISSA COU (Mission Scenarios and Mission Profiles) Vol. 2
SSP 50011-03	Concept of Operations and Utilization, Volume 3 Process
SSP 50021	Safety Requirements Document	X
SSP 50033	NASA/CSA Bilateral Integration and Verification Plan (BIVP)	X
SSP 50034	NASA/ESA Bilateral Integration and Verification Plan (BIVP)	X
SSP 50035	NASA/NASDA Bilateral Integration and Verification Plan (BIVP)	X
SSP 50038	Computer-Based Control System Safety Requirements	X
SSP 50062	NASA/CSA Bilateral S&MA Requirements	X
SSP 50101	NASA/RSA Bilateral Integration and Verification Plan (BIVP)	X
SSP 50102	NASA-ASI Bilateral Integration and Verification Plan (BIVP)	X
SSP 50117	Increment Definition and Requirements Document Standard Blank Book

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Contract No.: SGS-0311403.00 MOD3

Document Number	Title	Book Coordination Required
SSP 50128	Specification Of Technical Requirements For The FGB, Functional Cargo Block	X
SSP 50136	NASA/RSA Bilateral Hardware and Software Agreements, Lists and Schedules (BHSEALS)
SSP 50145	NASA/NASDA Bilateral S&MA Requirements	X
SSP 50146	NASA/RSA Bilateral S&MA Process Requirements for ISS	X
SSP 50177 Part 1	Government Furnished Data (GFD) Description Document Part 1 - US Sources
SSP 50177 Part 2	Government Furnished Data (GFD) Description Document Part 2 International Partners Data
SSP 50182	NASA/ASI Bilateral Safety and Product Assurance Requirements
SSP 50191	NASA/ESA Bilateral S&PA Requirements	X
SSP 50198	SS Requirements For Advanced Technology
SSP 50200-01 Annexes	Station Program Implementation Plan (SPIP), Volume 1, Station Program Management Plan; Annexes A, B, C, D, E, F, G, I, L, M, R, Z)
SSP 50200-02	SPIP, Volume 2, Program Planning and Manifesting
SSP 50200-03	SPIP, Volume 3, Cargo Analytical Integration
SSP 50200-03- ANX1	Station Program Implementation Plan Volume 3, Cargo Integration, Annex 1: NASA Cargo Integration Data Requirements
SSP 50200-04	SPIP, Volume 4, Payload Engineering Integration
SSP 50200-10	SPIP, Volume 10, Sustaining Engineering
SSP 50219	NASA/ASI Bilateral Hardware and Software Exchange Agreements, Lists, & Schedules (BHSEALS)
SSP 50220	NASA/CSA Bilateral Hardware and Software Exchange Agreements, Lists and Schedules (BHSEALS)
SSP 50223	International Space Station Export Control Program
SSP 50231	Safety and Mission Assurance Certificate Of Flight Readiness Implementation Plan	X
SSP 50235	Interface Definition Document (IDD) For ISS Visiting Vehicles
SSP 50261-02	Generic Ground rules, Requirements, and Constraints Part 2: Execution Planning (GGR&C Part 2)
SSP 50264	NASA/NASDA Bilateral Hardware and Software Exchange Agreements, Lists and Schedules (BHSEALS)
SSP 50266	ISS Flight Certification Of Flight Readiness Implementation Plan

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Contract No.: SGS-0311403.00 MOD3

Document Number	Title	Book Coordination Required
SSP 50272	Interface Requirements Document International Space Station To H-II Transfer Vehicle
SSP 50280	Node 2 Bilateral Hardware and Software Exchange Agreements Lists and Schedules (BHSEALS) For Node 2
SSP 50281	Node 2 NASA/ASI Bilateral Integration and Verification Plan (BIVP)	X
SSP 50287	Hardware/Software Acceptance Process	X
SSP 50289	NASA/ESA Bilateral Hardware and Software Exchange Agreements, Lists, and Schedules (BHSEALS)
SSP 50295	NASA To NASA GFE List
SSP 50301	NASA/ASI BDEALS – Node 2
SSP 50334	ESA/RSA Bilateral Integration and Verification Plan (BIVP) For ATV	X
SSP 50335	ATV Demonstration and Nominal Operations Flight Plan
SSP 50346	NASA/ASI Nodes Bilateral S&PA Requirements	X
SSP 50406	NASA/ESA Bilateral Integration & Verification Plan (BIVP) For Cupola	X
SSP 50408	NASA/ESA Bilateral Hardware and Software Exchange Agreements, Lists, and Schedules (BHSEALS) For Cupola	X
SSP 50415	Mobile Remote Servicer (MRS) Base System (MBS) Common Attach System (MCAS) Specification
SSP 50416	Mobile Transporter (MT) Capture Latch (MTCL) Specification
SSP 50420	NASA/NASDA Bilateral Integration & Verification Plan (BIVP) For HTV	X
SSP 50429	Centrifuge Rotor (CR) Specification
SSP 50430	Life Science Glovebox (LSG) Specification
SSP 50437	Safety and Mission Assurance/Program Risk Mission Evaluation Room Console Operations Handbook for ISSP	X
SSP 50451	Electrical Flight Grapple Fixture To Strela Cargo Crane Adapter Interface Control Document
SSP 50461	Interim Resistive Exercise Device (IRED) To Node 1 Interface Control Agreement (ICA) Hardmounted and Isolated IRED Assemblies
SSP 50468	On-Orbit Stowage Capabilities and Requirements: Pressurized Volume, Flight 2a. 1, STS-96
SSP 50489	ISS Mission Integration Template
SSP 50492	General International Space Station On-Orbit Requirements For Nonpressurized Support Equipment

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Contract No.: SGS-0311403.00 MOD3

Document Number	Title	Book Coordination Required
SSP 50504	ISS Configuration Document	X
SSP 50520	International Space Station Logistics & Maintenance Operational Support Plan
SSP 50541	On-Orbit Stowage Capabilities and Requirements: Pressurized Volume Flight 5a. 1 - STS-102
SSP 50542	On-Orbit Stowage Capabilities and Requirements: Pressurized Volume Flight 6a - STS-100
SSP 50543	On-Orbit Stowage Capabilities and Requirements: Pressurized Volume Flight 7a - STS-104
SSP 50544	NASA/NASDA Bilateral Integration & Verification Plan (BIVP) For CAM	X
SSP 50545	NASA/NASDA Joint Implementation Plan Of The JEM Launch Offset Implementing Agreement
SSP 50562	ISS Program Off-Nominal Situation Plan (IPOP)
SSP 50576	NASA/RSA Bilateral Agreement - Shipping/Receiving Process For ISS Flight Hardware
SSP 50615	NASA/NASDA BHSEALS for the H II Transfer Vehicle (HTV)
SSP 50616	NASA/NASDA BHSEALS for the Centrifuge Element (Main Body)
SSP 50620	On-Orbit Stowage Capabilities and Requirements: Pressurized Volume Flight 7a. 1
SSP 50621	On-Orbit Stowage Capabilities and Requirements (OSCAR): Pressurized Volume
SSP 50621-05P	On-Orbit Stowage Capabilities and Requirements: Pressurized Volume, Flight 5 Progress Annex
SSP 50621-06P	On-Orbit Stowage Capabilities and Requirements: Pressurized Volume, Flights 4 Russian (Docking Compartment 1), 3 Soyuz, Utilization Flight 1, and 6 Progress Annex
SSP 50622-03	Operation Data Set Blank Book (ODSBB)	X
SSP 50646	On-Orbit Quality Assurance Handbook
SSP 52055	Express Pallet Project Requirements Definition Document
SSP 54104-ANX3	Increment Definition and Requirements Document For Planning Period 4, Annex 3: Flight 11a and Increment 6 Stage Imagery Requirements
SSP 54104-ANX4	Increment Definition and Requirements Document For Planning Period 4, Annex 4: Medical Operations and Environmental Monitoring

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Contract No.: SGS-0311403.00 MOD3

Document Number	Title	Book Coordination Required
SSP 54104-ANX5/05	Increment Definition and Requirements Document For Planning Period 4, Annex 5: Increment 5 Payload Tactical Plan
SSP 54104-ANX5/06	Increment Definition and Requirements Document For Planning Period 4, Annex 5: Increment 6 Payload Tactical Plan
SSP 54104-UF2	Increment Definition and Requirements Document For Planning Period 4, Annex 1: Station Manifest, Flight UF2, STS-111
SSP 54105	Increment Definition and Requirements Document For Planning Period 5
SSP 54105-ANX2	Increment Definition and Requirements Document For Planning Period 5, Annex 2: On-Orbit Maintenance Plan
SSP 54105-ULF1	Increment Definition and Requirements Document For Planning Period 5, Annex 1: Station Manifest, Flight ULF1,STS-114
SSP 54300	Post Increment Evaluation Report Increment 0
SSP 57100	Payload Integration Agreement For The Human Research Facility
SSP 57100-A2	Addendum To Payload Integration Agreement To The Human Research Facility For Increment 2
SSP 57100-A3	Addendum To Payload Integration Agreement For The Human Research Facility For Increment 3
SSP 57100-A4	Addendum To Payload Integration Agreement For The Human Research Facility For Increment 4
SSP 57100-A5	Addendum To Payload Integration Agreement For The Human Research Facility For Increment 5
SSP 57100-A6	Payload Integration Agreement Increment 6 Addendum For The Human Research Facility
SSP 57100-A7	Payload Integration Agreement Increment 7 Addendum For The Human Research Facility
SSP 57200	Human Research Facility - Rack One Hardware Interface Control Document
SSP 57211	Microgravity Sciences Glovebox (MSG) Interface Control Document
SSP 57228	Human Research Facility (HRF) Radiation Experiments Hardware Interface Control Document
SSP 57252	Human Research Facility - Rack Two Hardware Interfac Control Document
SSP 57300	Human Research Facility Software Interface Control Document

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Contract No.: SGS-0311403.00 MOD3

Document Number	Title	Book Coordination Required
SSP 57300-6A	Human Research Facility Software Interface Control Document (6a)
SSP 57300-7A1	Human Research Facility Software Interface Control Document (7a. 1)
SSP 57300-8A	Human Research Facility Software Interface Control Document (8a)
SSP 57300-UF1	Human Research Facility Software Interface Control Document (UF-1)
SSP 57300-UF2, Table A	Human Research Facility Software Interface Control Document (UF-2)
SSP 57400	Human Research Facility Unique Payload Verification Plan For Rack 1
SSP 57400-ADAS	Human Research Facility Unique Payload Verification Plan For Ambulatory Data Acquisition System (ADAS)
SSP 57400-FGI-FCU	Human Research Facility Unique Payload Verification Plan For The Foot Ground Interface (FGI) Flight Calibration Unit (FCU)
SSP 57400-FOOT	Human Research Facility Unique Payload Verification Plan For E318 Foot Reaction Forces During Space Flight
SSP 57400-JES	Human Research Facility Unique Payload Verification Plan For Joint Excursion Sensor (JES)
SSP 57400-PUFF	Human Research Facility Unique Payload Verification Plan For Puff (Pulmonary Function In Flight) Experiment Configuration Of HRF Rack 1
SSP0 57400-RENAL	Human Research Facility Unique Payload Verification Plan For Renal Stone (EO57)
SSP 57400-TF-FGI	Human Research Facility Unique Payload Verification Plan For The Total Force Foot Ground Interface (TF-FGI)
SSP 57400-UCH	Human Research Facility Unique Payload Verification Plan For Urine Collection Hardware (UCH)
SSP 57428-BBND	Human Research Facility Unique Payload Verification Plan For Bonner Ball Nuclear Detector (BBND)
SSP 57428-DOSMAP	Human Research Facility Unique Payload Verification Plan For Dosimetric Mapping (DOSMAP) Instrument
SSP 57428-PWR	Human Research Facility Unique Payload Verification Plan For Power Converter
SSP 57428-TORSO	Human Research Facility Unique Payload Verification Plan For Phantom Torso (E039)
SSP 57429	Human Research Facility Unique Payload Verification Plan For H Reflex

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Contract No.: SGS-0311403.00 MOD3

Document Number	Title	Book Coordination Required
TDH Chapters 505, 506, 507	Texas Department of Health, Health and Safety Code

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Contract No.: SGS-0311403.00

APPENDIX G-SOW TO PROGRAM WORK BREAKDOWN STRUCTURE MAP

	Program Integration and Control		ISS WBS (SSP-50659 REV-A)
SOW	Title	PWBS	Title
1.0	Management Integration and Control	1.0	Management Integration and Control
1.1	Program Management	1.1	Program Management
1.1.1	Program Management and Administration	1.1.1	Program Management and Administrative Staff
1.1.1.1	Planning and Reviews
1.1.2	Internal/External Program Review Support	1.1.2	Internal/External Program Review Support
1.2	Business Management	1.2	Business Management
1.2.1	Reserved	1.2.1	Management and Administration
1.2.2	Reserved	1.2.2	Procurement
1.2.3	Resources Management	1.2.3	Resources Management
1.2.3.1	Financial Management
1.2.3.2	Performance Management
1.2.3.3	Organizational Management
1.2.3.4	PI&C Contract Work Breakdown Structure
1.2.4	ISSP Budget Support / Assessments (LOE)	1.2.4	Assessments
1.2.5	Program Scheduling	1.2.5	Program Scheduling
1.2.5.1	Schedule Management
1.2.5.2	Scheduling System Support
1.2.5.3	Team Schedule Support
1.2.5.4	Common Schedules Database Support
1.2.5.5	ISSP Planning Calendar
1.2.5.6	Schedule Risk Assessment
1.2.5.7	Special Schedule Trade Study
1.2.5.8	Integrated Schedule Risk Analysis
		1.2.6	Program Mission Support
		1.2.7	Business Other (AF, MR, Adj.)
		1.2.8	Defense Contract Agency Support
1.3	Configuration Management / Data Integration	1.3	Configuration Management / Data Integration
1.3.1	Configuration Management	1.3.1	Configuration Management
1.3.1.1	Management and Administration	1.3.1.1	Management and Administration
1.3.1.2	Configuration Status Accounting and Verification	1.3.1.2	Configuration Status Accounting and Verification
1.3.1.3	Configuration Control	1.3.1.3	Configuration Control/Change Management
1.3.1.4	Data Management	1.3.1.4	Data Management
1.3.1.5	Software CM Requirements	1.3.1.5	Software Configuration Management
1.3.2	Program Data Integration	1.3.2	Program Data Integration/Vehicle Data Integration (VDI)
1.4	Program Information Technology (IT)	1.4	Program Information Technology (IT)
1.4.1	IT Management and Administration	1.4.1	Management and Administration
1.4.2	IT Systems Management and Operations	1.4.2	Systems Management and Operations

Section J1-G

1

Contract No.: SGS-0311403.00

APPENDIX G-SOW TO PROGRAM WORK BREAKDOWN STRUCTURE MAP

	Program Integration and Control		ISS WBS (SSP-50659 REV-A)
SOW	Title	PWBS	Title
1.4.2.1	IT Life Cycle Management
1.4.2.2	Work Authorization and User Support
		1.4.3	IT Infrastructure
		1.4.3.1	Agency IT Services
		1.4.3.1.1	Outsource Desktop Inits
		1.4.3.1.2	NACC Support Services
		1.4.3.1.3	NISN Services
		1.4.3.2	JSC IT Services
1.5	International Integration	1.5	International Integration
1.5.1	Reserved	1.5.1	Management and Administration
1.5.2	Reserved	1.5.2	International Programmatic Integration
		1.5.2.1	International Policies/ Agreements/ MOUs/ Barters & Offsets
		1.5.2.2	NASA Liaisons to IP’s
		1.5.2.2.1	NASA Liaisons to ESA, CSA, ASI, IMPE, NASDA
		1.5.2.2.2	NASA Mgmt Team Russ
		1.5.2.3	Russian Goods & Services
		1.5.2.4	Russian Enabling
		1.5.2.4.1	Russian Language and Logistics
		1.5.2.4.2	RSA Cosmonaut Representative to NASA
		1.5.2.4.3	NASA Astronaut Rep to Russia (Gagarin Cosmonaut Training Center)
		1.5.2.5	Export Control
1.5.3	IP Elements Integration Management (LOE)	1.5.3	International Elements Integration
1.5.3.1	Systems Engineering and Integration of IP Elements
1.5.3.2	IP Milestone Reviews
1.5.3.3	ISS and Mission Integration
		1.5.4	International Operations
1.6	Human Space Flight Collaboration	1.6	Human Space Flight Collaboration
		1.6.1	Management and Administration
		1.6.2	Capability Upgrades
		1.6.3	Space Commerce
		1.6.4	Space Flight Participants
		1.6.5	Outreach and Education
		1.7	Strategic Initiative
		1.7.1	Program Process Re-engineering
		1.7.2	Knowledge-Based Tools
		1.7.3	Pre-planned Product Improvement (P3I) Planning

Section J1-G

2

Contract No.: SGS-0311403.00

APPENDIX G-SOW TO PROGRAM WORK BREAKDOWN STRUCTURE MAP

	Program Integration and Control		ISS WBS (SSP-50659 REV-A)
SOW	Title	PWBS	Title
		1.7.4	Special Studies/Tasks
2.0	Systems Engineering, Analysis, and Integration	2	ISS Systems Engineering, Analysis, and Integration
2.1	Reserved	2.1	Mgmt and Admin
2.2	Systems Analysis and Integration	2.2	Systems Analysis and Integration
2.2.1	Program Requirements and Interfaces	2.2.1	Requirements and Interfaces
2.2.2	System Performance Analysis and Integration	2.2.2	System Performance Analysis and Integration
2.2.2.1	Mission Analysis and Integration
2.2.2.2	Mission Requirements and Support
2.2.2.3	System Analysis and Integration
2.2.3	Assembly and Configuration Definition/Analysis	2.2.3	Assembly and Configuration Definition/Analysis
2.2.3.1	Assembly Sequence Analysis and Definition
2.2.3.2	External Configuration Analysis and Definition
		2.2.4	Drawing Integration
		2.2.5	Shuttle/Station Integration
3.0	Spacecraft	3.0	Spacecraft
3.1	Reserved	3.1	ISS Spacecraft Management
3.1.1	Vehicle Management and Administration	3.1.1	Vehicle Management and Administration
3.1.1.1	Engineering and Technical Services (LOE)
4.0	Reserved	4.0	Operations
5.0	Reserved	5.0	ISS Research Program
6.0	Safety and Mission Assurance (S&MA)	6.0	Safety and Mission Assurance (S&MA)
6.1	S&MA Management and Administration	6.1	Management and Administration
6.1.1	Mission Assurance and Risk Management Plan
6.1.2	Quality Record Maintenance
6.1.3	AS9100
6.1.4	Audit/Surveillance
6.1.5	Mishap Investigating and Reporting
6.1.6	Safety and Health
6.1.7	Lessons Learned
6.1.8	Document Maintenance
6.2	S&MA Integration	6.2	S&MA Integration
6.2.1	IP Integration
6.2.2	Change Request Integration
6.3	Program Risk	6.3	Risk Management
6.3.1	Risk Process Management
6.3.2	Risk Management
6.3.3	Corrective Action/Preventative Action

Section J1-G

3

Contract No.: SGS-0311403.00

APPENDIX G-SOW TO PROGRAM WORK BREAKDOWN STRUCTURE MAP

	Program Integration and Control		ISS WBS (SSP-50659 REVA)
SOW	Title	PWBS	Title
6.3.4	Risk Management Integration
6.3.5	Probabilistic Risk Assessment (PRA)
6.3.5.1	Probabilistic Risk Assessment Process
6.3.5.2	Probabilistic Risk Assessment Analyses
6.3.5.3	Probabilistic Risk Identification Results
6.4	Reserved	6.4	Safety
6.5	Reserved	6.5	Reliability and Maintainability (R&M)
6.6	Quality Assurance	6.6	Quality Assurance
6.6.1	Problem Reporting System
6.6.1.1	Problem Reporting System Maintenance
6.6.1.2	Problem Reporting System Participation
6.6.2	Element Hardware / Software Acceptance
		6.7	S&MA Operations

Section J1-G

4

Contract NNJ04AA01C PROGRAM INTEGRATION AND CONTROL Attachment J-2

ATTACHMENT J-2

AWARD FEE EVALUATION PLAN

I. INTRODUCTION

In accordance with the provisions of the Federal Acquisition Regulation (FAR), and the NASA and JSC policies, an Award Fee Evaluation Plan is established for evaluation of contractor performance and determination of Award Fees to be earned and payable under this contract. The Award Fee evaluation process is composed of Objective and Subjective assessments by the Government.

The contractor’s performance will be evaluated by the Government, in accordance with the procedures set forth below, at the expiration of each period specified in Appendix IV; Award Fee Schedule. The evaluations to be performed by the Government will be based on the Government’s assessment of the contractor’s accomplishment of the various areas of work covered by the Statement of Work and authorized Task Orders, in accordance with the factors, weightings, procedures, and other provisions set forth below.

Award Fee Provisions

Award Fee provisions have been established to motivate the contractor to strive for excellence in managerial, technical, schedule, and cost performance. For each period, the contractor can earn Award Fee from a minimum of zero dollars to the maximum available Award Fee shown in Appendix IV. Changes to these Award Fee provisions will be via a bilateral modification, except for evaluation criteria and weightings that are established unilaterally by the Government. The contractor will be informed of any changes to the evaluation criteria or the weightings prior to the affected Award Fee period.

Each Award Fee evaluation rating is considered to be discrete and final. Unearned Award Fee in a given period is lost and cannot be reassessed or moved into subsequent fee evaluation periods for consideration. An overall performance evaluation and Award Fee determination of zero may be made for any evaluation period when there is a major breach of safety or security as defined in NFS 1852.223-75, Major Breach of Safety or Security.

The Government shall pay fee to the contractor in accordance with the Section G clause entitled, “AWARD FEE FOR SERVICE CONTRACTS.”

J2-1

Contract NNJ04AA01C PROGRAM INTEGRATION AND CONTROL Attachment J-2

[DIQ Provisions: Evaluations will be based upon the contractor’s safety, technical, and management performance measured against mutually agreed to objective performance criteria specified in the published plan for each performance period.

Evaluations will also be based upon subjective assessments of the contractor’s performance against Associate Contractor Agreement effectiveness, customer satisfaction, and specific Areas of Emphasis (AOE) published for each performance period.

Cost performance for the IDIQ portion will be evaluated based on the contractor’s ability to control, adjust, and accurately project contract costs (based on estimated costs of authorized task orders) for each Award Fee evaluation period.

LOE Provisions: Evaluations will be based upon assessments of the contractor’s performance related to the LOE work for technical, management, and cost control including Associate Contractor Agreement effectiveness and customer satisfaction.

Cost performance for the LOE portion will be evaluated against an overall Wrap Rate (based on all costs of the task order divided by the number of estimated hours) and against the actual hours worked during the Award Fee evaluation period.

General Provisions: In order to earn any Award Fee, the contractor must receive a total numerical rating higher than 60. Appendix 1, Numerical Ranges and Adjective Definitions, provides the performance level definition adjective ratings and corresponding numerical scores that will be used in evaluating performance. The numerical grade ranges corresponding to the adjective ratings and their conversion to percent of available Award Fee earned is set forth in Appendix III.

The following rules apply for Cost Control for both the IDIQ and LOE areas:

• If the contractor’s average score for all other evaluation factors is 81 or greater (very good or excellent) and a cost underrun is achieved, the contractor can receive up to the maximum score for cost control, depending on the size of the underrun.

• If the average numerical score for all other factors is 80 or less but at least 61 (good or satisfactory) and an underrun is achieved, a contractor will only be rewarded for the cost underrun as if the contractor had met the estimated contract costs.

• If the average score for the non-cost factors is less than 61, the contractor will receive a score of zero for cost control.

J2-2

Contract NNJ04AA01C PROGRAM INTEGRATION AND CONTROL Attachment J-2

II. ORGANIZATIONAL STRUCTURE

Performance Evaluation Board Integration Team (PEB-IT)

The PEB-IT will be composed of selected NASA technical and administrative personnel and headed by the Contracting Officer’s Technical Representative (COTR). The COTR will be the focal point for the accumulation and development of Award Fee evaluation reports, reviews, and presentations, as well as discussions with contractor management on Award Fee matters. The PEB-IT will evaluate the contractor’s performance as related to the factors listed in paragraph III below.

This team will furnish the contractor interim performance evaluations every three months (after 6 months for the first evaluation period). It shall be the purpose of these communications to discuss any specific areas where the contractor has excelled and areas where future improvement is necessary.

The PEB-IT will prepare a 6-month evaluation report for review by the PEB for each evaluation period. This report will include a recommendation to the PEB as to the adjective rating and numerical score to be assigned for the contractor’s performance for the period evaluated.

Performance Evaluation Board (PEB)

The PEB will be appointed by the Fee Determination Official (FDO). A PEB, comprised of selected technical and administrative personnel of NASA, will assess the contractor’s performance after each evaluation period to determine whether, and to what extent, the contractor’s performance during the evaluation period is deserving of the payment of Award Fee. The Board, at the end of each evaluation period, will approve the PEB-IT report and prepare a summary of the evaluations for review by the FDO. This summary will include a recommendation to the FDO as to the adjective rating and numerical score to be assigned for the contractor’s performance in the preceding evaluation period.

Fee Determination Official (FDO)

The FDO, a senior NASA official, after considering available pertinent information and recommendations, will make a performance determination for each period in accordance with the provisions of this Award Fee Plan and the Section G clause entitled, AWARD FEE FOR SERVICE CONTRACTS.

III. EVALUATION PROCEDURES

Award Fee Periods

Each Award Fee period shall be 6 months in length, except for the first Award Fee period, which shall be 9 months. The contractor’s performance will be assessed at the mid-point of each

J2-3

Contract NNJ04AA01C PROGRAM INTEGRATION AND CONTROL Attachment J-2

evaluation period (at the end of the 6^th month for the first evaluation period). Contractor performance levels may be communicated by the COTR or the Contracting Officer at other times during the evaluation period.

No later than 30 days prior to the start of each Award Fee evaluation period, the contractor may submit to the Contracting Officer recommended objective performance metrics, weightings, and Areas of Emphasis (AOEs) for consideration by the Government to be used for the ensuing evaluation period.

Objective performance metrics and AOEs will be established for each evaluation period by the Government and communicated to the contractor at least 15 calendar days prior to the start of each evaluation period. The Government may unilaterally change the weightings of the criteria from period to period. However, cost control will not fall below 25 percent.

Contractor Self Evaluation and Submissions

The contractor shall furnish a Self-Evaluation for each evaluation period. The Self-Evaluation must be received by the Contracting Officer not later than 30 days prior to the end of the period. The contractor may present to the PEB an oral summary of its Self-Evaluation.

The contractor will be furnished a copy of the PEB’s findings, conclusions, and fee recommendation. The contractor will be afforded the opportunity to submit for consideration of the FDO: (a) proposed evaluations or conclusions, or (b) exceptions to the evaluations, conclusions, or fee recommendations of the PEB, and (c) supporting reasons for such exceptions or proposed evaluations or conclusions. The contractor’s submissions must be made in writing and must be submitted through the Contracting Officer to the FDO within 5 working days from the date of the contractor’s receipt of the PEB findings and fee recommendations.

In the event the FDO has not received a submission from the contractor, the performance determination will not be considered final until expiration of the 5-working day period prescribed above for contractor submissions unless the contractor has affirmatively indicated, in writing, that no contractor submission will be made.

The contractor shall submit to the Contracting Officer a Corrective Action Plan (CAP) for any weaknesses or failing Objective performance as are identified by the Government as part of the evaluation. The CAP shall be submitted within 30 working days after the final performance determination for each evaluation period. Corrective Actions will be closed by concurrence from the Contracting Officer and the COTR.

J2-4

Contract NNJ04AA01C PROGRAM INTEGRATION AND CONTROL Attachment J-2

IV. EVALUATION CRITERIA AND WEIGHTINGS

IDIQ EVALUATION CRITERIA

	Weightings
I. OBJECTIVE CRITERIA	50%
a. Safety
b. Technical
c. Management
II. SUBJECTIVE CRITERIA	25%
a. ACA Effectiveness
b. Customer Satisfaction
c. Areas of Emphasis
III. COST CONTROL	25%
TOTAL	100%
LOE EVALUATION CRITERIA
I. TECHNICAL PERFORMANCE	50%
a. Quality of Work
b. Efficiency of Work
II. MANAGEMENT	25%
III. COST CONTROL	25%
TOTAL	100%

APPENDICES:

Appendix I, Numerical Ranges and Adjective Definitions, sets forth the adjective ratings, definitions, and associated numerical ranges to be used to define the various levels of performance under the contract.

Appendix II, Objective Performance Metrics Areas: Metrics for each area to be developed for each evaluation period.

Appendix III, Score Conversion Chart

Appendix IV, Award Fee Schedule

J2-5

Contract NNJ04AA01C PROGRAM INTEGRATION AND CONTROL Attachment J-2

Appendix I

Numerical Ranges and Adjective Definitions

ADJECTIVE RATING	RANGE OF WEIGHTINGS	DESCRIPTION
Excellent	100 - 91	Of exceptional merit; exemplary performance in a timely, efficient and economical manner; very minor (if any) deficiencies with no adverse effect on overall performance.
Very Good	90 - 81	Very effective performance, fully responsive to contract; contract requirements accomplished in a timely, efficient and economical manner for the most part; only minor deficiencies.
Good	80 - 71	Effective performance; fully responsive to contract requirements; reportable deficiencies, but with little identifiable effect on overall performance.
Satisfactory	70 - 61	Meets or slightly exceeds minimum acceptable standards; adequate results; reportable deficiencies with identifiable, but not substantial, effects on overall performance.
Poor/Unsatisfactory	60 - 0	Does not meet minimum acceptable standards in one or more areas; remedial action required in one or more areas; deficiencies in one or more areas, which adversely affect overall performance.

J2-6

Contract NNJ04AA01C PROGRAM INTEGRATION AND CONTROL Attachment J-2

Appendix II

Objective Performance Metrics Areas

Total PI&C Contract

Program Management

Business Management

Configuration Management & Data Integration

Program Information Technology (IT)

Systems Analysis and Integration

Safety and Mission Assurance (S&MA)

Objective Performance Metrics will be established prior to each Award Fee Evaluation Period. The Metrics will be useful measurements of performance based on Outputs or Outcomes utilizing measurement factors for each as described below:

Output Factors: The tabulation, calculation, or recording of activity or effort that can be expressed in a quantitative or qualitative manner. These factors may be more effective for routine efforts, such as for meeting deliverables or schedules. The factors are to provide a logical connection between the reported measures and the objectives of this contract, which include the ISS Program’s Mission, Goals and Objectives. (Example: Process and close 100 requests for IT support.)

Outcome Factors: An assessment of the results of an activity compared to its intended purpose. These factors are most effective for non-routine efforts. Outcome-based factors are to provide the best indicator of overall success to a particular area of performance. (Example: Ensure that 99.5% Cost Reporting Deliverables are delivered on time.)

J2-7

Contract NNJ04AA01C PROGRAM INTEGRATION AND CONTROL Attachment J-2

Appendix III

SCORE CONVERSION CHART

AWARD FEE SCORE	ADJECTIVE RATING	PERCENTAGE OF AVAILABLE FEE
100		100%
99		99.0
98		98.0
97		97.0
96	EXCELLENT	96.0
95		95.0
94		94.0
93		93.0
92		92.0
91		91.0
90		90.0
89		89.0
88		88.0
87		87.0
86		86.0
85	VERY GOOD	85.0
84		84.0
83		83.0
82		82.0
81		81.0
80		80.0
79		79.0
78		78.0
77		77.0
76		76.0
75	GOOD	75.0
74		74.0
73		73.0
72		72.0
71		71.0
70		70.0
69		69.0
68		68.0
67		67.0
66		66.0
65	SATISFACTORY	65.0
64		64.0
63		63.0
62		62.0
61		61.0
60 and below		0.0

J2-8

ATTACHMENT J-4

DOL WAGE DETERMINATION

Section J4

1

	NOTICE OF INTENTION TO MAKE
January 1996	A SERVICE CONTRACT AND RESPONSE TO
	NOTICE
U.S. DEPARTMENT OF LABOR		A-2241840
		Memorandum
EMPLOYMENT STANDARDS	(See Instructions on Reverse)
ADMINISTRATION

MAIL TO:			2.      Estimated solicitation date (use numerals)          New Procurement
ADMINISTRATOR			Month 02	Day 28	Year 03
	Wage and Hour Division    U.S. Department of Labor Washington, DC 20210		3.      Estimated date bids or proposals to be opened or negotiations begun (use numerals)
			Month 06	Day 13	Year 03
			4.      Date contract performance to begin (use numerals)
			Month 01	Day 01	Year 04
5.      PLACE(S) OF PERFORMANCE HARRIS COUNTY, TX		6.      SERVICES TO BE PERFORMED (describe) II:     International Space Station Program Integration and Control Contract          WD Contract Period: 01/01/04 to 12/31/04
7.      INFORMATION ABOUT PERFORMANCE
A. x  Services now performed by a Contractor		B. ¨  Services now performed by federal employees		C. ¨  Services not presently being performed
8. IF BOX A IN ITEM 7 IS MARKED, COMPLETE ITEM 8 AS APPLICABLE

a.      Name and address of incumbent contractor See attached list	b.      Number(s) of any wage determination(s) in incumbent’s contract WD 94-2516
c.      Name(s) of union(s) if services are being performed under collective bargaining agreement(s). Important: Attach copies of current applicable collective bargaining agreements		RESPONSE TO NOTICE (by Department of Labor)
None		A.     x The attached wage determination(s) listed below apply to procurement. WD 94-2516 Rev 21
9.      OFFICIAL SUBMITTING NOTICE
SIGNED:	DATE	B.     ¨ As of this date, no wage determination applicable to the specified locality and classes of employees is in effect.
TYPE OR PRINT NAME Connie R. Pritchard Contract Labor Relations Officer	TELEPHONE NO. 281-483-4121	C.     ¨ From information supplied, the Service Contract Act does not apply (see attached explanation).
10.    TYPE OR PRINT NAME AND TITLE OF PERSON TO WHOM RESPONSE IS TO BE SENT AND NAME AND ADDRESS OF DEPARTMENT OR AGENCY, BUREAU, DIVISION, ETC.
		D.     ¨ Notice returned for additional information
NASA Johnson Space Center		(see attached explanation)

Connie R. Pritchard, Mail Code BA2	Signed:
2101 NASA Parkway Houston, TX 77058		(U.S. Department of Labor)
		(Date)
98-103	COMPUTER-GENERATED                    1/96

Section J4

2

SF98 Request

A2241840

International Space Station Program Integration and Control Contract

NASA Johnson Space Center

Item # 8a Name and address of incumbent contractors that are currently performing a portion of the work to be included in this competition:

NAS 9-00125	Johnson Engineering 12130 Highway 3, Building 1 Webster, TX 77598-1504
NAS 9-01054	The Futron Corporation 7315 Wisconsin Avenue, Suite 900W Bethesda, MD 20814-3202
NAS 9-01090	Blackhawk Management Corp. 1335 Regents Park Drive, Suite 130 Houston, TX 77058
NAS 9-98123	Muniz Engineering 16903 Bucaneer Lane, Suite 200 Houston, TX 77058
NAS 15-10215	Barrios Technology, Inc. 2525 Bay Area Blvd., Suite 300 Houston, TX 77058
NAS 9-19180	SAIC 2200 Space Park Dr., Suite 200 Houston, TX 77058
NAS 15-10000	Boeing Company 13100 Space Center Blvd. Houston, TX 77059
NAS 9-20000	United Space Alliance 1150 Gemini Houston, TX 77058-2708
NAS 9-19100	Lockheed Martin 2400 NASA Parkway Houston, TX 77258-8561

Section J4

3

94-2516 TX,HOUSTON         06/10/03

***FOR OFFICIAL USE ONLY BY FEDERAL AGENCIES PARTICIPATING IN MOU

WITH DOL***

WASHINGTON D.C. 20210

		Wage Determination No.: 1994-2516
William W.Gross	Division of	Revision No.: 21
Director	Wage Determinations	Date Of Last Revision: 06/03/2003

State: Texas

Area: Texas Counties of Austin, Brazoria, Chambers, Colorado, Fort Bend, Galveston, Grimes, Harris, Houston, Jackson, Lavaca, Liberty, Madison, Matagorda, Montgomery, San Jacinto, Trinity, Walker, Waller, Washington, Wharton

**Fringe Benefits Required Follow the Occupational Listing**

OCCUPATION CODE - TITLE	MINIMUM WAGE RATE
01000 - Administrative Support and Clerical Occupations
01011 - Accounting Clerk I	11.45
01012 - Accounting Clerk II	12.35
01013 - Accounting Clerk III	13.86
01014 - Accounting Clerk IV	15.29
01030 - Court Reporter	16.81
01050 - Dispatcher, Motor Vehicle	14.00
01060 - Document Preparation Clerk	11.66
01070 - Messenger (Courier)	9.87
01090 - Duplicating Machine Operator	10.72
01110 - Film/Tape Librarian	11.50
01115 - General Clerk I	9.09
01116 - General Clerk II	9.86
01117 - General Clerk III	12.77
01118 - General Clerk IV	14.65
01120 - Housing Referral Assistant	17.60
01131 - Key Entry Operator I	10.76
01132 - Key Entry Operator II	13.76
01191 - Order Clerk I	12.51
01192 - Order Clerk II	14.27
01261 - Personnel Assistant (Employment) I	12.28
01262 - Personnel Assistant (Employment) II	13.79
01263 - Personnel Assistant (Employment) III	16.50
01264 - Personnel Assistant (Employment) IV	17.63
01270 - Production Control Clerk	17.94
01290 - Rental Clerk	14.34
01300 - Scheduler, Maintenance	14.52
01311 - Secretary I	14.52
01312 - Secretary II	16.12
01313 - Secretary III	17.60

Section J4

4

01314 - Secretary IV	20.69
01315 - Secretary V	25.57
01320 - Service Order Dispatcher	13.30
01341 - Stenographer I	12.06
01342 - Stenographer II	14.34
01400 - Supply Technician	20.69
01420 - Survey Worker (Interviewer)	14.26
01460 - Switchboard Operator-Receptionist	10.65
01510 - Test Examiner	16.12
01520 - Test Proctor	16.12
01531 - Travel Clerk I	11.09
01532 - Travel Clerk II	11.95
01533 - Travel Clerk III	12.79
01611 - Word Processor I	11.45
01612 - Word Processor II	13.79
01613 - Word Processor III	16.27
03000 - Automatic Data Processing Occupations
03010 - Computer Data Librarian	11.98
03041 - Computer Operator I	12.05
03042 - Computer Operator II	14.61
03043 - Computer Operator III	16.59
03044 - Computer Operator IV	22.60
03045 - Computer Operator V	23.59
03071 - Computer Programmer I(1)	19.99
03072 - Computer Programmer II (1)	24.38
03073 - Computer Programmer III (1)	27.62
03074 - Computer Programmer IV (1)	27.62
03101 - Computer Systems Analyst I(1)	25.70
03102 - Computer Systems Analyst II (1)	27.62
03103 - Computer Systems Analyst III (1)	27.62
03160 - Peripheral Equipment Operator	12.36
05000 - Automotive Service Occupations
05005 - Automotive Body Repairer, Fiberglass	21.26
05010 - Automotive Glass Installer	19.86
05040 - Automotive Worker	19.15
05070 - Electrician, Automotive	20.76
05100 - Mobile Equipment Servicer	17.65
05130 - Motor Equipment Metal Mechanic	22.47
05160 - Motor Equipment Metal Worker	19.15
05190 - Motor Vehicle Mechanic	22.47
05220 - Motor Vehicle Mechanic Helper	16.93
05250 - Motor Vehicle Upholstery Worker	18.17
05280 - Motor Vehicle Wrecker	19.15
05310 - Painter, Automotive	20.76
05340 - Radiator Repair Specialist	20.96
05370 - Tire Repairer	14.40
05400 - Transmission Repair Specialist	23.06

Section J4

5

07000 - Food Preparation and Service Occupations
(not set) - Food Service Worker	7.39
07010 - Baker	8.93
07041 - Cook I	8.19
07042 - Cook II	8.83
07070 - Dishwasher	7.16
07130 - Meat Cutter	11.33
07250 - Waiter/Waitress	6.83
09000 - Furniture Maintenance and Repair Occupations
09010 - Electrostatic Spray Painter	16.65
09040 - Furniture Handler	11.74
09070 - Furniture Refinisher	12.78
09100 - Furniture Refinisher Helper	13.74
09110 - Furniture Repairer, Minor	15.29
09130 - Upholsterer	16.65
11030 - General Services and Support Occupations
11030 - Cleaner, Vehicles	7.54
11060 - Elevator Operator	6.90
11090 - Gardener	10.26
11121 - House Keeping Aid I	6.79
11122 - House Keeping Aid II	6.90
11150 - Janitor	7.54
11210 - Laborer, Grounds Maintenance	8.23
11240 - Maid or Houseman	6.79
11270 - Pest Controller	10.73
11300 - Refuse Collector	7.54
11330 - Tractor Operator	9.66
11360 - Window Cleaner	8.23
12000 - Health Occupations
12020 - Dental Assistant	12.93
12040 - Emergency Medical Technician (EMT)
Paramedic/Ambulance Driver	11.75
12071 - Licensed Practical Nurse I	12.86
12072 - Licensed Practical Nurse II	14.63
12073 - Licensed Practical Nurse III	15.94
12100 - Medical Assistant	11.41
12130 - Medical Laboratory Technician	13.61
12160 - Medical Record Clerk	12.09
12190 - Medical Record Technician	14.56
12221 - Nursing Assistant I	7.08
12222 - Nursing Assistant II	9.82
12223 - Nursing Assistant III	10.62
12224 - Nursing Assistant IV	12.40
12250 - Pharmacy Technician	13.10
12280 - Phlebotomist	13.30
12311 - Registered Nurse I	20.25
12312 - Registered Nurse II	24.95

Section J4

6

12313 - Registered Nurse II, Specialist	26.51
12314 - Registered Nurse III	31.37
12315 - Registered Nurse III, Anesthetist	31.37
12316 - Registered Nurse IV	35.94
13000 - Information and Arts Occupations
13002 - Audiovisual Librarian	18.40
13011 - Exhibits Specialist I	19.15
13012 - Exhibits Specialist II	24.55
13013 - Exhibits Specialist III	28.72
13041 - Illustrator I	17.60
13042 - Illustrator II	22.56
13043 - Illustrator III	26.40
13047 - Librarian	21.17
13050 - Library Technician	12.96
13071 - Photographer I	13.93
13072 - Photographer II	17.60
13073-Photographer III	22.56
13074 - Photographer IV	26.40
13075 - Photographer V	30.06
15000 - Laundry, Dry Cleaning, Pressing and Related Occupations
15010 - Assembler	7.68
15030 - Counter Attendant	7.68
15040 - Dry Cleaner	9.65
15070 - Finisher, Flatwork, Machine	7.68
15090 - Presser, Hand	7.68
15100 - Presser, Machine, Drycleaning	7.68
15130 - Presser, Machine, Shirts	7.68
15160 - Presser, Machine, Wearing Apparel, Laundry	7.68
15190 - Sewing Machine Operator	10.22
15220 - Tailor	11.02
15250 - Washer, Machine	8.42
19000 - Machine Tool Operation and Repair Occupations
19010 - Machine-Tool Operator (Toolroom)	16.65
19040 - Tool and Die Maker	19.20
21000 - Material Handling and Packing Occupations
21010 - Fuel Distribution System Operator	16.33
21020 - Material Coordinator	17.64
21030 - Material Expediter	17.64
21040 - Material Handling Laborer	11.72
21050 - Order Filler	10.53
21071 - Forklift Operator	12.84
21080 - Production Line Worker (Food Processing)	12.84
21100 - Shipping/Receiving Clerk	11.79
21130 - Shipping Packer	12.22
21140 - Store Worker I	9.51
21150 - Stock Clerk (Shelf Stocker; Store Worker II)	12.79
21210 - Tools and Parts Attendant	13.58

Section J4

7

21400 - Warehouse Specialist	12.84
23000 - Mechanics and Maintenance and Repair Occupations
23010 - Aircraft Mechanic	21.09
23040 - Aircraft Mechanic Helper	16.43
23050 - Aircraft Quality Control Inspector	22.02
23060 - Aircraft Servicer	18.28
23070 - Aircraft Worker	19.26
23100 - Appliance Mechanic	16.65
23120 - Bicycle Repairer	13.91
23125-Cable Splicer	19.33
23130 - Carpenter, Maintenance	17.01
23140 - Carpet Layer	15.92
23160 - Electrician, Maintenance	21.45
23181 - Electronics Technician, Maintenance I	13.36
23182 - Electronics Technician, Maintenance II	19.02
23183 - Electronics Technician, Maintenance III	22.33
23260 - Fabric Worker	15.00
23290 - Fire Alarm System Mechanic	17.43
23310 - Fire Extinguisher Repairer	14.40
23340 - Fuel Distribution System Mechanic	19.17
23370 - General Maintenance Worker	15.46
23400 - Heating, Refrigeration and Air Conditioning Mechanic	17.43
23430 - Heavy Equipment Mechanic	17.43
23440 - Heavy Equipment Operator	17.43
23460 - Instrument Mechanic	17.43
23470 - Laborer	8.82
23500 - Locksmith	16.65
23530 - Machinery Maintenance Mechanic	19.81
23550 - Machinist, Maintenance	20.16
23580 - Maintenance Trades Helper	13.58
23640 - Millwright	19.02
23700 - Office Appliance Repairer	16.65
23740 - Painter, Aircraft	18.32
23760 - Painter, Maintenance	16.65
23790 - Pipefitter, Maintenance	19.33
23800 - Plumber, Maintenance	17.15
23820 - Pneudraulic Systems Mechanic	17.43
23850 - Rigger	17.43
23870 - Scale Mechanic	15.92
23890 - Sheet-Metal Worker, Maintenance	17.43
23910 - Small Engine Mechanic	15.92
23930 - Telecommunication Mechanic I	19.17
23931 - Telecommunication Mechanic II	20.02
23950 - Telephone Lineman	17.43
23960 - Welder, Combination, Maintenance	17.43
23965 - Well Driller	17.43
23970 - Woodcraft Worker	17.43
23980 - Woodworker	9.64

Section J4

8

24000 - Personal Needs Occupations
24570 - Child Care Attendant	9.68
24580 - Child Care Center Clerk	12.06
24600 - Chore Aid	6.15
24630 - Homemaker	15.41
25000 - Plant and System Operation Occupations
25010 - BoilerTender	19.86
25040 - Sewage Plant Operator	17.00
25070 - Stationary Engineer	19.86
25190 - Ventilation Equipment Tender	14.33
25210 - Water Treatment Plant Operator	16.65
27000 - Protective Service Occupations
(not set) - Police Officer	19.63
27004 - Alarm Monitor	12.98
27006 - Corrections Officer	18.04
27010 - Court Security Officer	18.04
27040 - Detention Officer	18.04
27070 - Firefighter	17.70
27101 - Guard I	10.02
27102 - GuardII	17.90
28000 - Stevedoring/Longshoremen Occupations
28010 - Blocker and Bracer	15.18
28020 - Hatch Tender	15.18
28030 - Line Handler	15.18
28040 - Stevedore I	14.21
28050 - Stevedore II	16.17
29000 - Technical Occupations
21150 - Graphic Artist	23.11
29010 - Air Traffic Control Specialist, Center (2)	31.76
29011 - Air Traffic Control Specialist, Station (2)	21.90
29012 - Air Traffic Control Specialist, Terminal (2)	24.12
29023 - Archeological Technician I	19.34
29024 - Archeological Technician II	21.66
29025 - Archeological Technician III	26.79
29030 - Cartographic Technician	26.79
29035 - Computer Based Training (CBT) Specialist/ Instructor	25.70
29040 - Civil Engineering Technician	24.82
29061 - Drafter I	15.37
29062 - Drafter II	15.85
29063 - Drafter III	20.90
29064 - Drafter IV	26.79
29081 - Engineering Technician I	14.00
29082 - Engineering Technician II	17.40
29083 - Engineering Technician III	20.25
29084 - Engineering Technician IV	25.71
29085 - Engineering Technician V	33.57
29086 - Engineering Technician VI	38.16
29090 - Environmental Technician	24.76

Section J4

9

29100 - Flight Simulator/Instructor (Pilot)	32.45
29160 - Instructor	21.34
29210 - Laboratory Technician	16.34
29240 - Mathematical Technician	28.04
29361 - Paralegal/Legal Assistant I	17.19
29362 - Paralegal/Legal Assistant II	20.65
29363 - Paralegal/Legal Assistant III	25.71
29364 - Paralegal/Legal Assistant IV	28.58
29390 - Photooptics Technician	24.76
29480 - Technical Writer	21.85
29491 - Unexploded Ordnance (UXO) Technician I	20.19
29492 - Unexploded Ordnance (UXO) Technician II	24.42
29493 - Unexploded Ordnance (UXO) Technician III	30.65
29494 - Unexploded (UXO) Safety Escort	20.19
29495 - Unexploded (UXO) Sweep Personnel	20.19
29620 - Weather Observer, Senior (3)	21.81
29621 - Weather Observer, Combined Upper Air and Surface Programs (3)	17.99
29622 - Weather Observer, Upper Air	17.99
31000 - Transportation/ Mobile Equipment Operation Occupations
31030 - BusDriver	14.24
31260 - Parking and Lot Attendant	7.38
31290 - Shuttle Bus Driver	10.80
31300-Taxi Driver	8.01
31361 - Truckdriver, Light Truck	10.96
31362 - Truckdriver, Medium Truck	14.24
31363 - Truckdriver, Heavy Truck	15.22
31364 - Truckdriver, Tractor-Trailer	15.22
99000 - Miscellaneous Occupations
99020 - Animal Caretaker	8.13
99030 - Cashier	7.90
99041 - Carnival Equipment Operator	9.36
99042 - Carnival Equipment Repairer	9.84
99043 - Carnival Worker	7.22
99050 - Desk Clerk	9.68
99095 - Embalmer	19.59
99300 - Lifeguard	10.61
99310 - Mortician	21.55
99350 - Park Attendant (Aide)	13.32
99400 - Photofinishing Worker (Photo Lab Tech., Darkroom Tech)	8.62
99500 - Recreation Specialist	14.74
99510 - Recycling Worker	11.12
99610 - Sales Clerk	10.30
99620 - School Crossing Guard (Crosswalk Attendant)	7.54
99630 - Sport Official	9.48
99658 - Survey Party Chief (Chief of Party)	16.58
99659 - Surveying Technician (Instr. Person/Surveyor Asst./Instr.)	14.34
99660 - Surveying Aide	11.35
99690 - Swimming Pool Operator	12.60

Section J4

10

99720 - Vending Machine Attendant	10.49
99730 - Vending Machine Repairer	12.60
99740 - Vending Machine Repairer Helper	10.76

ALL OCCUPATIONS LISTED ABOVE RECEIVE THE FOLLOWING BENEFITS:

HEALTH & WELFARE: Life, accident, and health insurance plans, sick leave, pension plans, civic and personal leave, severance pay, and savings and thrift plans. Minimum employer contributions costing an average of $2.56 per hour computed on the basis of all hours worked by service employees employed on the contract.

VACATION: 2 weeks paid vacation after 1 year of service with a contractor or successor; 3 weeks after 5 years, and 4 weeks after 15 years. Length of service includes the whole span of continuous service with the present contractor or successor, wherever employed, and with the predecessor contractors in the performance of similar work at the same Federal facility. (Reg. 29 CFR 4.173)

HOLIDAYS: A minimum of ten paid holidays per year: New Year’s Day, Martin Luther King Jr.’s Birthday, Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans’ Day, Thanksgiving Day, and Christmas Day. (A contractor may substitute for any of the named holidays another day off with pay in accordance with a plan communicated to the employees involved.) (See 29 CFR 4.174)

THE OCCUPATIONS WHICH HAVE PARENTHESES AFTER THEM RECEIVE THE FOLLOWING BENEFITS (as numbered):

1) Does not apply to employees employed in a bona fide executive, administrative, or professional capacity as defined and delineated in 29 CFR 541. (See CFR 4.156)

2) APPLICABLE TO AIR TRAFFIC CONTROLLERS ONLY - NIGHT DIFFERENTIAL: An employee is entitled to pay for all work performed between the hours of 6:00 P.M. and 6:00 A.M. at the rate of basic pay plus a night pay differential amounting to 10 percent of the rate of basic pay.

3) WEATHER OBSERVERS - NIGHT PAY & SUNDAY PAY: If you work at night as part of regular tour of duty, you will earn a night differential and receive an additional 10% of basic pay for any hours worked between 6pm and 6am. If you are a full-time employed (40 hours a week) and Sunday is part of your regularly scheduled workweek, you are paid at your rate of basic pay plus a Sunday premium of 25% of your basic rate for each hour of Sunday work which is not overtime (i.e. occasional work on Sunday outside the normal tour of duty is considered overtime work).

HAZARDOUS PAY DIFFERENTIAL: An 8 percent differential is applicable to employees employed in a position that represents a high degree of hazard when working with or in close proximity to ordinance, explosives, and incendiary materials. This includes work such as screening, blending, dying, mixing, and pressing of sensitive ordance, explosives, and pyrotechnic compositions such as lead azide, black powder and photoflash powder. All dry-house activities involving propellants or explosives. Demilitarization, modification, renovation, demolition, and maintenance operations on sensitive ordnance, explosives and incendiary materials. All operations involving regrading and cleaning of artillery ranges.

Section J4

11

A 4 percent differential is applicable to employees employed in a position that represents a low degree of hazard when working with, or in close proximity to ordance, (or employees possibly adjacent to) explosives and incendiary materials which involves potential injury such as laceration of hands, face, or arms of the employee engaged in the operation, irritation of the skin, minor burns and the like; minimal damage to immediate or adjacent work area or equipment being used. All operations involving, unloading, storage, and hauling of ordance, explosive, and incendiary ordnance material other than small arms ammunition. These differentials are only applicable to work that has been specifically designated by the agency for ordance, explosives, and incendiary material differential pay.

** UNIFORM ALLOWANCE **

If employees are required to wear uniforms in the performance of this contract (either by the terms of the Government contract, by the employer, by the state or local law, etc.), the cost of furnishing such uniforms and maintaining (by laundering or dry cleaning) such uniforms is an expense that may not be borne by an employee where such cost reduces the hourly rate below that required by the wage determination. The Department of Labor will accept payment in accordance with the following standards as compliance:

The contractor or subcontractor is required to furnish all employees with an adequate number of uniforms without cost or to reimburse employees for the actual cost of the uniforms. In addition, where uniform cleaning and maintenance is made the responsibility of the employee, all contractors and subcontractors subject to this wage determination shall (in the absence of a bona fide collective bargaining agreement providing for a different amount, or the furnishing of contrary affirmative proof as to the actual cost), reimburse all employees for such cleaning and maintenance at a rate of $3.35 per week (or $.67 cents per day). However, in those instances where the uniforms furnished are made of “wash and wear” materials, may be routinely washed and dried with other personal garments, and do not require any special treatment such as dry cleaning, daily washing, or commercial laundering in order to meet the cleanliness or appearance standards set by the terms of the Government contract, by the contractor, by law, or by the nature of the work, there is no requirement that employees be reimbursed for uniform maintenance costs.

** NOTES APPLYING TO THIS WAGE DETERMINATION **

Source of Occupational Title and Descriptions:

The duties of employees under job titles listed are those described in the “Service Contract Act Directory of Occupations,” Fourth Edition, January 1993, as amended by the Third Supplement, dated March 1997, unless otherwise indicated. This publication may be obtained from the Superintendent of Documents, at 202-783-3238, or by writing to the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402. Copies of specific job descriptions may also be obtained from the appropriate contracting officer.

REQUEST FOR AUTHORIZATION OF ADDITIONAL CLASSIFICATION AND WAGE RATE {Standard Form 1444 (SF 1444)}

Conformance Process:

The contracting officer shall require that any class of service employee which is not listed herein and which is to be employed under the contract (i.e., the work to be performed is not performed

Section J4

12

by any classification listed in the wage determination), be classified by the contractor so as to provide a reasonable relationship (i.e., appropriate level of skill comparison) between such unlisted classifications and the classifications listed in the wage determination. Such conformed classes of employees shall be paid the monetary wages and furnished the fringe benefits as are determined. Such conforming process shall be initiated by the contractor prior to the performance of contract work by such unlisted class(es) of employees. The conformed classification, wage rate, and/or fringe benefits shall be retroactive to the commencement date of the contract. {See Section 4.6 (C)(vi)} When multiple wage determinations are included in a contract, a separate SF 1444 should be prepared for each wage determination to which a class(es) is to be conformed.

The process for preparing a conformance request is as follows:

1) When preparing the bid, the contractor identifies the need for a conformed occupation) and computes a proposed rate).

2) After contract award, the contractor prepares a written report listing in order proposed classification title), a Federal grade equivalency (FGE) for each proposed classification), job description), and rationale for proposed wage rate), including information regarding the agreement or disagreement of the authorized representative of the employees involved, or where there is no authorized representative, the employees themselves. This report should be submitted to the contracting officer no later than 30 days after such unlisted class(es) of employees performs any contract work.

3) The contracting officer reviews the proposed action and promptly submits a report of the action, together with the agency’s recommendations and pertinent information including the position of the contractor and the employees, to the Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, for review. (See section 4.6(b)(2) of Regulations 29 CFR Part 4).

4) Within 30 days of receipt, the Wage and Hour Division approves, modifies, or disapproves the action via transmittal to the agency contracting officer, or notifies the contracting officer that additional time will be required to process the request.

5) The contracting officer transmits the Wage and Hour decision to the contractor.

6) The contractor informs the affected employees.

Information required by the Regulations must be submitted on SF 1444 or bond paper.

When preparing a conformance request, the “Service Contract Act Directory of Occupations” (the Directory) should be used to compare job definitions to insure that duties requested are not performed by a classification already listed in the wage determination. Remember, it is not the job title, but the required tasks that determine whether a class is included in an established wage determination. Conformances may not be used to artificially split, combine, or subdivide classifications listed in the wage determination.

Section J4

13

STANDARD FORM 98a February 1973 U.S. DEPARTMENT OF LABOR Employment Standards Administration NOTICE OF INTENTION TO MAKE A SERVICE CONTRACT AND RESPONSE TO NOTICE (Attachment A) 11. Notice No. NASA A2241840 MOU

12 CLASSES OF SERVICE EMPLOYEES TO BE EMPLOYED ON CONTRACT Harris County, TX ; WD 94-2516 Nonexempt/Nonunion: Occupations included in “DOL Directory”	13. NUMBER OF EMPLOYEES IN EACH CLASS	14. HOURLY WAGE RATE THAT WOULD BE PAID IF FEDERALLY EMPLOYED
Engineering Technician, V	1	GS-9 $20.19
Engineering Technician, III	7	GS-5 $13.32
Engineering Technician, II	1	GS-4 $11.91
Computer Programmer, IV	13	GS-11 $24.42
Computer Programmer, II	18	GS-7 $16.50
Computer Programmer, I	9	GS-5 $13.32
Computer Systems Analyst, III	4	GS-12$29.27
Computer Systems Analyst, II	21	GS-11$24.42
Computer Systems Analyst, I	19	GS-9 $20.19
Secretary, I	1	GS-4 $11.91
General Clerk, I	1	GS-1 $8.65
Document Preparation Clerk	31	GS-3 $10.61

Section J4

14

EX-10.25

Exhibit 10.25

CONTRACT No. SHI-SFS-03001

18 December 2003

FOR

THERMAL CONDITIONING SERVICE

FOR GRANADA CRYSTALLIZATION FACILITIES

BETWEEN

VJF RUSSIAN CONSULTING, LTD.

5521 Grand Lake

Bellair, TX 77402

AND

SPACEHAB, INCORPORATED

12130 Highway 3, Building 1

Webster, Texas USA 77598

Contract No. SHI-SFS-03001

18 December 2003

SPACEHAB, Inc. (SHI), with offices at 12130 Highway 3, Building 1, Webster, Texas 77598-1504 (hereinafter SHI) and VJF Russian Consulting, Ltd. (VJF), with offices at 5521 Grand Lake, Bellaire, TX 77401 (hereinafter VJF)

Individually and together referred to as Party or Parties respectively, have entered into this Contract (Contract) as follows.

Article 1. Subject of the Contract

Pursuant to the terms and conditions of this Contract, VJF shall provide and SHI shall pay to procure thermal conditioning service for up to nine Granada Crystallization Facilities (GCFs) using the Thermal Biological Universal (TBU) Incubator or other thermal conditioning means aboard the Service Module (SM) of the International Space Station (ISS) Russian Segment (RS).

Principal requirements of the Service are provided in the Statement of Work provided as Attachment 1.

Article 2. Period of Performance

2.1 The period of performance for this Contract shall be from the December 18, 2003 through January 31, 2006 and shall include the receipt of final payments as provided in Article 4.

2.2 The period of performance for this Contract may be extended by mutual written agreement of the Parties.

2.3 Completion of this Contract does not terminate obligations of SHI and VJF to comply with Article 9 and Article 15.

Article 3. Contract price

The firm fixed price to be paid for the effort performed under this Contract is $2,650,000 USD (Two Million, Six Hundred Fifty Thousand United States Dollars).

The Parties agree that the Contract price shall include the following expenses:

• delivery of all required documentation and original Acts on Completion and Acceptance of Work via express mail

• obtaining customs clearance and necessary approvals required by Russian government agencies

• travel of VJF and its subcontractors

Article 4. Milestone Payment Schedule

All payments under this Contract shall be made upon receipt of a complete invoice from VJF in accordance with the payment schedule below:

Page 1 of 6

Contract No. SHI-SFS-03001

18 December 2003

	Milestone	Payment Date	Payment Amount {USD)
1	Reservation Agreement	December 19, 2003	$	1,060,000
2	Pre-Flight Guarantee	April 30, 2004	$	250,000
3	Launch of TBU and GCF Unit 1	July 15, 2004	$	250,000
4	GCF Mission 1 (GCF experiment #4) Completion of Operations	November 15, 2004	$	350,000
5	GCF Mission 2 (GCF experiment #4) Completion of Operations	May 15, 2005	$	370,000
6	GCF Mission 3 (GCF experiment #5) Completion of Operations	November 15, 2005	$	370,000

Article 5. Payment

5.1 VJF shall submit invoices upon completion of each milestone in accordance with the Milestone Payment Schedule identified in Article 4 of this Contract.

5.2 All payments shall be made in United States Dollars 30 days from receipt of properly submitted VJF invoice.

Article 6. Technical Direction

6.1 Steve Brock is assigned as SHI project manager and is authorized to provide technical direction for this contract.

Article 7. Hardware and Documentation Delivery

7.1 The deliverable documentation under this Contract is provided in Section 3, Deliverables, of the Statement of Work.

7.2 The delivery of documentation shall be made to the following address:

SPACEHAB, Inc.

12130 Highway 3,

Webster, TX 77598, USA

Article 8. Technology Export Control

In the event that export/import of hardware or documentation containing any technologies or technical data subject to export/import restrictions imposed by any government organization binding on either Party is required, the Party that is subject to such restrictions shall seek all necessary approvals and licenses, and the other Party agrees to assist it. Approval of the providing party shall be required prior to the re-export of any hardware or documentation provided under this Contract.

Page 2 of 6

Contract No. SHI-SFS-03001

18 December 2003

Article 9. Intellectual Property Rights

9.1 All Intellectual Property utilized in the performance of this Contract shall remain the exclusive property of the party(s) who had the rights in the IP prior to this Contract.

9.2 Any Intellectual Property first conceived, reduced to practice or developed during the Contract Term by employees or consultants of any party shall be owned by such party.

9.3 Any Intellectual Property jointly developed by the employees or consultants of the Parties shall be the joint property of the parties.

Article 10. Document Translation

10.1 All textual documents provided by VJF shall be in Russian.

Article 11. Excusable Delays

11.1 VJF shall not be held liable for any damage, loss, or failure to perform obligations hereunder if it was caused by an occurrence of extraordinary events that took place after the Contract execution, such as flood, fires, earthquakes, storms, epidemics, adverse weather conditions at the launch site, quarantine, war, military actions, armed conflicts, riots, sabotage, acts of terror, embargo, siege, strikes or any labor conflicts, sovereign acts by the Government of the Russian Federation or any Russian governmental/federal authorities, as well as any Government and/or governmental/federal authority of the ISS Partner States, as well as cancellations or delays of the ISS Russian Segment assembly sequence and/or any spacecraft launch dates in support of the ISS Program, and any other activities that cannot be controlled, foreseen or prevented through all available means by VJF (hereinafter “Force Majeure”).

11.2 If VJF is prevented from, or delayed in performing any of its obligations under this Agreement by a Force Majeure Event, VJF shall promptly notify SHI by telephone (to be confirmed in writing within fifteen (15) days of the inception of the delay) of the occurrence of a Force Majeure Event and describe, in reasonable detail, the circumstances constituting the Force Majeure Event and of the obligations, the performance of which are thereby delayed or prevented, together with a good faith estimate of a revised completion date.

11.3 The period of performance of the Contract shall be extended by the duration of the Force Majeure Event and the time required for the correction of its consequences provided conditions of Article 11 hereof are met. If required, the Parties may agree to implement changes to the Contract price.

11.4 The Parties further agree that the waiver of liability with respect to VJF similar to that described above shall be also applicable when the Contract performance in whole or in part is delayed due to SHI’s failure to fulfill its obligations hereunder due to a Force Majeure Event.

11.5 In the occurrence of the event described in paragraph 11.1, VJF shall be entitled to such extension of the period of performance as may be required under the

Page 3 of 6

Contract No. SHI-SFS-03001

18 December 2003

circumstances, but under no circumstances shall the extension of the period of performance exceed the duration of the Force Majeure Event.

11.6 If the duration of a Force Majeure Event exceeds 6 (six) months, each Party may terminate this Contract by providing a written notification to the other Party. In this event, neither Party shall be held responsible for any damage and/or losses that one of the Parties may incur in relation to this termination.

Article 12. Cross-Waiver of Liability

12.1 In carrying out this Agreement, 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 performance of this Contract, irrespective of whether such damage is caused by SHI or VJF regardless of whether such damage arises through negligence or otherwise.

12.2 The parties agree to extend the waiver as set forth in Section 12.1 above to the other party’s contractors and subcontractors at every tier, as third party beneficiaries, for activities associated with the performance of this Contract.

12.3 The parties intend that the inter-party waiver of liability set forth above be broadly construed to achieve the intended objectives as set forth in Article 16 of the Intergovernmental Agreement Concerning Cooperation on the Civil International Space Station dated January 29, 1998.

12.4 Notwithstanding any other provisions herein, to the extent that a risk of damage is not dealt with expressly in this Contract, SHI’s and VJF’s liability under this Contract, whether or not arising as a result of an alleged breach of this Contract, shall be limited to direct damages only and shall not include any loss of revenue, profits or other indirect or consequential damages.

12.5 In the event a third party claim is asserted against SHI or VJF 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 VJF under this Contract, SHI and VJF 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 Contract, 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.

Page 4 of 6

Contract No. SHI-SFS-03001

18 December 2003

Article 13. Governing Law

All provisions herein and performance hereunder shall be governed by the laws of the State of Texas without reference to the conflict of laws provisions thereof.

Article 14. Disputes

Any dispute that arises under or is related to this contract that cannot be settled by mutual agreement of the Parties may be decided by a court of competent jurisdiction. Pending final resolution of any dispute, VJF shall proceed with performance of this contract according to SHI’s instructions so long as SHI continues to pay amounts not in dispute.

Article 15. Confidentiality

SPACEHAB, Inc. and VJF shall abide by the Confidentiality and Nondisclosure Agreement between the Parties dated 4 December 2003.

Article 16. Termination

16.1 Either Party may terminate this Contract for cause if the other party breaches any of its material obligations under this Contract and fails to cure such breach within sixty (60) days following receipt from the other Party of a written notice of such material breach; provided, however, that in the case of a material breach that cannot with reasonable diligence be cured within a period of sixty (60) days, the period of time after receipt of such notice within which the defaulting party may cure the breach shall be extended for such additional period as may be necessary for one working with reasonable diligence to cure the breach, subject to the provisions of the next sentence. In no event shall the aggregate cure period be longer than six (6) months after the date that the written notice of material breach was first received, and the extended cure period shall only be available so long as the defaulting party promptly begins to work to cure such breach, expeditiously develops a cure plan, provides the non-defaulting party with a copy of the plan, reports regularly to the non-defaulting party upon its progress, and continues to work diligently and continuously to cure the breach.

16.2 (a) SHI may terminate this Contract for convenience at any time by delivering to VJF a written Notice of Termination specifying the intent to terminate 30 days prior to termination.

(b) In the event of termination, SHI will pay VJF actual costs, up to the maximum amount to be paid under this Contract as defined in Article 3, for all completed work through the date of termination plus reasonable costs incurred in terminating the Contract.

VJF shall deliver to SHI any deliverable items, whether or not complete, identified herein.

16.3 Anything herein to the contrary notwithstanding, in the event of the bankruptcy of either VJF or SHI, then this Contract shall terminate upon written notice thereof provided by the other party to such party.

16.4 Termination of this Contract does not terminate obligations of SHI and VJF to comply with Article 9 and Article 15.

Page 5 of 6

Contract No. SHI-SFS-03001

18 December 2003

Article 17. Changes

SHI and VJF may at any time make mutually agreed upon changes to this Contract. All agreed upon changes shall be in writing and executed by both parties.

Article 18. Notices

18.1 All documentation incorporated in this Contract shall be in written form and sent via express mail, or electronic mail to the addresses specified below.

18.2 The date upon which any such communication is received by the addressee via express mail or by electronic transmission shall be the effective date of such communication.

18.3 Each Party shall promptly notify the other in the event of any change in their respective addresses.

18.4 The addresses of SHI and VJF are as follows:

For correspondence sent to SHI:

SPACEHAB, Inc.

12130 Highway 3,

Webster, TX 77598, USA

Fax: (713)558-5966

E-mail: nwilbanks@spacehab.com

For correspondence sent to VJF:

VJF Russian Consulting, Ltd.

5521 Grand Lake

Bellaire, TX 77401

Fax: (713)432-0684

E-mail: fishel@vjfrc.com

Article 19. Provisions for Execution

VJF and SHI shall execute two (2) original copies of this Contract, one original for each party.

Article 20. Entire Agreement

This Agreement, including any Attachments, constitutes the complete Contract and understanding with respect to the subject matter hereof between the parties.

SPACEHAB, Inc.		VJF Russian Consulting, Ltd.
By:	/s/    NELDA WILBANKS	By:	/s/    VLADIMIR FISHEL
Name:	Nelda Wilbanks	Name:	Vladimir Fishel
Title:	Dir, Subcontracts	Title:	President
Date:	30 June 2004	Date:	01-30-04

Page 6 of 6

Contract No. SHI-SFS-03001

Statement of Work (SOW) and Deliverables

1. General Description of VJF RC Services

VJF RC will provide thermal conditioning service for three Granada Crystallization Facilities (GCFs) using the Thermal Biological Universal (TBU) Incubator aboard the Service Module (SM) of the International Space Station (ISS) Russian Segment (RS). This service will support three protein crystallization experiments in microgravity which are owned by the Japanese Aerospace Exploration Agency (JAXA).

2. Responsibilities of VJF RC

VJF RC will ensure that thermal conditioning services controlled completely by VJF RC will be performed as set forth in this document. VJF RC will apply its best efforts for all other services that require some performance by its contractors.

Provision of Standard Services

VJF RC will perform the following services

1. Reserve flight opportunities and related resources aboard Progress and ISS RS to ensure TBU integration and utilization.

2. Support the development of a thermal conditioning service interface control agreement (ICA) between SpaceHab Inc. (SHI) and VJF RC. The ICA will be a simplified bi-lateral interface definition document that will serve to define approved SPACEHAB requirements and clearly specify the interface between the GCF and the TBU.

3. Develop the operational and technical documentation package (technical description, operational manual, and hardware passport) for the TBU Incubator in accordance with Russian standards. Provide other documentation as mutually agreed to by SHI and VCF RC. All TBU documentation provided to SHI should include the softcopy whenever possible.

4. Develop flight crew procedures and conduct Russian ISS crew training on incubator operations, in-flight maintenance and repair.

5. Ensure fabrication of the TBU Incubator using proven technologies and conduct a complete cycle of ground development and flight certification tests in accordance with the Russian standards and the Program Schedule.

6. Ensure hardware safety certification by applicable Russian and multilateral ISS boards.

7. Design, build and certify Flight Support Equipment (FSE) necessary for integration.

8. Deliver the TBU and any associated FSE to Baikonur. Provide TBU pre-launch processing at Baikonur and Progress integration consistent with the targeted launch opportunity to the ISS RS in July-August 2004.

9. Provide Incubator integration into the ISS RS and its utilization, including in flight maintenance, to support thermal conditioning of three GCF units.

10. A guarantee that the thermal service requirements needed for the successful completion of GCF Missions #4, 5 and 6, even in the event that TBU is not delivered in time for the launch per the agreed to schedule or other unforeseen circumstances, will be met. VCF RC will provide an alternative capability for meeting these requirements aboard the ISS RS.

11. Provide the option to continue use of the TBU Incubator beyond the three experiments covered by this contract.

12. Provide for disposal of the TBU at the completion of on-orbit operations of the three experiments covered by this contract or the experiments under the option.

13. Support Technical Interchange Meetings (TIMs) between RSC Energia, SHI and JAXA in accordance with the Program Schedule. These meetings, whose locations are TBD, include the acceptance testing review and flight readiness review.

14. Support status reviews with SHI and generally support SHI in answering questions and addressing issues that may arise from JAXA. Status reviews will be held monthly unless rescheduled by mutual agreement between SHI and VCF RC.

15. Submit written reports by email at least one day prior to the status review. Reports include implementation progress, technical issues, schedule changes and financial issues.

16. Record TBU Incubator internal volume temperature daily during on-orbit operations. Provide temperature reports per ICA.

17. Provide on-orbit photographs of the TBU and GCF containers at the start and end of each JAXA GCF mission. Further details regarding the photographs are per ICA.

Provision of Non-Standard Services

None Identified

3. Deliverables

In support of the SOW provisions, VCF RC will deliver the following:

1) Monthly status reports.

2) TBU-to-GFC interface definition data required to complete the ICA.

3) TBU temperature reports during on-orbit operations per ICA.

4) In-flight photo documentation per ICA.

5) Technical documentation for incubator integration and operations.

6) Post mission report 30 days after completion of each JAXA mission.

2.0 Program Schedule

Note: The schedule provided below is for planning purposes only and will not be updated during contract execution. The actual project schedule will be documented and maintained in the ICA between VJF RC and SpaceHab Inc.

Program Milestone	Date
Authority to Proceed	Feb 3 2004
Technical Interchange Meeting / Acceptance Testing - Moscow	Apr 30 2004
Crew training Soyuz 8 Crew - Moscow	Mar-Apr 2004
Technical Interchange Meeting / Flight Readiness Review GCF #4 - Moscow	Jun 1 2004
Turnover of Incubator for Flight	Jun 15 2004
Ship Incubator to Baikonur	Jul 1 2004
Launch of Incubator on Progress	Jul 15 2004
Support GCF #4 on-orbit operations	Jul-Oct 2004
Post Flight Report for GCF #4	Dec 2004
Crew Training Expedition 10 Crew - Moscow	Sep 2004
Flight Readiness Review GCF #5 - teleconference	Dec 2004
Support GCF #5 on-orbit operations	Jan-Apr 2005
Crew Training Expedition 11 Crew - Moscow	Feb 2005
Post Flight Report for GCF #5	Jun 2005
Crew Training Expedition 12 Crew - Moscow	Jun 2005
Flight Readiness Review for GCF #6 - teleconference	Jul 2005
Support GCF #6 on-orbit operations	Aug-Oct 2005
Post Flight Report for GCF #6	Dec 2005

Reservation Agreement

For TBU and Associated Services

This Reservation Agreement is entered into by and between VJF Russian Consulting, LLC with offices at 5521 Grand Lake, Bellaire, TX 77401 (VJF) and SPACEHAB, Inc. Space Flight Services with offices located at 12130 Highway 3, Bldg. 1, Webster, TX 77598 (SHI).

1. Services

VJF desires to sell and SHI desires to purchase the on-orbit thermal conditioning service for JAXA GCF experiments #4, 5 and 6 (Service). VJF will provide the thermal conditioning service using the Thermal Biological Universal (TBU) Incubator aboard the Service Module (SM) of the International Space Station Russian Segment (ISS RS) to support three Granada Crystallization Facilities (GCF) designed to conduct protein crystallization experiments in microgravity and owned by the Japanese Aerospace Exploration Agency (JAXA).

2. Price

The price SHI shall pay VJF for the Service described in Section 1 above shall be $2,650,000 (Two Million, Six Hundred Fifty Thousand Dollars).

3. Deposit

To secure the price of $2,650,000 for the Service, SHI shall pay to VJF a deposit in the amount of $1,060,000 (One Million, Sixty Thousand Dollars). The deposit of $1,060,000 will be credited towards the total amount due to VJF under a contract to be executed between VJF and SHI for the Services. This deposit shall be made by January 6, 2004, and is non-refundable except in the case that VJF is unable to provide the Service.

4. Complete Agreement

This Agreement constitutes the complete agreement and understanding with respect to the subject matter hereof between the parties. It is anticipated that the contract and associated Statement of Work will be negotiated and executed by 31 January 2004. Such contract will supersede this Reservation Agreement.

VJF Russian Consulting, LCC		SPACEHAB, Inc.
By:	/s/    VLADIMIR FISHEL	By:	/s/    NELDA WILBANKS
Name:	Vladimir Fishel	Name:	Nelda Wilbanks
Title:	President	Title:	Director, Subcontracts
Dates:	20 December 2003	Dates:	20 December 2003

EX-10.26

Exhibit 10.26

CONSULTING AGREEMENT

AGREEMENT NO. 2004-006-SHI-VJF

P.O. No. _______________

This Consulting Agreement (“Agreement”) is entered into as of June 01, 2004, by and between SPACEHAB, Inc., a Washington state Corporation, having offices at: 12130 Highway 3, Bldg. 1, Webster, TX 77598 (hereinafter “SPACEHAB”), and V.J.F. Russian Consulting LTD., A Texas Limited Liability Company, (hereinafter “CONSULTANT”).

RECITALS

• WHEREAS, CONSULTANT will market and promote SPACEHAB’s capabilities and services to RSC Energia, the Russian Federal Space Agency and other Russian entities (the “Russian Entities”) involved in the exploration and development of space, and;

• WHEREAS, CONSULTANT will support and assist SPACEHAB in the negotiation of service contracts and agreements between SPACEHAB and the Russian Entities, and;

• WHEREAS, as requested, CONSULTANT will provide technical expertise and services in support of SPACEHAB’s activities under contracts with the Russian Entities, and;

• WHEREAS, in representing SPACEHAB, CONSULTANT will at all times comply with all applicable laws, regulations and legal requirements, including the Iran Nonproliferation Act of 2000, the Foreign Corrupt Practices Act, and Federal Acquisition Regulations and shall adhere to SPACEHAB’s Export Compliance Policy and Code of Conduct.

NOW THEREFORE, In consideration of the foregoing and of the mutual promises contained herein, it is agreed as follows:

Page 1

AGREEMENT

Basic Term:

• The Effective Date of this agreement shall be June 1, 2004 and will continue for a period of twenty-four (24) months ending May 31, 2006.

Option Term:

• Upon written notice given to Consultant not less than ninety (90) days prior to the completion of the Basic Term, SPACEHAB may exercise its option to renew all or part of this Agreement for one additional six (6) month period.

Exclusivity:

• CONSULTANT will represent SPACEHAB exclusively to the Russian Entities for all U.S. Government or U.S. Government related contracts. For non-U.S. Government contracts exclusivity shall apply to the area of SPACEHAB’s core business of payload integration and space transportation services.

• CONSULTANT will not enter into any agreements, except as provided below, with the Russian Entities, but shall offer any such agreements to SPACEHAB who may, at its sole discretion, enter into such agreements.

• CONSULTANT may enter into contracts with the Russian Entities that provide services to commercial entities (the “Commercial Contracts”) that are not in conflict with SPACEHAB’s core business; for example, payload facility development and commercial utilization where the customer is not the U.S. Government.

Reimbursement Schedule for Services:

• SPACEHAB will pay CONSULTANT a Retainer Fee in the amount of $ 180,000 annually, paid in monthly installments of $15,000 beginning on the Effective Date.

• SPACEHAB will pay CONSULTANT for technical consulting services rendered on the Lockheed Martin Shipping Contract; the Boeing Company representation contract and the SMDP Contract (the “Existing Contracts”) at an hourly rate of $167.50 for actual hours performed by CONSULTANT’S Senior Project Manager (as approved by SPACEHAB), provided such hours shall be approved in advance by SPACEHAB.

• SPACEHAB will pay CONSULTANT for technical consulting services rendered on any new contracts entered into by SPACEHAB, either under this agreement or otherwise, (the “New Contracts”) at an hourly rate of $170.00 where the customer (at any level) is the U.S. Government, and an hourly rate of $250.00 for non-U.S. Government customers, for actual

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hours performed by CONSULTANT’s Senior Project Manager (as approved by SPACEHAB), provided such hours shall be approved in advance by SPACEHAB.

• SPACEHAB will reimburse CONSULTANT for travel costs, at U.S. Government published per diem amounts (CONUS/OCONUS), with travel performed by CONSULTANT in discharge of its services hereunder, provided that such all travel shall be approved in advance by SPACEHAB. All travel shall be in accordance with SPACEHAB Policy No. SHI-SMS-A0028.

• SPACEHAB will pay CONSULTANT a Contingent Award Fee, computed and paid within thirty (30) days of the end of each calendar year quarter (March 31; June 30; September 30 and December 31) during the term hereof as the corresponding percentage from the table below times the New Contract Gross Margin (SPACEHAB’s revenue from all New Contracts (specifically excluding the Existing Contracts) as reported for external financial statements during such quarter less Direct Costs from Russian Entities in accordance with such New Contracts as reported for external financial statements during such quarter):

New Contract Gross Margin	Contingent Award Fee Percentage
	High Direct Cost*			Low Direct Cost*
Less than $ 500,000	0	%	to	0	%
Over $     500,000 up to $  3,000,000	7	%	to	12	%
Over $  3,000,000 up to $  5,000,000	9	%	to	14	%
Over $  5,000,000 up to $  7,000,000	9.5	%	to	16	%
Over $  7,000,000 up to $10,000,000	10	%	to	17	%
Over $10,000,000	10	%	to	18	%

• SPACEHAB Direct Costs are costs recorded by SPACEHAB as Cost of Revenues in its public financial reports for each quarter for each New Contract, less payments to Russian Entities included in the computation of the New Contract Gross Margin.

• SPACEHAB Direct Costs that are less than 10% of a New Contract’s Gross Margin for each quarter would be considered Low Direct Costs. SPACEHAB Direct Costs that are more than 40% of a New Contract’s Gross Margin for each quarter would be considered High Direct Costs. SPACEHAB will present its Direct Costs in good faith and at all times use its best efforts to keep its Direct Costs for purposes hereof reasonable.

• The Contingent Award Fee as presented above is computed from the following:

• Revenue from New Contracts: The recognized revenue under Generally Accepted Accounting Principals or other accounting rules prescribed for SPACEHAB’s external financial statements.

• Direct Costs from Russian Entities: The component of Cost of Revenue recognized under GAAP directly attributed to Russian Entities under the New Contracts.

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• New Contract Gross Margin: Revenue from New Contracts less Direct Costs from Russian Entities applicable to such New Contracts.

• SPACEHAB Direct Costs: Cost of Revenue recognized under GAAP by SPACEHAB for New Contracts, less Direct Costs from Russian Entities.

• An example of such computation follows:

•      Revenue	$	10,000,000
•      Direct Costs from Russian Entities		6,000,000
•      New Contract Gross Margin		4,000,000
Assuming:
•      SPACEHAB Direct Costs		360,000	(9% of $4,000,000)
•      Contingent Award Fee		560,000	(14% of $4,000,000)

Timekeeping, Invoicing, Payment and Audit for Technical Consulting Services only:

A. SPACEHAB shall provide CONSULTANT’S employees, assigned to SPACEHAB, access to SPACEHAB’S electronic timesheet system. The CONSULTANT’S employees shall record all time worked in accordance with SPACEHAB instructions and assigned charge numbers. The CONSULTANT’S employees must obtain SPACEHAB electronic approval on each timesheet. SPACEHAB is responsible for ensuring charge numbers are correct and CONSULTANT is responsible for the accuracy of all other timesheet records and associated documents (e.g. invoices).

B. In consideration of completion of the work or labor hour services provided by the CONSULTANT, compliance with all provisions of this Agreement, each Work Authorization, and approved timesheets, the CONSULTANT will be paid in accordance with the established billing rates and for hours worked only.

Any other allowable and reimbursable expenses (e.g., travel) requires prior approval by SPACEHAB and shall be listed as a separate line item on the invoice or on a SPACEHAB approved expense account form. CONSULTANT, its employees, and/or agents will provide completed expense reports, including receipts, with each invoice to substantiate expenses. CONSULTANT, its employees, and/or agents will be reimbursed for allowable cost only. All travel will be coordinated through SPACEHAB in accordance with current Federal Travel Regulations.

C CONSULTANT shall submit two (2) copies of an itemized invoice for all CONSULTANT employees, agents, representatives and other incurred costs on a monthly basis. The invoice must include the following information:

1 Agreement number

2 Employee name(s), Department No., Work Authorization No. and Modification No., if applicable

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3 Breakdown of total labor hours worked for each SPACEHAB charge number

4 Total invoice amount

5 Cumulative amount of invoices submitted to date

6 One copy of each approved SPACEHAB timesheet

7 Certification for Performance of Services statement executed and dated by an authorized agent of CONSULTANT in order to certify that the period of performance, associated labor categories and hours were used to perform the services required under this Agreement and associated Work Authorizations. Each invoice submitted by CONSULTANT will contain the following statement verbatim:

“I certify to the best of my knowledge and belief that the information provided above is accurate, and represents the work performed to accomplish the requirement(s).

BY:
	(Authorized CONSULTANT Representative)	(Title)	(Date)

The invoices shall be mailed or delivered to:

SPACEHAB, Inc.

12130 Highway 3, Bldg 1

Webster, TX 77598

Attn: Accounts Payable

D. After the requirements of A, B, and C have been met, SPACEHAB shall pay the CONSULTANT upon receipt and approval of CONSULTANT’s invoices in accordance with the terms and conditions of this AGREEMENT.

E. Terms of payment for each invoice are Net 30 Days.

F. Discrepant invoices will be returned to the CONSULTANT unpaid for correction.

Office Space and administrative support:

• SPACEHAB will provide CONSULTANT with office space and furniture consistent with the SPACEHAB’s internal office parameters for CONSULTANT’s Senior Project Manager engaged under this agreement.

• SPACEHAB will provide office supplies, telephone, fax, computer and other general office support to CONSULTANT’s Senior Project Manager while officed at SPACEHAB’s facility and in execution of this agreement.

Independent Contractor:

• CONSULTANT shall be an independent contractor to SPACEHAB and no employment arrangement is created or construed under this contract.

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• CONSULTANT, the Senior Project Manger and any other employee, contractor or representative of CONSULTANT shall not be entitled to benefits, stock options, bonuses or any other employee compensation or benefit paid by SPACEHAB to its employees.

Designation of Senior Project Manager:

• CONSULTANT represents that it has engaged Vladimir J. Fishel and will designate him as the Senior Project Manager under this agreement. In the event that Vladimir J. Fishel is not able to perform the services of Senior Project Manager hereunder, SPACEHAB shall have the right, at its sole discretion, to terminate this agreement.

Indemnification and Insurance:

• CONSULTANT shall indemnify and hold harmless SPACEHAB, its officers, employees and agents from claims and damages arising out of or as a result of the actions or omissions of Contractor, its employees or subcontractors in performance of this agreement.

• CONSULTANT shall secure and maintain worker’s compensation and comprehensive automobile liability in amounts acceptable to SPACEHAB and shall furnish a certificate of insurance designating SPACEHAB as an additional insured. It is agreed that CONSULTANT will not carry commercial general liability insurance in respect to the services provided to SPACEHAB under this agreement and that SPACEHAB may obtain its own insurance, at its own cost and expense, on such risks.

Patents and Incidents of Business to be the Property of SPACEHAB:

• CONSULTANT agrees that any and all business, patents and Confidential Information which are part of or relate to the Business and which are or have been developed by CONSULTANT or any employee or representative of CONSULTANT or any of its affiliates or subsidiaries, including without limitation, contracts, fees, commissions, customer lists and any other incident of any business developed by SPACEHAB or carried on by CONSULTANT on behalf of SPACEHAB, are and shall be the exclusive property of SPACEHAB for its sole use.

• Each Employee Invention (idea, invention, technique, modification, process or improvement (whether patentable or not), any industrial design (whether registerable or not) and any work of authorship (whether or not copy right protection may be obtained for it), created, conceived, or developed by CONSULTANT or its employees, agents, or representatives in providing the services hereunder, either solely or in conjunction with others, during the term of this agreement) shall be the property of SPACEHAB.

Covenants of Confidentiality, Nondisclosure, Non-solicitation and Non-competition:

• CONSULTANT and CONSULTANT’s employees shall conduct themselves in accordance with Agreement No. 2004-005-SHI-VJF, hereto made apart of this document as an Attachment.

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Miscellaneous Provisions

(a) Complete Agreement. This Agreement constitutes the entire agreement between the parties and cancels and supersedes all other agreements and understandings, whether written or oral, between the parties which may have related to the subject matter contained in this Agreement.

(b) Amendment; Waiver. No modification, amendment or waiver of any provisions of this Agreement shall be effective unless approved in writing by each of the parties hereto. The failure at any time to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of either party thereafter to enforce each and every provision hereof in accordance with its terms.

(c) Litigation. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF THE STATE OF TEXAS, 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 PARAGRAPH (d) BELOW, CONSULTANT AND SPACEHAB AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT MAY BE COMMENCED IN THE COURTS OF HARRIS COUNTY, TEXAS. OR THE UNITED STATES DISTRICT COURTS IN THE STATE OF TEXAS. CONSULTANT AND SPACEHAB CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WELL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS PARAGRAPH (c) 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.

(d) Arbitration. CONSULTANT AND SPACEHAB AGREE THAT ANY DISPUTE BETWEEN OR AMONG THE PARTIES TO THIS AGREEMENT RELATING TO OR 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 HOUSTON, HARRIS COUNTY, TEXAS, AND SHALL BE SUBJECT TO THE SUBSTANTIVE LAW OF THE STATE OF TEXAS. 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 PARAGRAPH (c) 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.

(e) Injunctive Relief. It is agreed among the parties that the remedities provided herein may not be sufficient to protect SPACEHAB’s interests under this agreement and agree

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hereby that SPACEHAB may obtain and enforce injunctive relief against CONSULTANT or any employee, agent or representative of CONSULTANT.

(f) Severability. Whenever 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 held to 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.

(g) Assignment. The rights and obligations of the parties under this Agreement shall be binding upon and inure to the benefit of their respective successors, assigns, executors, administrators and heirs; and SPACEHAB may assign its rights and obligations to any wholly owned subsidiary existing as of the date hereof and further provided, however, that CONSULTANT may not assign any of its obligations under this Agreement without the prior written consent of SPACEHAB.

(i) Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

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

VJF Russian Consulting		SPACEHAB, Inc.
By:	/s/    VLADIMIR J. FISHEL	By:	/s/    MICHAEL E. KEARNEY
	Vladimir J. Fishel		Michael E. Kearney
	President		President and CEO

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CONFIDENTIALITY & NONDISCLOSURE AGREEMENT

Agreement Number 2004-005-SHI-VJF

This Confidentiality and Nondisclosure Agreement (“Agreement”) is entered into by and between SPACEHAB, Inc., having offices at: 12130 Highway 3, Bldg. 1, Webster, TX 77598 (hereinafter “SPACEHAB”), and V.J.F. Russian Consulting LTD. (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 his subcontracted 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 latest date of receipt of such information from SPACEHAB.

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CONFIDENTIALITY & NONDISCLOSURE AGREEMENT

Agreement Number 2004-005-SHI-VJF

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.

7. Nothing contained in this Agreement shall be construed as granting or conferring any rights by license or otherwise in any Proprietary Information disclosed under this Agreement.

8. 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, Inc.:	If to VJF Russian Consulting LTD.:
SPACEHAB, Inc.	VJF Russian Consulting LTD.
Attn: Bryan Leger	Attn: Vladimir Fishel
12130 Highway 3, Bldg. 1	12130 Highway 3, Bldg. 1
Webster, TX 77598	Webster, TX 77598

Each party may change its respective address or point of contact by delivering a written notice thereof to the other party.

9. 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 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.

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CONFIDENTIALITY & NONDISCLOSURE AGREEMENT

Agreement Number 2004-005-SHI-VJF

10. This Agreement shall become effective on date of award, and it shall terminate three (3) years from the effective date, provided, however, that this Agreement may be terminated by either party at any time by giving thirty (30) days prior written notice to the other party, 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 terms 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.

11. 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.

12. 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.

13. 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”.

14. This Agreement shall be governed and construed under the laws of the State of Texas, including the rights and liabilities of the parties to this Agreement, excluding its conflicts of laws principles.

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:

Issued By:		Accepted by:
SPACEHAB, Inc.		VJF Russian Consulting, LTD
/s/    MICHAEL E. KEARNEY	/   6/1/04	/s/    VLADIMIR J. FISHEL	/   6/1/04
Michael E. Kearney	(Date)	Vladimir J. Fishel	(Date)
President and CEO		President

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EX-10.27

Exhibit 10.27

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is made as of the 19^th day of December, 2000, by and between Astrium GmbH, a German corporation (“Purchaser”), and Spacehab, Incorporated (“Seller”), a Washington state corporation.

RECITALS

WHEREAS, Seller has developed and owns or is developing and will own certain commercial space hardware known as the integrated cargo carrier or ICC and related assets (the ICC that is integrated into the Shuttle cargo bay in a horizontal position and related assets are referred to hereafter as the “ICC System” and the ICC that is to be integrated into the Shuttle cargo bay in vertical position and related assets are referred to hereafter as the “ICC-V System”);

WHEREAS, Purchaser and Seller have entered into a (i) Collaboration Agreement and a Stock Purchase Agreement dated as of August 2, 1999 establishing a Strategic Alliance, (ii) a Joint Program Agreement for the purchase of the ICC System Assets and the ICC-V System Assets and a leaseback of said assets to Seller dated as of November 30, 2000 and (iii) an Agreement on Principles for Lease of the ICC System Assets and the ICC-V System Assets dated as of November 30, 2000; and

WHEREAS, on the terms and subject to the conditions contained in this Agreement, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, the ICC Systems Assets and the ICC-V Systems Assets.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE 1

Purchase and Sale of Assets

1.1 Agreement to Purchase and Sell. On the terms and subject to the conditions contained in this Agreement, Purchaser agrees to purchase from Seller, and Seller agrees to sell to Purchaser, all of Seller’s right, title and interest in and to the ICC System and the ICC-V System as set forth on Schedule I hereto (referred to hereafter as “ICC System Assets” and ICC-V System Assets, respectively) and the assets related thereto as set forth in paragraphs 1.3 (a), (b), (c) and (d) (the ICC System Assets, the ICC-V System Assets and the assets related thereto are collectively referred to as the “Purchased Assets”).

The Purchased Assets shall be sold to Purchaser free and clear of any and all liens, claims and encumbrances of whatever kind or nature, including but not limited to security interests, mortgages, pledges, charges, suits, licenses, options, rights of recovery, judgments, rights of first refusal, orders and decrees of any court or foreign or domestic governmental entity, interest, tax, covenants, restrictions, indentures, instruments, leases, options, contracts, agreements, offsets, recoupments, claims for reimbursement, contribution, indemnity or

exoneration successor, product, environmental, taxes, labor, ERISA, CERCLA, alter ego and other liabilities (collectively, “Claims”).

1.2 Transfer of title to Purchaser’s subsidiary. Unless otherwise notified by Purchaser prior to the First Closing or Second Closing respectively, Seller shall transfer all of Seller’s right, title and interest in and to the Purchased Assets to Purchaser’s subsidiary, Astrium North America, Inc., a Delaware corporation, in lieu of delivering said right, title and interest to Purchaser

1.3 Enumeration of Assets Purchased. In addition to the ICC System Assets and the ICC-V System Assets set forth on Schedule I hereto, the assets related thereto that are being purchased also shall include the following:

(a) all rights under warranties, representations and guarantees made by suppliers, manufacturers and contractors in connection with the ICC System Assets and the ICC-V System Assets related thereto;

(b) all U.S. and foreign trademarks, service marks, logos, designs, trade names, patents, registered designs, mask works, copyrights, computer software and databases, whether or not registered, and related items (and all intellectual property and proprietary rights incorporated therein) and all other trade secrets, research and development, formulae, know-how, and proprietary and intellectual property rights and information, including all grants, registrations, renewals, reissues and applications relating thereto, owned by Seller and related exclusively to the ICC System Assets or the ICC-V System Assets; and

(c) all processes, procedures and test data related to the handling and operation of the ICC System Assets and the ICC-V System Assets documented in whatever form, it being agreed that those items related to Generic ICC will only be transferred in the status and form available to Seller on 31^st December 2000; and

(d) any and all other assets and rights that are not of the type or character referenced in Section 1.2(a)-(c) and which are necessary for the continuation of the operation of the ICC System Assets or the ICC-V System Assets in at least the same manner as they are conducted as of the date hereof.

ARTICLE 2

No Liabilities Assumed; Indemnification

2.1 No Liabilities Assumed. Seller acknowledges and agrees that pursuant to the terms and provisions of this Agreement, Purchaser will not assume any obligation of Seller whatsoever. In furtherance and not in limitation of the foregoing, Purchaser shall not assume and shall not be deemed to have assumed, any debt, Claim, obligation or other liability of Seller whatsoever (the “Excluded Liabilities”), including, but not limited to (i) any environmental costs and liabilities arising from environmental, health, or safety conditions, or the release of a contaminant into the environment, for any act, omission, condition, event or circumstance to the extent occurring or existing prior to the respective closing date for the assets involved, including

2

without limitation all environmental costs and liabilities relating in any manner to Seller’s direct or indirect handling, transportation or disposal of any contaminants, (ii) any of Seller’s liabilities in respect of any taxes, (III) any taxes or any fees arising in connection with the consummation of the transactions contemplated hereby, including any tax or liability of any stockholder of Seller or its affiliates and any of Seller’s fees and expenses incurred in connection with the transfer of the Purchased Assets (other than as expressly provided in this Agreement), (iv) any brokers’ or finders’ fees, or other liability of Seller for costs and expenses (including legal fees and expenses) incurred in connection with this Agreement or the consummation of the transactions contemplated hereby, (v) any liability or obligation of Seller under this Agreement, (vi) any indebtedness of the Seller, (vii) any obligation or liability arising as a result of or whose existence is a breach of Seller’s representations, warranties, agreements or covenants, and (vii) any Excluded Assets.

2.2 Indemnification. Seller agrees to defend, indemnify, and hold harmless the Purchaser, its officers, directors, shareholders, employees, accountants, attorneys, agents, successors and assigns from and against any and all claims, damages, liabilities, costs and expenses (including reasonable attorneys’ fees and court costs) arising out of or related to a debt, Claim, obligation or liability concerning the Excluded Liabilities. With respect to any claim which may form the basis for indemnification under this Section, the Purchaser shall give prompt notice of such claim to the Seller as well as the opportunity for Seller to defend, compromise, or settle such claim with counsel selected by Seller, and shall fully cooperate in the course thereof. The Seller shall not enter into any compromise or settlement that shall have the effect of creating any liability or obligation (whether legal or equitable) on the part of the Purchaser.

ARTICLE 3

Purchase Price, Manner of Payment and Closing

3.1 Consideration. The purchase price (the “Purchase Price”) of the Purchased Assets shall be the sum of Fifteen Million Four Hundred Thousand Dollars ($15,400,000) of which Eleven Million Dollars ($11,000,000) shall be for Purchased Assets related to the ICC System Assets and Four Million Four Hundred Thousand Dollars ($4,400,000) shall be for Purchased Assets related to the ICC-V System Assets. The Purchase Price shall be paid in the manner described in Section 3.2 below.

3.2 Time and Place of the Closings. The closing of the transactions contemplated by this Agreement shall take place at two separate closings, respectively, the “First Closing” and the “Second Closing”, each to occur as hereinafter set forth.

(a) The First Closing shall occur at such place and on such date and at such time as the parties mutually agree, but in no event later than June 30, 2002. On or before the First Closing, the Purchaser shall: (i) pay the Seller Five Million Dollars ($5,000,000) in cash, (ii) pay Seller Three Million Dollars ($3,000,000), on or before March 9, 2001, and (iii) pay Seller Three Million Dollars ($3,000,000) on or before June 30, 2002. After fulfillment of Purchaser’s obligation under (i) above, the Seller shall execute and deliver to Purchaser (i) a Bill of Sale, and (ii) such other endorsements, assignments and such other instruments of transfer and conveyance, in form and

3

substance reasonably satisfactory to Purchaser, as shall be effective to vest in Purchaser as of the date of the First Closing good title, free and clear of any Claims, to the ICC System Assets and all other assets set forth in paragraphs 1.3 (a), (b), (c) and (d) related to the ICC System Assets. In addition, both parties shall execute and deliver such other ancillary documents contemplated by, or arising under, this Agreement as are necessary in order to effect the transfers contemplated for the First Closing.

(b) The Second Closing shall occur at such place and on such date and at such time as the parties mutually agree after the ICC-V system has been qualified for flight onboard Space Shuttle in accordance with the requirements identified in Article 6.2 (e) of this Agreement. Upon the Second Closing, Purchaser shall pay Seller Four Million Four Hundred Thousand Dollars ($4,400,000). Upon the Second Closing, Seller shall execute and deliver to Purchaser (i) a Bill of Sale and (ii) such other endorsements, assignments and such other instruments of transfer and conveyance, in form and substance reasonably satisfactory to Purchaser, as shall be effective to vest in the Purchaser as of the date of the Second Closing good title, free and clear of any Claims, to the ICC-V System Assets and all other assets set forth in sections 1.3 (a), (b), (c) and (d) related to the ICC-V System Assets. In addition, both parties shall execute and deliver such other ancillary documents contemplated by, or arising under, this Agreement as are necessary in order to effect the transfers contemplated for the Second Closing.

3.3 Transfer Taxes. All taxes upon, related to or arising out of the transactions contemplated by this Agreement, including, without limitation, transfer, registration, stamp, documentary, sales, use, excises, duties and similar taxes and specifically including all applicable Seller income or gains taxes, any penalties, interest and additions to tax, and court, registration and filing fees incurred in connection with this Agreement shall be the responsibility of and be timely paid by Seller. Seller and Purchaser shall cooperate in the timely making of all filings, returns, reports and forms as may be required in connection therewith.

ARTICLE 4

Representations and Warranties

4.1 Purchaser’s Representations and Warranties. Purchaser represents and warrants to Seller that:

(a) Purchaser is a corporation existing and in good standing under the laws of Germany.

(b) Purchaser has full power and authority to enter into and perform this Agreement and all documents and instruments to be executed by Purchaser pursuant to or in connection with this Agreement. The execution and delivery of this Agreement by Purchaser, and the performance by Purchaser of all of its obligations hereunder, have been duly authorized and approved prior to the date hereof by all necessary corporate action. This Agreement has been duly executed and delivered by the Purchaser and constitutes its legal, valid and binding agreement, enforceable against it in accordance

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with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally.

(c) No consent, authorization, order or approval of, or filing or registration with, any governmental authority or other person is required for the execution and delivery by Purchaser of this Agreement and the consummation by Purchaser of the transactions contemplated by this Agreement.

(d) Neither the execution and delivery of this Agreement by Purchaser, nor the consummation by Purchaser of the transactions contemplated hereby, will conflict with or result in a breach of any of the terms, conditions or provisions of the constituent organizational and governing documents of Purchaser, or of any agreement or instrument to which Purchaser is a party or any of its properties is subject or bound or any statute or administrative regulation, or of any order, writ, injunction, judgment or decree of any court or governmental authority or of any arbitration award that is binding upon Purchaser.

(e) Purchaser has not dealt with any person or entity who is or may be entitled to a broker’s commission, finders fee, investment bankers fee or similar payment from Seller for arranging the transaction contemplated hereby or introducing the parties to each other.

4.2 Seller’s Representations and Warranties. Seller represents and warrants to Purchaser that:

(a) Seller has full power and authority to enter into and perform this Agreement and all documents, agreements and instruments to be executed by Seller pursuant to or in connection with this Agreement. The execution and delivery by Seller of this Agreement, and the performance by Seller of all of its obligations hereunder and thereunder, have been duly authorized and approved prior to the date hereof by all necessary corporate action. This Agreement has been duly executed and delivered by Seller and constitutes its legal, valid and binding agreement, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditor’s rights and remedies generally.

(b) Except for technology transfer regulations (see paragraph c below), no consent, authorization, order or approval of, or filing or registration with, any governmental authority or other person or entity not furnished at or prior to Closing is required for the execution and delivery of this Agreement and the consummation by Seller of the transactions contemplated by this Agreement. Except as noted above, neither the execution and delivery by Seller of this Agreement, nor the consummation by Seller of the transactions contemplated hereby and thereby, will conflict with or result in a breach of any of the terms, conditions or provisions of the constituent organizational and governing documents of Seller, or of any agreement or instrument to which Seller is a party or any of its properties is subject or bound or any statute or administrative regulation, or of any order, writ, injunction, judgment or decree of any court or any

5

governmental authority or of any arbitration award, in each case to which Seller is subject or by which Seller is bound, which conflict or breach could have a material adverse effect on the Seller’s ability to complete the transactions contemplated by this Agreement.

(c) Seller has the power and authority to transfer title to the ICC System and ICC-V System hardware and operating documentation as set forth in section 1 of the present purchase agreement. Seller shall have full power and authority and will transfer title to the ICC System and ICC-V System technical design data upon (i) receipt of the approvals of the U.S. Department of State and/ or Department of Commerce, if required, or (ii) availability of personnel and processes within Astrium NA which allow such transfer without approval.

(d) Seller has the power to sell free and clear of any Claims all Purchased Assets. Seller has or will have good title to Purchased Assets at the time of the closing related to such assets. All ICC System Assets and ICC-V System Assets are in good operating condition and repair, ordinary wear and tear excepted, in accordance with industry standards. The ICC System Assets are physically located in or about Seller’s place of business. The ICC-V System Assets will be physically located in or about Seller’s place of business at the time of the Second Closing.

(e) Seller warrants that there is no litigation or proceeding, in law or in equity, pending against Seller with respect to the Purchased Assets and there are no proceedings or governmental investigations before any commission or other administrative authority pending against or, to the best of the Seller’s knowledge, threatened against Seller with respect to the Purchased Assets.

(f) Seller has not dealt with any person or entity who is or may be entitled to a broker’s commission, finders fee, investment bankers fee or similar payment from Purchaser for arranging the transaction contemplated hereby or introducing the parties to each other.

(g) Seller owns all intellectual property that are incorporated in, used by or related to the ICC System Assets or the ICC-V System Assets. Seller is not and will not be, as a result of the execution and delivery of this Agreement or the performance of its obligations under this Agreement, in breach of any license, sublicense or other agreement relating to intellectual property or the rights of third parties with regard to intellectual property. Purchaser’s use or lease to Seller or to third parties of the Purchased Assets will not infringe the intellectual property rights of any third party.

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ARTICLE 5

Conduct Prior to the Closings

5.1 Prohibitions. From the date hereof until the respective closing hereunder, without the prior written consent of Purchaser, Seller shall not:

(a) sell, transfer, or otherwise dispose of any of the Purchased Assets;

(b) take any action that would materially adversely affect the Purchased Assets.

5.2 Maintenance of Assets. From the date hereof until the respective closing hereunder, except as expressly contemplated or permitted by this Agreement or as otherwise consented to by Purchaser in writing, Seller shall:

(a) maintain the ICC System Assets and the ICC-V System Assets in good working repair, order and condition, in accordance with their standard maintenance policies, and in any event in at least as good repair, order and condition as on the date hereof (ordinary wear and tear excepted);

(b) neither (i) encumber, mortgage or subject to any lien any of the Purchased Assets; (ii) or do or omit to do any act which may cause a material breach of or default under any commitment or a material breach of any representation, warranty, covenant or agreement made herein by Seller;

ARTICLE 6

Conditions to Closing

6.1 Conditions to Seller’s Obligations. The obligations of Seller to consummate the transactions contemplated hereby are subject to the fulfillment of all of the following conditions on or prior to the respective closing date; upon the non fulfillment of any of which this Agreement may, at Seller’s option, be terminated pursuant to and with the effect set forth in Section 8.2:

(a) Each and every representation and warranty made by Purchaser shall have been true and correct in all material respects when made and shall be true and correct in all material respects as if originally made on and as of the respective closing date;

(b) All material obligations of Purchaser to be performed hereunder through, and including on, the respective closing date shall have been performed;

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(c) No action or proceeding before any court, government body, or other tribunal shall have been commenced (by a party other than Seller, or an Affiliate of Seller) wherein an unfavorable judgment, decree or order would (i) prevent the carrying out of this Agreement or any of the transactions contemplated hereby, (ii) declare unlawful any of the transactions contemplated by this Agreement, or (iii) cause any of such transactions to be rescinded. As used in this Agreement, the term “Affiliate” shall mean any person or entity which controls a party to this Agreement, which is controlled by a party to this Agreement, or which is under common control with that party;

(d) Seller shall have received or otherwise be satisfied with payment of the purchase price for the assets to be acquired at such closing;

6.2 Conditions to Purchaser’s Obligations. The obligation of Purchaser to consummate the transactions contemplated hereby is subject to the fulfillment of all of the following conditions on or prior to the respective closing date; upon the non fulfillment of any of which this Agreement may, at Purchaser’s option, be terminated pursuant to and with the effect set forth in Section 8.2:

(a) Each and every representation and warranty made by Seller shall have been true and correct in all material respects when made, and shall be true and correct in all material respects as if originally made on and as of the respective closing date;

(b) All material obligations of Seller to be performed hereunder through, and including on, the Closing Date shall have been performed;

(c) No action or proceeding before any court, government body, or other tribunal shall have been commenced or threatened (other than by an Affiliate of Purchaser) which seeks to (i) nullify, restrict or modify the rights and protections afforded Purchaser in this Agreement, (ii) prevent the carrying out of this Agreement or any of the transactions contemplated hereby, (iii) declare unlawful the transactions contemplated by this Agreement (iv) cause such transactions to be rescinded, or (v) materially affect the right of Purchaser to own, operate or control the purchased assets; and

(d) The Purchaser shall not be obligated to consummate the transactions contemplated by the Second Closing unless and until the ICC-V System Assets have been delivered by S.P. Korolev Rocket and Space Corporation Energia to Seller. Seller shall not give final acceptance except with the written concurrence of Purchaser or its nominee (appointed as provided in Section 1.2). For the purposes of this Agreement, final acceptance shall not occur unless Purchaser or its nominee concurs with Seller that the ICC-V System Assets meet all of the conditions of the ICC-V purchase contract. Purchaser or its nominee shall be allowed to be present at and participate in all acceptance testing and inspections related to the ICC-V System Assets.

(e) The Purchaser shall not be obligated to consummate the transactions contemplated by the Second Closing unless and until the ICC-V System

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Assets have been delivered by Seller as a flight qualified system. VCC qualification means that sufficient reviews, inspections, tests and analyses have been performed successfully to show that the VCC has met the requirements documented in the VCC Systems requirements specification (SHI-VCC-S1002) and that the VCC is qualified for use as described therein. Flight Qualification shall be documented by the completion and delivery, by Seller, and acceptance by Purchaser of the following products related to the VCC in its nominal configuration, i.e. as a vertical carrier utilizing 1 core section, 2 outer sections and left and right trunnion beam assemblies, for use as a Shuttle based un-pressurized cargo carrier.

Astrium Requirement	Related Item from Transfer List	SHI Deliverable Item (“Line Item” refers to Transfer List)
Structure Verification Plan based on NASA NSTS 14046 or Russian equivalent (SSP 50094)	Structural verification plan	(Line item 314)
Fracture Control Plan based on 1 NASA-STD-5003 or Russian equivalent (SSP 50094)	Fracture control plan	(Line item 324)
Dynamic- and Strength-Analysis Technical Note including a Margin of Safety Summary Table	Structural strength analysis report Loads analysis	(Line item 318-319)
Fracture Mechanics Analysis Technical Note including life limited items list	Fracture control plan	(Line item 324)
Certification of the required nondestructive crack inspections of each selected hardware item	See comments	General statement included in passport or “Readiness for Customer Turnover”
Thermal Analysis Technical Note	Thermal analysis report	(Line item 316)
Bulk Data NASTRAN Finite Element Model used for strength analysis	See comments	SPACEHAB /ASI provided
Bulk Data NASTRAN Finite Element Model correlated to the results of a modal survey test. Model quality requirements as defined by NASA NSTS 37329	Correlated Math Model	(Line item 335)

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Static Strength Test Reports	Static Test Plan Static Test Procedures Static test fixture drawings Static Test Report	(Line items 326-329)
Dynamic Test Reports including the Modal Survey Test Report	Modal Test Plan Modal Test Procedure Test fixture and simulators drawings Modal Test Report	(Line items 331-334)
Thermal Mathematical Model either validated by test or best engineering available	Thermal math model	(Line item 317)
Assembly- and Parts- Drawings and Listings (Manufacturing Documents)	VCC1 Released Working Drawings (VCC)	(Line item 340)
Material and Material usage List according NASA Standards or Russian equivalent (SSP 50094). Translation of Russian material designation to US- and/or European aerospace-standards shall be provided.	Material Usage List Material Usage Agreement (MUA) (if required)	(Line item 349-350)
Handling - and Operational- Procedures	Operator’s Manual (VCC) Operator’s Manual (GSE)	(Line item 347-348)
Verification Control Document which contains the references for closure of the initial requirements	Certification of “Readiness for Customer Turnover”	General certification that the system meets all the customer’s contractual requirements
Applicable Safety Hazard Sheets	VCC1 EVA Sharp Edges Inspection Report (AKT)	(Line item 339)
“Passport”	VCC1 Passport (Formular) VCC3 Passport (Formular)	(Line item 337) (Line item 342)

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ARTICLE 7

Other Agreements

7.1 Further Assurances. The parties shall execute such further documents, and perform such further acts, as may be reasonably necessary to transfer and convey the Purchased Assets to Purchaser, on the terms herein contained, and to otherwise comply with the terms of this Agreement and consummate the transactions contemplated hereby.

7.2 Survival. The representations, warranties, covenants and agreements of the parties hereto contained in this Agreement or any agreement delivered in connection herewith shall survive each closing date for a period of one year from the date of said closing.

ARTICLE 8

Termination

8.1 Termination.

(a) This Agreement may be terminated with respect to the ICC System Assets at any time prior to First Closing date or with respect to the ICC-V System Assets at any time prior to the Second Closing date by mutual written agreement of Seller and Purchaser. This Agreement may be terminated with respect to the ICC System Assets by either party pursuant to the terms of Section 6.1 or 6.2 if the closing conditions are not met by the other Party by June 30, 2001. This Agreement may be terminated with respect to the ICC-V System Assets by either party pursuant to the terms of Section 6.1 or 6.2 if the closing conditions are not met by the other Party by January 31, 2003.

(b) If a Party intends to terminate this Agreement it shall do so by delivering a written notice to the other party, such termination to be effective on the fifth business day (the “Termination Date”) following the terminating party’s delivery of such notice. On the Termination Date, (i) Seller shall return the Cash Payment, plus interest thereon at an annualized rate of five percent (5%) applied for the period between the First Closing and the Termination Date, plus any amounts applied to the Future Astrium Claim prior to the Termination Date, and (ii) the balance remaining under the Astrium Work Credit shall be cancelled, with Seller being thereafter responsible for full payment of any invoices arising in respect of services rendered by Purchaser to Seller.

8.2 Effect of Termination and Abandonment. In the event of termination of the Agreement pursuant to this Article 8, written notice thereof shall as promptly as practicable be given to the other parties to this Agreement and this Agreement shall terminate and the transactions contemplated hereby not then completed shall be abandoned, without further action by any of the parties hereto. If this Agreement is terminated as provided herein:

(a) all further obligations of the parties shall terminate; and

(b) each party shall have available to it such remedies as may exist at law or in equity.

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ARTICLE 9

Miscellaneous

9.1 Publicity. Except as otherwise required by law, press releases concerning this transaction shall be made only with the prior approval of the Seller and Purchaser, which approval shall not be unreasonably withheld.

9.2 Notices. All notices required or permitted to be given hereunder shall be in writing and may be delivered by hand, by facsimile or by nationally recognized private courier. Notices delivered by hand, by facsimile or by nationally recognized private carrier shall be deemed given on the day of receipt. All notices, including any change in notice addresses shall be addressed as follows:

If to Seller:

Spacehab, Incorporated

555 Forge River, Suite 150

Webster, Texas 77598/ 4336

Attention: Nelda Wilbanks

Facsimile: (281) 853 2920

with a copy to:

Dewey Ballantine LLP

1301 Avenue of the Americas

New York, New York 10019

Attention: Frank E. Morgan II

Facsimile: (212) 259-6333

If to the Purchaser:

Astrium GmbH

Bremen, Germany

Attention: Holger Vöge

Facsimile: 011-49-421-539-4137

with a copy to:

Pierson & Burnett, LLP

1667 K Street, NW Suite 801

Washington, D.C. 20006

Attention: Dennis J. Burnett

Facsimile: (202) 466-3055

or, in each case, at such other address as may be specified in writing to the other party.

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9.3 Expenses. Unless otherwise expressly agreed to in Articles 1, 2, and 3 of the present agreement each of the Seller and the Purchaser will bear their respective costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.

9.4 Entire Agreement. This Agreement and the instruments to be delivered by the parties pursuant to the provisions hereof constitute the entire agreement between the parties. Each Exhibit and Schedule shall be considered incorporated into this Agreement.

9.5 Applicable Law. This Agreement shall be governed and controlled as to validity, enforcement, interpretation, construction, effect and in all other respects by the internal laws of the District of Columbia applicable to contracts made therein, without regard to rules of conflicts of law.

9.6 Binding Effect; Benefit. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto, and their successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer on any person other than the parties hereto, and their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement.

9.7 Assignability. This Agreement shall not be assignable by either party without the prior written consent of the other party, except in the event of a reorganization, merger or acquisition of a party where the successor entity is reasonably deemed to be qualified to perform the duties and obligations of the original party under this Agreement.

9.8 Amendments. This Agreement shall not be modified or amended except pursuant to an instrument in writing executed and delivered on behalf of each of the parties hereto.

9.9 Headings. The headings contained in this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.

9.10 Bulk Sales Laws. The parties hereto hereby waive compliance with the provisions of any applicable bulk sales laws, including Article 6 of the Uniform Commercial Code as it may be in effect in any applicable jurisdiction.

9.11 Dispute Resolution. All disputes arising out of the interpretation or enforcement of this Agreement and not settled previously in an amicable manner shall be finally settled under the rules of conciliation and arbitration of the International Chamber of Commerce by a panel of three arbitrators appointed in accordance with said rule. The arbitration proceeding shall take place in London, England, or any such other location as the parties may mutually agree, and shall be conducted in the English language. The arbitration award shall be final and binding on the parties. A party may enter judgment upon the award in any court of appropriate jurisdiction upon application thereto.

9.12 Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same Agreement.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

ASTRIUM GmbH
By:	/s/    DR. STEFAN-FRITZ GRAUL
	Dr. Stefan-Fritz Graul [V.P. Orbital Systems Infrastructure & Operations]
By:	/s/    DR. ECKART WOLFF
	Dr. Eckart Wolff [Director of Finance, Control, Procurement & Commercial]
SPACEHAB, INCORPORATED
By:	/s/    MICHAEL E. KEARNEY
	Michael E. Kearney [President]

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Schedule I to Asset Purchase Agreement

DESCRIPTION			QTY/REF	REF NUMBER
1.0 ICC
1,1	FLIGHT HARDWARE
		UCP 1L	1	381GK1000-0
		UCP 2L	1	381GK1000-0
		UCP 3L	1	381GK1000-0
		Primary Flight Trunnions, including Bracketry & attachment hardware	4	1264555
		Secondary Flight Trunnions, including Bracketry & attachment hardware	4	1264556
		KYA 1	1	1264553
		KYA 2	1	1264553
		INTERFACE PLATE, STANDARD	1	SHI-ICC-D5002-001
		INTERFACE PLATE ASSY, STANDARD	16	SHI-ICC-D5002-301
		INTERFACE PLATE, GAS	8	SHI-ICC-D5003-001
		SPACER	44	SHI-ICC-D5004-001
		SPACER	10	SHI-ICC-D5004-002
		BUSHING, INTERFACE PLATE	122	SHI-ICC-D5005-001
		BUSHING, INTERFACE PLATE	1	SHI-ICC-D5005-002
		BUSHING, INTERFACE PLATE	10	SHI-ICC-D5005-003
		ASSEMBLY, EVAS ADAPTER, NHP	24	SHI-ICC-D5016-301
		LABEL ASSY, SPACEHAB	1	SHI-ICC-D5019-701
		ASSY, HANDRAIL ADAPTER	42	SHI-ICC-D5020-301
		BUSHING, INNER, ECCENTRIC 3/8”	4	SHI-ICC-D5021-001
		BUSHING, OUTER, ECCENTRIC 3/8”	4	SHI-ICC-D5021-002
		INTERFACE PLATE, SHOSS	5	SHI-ICC-D5022-001
		GANG CHANNEL, SHORT, UCP PHP	109	SHI-ICC-D5024-701
		GANG CHANNEL, LONG, UCP PHP	106	SHI-ICC-D5024-702
		ASSY, EVAS ADAPTER, PHP	10	SHI-ICC-D5025-301
		ASSY, WIF AND HANDRAIL ADAPTER	5	SHI-ICC-D5026-301

15

		UCP Spare Parts for UCP-1L, 2L, and 3L (PER EXISTING ASTRIUM H/W INVENTORY)	1	VARIOUS
		TITANIUM SECONDARY TRUNNION BRACKETS	2
1,2	FLIGHT SUPPORT EQUIPMENT (INCLUDES RELEVANT DOCUMENTATION)
		LCA FSE complete	1	1274311
		PFCS FSE complete	1	9070417
		PFCS alignment jig	2
		EAS FSE complete	1	9070438
		EAS alignment jig	1
		RU FSE complete	1	1274337
		ESP FSE complete	1	1275227
		MISSE/APC	2	1283501
		Strela TDK	1
		Connector bracket	1	907-0447-503
		Connector bracket	1	907-0447-1
		SOAR cable PWR	1	9063751-1
		SOAR cable data	1	9063752-1
		Screw 1230	50	1274115
		SCAP	1	1278427
		SOAR FSE complete	1	1274418
		Connector bracket	1	9063750-1-3
		Connector bracket	1	9063750-501-5
		ISS5A.1 cable assembly	1	9070411
		PFAP HARDWARE
1,3	GSE AND MISCELLANEOUS HARDWARE
		GSE Trunnions (Astrium made)	4	1274578
		GSE Trunnions (RSC Energia made)	4
		GSE T-BAR	4	SHI-ICC D7002-001
		ASSEMBLY, POSITIONING TOOL, NHP EVAS ADAPTER	2	SHI-ICC-D8003-001
		UCP Transportation Container (Blue Frame)	1	9060888
		SPACER, BLUE FRAME GSE	4	SHI-ICC-D8008-701
		Red UCP Plates (GSE)	60
		Rotator	1

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		SISK		2	1264579
		Yellow Beam		1
		UCP hoisting device		1
		Coffee Table short		4	SH-99-001
		Coffee Table high		4	SHI-ICC-D8005
		Dolley heavy duty		12	McMaster 2764T2
		Dolley (plastic)		8	McMaster 24385T3
		Step ladder tall		1	8112T7
		Step ladder medium		1	8112T5
		Step ladder small		2	8112T4
		Step ladder very small		2	79485T23
		Scaffholding		2	8079T14
		Air pads		12
		Shelves		10
		Cabinets		9
		Chemical cabinets		3
		KYA Test Stand		1	1264300
		KYA Transport Container		1
		KYA Hoisting Device including Pulley		1
		Modal Survey Payload Test Dummies		5
		NBL MOCKUPS		1
		STIPL DRILL TEMPLATE/FIXTURE		1
		PHP DRILL TEMPLATE		1
		GFE PRLA USED ON BLUE FRAME TRANSPORTER
1,3	DOCUMENTATION
	1.3.1	ORIGINAL DOCUMENTATION
		1.3.1.1	UCP
			UCP 1L ADP	1
			UCP 1L PASSPORT	1
			UCP 1L ACCEPTANCE REPORT	1
			UCP 2L ADP
			UCP 2L PASSPORT	1
			UCP 2L ACCEPTANCE REPORT

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UCP 3L ADP
UCP 3L PASSPORT	1
UCP 2L ACCEPTANCE REPORT
CAD MODEL(S)	1
STRUCTURAL MODEL(S)	1
STRUCTURAL ANALYSIS	1
FRACTURE ANALYSIS	1
THERMAL PROPERTIES
INSPECTION RECORDS
CERTIFICATIONS
Correlated ICC (KYA & UCP) data
NASTRAN bulk data files and matrices	A/R
Correlation Report	1
Frequent Flyer Program Results
NASTRAN bulk data files and matrices including pseudo-payloads
Report
Results from UCP local load carrying capability increase
Test report
Evalution
1.3.1.2 ICC
Integrated Cargo Carrier (ICC) Payload Standard Interface Definition Document (SIDD)	1	SHI-ICC-M0001
Structural Loads Data Book	1
Acceptance Report for Unpressurized Cargo Pallet (UCP 1L)	1	SHI-ICC-R1004
Cargo Interface Control Agreement between the Integrated Cargo Carrier (ICC) and the Payload Working Platform (PWP)	1	SHI-ICC-S1011
Cargo Interface Control Agreement between the Integrated Cargo Carrier (ICC) and the Service Module Debris Panels (SMDP_	1	SHI-ICC-S1012
External Stowage Platform 2 (ESP2) Power Video Grapple Fixture (PVGF) Tower Mockup Project Overview	1	SHI-NICC-S1000
GAS Interface Plate Static Loads Test Plan	1	SHI-ICC-L0009
Handrail Adapter Assembly, SHI-ICC-D5020-301 SHI-ICC-D5020-301, S/N 1025-1042 Acceptance Data Packaqe	1	SHI-ICC-K0007
Integrated Cargo Carrier (ICC) Payload Standard Interface Definition Document (SIDD)	1	SHI-ICC-M0001
Interface Plate Bushings, SHI-ICC-D5005-001 Acceptance Data Packaqe	1	SHI-ICC-K0004
Node Hole Pattern. EVAS Adapter, SHI-ICC-D5006-701 Acceptance Data Package	1	SHI-ICC-K0005

18

Node Hole Pattern, EVAS Adapter Assembly SHI-ICC-D5016-301 Acceptance Data Package	1	SHI-ICC-K0006
Perimeter Hole Pattern, EVAS Adapter Assembly SHI-ICC-D5025-301, S/N 1001-1010 Acceptance Data Package	1	SHI-ICC-K0008
PFCS KAAN Thermal Shroud Structural Analysis Report	1	SHI-ICC-R1010
Pre-Delivery Acceptance (PDA) Test Procedure for the Pump and Flow Control Subassembly (PFCS) KAAN Thermal Shroud	1	SHI-ICC-R1009
Pump Flow Control Subassembly (PFCS) Multi-Layer Insulation (MLI) Thermal Shroud Assembly Phase III Safety Data Package	1	SHI-ICC-R1008
Pump Flow Control Subasssembly (PFCS) Multi-Layer Insulation (MLI) Thermal Shroud Assembly Failure Modes and Effects Analysis (FMEA) / Critical Items List (CIL)	1	SHI-ICC-R1011
SHOSS Interface Plate Static Loads Test Plan	1	SHI-ICC-L0010
Specification of Requirements for Ammonia Servicing Ground Support Equipment (AS GSE) to be used in ICC Payload Tanking Operations	1	SHI-ICCOP-S0001
Standard Interface Plates, SHI-ICC-D5002-301, S/N 1004-1018 Acceptance Data Package	1	SHI-ICC-K0003
STIPL Static Loads Test Plan	1	SHI-ICC-L0008
STIPL-Lite Static Loads Test Plan	1	SHI-ICC-L0011
Structural Integrity Verification Plan for the Integrated Cargo Carrier Mission Support Equipment	1	SHI-ICC-L0001
STS-105/ISS 7A.1 Integrated Cargo Carrier (ICC) Mission Requirements and Allocations Document	1	SHI-ICC-S1008
STS-96 Materials Identification & Usage List for the Integrated Cargo Carrier Mission Support Equipment	1	SHI-ICC-L0002
WIF & Handrail Adapter Assembly, SHI-ICC-D5026 S/N 1001 - 1005, Acceptance Data Package	1	SHI-ICC-K0009
Work Instruction for the Unpressurized Cargo Pallet Plate Tooling Fixture and Drill Template	1	SHI-ICC-W0001
ICC I&O List of Applicable Documents	2A.1	ICC-RIHOU-LI-0001
ICC I&O ICA Status List for STS-102 / 5A.1	5A.1	ICC-RIHOU-LI-0002
External Stowage Platform 2 (ESP-2) Electrical, Electronic and Electromechanical (EEE) Parts List	ESP-2	ICC-RIHOU-LI-0003
ICC-RIBRE-LI-0010, Declared Materials, Mechanical Parts and Processes List for SOAR Flight Support Equipment & Connector Bracket on ICC Payload/STS-101	2A.2a	ICC-RIHOU-99-R249/RI
ICC-RIBRE-LI-0005, Keel Yoke Assembly Potentially Fracture Critical Items List		ICC-RIHOU-00-R118/RI

19

ICC-RIBRE-LI-0009, Keel Yoke Assembly Fracture Critical Item List		ICC-RIBRE-00-R119/RI
PLANS
Configuration Management Plan for ICC Integration & Operations	All	ICC-RIHOU-PL-0001
ICC Mission Training Plan	2A.2a	ICC-RIHOU-PL-0002
ICC Configuration Plan ICC Mission Training Plan	5A.1	ICC-RIHOU-PL-0003
STS-106/2A.2b ICC Mission Training Support Plan	106/ 2A.2b	ICC-RIHOU-PL-0004
STS-105/7A.1 ICC Mission Training Support Plan	7A.1	ICC-RIHOU-PL-0005
ICC STS-96/2A.1 Post Flight Report	2A.1	ICC-RIHOU-PL-0007
ICC-RIBRE-LET-004/ICC-RIBRE-PL-0011 Interface Management Plan for ICC Integration & Operations		ICC-RIHOU-99-R250/RI
ICC-RIBRE-PL-0012, ICC Program Mission Integration and Operations Management Plan		ICC-RIHOU-00-R115/RI
ICC-RIBRE-PL-0009, ICC Integration and Operations Product Assurance and Safety Plan		ICC-RIHOU-00-R116/RI
ICC-RIBRE-PL-0010, ICC Integration Site Safety and Health Plan		ICC-RIHOU-00-R117/RI
ASTRIUM - DATA CARRIERS (DC) (i.e. CD-ROMs)
STS-101/2A.2a ICC Photos (DASA/Astrium File Copy)	2A.2a	ICC-RIHOU-DC-0001
STS-101/2A.2a ICC Photos (SPACEHAB Copy, delivered under memo Ref: ICC-RIHOU-00-100, dated 7/6/00)	2A.2a	ICC-RIHOU-DC 0002
STS-106/2A.2b ICC Photos (Astrium File Copy)	2A.2b	ICC-RIHOU-DC-0003
STS-106/2A.2b ICC Photos (SPACEHAB Copy, to be delivered under memo Ref: ICC-RIHOU-00-TBD, dated TBD)	2A.2b	ICC-RIHOU-DC 0004
PROCEDURES
		ICC-RIHOU-PR-0001
KYA Handling & Orbiter Installation Procedure	2A.2a	ICC-RIKSC-PR-001
KYA Removal & Handling Procedure	2A.2a	ICC-RIKSC-PR-002
UCP Handling & Installation Procedure	2A.2a	ICC-RIKSC-PR-003
ICC Mission 2A.2a/Connector Mating & Close-Out Procedure	2A.2a	ICC-RIKSC-PR-005
REPORTS
STS-96 Design Coupled Loads Analysis – Cycle 1	2A.1	ICC-RIHOU-RP-0001
ICC 2A.1 Mass properties	2A.1	ICC-RIHOU-RP-0002
Structural Analysis for MICC, FSE and Cargo Attach Fasteners Bolt Analysis: Reference ICC-RIHOU-RP-0003 [Located in MSE & Cargo Fasteners Binder	2A.1	ICC-RIHOU-RP-0003
ICC Mass Verification Summary Report	2A.1	ICC-RIHOU-RP-0004

20

2A.1 VLA-2 Transient & Quasi-Static Recoveries for ICC	2A.1	ICC-RIHOU-RP-0005
STS-101/2A.2 ICC Mass Verification Summary Report	2A.2a	ICC-RIHOU-RP-0006
ICC-RIBRE-RP-0006, Payload Hazard Report, ICC Unsafe Configuration for Orbiter Return, Phase ll/lll, Loss Orbiter Entry Capability	2A.2	Payload Hazard Report
Post Mission Report	2A.1	ICC-RIHOU-RP-0007
Pre-Test Analysis & Correlation of the Unpressurized Cargo Pallet (UCP) to the RSC-E Modal Test	Generic	ICC-RIHOU-RP-0008
(Ref: ICC-RIHOU-99-R195/TM-SA-99-019 Memo w/enclosure) Loads Data Book for STS-101 Verification Loads Analysis (VLA) Report	2A.2a	ICC-RIHOU-RP-0009
ICC-RIBRE-RP-0009, Integrated Cargo Carrier Mission 5a. 1 Flight Safety Data Package Phase ll/lll	5A.1	ICC-RIBRE-RP-0009
INTERNAL STS-106/2A.2b ICC Mass Verification Summary Report	2A.2b	ICC-RIHOU-RP-0010
STS-101/2A.2a Post Flight Mission Report	2A.2a	ICC-RIHOU-RP-0011
STS-102/5A.1 ICC Verification Closure Tracking Report	5A.1	ICC-RIHOU-RP-0012
STS-106/2A.2b ICC Mass Verification Summary Report	2A.2b	ICC-RIHOU-RP-0013
Reflight Safety Assessment for STS-106 (Mission 2A.2b) [See Generic Binder # 13]	2A.2b	ICC-RIBRE-RP-0012
Ground Safety Assessment for STS-106 (Mission 2A.2b) [See Generic Binder # 13]	2A.2b	ICC-RIBRE-RP-0013
ICC Mission 2A.2 Ground Safety Data Package Phase III (ICC-RIBRE-RP-0008, Issue 1, Rev. B, Dated 11/17/99)	2A.2a	ICC-RIHOU-99-335
STS-106/2a.2b Post Flight Mission Report	2A.2b	ICC-RIHOU-RP-0014
STS-102/5A.1 ICC Mass Verification Summary Report	5A.1	ICC-RIHOU-RP-0015
STS-102/5A.1 IC No EAS Mass Verification Summary Report	5A.1	ICC-RIHOU-RP-0016
REQUIREMENTS
Mission Requirements & Allocations Document (MRAD) for STS-101/2A.2a	2A.2a	ICC-RIHOU-RQ-0001
Mission Requirements & Allocations Document (MRAD) for STS-102/5A.1	5A.1	ICC-RIHOU-RQ-0002
ICC Cargo customer Questionnaire (Generic)	All	ICC-RIHOU-RQ-0003
Mission Requirements & Allocations Document (MRAD) for STS-106/2A.2b [See Generic Binder # 14]	2A.2b	ICC-RIHOU-RQ-0004
Mission Requirements & Allocations Document (MRAD) for STS-106/2A.2b [See Generic Binder # 14]	2A.2b	ICC-RIHOU-RQ-0004
Mission Requirements & Allocations Document (MRAD) for STS-106/2A.2b [See Generic Binder # 14]	2A.2b	ICC-RIHOU-RQ-0004
ICC/Cargo Element Interface & Safety Verification Requirements & System Verification Requirements	5A.1	ICC-RIHOU-RQ-0005
TECHNICAL NOTES
ICC-RIBRE-TN-0003, Structural/Dynamic Analysis Report		ICC/RIBRE-TN-0003

21

		ICC-RIBRE-TN-0029, LCA, ESP, RU FSE Mass Properties		ICC-RIBRE-TN-0029
		ICC-RIBRE-TN-0014, ICC - Keel Yoke Structure Fracture Mechanics Analysis		ICC-RIBRE-TN-0014
		ICC Fracture Control Summary Report for STS-96/2A.1	2A.1	ICC-RIBRE-TN-0018
		ICC-RIBRE-TN-0023, ICC Thermal Worst Case Analysis for STS-101/2A.2	2A.2a	ICC-RIBRE-TN-0023
		ICC-RIBRE-TN-0027, ICC Thermal Worst Case Analysis for STS-102/5A.1	5A.1	ICC-RIBRE-TN-0027
		Fatigue Spectra for ICC - Cargo Items & FSE w/Mass m= 50kg up to 1815 kg		ICC-RIBRE-TN-0028
		ICC-RIBRE-TN-0030, Sensitivity Analysis of Non Corrolated FEM for Strela Components on 2A.2	2A.2a	ICC-RIBRE-TN-0030
		ICC-TN-RIBRE-0031, No Strela Sensitivity Analysis		ICC-RIBRE-TN-0031
		ICC-RIBRE-TN-0032, 5A.1 Contingency Landing Sensitivity Analysis	5A.1	ICC-RIBRE-TN-0032
		ICC-RIBRE-TN-0033, SOAR FSE Structural Analysis	2A.2a	ICC-RIBRE-TN-0033
		ICC-RIBRE-TN-0033, SOAR FSE Structural Analysis	2A.2a	ICC-RIBRE-TN-0033
		ICC-RIBRE-TN-0034, 5A.1 Sensitivity Analysis for Low Stiffness Delivery of LCA & RU	5A.1	ICC-RIBRE-TN-0034
		ICC-RIBRE-TN-0035, ICC 2A.2 SOAR FSE Fracture Mechanics Analysis	2A.2a	ICC-RIBRE-TN-0035
		ICC-TN-RIBRE-0037, Dynamic and Static Analysis of the ICC Mission 5A.1 Payload Flight Support Engineering	5A.1	ICC-RIBRE-TN-0037
		ICC-RIBRE-TN-0038, ICC Fracture Control Summary Report for STS-101/2A.2a	2A.2a	ICC-RIBRE-RN-0038
		ICC-RIBRE-TN-0040, ICC Fracture Control Summary Report for STS-106/2a.2b	2A.2b	ICC-RIBRE-TN-0040
		ICC-RIBRE-TN-0042, ICC Hoistin Beam Specification {Generic}	Generic	ICC-RIBRE-TN-0042
		ICC-RIBRE-TN-0045, ICC - 5A.1 FSE Fracture Mechanics Analysis	5A.1	ICC-RIBRE-TN-0045
		ICC-RIBRE-TN-0047, ICC Fracture Control Summary Report for STS-102/5A.1	5A.1	ICC-RIBRE-TN-0047
		Structural Design Criteria & Dimensioning Loads for ICC Cargo of Mission 5A.1	5A.1	ICC-RIHOU-TN-0001
		STS-101 PVLR Loads Report for the ICC	2A.2a	ICC-RIHOU-TN-0002
		ICC Generic Hardware Database for Keel Yoke Assembly & Unpressurized Cargo Pallets [Draft]	Generic	ICC-RIHOU-TN-0003
		ICC Generic Hardware Database for Flight Support Equipment [Draft]	Generic	ICC-RIHOU-TN-0004
		STS-106/2A.2b Payload Compliment Assessment	2A.2b	ICC-RIHOU-TN-0005
		STS-102/5A.1 Crew Bench Review/ Crew Interface Activities/ Crew Walkdown	5A.1	ICC-RIHOU-TN-0006
		STS-102/5A.1 Preflight Imagery Plan	5A.1	ICC-RIHOU-TN-0007
		External Stowage Platform 2 (ESP-2) Electrical Design and Analysis	ESP-2	ICC-RIHOU-TN-0008
1.3.1.3	KYA
		KYA1 ADP	1
		KYA2 ADP	1
1.3.1.4	PFAP

22

	End Item Specification	X
	Verification Matrix	X
	Schedule	X
	ICDs/ICAs	X
	RIDs from PDR/IDR	X
	Results of Safety Review	X
	Flight drawings (releasable)	X
	Parts List	X
	EVA layout	X
	Mass Properties report	X
	Bonding Diagram	X
	RIDs from PDR/IDR	X
	SIVP (final)	X
	Stress Analysis	X
	Fatigue Analysis	X
	Loads Report	X
	Loads Model	X
	Fracture Control Plan (final)	X
	Fracture Analysis	X
	Test Plans and Procedures (draft)	X
	RIDs from PDR/IDR	X
	Thermal Report	X
	Thermal Model	X
	FMEA/CIL	X
	MIUL	X
1.3.2 GENERIC ICC PROGRAM DOCUMENTATION
	ROBUST CONFIGURATION (REPORT)	X
	GENERIC ICC PROGRAM 3 PHASE SUMMARY	X
	PLATE TESTING
	TEST PLANS/REPORT	X
	CORRELATED MATH MODEL(S)	X
	PHASE 1A
	TEST PLAN	X

23

	RSC-E TEST REPORT	X
	UCP CAPABILITY DOCUMENT	X	ASI-00002
	PHASE 1B
	TEST PLAN	X
	RSC-E TEST REPORT	X
	UCP CAPABILITY DOCUMENT (UPDATE)	X	ASI-00002
2.0 VCC
2,1 FLIGHT HARDWARE
	VCC1 Flight Unit	1	397GK.1000
	VCC NBL Unit (Refinished VCC2)	1	397GK.1000
	VCC3 Flight Unit	1	397GK.1000
	Flight Spare Parts Kit	2	ZIP
	INSERT (NHP)	2	381GK.1000-128
	INSERT (LONGERON TRUNNION BRACKET)	2	381GK.1000-129
	BOLT (SECTION INTERFACE)	5	397GK.0000-501
	ANGULAR PIN (SECTION INTERFACE)	2	397GK.2000-132
	PIN (SECTION INTERFACE)	5	397GK.2000-133
	BOLT (TRUNNION BRACKET ATTACHMENT)	5	397GK.0000-502
	WASHER (SECTION INTERFACE)	5	397GK.0000-505
	KEEL FITTING ATTACHMENT	2	SCREW M12 X 1.5
	KEEL FITTING ATTACHMENT	2	WASHER A12
	SCUFF PLATE ATTACHMENT SCREW M10-6e X 24.26.011	2
	PIN (KEEL FITTING ATTACHMENT)	2	397GK.3000-405
	BOLT (KEEL FITTING ATTACHMENT)	2	397GK.3000-305
2,2 FLIGHT SUPPORT EQUIPMENT		N/A
2,3 GSE AND MISCELLANEOUS HARDWARE
	Unique Test Hardware	A/R*
	VCC2 Spare Parts Kit	1
	Special tools for re-assembly	1
	GSE Kit (Stabilizing beam for outer section)	3
	Special Fixtures for re-assembly	1
	Re-useable Shipping Container Sets	3

24

	* Quantity to be determined by mutual agreement.
2,3 DOCUMENTATION
	VCC System Requirements Specification (SRS) Rev 0	X	SHI-VCC-S1003
	Design Coupled Loads Results **	X	N/A
	Shuttle Thermal Analysis	X	SHI-VCC-XXXX
	LOADS DATA BOOK (APPENDIX X OF SHI-VCC-S1002)	X
	Mass properties report	X
	Structural verification plan	X	(Line Item 314)
	Thermal analysis
	Report	X	(Line Item 316)
	Model	X	(Line Item 317)
	Structural strength analysis report	X	(Line Item 318)
	Loads analysis
	Report	X	(Line Item 319)
	Loads model	X
	Drawing Package	X
	VCC Section interchangeability verification plan (INC W/STRUCTURAL VERIFICATION PLAN)	X
	Fracture control plan	X	(Line Item 324)
	Static Test
	Static Test Plan	X	(Line Item 326)
	Static Test Procedures	X	(Line Item 327)
	Static test fixture drawings	X	(Line Item 328)
	Static Test Report	X	(Line Item 329)
	Modal Test
	Modal Test Plan	X	(Line Item 331)
	Modal Test Procedure	X	(Line Item 332)
	Test fixture and simulators drawings	X	(Line Item 333)
	Modal Test Report	X	(Line Item 334)
	Correlated Math Model	X	(Line Item 335)
	Requirements Compliance Matrix	X
	VCC1 Passport (Formular)	X	(Line Item 337)
	VCC1 Non-Conformance Report	X
	VCC1 EVA Sharp Edges Inspection Report (AKT)	X	(Line Item 339)

25

VCC1 Released Working Drawings (VCC)	X	(Line Item 340)
VCC1 Released Working Drawings (GSE)	X
VCC3 Passport (Formular)	X	(Line Item 342)
VCC3 Non-Conformance Report	X
VCC3 EVA Sharp Edges Inspection Report (AKT)	X
VCC3 Released Working Drawings (VCC)	X
VCC3 Released Working Drawings (GSE)	X
Operator’s Manual (VCC)	X	(Line Item 347)
Operator’s Manual (GSE)	X	(Line Item 348)
Material Usage List	X	(Line Item 349)
Material Usage Agreement (MUA) (if required)	X	(Line Item 350)
Bulk Data NASTRAN Finite Element Model	X

26

EX-10.28

Exhibit 10.28

Amendment No. 1

To Asset Purchase Agreement

This amendment (“Amendment No. 1”) is made as of this 3rd day of July, 2001 by and between Astrium, GmbH, a German corporation (“Astrium”), and Spacehab, Incorporated (“SHI”), a state of Washington corporation.

WHEREAS, Astrium and SHI have entered into an Asset Purchase Agreement dated December 19, 2000 (“Asset Purchase Agreement”) for the sale of certain commercial space hardware known as the integrated cargo carrier (“ICC”) and related assets (the “ICC System Assets”) and known as vertical cargo carrier (“VCC”) and related assets (the “ICC-V System Assets”);

WHEREAS, SHI desires to split the delivery of the ICC-V System assets into one partial delivery (the “Partial Delivery”) and one final delivery (the “Final Delivery”);

NOW THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, it is hereby agreed that:

Amendment No. 1 to Asset Purchase Agreement

1. Article 3.2 (b) of the Asset Purchase Agreement is hereby deleted in its entirety and replaced by the following wording:

“The Second Closing shall occur in two separate steps, i.e. the Partial Delivery and the Final Delivery of the ICC-V System Assets. Upon the Partial Delivery Seller shall deliver those items to Purchaser as identified for partial delivery in Schedule 1, Section 2, and Purchaser shall make a partial payment of One Million Five Hundred Thousand Dollars ($1,500,000). The Partial Delivery shall take place in August 2001. Upon the Final Delivery Seller shall deliver to Purchaser those items identified as ICC-V System Assets as far as they have not been delivered under the Partial Delivery and the Purchaser shall pay Seller Two Million Nine Hundred Thousand Dollars ($2,900,000). The Final Delivery shall occur at such place and on such date and at such time as the parties mutually agree after the ICC-V system has been qualified for flight onboard Space Shuttle in accordance with the requirements identified in Article 6.2 (e) of this Agreement. Upon the Second Closing, Seller shall execute and deliver to Purchaser (i) a Bill of Sale each for the Partial Delivery and the Final Delivery and (ii) such other endorsements, assignments and such other instruments of transfer and conveyance, in form and substance reasonably satisfactory to Purchaser, as shall be effective to vest in the Purchaser as of the date of the Second Closing good title, free and clear of any Claims, to the ICC-V System Assets and all other assets set forth in sections 1.3 (a), (b), (c) and (d) related to the ICC-V System Assets. In addition, both parties shall execute and deliver such other ancillary documents contemplated by, or arising under, this Agreement as are necessary in order to effect the transfers contemplated for the Second Closing. Completion of the Second Closing shall occur upon performance of the Final Delivery”

2. Article 8.1 (a) of the Asset Purchase Agreement is amended by adding the following sentence at the end of the paragraph:

“ Purchaser may terminate this Agreement at any time with respect to the Partial Delivery of the ICC-V System Assets if Seller fails to perform the Final Delivery with respect to the ICC-V System Assets in accordance with the terms of this Agreement.”

3. Schedule 1 of the Asset Purchase Agreement is amended by deleting its Section 2.0 in its entirety and replacing it with the annex to this Amendment No. 1.

4. All capitalized terms used and not defined herein shall have the meaning ascribed to them in the Asset Purchase Agreement.

Amendment No. 1 to Asset Purchase Agreement

IN WITNESS WHEREOF, the undersigned has executed this Amendment No. 1 to the Asset Purchase Agreement as of this 3^rd day of July, 2001.

ASTRIUM, GMBH
By:	/s/    DR. STEFAN GRAUL	By:	/s/    DR. ECKART WOLFF
Name:	Dr. Stefan Graul	Name:	Dr. Eckart Wolff
Title:	Director Orbital Infrastructure & Ops	Title:	Director of Finance, Control, Procurement & Commercial

SPACEHAB, INCORPORATED
By:	/s/    MICHAEL E. KEARNEY
Name:	Michael E. Kearney
Title:	President

Amendment No. 1 to Asset Purchase Agreement

DESCRIPTION	QTY/REF	REF
1.0 VCC
1,1 FLIGHT HARDWARE
VCC1 Flight Unit	1	397GK.100
VCC NBL Unit (Refinished VCC2)	1	397GK.100
VCC3 Flight Unit	1	397GK.100
Flight Spare Parts Kit	2	ZIP
INSERT (NHP)	2	381GK.100
INSERT (LONGERON TRUNNION BRACKET)	2	381GK.100
BOLT (SECTION INTERFACE)	5	397GK.000
ANGULAR PIN (SECTION INTERFACE)	2	397GK.200
PIN (SECTION INTERFACE)	5	397GK.200
BOLT (TRUNNION BRACKET ATTACHMENT)	5	397GK.000
WASHER (SECTION INTERFACE)	5	397GK.000
KEEL FITTING ATTACHMENT	2	SCREW M
KEEL FITTING ATTACHMENT	2	WASHER A
SCUFF PLATE ATTACHMENT SCREW M10-6e X 24.26.011	2
PIN (KEEL FITTING ATTACHMENT)	2	397GK.300
BOLT (KEEL FITTING ATTACHMENT)	2	397GK.300
1,2 FLIGHT SUPPORT EQUIPMENT	N/A
1,3 GSE AND MISCELLANEOUS HARDWARE
Unique Test Hardware	A/R*
VCC2 Spare Parts Kit	1
Special tools for re-assembly	1
GSE Kit (Stabilizing beam for outer section)	3
Special Fixtures for re-assembly	1
Re-useable Shipping Container Sets	3

Notes:

1. All line items marked “P” are included in Partial Delivery

2. 1 of 3 Shipping Container sets included in partial delivery

Amendment No. 1 to Asset Purchase Agreement

EX-10.29

Exhibit 10.29

LEASE AGREEMENT

dated as of February 28, 2001

between

ASTRIUM NA, INC.

as LESSOR,

and

SPACEHAB, INCORPORATED,

as LESSEE

This Lease Agreement has been executed in several counterparts. To the extent, if any, that this Lease Agreement constitutes chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in this Lease Agreement may be created through the transfer or possession of any counterpart other than the original counterpart containing the receipt therefor executed by the Lessor immediately following the signature page hereof.

TABLE OF CONTENTS

Section 1.	Definitions	1
Section 2.	Agreement to Lease on the Closing Date	1
Section 3.	Term and Rent	1
Section 4.	Representations and Warranties; Certain Agreements of Lessee	2
Section 5.	Liens	2
Section 6.	Operation, Possession and Sublease	3
Section 7.	Alterations, Modifications and Additions	4
Section 8.	Loss Destruction, Requisition	5
Section 9.	Inspection	5
Section 10.	Assignment	5
Section 11.	Events of Default	6
Section 12.	Remedies	7
Section 13.	Tax Matters	8
Section 14.	Further Assurances; Covenant of Quiet Enjoyment	11
Section 15.	Notices	11
Section 16.	Net Lease, No Set-Off, Counterclaim, etc.	11
Section 18.	Language	12
Section 19.	Miscellaneous	13
Section 20.	Waiver of Jury Trial	13

i

Appendix A		Definitions
Exhibit I	-	Equipment (Terms of Lease, Lease Period Dates; Rents)
Exhibit II		Tax Assumptions

ii

Exhibit 10.29

LEASE AGREEMENT

This LEASE AGREEMENT, dated as of February 28, 2001 (this “Lease” or this “Agreement”), between ASTRIUM NORTH AMERICA, INC., a corporation organized and existing pursuant to the laws of Delaware (the “Lessor”), and SPACEHAB, Incorporated, a corporation organized and existing pursuant to the laws of the State of Washington (“SHI” or the “Lessee”).

WHEREAS, the parties hereto have entered into an Agreement on Principles for Lease of ICC/ICC-V, dated as of November 30, 2000 with respect to the subject-matter of this Lease;

WHEREAS, the parties hereto are also parties to that certain Asset Purchase Agreement (the “Sale Agreement”), dated as of the date hereof, regarding the sale of the Equipment from the Lessee to the Lessor.

Section 1. Definitions.

(a) Unless otherwise provided herein, capitalized terms used herein without definition shall have the meanings assigned to such terms in Appendix A.

Section 2. Agreement to Lease on the Closing Date.

Subject to the terms and conditions of this Lease, Lessor hereby agrees to lease to Lessee hereunder, and Lessee hereby agrees to accept delivery of and to lease from Lessor hereunder, the Equipment on the Closing Date, whereupon the Term shall commence.

Section 3. Term and Rent.

(a) Term; Renewal; Rent. Subject to delivery of the Equipment as provided in Section 2, Lessee hereby leases the Equipment from Lessor for the term of four (4) years (the “Initial Term”) from the Closing Date (the “Initial Termination Date”); provided, that Lessee shall have the option (an “Option”) to renew this Lease for up to two (2) additional periods of four (4) years each beyond the Initial Termination Date, on the same terms and conditions as are set forth in this Agreement (with such extended period pursuant to the Option exercise the “Extended Term” and the Initial Term and any Extended Term collectively, the “Term”). Lessee agrees to pay to Lessor Rent for the Equipment in an amount equal to the amount set forth with respect to the Equipment on Exhibit I hereto. Should Lessee exercise the option described herein, the rent for the subsequent Term covered by such option shall escalate at a rate of 5% per year starting at the beginning of the subsequent term.

(b) Manner of Payment. All Rent shall be paid by Lessee to Lessor’s Account in Immediately Available Funds not later than 12:00 noon, New York time, on the date of payment. If any payment hereunder is due on a date that is not a Business Day, such payment shall be made on the next succeeding Business Day, and no interest shall accrue if such payment is made on the next succeeding Business Day.

(c) Interest on Overdue Rent. Lessee also agrees to pay to Lessor any and all Rent promptly as the same shall become due and owing (or on demand if no due date is specified). In the event of any failure on the part of Lessee to pay any Rent, Lessor and each such other Person shall have all rights, powers and remedies provided for herein or by law or in equity or otherwise in the case of nonpayment of Rent. Lessee will also pay, on demand, to the extent permitted by Applicable Law, interest at the Overdue Interest Rate on any part of any installment of Rent not paid when due for any period for which the same shall be overdue for the period from such due date or demand until the same shall be paid. All Rent to be paid pursuant to this Section 3(c) shall be payable in the type of funds and in the manner set forth in Section 3(b).

Section 4. Representations and Warranties; Certain Agreements of Lessee.

(a) Representations and Warranties. Lessee acknowledges and agrees that the Equipment is of a size, design, capacity and manufacture selected by and acceptable to Lessee, and Lessee is satisfied that the Equipment is suitable in design, maintenance, and condition for its purposes. Lessor does not make or give and shall not be deemed to have made or given, and hereby expressly disclaims any representation or warranty, express or implied, as to the title, value, condition, design, operation, merchantability or fitness for use of the equipment or any part thereof, or as to the absence of latent or other defects, whether or not discoverable, or as to the absence of any infringement or interference with any patent, trademark or copyright, or as to the absence of obligations based on strict liability in tort or any other representation or warranty whatsoever, express or implied, with respect to the equipment or any part thereof, except that Lessor warrants that as of the Closing Date Lessor shall have such interest in the Equipment as was conveyed to it by Lessee under the Sale Agreement and that the Equipment or any Parts (and any interest therein) shall during the Term be free of Lessor Lien attributable to it. Lessor shall be responsible for the reliability, and maintenance of the Equipment and any Parts thereof.

(b) Manufacturer’s Warranties. None of the provisions of this Section 4 or any other provision of this Lease shall be deemed to amend, modify or otherwise affect the representations, warranties or other obligations (expressed or implied) of the Manufacturer or any subcontractor or supplier of the Manufacturer with respect to any Item of the Equipment or any Parts forming a part of in or attached to any Item of Equipment or to release the Manufacturer or any such subcontractor or supplier from any such representation, warranty or obligation. Lessee shall have the benefit of and shall be entitled to enforce (as it shall deem appropriate), any and all manufacturer’s credits, guarantees, indemnities, warranties or other benefits, available to Lessor or Lessee in respect of the Equipment.

Section 5. Liens.

Lessee will not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to the Equipment or any Part, title thereto or any interest therein or in or to this Lease (or any other Operative Documents to which Lessee is a party) except Permitted Liens. Lessee will promptly, at its own expense, take such action as may be necessary duly to discharge (by bonding or otherwise) any Lien that is not a Permitted Lien if the same shall arise at any time during the Term.

2

Section 6. Operation, Possession and Sublease.

(a) Maintenance and Operation, Etc. Lessee, at its own cost and expense, undertakes (or shall cause any Permitted Sublessee to undertake) that throughout the Term, Lessee (or any Permitted Sublessee) shall comply with the following agreements and undertakings:

(i) Operation and Use. Lessee shall:

(A) ensure that the Equipment is used, operated and controlled in accordance with all Applicable Laws of the United States (and of any country in which the Equipment may be operated).

(B) ensure that the Equipment is not used for any purpose for which it is not designated or reasonably suited, or outside the tolerances and limitations for which the Equipment was designed, and will be operated in accordance with Lessor’s operating manuals, and in accordance with all applicable ISS and Shuttle regulations and operating procedures; and

(C) ensure that the Equipment is used for its intended function and not for any illegal purpose or in any illegal manner.

(D) ensure that the Equipment is not used in any manner or location which would cause the loss of any applicable tax exemption or cause Lessor to become subject to taxation in any jurisdiction in which it was not, as of the date of this Lease, then subject to taxation.

(ii) Certificates and Licenses. Lessee shall ensure that there are obtained and maintained in full force and effect in good standing at all times all necessary certificates, authorizations and qualifications required to perform the Lessee’s (and any Permitted Sublease’s) obligations under the Operative Documents and for the use and operation of the Equipment.

(b) Possession and Subleases.

(A) General Restrictions. Lessee shall not, without the prior written consent of Lessor (which consent shall not be unreasonably withheld), sublease or otherwise in any manner deliver, transfer or relinquish possession of any Item of Equipment

No transaction permitted under this Section 6(b) shall involve any transfer of title in or to any Item of Equipment or any Part thereof nor shall it in any way diminish, release or discharge any of Lessee’s obligations to Lessor under this Lease or under any other Operative Document. Lessee shall remain primarily liable for the performance of all of its obligations under this Lease irrespective of any such transaction.

(ii) Performance by Sublessee. Notwithstanding anything to the contrary contained in this Lease, if any obligation that is required to be performed by Lessee under this Lease is performed or not performed, as the case may be, by any Permitted

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Sublessee, then performance or non-performance by such Permitted Sublessee shall, to the extent thereof only, for the purposes of this Lease constitute performance or non-performance by Lessee.

(c) Location of Equipment. Nothing in this Lease or elsewhere in the Operative Documents shall be deemed to require that the Equipment be maintained in any particular location; provided that (i) prior to relocation of any Item of Equipment to a country which is not a member of the OECD, Lessee shall provide to Lessor an opinion of counsel in such jurisdiction reasonably acceptable to Lessor to the effect that the laws of such jurisdiction would not impair the right of Lessor to repossess such Item of Equipment upon the occurrence of an Event of Default and (ii) prior to relocation of any Item of Equipment outside of the United States, Lessee shall provide to Lessor an opinion of counsel in such jurisdiction reasonably acceptable to Lessor that such relocation shall not cause Lessor to become subject to taxation in such jurisdiction in any respect.

Section 7. Alterations, Modifications and Additions.

Upon receiving prior written approval from the Lessor, Lessee or any Permitted Sublessee, at its own expense, may from time to time make such additions, alterations and modifications, including removal (without replacement) of Parts which Lessee or any Permitted Sublessee deems obsolete or no longer appropriate or suitable for use in the Equipment, and additions to the Equipment as Lessee or such Permitted Sublessee may deem desirable in the proper conduct of its business; provided that no such alteration, modification, removal or addition decreases the value, utility, residual value or remaining economic useful life of the Equipment below the value, utility, residual value or remaining economic useful life thereof immediately prior to such alteration, modification, removal or addition assuming the Equipment was then in the condition required to be maintained by the terms of this Lease. Any severable Part not mandated by Applicable Law to be incorporated or installed in or attached or added to the Equipment as the result of such alteration, modification, removal or addition shall not constitute part of Lessor’s Interest and may be removed at any time during the Term; provided that (i) such Part is in addition to, and not in replacement of or substitution for, any Part originally incorporated or installed in or attached or added to the Equipment at the time of the delivery thereof thereunder or any Part in replacement of or substitution for any such Part; (ii) such Part is not otherwise required to be incorporated or installed in or attached to the Equipment pursuant to the terms hereof or in order to maintain insurance coverage; and (iii) such Part can be removed from such Equipment without damage and without diminishing the value, utility, residual value or remaining economic useful life of such which the Equipment would have had at such time had such alteration, modification, removal or addition not occurred, assuming such Equipment was maintained in the condition required by the terms of this Lease. All other such Parts and the rights of Lessor and Lessee with respect thereto shall be subject to the Sale Agreement and this Lease. Upon termination of this Lease or, in the event that this Lease is renewed pursuant to Section 3(a) hereof, the termination of the term of the last renewal, with respect to any Item of Equipment, Lessor shall have the right to purchase for its then fair market value such Item of Equipment or any severable Part owned by Lessee (or its designee) not removed prior to the return to Lessor (including pursuant to the exercise of remedies following an Event of Default) of such Item of Equipment. If Lessor elects not to purchase a severable Part owned by Lessee (or its designee), Lessee or a Permitted Sublessee, as the case may be, may at

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its option remove such Part or return the applicable Item of Equipment with such Part intact (in which case such Part shall become subject to the Sale Agreement without further act by the parties hereto). Any permitted additions or modifications will be permanently recorded and the records of such shall be made available at the request of the Lessor.

Section 8. Loss, Destruction, Requisition.

(a) General. Upon the occurrence of an Event of Loss with respect to any Item of Equipment, Lessee shall be liable only for Rent having accrued and remaining unpaid as of the occurrence of such Event of Loss. Thereafter, Lessee shall not be responsible, and shall bear no liability, for the Item of Equipment having suffered such Event of Loss and Lessee shall have no further obligations with respect to such Item of Equipment. Notwithstanding the foregoing, Lessee shall forthwith (and, in any event, within five (5) days after such occurrence) give Lessor written notice of such Event of Loss.

(b) Seizure and Requisition. In the event of the seizure or requisition of an Item of Equipment (other than as set forth in Appendix A, paragraphs (c) and (d) of the definition of “Event of Loss”) by any Governmental Authority which results in the loss of possession of such Item of Equipment (or, if any Permitted Sublease is then in effect, the Permitted Sublessee thereunder) during the Term, the Lessee or, as the case may be, the Permitted Sublessee shall not be responsible for any Rent for such Item of Equipment attributable to the period of time during which the Item of Equipment was not in the possession of the Lessee or, as the case may, the Permitted Sublessee.

Section 9. Inspection.

At reasonable times and upon reasonable written notice to Lessee or any Permitted Sublessee, Lessor, and its respective authorized representatives may at their own expense (or at the expense of Lessee if an Event of Default shall have occurred and be continuing) and risk conduct a visual walk-around inspection of the Equipment and may inspect the books and records of Lessee related thereto. No inspection pursuant to this Section 12 shall interfere with the use, operation or maintenance of the Equipment or the normal conduct of the business of Lessee or any Permitted Sublessee of the Equipment, and Lessee shall not be required to undertake or incur any additional liabilities in connection therewith. Lessor shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection.

Section 10. Assignment.

Except as otherwise provided in Section 6(b) or in the case of any requisition by the government of the United States of America or Germany referred to in Sections 8 and in “Event of Loss”, Lessee will not, without prior written consent of Lessor, assign any of its rights hereunder, except as expressly permitted hereunder. Lessor agrees that it will not assign or convey its rights and interests in and to the Sale Agreement, this Lease and the Equipment except

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as contemplated thereby. The terms and provisions of this Lease shall be binding upon and inure to the benefit of Lessor and Lessee and their respective successors and assigns.

Section 11. Events of Default.

The following events shall constitute Events of Default (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a) Lessee shall fail to make any payment of Rent which has accrued and remains unpaid within five (5) Business Days after delivery of written notice of such failure by Lessor to Lessee; or

(b) Lessee shall fail to make any other payment of Rent and such failure shall continue un-remedied for a period of thirty days after written demand therefor by Lessor to Lessee; or

(c) Lessee shall fail to perform or observe any covenant (other than the covenants described in paragraphs (a), (b) or (c) of this Section 11), condition or agreement to be performed or observed by it hereunder or under any other Operative Document, and such failure shall continue unremedied for a period of thirty (30) days after written notice thereof by Lessor to Lessee (or, if such failure is capable of being cured, but not within such 30-day period, and provided Lessee is diligently pursuing such cure, for an additional period, not to exceed one hundred and eighty (180) days, as may reasonably be required in order for Lessee to cure such failure); or

(d) any representation or warranty made by Lessee herein, in the Sale Agreement or in any document or certificate furnished by Lessee in connection herewith or therewith or pursuant hereto or thereto shall prove to have been incorrect in any material respect on the date as of which made and shall not have been corrected within 30 days after receipt of written notice from Lessor of such incorrectness; or

(e) Lessee shall consent to the appointment of a receiver, trustee or liquidator of itself or of a substantial part of its property, or Lessee shall admit in writing its inability to pay its debts generally as they come due, or shall make a general assignment for the benefit of creditors; or

(f) Lessee shall file a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization in a proceeding under any bankruptcy laws (as now or hereafter in effect) or an answer admitting the material allegations of a petition filed against Lessee in any such proceeding, or Lessee shall, by voluntary petition, answer or consent or otherwise, seek relief under the provisions of any other now existing or future bankruptcy or other similar law providing for the reorganization or winding-up of corporations, or providing for an agreement, composition, extension or adjustment with its creditors; or

(g) an order, judgment or decree shall be entered in any proceeding by any court of competent jurisdiction appointing, without the consent of Lessee, a receiver, trustee or liquidator

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of Lessee or any substantial part of its property, or sequestering any substantial part of the property of Lessee, and any such order, judgment or decree or appointment or sequestration shall remain in force undismissed, unstayed or unvacated for a period of ninety (90) days after the date of entry thereof; or

(h) a petition against Lessee or a proceeding under applicable bankruptcy laws or other insolvency laws, as now or hereafter in effect, shall be filed and shall not be withdrawn or dismissed within ninety (90) days thereafter, or if, under the provisions of any law providing for reorganization or winding-up of corporations which may apply to Lessee or, any court of competent jurisdiction shall assume jurisdiction, custody or control of Lessee or of any substantial part of its property and such jurisdiction, custody or control shall remain in force unrelinquished, unstayed or unterminated for a period of ninety days; or

(i) any additional proceeding for the relief of financially distressed debtors is entered into by Lessee voluntarily or involuntarily.

Section 12. Remedies.

Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare this Lease to be in default by a written notice to Lessee. At any time thereafter, so long as Lessee shall not have remedied all outstanding Events of Default, Lessor may do one or more of the following with respect to all or any part of its rights and interests in the Equipment as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, Applicable Law then in effect:

(a) cause Lessee, upon the written demand of Lessor and at Lessee’s expense, to return promptly to Lessor, and Lessee shall return promptly to Lessor, all or such part of the Equipment as Lessor may so demand or otherwise in accordance with its order in the manner and condition as if the Equipment were being returned at the end of the Term, or Lessor, at its option, may enter upon the premises where all or any part of the Equipment is located and take immediate possession of and remove the same by summary proceedings or otherwise, all without liability accruing to Lessor for or by reason of such entry or taking of possession or removal, whether for the restoration of damage to property caused by such action or otherwise;

(b) sell all of its rights and interests in the Equipment or any Item of Equipment at public or private sale, as Lessor may determine, or otherwise dispose of, hold, use, operate, lease to others or keep idle all or any part of the Equipment as Lessor, in its sole discretion, may determine, all free and clear of any rights of Lessee, except as hereinafter set forth in this Section 12, and without any duty to account to Lessee with respect to such action or inaction or for any proceeds with respect thereto, except (i) to the extent required by paragraph (c) below if Lessor elects to exercise its rights under such paragraph (c) and (ii) that Lessor shall obtain Lessee’s prior consent to such sale or disposition, such consent of Lessee not to be unreasonably withheld;

(c) Lessor may cancel, rescind or terminate this Lease by delivery of a notice of rescission or termination to Lessee, or may exercise any other right or remedy which may be

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available to it under applicable law or may proceed by appropriate court action to enforce the terms of this Lease at Lessee’s expense or to recover damages for the breach hereof.

In addition, in the event that Lessor shall have exercised any of its rights with the result that Lessee no longer enjoys the rights set forth in Section 13(a) of this Agreement, Lessee shall be liable only for any and all unpaid Rent which shall have accrued as of the date upon which Lessee ceases to have the benefit of the rights as set forth in Section 13(a) of this Agreement and for all reasonable legal fees and other costs and expenses incurred by reason of the occurrence of any Event of Default or the exercise of Lessor’s remedies with respect thereto, including all costs and expenses incurred in connection with the retaking or return of the Equipment or in placing such Equipment in the condition required. If requested by Lessor, Lessee will use its best efforts after such return of the Equipment to aid in the sale of Lessor’s rights and interests in the Equipment. At any sale of the Equipment pursuant to this Section 12, Lessee or any of its Affiliates may bid for and purchase the Equipment. Except as otherwise expressly provided above, no remedy referred to in this Section 12 is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No express or implied waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of any future or subsequent Event of Default. To the extent permitted by Applicable Law, Lessee hereby waives any rights, except those set forth in this paragraph, now or hereafter conferred by statute or otherwise which may require Lessor to sell its rights and interests in the Equipment, or lease or otherwise use the Equipment or any part thereof in mitigation of Lessor’s damages as set forth in this Section 12 or which may otherwise limit or modify any of Lessor’s rights or remedies under this Section 12. Lessor shall provide Lessee with not less than 30 days’ prior notice of any sale or other disposition of the Equipment or any Item of Equipment pursuant to paragraph (b) above.

Section 13. Tax Matters

(a) Tax Payments.

(i) Spacehab shall pay all Taxes which are levied, assessed or imposed on or with respect to Spacehab, the Equipment, or any Part thereof or interest therein or any addition, alteration, modification or improvements thereto, or on the Rent payable hereunder, except the income Taxes described in subsection (b), but including all penalties, additions to tax, fines and interest in connection with any such Taxes (“Spacehab Taxes”).

(ii) The Taxes which Spacehab is required to pay pursuant to this Section shall be treated as payments of additional Rent for all purposes of this Agreement (including the default provisions hereof) except the payment procedures of Section 3(b)), provided however, that in the event Spacehab shall unintentionally have failed to pay any Spacehab Taxes or shall have failed to pay Spacehab Taxes as a consequence of being reasonably unaware of such requirement, Spacehab shall have a period of 15 days from notice thereof by either any

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applicable taxing authority or Astrium NA within₌which to make the required payment in full before such failure to pay shall be treated as a default for purposes of this Agreement.

(iii) To the extent any Spacehab Taxes may be imposed on or payable only by Astrium N A, Spacehab shall pay Astrium N A the full amount thereof by the date which is 15 days prior to the earlier of: (A) the due date for each such Tax or (B) the date specified by each applicable taxing jurisdiction on which each such Tax shall become a lien on the Equipment or any Part thereof.

(iv) The payment obligations under subsection (a) shall apply from the effective date hereof through the later of (A) the end of the Term and (B) Spacehab’s actual return of possession of the Equipment in accordance with this Lease.

(b) Astrium NA shall pay any Federal, national, state, or municipal net income Tax which is a liability or obligation of Astrium NA.

(c) Tax Assumptions, Representations, Warranties, and Covenants.

(i) The parties are entering into the Operative Documents and Astrium NA has calculated the Rent, based on, among other things, the assumed tax treatment set forth in Exhibit II hereto (the “Tax Assumptions”). In the event of any material change in the Tax Assumptions, the parties shall thereafter, if and to the extent appropriate, promptly renegotiate the Rent to restore Astrium NA’ economics in a manner consistent with its intended returns under this Lease but taking into account the change in the Tax Assumptions.

(ii) Spacehab has not and during the Term will not, with respect to the Equipment or any Part thereof, (i) claim any cost recovery deductions, amortization deductions or interest deductions (each as defined in the Code), or (ii) make any elections or take any position on any Tax return, amended Tax returns, claim for refund or otherwise that is inconsistent with the Tax Assumptions or (iii) claim to be the owner of such Property for United States Federal (“Federal”), Florida or other country, state or local tax purposes, provided however, that nothing in this subsection shall operate to restrict or limit the ability of Spacehab to file amended Tax returns for any period ending on or before the earlier of the effective date of this Agreement or the actual date of transfer of title to the Equipment.

(d) Tax Contests.

(i) If any written claim shall be made or proceeding commenced against Spacehab or Astrium NA for any Spacehab Taxes, Spacehab or shall promptly notify the other party in writing (any contest of any such claim or proceeding a “Contest”).

(ii) Spacehab shall conduct and control any Contest which must be conducted in its name.

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(iii) Astrium NA shall conduct and control any other Contest.

(iv) The party conducting the Contest (“Controlling Party”) shall consult in good faith with the other party (“Noncontrolling Party”) and its counsel with respect to such Contest but the decisions regarding what actions to be taken shall be made by the Controlling Party in its sole judgment (exercised in good faith). In addition, the Controlling Party shall keep the Noncontrolling Party reasonably informed as to the progress of the Contest, and shall provide the Noncontrolling Party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the Controlling Party or any affiliate thereof, in connection with such claim, proceeding, Tax or Contest.

(e) Tax Compliance. With respect to any report, return or statement (a “Filing”) required to be filed with respect to any Spacehab Tax:

(i) Spacehab shall promptly notify Astrium NA in writing of any Filing required to be made by that (x) Spacehab has knowledge of; or (y) Spacehab should have knowledge of based on either the Operative Documents or the responsibilities which are customary for an operator, user or lessor of similar property. Upon receipt of such notice, Astrium NA shall promptly notify Spacehab in a writing satisfying the requirements of Section 15 whether it will make such Filing or shall require that Spacehab make such Filing.

(ii) If permitted by applicable Laws to do so, Spacehab shall timely file or cause to be filed such Filing with respect to any Spacehab Tax (except for any such Filing that Astrium NA has notified Spacehab in writing that Astrium NA intends to file) and will send a copy of such Filing to Astrium NA.

(iii) If Spacehab is not permitted by applicable Laws to file any Filing contemplated by subsection (ii), Spacehab will promptly notify Astrium NA of such requirement in writing and prepare and deliver to Astrium NA a proposed form of such Filing within a reasonable time, and in all events at least 15 days prior to the time such Filing is required to be filed.

(iv) In the case of any Filing contemplated by this subsection 13(d), Spacehab and Astrium NA shall provide to each other such information as is necessary to make any such Filing.

(v) Spacehab shall hold Astrium NA harmless from and against any liabilities, including, but not limited to penalties, additions to tax, fines and interest, arising out of any insufficiency or inaccuracy in any Filing contemplated by this subsection 13(d), if such insufficiency or inaccuracy is attributable to Spacehab.

(f) Tax Indemnity. Spacehab shall within 15 days of notice thereof, indemnify and hold Astrium NA harmless with respect to all Spacehab Taxes which may be imposed against it, its properties or assets or any of its affiliates.

(g) Survival. The representations, warranties, covenants, indemnities, agreements, obligations, and liabilities of Spacehab and Astrium NA provided for in this Agreement shall

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continue in full force and effect, notwithstanding the expiration or other termination of the Lease or any other Operative Documents, until all such obligations have been met and such liabilities have been paid in full.

Section 14. Further Assurances; Covenant of Quiet Enjoyment.

(a) Further Assurances. Lessee will take all action necessary or desirable under Applicable Laws of New York, Florida, or of any jurisdiction where any Item of Equipment is located to establish and protect Lessor’s rights and interests in the Equipment. In addition, Lessee will (and Lessee shall ensure that any Permitted Sublessee shall) promptly and duly execute and deliver to Lessor such further documents and assurances and take such further action as Lessor may from time to time reasonably request in order more effectively to carry out the intent and purpose of this Lease and to establish and protect the rights and remedies created or intended to be created in favor of Lessor hereunder, including if requested by Lessor, the execution and delivery of supplements or amendments hereto, in recordable form, and the recording or filing of counterparts hereof or thereof, in accordance with the laws of such jurisdictions as Lessor may from time to time deem advisable, provided that this sentence is not intended to impose upon Lessee any additional liabilities not otherwise contemplated by this Lease.

(b) Covenant of Quiet Enjoyment. So long as this Lease shall not have been declared in default following the occurrence of an Event of Default, neither Lessor nor anyone claiming through or under Lessor shall interrupt or interfere with, or take or cause to be taken any action contrary to, Lessee’s rights hereunder (or the rights of any Sublessee, assignee or transferee permitted hereunder), including the right to quiet enjoyment of, and to continued possession, use or operation of, the Equipment.

Section 15. Notices.

All notices required or permitted under the terms and provisions hereof shall be given in writing and in accordance with Section 9.2 of the Sale Agreement.

Section 16. Net Lease, No Set-Off, Counterclaim, etc.

All Rent shall be paid by Lessee in the manner provided in Section 3(b). This Lease is a net lease and it is intended that Lessee shall pay all costs and expenses in connection with the use, possession, and operation of the Equipment, provided that Lessor shall be responsible for the costs incurred by Lessor in discharging its responsibilities and obligations hereunder. Lessee’s obligation to pay all Rent payable hereunder shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any set-off, counterclaim, recoupment, defense or other right which Lessee may have against Lessor, the Manufacturer or anyone else for any reason whatsoever, (ii) any defect in the title, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Equipment, or any interruption or cessation in the use or possession thereof by Lessee for any reason whatsoever, (iii) any insolvency, bankruptcy, reorganization or similar proceedings by or against Lessee or Lessor, (iv) Lessee at

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any time having immunity from suit or execution on the grounds of sovereignty or otherwise, either of such not being in effect or any default thereunder, (v) any failure of a Permitted Sublessee to comply with its obligations under any Permitted Sublease, or (vi) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise except as specifically provided herein, Lessee nonetheless agrees to pay to Lessor the amount such prorated portion of the Rent having accrued with respect to each Item of Equipment, based on the portion of the year during which this Lease was in effect. Lessee hereby waives, and hereby agrees to waive at any future time at the request of Lessor, to the extent now or then permitted by Applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, cancel, quit or surrender this Lease except in accordance with the express terms hereof. Each payment of Rent made by Lessee to Lessor shall be final as to Lessor and Lessee and, absent manifest error, Lessee will not seek to recover all or any part of any such payment of Rent from Lessor for any reason whatsoever.

Section 17. Lessee’s Remedies.

If Lessor creates, incurs, assumes or suffers to exist any Lessor Lien on the Equipment, then, Lessee may, on behalf of Lessor, itself make such payment as is necessary to discharge such Lessor Lien, and the amount of such payment and the amount of the reasonable expenses of Lessee incurred in connection with such discharge, together with interest thereon, to the extent permitted by Applicable Law, at the Overdue Interest Rate, shall be payable by Lessor to Lessee upon demand.

Section 18. Language.

All notices, communications, evidences, reports, opinions and other documents given under this Lease, unless submitted in the English language, shall be accompanied by one copy of an English translation thereof for each copy of the foregoing so submitted and the English version shall govern in the event of any conflict with the non-English version thereof.

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Section 19. Miscellaneous.

(a) This Lease may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of such counterparts shall together constitute one and the same instrument. To the extent, if any, that this lease constitutes chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in this lease may be created through the transfer or possession of any counterpart other than the original counterpart containing the receipt therefor executed by the lessor immediately following the signature page hereof.

(b) Unless otherwise specifically provided herein, this lease shall in all respects be governed by, and construed in accordance with, the law of the state of New York, United States of America, including all matters of construction, validity and performance, but without regard to its choice of law provisions thereof.

(c) The section and paragraph headings in this Lease and the table of contents are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof and all references herein to numbered sections, unless otherwise indicated, are to sections of this Lease.

(d) The provisions of this Lease may be modified or amended only by an instrument or instruments in writing signed by all parties hereto.

(e) Any provision of this Lease that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in such jurisdiction or affecting the validity or enforceability of any provisions hereof in any other jurisdiction. To the extent permitted by Applicable Law, Lessor and Lessee hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

Section 20. Waiver of Jury Trial.

Each of the parties hereto irrevocably waives as against the other party hereto any rights it may have to a jury trial in respect of any civil action arising under this lease.

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IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease Agreement to be duly Executed as of the day and year first above written.

Astrium N A, Inc., as Lessor
By:	/s/    STEFAN-FRITZ GRAUL
Name:	Stefan-Fritz Graul
Title:
By:	/s/    ECKART WOLFF
Name:	Eckart Wolff
Title:
SPACEHAB, Incorporated, as Lessee
By:	/s/    MICHAEL E. KEARNEY
Name:	Michael E. Kearney
Title:	President

APPENDIX A TO LEASE AGREEMENT BETWEEN ASTRIUM NA AND SPACEHAB DATED 28^TH FEBRUARY 2001

DEFINITIONS

The following terms appearing in any Operative Document (as defined below) which incorporates by reference or refers to this Appendix shall have the meanings set forth below in this Appendix:

“Affiliate” of any Person shall mean any other Person which, directly or indirectly, controls or is controlled by, or is under common control with, such Person. For purposes of this definition, “control” when used with respect to any specified Person shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Applicable Laws” shall mean all applicable laws, statutes, treaties, codes, certificates, ordinances, judgments, decrees, injunctions, writs, rules, regulations, orders, interpretations, licenses, permits and orders of any federal, state, county, municipal, foreign, international, supranational, regional or other Governmental Authority, agency, board, body or instrumentality and judgments, decrees, injunctions, writs, orders or like action of any court, arbitrator or other administrative, judicial or quasi-judicial tribunal or agency of competent jurisdiction.

“Business Day” means any day other than a Saturday, Sunday or holiday scheduled by law for commercial banking institutions and foreign exchange markets in New York, New or any other day on which such institutions are permitted to be closed in such city.

“Closing Date” shall mean the date on which the completion of the First or Second Closing, as defined in the Asset Purchase Agreement is achieved by the Parties.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“Dollars”, “US$” and “$” means lawful currency of the United States of America.

“Equipment” shall mean the Items described in Exhibit II hereto. [Not used in document.]

“Event of Default” has the meaning specified in Section 11 of the Lease Agreement.

“Event of Loss” with respect to any Item of Equipment shall mean any of the following events with respect to such Item:

(a) the actual, constructive, compromised or agreed total loss of such Item (including any damage to such Item or requisition for use or hire that results in an insurance settlement on the basis of total loss);

(b) such Item being destroyed, damaged beyond repair or permanently rendered unfit for normal use for any reason whatsoever;

(c) any compulsory acquisition, expropriation or condemnation of, or requisition of title to, such Item by any Governmental Authority or purported Governmental Authority;

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(d) the theft or disappearance of such Item which results in the loss of possession of such Item by Lessee (or, if any permitted sublease is then in effect, the Permitted Sublessee thereunder) for 90 consecutive days or more, or in any event if such loss of possession is continuing on the last day of the Term for such Item;

(e) the seizure or requisition of use of such Item (other than where clause (c) or (d) above is applicable) by any Governmental Authority which results in the loss of possession of such Item of Equipment by Lessee (or, if any permitted sublease is then in effect, the Permitted Sublessee thereunder) for 180 consecutive days or more, or in any event if such loss of possession is continuing on the last day of the Term;

(f) a requisition for use of such Item by any Governmental Authority of Germany which shall become an Event of Loss on the last day of the Term with respect to such Item.;

provided that with respect to any Event of Loss described in clause (d) or (e) above, if (i) the Item subject to such Event of Loss is returned to Lessee (or, if any permitted sublease is then in effect, the Permitted Sublessee) in the condition required by the Lease within 60 days after the date of such Event of Loss (such return date in no event being later than the last day of the Term or the date of payment of the Termination Value), (ii) Lessor has not been divested of Lessor’s Interest and (iii) the rights, title and interest of Lessor and Agent in such Item have been restored prior to such date, then no Event of Loss shall be deemed to have occurred.

“Germany” means the Federal Republic of Germany or any successor thereto.

“Governmental Authority” shall mean any national, state, local or other political subdivision and any agency, authority, instrumentality, regulatory body, court or central bank thereof or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Immediately Available Funds” shall mean funds in Dollars available by wire or similar transfer for immediate use by the recipient not later than the date on which such payment is made and received.

“Item” or “Item of Equipment” shall mean each item of Equipment individually specified as “Item” in Exhibit II, but excluding any Item as to which the Lease has terminated in accordance herewith.

“Lease” or “Lease Agreement” means the Lease Agreement dated as of December     , 2000 between Lessor and Lessee.

“Lease Period Date” means each date set forth in the column under the heading “Payment Date” in Exhibit II to the Lease.

“Lease Supplement” means a Lease Supplement, substantially in the form of Exhibit I to the Lease Agreement, to be entered into between Lessor and Lessee for the purpose of leasing the Equipment (including any Replacement Equipment) under and pursuant to the terms of the Lease Agreement or any amendment thereto, including any amendment thereto.

“Lessee” means SPACEHAB, Incorporated.

16

“Lessee Person” shall mean Lessee or any Permitted Sublessee or any other Person using or in possession of the Equipment or any Part thereof, or any officer, director, employee or agent of any of the foregoing.

“Lessor” means Astrium N A, Inc.

“Lessor’s Cost” shall mean with respect to any Item of Equipment the amount set forth opposite such Item of Equipment on Exhibit II.

“Lessor’s Interest” means, with respect to any Item of Equipment, all right and interest in and to such Item of Equipment and if not otherwise specified, “Lessor’s Interest” means, at any time, the Lessor’s interest with respect to all Items of Equipment subject to the Lease.

“Lessor Lien” shall mean any Lien of or attributable to Lessor or any Affiliate of any thereof on the Equipment or any Part thereof (any Lien attributable to an Affiliate of any of the foregoing Persons being deemed attributable to such Person), or any interest therein arising as a result of (i) claims against or affecting such Person that are not created by or related to the transactions contemplated by the Lease and the other Operative Documents, (ii) any act or omission of such Person (to the extent such omission is within such Person’s control) that is not related to the transactions contemplated by, or that is in violation of any of the terms of the Lease or the other Operative Documents.

“Lien” shall mean any lien, mortgage, encumbrance, pledge, charge, lease, easement, servitude, adverse claim, right of others or security interest of any kind, including any thereof arising under any conditional sale or other title retention agreement.

“Manufacturer” shall mean each manufacturer of any Item of Equipment.

“NASA” means the National Aeronautic & Space Administration.

“OECD” shall mean the Organization for Economic Cooperation and Development.

“Operative Documents” shall mean this Agreement and the Sale Agreement.

“Overdue Interest Rate” means 1% per annum over the one year LIBOR rate announced by The Wall Street Journal on the date the Rent first becomes overdue.

“Part” or “Parts” shall mean any or all appliances, components, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than any equipment leased by Lessee or any Permitted Sublessee from any third-party lessor that may be removed without material damage to the Equipment and without materially decreasing the value, utility, remaining useful life or estimated residual value of the Equipment) that may from time to time be incorporated in or attached to the Equipment so long as the same shall be subject to the Lease in accordance with the terms hereof.

“Permitted Investments” shall mean the securities in which Lessor is authorized to invest pursuant to Section 18 of the Lease (and subject to the restrictions on maturity specified therein).

“Permitted Liens” shall mean (i) the respective rights of the Lessor and any Permitted Sublessee as provided in the Lease and the other Operative Documents, (ii) the rights of Permitted Subleases and other

17

Persons under subleases, agreements and arrangements to the extent permitted by the terms of the Lease, (iii) Lessor Liens, (iv) Liens for Taxes payable by Lessee or any Permitted Sublessee either not yet due or being diligently contested in good faith by appropriate proceedings (and for the payment of which adequate reserves have been established by Lessee or any other Lessee Person liable with respect thereto) so long as such Liens or proceedings do not involve any material risk of the sale, forfeiture or loss of the Equipment or any part thereof, title thereto or interest therein or the use thereof, (v) materialmen’s, mechanics’, workmen’s, repairmen’s, employees’ or other like Liens arising in the ordinary course of business for amounts the payment of which is either not yet delinquent or is being diligently contested in good faith by appropriate proceedings (and for the payment of which adequate reserves have been established by Lessee or any other Lessee Person liable with respect thereto) so long as such Liens or proceedings do not involve any material risk of the sale, forfeiture or loss of the Equipment or any part thereof, title thereto or interest therein or the use thereof, and (vi) Liens arising out of judgments or awards against Lessee or any Permitted Sublessee with respect to which at the time an appeal or proceeding for review is being diligently prosecuted in good faith by appropriate proceedings (and for the payment of which adequate reserves have been established by Lessee or any other Lessee Person liable with respect thereto) so long as such Liens or proceedings do not involve any material risk of the sale, forfeiture or loss of the Equipment or any part thereof, title thereto or interest therein or the use thereof.

“Person” means any individual, corporation, limited liability company, partnership, limited partnership, joint venture, association, joint-stock company, trust, business trust, unincorporated organization or government or any agency or political subdivision thereof.

“Regulations” shall mean the income tax regulations issued, published or promulgated from time to time under and pursuant to the Code.

“Rent” means the rent payable for each Item of Equipment pursuant to Section 3(a) of the Lease during the Term.

“Taxes” means any and all license and qualification fees, documentation fees, taxes (including, without limitation, gross or net income, gross or net receipts, sales, use, value-added, ad valorem, franchise, business transfer, capital, property (tangible and intangible), excise, minimum or alternative minimum taxable income, tax preferences, excess profits, accumulated earnings, capital gains, doing business, net worth and stamp taxes), levies, imposts, duties, charges or withholdings, together with any penalties, fines or interest thereon or additions thereto, whether levied or imposed by the United States or any country, state, or political subdivision or taxing authority thereof or therein.

“Term” shall have the meaning set forth in Section 3 hereof.

“United States” shall mean the United States of America, its territories and possessions.

18

EXHIBIT I to Lease Agreement between Astrium NA and Spacehab dated 28^th February 2001

Exhibit I, Section 1

(a) The annual Rent for the lease of Integrated Cargo Carrier System Assets as listed below is $2,400,000. The Rent shall be paid on or before December 31^stof each year in arrears, beginning on 31^st December 2001.

(b) Annual rent for the ICC is based on a maximum usage of two flights per year. In the event the ICC is used for more than two flights in any calendar year, additional rent shall be paid amounting to $400,000 per flight. Such additional rent shall be due and be paid at the same time as payment is due for the basic rent.

Exhibit I, Section 2

Integrated Cargo Carrier System Assets ( H/W only) are consisting of the following items:

DESCRIPTION	QTY/REF	REF NUMBER
1.0 ICC
1,1 FLIGHT HARDWARE
UCP1L	1	381GK1000-0
UCP2L	1	381GK1000-0
UCP3L	1	381GK1000-0
Primary Flight Trunnions, including Bracketry & attachment hardware	4	1264555
Secondary Flight Trunnions, including Bracketry & attachment hardware	4	1264556
KYA 1	1	1264553
KYA 2	1	1264553
INTERFACE PLATE, STANDARD	1	SHI-ICC-D5002-001
INTERFACE PLATE ASSY, STANDARD	16	SHI-ICC-D5002-301
INTERFACE PLATE, GAS	8	SHI-ICC-D5003-001
SPACER	44	SHI-ICC-D5004-001
SPACER	10	SHI-ICC-D5004-002
BUSHING, INTERFACE PLATE	122	SHI-ICC-D5005-001
BUSHING, INTERFACE PLATE	1	SHI-ICC-D5005-002
BUSHING, INTERFACE PLATE	10	SHI-ICC-D5005-003
ASSEMBLY, EVAS ADAPTER, NHP	24	SHI-ICC-D5016-301
LABEL ASSY, SPACEHAB	1	SHI-ICC-D5019-701
ASSY, HANDRAIL ADAPTER	42	SHI-ICC-D5020-301
BUSHING, INNER, ECCENTRIC 3/8”	4	SHI-ICC-D5021-001
BUSHING, OUTER, ECCENTRIC 3/8”	4	SHI-ICC-D5021-002
INTERFACE PLATE, SHOSS	5	SHI-ICC-D5022-001
GANG CHANNEL,SHORT, UCP PHP	109	SHI-ICC-D5024-701
GANG CHANNEL, LONG, UCP PHP	106	SHI-ICC-D5024-702
ASSY, EVAS ADAPTER, PHP	10	SHI-ICC-D5025-301

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DESCRIPTION	QTY/REF	REF NUMBER
ASSY, WIF AND HANDRAIL ADAPTER	5	SHI-ICC-D5026-301
UCP Spare Parts for UCP-1L, 2L, and 3L (PER EXISTING ASTRIUM H/W INVENTORY)	1	VARIOUS
TITANIUM SECONDARY TRUNNION BRACKETS	2
1,2 FLIGHT SUPPORT EQUIPMENT (INCLUDES RELEVANT DOCUMENTATION)
LCA FSE complete	1	1274311
PFCS FSE complete	1	9070417
PFCS alignment jig	2
EAS FSE complete	1	9070438
EAS alignment jig	1
RU FSE complete	1	1274337
ESP FSE complete	1	1275227
MISSE/APC	2	1283501
Strela TDK	1
Connector bracket	1	907-0447-503
Connector bracket	1	907-0447-1
SOAR cable PWR	1	9063751-1
SOAR cable data	1	9063752-1
Screw 1230	50	1274115
SCAP	1	1278427
SOAR FSE complete	1	1274418
Connector bracket	1	9063750-1-3
Connector bracket	1	9063750-501-5
ISS 5A.1 cable assembly	1	9070411
1,3 GSE AND MISCELLANEOUS HARDWARE
GSE Trunnions (Astrium made)	4	1274578
GSE Trunnions (RSC Energia made)	4

21

DESCRIPTION	QTY/REF	REF NUMBER
GSE T-BAR	4	SHI-ICC D7002-001
ASSEMBLY, POSITIONING TOOL, NHP EVAS ADAPTER	2	SHI-ICC-D8003-001
UCP Transportation Container (Blue Frame)	1	9060888
SPACER, BLUE FRAME GSE	4	SHI-ICC-D8008-701
Red UCP Plates (GSE)	60
Rotator	1
SISK	2	1264579
Yellow Beam	1
UCP hoisting device	1
Coffee Table short	4	SH-99-001
Coffee Table high	4	SHI-ICC-D8005
Dolley heavy duty	12	McMaster 2764T2
Dolley (plastic)	8	McMaster 24385T3
Step ladder tall	1	8112T7
Step ladder medium	1	8112T5
Step ladder small	2	8112T4
Step ladder very small	2	79485T23
Scaffholding	2	8079T14
Air pads	12
Shelves	10
Cabinets	9
Chemical cabinets	3
KYA Test Stand	1	1264300
KYA Transport Container	1
KYA Hoisting Device including Pulley	1
Modal Survey Payload Test Dummies	5
NBL MOCKUPS	1
STIPL DRILL TEMPLATE/FIXTURE	1

22

DESCRIPTION	QTY/REF	REF NUMBER
PHP DRILL TEMPLATE	1
GFE PRLA USED ON BLUE FRAME TRANSPORTE – provided via SPACEHAB on loan basis only	4	Government loan items

23

EXHIBIT II to Lease Agreement between Astrium NA and Spacehab dated 28^th February 2001

Tax Assumptions

Astrium NA has calculated the consideration paid under the Sale Agreement based on among other things, the following assumed tax treatment for Federal, Florida and other state and local income tax purposes:

(a) This Lease will be treated as a “true lease” so that Astrium NA will be treated as the owner, lessor, and purchaser of the Equipment and will be required to take into account in computing its taxable income all items of income, gain, loss and deduction;

(b) ICC Services’ tax basis is the Equipment Purchase Price pursuant to the Sale Agreement and, with respect to the Equipment, Astrium NA will be entitled to cost recovery deductions based on current Code Cost Recovery provisions;

(c) Astrium NA will be entitled to treat each item of gain, loss, income, deduction and credit with respect to the transactions contemplated by the Operative Documents as derived from, or allocable to, sources within and without the United States pursuant to sections 861, et. seq., of the Code in such proportions as are consistent with the use of such Equipment as reported to it by SPACEHAB;

(d) The Closing Date will occur on                     , 2001 and each Property will be placed in service by Astriuam NA for Federal income tax purposes on the Closing Date.

EX-10.30

Exhibit 10.30

Clarification of Rent under Lease Agreement

Term Sheet

This binding term sheet dated as of December 19, 2001 (the “Term Sheet”) sets forth the principal terms and conditions applicable to a clarification of the terms of Exhibit I to the Lease Agreement dated February 28, 2001 (the “Lease Agreement”), by and between SPACEHAB, INCORPORATED, (“Spacehab”) and ASTRIUM NA, INC. (“Astrium NA”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Lease Agreement.

Terms of Exhibit I	Exhibit I, Section 1, as attached to the Lease Agreement dated as of February 28, 2001, shall be deleted in its entirety and replaced with a revised Exhibit I, Section 1, in the form attached hereto. The purpose of this revision of Exhibit I is to clarify the terms relating to both the payment and the allocation of Rent over the Lease Term.
General Provisions	This term sheet may be executed by facsimile in separate counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument.
	This Term Sheet and the rights and obligations of the parties under this Term Sheet shall be governed by, and construed and interpreted in accordance with the law of the State of New York, without giving effect to conflicts of law principles.
	Except as modified and amended by this Term Sheet, the remaining provisions of the Lease Agreement shall remain in full force and effect as originally entered into and are hereby ratified and confirmed.
	This Term Sheet constitutes the entire agreement between the parties on the subject matter hereof and supercedes, and its terms govern, all prior proposals, agreements, or other communications between the parties, oral or written, regarding the subject matter of this Term Sheet, including without limitation, a certain Term Sheet between the parties dated as of June 29, 2001. The Deferral and Security Agreement remains valid as far as Spacehab’s commitments concerning the collateral and the interest payment are concerned.

IN WITNESS WHEREOF, the parties have caused this Term Sheet to be signed by their duly authorized representatives under seal all as of the day and year first above written.

SPACEHAB, INCORPORATED		ASTRIUM NA, INC.
By:	/S/    SHELLEY A. HARRISON	By:	/S/    DR. STEFAN GRAUL
Name:	Shelley A. Harrison	Name:	Dr. Stefan Graul
Title:	Chairman and Chief Executive Officer	Title:	Director
		By:	/S/    DR. ECKART WOLFF
		Name:	Dr. Eckart Wolff
		Title:	Director

Revised EXHIBIT I to Lease Agreement between Astrium NA and Spacehab dated 28^th February 2001

Exhibit I, Section 1

(a) The Rent for the Initial Term of the Lease of Integrated Cargo Carrier System Assets as listed below is $9,600,000. The Rent shall be payable over five (5) periods (each a “Rental Period”) according to the schedule set forth below:

Rental Period	Rent Allocated to Rental Period
1st March 2001 – 31st May 2001	$	0.00
1st June 2001    – 31st May 2002	$	2,560,000.00
1st June 2002    – 31st May 2003	$	2,560,000.00
1st June 2003    – 31st May 2004	$	2,560,000.00
1st June 2004    – 28th February 2005	$	1,920,000.00

The Rent which is allocated to each Rental Period according to the schedule above shall be paid on or before the date which is thirty days after the end of such Rental Period, in arrears. It is further understood that if the Lessee exercises its Option to renew this Lease, the rental periods for the Extended Term shall be equal annual periods, beginning on 1^st March 2005, the Rent for the first such annual period of the Extended Term shall be $2,520,000, and the Rent for each subsequent annual period of the Extended Term shall escalate at a rate of 5% per year.

(b) Annual Rent for the ICC is based on a maximum usage of two flights per year. In the event the ICC is used for more than two flights in any calendar year, additional rent shall be paid amounting to $400,000 per flight. Such additional rent shall be due and be paid at the same time as payment is due for the basic rent.

Exhibit I, Section 2

Integrated Cargo Carrier System Assets (H/W only) are consisting of the following items:

EX-10.31

Exhibit 10.31

LEASE AGREEMENT

dated as of July 3, 2001

between

ASTRIUM NA, INC.

as LESSOR,

and

SPACEHAB, INCORPORATED,

as LESSEE

This Lease Agreement has been executed in several counterparts. To the extent, if any, that this Lease Agreement constitutes chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in this Lease Agreement may be created through the transfer or possession of any counterpart other than the original counterpart containing the receipt therefor executed by the Lessor immediately following the signature page hereof.

TABLE OF CONTENTS

Section 1.	Definitions	1
Section 2.	Agreement to Lease on the date of Partial and Final Delivery	1
Section 3.	Term and Rent	1
Section 4.	Representations and Warranties; Certain Agreements of Lessee	2
Section 5.	Liens	2
Section 6.	Operation, Possession and Sublease	3
Section 7.	Alterations, Modifications and Additions	4
Section 8.	Loss, Destruction, Requisition	5
Section 9.	Inspection	5
Section 10.	Assignment	5
Section 11.	Events of Default	6
Section 12.	Remedies	7
Section 13.	Tax Matters	8
Section 14.	Further Assurances; Covenant of Quiet Enjoyment	11
Section 15.	Notices	11
Section 16.	Net Lease, No Set-Off, Counterclaim, etc	11
Section 18.	Language	12
Section 19.	Miscellaneous	12
Section 20.	Waiver of Jury Trial	13

i

Appendix A		Definitions
Exhibit I	-	Equipment (Terms of Lease, Lease Period Dates; Rents)
Exhibit II		Tax Assumptions

ii

LEASE AGREEMENT

This LEASE AGREEMENT, dated as of July 3, 2001 (this “Lease” or this “Agreement”), between ASTRIUM NORTH AMERICA, INC., a corporation organized and existing pursuant to the laws of Delaware (the “Lessor”), and SPACEHAB, Incorporated, a corporation organized and existing pursuant to the laws of the State of Washington (“SHI” or the “Lessee”).

WHEREAS, an Agreement on Principles for Lease of ICC/ICC-V, dated as of November 30, 2000 with respect to the subject-matter of this Lease has been agreed between Lessee and Astrium GmbH;

WHEREAS, an Asset Purchase Agreement (the “Sale Agreement”) exists, dated December 19, 2000, regarding the sale of the Equipment from the Lessee to Astrium GmbH.

Section 1. Definitions.

(a) Unless otherwise provided herein, capitalized terms used herein without definition shall have the meanings assigned to such terms in Appendix A.

Section 2. Agreement to Lease on the date of Partial and Final Delivery.

Subject to the terms and conditions of this Lease, Lessor hereby agrees to lease to Lessee hereunder, and Lessee hereby agrees to accept delivery of and to lease from Lessor hereunder, the Equipment on the date of the Partial Delivery, whereupon the Term shall commence, and on the date of the Final Delivery.

Section 3. Term and Rent.

(a) Term; Renewal; Rent. Subject to delivery of the Equipment as provided in Section 2, Lessee hereby leases the Equipment from Lessor for the term of four (4) years (the “Initial Term”) from the Closing Date (the “Initial Termination Date”); provided, that Lessee shall have the option (an “Option”) to renew this Lease for up to two (2) additional periods of four (4) years each beyond the Initial Termination Date, on the same terms and conditions as are set forth in this Agreement (with such extended period pursuant to the Option exercise the “Extended Term” and the Initial Term and any Extended Term collectively, the “Term”). Lessee agrees to pay to Lessor Rent for the Equipment in an amount equal to the amount set forth with respect to the Equipment on Exhibit I hereto. Should Lessee exercise the option described herein, the rent for the subsequent Term covered by such option shall escalate at a rate of 5% per year starting at the beginning of the subsequent term.

(b) Manner of Payment. All Rent shall be paid by Lessee to Lessor’s Account in Immediately Available Funds not later than 12:00 noon, New York time, on the date of payment. If any payment hereunder is due on a date that is not a Business Day, such payment shall be made on the next succeeding Business Day, and no interest shall accrue if such payment is made on the next succeeding Business Day.

(c) Interest on Overdue Rent. Lessee also agrees to pay to Lessor any and all Rent promptly as the same shall become due and owing (or on demand if no due date is specified). In the event of any failure on the part of Lessee to pay any Rent, Lessor and each such other Person shall have all rights, powers and remedies provided for herein or by law or in equity or otherwise in the case of nonpayment of Rent. Lessee will also pay, on demand, to the extent permitted by Applicable Law, interest at the Overdue Interest Rate on any part of any installment of Rent not paid when due for any period for which the same shall be overdue for the period from such due date or demand until the same shall be paid. All Rent to be paid pursuant to this Section 3(c) shall be payable in the type of funds and in the manner set forth in Section 3(b).

Section 4. Representations and Warranties; Certain Agreements of Lessee.

(a) Representations and Warranties. Lessee acknowledges and agrees that the Equipment is of a size, design, capacity and manufacture selected by and acceptable to Lessee, and Lessee is satisfied that the Equipment is suitable in design, maintenance, and condition for its purposes. Lessor does not make or give and shall not be deemed to have made or given, and hereby expressly disclaims any representation or warranty, express or implied, as to the title, value, condition, design, operation, merchantability or fitness for use of the equipment or any part thereof, or as to the absence of latent or other defects, whether or not discoverable, or as to the absence of any infringement or interference with any patent, trademark or copyright, or as to the absence of obligations based on strict liability in tort or any other representation or warranty whatsoever, express or implied, with respect to the equipment or any part thereof, except that Lessor warrants that as of the Closing Date Lessor shall have such interest in the Equipment as was conveyed to it by Lessee under the Sale Agreement and that the Equipment or any Parts (and any interest therein) shall during the Term be free of Lessor Lien attributable to it. Lessor shall be responsible for the reliability and maintenance of the Equipment and any Parts thereof.

(b) Manufacturer’s Warranties. None of the provisions of this Section 4 or any other provision of this Lease shall be deemed to amend, modify or otherwise affect the representations, warranties or other obligations (expressed or implied) of the Manufacturer or any subcontractor or supplier of the Manufacturer with respect to any Item of the Equipment or any Parts forming a part of in or attached to any Item of Equipment or to release the Manufacturer or any such subcontractor or supplier from any such representation, warranty or obligation. Lessee shall have the benefit of and shall be entitled to enforce (as it shall deem appropriate), any and all manufacturer’s credits, guarantees, indemnities, warranties or other benefits, available to Lessor or Lessee in respect of the Equipment.

Section 5. Liens.

Lessee will not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to the Equipment or any Part, title thereto or any interest therein or in or to this Lease (or any other Operative Documents to which Lessee is a party) except Permitted Liens. Lessee will promptly, at its own expense, take such action as may be necessary duly to discharge (by bonding or otherwise) any Lien that is not a Permitted Lien if the same shall arise at any time during the Term.

2

Section 6. Operation, Possession and Sublease.

(a) Maintenance and Operation, Etc. Lessee, at its own cost and expense, undertakes (or shall cause any Permitted Sublessee to undertake) that throughout the Term, Lessee (or any Permitted Sublessee) shall comply with the following agreements and undertakings:

(i) Operation and Use. Lessee shall:

(A) ensure that the Equipment is used, operated and controlled in accordance with all Applicable Laws of the United States (and of any country in which the Equipment may be operated).

(B) ensure that the Equipment is not used for any purpose for which it is not designated or reasonably suited, or outside the tolerances and limitations for which the Equipment was designed, and will be operated in accordance with Lessor’s operating manuals, and in accordance with all applicable ISS and Shuttle regulations and operating procedures; and

(C) ensure that the Equipment is used for its intended function and not for any illegal purpose or in any illegal manner.

(D) ensure that the Equipment is not used in any manner or location which would cause the loss of any applicable tax exemption or cause Lessor to become subject to taxation in any jurisdiction in which it was not, as of the date of this Lease, then subject to taxation.

(ii) Certificates and licenses. Lessee shall ensure that there are obtained and maintained in full force and effect in good standing at all times all necessary certificates, authorizations and qualifications required to perform the Lessee’s (and any Permitted Sublease’s) obligations under the Operative Documents and for the use and operation of the Equipment.

(b) Possession and Subleases.

(A) General Restrictions. Lessee shall not, without the prior written consent of Lessor (which consent shall not be unreasonably withheld), sublease or otherwise in any manner deliver, transfer or relinquish possession of any Item of Equipment

No transaction permitted under this Section 6(b) shall involve any transfer of title in or to any Item of Equipment or any Part thereof nor shall it in any way diminish, release or discharge any of Lessee’s obligations to Lessor under this Lease or under any other Operative Document. Lessee shall remain primarily liable for the performance of all of its obligations under this Lease irrespective of any such transaction.

(ii) Performance by Sublessee. Notwithstanding anything to the contrary contained in this Lease, if any obligation that is required to be performed by Lessee under this Lease is performed or not performed, as the case may be, by any Permitted Sublessee, then performance or non-performance by such Permitted Sublessee shall, to

3

the extent thereof only, for the purposes of this Lease constitute performance or non-performance by Lessee.

(c) Location of Equipment. Nothing in this Lease or elsewhere in the Operative Documents shall be deemed to require that the Equipment be maintained in any particular location; provided that (i) prior to relocation of any Item of Equipment to a country which is not a member of the OECD, Lessee shall provide to Lessor an opinion of counsel in such jurisdiction reasonably acceptable to Lessor to the effect that the laws of such jurisdiction would not impair the right of Lessor to repossess such Item of Equipment upon the occurrence of an Event of Default and (ii) prior to relocation of any Item of Equipment outside of the United States, Lessee shall provide to Lessor an opinion of counsel in such jurisdiction reasonably acceptable to Lessor that such relocation shall not cause Lessor to become subject to taxation in such jurisdiction in any respect.

Section 7. Alterations, Modifications and Additions.

Upon receiving prior written approval from the Lessor, Lessee or any Permitted Sublessee, at its own expense, may from time to time make such additions, alterations and - modifications, including removal (without replacement) of Parts which Lessee or any Permitted Sublessee deems obsolete or no longer appropriate or suitable for use in the Equipment, and additions to the Equipment as Lessee or such Permitted Sublessee may deem desirable in the proper conduct of its business; provided that no such alteration, modification, removal or addition decreases the value, utility, residual value or remaining economic useful life of the Equipment below the value, utility, residual value or remaining economic useful life thereof immediately prior to such alteration, modification, removal or addition assuming the Equipment was then in the condition required to be maintained by the terms of this Lease. Any severable Part not mandated by Applicable Law to be incorporated or installed in or attached or added to the Equipment as the result of such alteration, modification, removal or addition shall not constitute part of Lessor’s Interest and may be removed at any time during the Term; provided that (i) such Part is in addition to, and not in replacement of or substitution for, any Part originally incorporated or installed in or attached or added to the Equipment at the time of the delivery thereof thereunder or any Part in replacement of or substitution for any such Part; (ii) such Part is not otherwise required to be incorporated or installed in or attached to the Equipment pursuant to the terms hereof or in order to maintain insurance coverage; and (iii) such Part can be removed from such Equipment without damage and without diminishing the value, utility, residual value or remaining economic useful life of such which the Equipment would have had at such time had such alteration, modification, removal or addition not occurred, assuming such Equipment was maintained in the condition required by the terms of this Lease. All other such Parts and the rights of Lessor and Lessee with respect thereto shall be subject to the Sale Agreement and this Lease. Upon termination of this Lease or, in the event that this Lease is renewed pursuant to Section 3(a) hereof, the termination of the term of the last renewal, with respect to any Item of Equipment, Lessor shall have the right to purchase for its then fair market value such Item of Equipment or any severable Part owned by Lessee (or its designee) not removed prior to the return to Lessor (including pursuant to the exercise of remedies following an Event of Default) of such Item of Equipment. If Lessor elects not to purchase a severable Part owned by Lessee (or its designee), Lessee or a Permitted Sublessee, as the case may be, may at its option remove such Part or return the applicable Item of Equipment with such Part intact (in

4

which case such Part shall become subject to the Sale Agreement without further act by the parties hereto). Any permitted additions or modifications will be permanently recorded and the records of such shall be made available at the request of the Lessor.

Section 8. Loss, Destruction, Requisition.

(a) General. Upon the occurrence of an Event of Loss with respect to any Item of Equipment, Lessee shall be liable only for Rent having accrued and remaining unpaid as of the occurrence of such Event of Loss. Thereafter, Lessee shall not be responsible, and shall bear no liability, for the Item of Equipment having suffered such Event of Loss and Lessee shall have no further obligations with respect to such Item of Equipment. Notwithstanding the foregoing, Lessee shall forthwith (and, in any event, within five (5) days after such occurrence) give Lessor written notice of such Event of Loss.

(b) Seizure and Requisition. In the event, of the seizure or requisition of an Item of Equipment (other than as set forth in Appendix A, paragraphs (c) and (d) of the definition of - “Event of Loss”) by any Governmental Authority which results in the loss of possession of such Item of Equipment (or, if any Permitted Sublease is then in effect, the Permitted Sublessee thereunder) during the Term, the Lessee or, as the case may be, the Permitted Sublessee shall not be responsible for any Rent for such Item of Equipment attributable to the period of time during which the Item of Equipment was not in the possession of the Lessee or, as the case may, the Permitted Sublessee.

Section 9. Inspection.

At reasonable times and upon reasonable written notice to Lessee or any Permitted Sublessee, Lessor, and its respective authorized representatives may at their own expense (or at the expense of Lessee if an Event of Default shall have occurred and be continuing) and risk conduct a visual walk-around inspection of the Equipment and may inspect the books and records of Lessee related thereto. No inspection pursuant to this Section 12 shall interfere with the use, operation or maintenance of the Equipment or the normal conduct of the business of Lessee or any Permitted Sublessee of the Equipment, and Lessee shall not be required to undertake or incur any additional liabilities in connection therewith. Lessor shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection.

Section 10. Assignment.

Except as otherwise provided in Section 6(b) or in the case of any requisition by the government of the United States of America or Germany referred to in Sections 8 and in “Event of Loss”, Lessee will not, without prior written consent of Lessor, assign any of its rights hereunder, except as expressly permitted hereunder. Lessor agrees that it will not assign or convey its rights and interests in and to the Sale Agreement, this Lease and the Equipment except as contemplated thereby. The terms and provisions of this Lease shall be binding upon and inure to the benefit of Lessor and Lessee and their respective successors and assigns.

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Section 11. Events of Default.

The following events shall constitute Events of Default (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a) Lessee shall fail to make any payment of Rent which has accrued and remains unpaid within five (5) Business Days after delivery of written notice of such failure by Lessor to Lessee; or

(b) Lessee shall fail to make any other payment of Rent and such failure shall continue un-remedied for a period of thirty days after written demand therefor by Lessor to Lessee; or

(c) Lessee shall fail to perform or observe any covenant (other than the covenants described in paragraphs (a), (b) or (c) of this Section 11), condition or agreement to be performed or observed by it hereunder or under any other Operative Document, and such failure shall continue unremedied for a period of thirty (30) days after written notice thereof by Lessor to Lessee (or, if such failure is capable of being cured, but not within such 30-day period, and provided Lessee is diligently pursuing such cure, for an additional period, not to exceed one hundred and eighty (180) days, as may reasonably be required in order for Lessee to cure such failure); or

(d) any representation or warranty made by Lessee herein, in the Sale Agreement or in any document or certificate furnished by Lessee in connection herewith or therewith or pursuant hereto or thereto shall prove to have been incorrect in any material respect on the date as of which made and shall not have been corrected within 30 days after receipt of written notice from Lessor of such incorrectness; or

(e) Lessee shall consent to the appointment of a receiver, trustee or liquidator of itself or of a substantial part of its property, or Lessee shall admit in writing its inability to pay its debts generally as they come due, or shall make a general assignment for the benefit of creditors; or

(f) Lessee shall file a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization in a proceeding under any bankruptcy laws (as now or hereafter in effect) or an answer admitting the material allegations of a petition filed against Lessee in any such proceeding, or Lessee shall, by voluntary petition, answer or consent or otherwise, seek relief under the provisions of any other now existing or future bankruptcy or other similar law providing for the reorganization or winding-up of corporations, or providing for an agreement, composition, extension or adjustment with its creditors; or

(g) an order, judgment or decree shall be entered in any proceeding by any court of competent jurisdiction appointing, without the consent of Lessee, a receiver, trustee or liquidator of Lessee or any substantial part of its property, or sequestering any substantial part of the property of Lessee, and any such order, judgment or decree or appointment or sequestration shall

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remain in force undismissed, unstayed or unvacated for a period of ninety (90) days after the date of entry thereof; or

(h) a petition against Lessee or a proceeding under applicable bankruptcy laws or other insolvency laws, as now or hereafter in effect, shall be filed and shall not be withdrawn or dismissed within ninety (90) days thereafter, or if, under the provisions of any law providing for reorganization or winding-up of corporations which may apply to Lessee or, any court of competent jurisdiction shall assume jurisdiction, custody or control of Lessee or of any substantial part of its property and such jurisdiction, custody or control shall remain in force unrelinquished, unstayed or unterminated for a period of ninety days; or

(i) any additional proceeding for the relief of financially distressed debtors is entered into by Lessee voluntarily or involuntarily.

Section 12. Remedies.

Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare this Lease to be in default by a written notice to Lessee. At any time thereafter, so long as Lessee shall not have remedied all outstanding Events of Default, Lessor may do one or more of the following with respect to all or any part of its rights and interests in the Equipment as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, Applicable Law then in effect:

(a) cause Lessee, upon the written demand of Lessor and at Lessee’s expense, to return promptly to Lessor, and Lessee shall return promptly to Lessor, all or such part of the Equipment as Lessor may so demand or otherwise in accordance with its order in the manner and condition as if the Equipment were being returned at the end of the Term, or Lessor, at its option, may enter upon the premises where all or any part of the Equipment is located and take immediate possession of and remove the same by summary proceedings or otherwise, all without liability accruing to Lessor for or by reason of such entry or taking of possession or removal, whether for the restoration of damage to property caused by such action or otherwise;

(b) sell all of its rights and interests in the Equipment or any Item of Equipment at public or private sale, as Lessor may determine, or otherwise dispose of, hold, use, operate, lease to others or keep idle all or any part of the Equipment as Lessor, in its sole discretion, may determine, all free and clear of any rights of Lessee, except as hereinafter set forth in this Section 12, and without any duty to account to Lessee with respect to such action or inaction or for any proceeds with respect thereto, except (i) to the extent required by paragraph (c) below if Lessor elects to exercise its rights under such paragraph (c) and (ii) that Lessor shall obtain Lessee’s prior consent to such sale or disposition, such consent of Lessee not to be unreasonably withheld;

(c) Lessor may cancel, rescind or terminate this Lease by delivery of a notice of rescission or termination to Lessee, or may exercise any other right or remedy which may be available to it under applicable law or may proceed by appropriate court action to enforce the terms of this Lease at Lessee’s expense or to recover damages for the breach hereof.

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In addition, in the event that Lessor shall have exercised any of its rights with the result that Lessee no longer enjoys the rights set forth in Section 13(a) of this Agreement, Lessee shall be liable only for any and all unpaid Rent which shall have accrued as of the date upon which Lessee ceases to have the benefit of the rights as set forth in Section 13(a) of this Agreement and for all reasonable legal fees and other costs and expenses incurred by reason of the occurrence of any Event of Default or the exercise of Lessor’s remedies with respect thereto, including all costs and expenses incurred in connection with the retaking or return of the Equipment or in placing such Equipment in the condition required. If requested by Lessor, Lessee will use its best efforts after such return of the Equipment to aid in the sale of Lessor’s rights and interests in the Equipment. At any sale of the Equipment pursuant to this Section 12, Lessee or any of its Affiliates may bid for and purchase the Equipment. Except as otherwise expressly provided above, no remedy referred to in this Section 12 is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No express or implied waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of any future or subsequent Event of Default. To the extent permitted by Applicable Law, Lessee hereby waives any rights, except those set forth in this paragraph, now or hereafter conferred by statute or otherwise which may require Lessor to sell its rights and interests in the Equipment, or lease or otherwise use the Equipment or any part thereof in mitigation of Lessor’s damages as set forth in this Section 12 or which may otherwise limit or modify any of Lessor’s rights or remedies under this Section 12. Lessor shall provide Lessee with not less than 30 days’ prior notice of any sale or other disposition of the Equipment or any Item of Equipment pursuant to paragraph (b) above.

Section 13. Tax Matters

(a) Tax Payments.

(i) Spacehab shall pay all Taxes which are levied, assessed or imposed on or with respect to Spacehab, the Equipment, or any Part thereof or interest therein or any addition, alteration, modification or improvements thereto, or on the Rent payable hereunder, except the income Taxes described in subsection (b), but including all penalties, additions to tax, fines and interest in connection with any such Taxes (“Spacehab Taxes”).

(ii) The Taxes which Spacehab is required to pay pursuant to this Section shall be treated as payments of additional Rent for all purposes of this Agreement (including the default provisions hereof) except the payment procedures of Section 3(b) ), provided however, that in the event Spacehab shall unintentionally have failed to pay any Spacehab Taxes or shall have failed to pay Spacehab Taxes as a consequence of being reasonably unaware of such requirement, Spacehab shall have a period of 15 days from notice thereof by either any applicable taxing authority or Astrium NA within which to make the required payment in full before such failure to pay shall be treated as a default for purposes of this Agreement.

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(iii) To the extent any Spacehab Taxes may be imposed on or payable only by Astrium NA, Spacehab shall pay Astrium NA the full amount thereof by the date which is 15 days prior to the earlier of: (A) the due date for each such Tax or (B) the date specified by each applicable taxing jurisdiction on which each such Tax shall become a lien on the Equipment or any Part thereof.

(iv) The payment obligations under subsection (a) shall apply from the effective date hereof through the later of (A) the end of the Term and (B) Spacehab’s actual return of possession of the Equipment in accordance with this Lease.

(b) Astrium NA shall pay any Federal, national, state, or municipal net income Tax which is a liability or obligation of Astrium NA.

(c) Tax Assumptions, Representations, Warranties, and Covenants.

(i) The parties are entering into the Operative Documents and Astrium NA has calculated the Rent, based on, among other things, the assumed tax treatment set forth in Exhibit II hereto (the “Tax Assumptions”). In the event of any material change in the Tax Assumptions, the parties shall thereafter, if and to the extent appropriate, promptly renegotiate the Rent to restore Astrium NA’ economics in a manner consistent with its intended returns under this Lease but taking into account the change in the Tax Assumptions.

(ii) Spacehab has not and during the Term will not, with respect to the Equipment or any Part thereof, (i) claim any cost recovery deductions, amortization deductions or interest deductions (each as defined in the Code), or (ii) make any elections or take any position on any Tax return, amended Tax returns, claim for refund or otherwise that is inconsistent with the Tax Assumptions or (iii) claim to be the owner of such Property for United States Federal (“Federal”), Florida or other country, state or local tax purposes, provided however, that nothing in this subsection shall operate to restrict or limit the ability of Spacehab to file amended Tax returns for any period ending on or before the earlier of the effective date of this Agreement or the actual date of transfer of title to the Equipment.

(d) Tax Contests.

(i) If any written claim shall be made or proceeding commenced against Spacehab or Astrium NA for any Spacehab Taxes, Spacehab or shall promptly notify the other party in writing (any contest of any such claim or proceeding a “Contest”).

(ii) Spacehab shall conduct and control any Contest which must be conducted in its name.

(iii) Astrium NA shall conduct and control any other Contest.

(iv) The party conducting the Contest (“Controlling Party”) shall consult in good faith with the other party (“Noncontrolling Party”) and its counsel with respect to such Contest but

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the decisions regarding what actions to be taken shall be made by the Controlling Party in its sole judgment (exercised in good faith). In addition, the Controlling Party shall keep the Noncontrolling Party reasonably informed as to the progress of the Contest, and shall provide the Noncontrolling Party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the Controlling Party or any affiliate thereof, in connection with such claim, proceeding, Tax or Contest.

(e) Tax Compliance. With respect to any report, return or statement (a “Filing”) required to be filed with respect to any Spacehab Tax:

(i) Spacehab shall promptly notify Astrium NA in writing of any Filing required to be made by that (x) Spacehab has knowledge of; or (y) Spacehab should have knowledge of based on either the Operative Documents or the responsibilities which are customary for an operator, user or lessor of similar property. Upon receipt of such notice, Astrium NA shall promptly notify Spacehab in a writing satisfying the requirements of Section 15 whether it will make such Filing or shall require that Spacehab make such Filing.

(ii) If permitted by applicable Laws to do so, Spacehab shall timely file or cause to be filed such Filing with respect to any Spacehab Tax (except for any such Filing that Astrium NA has notified Spacehab in writing that Astrium NA intends to file) and will send a copy of such Filing to Astrium NA.

(iii) If Spacehab is not permitted by applicable Laws to file any Filing contemplated by subsection (ii), Spacehab will promptly notify Astrium NA of such requirement in writing and prepare and deliver to Astrium NA a proposed form of such Filing within a reasonable time, and in all events at least 15 days prior to the time such Filing is required to be filed.

(iv) In the case of any Filing contemplated by this subsection 13(d), Spacehab and Astrium NA shall provide to each other such information as is necessary to make any such Filing.

(v) Spacehab shall hold Astrium NA harmless from and against any liabilities, including, but not limited to penalties, additions to tax, fines and interest, arising out of any insufficiency or inaccuracy in any Filing contemplated by this subsection 13(d), if such insufficiency or inaccuracy is attributable to Spacehab.

(f) Tax Indemnity. Spacehab shall within 15 days of notice thereof, indemnify and hold Astrium NA harmless with respect to all Spacehab Taxes which may be imposed against it, its properties or assets or any of its affiliates.

(g) Survival. The representations, warranties, covenants, indemnities, agreements, obligations, and liabilities of Spacehab and Astrium NA provided for in this Agreement shall continue in full force and effect, notwithstanding the expiration or other termination of the Lease or any other Operative Documents, until all such obligations have been met and such liabilities have been paid in full.

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Section 14. Further Assurances; Covenant of Quiet Enjoyment.

(a) Further Assurances. Lessee will take all action necessary or desirable under Applicable Laws of New York, Florida, or of any jurisdiction where any Item of Equipment is located to establish and protect Lessor’s rights and interests in the Equipment. In addition, Lessee will (and Lessee shall ensure that any Permitted Sublessee shall) promptly and duly execute and deliver to Lessor such further documents and assurances and take such further action as Lessor may from time to time reasonably request in order more effectively to carry out the intent and purpose of this Lease and to establish and protect the rights and remedies created or intended to be created in favor of Lessor hereunder, including if requested by Lessor, the execution and delivery of supplements or amendments hereto, in recordable form, and the recording or filing of counterparts hereof or thereof, in accordance with the laws of such jurisdictions as Lessor may from time to time deem advisable, provided that this sentence is not intended to impose upon Lessee any additional liabilities not otherwise contemplated by this Lease.

(b) Covenant of Quiet Enjoyment. So long as this Lease shall not have been declared in default following the occurrence of an Event of Default, neither Lessor nor anyone claiming through or under Lessor shall interrupt or interfere with, or take or cause to be taken any action contrary to, Lessee’s rights hereunder (or the rights of any Sublessee, assignee or transferee permitted hereunder), including the right to quiet enjoyment of, and to continued possession, use or operation of, the Equipment.

Section 15. Notices.

All notices required or permitted under the terms and provisions hereof shall be given in writing and in accordance with Section 9.2 of the Sale Agreement.

Section 16. Net Lease, No Set-Off, Counterclaim, etc.

All Rent shall be paid by Lessee in the manner provided in Section 3(b). This Lease is a net lease and it is intended that Lessee shall pay all costs and expenses in connection with the use, possession, and operation of the Equipment, provided that Lessor shall be responsible for the costs incurred by Lessor in discharging its responsibilities and obligations hereunder. Lessee’s obligation to pay all Rent payable hereunder shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any set-off, counterclaim, recoupment, defense or other right which Lessee may have against Lessor, the Manufacturer or anyone else for any reason whatsoever, (ii) any defect in the title, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Equipment, or any interruption or cessation in the use or possession thereof by Lessee for any reason whatsoever, (iii) any insolvency, bankruptcy, reorganization or similar proceedings by or against Lessee or Lessor, (iv) Lessee at any time having immunity from suit or execution on the grounds of sovereignty or otherwise, either of such not being in effect or any default thereunder, (v) any failure of a Permitted Sublessee to comply with its obligations under any Permitted Sublease, or (vi) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If

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for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise except as specifically provided herein, Lessee nonetheless agrees to pay to Lessor the amount such prorated portion of the Rent having accrued with respect to each Item of Equipment, based on the portion of the year during which this Lease was in effect. Lessee hereby waives, and hereby agrees to waive at any future time at the request of Lessor, to the extent now or then permitted by Applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, cancel, quit or surrender this Lease except in accordance with the express terms hereof. Each payment of Rent made by Lessee to Lessor shall be final as to Lessor and Lessee and, absent manifest error, Lessee will not seek to recover all or any part of any such payment of Rent from Lessor for any reason whatsoever.

Section 17. Lessee’s Remedies.

If Lessor creates, incurs, assumes or suffers to exist any Lessor Lien on the Equipment, then, Lessee may, on behalf of Lessor, itself make such payment as is necessary to discharge such Lessor Lien, and the amount of such payment and the amount of the reasonable expenses of Lessee incurred in connection with such discharge, together with interest thereon, to the extent permitted by Applicable Law, at the Overdue Interest Rate, shall be payable by Lessor to Lessee upon demand.

Section 18. Language.

All notices, communications, evidences, reports, opinions and other documents given under this Lease, unless submitted in the English language, shall be accompanied by one copy of an English translation thereof for each copy of the foregoing so submitted and the English version shall govern in the event of any conflict with the non-English version thereof.

Section 19. Miscellaneous.

(a) This Lease may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of such counterparts shall together

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constitute one and the same instrument. To the extent, if any, that this lease constitutes chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in this lease may be created through the transfer or possession of any counterpart other than the original counterpart containing the receipt therefor executed by the lessor immediately following the signature page hereof.

(b) Unless otherwise specifically provided herein, this lease shall in all respects be governed by, and construed in accordance with, the law of the state of New York, United States of America, including all matters of construction, validity and performance, but without regard to its choice of law provisions thereof.

(c) The section and paragraph headings in this Lease and the table of contents are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof and all references herein to numbered sections, unless otherwise indicated, are to sections of this Lease.

(d) The provisions of this Lease may be modified or amended only by an instrument or instruments in writing signed by all parties hereto.

(e) Any provision of this Lease that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in such jurisdiction or affecting the validity or enforceability of any provisions hereof in any other jurisdiction. To the extent permitted by Applicable Law, Lessor and Lessee hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

Section 20. Waiver of Jury Trial.

Each of the parties hereto irrevocably waives as against the other party hereto any rights it may have to a jury trial in respect of any civil action arising under this lease.

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IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease Agreement to be duly executed as of the day and year first above written.

Astrium N A, Inc., as Lessor
By:	/S/    DR. STEFAN-FRITZ GRAUL
Name:	Dr. Stefan-Fritz Graul
Title:	Director

By:	/S/    DR. ECKART WOLFF
Name:	Dr. Eckart Wolff
Title:	Director

SPACEHAB, Incorporated, as Lessee
By:	/S/    MICHAEL E. KEARNEY
Name:	Michael E. Kearney
Title:	President

APPENDIX A TO LEASE AGREEMENT BETWEEN ASTRIUM NA AND SPACEHAB DATED 10^TH AUGUST 2001

DEFINITIONS

The following terms appearing in any Operative Document (as defined below) which incorporates by reference or refers to this Appendix shall have the meanings set forth below in this Appendix:

“Affiliate” of any Person shall mean any other Person which, directly or indirectly, controls or is control led by, or is under common control with, such Person. For purposes of this definition, “control” when used with respect to any specified Person shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Applicable Laws” shall mean all applicable laws, statutes, treaties, codes, certificates, ordinances, judgments, decrees, injunctions, writs, rules, regulations, orders, interpretations, licenses, permits and orders of any federal, state, county, municipal, foreign, international, supranational, regional or other Governmental Authority, agency, board, body or instrumentality and judgments, decrees, injunctions, writs, orders or like action of any court, arbitrator or other administrative, judicial or quasi-judicial tribunal or agency of competent jurisdiction.

“Business Day” means any day other than a Saturday, Sunday or holiday scheduled by law for commercial banking institutions and foreign exchange markets in New York, New or any other day on which such institutions are permitted to be closed in such city.

“Closing Date” shall mean the date on which the completion of the First or Second Closing, as defined in the Asset Purchase Agreement is achieved by the Parties.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“Dollars”, “US$” and “$” means lawful currency of the United States of America.

“Equipment” shall mean the Items described in Exhibit II hereto. [Not used in document.]

“Event of Default” has the meaning specified in Section 11 of the Lease Agreement.

“Event of Loss” with respect to any Item of Equipment shall mean any of the following events with respect to such Item:

(a) the actual, constructive, compromised or agreed total loss of such Item (including any damage to such Item or requisition for use or hire that results in an insurance settlement on the basis of total loss);

(b) such Item being destroyed, damaged beyond repair or permanently rendered unfit for normal use for any reason whatsoever;

(c) any compulsory acquisition, expropriation or condemnation of, or requisition of title to, such Item by any Governmental Authority or purported Governmental Authority;

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(d) the theft or disappearance of such Item which results in the loss of possession of such Item by Lessee (or, if any permitted sublease is then in effect, the Permitted Sublessee thereunder) for 90 consecutive days or more, or in any event if such loss of possession is continuing on the last day of the Term for such Item;

(e) the seizure or requisition of use of such Item (other than where clause (c) or (d) above is applicable) by any Governmental Authority which results in the loss of possession of such Item of Equipment by Lessee (or, if any permitted sublease is then in effect, the Permitted Sublessee thereunder) for 180 consecutive days or more, or in any event if such loss of possession is continuing on the last day of the Term;

(f) a requisition for use of such Item by any Governmental Authority of Germany which shall become an Event of Loss on the last day of the Term with respect to such Item.;

provided that with respect to any Event of Loss described in clause (d) or (e) above, if (i) the Item subject to such Event of Loss is returned to Lessee (or, if any permitted sublease is then in effect, the Permitted Sublessee) in the condition required by the Lease within 60 days after the date of such Event of Loss (such return date in no event being later than the last day of the Term or the date of payment of the Termination Value), (ii) Lessor has not been divested of Lessor’s Interest and (iii) the rights, title and interest of Lessor and Agent in such Item have been restored prior to such date, then no Event of Loss shall be deemed to have occurred.

“Germany” means the Federal Republic of Germany or any successor thereto.

“Governmental Authority” shall mean any national, state, local or other political subdivision and any agency, authority, instrumentality, regulatory body, court or central bank thereof or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Immediately Available Funds” shall mean funds in Dollars available by wire or similar transfer for immediate use by the recipient not later than the date on which such payment is made and received.

“Item” or “Item of Equipment” shall mean each item of Equipment individually specified as “Item” in Exhibit II, but excluding any Item as to which the Lease has terminated in accordance herewith.

“Lease” or “Lease Agreement” means the Lease Agreement dated as of December        , 2000 between Lessor and Lessee.

“Lease Period Date” means each date set forth in the column under the heading “Payment Date” in Exhibit II to the Lease.

“Lease Supplement” means a Lease Supplement, substantially in the form of Exhibit I to the Lease Agreement, to be entered into between Lessor and Lessee for the purpose of leasing the Equipment (including any Replacement Equipment) under and pursuant to the terms of the Lease Agreement or any amendment thereto, including any amendment thereto.

“Lessee” means SPACEHAB, Incorporated.

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“Lessee Person” shall mean Lessee or any Permitted Sublessee or any other Person using or in possession of the Equipment or any Part thereof, or any officer, director, employee or agent of any of the foregoing.

“Lessor” means Astrium N A, Inc.

“Lessor’s Cost” shall mean with respect to any Item of Equipment the amount set forth opposite such Item of Equipment on Exhibit II.

“Lessor’s Interest” means, with respect to any Item of Equipment, all right and interest in and to such Item of Equipment and if not otherwise specified, “Lessor’s Interest” means, at any time, the Lessor’s interest with respect to all Items of Equipment subject to the Lease.

“Lessor Lien” shall mean any Lien of or attributable to Lessor or any Affiliate of any thereof on the Equipment or any Part thereof (any Lien attributable to an Affiliate of any of the foregoing Persons being deemed attributable to such Person), or any interest therein arising as a result of (i) claims against or affecting such Person that are not created by or related to the transactions contemplated by the Lease and the other Operative Documents, (ii) any act or omission of such Person (to the extent such omission is within such Person’s control) that is not related to the transactions contemplated by, or that is in violation of any of the terms of, the Lease or the other Operative Documents.

“Lien” shall mean any lien, mortgage, encumbrance, pledge, charge, lease, easement, servitude, adverse claim, right of others or security interest of any kind, including any thereof arising under any conditional sale or other title retention agreement.

“Manufacturer” shall mean each manufacturer of any Item of Equipment.

“NASA” means the National Aeronautic & Space Administration.

“OECD” shall mean the Organization for Economic Cooperation and Development.

“Operative Documents” shall mean this Agreement and the Sale Agreement.

“Overdue Interest Rate” means 1% per annum over the one year LJBOR rate announced by The Wall Street Journal on the date the Rent first becomes overdue.

“Part” or “Parts” shall mean any or all appliances, components, parts, instruments, appurtenances, access ones, furnishings and other equipment of whatever nature (other than any equipment leased by Lessee or any Permitted Sublessee from any third-party lessor that may be removed without material damage to the Equipment and without materially decreasing the value, utility, remaining useful life or estimated residual value of the Equipment) that may from time to time be incorporated in or attached to the Equipment so long as the same shall be subject to the Lease in accordance with the terms hereof.

“Permitted Investments” shall mean the securities in which Lessor is authorized to invest pursuant to Section 18 of the Lease (and subject to the restrictions on maturity specified therein).

“Permitted Liens” shall mean (i) the respective rights of the Lessor and any Permitted Sublessee as provided in the Lease and the other Operative Documents, (ii) the rights of Permitted Subleases and other

17

Persons under subleases, agreements and arrangements to the extent permitted by the terms of the Lease, (iii) Lessor Liens, (iv) Liens for Taxes payable by Lessee or any Permitted Sublessee either not yet due or being diligently contested in good faith by appropriate proceedings (and for the payment of which adequate reserves have been established by Lessee or any other Lessee Person liable with respect thereto) so long as such liens or proceedings do not involve any material risk of the sale, forfeiture or loss of the Equipment or any part thereof, title thereto or interest therein or the use thereof, (v) materialmen’s, mechanics’, workmen’s, repairmen’s, employees’ or other like Liens arising in the ordinary course of business for amounts the payment of which is either not yet delinquent or is being diligently contested in good faith by appropriate proceedings (and for the payment of which adequate reserves have been established by Lessee or any other Lessee Person liable with respect thereto) so long as such Liens or proceedings do not involve any material risk of the sale, forfeiture or loss of the Equipment or any part thereof, title thereto or interest therein or the use thereof, and (vi) liens arising out of judgments or awards against Lessee or any Permitted Sublessee with respect to which at the time an appeal or proceeding for review is being diligently prosecuted in good faith by appropriate proceedings (and for the payment of which adequate reserves have been established by Lessee or any other Lessee Person liable with respect thereto) so long as such Liens or proceedings do not involve any material risk of the sale, forfeiture or loss of the Equipment or any part thereof, title thereto or interest therein or the use thereof.

“Person” means any individual, corporation, limited liability company, partnership, limited partnership, joint venture, association, joint-stock company, trust, business trust, unincorporated organization or government or any agency or political subdivision thereof.

“Regulations” shall mean the income tax regulations issued, published or promulgated from time to time under and pursuant to the Code.

“Rent” means the rent payable for each Item of Equipment pursuant to Section 3(a) of the Lease during the Term.

“Taxes” means any and all license and qualification fees, documentation fees, taxes (including, without limitation, gross or net income, gross or net receipts, sales, use, value-added, ad valorem, franchise, business transfer, capital, property (tangible and intangible), excise, minimum or alternative minimum taxable income, tax preferences, excess profits, accumulated earnings, capital gains, doing business, net worth and stamp taxes), levies imposts, duties, charges or withholdings, together with any penalties, fines or interest thereon or additions thereto, whether levied or imposed by the United States or any country, state, or political subdivision or taxing authority thereof or therein.

“Term” shall have the meaning set forth in Section 3 hereof.

“United States” shall mean the United States of America, its territories and possessions.

18

EXHIBIT I to Lease Agreement between Astrium NA and Spacehab dated 10^th August 2001

Exhibit I, Section 1

(a) The annual Rent for the lease of the ICC-V System Assets as listed below is $960,000 (in words: Nine Hundred Sixty Thousand Dollars. The Rent shall be paid on or before December 31^st of each year in arrears, beginning on 31^st December 2001. For the calendar year 2001 the amount of rent shall be determined on a pro rata basis depending on the dates of Partial Delivery and Final Delivery.

(b) Annual rent for the ICC and VCC is based on a maximum usage of three flights per year. In the event the ICC and VCC is used for more than three flights in any calendar year, additional rent shall be paid amounting to $400,000 per flight. Such additional rent shall be due and be paid at the same time as payment is due for the basic rent.

Exhibit I, Section 2

The ICC-V System Assets (H/W only) are consisting of the following items:

Exhibit 1, Section 2 to ICC-V Lease Agreement dated 10^th August 2001

DESCRIPTION	QTY/REF	REF NUMBER
1.0 VCC
1,1 FLIGHT HARDWARE
VCC1 Flight Unit	1	397GK.1000
VCC NBL Unit (Refinished VCC2)	1	397GK.1000
VCC3 Flight Unit	1	397GK.1000
Flight Spare Parts Kit	2	ZIP
INSERT (NHP)	2	381GK.1000-128
INSERT (LONGERON TRUNNION BRACKET)	2	381GK.1000-129
BOLT (SECTION INTERFACE)	5	397GK.0000-501
ANGULAR PIN (SECTION INTERFACE)	2	397GK.2000-132
PIN (SECTION INTERFACE)	5	397GK.2000-133
BOLT (TRUNNION BRACKET ATTACHMENT)	5	397GK.0000-502
WASHER (SECTION INTERFACE)	5	397GK.0000-505
KEEL FITTING ATTACHMENT	2	SCREW M12 X 1.5
KEEL FITTING ATTACHMENT	2	WASHER A12
SCUFF PLATE ATTACHMENT SCREW M10-6e X 24.26.011	2
PIN (KEEL FITTING ATTACHMENT)	2	397GK.3000-405
BOLT (KEEL FITTING ATTACHMENT)	2	397GK.3000-305
1,2 FLIGHT SUPPORT EQUIPMENT	N/A
1,3 GSE AND MISCELLANEOUS HARDWARE
Unique Test Hardware	A/R*
VCC2 Spare Parts Kit	1
Special tools for re-assembly	1
GSE Kit (Stabilizing beam for outer section)	3
Special Fixtures for re-assembly	1
Re-useable Shipping Container Sets	3

20

EXHIBIT II to Lease Agreement between Astrium NA and Spacehab dated 10^th August 2001

Tax Assumptions

Astrium NA has calculated the consideration paid under the Sale Agreement based on among other things, the following assumed tax treatment for Federal, Florida and other state and local income tax purposes:

(a) This Lease will be treated as a “true lease” so that Astrium NA will be treated as the owner, lessor, and purchaser of the Equipment and will be required to take into account in computing its taxable income all items of income, gain, loss and deduction;

(b) Astrium NA’ tax basis is the Equipment Purchase Price pursuant to the Sale Agreement and, with respect to the Equipment, Astrium NA will be entitled to cost recovery deductions based on current Code Cost Recovery provisions;

(c) Astrium NA will be entitled to treat each item of gain, loss, income, deduction and credit with respect to the transactions contemplated by the Operative Documents as derived from, or allocable to, sources within and without the United States pursuant to sections 861, et. seq., of the Code in such proportions as are consistent with the use of such Equipment as reported to it by SPACEHAB;

(d) The Closing Date will occur on                      , 2001 and each Property will be placed in service by Astrium NA for Federal income tax purposes on the Closing Date.

EX-10.32

Exhibit 10.32

AGREEMENT NO. 48801

AMENDMENT 6

AGREEMENT BETWEEN

ASTROTECH SPACE OPERATIONS, INC.

AND

LOCKHEED MARTINCOMMERCIAL LAUNCH SERVICES, INC.

FOR PROVISION OF

PAYLOAD PROCESSING FACILITIES AND SUPPORT

IN CONJUNCTION WITH

COMMERCIAL ATLAS LAUNCHES

TABLE OF CONTENTS

	Page
Table of Contents	i
Amendment 1	iv
Amendment 2	v
Amendment 3	vi
Amendment 4	vii
Amendment 5	viii
Amendment 6	ix
Title & Preamble	1
1. Recital	1
2. Format of Agreement	2
3. Changes	2
4. Description of Services	2
4.1 Facility Requirements Specific to LMCLS	3
4.2 Facility Access and Manifest Coordination	4
4.3 Future Facility Expansion at Astrotech Florida	4
5. Documentation Requirements	5
5.1 General	5
5.2 Payload Processing Requirements Document	5
5.3 Hazardous Procedures	6
5.4 Liquid Propellant Operations Crew Certification	6
6. Environmental, Safety, and Health Responsibilities	6
6.1 Astrotech Obligations to LMCLS	6
6.2 LMCLS Obligations to Astrotech	8
7. Coordination	9
7.1 Agreement Coordinators and Technical Managers	9
7.2 Coordination with USAF	9
7.3 Additional Coordination	9
8. Schedule and Facility Assignment	10
8.1 Occupancy Period	10
8.2 Key Dates	10
8.3 Schedule Changes	10
9. Service Fees and Other Charges	12
9.1 Price	12
9.2 Out-of-Scope Items	12
9.3 Future Facility Expansion	13
9.4 Payments	13
9.5 Billing and Payment Schedule	14
9.6 LMCLS Additional Costs	15

i

10. Allocation of Certain Risks of Liability and Damage	15
10.1 General	15
10.2 Definitions	15
10.3 Damage to Persons or Property Involved in Payload Processing Activity	16
10.4 Risk of Patent Infringement	18
10.5 Assistance with Third Party Claims	18
11. Limitation of Astrotech and LMCLS Liability	19
12. Termination	19
12.1 Termination by LMCLS	19
12.2 Termination by Astrotech	23
13. Handling of LMCLS and Customer Provided Data	24
13.1 Technical Data Furnished to Astrotech by LMCLS and Customer	24
13.2 Financial and Commercial Data	24
14. Patent and Data Rights	25
15. Compliance With the International Traffic in Arms Regulation (ITAR)	25
15.1 Conduct of Activities	25
15.2 Technical Assistance Agreements	25
15.3 Signature Assistance	25
16. Permits and Licenses	26
17. Warranty	26
17.1 Warranty of Services	26
17.2 Exclusivity of Warranties and Remedies	26
18. Notices	26
19. Governing Law	27
20. Severability	27
21. Waiver	27
22. Disputes	28
22.1 Disputes Resolution	28
22.2 Performance During Submission of Dispute	28
23. Headings	28
24. Assignability	28
24.1 Assignment to Astrotech Florida Holdings, Inc.	28
24.2 Assignment to SouthTrust Bank	28
24.3 Future Assignments	29
25. Disclaimer of Authority	29
26. Complete Agreement	29
27. Addition of Astrotech Florida Holdings, Inc. as a 3rd Party	29
28. Effective Date and Duration of Agreement	30

ii

Appendix 1:	Agreement Exhibit Format
Appendix 2:	Spacecraft Services
Appendix 3:	Atlas Launch Vehicle Services
Appendix 4:	Facility Services Agreement
Appendix 5:	Baseline Pricing – Missions 1 Through 4 in a Single Calendar Year
Appendix 6:	Baseline Pricing – Missions 5 and Above in a Single Calendar Year
Appendix 7:	Facility Expansion Pricing – Missions 1 Through 4 in a Single Calendar Year
Appendix 8:	Facility Expansion Pricing – Missions 5 and Above in a Single Calendar Year

iii

AMENDMENT 1

1. Description of Amendment. Amendment 1 (i) extends the duration of this Agreement from 4 March 1989 through 31 December 1994 to 4 March 1989 through 31 December 1997, (ii) and similarly extends the Appendix 4 Price Schedule.

2. Incorporation of Amendment 1 Change Pages. Amendment 1 consists of the following change pages: Coverpage; i; iii; iv; 24; Appendix 4, Page 1 of 3, Page 2 of 3, and Page 3 of 3. Where change pages contained in Amendment 1 have the same page number as pages in the previous issue of this Contract, the Amendment 1 changes pages are to be substituted for and replace the corresponding previous issue pages in their entirety. All pages of this contract affected by Amendment 1 carry the notation “AMENDMENT 1” in either the upper or lower right-hand corner. The update of this Contract to Amendment 1 is accomplished by the addition of substitution, as appropriate, of all Amendment 1 change pages.

3. Effective Date. This Amendment 1 shall enter into force as of the date of the last signature of the parties shown on Page 24.

iv

AMENDMENT 2

1. Description of Amendment. Amendment 2 (i) extends the duration of this Agreement from 4 March 1989 through 31 December 1994 to 4 March 1989 through 31 December 2000, (ii) recognizes the change from NASA to USAF as the source of Government support provided to Astrotech, and (iii) revises, and simplifies and extends the Appendix 4 Price Schedule to cover the time period through the year 2000.

2. Incorporation of Amendment 2 Change Pages. Amendment 2 consists of the following change pages: Cover page; i; iv; 3; 6; 19; 21; and 24; and Appendix 4 in its entirety. Where change pages in Amendment 2 have the same page number as pages in the previous issue of this Contract, the Amendment 2 change pages are to be substituted for and replace the corresponding previous issue pages in their entirety. All pages of this Contract affected by Amendment 2 carry the notation “AMENDMENT 2” in either the upper or lower right-hand corner. The update of this Contract to Amendment 2 is accompanied by the addition or substitution, as appropriate, of all Amendment 2 change pages.

3. Effective Date. This Amendment 2 shall enter into force as of the date of the last signature of the parties shown on Page 24.

v

AMENDMENT 3

1. Description of Amendment. Amendment 3 (i) recognizes that Martin Marietta Commercial Launch Services, Inc. has been renamed Lockheed Martin Commercial Launch Services, Inc. and that all references in this Agreement to General Dynamics Commercial Launch Services, Inc. or GDCLS are to be construed to be references to Lockheed Martin Commercial Launch Services, Inc. (LMCLS), (ii) revises the expiration date of this Agreement to 31 December 1997, and (iii) revises the Appendix 4 Price Schedule to extend the previous Price Schedule for an additional one year period, with the option to elect an Alternative Price Schedule for a multi-year period at a reduced per payload price.

2. Incorporation of Amendment 3 Change Pages. Amendment 3 consists of the following change pages: Cover page; i; ii; v; and 24; and Appendix 4 in its entirety. Where change pages in Amendment 3 have the same page number as pages in the previous issue of this Contract, the Amendment 3 change pages are to be substituted for and replace the corresponding previous issue pages in their entirety. All pages of this Contract affected by Amendment 3 carry the notation “AMENDMENT 3” in either the upper or lower right-hand corner. The update of this Contract to Amendment 3 is accomplished by the addition or substitution, as appropriate, of all Amendment 3 change pages.

3. Effective Date. This Amendment 3 shall enter into force as of the date of the last signature of the parties shown on Page 24.

vi

AMENDMENT 4

1. Description of Amendment. Amendment 4 (i) recognizes that all references in this Agreement to General Dynamics Commercial Launch Services, Inc. or GDCLS are to be construed to be references to Lockheed Martin Commercial Launch Services, Inc. (LMCLS), (ii) incorporates LMCLS’ commitment to exclusive use of Astrotech Services, (iii) revises the termination provisions to be consistent with the exclusive use commitment, (iv) retains the expiration date of this Agreement as 31 December 1999, (v) revises the Appendix 3 Services for Payload Fairing Encapsulation to indicate GDCLS responsibility for transport, and (vi) revises the Appendix 4 Price Schedule.

2. Incorporation of Amendment 4 Change Pages. Amendment 4 consists of the following change pages: Cover page; i; vi; 2; 16; 16a, 24; Appendix 3 Page 1 of 3, and Appendix 4 in its entirety. Where change pages in Amendment 4 have the same page number as pages in the previous issue of this Contract, the Amendment 4 change pages are to be substituted for and replace the corresponding previous issue pages in their entirety. All pages of this Contract affected by Amendment 4 carry the notation “AMENDMENT 4” in either the upper or lower right-hand corner. The update of this Contract to Amendment 4 is accompanied by the addition or substitution, as appropriate, of all Amendment 4 change pages.

3. Effective Date. This Amendment 4 shall enter into force as of the date of the last signature of the parties shown on Page 24.

vii

AMENDMENT 5

1. Description of Amendment. Amendment 5 (i) changes all references to General Dynamics Commercial Launch Services, Inc. or GDCLS to Lockheed Martin Commercial Launch Services, Inc. (LMCLS), (ii) changes all references to Astrotech Space Operations, L.P. to Astrotech Space Operations, Inc., (iii) incorporates reference to Facility Requirements Document for Florida FLORIDA facility expansion, (iv) incorporates references and standard services for Astrotech Vandenberg AFB payload processing services, (v) revises the Appendix 2 and Appendix 3 Services for Spacecraft Processing and Payload Fairing Encapsulation to meet Atlas V requirements, (vi) revises the Agreement expiration date to 31 December 2005, (vii) provides for five (5) one-year option periods for calendar years 2006 through 2010 inclusive, and (viii) revises the Appendix 4 Price Schedule.

2. Incorporation of Amendment 5 Changes. Amendment 5 is a complete revision to the Agreement, replacing the original issue and Amendments 1 through 4 in their entirety.

3. Effective Date. This Amendment 5 shall enter into force as of the date of the last signature of the parties shown on Page 20.

viii

AMENDMENT 6

1. Description of Amendment. Amendment 6 (i) redefines the Astrotech facilities that will support the Atlas V program, (ii) adds the out-of-scope work related to the facility cranes and fiber-optic connection, (iii) provides for modified contract termination provisions, (iv) provides for LMCLS’ continued use of the Astrotech facilities in the event that LMCLS terminates for cause Astrotech’s involvement in the project, (v) assigns certain of Astrotech’s rights and obligations under the contract to Astrotech Florida Holdings, Inc. and Astrotech’s lender, (vi) extends the Agreement through 31 December 2006, and (vii) updates the contract pricing based on Items (i) through (vi).

2. Incorporation of Amendment 6 Changes. Amendment 6 is a complete revision and restatement of the Agreement, replacing the original issue and Amendments 1 through 5 in their entirety.

3. Effective Date. This Amendment 6 shall enter into force as of the date of the last signature of both LMCLS and Astrotech Space Operations, Inc. shown on Page 30.

ix

AGREEMENT BETWEEN

ASTROTECH SPACE OPERATIONS, INC.

AND

LOCKHEED MARTIN COMMERCIAL LAUNCH SERVICES, INC.

FOR PROVISION OF

PAYLOAD PROCESSING FACILITIES AND SUPPORT

IN CONJUNCTION WITH

COMMERCIAL ATLAS LAUNCHES

This Agreement is entered into by and between Astrotech Space Operations, Inc., a Delaware corporation and a wholly-owned subsidiary of SPACEHAB, Inc. (hereinafter called “Astrotech”), and Lockheed Martin Commercial Launch Services, Inc., a Delaware corporation (hereinafter called “LMCLS”), and sets forth the terms and conditions under which Astrotech shall furnish Payload Processing Facilities and Activities to LMCLS and to each LMCLS customer (hereinafter called “Customer”) so identified in a duly executed Exhibit to this Agreement in conjunction with commercial Atlas launches.

1. Recital. LMCLS has established a program to provide Atlas expendable launch vehicle launch services on a commercial basis utilizing launch facilities at Cape Canaveral Air Station, Florida and Vandenberg AFB, California. Under its contract with Customer for Atlas launch services, LMCLS acts as the agent of Customer to arrange for all Customer-required prelaunch Payload Processing Facilities and Activities. Therefore, in conjunction with these commercial Atlas launches, LMCLS will require (a) assured access to specialized facilities and (b) processing support, both for the preparation of each Customer spacecraft and its respective upper stage system, if applicable, the payload fairing, and all other associated property to be flown aboard the Atlas launch vehicle (hereinafter called “Payload”), and for Atlas payload fairing encapsulation activities. Astrotech has built and operates specialized Payload Processing Facilities in Titusville, Florida adjacent to the NASA-John F. Kennedy Space Center (hereinafter called “Astrotech Florida”) and at Vandenberg AFB, California (hereinafter called “Astrotech VAFB”) wherein Astrotech offers such services. Pursuant to this Agreement Astrotech shall provide and LMCLS will utilize Astrotech services for the prelaunch processing of the Payloads for commercial Atlas launches for the duration of this Agreement. Additionally, as mutually agreed, LMCLS will provide, without cost to Astrotech, engineering support services to Astrotech (e.g., reviewing Astrotech drawings and analyses) for facility modifications necessary to satisfy future LMCLS and Customer payload processing requirements.

1 AMENDMENT 6

2. Format of Agreement. This Agreement is in the form of a Basic Purchase Order Agreement. The Title, Preamble, Sections 1 through 28, and the Appendices of this Agreement constitute the general terms and conditions (hereinafter called “General Terms and Conditions”) applicable to the services to be provided by Astrotech for all Payload Processing Activities performed under this Agreement. The mission specific details and requirements for each Payload are contained in a series of Exhibits, modeled after Appendix 1, which will be attached to and made part of this Agreement as they are mutually agreed to and signed by authorized representatives of LMCLS and Astrotech. Any alteration or exception to the General Terms and Conditions for a specific mission will be clearly stated and identified in the applicable Exhibit.

3. Changes. Changes to the services defined herein to be provided by Astrotech to LMCLS under this Agreement may be agreed to by LMCLS and Astrotech and shall be evidenced by a written amendment to the General terms and Conditions or applicable Exhibit of this Agreement, as appropriate, prior to implementation of such change.

4. Description of Services. The facilities and services to be provided by Astrotech to LMCLS are divided into two Contract Line Item Numbers (CLINs), as defined in Section 9.1. CLIN 1 (hereinafter referred to as the “Facility Services CLIN”) provides for LMCLS access to the Astrotech Florida facilities and the basic operation/maintenance/ownership of these facilities by Astrotech. CLIN 2 (hereinafter referred to as the “Mission Services CLIN”) provides for Astrotech facility operation services and mission processing services at both the Astrotech Florida facilities and Astrotech VAFB facilities. The description and specifications of the Astrotech Florida facilities and equipment, as they pertain to this Agreement, are those contained in the Astrotech document titled “Astrotech Space Operations Florida Facility Accommodations Manual” (ASO-SHI-M0007) dated April 2001, and subsequent revisions that do not diminish the previously stated capabilities, which is explicitly incorporated by reference herein. This Facility Manual will form the requirements baseline for the design, construction and validation of the Building 9 Spacecraft Processing Facility (SPF) at Astrotech Florida. The date for LMCLS’ beneficial occupancy of the Bldg. 9 facility shall be 15 October 2001. The description and specifications of the Astrotech VAFB facilities and equipment, as they pertain to this Agreement, are those contained in the Astrotech document titled “Astrotech Space Operations VAFB Facility Accommodations Manual” (ASO-SHI-M0003) dated July 2001, and subsequent revisions that do not diminish the previously stated capabilities, which is explicitly incorporated by reference herein. Astrotech shall maintain the Florida and VAFB facilities to ensure readiness to support LMCLS and LMCLS’ Customer requirements consistent with the capabilities specified in the above documentation. In addition to operating and maintaining the Astrotech Florida and Astrotech VAFB facilities, Astrotech shall provide to LMCLS for each Customer Payload to be processed under this Agreement the

2 AMENDMENT 6

“Spacecraft Services” set forth in Appendix 2 of this Agreement and for each associated Payload fairing encapsulation to be accomplished under this Agreement the “Atlas Launch Vehicle Services” set forth in Appendix 3 of this Agreement. It is recognized by LMCLS and Astrotech (i) that certain of the services to be provided to LMCLS will be obtained by Astrotech from the U.S. Government pursuant to “Department of the Air Force/Astrotech Space Operations Commercial Space Operations Support Agreement”, executed 15 November 1999, and subsequent revisions, and (ii) that LMCLS and Customer or their respective contractors or subcontractors, other than Astrotech, shall perform all activity involving assembly, servicing and checkout of the Payload and use of its associated ground support equipment, unless otherwise expressly provided for in this Agreement.

4.1 Facility Requirements Specific to LMCLS. Astrotech agrees to provide the facility systems/modifications listed below. These items were considered out-of-scope of the standard services provided for each Customer under this Agreement prior to Amendment 6, but are hereby incorporated into and made a part of the Agreement via Amendment 6. Payment terms for these items are defined in Section 9.1.1.

4.1.1 HECO Pacific Cranes. Astrotech will modify the design and construction of the Building 9 SPF to accommodate two HECO Pacific cranes designed and manufactured to Lockheed Martin specifications. The facility design will be altered with regards to the cranes in both the Encapsulation Bay and the West Processing Cell. In addition, Astrotech agrees to fund the purchase price of the 30-ton HECO Pacific crane to be installed in the West Processing Cell. The 50-ton HECO Pacific crane to be installed in the Encapsulation Bay will be provided as Customer furnished equipment by Lockheed Martin without assistance from Astrotech. The cranes were turned-over to Astrotech by way of Memorandum of Understanding dated 31 July 2001, signed by both parties, and LMCLS letter CLSB-0108-0310 dated 01 August 2001, co-signed by Astrotech.

4.1.2 Fiber-Optic Network. Astrotech will provide a fiber-optic network connection from the Astrotech Florida facility to the Atlas V Space Launch Complex 41 at CCAFS. Astrotech will be responsible for providing all end-item and repeater equipment-required to transmit/receive spacecraft data signals between the Astrotech facility and the launch pad.

4.1.3 Sale of Astrotech Cranes. Astrotech will complete the build of two cranes designed to Astrotech specifications originally intended for use in the Building 9 West Spacecraft Processing Cell and the Encapsulation Bay using its own funds. Upon completion, Astrotech will sell these two cranes, using reasonable commercial efforts to obtain the highest selling prices, and credit the proceeds to LMCLS against the next Atlas mission(s) to be processed under this Agreement.

3 AMENDMENT 6

4.2 Facility Access and Manifest Coordination. During the period of performance specified in Section 28, Astrotech will coordinate with LMCLS on a regular basis, but no less than once per quarter, the facility manifest for the Astrotech Florida facilities in general, and Building 9 in particular, in order to coordinate the availability of the facilities required to support Atlas mission processing. LMCLS’ right of occupancy at the Astrotech Florida facilities, as created in this Agreement, shall constitute a non-exclusive tenancy and the relationship of Astrotech and LMCLS with respect thereto shall be that of Landlord and Tenant. In Building 9, LMCLS will be provided Dedicated Use of storage space in the Conditioned Storage Area for the storage of flight hardware elements and ground support equipment. Processing by LMCLS and Astrotech’s other customers of 5-meter missions in Building 9 shall take priority over the processing of 4-meter missions, which can be accommodated in Building 2 if required. Should two 5-meter missions, one Atlas and one non-Atlas, be scheduled for occupancy in Building 9 during the same time period, the Atlas mission shall be granted Priority Use of the West Processing Cell and the non-Atlas mission shall be granted Priority Use of the East Processing Cell. The Astrotech policy regarding the resolution of potential conflicts resulting from program schedule changes, as documented in Section 8.3, applies to all processing operations conducted at the Astrotech Florida facility. Astrotech will not enter into any additional contracts for payload processing services that require the use of Building 9, other than those already in existence as of the date of this amendment, without the express written consent of LMCLS. The addition of mission exhibits to existing contracts and/or the amendment of existing contracts shall not be considered an “additional contract”.

4.3 Future Facility Expansion at Astrotech Florida. Astrotech agrees to coordinate with LMCLS the projected facility usage for the Building 9 Satellite Processing Facility over the period of this Agreement in order to respond to the potential demand for increased facility capacity at some future time during the period of this Agreement. Should the total number of 5-meter payload fairing missions processed at the Astrotech Florida facility in any twelve-month period exceed 10 missions and/or be forecasted to exceed 12 missions during the next twelve-month period, Astrotech will provide LMCLS with a plan to respond to the increased facility demand. Should an analysis of the total projected 5-meter mission loading, both for LMCLS and Astrotech’s other customers, indicate the forecasted number of 5-meter missions will (i) continue at an average rate of 12 or greater missions per twelve month period or (ii) average 1 or more missions per month over a twenty-four month period which starts eighteen months from any point in time Astrotech will respond by constructing a new Payload Processing Facility in accordance with the Lockheed Martin Astronautics Astrotech Satellite Processing Facility, Building 10, Facility Requirements Document (SPF FRD 99) dated [TBD] and LMCLS’ crane specifications, or

4 AMENDMENT 6

equivalent facility that satisfies the requirements of LMCLS, to accommodate the increased demand with a beneficial occupancy date within eighteen (18) months of the analysis. Astrotech shall also exercise best efforts to ensure that the necessary financing is available if or when a future facility expansion is required. Astrotech shall make an assessment to determine and implement the more cost effective approach of cranes for the new facility—either using the LMCLS provided cranes (ref: Section 4.1.1) in the new facility and replacing them in Building 9 with cranes to Astrotech’s standard crane specification or purchasing new cranes for the new facility to LMCLS’ crane specifications. The pricing provided for in this Agreement relative to a future facility expansion is based on the use of Astrotech’s standard crane specification. The applicability of increased Astrotech pricing for LMCLS missions related to LMCLS use of a future facility expansion is described in Section 9.3.

5. Documentation Requirements.

5.1 General. LMCLS shall provide Astrotech the documentation described in Sections 5.2, 5.3 and 5.4 below applicable to the activities planned to occur at the Astrotech Facility. While it is essential that the required content of this documentation be complete as defined below, Astrotech will accept the documentation in any format convenient to LMCLS and Customer. In particular, to the extent the required documentation has been prepared for and approved for activity in Government facilities such documentation shall be fully acceptable to Astrotech, except to the extent additional information may be required to adequately define a planned activity at the Astrotech Facility. Astrotech will evaluate such LMCLS-provided documentation only from the standpoint of facility compatibility and safety, and will not attempt to evaluate, in any way, the probability of Payload success. All such documentation shall be written in the English language.

5.2 Payload Processing Requirements Document. A Payload Processing Requirements Document (or Documents) for each Payload shall be submitted to Astrotech nominally nine months prior to the beginning of the Occupancy Period set forth in Section 8.1 below for the particular Payload, unless otherwise agreed to in writing by Astrotech. This document shall provide a description of the Payload (including a description of each hazardous system), outline all Payload and Payload fairing activities planned to occur at the Astrotech Facility, and detail all services and support requested by LMCLS to be provided to LMCLS and Customer by Astrotech. The hazardous systems description shall include drawings, schematics, summary test data, and any other available information that will aid in appraising the respective systems. Hazardous systems description shall include ordnance devices, radioactive materials, propellants, pressurized systems, toxic material, cryogenic material, and radio frequency (RF) radiation, and any other system that is a source of danger either to personnel or equipment. Astrotech will review the Payload Processing Requirements Document, which, when mutually agreed to by

5 AMENDMENT 6

Astrotech and LMCLS, will constitute the detailed definition of the services to be provided by Astrotech for the particular Payload and associated Payload fairing encapsulation. For repeat payload processing operations, to the extent that identical Spacecraft processing operations and Payload fairing encapsulation operations are to be performed, a one-time submittal will suffice for all such operations.

5.3 Hazardous Procedures. Detailed procedures must be prepared for all operations at the Astrotech Facility involving hazardous systems, as defined in Section 5.2 above. Hazardous procedures planned for use at Astrotech VAFB must be prepared in accordance with EWR 127-1. All such procedures shall be clearly labeled as “Hazardous” and shall be submitted to Astrotech for review no later than forty-five (45) days prior to planned use at the Astrotech Facility, unless otherwise agreed to in writing by Astrotech. Once mutually agreed to by Astrotech and LMCLS, hazardous procedures shall be followed without exception. Any changes to an approved hazardous procedure must be mutually agreed to by the Astrotech and LMCLS Technical Managers prior to use.

5.4 Liquid Propellant Operations Crew Certification. A Liquid Propellant Operations Crew Certification shall be submitted by LMCLS to Astrotech no later than one (1) week prior to the beginning of liquid propellant operations for each Payload. This document shall identify all personnel who will be directly involved in handling liquid propellants at the Astrotech Facility and shall state that each individual is properly qualified for such activity. At Astrotech VAFB, the personnel so identified, by means of Astrotech sponsorship, may be required to obtain medical certification and attend USAF training courses as required by Air Force safety regulations.

6. Environmental, Safety, and Health Responsibilities.

6.1 Astrotech Obligations to LMCLS

6.1.1 Astrotech, at its own cost and expense, shall operate the Astrotech Facilities and conduct all Astrotech Payload Processing Activities in compliance with all applicable federal, state and local laws, regulations, rules, ordinances, and other regulatory requirements and standards relating to the regulation and protection of the environment, safety and health, in effect at any time during the period of this contract (“ESH Laws”).

6.1.2 With respect to all Payload Processing Activities performed under this Agreement that are conducted on United States government-owned property, the term “ESH Laws” also includes all applicable base permits, operational plans and procedures and other site specific

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requirements relating to the environment, safety and health at the particular government-owned property in question.

6.1.3 Astrotech shall be considered the owner and operator of the Astrotech Facilities for the purposes of all applicable ESH Laws. Astrotech shall obtain, at its own cost and expense, any and all permits or licenses, maintain records and prepare any reports, manifests, or other documentation necessary to operate the Astrotech Facilities and conduct all Astrotech Payload Processing Activities in compliance with all ESH Laws.

6.1.4 Upon LMCLS’ or the Customer’s reasonable notice and request, Astrotech shall make available all permits, licenses, plans, procedures, manuals, protocols and other documents pertaining to the Astrotech Facilities (including any amendments or revisions thereto) that Astrotech has developed or maintained pursuant to applicable ESH laws.

6.1.5 Astrotech shall notify LMCLS and the Customer(s) of any potentially hazardous operations (as defined in Section 5.3) that are being conducted at the Astrotech Facilities by Astrotech or any of its other customers at the facility concurrent with LMCLS or the Customer’s activities.

6.1.6 Astrotech shall be responsible for all permitted and unpermitted releases or discharges of pollutants, contaminants, hazardous substances, or petroleum products to the environment from or at the Astrotech Facilities related to activities performed by Astrotech, LMCLS, their agents (e.g., LMA) and their Customers. Notwithstanding the foregoing, and with the express agreement that Astrotech shall be responsible for reporting and other regulatory requirements, Astrotech shall not be responsible for any damages or penalties resulting from releases caused solely by the negligence of LMCLS, its agents or Customer(s).

6.1.7 For the purposes of ESH Laws pertaining to the generation, storage, transportation, treatment and disposal of hazardous waste, Astrotech shall be considered the generator of and, at its own cost and expense, shall manage all hazardous waste generated in connection with the Payload Processing Activities. In addition, Astrotech agrees to provide proper disposal for any hazardous materials identified as excess by the Customer. For such excess materials, Astrotech agrees to pay up to $1000 per mission towards the disposal costs. Any costs in excess of $1000 will be billed to LMCLS as a reimbursable expense without Astrotech mark-up.

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6.1.8 Astrotech, at its own cost and expense, shall provide and maintain Hazardous Materials Storage lockers for use by LMCLS and Customer personnel working at the Astrotech Facility. Storage lockers shall meet applicable OSHA and NFPA Code 30 requirements.

6.1.9 Astrotech, at its own cost and expense, shall provide Astrotech Facility Orientation to all LMCLS and Customer personnel. This orientation course will include a summary of Astrotech site-specific hazardous material requirements. Upon LMCLS’ reasonable notice and request, Astrotech shall make available to LMCLS all course materials that will be used to provide Customer orientation.

6.1.10 Astrotech, as its own cost and expense, will review all customer-submitted operating procedures for compliance with all applicable ESH and OSHA standards.

6.2 LMCLS Obligations to Astrotech

6.2.1 LMCLS shall require the Customer to agree to notify Astrotech, within sixty (60) days prior to the arrival of the Payload to the Astrotech Facility, of the types and amounts of hazardous chemical products or articles, including but not limited to cleaners, propellants and ordnance, that will be required for preparation of any payload. Such notification shall include the submission of applicable Material Safety Data Sheets (MSDS) or similar documents.

6.2.2 LMCLS shall require the Customer to agree to comply with applicable requirements of the Toxic Substances Control Act, 15 U.S.C. §§ 2601 to 2692, including those requirements that pertain to the import or export of chemicals, and all other applicable ESH laws while in residence at the Astrotech Facility.

6.2.3 LMCLS shall require the Customer to agree to minimize the generation of hazardous waste in its Payload Processing Activities. As part of this obligation, LMCLS shall require the Customer to agree to minimize the amount of hazardous materials used in connection with its Payload Processing Activities to be performed at the Astrotech facility.

6.2.4 LMCLS shall require the Customer to agree to submit all hazardous operating procedures to be performed at the Astrotech facility to Astrotech safety for review and approval prior to use. Customers shall be required to execute the procedures as approved, and coordinate any required deviations with Astrotech safety prior to performance.

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6.2.5 While occupying the Astrotech facilities and except as otherwise provided herein, LMCLS, their agents (e.g., LMA) and their Customers will be responsible for appropriately handling all hazardous materials brought on to the Astrotech Facility and utilized by their respective personnel in the performance of their operations to include: (i) storage of all hazardous materials in Astrotech-provided, hazardous material storage lockers, (ii) monthly update of locker inventories and submittal to Astrotech, and (iii) at the completion of mission processing operations removal of hazardous material that LMCLS or the Customer, in its sole discretion, determines it can use in its ongoing operations and transfer to Astrotech of all other hazardous material or waste for disposal per Section 6.1.7.

7. Coordination.

7.1 Agreement Coordinators and Technical Managers. LMCLS and Astrotech shall each designate an Agreement Coordinator who shall be responsible for coordinating with each other all financial, general scheduling, and other administrative matters related to this Agreement. In addition, LMCLS and Astrotech shall each designate a Technical Manager, who shall be responsible for coordinating with each other all technical activities, including the day-by-day activity schedules, to be performed under this Agreement.

7.2 Coordination with USAF. The Astrotech Technical Manager shall provide all coordination with USAF and NASA for any U.S. Government support provided to LMCLS and Customer under this Agreement.

7.3 Additional Coordination. The Astrotech Technical Manager and LMCLS Technical Manager shall, through consultation and with the assistance of the Customer Technical Manager, coordinate the activities of Astrotech, LMCLS, and Customer related to the furnishing of services provided under this Agreement, and will call upon individuals from their respective organizations, including contractors and consultants, to participate as necessary and appropriate in such consultations.

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8. Schedule and Facility Assignment.

8.1 Occupancy Period. The period of time agreed to by LMCLS and Astrotech during which LMCLS and Customer will have the right to occupy the Astrotech facilities and to otherwise receive services for each Payload to be processed under this Agreement (hereinafter called “Occupancy Period”) and the launch date upon which the Occupancy Period is based shall be determined and set forth in the Exhibit of this Agreement applicable to the particular Payload. Such Exhibit shall also contain the schedules and assignments for the use of the facilities within Astrotech Florida or Astrotech VAFB, as applicable, by LMCLS and Customer. Subject to the provisions of Sections 8.2 and 8.3, LMCLS shall have the right, as a customer of Astrotech, to occupy and to use the Astrotech Florida facilities for the purposes of the prelaunch processing of the Payloads for commercial Atlas launches during the term of this Agreement.

8.2 Key Dates. Key milestone dates relating to all critical events that could affect the Occupancy Period or services to be performed for each Payload under this Agreement shall be exchanged between the Astrotech Technical Manager and the LMCLS Technical Manager. Each party shall advise the other, in a timely manner, of any event which occurs that would significantly alter the agreed to Occupancy Period or services.

8.3 Schedule Changes. LMCLS and Astrotech recognize that the nature of spaceflight activity is such that schedules must sometimes be changed, often for reasons beyond the control or reasonable predictive ability of LMCLS, Customer, or Astrotech. In the event that a change in the Occupancy Period or in the schedules for the use of the respective Astrotech facilities for a particular Payload becomes necessary by LMCLS, Customer, or Astrotech, LMCLS and Astrotech agree to work together to accommodate the particular rescheduling request (including, if necessary, changes in the assignments for the use of the respective Astrotech facilities, and overtime and weekend work by LMCLS, Customer, and Astrotech, and their respective contractors and subcontractors) in a manner that will be mutually acceptable, satisfy the established launch schedules, and be compatible with the established or changed schedules of the other customers of Astrotech. Once the need for such a change has been recognized by either LMCLS or Astrotech, the party recognizing such need shall promptly notify the other party of the particular rescheduling or reassignment request, and the related circumstances. A change in the announced launch schedule for a particular Payload by more than one week from the launch date upon which the current Occupancy Period is based shall be deemed to be notification to Astrotech of a request to change the Occupancy Period, unless LMCLS otherwise notifies Astrotech.

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8.3.1 Schedule Changes Requested or Caused by LMCLS. In the event that LMCLS requests or causes a change in the Occupancy Period or the schedule for the use of the respective Astrotech facilities for a particular Payload, as long as the resulting change does not exceed the duration of the previously established schedule such change shall not affect the Facility Services Fee (CLIN 1) or Mission Services Fee (CLIN 2) or other charges to LMCLS, except that LMCLS shall be charged any increase or credited with any decrease in the Mission Services Fee (CLIN 2) applicable to any change in launch date associated with the rescheduled Occupancy Period, in accordance with the Price Schedules set forth in Appendices 5 and 6 of this Agreement applicable to the particular Payload.

8.3.2 Schedule Changes Requested by Astrotech. In the event that Astrotech requests and LMCLS agrees to a change in the Occupancy Period, such change shall not affect the Facility Services Fee (CLIN 1) or Mission Services Fee (CLIN 2) or other charges to LMCLS, except that LMCLS shall be credited with any decrease in the Mission Services Fee (CLIN 2) applicable to any change in launch date associated with the rescheduled Occupancy Period, calculated in accordance with the Price Schedules set forth in Appendices 5 and 6 of this Agreement applicable to the particular Payload.

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9. Service Fees and Other Charges.

9.1 Price. LMCLS shall pay Astrotech on a firm fixed price basis for the facility access and services provided by Astrotech under this Agreement. The payment structure corresponds to the CLINs as referred to in Section 4.

9.1.1 CLIN 1 - Facility Services Fee. Constitutes charges paid by LMCLS as consideration for access to the Astrotech Florida facilities and for Astrotech’s services related to basic ownership, care and maintenance of these facilities. The Facility Services Fee is paid on a quarterly basis, beginning in CY2002, regardless of Atlas mission processing activity at the Astrotech facilities. The Facility Services Fee schedule by calendar year is provided in Appendix 5 to this Agreement.

9.1.2 CLIN 2 - Mission Services Fee. Constitutes charges paid by LMCLS for Astrotech’s facility operation services and mission support services performed in support of LMCLS and LMCLS’ customer processing activities at the Astrotech facilities. The Mission Services Fee is specified in the applicable Exhibit for each Payload to be processed at the Astrotech facilities under this Agreement, determined pursuant to the applicable Price Schedule set forth in Appendices 5 and 6 of this Agreement, plus any additional charges agreed to or otherwise due and payable under this Agreement. The stated Facility Services Fee and Mission Services Fee, and any additional charges, are exclusive of any taxes, if applicable. The Appendices 5 and 6 Price Schedules provide both the Facility Services Fee and Mission Services Fee pricing on a calendar year basis through the expiration date of the current Agreement, 31 December 2006, plus pricing terms for four (4) one-year option periods for CY2007 through 2010 inclusive.

9.2 Out-of-Scope Items. Astrotech agrees to fund the design and implementation of the facility enhancements described in Section 4.1 for the benefit of LMCLS. LMCLS agrees to pay for these enhancements plus applicable financing charges through an increase to the Facility Services Fee beginning in CY2001 and continuing through 31 December 2006. Should adjustments to the prices shown in Appendices 5 and/or 6 associated with these out-of-scope items be required because of changes subsequent to Amendment 6, the financing rate associated with these reimbursable items is 11.57% APR fixed. The price impacts associated with Sections 9.2.1 and 9.2.2 have been incorporated into Appendices 5 and 6 via Amendment 6.

9.2.1 HECO Pacific Cranes. The total cost to Astrotech associated with the crane modifications described in Section 4.1.1 is $1,308,000 ($911,000 in direct costs plus $397,000 in financing fees). In addition, Astrotech agrees to pay for charges in the amount of $165,000 for HECO

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Pacific contract changes related to redesign of the two cranes for installation in the Building 9 SPF, and for the associated schedule changes and contract termination fees. This amount will be borne by Astrotech and will not be billed back to LMCLS

9.2.2 Fiber-Optic Network. The total cost to Astrotech associated with the Fiber-Optic Network described in Section 4.1.2 is $1,692,000 ($1,182,000 in direct costs plus $510,000 in financing fees). It is understood that the actual price to design and install the fiber optic system may be more or less than the cost listed above based on the actual cost to Astrotech from NASA to install the portion of the system on the Kennedy Space Center. Any applicable adjustment to the LMCLS costs associated with the Fiber-Optic Network will be made following completion of this work effort and submittal of final pricing documentation to LMCLS. Any cost adjustment will be reflected in the Facility Services Fees in Appendix 5.

9.2.3 Excess Astrotech Cranes. The total net sales price (i.e., gross sales price minus related expenses, excluding the original purchase price of the cranes) realized by Astrotech associated with the two cranes built to Astrotech specifications described in Section 4.1.3 shall be applied as a credit to the next LMCLS payment to Astrotech for services provided under this Agreement.

9.3 Future Facility Expansion. Should Astrotech expand the Florida facility during the current period of this Agreement, and said expansion was done at the written request and concurrence of LMCLS per the terms of Section 4.3, the Pricing Schedule set forth in Appendices 7 and 8 would replace those shown in Appendices 5 and 6 for all missions launched starting in the year of LMCLS’ beneficial occupancy of the facility expansion and continuing through the end of the current contract period as specified in Section 28. The pricing provided in Appendices 7 and 8 represents Not-to-Exceed prices which shall be negotiated to Firm Fixed Prices based upon the facility requirements for a second 5-meter processing facility for use by LMCLS, at the Astrotech Florida facility.

9.4 Payments.

9.4.1 For the Facility Services Fee (CLIN 1), all payments shall be (i) in United States Dollars, (ii) payable to SouthTrust Bank, as the lender and assignee of Astrotech Space Operations, Inc., and/or Astrotech Florida Holdings, Inc., and (iii) delivered, at LMCLS’ expense, to the offices of SouthTrust Bank at 150 Second Avenue North, Suite 400, St. Petersburg, FL 33701 (Attn: Mr. Timothy Mann, Group Vice President) within thirty (30) days of receipt of the invoice by LMCLS. All payments made under this CLIN shall reference the applicable Astrotech invoice number.

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9.4.2 For the Mission Services Fee (CLIN 2), all payments shall be (i) in United States Dollars, (ii) payable to Astrotech Space Operations, Inc., and (iii) delivered, at LMCLS’ expense, to the office of Astrotech Space Operations, Inc. at 300 D Street SW, Suite 814, Washington, DC 20024-4703 (or other address as specified by Astrotech in writing) within thirty (30) days of receipt of the invoice by LMCLS. All payments made under these CLINs shall reference the applicable Astrotech invoice number. At its discretion, LMCLS may elect to pay the CLIN 2 payment for any Astrotech invoice by wire transfer to Astrotech’s bank in accordance with instructions available upon request from Astrotech.

9.5 Billing and Payment Schedule.

9.5.1 Facility Services Fee (CLIN 1). Commencing in CY2002, Astrotech shall invoice LMCLS thirty (30) calendar days prior to the end of each calendar quarter for the Facility Services Fees due that quarter per the Appendix 5 Price Schedule. Payment of the Facility Services Fee by LMCLS is due regardless of mission processing activity at the Astrotech facilities. Payment of the Facility Services Fee shall be made directly to SouthTrust Bank acting as the agent for Astrotech per terms of Section 9.4.1.

9.5.2 Mission Services Fee (CLIN 2). Each Exhibit of this Agreement sets forth the billing schedule for the Mission Services Fee applicable for that particular Payload. In addition to these scheduled payments, Astrotech shall provide LMCLS a separate invoice for any additional charge or charges agreed to or otherwise due and payable under this Agreement determined in accordance with Section 9.5.2.4 below, unless otherwise expressly provided for in this Agreement. The amount and billing dates of the three partial payments of the Mission Services Fee for each Payload are determined in accordance with Sections 9.5.2.1, 9.5.2.2, and 9.5.2.3 below.

9.5.2.1 Deposit and First Partial Payment. On the effective date of the Exhibit, LMCLS will be billed five percent (5%) of the Mission Services Fee for that particular Payload to be processed at the Astrotech Facility under this Agreement.

9.5.2.2 Second Partial Payment. Thirty (30) days prior to the beginning of the Occupancy Period for the Payload, LMCLS will be billed forty-five percent (45%) of the Mission Services Fee applicable to that particular Payload plus any adjustments to the First Partial Payment required due to a change in the scheduled launch date subsequent to the effective date of the applicable Exhibit. The cumulative total of the First and Second Partial Payments will equal fifty percent (50%) of the applicable Mission Services Fee.

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9.5.2.3 Third Partial Payment. On the last day of the Occupancy Period for the Payload, LMCLS will be billed fifty percent (50%) of the Mission Services Fee applicable to that particular Payload plus any outstanding unpaid balance or credit due toward the Mission Services Fee for that particular Payload as a result of Changes to this Agreement. The cumulative total of the First, Second, and Third Partial Payments will equal one hundred percent (100%) of the applicable Mission Services Fee based upon the actual launch date.

9.5.2.4 Final Billing. As soon as practicable, but not later than sixty (60) days after the end of the Occupancy Period for each Payload, LMCLS will be billed for any additional charges agreed to or otherwise due and payable for that particular Payload under this Agreement.

9.6 LMCLS Additional Costs. As a result of the modifications incorporated in this Amendment 6 to the Agreement, LMCLS shall not be required to absorb additional costs that directly result from the splitting of the services into the two CLINs defined in Section 4.1, including but not limited to taxes not currently paid by LMCLS but which would otherwise become payable because of the creation of the Facility Services CLIN and the defined Tenant/Landlord relationship.

10. Allocation of Certain Risks of Liability and Damage.

10.1 General. Certain risks of Liability and Damage, as defined below, arising out of the services to be provided by Astrotech, Astrotech Florida Holding, Inc. and their contractors and subcontractors under this Agreement, including the use of any U. S. Government facilities and support arranged by Astrotech under this Agreement, shall be allocated between LMCLS, Astrotech and Astrotech Florida Holding, Inc. (hereinafter called the “Parties”) as set forth in this Section 10.

10.2 Definitions. The following definitions shall be applicable to this Agreement.

10.2.1 Liability. “Liability” shall include payments made pursuant to any judgment by a court of competent jurisdiction or award of an arbitration tribunal, and administrative and litigation costs, and settlement payments made after consultation between the Parties.

10.2.2 Damage. “Damage” shall mean bodily injury to or death of any person, damage to or loss of any property, and loss of revenue or profits or other direct, indirect or consequential damages arising therefrom.

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10.2.3 Payload Processing Activity. “Payload Processing Activity” shall mean all activity conducted at the Astrotech Facility or at a U.S. Government installation, where use of the U.S. Government installation is arranged by Astrotech under this Agreement, including that associated with the preparation of the Payload or another payload for launch aboard a Government or commercial launch vehicle, post flight processing of the Payload or another payload, the storage of all or a portion of the Payload or another payload, the handling and transportation of all or a portion of the Payload or another payload outside the confines of the Astrotech Facility by Astrotech or its contractors or subcontractors, or outside a U.S. Government installation by the U.S. Government or its contractors or subcontractors, and Manufacturing Support Activity.

10.2.4 Manufacturing Support Activity. “Manufacturing Support Activity” shall mean all activity conducted at the Astrotech Facility that is not directly related to the prelaunch or post flight processing, storage, or handling and transportation of the Payload or another payload.

10.3 Damage to Persons or Property Involved in Payload Processing Activity.

10.3.1 Inter-Party Waiver of Liability. In carrying out this Agreement, Astrotech, Astrotech Florida Holdings, Inc., LMCLS and LMCLS Customer will respectively utilize their property and employees in the Payload Processing Activity in close proximity to one another and to others. Furthermore, the Parties recognize that all participants in Payload Processing Activity are engaged in the common goal of meaningful exploration, exploitation and uses of outer space. In furtherance of this goal, the Parties hereby agree to a no-fault, no-subrogation, inter-party waiver of liability pursuant to which each party agrees not to bring a claim in arbitration or otherwise against or sue the other or other participants (including the U.S. Government) in Payload Processing Activity, and agrees to absorb the financial and any other consequences for Damage it incurs to its own property and employees as a result of participation in Payload Processing Activity, irrespective of whether such Damage is caused by Astrotech, LMCLS, or other participants in Payload Processing Activity, and regardless of whether such Damage arises through negligence or otherwise. Thus, the Parties, by absorbing the consequences of Damage to their property and employees without recourse against each other or other participants in Payload Processing Activity, jointly contribute to the common goal of meaningful exploration, exploitation and uses of outer space.

10.3.2 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 Payload Processing Activity. Accordingly, the Parties agree to extend the waiver as set forth in Section 10.3.1 above to the LMCLS’ Customer, to other customers of Astrotech, to Astrotech Florida Holdings, Inc., to

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contractors and subcontractors at every tier of Astrotech, LMCLS, LMCLS’ Customer, and to all other participants (excluding the U.S. Government) in Payload Processing Activity, as third party beneficiaries, whether or not such participants causing damage bring property or employees to the Astrotech Facility or retain title to or other interest in property provided by them to be used, or otherwise involved, in Payload Processing Activity. Further, the Parties recognize and agree that, although the U.S. Government will not participate in this inter-party waiver, the U.S. Government will also be a third party beneficiary. Specifically, the Parties intend to protect these contractors, subcontractors and the U.S. Government from claims, including “products liability” claims, which might otherwise be pursued by the Parties, or the contractors or subcontractors of the Parties, or other participants in Payload Processing Activity. Moreover, it is the intent of the Parties that each will take all necessary and reasonable steps in accordance with Section 10.3.4 below to foreclose claims for Damage by any participant in Payload Processing Activity, under the same conditions and to the same extent as set forth in Section 10.3.1 above, except for claims between LMCLS and its contractors and subcontractors, claims between LMCLS’ Customer and its contractors or subcontractors, claims between Astrotech, Astrotech Florida Holdings, Inc. and their contractors or subcontractors, and claims by the U.S. Government for Damage to U.S. Government persons or property.

10.3.3 Broad Construance of Inter-Party Waiver. The Parties intend that the inter-party waiver of liability set forth in Sections 10.3.1 and 10.3.2 above be broadly construed to achieve the intended objectives.

10.3.4 Agreement to Extend Inter-Party Waiver. Astrotech will require all customers entering into Agreements for services to be provided by Astrotech or Astrotech Florida Holdings, Inc. utilizing the Astrotech Facility to agree to the inter-party waiver of liability as set forth in Sections 10.3.1 and 10.3.2 above. Further, Astrotech will require all the following to agree to the waiver of liability set forth in Section 10.3.2 above: (i) Astrotech Florida Holdings, Inc., (ii) all of Astrotech’s and Astrotech Florida Holdings, Inc.’s contractors; and (iii) all Astrotech’s and Astrotech Florida Holdings’, Inc. subcontractors who will have persons or property involved in Payload Processing Activity. If either Astrotech or Astrotech Florida Holdings, Inc. fails to fulfill any of its obligations under this Section 10.3.4, Astrotech will indemnify LMCLS and the U.S. Government for any Liability LMCLS or the U.S. Government may sustain as a result of such failure. LMCLS will require the following to agree to the waiver of liability set forth in Section 10.3.2 above: (i) LMCLS’ Customer and all other persons and entities to whom it assigns all or part of its right to services; (ii) any person or entity to whom LMCLS’ Customer has sold or leased or otherwise agreed, prior to the completion of services for a particular Payload, to provide all or any portion of its Payload or Payload services; (iii) all LMCLS’ and LMCLS’ Customer’s prime contractors; and (iv) all LMCLS’ and LMCLS’ Customer’s subcontractors who will

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have persons or property involved in Payload Processing Activity. If LMCLS fails to fulfill its obligation under this Section 10.3.4, LMCLS will indemnify Astrotech and the U.S. Government for any Liability Astrotech or the U.S. Government may sustain as a result of LMCLS’ failure. Failure of LMCLS, or LMCLS’ Customer, or Astrotech, or Astrotech Florida Holdings, Inc. or any other participant (excluding the U.S. Government) in Payload Processing to obtain a waiver agreement required above shall not affect LMCLS’, or LMCLS’ Customer’s, or Astrotech’s, or such other participant’s right to the protection otherwise provided by this Section 10.

10.3.5 Damage to U.S. Government Persons or Property. The Parties acknowledge that, except as a third-party beneficiary, the U.S. government is not a participant in the inter-party waiver set forth in Sections 10.3.1, 10.3.2,10.3.3, and 10.3.4 above.

10.4 Risk of Patent Infringement.

10.4.1 Astrotech Indemnity of LMCLS. Astrotech agrees to indemnify LMCLS, its officers, employees and agents against any United States Patent infringement costs (including, but not limited to, any judgment against LMCLS by a court of competent jurisdiction, reasonable administrative and litigation costs, and settlement payments made as a result of an administrative claim) incurred by LMCLS which are attributable to products, processes or articles of manufacture used in the facilities and support to be furnished to LMCLS by Astrotech or Astrotech Florida Holdings, Inc. hereunder.

10.4.2 LMCLS Indemnity of Astrotech. LMCLS agrees to indemnify Astrotech, its officers, employees and agents against any United States Patent infringement costs (including, but not limited to, any judgment against Astrotech by a court of competent jurisdiction, reasonable administrative and litigation costs, and settlement payments made as a result of an administrative claim) incurred by Astrotech which are attributable to products, processes or articles of manufacture used in the Payload and any supporting equipment and facilities brought to the Astrotech Facility by LMCLS, LMCLS’ Customer, or their respective contractors or subcontractors, and to any activity which entails infringement of a United States Patent and which is performed at the Astrotech Facility by LMCLS, LMCLS’ Customer, or their respective contractors or subcontractors.

10.5 Assistance with Third Party Claims. In the event a third party claim is asserted against Astrotech or LMCLS as a result of patent infringement, use of proprietary data, or Damage, including claims of their respective contractors or subcontractors, or LMCLS’ Customer or LMCLS’ Customer’s contractors or subcontractors arising from or in connection with the services provided by Astrotech under this Agreement, Astrotech and LMCLS each agree to give prompt notice to the other of any such claim

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and agree to provide each other with all assistance practicable in the defense against such claim. If a claim asserted against LMCLS, Astrotech or Astrotech Florida Holdings, Inc. is a claim in which one party has agreed to indemnify the other party 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.

11. Limitation of Astrotech and LMCLS Liability. Notwithstanding Section 10.2.2 above, to the extent that a risk of Damage is not dealt with expressly in this Agreement, Astrotech’s liability to LMCLS, and LMCLS’ liability to Astrotech arising out of this Agreement, whether or not arising as a result of an alleged breach of this Agreement, (i) shall be limited to direct damages only and shall not include any loss of revenue, profits or other indirect or consequential damages, and (ii) shall not exceed the total price paid to Astrotech by LMCLS for the services to be provided for the particular Payload under this Agreement.

12. Termination.

12.1 Termination by LMCLS.

12.1.1 Termination for Convenience. LMCLS shall have the right to terminate for convenience, in whole for CLIN 1 and CLIN 2 or in part for CLIN 2, its obligation to obtain Astrotech services under CLIN 1 and CLIN 2 of this Agreement by providing written notification to Astrotech.

12.1.1.1 Termination Charge. In the event of termination by LMCLS pursuant to Section 12.1.1, LMCLS shall pay Astrotech liquidated damages as specified in this Agreement. In the event of an overpayment, Astrotech shall refund the amount of such overpayment to LMCLS.

12.1.1.1.1 In Whole. During the period beginning with the Effective Date of this Amendment 6 and ending on 31 December 2005, the termination liability charge to LMCLS shall be the greater of the unpaid balance of payments for all guaranteed missions (both Facility Services Fee and the Mission Services Fee) required through31 December 2005, or $5.2M. During CY2006, the termination liability charge to LMCLS shall be the unpaid balance of guaranteed payments (both Facility Services Fees and Mission Services Fee) required during that year. The maximum termination liability to LMCLS during the term of this Agreement under any circumstances shall be $16.85M. The Pricing Schedules for both the Facility Services Fees and Mission Services Fees are provided in Appendices 5 and 6 for each year through the end of the contract period. In the event of a Termination for

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Convenience in Whole, LMCLS shall not be required to make any additional payment to Astrotech beyond those required per this Section 12.1.1.1.1.

12.1.1.1.2 In Part. The termination liability charge for a given Payload that represents a mission over and above the annual guaranteed mission quantity and for which a Mission Specific Exhibit was previously added to the Agreement shall be the pro-rated share of the Mission Services Fee applicable for that particular Payload based on the portion of the contracted Occupancy Period elapsed as of the date Customer vacates the Astrotech Facility, computed on a daily basis, but not less than five percent (5%) of the Mission Services Fee for that Payload, plus any additional charges agreed to or otherwise due and payable under this Agreement as of the date Customer vacates the Astrotech Facility. The minimum 5% termination fee also applies if termination by LMCLS occurs after the effective date of the Mission Exhibit but prior to the start of the Facility Occupancy Period for the Payload. For a Payload that is one of the guaranteed minimum missions for a particular calendar year, the termination charge shall equal the full amount of the applicable Mission Services Fee. The Facility Services Fee, as defined in Section 9.1.1, is not affected by a Termination for Convenience in Part by LMCLS and remains payable to Astrotech per the terms of this Agreement.

12.1.2 Termination for Cause.

12.1.2.1 In Part. LMCLS shall only have the right to terminate in part for cause its obligation to obtain Astrotech services under CLIN 1 and/or CLIN 2 of this Agreement in the event that (i) Astrotech fails to meet a material provision of this Agreement for a particular Payload for which a Mission Exhibit has been executed, and such failure continues without identification and initiation of mutually-acceptable corrective action, acceptance of which by LMCLS shall not be unreasonably withheld, for thirty (30) days following first written notification to Astrotech and to Astrotech’s lender by LMCLS indicating such failure and that LMCLS intends to terminate its use of Astrotech services for the particular Payload affected by the identified Astrotech failure, or (ii) Astrotech fails to meet a material provision of this Agreement relative to the readiness of the Facility and/or Services required to support payload processing operations under this Agreement, and such failure or failures continues without identification and initiation of mutually-acceptable corrective action, acceptance of which by LMCLS shall not be unreasonably withheld, for thirty (30) days following written notification to Astrotech and to Astrotech’s lender by LMCLS indicating such failure and that LMCLS intends to terminate this Agreement in part for cause, or (iii) Astrotech is unable to adequately satisfy an essential mission requirement for a particular Payload and Astrotech so acknowledges in writing within thirty (30) days following written notification to Astrotech by LMCLS citing such inability, which acknowledgment shall not be unreasonably withheld by Astrotech. Upon exercising its rights to terminate in part under

20 AMENDMENT 6

this Section 12.1.2.1, LMCLS shall provide a second written notification to Astrotech and to Astrotech’s lender documenting the termination in part for cause with reference to the particular affected Payload if applicable.

12.1.2.1.1 Termination Charge. In the event of termination in part for cause by LMCLS pursuant to Section 12.1.2.1, LMCLS shall not be required to pay Astrotech any termination charge associated with the Mission Services Fee for that particular Payload. Astrotech shall return to LMCLS all payments towards the Mission Services Fee made to date for the terminated payload. In the event of Astrotech’s failure to meet a material provision relative to a Termination for Cause by LMCLS in Section 12.1.2.1, subparts (i) and (ii), LMCLS’ obligation to guarantee Astrotech a minimum of four processings in that calendar year shall be reduced by one Payload for each such terminated Payload. The Facility Services Fee, as defined in Section 9.1.1, is not affected by a Termination for Cause in Part of CLIN 2 by LMCLS and remains payable to Astrotech per the terms of this Agreement provided LMCLS has not also terminated for cause CLIN 1 in which case, LMCLS shall not be obligated to pay the prorated share of the Facility Services Fee (CLIN 1) for the period of time the Astrotech Florida facilities were not maintained in an acceptable state of readiness to support LMCLS and LMCLS’ Customer operations. However, should LMCLS Terminate CLIN 2 of this Agreement for Cause pursuant to Section 12.1.2 and access to the Astrotech Florida facilities (CLIN 1) is made available by Astrotech to LMCLS, but LMCLS no longer has a need or desire for the use of said facilities, it shall be considered a Termination for Convenience by LMCLS subject to the provisions of Section 12.1.1.

12.1.2.2 In Whole. LMCLS shall only have the right to terminate in whole for cause its obligation to obtain Astrotech Services under CLIN 1 and CLIN 2 of this Agreement in the event that Astrotech demonstrates an ongoing and persistent failure to meet a material provision or provisions of this Agreement and such failure or failures continue(s) without identification and initiation of mutually acceptable corrective action, acceptance of which by LMCLS shall not be unreasonably withheld, for a period of ninety (90) days following written notification to Astrotech and to Astrotech’s lender by LMCLS indicating such failure or failures and that LMCLS intends to terminate its use of Astrotech Services under this Agreement in whole. This ninety (90) day period shall be in addition to the thirty (30) day period specified in Section 12.1.2.1 and may commence only following submittal of the second written notification to Astrotech and to Astrotech’s lender by LMCLS indicating such failure or failures as specified in Section 12.1.2.1. During this same ninety (90) day period, Astrotech agrees that LMCLS’ payloads may be processed at an alternate (to Astrotech) facility, and any payloads terminated in part pursuant to Section 12.1.2.1 and processed at an alternate facility shall be credited towards LMCLS’ guaranteed minimum of four processings during that calendar year. Written notification of

21 AMENDMENT 6

contract termination in whole shall be submitted by LMCLS to Astrotech and to Astrotech’s lender at the conclusion of the ninety (90) day cure period.

12.1.2.2.1 Termination Charge. In the event of termination in whole for cause by LMCLS pursuant to Section 12.1.2.2, LMCLS shall not be required to pay Astrotech any termination charge associated with termination of the Agreement and Astrotech shall return to LMCLS all payments received to date for the payloads affected by this terminations.

12.1.2.3 In the event of a Termination for Cause in Part or in Whole for CLIN 2 services under this Agreement, LMCLS shall have the right, upon continued payment of the Facility Services Fee (CLIN 1) payments as defined in Section 9.1.1, to continued occupancy of the Astrotech Florida facilities during the Occupancy Period for the purposes of completing the prelaunch processing of the particular Payload subject to the Termination in Part or, in the case of a Termination in Whole, during a timeframe commercially reasonably required for the purposes of completing the prelaunch processing of all commercial Atlas mission Payloads contemplated by this Agreement for the duration of the Agreement as set forth in Section 28. CLIN 1 payments shall not be abated during any curative period. In the event of a Termination for Cause per this Section 12.1.2, the provisions of Section 12.1.3 shall apply.

12.1.3 LMCLS’ Continued Use of, and Payment for, Astrotech Facilities.

12.1.3.1 Continued Use. In the event of a Termination for Cause for CLIN 2 by LMCLS under Article 12.1.2 relative to Payloads processed at the Astrotech Florida facilities, LMCLS shall have the right to continue to use the Astrotech Florida facilities under the terms of CLIN 1 of this Agreement, and not included in a termination made pursuant to Article 12.1.2, for that period of time specified in Section 28, and Astrotech shall remain obligated to continue to allow LMCLS, and LMCLS’ customers, access to such facilities.

12.1.3.2 Continued Payment of Facility Services Fee. In addition to any fees LMCLS is otherwise obligated to pay Astrotech, and notwithstanding LMCLS’ Termination of this Agreement for Cause under Article 12.1.2, LMCLS shall remain obligated to continue to pay the Facility Services Fee under CLIN 1 as set forth in Article 9.3.1 and Appendix 5 for those services not included in a termination made pursuant to Article 12.1.2.

12.1.3.3 Continuing Obligations. The purpose of this Article 12.1.3 is to: (i) ensure LMCLS continued access to the Astrotech facilities necessary to the performance of the effort called for

22 AMENDMENT 6

by this Agreement, and (ii) ensure Astrotech, and its financing sources, that LMCLS will continue to make the Facilities Services Fee payments under CLIN 1 for services not otherwise affected by the any termination as set forth in this Agreement.

12.1.3.4 Modifications to Agreement. The specific modifications to the terms and conditions of this Agreement that would result from a Termination for Cause by LMCLS per Section 12.1.2 are defined in Appendix 4.

12.2 Termination by Astrotech.

12.2.1 Inability to Perform. Astrotech shall have the right to terminate, in whole or in part, its commitment to furnish Mission Services (CLIN 2) under this Agreement, only to the extent that Astrotech is prevented from performing said Mission Services, (i) in the event of riot, civil strife, war, damage to or destruction of the Astrotech facility, natural disaster or other Act of God beyond the control of Astrotech, or (ii) in the event the United States Government terminates or fails to provide support it has committed to Astrotech which is necessary for Astrotech to perform certain Mission Services to be provided hereunder, and Astrotech cannot reasonably provide other means whereby to perform such Mission Services. Prior to considering termination of the Mission Services pursuant to this Section 12.2.1, Astrotech shall consult with LMCLS in order to seek alternative means of providing alternate services acceptable to LMCLS. Astrotech shall not have the right, under any circumstances or for any reason other than LMCLS’ failure to pay the Facility Services (CLIN 1) payments when due, to terminate LMCLS’ access and right of occupancy to the Astrotech Florida facilities provided for in Section 8 of this Agreement.

12.2.2 Non-performance by LMCLS. Astrotech shall have the right to terminate, in whole or in part, its commitment to furnish, (i) Mission Services under this Agreement in the event LMCLS fails to make any required Mission Services Fee (CLIN 2) payment when due or LMCLS fails to meet any other material provision of this Agreement, and such failure continues for thirty (30) days beyond receipt by LMCLS of written notice from Astrotech which specifies such failure, or (ii) access and right of occupancy to the Astrotech Florida facilities under this Agreement in the event LMCLS fails to make any required Facility Services Fee (CLIN 1) payment when due and such failure continues for thirty (30) days beyond receipt by LMCLS of written notice from Astrotech which specifies such failure. Astrotech shall promptly notify LMCLS in writing, if LMCLS fails to make such payment or if LMCLS fails to meet any such other material provision of this Agreement.

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12.2.3 Termination Charge. In the event of a termination of Mission Services for a Payload by Astrotech pursuant to Section 12.2.1, LMCLS shall not be required to pay Astrotech any termination charge. In the event of a termination pursuant to Section 12.2.2, the termination charge shall be computed in accordance with Section 12.1.1.1. In the event of overpayment, Astrotech shall refund the amount of such overpayment to LMCLS.

13. Handling of LMCLS and Customer Provided Data.

13.1 Technical Data Furnished to Astrotech by LMCLS and Customer. Astrotech and LMCLS shall exchange all documents and information required for each party to fulfill its responsibilities under this Agreement, including certain documents that are prepared by and are the property of Customer.

13.1.1 Nonrestrictive Markings. All technical data furnished to Astrotech under this Agreement shall be provided with unrestricted rights for use by Astrotech and its contractors and subcontractors in performance of this Agreement (the right to use, duplicate, and disclose in any manner and for any purpose whatsoever in performance of this Agreement), and without a restrictive legend, except as provided pursuant to Section 13.1.2 below. It is the intent of the parties that the designation of technical data as proprietary or a trade secret shall be kept to a minimum in order to facilitate implementation of this Agreement.

13.1.2 Proprietary Data. In the event any of the technical data required to be furnished to Astrotech under this Agreement is considered by LMCLS or Customer to be proprietary or a trade secret (such as detailed design, manufacturing and processing information) and LMCLS or Customer desires to maintain proprietary or trade secret rights for such data, the LMCLS Technical Manager shall inform the Astrotech Technical Manager that the data is considered proprietary or a trade secret. Any data so provided shall be marked by LMCLS or Customer “PROPRIETARY” or “TRADE SECRET” prior to submittal to Astrotech. Astrotech agrees that such data will not, without permission of LMCLS, be duplicated, used or disclosed by Astrotech or its contractors and subcontractors for any purpose other than as necessary to carry out Astrotech’s obligations under this Agreement. If such data is required by Astrotech’s contractors and subcontractors, the data will only be furnished to them after the contractors and subcontractors have agreed with Astrotech in writing to protect the data from unauthorized use, duplication and disclosure.

13.2 Financial and Commercial Data. It is recognized that Astrotech may receive or otherwise have access to certain financial and commercial (business) data of LMCLS or Customer, or

24 AMENDMENT 6

their respective contractors and subcontractors, which may be considered confidential or privileged, and which, if subsequently disclosed to the public, could cause substantial harm to LMCLS’ or Customer’s competitive position or impair Astrotech’s ability to obtain necessary information in the future. Such data shall be considered by Astrotech to be proprietary and handled pursuant to Section 13.1 above, provided it is marked by LMCLS or Customer as “PROPRIETARY” or with markings indicating the proprietary or confidential nature of the data prior to submittal to Astrotech.

14. Patent and Data Rights. Astrotech will not acquire, as a result of the services provided under this Agreement, any rights to LMCLS’ or Customer’s copyrights, trade secrets, inventions, or patents that may be used in or result from the Payload or any rights to LMCLS’ or Customer’s proprietary data, except for the right to use such proprietary data as set forth in Section 13 above.

15. Compliance With the International Traffic in Arms Regulation (ITAR).

15.1 Conduct of Activities. LMCLS and Astrotech hereby agree to conduct all Activities at the Astrotech Facility in full compliance with the ITAR as it pertains to safeguarding the transfer of U.S. technology to non-U.S. citizens. Certain LMCLS Customers and other customers of Astrotech are non-U.S. based organizations represented by foreign national personnel that will participate in the Activities at the Astrotech Facility. LMCLS and Astrotech shall coordinate all LMCLS, Customer, and Astrotech Activities in such a way as to prevent the unauthorized transfer of data pertaining to operations, procedures and hardware to non-U.S. citizens participating in Activities at the Astrotech Facility.

15.2 LMCLS Technology Assistance Agreement. Astrotech shall submit Technical Assistance Agreement (TAA) applications to the United States Department of State for the performance of those activities that constitute “defense services” as defined in the FTAR. LMCLS shall obtain an U.S. Department of State TAA for each mission involving a non-U.S. Customer organization. The respective TAAs define the approved limits of technical interchange between Astrotech and the foreign Customer and LMCLS and the foreign Customer. LMCLS agrees that for all future TAA submittals they will include the Astrotech scope of work contained in this Agreement in the LMCLS TAA.

15.3 Signature Assistance. LMCLS shall provide assistance to Astrotech in obtaining approval signatures from LMCLS Customers on the Astrotech TAA for mission involving non-U.S. Customers.

25 AMENDMENT 6

16. Permits and Licenses. Astrotech shall obtain any permit or license that may be required to provide the services to be furnished under this Agreement. LMCLS will be responsible for obtaining any permit or license that may be required to perform an activity unique to the Payload that is not included in the foregoing, such as tests involving use of radioactive materials.

17. Warranty.

17.1 Warranty of Services. Astrotech warrants that the services performed by Astrotech will reflect competent professional knowledge, judgment and workmanship. In the event any portion of the services furnished to LMCLS fails to comply with this warranty obligation and Astrotech is so notified in writing prior to the launch date after completion of such portion of the services, Astrotech will either promptly reperform such portion of the services without additional compensation from LMCLS or at LMCLS’ option, Astrotech will refund a portion of the compensation paid to Astrotech for such portion of services.

17.2 Exclusivity of Warranties and Remedies. THE WARRANTIES SET FORTH IN THIS SECTION 17 ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES WHETHER STATUTORY, EXPRESSED, OR IMPLIED (INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE). The remedies set forth in this Section 17 are the exclusive remedies of LMCLS for any failure by Astrotech to comply with its warranty obligations. Correction of non-conformance or refund of compensation paid in the manner provided herein, shall constitute complete fulfillment of all the liabilities of Astrotech for defective or nonconforming services, whether the claims by LMCLS are based in contract, in tort (including negligence and strict liability), or otherwise.

18. Notices. All notices, requests, demands, and other communications hereunder shall be in writing, in English, and shall be delivered to the other party as follows:

To Astrotech:	Astrotech Space Operations, Inc.
	300 D Street, SW Suite 814
	Washington, DC 20024-4703
	Attention: Mr. John B. Satrom
	Voice:       (202) 488-9000
	Facsimile: (202) 488-3100

26 AMENDMENT 6

To LMCLS:	Lockheed Martin
	Commercial Launch Services, Inc.
	12999 Deer Creek Canyon Road
	Littleton, CO 80127
	Attention: Mr. Jack Zivic
	MS DC-1400
	Voice:       (303) 971-5394
	Facsimile: (303) 971-9456
To SouthTrust:	SouthTrust Bank
	150 Second Avenue North, Suite 400
	St. Petersburg, FL 33701
	Attention: Mr. Timothy M. Mann
	Voice:       (727) 825-2740
	Facsimile: (727) 898-5319

The effective date of each notice, demand, request, or other communication shall be deemed to be: (i) the date of confirmed receipt for communications delivered personally, or transmitted by facsimile machine, or sent by mail, courier or overnight express with the exception of billing invoices as stipulated in Section 9.3, or (ii) the date of transmission with a confirmed answerback, if transmitted by telex. If multiple transmission means are used, the earliest date, determined in accordance with the foregoing, shall be applicable. 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. Notices to SouthTrust, as lender for Astrotech, shall be limited to those specified in Section 12.1.2.

19. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with the laws in force in the State of Florida, and Astrotech and LMCLS further agree that they will not commence any action, whether in a court of law or equity or before an arbitration panel, other than in the State of Florida.

20. Severability. Any provision of this Agreement that is invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality, or unenforceability without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal, or unenforceable in any other jurisdiction.

21. Waiver. A failure by either Astrotech or LMCLS to assert its rights under this Agreement shall not be deemed a waiver of such rights, nor shall any waiver be implied from any such act or omission. No waiver by either Astrotech of LMCLS with respect to any right shall extend its effect to any subsequent breach of the terms hereof of like or different kind, unless such waiver explicitly provides otherwise.

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22. Disputes.

22.1 Disputes Resolution. Any controversy or claim arising out of or relating to this Agreement, whether or not involving an alleged breach of this Agreement, which cannot be resolved in a timely manner by the mutual agreement of the Technical Managers or Agreement Coordinators of Astrotech and LMCLS shall in the first instance be submitted in writing, by either Astrotech or LMCLS, to the President or equivalent senior official of LMCLS and the President of Astrotech for resolution, whose joint decision shall be made in writing within thirty (30) days after such submittal and shall be final and conclusive. In the event any controversy or claim submitted for joint resolution hereunder is not jointly resolved in writing within thirty (30) days from the date of such submittal, either party shall have the right to seek other appropriate relief.

22.2 Performance During Submission of Dispute. The decision to submit a dispute under this Section 22 shall not excuse either Astrotech or LMCLS from the timely performance of its obligations hereunder which are not the subject matter of such dispute. Further, if the lack of resolution of the matter in dispute will adversely impact the timely completion of the Payload Processing Activity, upon the request of LMCLS, Astrotech will perform, while reserving all rights, the subject matter of such dispute within the framework of this Agreement and without prejudice to the final resolution of the matter in dispute.

23. Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

24. Assignability.

24.1 Assignment to Astrotech Florida Holdings, Inc. Astrotech and LMCLS each acknowledges and agrees that certain rights, title, interest and obligations of Astrotech hereunder, as they relate to the CLIN 1 services and payments, are to be assigned to Astrotech Florida Holdings, Inc., a wholly-owned subsidiary of Astrotech, without the need for further notice by Astrotech and LMCLS.

24.2 Assignment to SouthTrust Bank. Astrotech and LMCLS each further acknowledges and agrees that those rights of Astrotech being assigned to Astrotech Florida Holdings, Inc. pursuant to Section 24.1 above are to be further assigned to SouthTrust Bank, and such rights shall remain in affect only so long as CLIN 1 has not been Terminated by either LMCLS or Astrotech. LMCLS consents to such assignment without the need for further notice to LMCLS per Section 24.3, except as otherwise expressly provided in Section 9.4.1. LMCLS agrees to attorn to SouthTrust Bank upon assignment of

28 AMENDMENT 6

Astrotech’s rights hereunder to such Bank and/or upon foreclosure by such Bank of its mortgage on the Astrotech Florida Facilities.

24.3 Future Assignments. Except for the cases specifically identified in Sections 24.1 and 24.2, and related to LMCLS’ right to assign to Customer its rights to services for Customer’s spacecraft under its role as agent of Customer, neither party to this Agreement shall be entitled to assign, directly or indirectly, by operation of law or otherwise, this Agreement or its rights or obligations hereunder or any interest herein, except to a related or successor entity, or with the prior written consent of the other. Furthermore, Astrotech agrees to ensure that SouthTrust Bank shall not further assign, directly or indirectly, by operation of law or otherwise, its rights with regard to the Facility Services (CLIN 1) payments as are assigned to it by Astrotech, without the prior written consent of LMCLS, which shall not be unreasonably withheld. This shall not affect or prohibit or require the prior approval of LMCLS of the assignment of such rights in whole by SouthTrust Bank to its successor or assign in connection with a sale of the bank.

25. Disclaimer of Authority. This Agreement shall not constitute either Astrotech or LMCLS as the legal representative, agent, or attorney-in-fact of the other, nor, except as expressly set forth herein, shall Astrotech or LMCLS have the right or authority to assume, create or incur any liability or obligation of any kind, express or implied, against or in the name of or on behalf of the other party.

26. Complete Agreement. This Agreement and the Appendices, Exhibits, and Annexes hereto, together with the documents herein before incorporated by reference, as amended and supplemented, and any Amendments to this Agreement constitute the entire agreement between the parties hereto with respect to the transactions contemplated hereby and supersede all previous oral and written and all contemporaneous oral negotiations, commitments, agreements, and understandings. The terms of this Agreement may not be waived, altered, modified or amended, except by a written agreement of the parties hereto executed by duly authorized officers thereof.

27. Addition of Astrotech Florida Holdings. Inc. as a 3^rd Party. Astrotech hereby agrees that following signature of this Amendment 6 by Astrotech and LMCLS, and immediately following the legal formation of Astrotech Florida Holding, Inc., that Astrotech shall obtain Astrotech Florida Holdings, Inc.’s signature in the space provided below and in the attached Appendix 4, with the intent of making this Amendment a tri-party agreement between Astrotech, Astrotech Florida Holdings, Inc. and LMCLS. Until such time as Astrotech Florida Holding, Inc signs this Amendment, it shall not have any rights or obligations under this Agreement as amended herein.

29 AMENDMENT 6

28. Effective Date and Duration of Agreement. This Agreement, which entered into force on 4 March 1989, shall continue in force through 31 December 2006, unless amended or terminated or extended by LMCLS’ right to exercise any or all of the four (4) one-year Agreement option periods for calendar years 2007 through 2010 inclusive pursuant to the provisions of this Agreement prior to said expiration date.

IN WITNESS WHEREOF, the parties hereto, having the authority and intending to be legally bound, have executed this Agreement.

LOCKHEED MARTIN COMMERCIAL LAUNCH SERVICES, INC.		ASTROTECH SPACE OPERATIONS, INC.
By:		By:
	John A. Zivic, Jr.		John B. Satrom
	Manager		Senior Vice President and General Manager
	Business Operations
Date:		Date:
		ASTROTECH FLORIDA HOLDINGS, INC.
		By:
			Julia A. Pulzone
			Chief Financial Officer
		Date:

30 AMENDMENT 6

APPENDIX 1

EXHIBIT 48801 - (xxx)

(Payload Name)

MISSION SPECIFIC DETAILS AND REQUIREMENTS

FOR

ASTROTECH SERVICES

This Exhibit 48801-(xxx) sets forth the mission specific details and requirements for the Services to be provided by Astrotech to Lockheed Martin Commercial Launch Services, Inc. (hereinafter called LMCLS) under Agreement No. 48801 to support the launch of the (Name) Payload.

1. Launch Date. The (Name) Payload is scheduled for launch from (CCAFS/VAFB) on (Date), which is the launch date for purposes of this Agreement.

2. Occupancy Period. The Occupancy Period and facility assignments at Astrotech (FLORIDA/VAFB) for the Payload established pursuant to Section 8.1 of the General terms and Conditions are set forth in Annex A, which is attached to and made part of this Exhibit.

3. Additional Services. Astrotech shall provide additional Services as set forth in Annex B, which is attached to and made part of this Exhibit.

4. Financial Arrangements.

4.1 Service Fee. Based on the launch date set forth in Section 1 above and pursuant to Section 9.1 of the General terms and Conditions, the Mission Services Fee applicable to the (Name) Payload is $                .

4.2 Charges for Additional Services. LMCLS shall pay Astrotech additional charges for certain additional Services, as specified in Annex B, which is attached to and made part of this Exhibit.

4.3 Billing Schedule. The billing schedule established pursuant to Section 9.5.2 of the General terms and Conditions is set forth in Annex C, which is attached to and made part of this Exhibit.

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5. Agreement Coordinators and Technical Managers: Pursuant to Section 7.1 of the General Terms and Conditions, the representatives of LMCLS, the Spacecraft Customer, and Astrotech designated as Agreement Coordinators and Technical Managers are identified in Annex D, which is attached to and made part of this Exhibit.

6. Alterations and Exceptions to the General terms and Conditions. Under this Exhibit 48801-(xxx) (there are no alterations or exceptions to the General terms and Conditions of this Agreement) or (the following are the alterations and/or exceptions to the General terms and Conditions of this Agreement:).

7. Effective Date. This Exhibit 48801-(xxx) shall be incorporated into Agreement No. 48801 and Astrotech’s commitment to provide Services for the (Name) Payload shall commence as of the date of the last signature of the parties below.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have executed this Exhibit.

LOCKHEED MARTIN COMMERCIAL LAUNCH SERVICES, INC.		ASTROTECH SPACE OPERATIONS, INC.
By:	(Signature)	By:	(Signature)
	(Name)		(Name)
	(Title)		(Title)
Date:		Date:

Page 2 of 6 AMENDMENT 6

ANNEX A

OCCUPANCY PERIOD AND FACILITY ASSIGNMENTS

FOR

(Name) PAYLOAD

AT

ASTROTECH (FLORIDA/VAFB)

PROGRAM LAUNCH DATE:                     

OCCUPANCY PERIOD:                      TO                     

FACILITY ASSIGNMENTS:

BUILDING/ROOM ENTRY DATE DEPARTURE DATE

FOR ASTROTECH FLORIDA:
Building 1/High Bay Complex (“A”, “B”, “C” or “D”)
Building 1/LMCLS Office Area (Area D4)	CONTINUOUS
Building 2/(“North” or “South”) High Bay Complex Building 2/(“North” or “South”) Encapsulation Bay Building 2/Spin Bay
Buildings 3, 4 and 6/ Warehouse Storage	SHARED SPACE, AS REQUIRED & AVAILABLE
Building 5/Customer Office Space (Receptionist Area & 4 Offices)
Building 7/Lockheed Martin Technical Office	CONTINUOUS
Building 9/High Bay Complex Building 9/Payload Encapsulation Bay Building 9/Conditioned Storage Area	CONTINUOUS
FOR ASTROTECH VAFB:
Building 1032/ (“East” or “West”) High Bay Complex
Building 1036/Technical Support Building (Receptionist Area & 10 Desks)
Building 1034/Warehouse Storage	SHARED SPACE, AS REQUIRED & AVAILABLE

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ANNEX B

ADDITIONAL SERVICES

AND

ASSOCIATED ADDITIONAL CHARGES

FOR

(Name) PAYLOAD

1. Telephone, Facsimile and Telex Service. Astrotech shall provide LMCLS and Customer, without separate charge, commercial telephone service at the Astrotech Facility, except that LMCLS shall reimburse Astrotech for all long-distance calls charged to its assigned telephone extensions. In addition, Astrotech shall provide access for LMCLS and Customer use of existing Astrotech facsimile transmission machine and telex capability via personal computer without separate charge, except that LMCLS shall reimburse Astrotech for all associated long-distance and telex transmission charges. Astrotech will submit an itemized summary of these separate charges along with the billing invoice.

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ANNEX C

PROGRESS PAYMENT SCHEDULE

FOR THE

(NAME) PAYLOAD

SERVICE FEE PROGRESS PAYMENT	BILLING DATE		AMOUNT
Deposit and First Partial Payment (5%)	EFFECTIVE DATE	*	$	_____
Second Partial Payment (45%)	_______________		$	_____
Third Partial Payment (50%)	_______________		$	_____
Total			$	_____

(* Invoice will be issued on the Effective Date of this Agreement)

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ANNEX D

AGREEMENT COORDINATORS

AND TECHNICAL MANAGERS

FOR

(Name) PAYLOAD

LMCLS Agreement Coordinator.	(Name)
	(Title or Position)
	Lockheed Martin Commercial Launch Services, Inc. (Address)
	(Address)
	Telephone:
	Facsimile:
LMCLS Technical Manager.	(Name)
	(Title or Position)
	Lockheed Martin Commercial Launch Services, Inc. (Address)
	(Address)
	Telephone:
	Facsimile:
Customer Technical Manager.	(Name)
	(Title or Position)
	(Customer Organization)
	(Address)
	(Address)
	Telephone:
	Facsimile:
Astrotech Agreement Coordinator.	(Name)
	(Title or Position)
	Astrotech Space Operations, Inc. 300 D Street, SW Suite 814 Washington, DC 20024-4703 Telephone: (202) 488-9000 Facsimile: (202) 488-3100
Astrotech Technical Manager.	(Name)
	(Title)
	Astrotech Space Operations, Inc. (Address)
	(Address)
	Telephone:
	Facsimile:

Page 6 of 6 AMENDMENT 6

APPENDIX 2

SPACECRAFT SERVICES

This Appendix 2 describes the scope of Basic Services to be provided by Astrotech in conjunction with the processing of each Customer spacecraft, spacecraft with integral upper stage, or spacecraft with PAM or other autonomous upper stage under this Agreement at either Astrotech FLORIDA or Astrotech VAFB (the “Astrotech Facility”). The specific Basic Services to be provided by Astrotech will be as detailed in the Payload Processing Requirements Document pursuant to Section 5.2 of the General Terms and Conditions of this Agreement.

1. Arrival and Departure Transportation. Astrotech will provide transportation of crated flight hardware and associated ground support equipment by commercially available ground transportation vehicles from and to terminals within a fifty (50) mile radius of the Astrotech Facility. This service will accommodate shipment by air to and from commercial or Government airports in the vicinity of Astrotech FLORIDA and Astrotech VAFB. Any specialized loading equipment required, other than forklifts, must be provided by the transporting airline.

2. Local Transportation. By means of commercially available ground transportation vehicle, Astrotech will provide transportation and delivery of the crated Payload or Payload elements, and ground support equipment, within the Astrotech Facility and (i) to and from Astrotech FLORIDA and designated facilities at the Kennedy Space Center (KSC) or Cape Canaveral Air Force Station (CCAFS), or (ii) to and from Astrotech VAFB and designated facilities at Vandenberg AFB (VAFB), as applicable.

3. Use of Astrotech Facilities. Astrotech will provide use of the following portions of the applicable Astrotech Facility. The total mission occupancy period shall be up to fourteen (14) weeks from the time of Customer arrival until Customer departure from the facility.

(A) For Payloads processed at Astrotech FLORIDA:

(1) In Building 1: up to fourteen (14) weeks use of one High Bay Complex, consisting of the High Bay, the associated Garment Change Room, Control Room (Ground Station), and one contiguous Office Area (minimum of 985 ft²) for use by the spacecraft contractor,

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(2) In Building 2:

(a) for Spacecraft only or Spacecraft with an integral upper stage up to three (3) weeks use of either (i) the South High Bay Complex, consisting of the High Bay and the adjacent Fuel and oxidizer Cart Storage Rooms, the South Garment Change Room, and the South Control Room, or (ii) the North High Bay Complex, consisting of the North High Bay, the North Garment Change Room, and the North Control Room for handling and loading of liquid propellants, and preparation and installation of the Spacecraft apogee kick motor and/or integral upper stage system, if applicable, and other ordnance, and use of the Spin High Bay, if required, for spin balancing the Spacecraft or related ordnance preparations, and

(b) for Spacecraft with PAM or other Autonomous Upper Stage up to three (3) weeks use for Spacecraft processing of either (i) the South High Bay Complex, consisting of the High Bay and the adjacent Fuel and oxidizer Cart Storage Rooms, the South Garment Change Room, and the South Control Room, or (ii) the North High Bay Complex, consisting of the North High Bay, the North Garment Change Room, and the North Control Room for handling and loading of liquid propellants, and preparation and installation of the Spacecraft apogee kick motor and/or integral upper stage system, if applicable, and other ordnance, and use of the Spin High Bay, if required, for spin balancing, and up to nine (9) weeks use for Upper Stage processing of either the Spin High Bay, North High Bay Complex, or South High Bay Complex;

(3) In Buildings 3,4 and 6: storage, on a shared space basis, of flight hardware elements, shipping containers, ground support equipment, etc.;

(4) In Building 5: use of up to 4 offices and shared use of conference rooms and reception area for the Customer; and

(5) In Building 9: for Spacecraft only or Spacecraft with an integral upper stage, use for up to four (4) weeks of one Satellite Processing Cell, its associated Garment Change Room, and adjacent Control Room for handling and loading of liquid propellants, and preparation and installation of the Spacecraft apogee kick motor and/or integral upper stage system, if applicable, and other ordnance.

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(B) For Payloads processed at Astrotech VAFB:

(1) In Building 1032: up to fourteen (14) weeks use of one High Bay Complex, consisting of the High Bay, the associated Garment Change Room, adjacent Control Room, and associated Cart Storage Room(s);

(2) In Building 1036: use of one Office Area; and

(3) In Building 1034: storage, on a shared space basis, of shipping containers, ground support equipment, etc.

4. Ordnance Handling and Storage. Astrotech will provide receiving, inspection, and storage of ordnance items; bridge-wire checking; and, for Payloads processed at Astrotech FLORIDA, cold soak and x-ray of solid rocket motors.

5. Communications. For Payloads processed at Astrotech FLORIDA, Astrotech will provide radio frequency (RF) links (via air-link RF circuits or fiber-optic connections), data circuits, and voice communications between Astrotech FLORIDA and KSC/CCAFS, between Building 1 and Building 2, and between Building 1 and Building 9, in accordance with the defined Astrotech capabilities; closed- circuit television in and between Building 1, Building 2 and Building 9. For Payloads processed at Astrotech VAFB, Astrotech will provide command and data circuits and voice communications between Astrotech VAFB and designated locations on VAFB, and between Building 1032 and Building 1036, in accordance with defined Astrotech capabilities; and closed-circuit television between the High Bays in Building 1032 and Building 1036. For Payloads processed at either site, Astrotech will provide on-site Local Area Network (LAN) connectivity, local and long distance telephone service and dedicated use of a facsimile machine, except that Astrotech will be reimbursed by LMCLS for all commercial long distance charges incurred by LMCLS and LMCLS Customer pursuant to the General Terms and Conditions of this Agreement.

6. Electrical Power. Astrotech will provide 60Hz, and for Payloads processed at Astrotech FLORIDA 50Hz, electrical power as defined in the Facility Accommodation Handbook, for electrical ground support equipment.

7. U.S. Government Coordination. Astrotech will provide coordination with the U.S. Government (NASA and USAF) for any Services requiring U.S. Government support.

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8. Security. Astrotech will provide 24 hour-a-day perimeter security at the Astrotech Facility. At Astrotech FLORIDA periodic security patrols will be conducted during non-work hours; digital cypher locks are on all internal and external doors leading into the Payload Processing Areas; and all buildings are electronically monitored 24 hours-a-day for smoke/fire detection. At Astrotech VAFB access via the perimeter gate and all internal and external doors leading into the Payload Processing Areas is controlled by a card readerkeypad system; the electronic security system is directly linked to Air Police Headquarters. All buildings are electronically monitored 24 hours-a-day for smoke/fire detection.

9. Solvents and Gases. Astrotech will provide moderate quantities of gaseous nitrogen, liquid nitrogen, gaseous helium, isopropyl alcohol, deionized water, and other general purpose cleaning agents and solvents.

10. Hazardous Waste Disposal. Astrotech will provide for disposal of hazardous materials, such as propellants and solvents, resulting from Payload Processing Activities pursuant to Section 6.1 of the General Terms and Conditions of this Agreement.

11. Sampling and Analysis. Astrotech will provide sampling and analysis of up to 25 samples of gases, propellants, and cleaning materials.

12. Photographic Services. Astrotech will provide use of a 35mm single lens reflex camera with color film and processing fees for up to 100 8x10 inch color prints, use of a digital camera, use of a video camera/recorder (1/2 inch VHS format) and up to three blank video tapes, and photographer support, as required.

13. Emergency Medical and Fire Protection. Astrotech will provide emergency medical assistance and fire protection at Astrotech FLORIDA utilizing the services of Brevard County and the City of Titusville, Florida, respectively. At Astrotech VAFB these services are provided through the U.S. Air Force.

14. Test Equipment. Astrotech will provide test equipment and tools, as available, on a non-interference basis.

15. Calibration. Astrotech will provide standard equipment calibration services for up to ten (10) items of scientific equipment.

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16. Personnel Protective Suits. Astrotech will provide self-contained, air hose-type personnel protective suits, splash suits, and related training and support for the Spacecraft team to support Payload propellant handling, transfer, and fueling operations. In addition, upon request Astrotech will arrange for attendance at available related NASA training courses.

17. Technical Shop Support. Astrotech will provide unplanned shop support, as available, on a non-interference basis.

18. Dynamic Balancing. For Payloads processed at Astrotech FLORIDA, Astrotech will support the dynamic balancing of the Payload or Payload components, as required, within the capabilities of the Astrotech Schenck-Trebel Model E7S aerospace balance machine.

19. Weighing. Astrotech will weigh the Payload, as requested, utilizing the available Astrotech weighing equipment.

20. U.S. Customs Clearance. Astrotech FLORIDA is part of the Port Canaveral Foreign Trade Zone (FTZ No. 136) and, in this capacity, for Payloads processed at Astrotech FLORIDA Astrotech will arrange for duty-free entry of the Payload and any Payload processing materials and equipment entering the U.S. from another country for the duration of the Occupancy Period. Astrotech VAFB is part of the Santa Maria Foreign Trade Zone (FTZ No. 237) and, in this capacity, for Payloads processed at Astrotech VAFB Astrotech will arrange for duty free entry of the Payload and any Payload processing materials and equipment entering the U.S. from another country for the duration of the Occupancy Period.

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APPENDIX 3

ATLAS LAUNCH VEHICLE SERVICES

This Appendix 3 describes the scope of Services to be provided by Astrotech in conjunction with the processing of each Atlas payload fairing (including the base module) and Payload encapsulation activity associated with the Customer Payload for the Service Fee under this Agreement at Astrotech FLORIDA or Astrotech VAFB (the Astrotech Facility). The specific Services to be provided by Astrotech will be as specified in the Payload Processing Requirements Document pursuant to Section 5.2 of the General Terms and Conditions of this Agreement.

1. Arrival and Departure Assistance. Astrotech will assist LMCLS with the loading and off-loading of hardware and equipment at the Astrotech Facility.

2. Transportation of Encapsulated Payload. For Payloads processed at Astrotech FLORIDA, Astrotech will arrange for and obtain the necessary permits and licenses (Wide Load, HazMat, etc.) as required by the State of Florida Department of Transportation for transport of the encapsulated Payload from Astrotech FLORIDA to the launch complex at KSC/CCAFS. LMCLS will be responsible for providing the transport vehicle and for conduct of the transportation operation.

3. Use of Astrotech Facilities. Astrotech will provide use of the following portions of the applicable Astrotech Facility for the duration stated:

(A) For Payloads processed at Astrotech FLORIDA:

(1) In Building 1: dedicated use of one Customer Office Area (minimum of 600 ft²) for LMCLS use for the duration of this Agreement;

(2) In Building 2: up to four (4) weeks use of one Encapsulation Bay or one High Bay and the associated Garment Change Room for payload fairing preparation and encapsulation of the Customer Payload;

(3) In Buildings 3,4, and 6: storage, on a shared basis, of flight hardware elements, shipping containers, ground support equipment, etc.;

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(4) In Building 7: dedicated use of one Launch Vehicle Technical Support/Break Area for the duration of this Agreement; and

(5) In Building 9: up to two (2) weeks use of the Encapsulation Bay and the associated Garment Change Room for payload fairing preparation and encapsulation of the Customer Payload, and continuous occupancy of the Conditioned Storage Area for storage of flight hardware elements and ground support equipment.

(B) For Payloads processed at Astrotech VAFB:

(1) In Building 1032: up to four (4) weeks use of one High Bay and the associated Garment Change Room for payload fairing preparation and encapsulation of the Customer Payload;

(2) In Building 1034: storage, on a shared space basis, of shipping containers, ground support equipment, etc.

4. Communications. For Payloads processed at Astrotech FLORIDA, Astrotech will provide radio frequency (RF) links (via air-link RF circuits or fiber-optic connections), data circuits, and voice communications within Astrotech FLORIDA between Building 1 and Building 2, and between Building 1 and Building 9, in accordance with the defined Astrotech capabilities; closed-circuit television in and between Building 1, Building 2 and Building 9. For Payloads processed at Astrotech VAFB, Astrotech will provide command and data circuits and voice communications within Astrotech VAFB between Building 1032 and Building 1036, in accordance with defined Astrotech capabilities; and closed-circuit television between the High Bays in Building 1032 and Building 1036. For Payloads processed at either site, Astrotech will provide on-site Local Area Network (LAN) connectivity, local and long distance telephone service and dedicated use of a facsimile machine, except that Astrotech will be reimbursed by LMCLS for all commercial long distance charges incurred by LMCLS and LMCLS Customer pursuant to the General Terms and Conditions of this Agreement.

5. Technical Shop Support. Astrotech will provide unplanned shop support, as available, on a non-interference basis.

6. Electrical Power. Astrotech will provide 60Hz, and for Payloads processed at Astrotech FLORIDA 50Hz, electrical power as defined in the Facility Accommodation Handbook, for electrical ground support equipment.

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7. U.S. Government Coordination. Astrotech will provide coordination with the U.S. Government (NASA and USAF) for any Services requiring U.S. Government support.

8. Security. Astrotech will provide 24 hour-a-day perimeter security at the Astrotech Facility. At Astrotech FLORIDA periodic security patrols will be conducted during non-work hours; digital cypher locks are on all internal and external doors leading into the Payload Processing Areas; and all buildings are electronically monitored 24 hours-a-day for smoke/fire detection. At Astrotech VAFB access via the perimeter gate and all internal and external doors leading into the Payload Processing Areas is controlled by a card reader, keypad system; the electronic security system is directly linked to Air Police Headquarters. All buildings are electronically monitored 24 hours-a-day for smoke/fire detection.

9. Solvents and Gases. Astrotech will provide moderate quantities of gaseous nitrogen, liquid nitrogen, gaseous helium, isopropyl alcohol, deionized water, and other general purpose cleaning agents and solvents.

10. Hazardous Waste Disposal. Astrotech will provide for disposal of hazardous materials, such as propellants and solvents, resulting from Payload Processing Activities pursuant to Section 6.1 of the General Terms and Conditions of this Agreement.

11. Photographic Services. Astrotech will provide use of a 35mm single lens reflex camera with color film and processing fees for up to 100 8x10 inch color prints, use of a digital camera, use of video a camera/recorder (1/2 inch VHS format) and up to three blank video tapes, and photographer support, as required.

12. Emergency Medical and Fire Protection. Astrotech will provide emergency medical assistance and fire protection at Astrotech FLORIDA utilizing the services of Brevard County and the City of Titusville, Florida, respectively. At Astrotech VAFB these services are provided through the U.S. Air Force.

13. Test Equipment. Astrotech will provide test equipment and tools, as available, on a non-interference basis.

14. Pathfinder Operations. Astrotech will provide support as required for LMCLS payload fairing pathfinder operations consistent with the services specified in this Appendix 3 on a non-interference basis to Spacecraft processing operations at no cost to LMCLS.

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APPENDIX 4

FACILITIES SERVICES AGREEMENT

In the event that LMCLS terminates CLIN 2 of the LMCLS Agreement No. 48801 (the “Basic Agreement”) for cause, this Facility Services Agreement shall automatically become effective in accordance with the Terms and Conditions of Section 12.1.3 of the Basic Agreement.

The terms of this Facilities Services Agreement shall be as follows:

1. In the event of a Termination for Cause by LMCLS under Section 12.1.2 relative to the Astrotech Florida facilities, LMCLS shall continue to use the Astrotech Florida facilities used in the performance of this Agreement and not included in a termination made pursuant to Section 12.1.2 for that period of time specified in Section 28 of the basic Agreement, and Astrotech shall remain obligated to continue to allow LMCLS, and LMCLS’ customers, access to such facilities.

2. In addition to any fees LMCLS is otherwise obligated to pay Astrotech, and notwithstanding LMCLS’ termination of CLIN 2 of the Basic Agreement for cause under Section 12.1.2 of that Agreement, LMCLS shall remain obligated to continue to pay the Facility Services Fee for CLIN 1 as set forth in Section 9 of that Agreement for those services not included in a termination made pursuant to Section 12.1.2.

3. The purpose of this Appendix 4 is to: (i) ensure LMCLS continued access to the Astrotech facilities necessary to the performance of the effort called for by CLIN 1 of the Basic Agreement, and (ii) ensure Astrotech, and its financing sources, that LMCLS will continue to pay the Facilities Services Fee for services not affected by the termination. Notwithstanding its formal termination of CLIN 2, the terms and conditions of the Basic Agreement shall continue to govern LMCLS’ continued use of the Astrotech Florida facilities under CLIN 1 with the following exceptions:

(A) Astrotech shall not be obligated to provide any further mission servicing related efforts as it relates to support of Atlas payload processing operations (see, for example, Sections 6.1.1, 6.1.4, 6.1.5, 6.1.9, 6.1.10, 7.2, 7.3 and 16, Appendix 2, paragraphs 1, 2,4, 7, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 and 20, and Appendix 3, paragraphs 1,2, 5, 7, 9, 10, 12, and 14), and

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(B) Astrotech shall be obligated to provide overall facility schedule (per Sections 4.2 and 8) and operations coordination with LMCLS in LMCLS’ assumption of the efforts and responsibilities referenced in Sections 6.1.1, 6.1.4, 6.1.5, 6.1.9, 6.1.10, 7.2, 7.3 and 16, and in Appendices 2 and 3, and

(C) Astrotech may assign its rights and responsibilities under the continuing agreement per the terms of Section 24 of the Basic Agreement, and

(D) LMCLS is not obligated to continue paying Astrotech any Mission Services Fees set forth in Section 9.1 of the Basic Agreement.

4. LMCLS obligation to continue to pay the Facilities Services Fee under paragraph 2 is contingent on Astrotech’s continued allowance of LMCLS’ and LMCLS’ customers access to the Astrotech facilities.

IN WITNESS WHEREOF, the parties hereto, having the authority and intending to be legally bound, have executed this Agreement.

LOCKHEED MARTIN COMMERCIAL LAUNCH SERVICES, INC.		ASTROTECH SPACE OPERATIONS, INC.
By:		By:
	John A. Zivic, Jr. Manager Business Operations		John B. Satrom Senior Vice President and General Manager
Date:		Date:

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ASTROTECH FLORIDA HOLDINGS, INC.
By:
	Julia A. Pulzone Chief Financial Officer
Date:

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APPENDIX 5

ASTROTECH PAYLOAD PROCESSING SERVICES

FOR SPACECRAFT AND, IF APPLICABLE, UPPER STAGE SYSTEMS

PROCESSING FEES FOR ATLAS MISSIONS 1 THROUGH 4 IN

A SINGLE CALENDAR YEAR (CCAFS & VAFB)

CALENDAR YEAR	FACILITY SERVICES FEE		MISSION SERVICES FEE
2001		N/A		N/A
2002	$	549,313	$	250,688
2003	$	553,563	$	263,438
2004	$	558,063	$	276,938
2005	$	562,563	$	290,438
2006	$	567,063	$	303,938
2007 (OPTION YEAR 1)	$	446,813	$	318,188
2008 (OPTION YEAR 2)	$	451,563	$	332,438
2009 (OPTION YEAR 3)	$	456,563	$	347,438
2010 (OPTION YEAR 4)	$	461,563	$	362,438

NOTE 1. Prices stated are based on a guaranteed minimum of 2 missions in CY2001, 4 missions per year for CY2002 through CY2006, and 2 additional missions at any time during 2001 through 2005. Missions in excess of the guaranteed mission quantity shall be priced per Appendix 6.

NOTE 2. The Facility Services Fee shall be invoiced thirty (30) calendar days before the end of each calendar quarter and shall be due and payable on the last day of the quarter regardless of mission processing activity.

NOTE 3. Should LMCLS fail to process the guaranteed minimum number of Payloads during any calendar year, LMCLS agrees to pay Astrotech for the balance of the Mission Services Fees for the guaranteed missions within thirty (30) calendar days of receipt of an invoice to be issued in December of the applicable calendar year. Minimum processing requirements have been satisfied for CY2001.

NOTE 4. Pricing is provided for four one-year option periods from CY2007 through CY2010.

NOTE 5. Mission Services Fee prices stated are on a “per-payload” basis. Dual manifested GEO spacecraft will be charged twice the rate shown in the price table. Multiple-LEO spacecraft missions utilizing a single processing cell will be charged as a single payload.

NOTE 6. Services as provided support all Atlas V/5 meter Payload Fairing Operations at CCAFS and all Atlas V/4 meter Payload Fairing Operations at VAFB.

NOTE 7. Prices stated are exclusive of any taxes, if applicable.

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APPENDIX 6

ASTROTECH PAYLOAD PROCESSING SERVICES

FOR SPACECRAFT AND, IF APPLICABLE, UPPER STAGE SYSTEMS

CHARGES FOR ATLAS MISSIONS 5 AND ABOVE IN

A SINGLE CALENDAR YEAR (CCAFS and VAFB)

CALENDAR YEAR	FIRM FIXED PRICE PER PAYLOAD
	PAYLOADS 5-7 IN SAME YEAR		PAYLOADS 8+ IN SAME YEAR
2001 (see Note 2)	$	749,000		N/A
2002	$	675,000	$	256,000
2003	$	692,000	$	262,000
2004	$	710,000	$	269,000
2005	$	728,000	$	276,000
2006	$	746,000	$	283,000
2007 (OPTION YEAR 1)	$	765,000	$	291,000
2008 (OPTION YEAR 2)	$	784,000	$	298,000
2009 (OPTION YEAR 3)	$	804,000	$	305,000
2010 (OPTION YEAR 4)	$	824,000	$	313,000

NOTE 1. Prices stated are for Missions 5 and above in any given calendar year. Pricing associated with Missions 1-4 is provided in Appendix 5 to this Agreement.

NOTE 2. The pricing shown for CY2001 applies to the 3^rd mission processed during that year assuming a launch in December 2001, and includes the $125,000 fee for out-of-scope items. If and when processed, this mission will count towards the two additional missions guaranteed at any time during 2001-2005 (refer to Note 1 of Appendix 5). This mission price increases by $3,000/month for an earlier launch date, beginning in November 2001 (Nov 2001 = $752,000, Oct 2001 = $755,000, etc.).

NOTE 3. Any mission above four in a given calendar year from 2002-2005, which is counted against the two additional missions guaranteed at any time during 2001 through 2005 (refer to Note 1 of Appendix 5), shall be charged an additional $125,000 fee for out-of-scope items.

NOTE 4. Pricing is provided for four one-year option periods from CY2007 through CY2010.

NOTE 5. Prices stated are on a “per-payload” basis. Dual manifested GEO spacecraft will be charged twice the rate shown in the price table. Multiple-LEO spacecraft missions utilizing a single processing cell will be charged as a single payload.

NOTE 6. Services as provided support all Atlas V/5 meter Payload Fairing Operations at CCAFS and all Atlas V/4 meter Payload Fairing Operations at VAFB.

NOTE 7. Prices stated are exclusive of any taxes, if applicable.

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APPENDIX 7

ALTERNATE PRICE SCHEDULE

APPLICABLE FOLLOWING CONSTRUCTION OF BUILDING 10 (2 CELLS)

CHARGES FOR MISSIONS 1 THROUGH 4 IN A SINGLE CALENDAR YEAR (CCAFS & VAFB)

NOT-TO-EXCEED (NTE) PRICING

CALENDAR YEAR	FACILITY SERVICES FEE		MISSION SERVICES FEE
2004	$	631,477	$	276,938
2005	$	637,562	$	290,438
2006	$	644,062	$	303,938
2007	$	525,812	$	318,188
2008	$	533,562	$	332,438
2009	$	539,562	$	347,438
2010	$	547,562	$	362,438

NOTE 1. Prices stated are based on a guaranteed minimum quantity of 2 missions in CY2001, 4 missions per year for CY2002 through CY2006, and 2 additional missions at any time during 2001 through 2005. Note that CY2007 through CY2010 are currently Option Years. Mission 5 and above in any given calendar year would be priced per Appendix 8 to this Agreement.

NOTE 2. The Facility Services Fee shall be invoiced on the first business day of each calendar quarter and shall be due and payable regardless of mission processing activity.

NOTE 3. Should LMCLS fail to process the guaranteed minimum number of Pay loads during any calendar year, LMCLS agrees to pay Astrotech for the balance of the Mission Services Fees for the guaranteed missions upon receipt of an invoice to be issued in December of the applicable calendar year.

NOTE 4. Prices stated are on a “per-payload” basis. Dual manifested GEO spacecraft will be charged twice the rate shown in the price table. Multiple-LEO spacecraft missions utilizing a single processing cell will be charged as a single payload.

NOTE 5. Services as provided support all Atlas V/5 meter Payload Fairing Operations at CCAFS and all Atlas V/4 meter Payload Fairing Operations at VAFB.

NOTE 6. Prices stated are exclusive of any taxes, if applicable

NOTE 7. Prices shown above assume two processing cells are constructed in Building 10. If only one processing cell is constructed, then the prices shown above shall be adjusted to reflect the prices for Building 10 with one processing cell as contained in Attachment B of the Memorandum of Understanding signed by Astrotech and LMCLS dated 25 January 2001.

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APPENDIX 8

ALTERNATE PRICE SCHEDULE

APPLICABLE FOLLOWING CONSTRUCTION OF BUILDING 10 (2 CELLS)

CHARGES FOR MISSIONS 5 AND ABOVE IN A SINGLE CALENDAR YEAR

FOR ALL ATLAS MISSIONS (CCAFS and VAFB)

NOT-TO-EXCEED (NTE) PRICING PER PAYLOAD

	NTE PRICE PER PAYLOAD
CALENDAR YEAR	PAYLOADS 5-7 IN SAME YEAR		PAYLOADS 8+ IN SAME YEAR
2004	$	783,000	$	269,000
2005	$	803,000	$	276,000
2006	$	823,000	$	283,000
2007	$	844,000	$	291,000
2008	$	866,000	$	298,000
2009	$	887,000	$	305,000
2010	$	910,000	$	313,000

NOTE 1. Prices stated are for Missions 5 and above in any given calendar year. Pricing associated with Missions 1-4 is provided in Appendix 7.

NOTE 2. Prices stated are on a “per-payload” basis. Dual manifested GEO spacecraft will be charged twice the rate shown in the price table. Multiple-LEO spacecraft missions utilizing a single processing cell will be charged as a single payload.

NOTE 3. Services as provided support all Atlas V/5 meter Payload Fairing Operations at CCAFS and all Atlas V/4 meter Payload Fairing Operations at VAFB.

NOTE 4. Prices stated are exclusive of any taxes, if applicable.

NOTE 5. Prices shown above assume two processing cells are constructed in Building 10. If only one processing cell is constructed, then the prices shown above shall be adjusted to reflect the prices for Building 10 with one processing cell as contained in Attachment B of the Memorandum of Understanding signed by Astrotech and LMCLS dated 25 January 2001.

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EX-10.33

Exhibit 10.33

SOLICITATION/CONTRACT/ORDER FOR COMMERCIAL ITEMS OFFEROR TO COMPLETE BLOCKS 12, 17, 23, 24, & 30				1. REQUISITION NO PR 4200069386		PAGE 1 OF 29
2. CONTRACT NO NNK04LA75C		3. AWARD/EFFECTIVE DATE         See Box 31c.	4. ORDER NO.	5. SOLICITATION NO. NNK04044847Q		6. SOLICITATION ISSUE DATE 04/01/04
7. FOR SOLICITATION INFORMATION CALL	ð	a. NAME LYNN RAFFORD     Lynn.e.rafford@nasa.gov		b. TELEPHONE NO. (No collect calls) (321) 867-7364		8. OFFER DUE DATE/LOCAL TIME 04/30/04 4:30 PM EST
9. ISSUED BY		OP-LS	10. THIS ACQUISITION IS		11. DELIVERY FOR FOB DESTINATION UNLESS BLOCK IS MARKED	12. DISCOUNT TERMS Net 30
John F. Kennedy Space Center, NASA Procurement Office, Mailcode: OP-LS Kennedy Space Center, FL 32899			x      UNRESTRICTED
			¨      SET ASIDE: 100 % FOR
			¨      SMALL BUSINESS		¨      SEE SCHEDULE
			¨      HUBZONE SMALL           BUSINESS		x 13a. THIS CONTRACT IS A RATED ORDER UNDER DPAS (15 CFR 700)
			¨      8(A)		13b. RATING: DO C-9     PPC: KC
			NAICS:         N/A SIZE STD:     N/A		14. METHOD OF SOLICITATION x   RFQ ¨   IFB ¨   RFP
15. DELIVER TO CODE			16. ADMINISTERED BY			CODE OP-LS
Not Applicable			Same as Block 9

17a CONTRACTOR/OFFEROR	CAGE CODE	OEUA1	VID S002033	18a. PAYMENT WILL BE MADE BY	CODE GG-B-C2
Astrotech Space Operations, Inc. 1515 Chaffee Drive Titusville, FL 32780				John F. Kennedy Space Center, NASA General Accounting A/P GG-B-C2 Kennedy Space Center, FL 32899
		TIN: 541836653 KRED: 11139
TELEPHONE NO. 321 268-3830
¨      17b. CHECK IF REMITTANCE IS DIFFERENT AND PUT SUCH ADDRESS IN OFFER				18b. SUBMIT INVOICES TO ADDRESS SHOWN IN BLOCK 18a UNLESS BLOCK BELOW IS CHECKED         ¨ SEE ADDENDUM

19. ITEM NO.	20. SCHEDULE OF SUPPLIES/SERVICES	21. QUANTITY	22. UNIT	23. UNIT PRICE		24. AMOUNT
1.	Payload Processing Capability for CALIPSO/CloudSat Expendable Launch Vehicle Mission, in Accordance with Attached Statement of Work, Appendices, and Terms and Conditions. (Use Reverse and/or Attach Additional Sheets as Necessary)	1	Lot	$	1,298,434.00	$	1,298,434.00
	29. ACCOUNTING AND APPROPRIATION DATA See Article 9 for Accounting and Appropriation Data				26. TOTAL AWARD AMOUNT (For Govt. Use Only)
							$1,298,434.00
x      27a. SOLICITATION INCORPORATES BY REFERENCE FAR 52.212-1, 52.212-4. FAR 52.212-3 AND 52.212-5 ARE ATTACHED. ADDENDA x ARE ¨ ARE NOT ATTACHED x      27b. CONTRACT/PURCHASE ORDER INCORPORATES BY REFERENCE FAR 52.212-4. FAR 52.212-5 IS ATTACHED. ADDENDA x ARE ¨ ARE NOT ATTACHED.

x      28. CONTRACTOR IS REQUIRED TO SIGN THIS DOCUMENT AND RETURN _4_ COPIES TO ISSUING OFFICE. CONTRACTOR AGREES TO FURNISH AND DELIVER ALL ITEMS SET FORTH OR OTHERWISE IDENTIFIED ABOVE AND ON ANY ADDITIONAL SHEETS SUBJECT TO THE TERMS AND CONDITIONS SPECIFIED HEREIN. 29.   AWARD OF CONTRACT: REFERENCE_______________ OFFER DATED_______. YOUR OFFER ON SOLICITATION (BLOCK 5). INCLUDING ANY ADDITIONS OR CHANGES WHICH ARE SET FORTH HEREIN IS ACCEPTED AS TO ITEMS: 1-5

30a. SIGNATURE OF OFFEROR/CONTRACTOR		31a. UNITED STATES OF AMERICA (SIGNATURE OF CONTRACTING OFFICER)
/s/    JOHN B. SATROM		/s/    TERRANCE W. CROWLEY
30b. NAME AND TITLE OF SIGNER (TYPE OR PRINT) John B. Satrom Senior Vice President & General Manager	30c. DATE         SIGNED 02 July 2004	31b. NAME OF CONTRACTING OFFICER (TYPE OR PRINT) Terrance W. Crowley Contracting Officer	31c. DATE         SIGNED 7/2/04

AUTHORIZED FOR LOCAL REPRODUCTION PREVIOUS EDITION IS NOT USABLE STANDARD FORM 1449 (REV. 4/2002) Prescribed by GSA - FAR (48 CFR) 53.212

NNK04LA75C CALIPSO/CloudSat Payload Processing

Standard Form 1449 (Solicitation/Contract/Order for Commercial Items)		1
Table of Contents		2
ARTICLE 1	TYPE OF CONTRACT	4
ARTICLE 2	SUPPLIES AND/OR SERVICES TO BE FURNISHED	4
ARTICLE 3	GOVERNMENT PROVIDED DOCUMENTS	4
ARTICLE 4	KSC 52.210-90 SCOPE OF WORK (FEB 1990)	5
ARTICLE 5	DATA REQUIREMENTS LIST (DRL)	5
ARTICLE 6	INSPECTION OF FACILITY AND SERVICES	5
ARTICLE 7	TIME OF PERFORMANCE	6
ARTICLE 8	PLACE OF PERFORMANCE	6
ARTICLE 9	ACCOUNTING AND APPROPRIATION DATA	7
ARTICLE 10	CONTRACTING OFFICER’S TECHNICAL REPRESENTATIVE	7
ARTICLE 11	LIABILITY	7
ARTICLE 12	LICENSES AND PERMITS FOR A PAYLOAD PROCESSING FACILITY/OPERATOR	11
ARTICLE 13	UNDERSTANDING REGARDING THE USE OF GOVERNMENT PROPERTY, FACILITIES AND ASSETS	11
ARTICLE 14	GOVERNMENT INSIGHT AND APPROVAL	12
ARTICLE 15	JOINT FACILITY OCCUPANCY	14
ARTICLE 16	SAFETY AND HEALTH	15
ARTICLE 17	MISSION SUCCESS DETERMINATION	16
ARTICLE 18	PAYMENT SCHEDULE	20
ARTICLE 19	INVESTIGATIONS AND CORRECTIVE ACTIONS	21
ARTICLE 20	FAR 52.212-4 CONTRACT TERMS AND CONDITIONS – COMMERCIAL ITEMS (OCT 2003)	21
ARTICLE 21	FAR 52.212-5 CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR EXECUTIVE ORDERS – COMMERCIAL ITEMS (JAN 2004)	25
ARTICLE 22	LISTING OF CLAUSES INCORPORATED BY REFERENCE	29
ARTICLE 23	LIST OF ATTACHMENTS	30

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SCHEDULE OF SUPPLIES/SERVICES

ARTICLE 1 TYPE OF CONTRACT

This contract is firm-fixed price.

ARTICLE 2 SUPPLIES AND/OR SERVICES TO BE FURNISHED

The Contractor shall provide all resources (except as may be expressly stated in this contract as furnished by the Government) necessary to accomplish the work set forth in the contract line items indicated below in accordance with the Description/Specifications/Work Statement in Article 4.

Contract Line Item Number	Description	Qty	Initial Facility Occupancy Date	Launch Date
1	CALIPSO/CloudSat Payload Processing	1 Lot	January 17,2005	April 15, 2005

ARTICLE 3 GOVERNMENT PROVIDED DOCUMENTS

At contract award, the Government will provide the Contractor the following documents:

Documents	Gov. Submittal Date	Contractor Reply Date
CALIPSO Launch Site Support Plan (KSC-PLN-CALIPSO-LSSP)	Upon contract award	15 calendar days after Government submittal
CloudSat Launch Site Support Plan (KSC-PLN-CLOUDSAT-LSSP)	Upon contract award	15 calendar days after Government submittal
CALIPSO Contamination Control Implementation Plan (NASA/LaRC PC-SAT-503)	30 calendar days after contract award	15 calendar days after Government submittal
CloudSat Contamination Control Implementation Plan (TBD)	30 calendar days after contract award	15 calendar days after Government submittal
Payload Processing Procedures	All Payload Procedures will be submitted 55 calendar days before initial use.	30 calendar days after Government submittal
Payload Safety Documentation, e.g., Spacecraft Missile System Pre-Launch Safety Package (MSPSP)	All Safety documentation will be submitted: Initial upon contract award; Final at 45 days prior to Initial Facility Occupation	15 calendar days after Government submittal

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ARTICLE 4 KSC 52.210-90 SCOPE OF WORK (FEB 1990)

The Contractor shall provide personnel, material, and facilities (except as otherwise provided for in this contract) necessary to perform those functions set forth in Attachment 1, entitled “STATEMENT OF WORK: CALIPSO/CloudSat Payload Processing Capability for the National Aeronautics and Space Administration, March 2004”.

ARTICLE 5 DATA REQUIREMENTS LIST (DRL)

A. The Contractor shall furnish all data identified and described in Attachment 2, “Data Requirements List”.

B. The Government reserves the right to reasonably defer the date of delivery of any or all line items of data specified in the DRL. Such right may be exercised at no increase in the contract amount. The parties may agree to terminate or add to the requirement for any or all line items of data specified in the DRL pursuant to FAR 52.212-4(c).

C. To the extent that data required to be furnished by other provisions of this contract are also identified and described in the DRL, compliance with the DRL shall be accepted as compliance with such other provisions. In the event of conflict between the identity and description of data called for by specific provisions of this contract and the DRL, the DRL shall control the data to be furnished.

D. Nothing contained in this Data Requirements List provision shall relieve the Contractor from furnishing data called for by, or under the authority of, other provisions of this contract, which are not identified and described in the DRL attached to this contract. Whenever such data are identified, either by the Contractor or the Government, they will be listed in the DRL.

E. Except as otherwise provided in this contract, the cost of data to be furnished in response to the DRL attached to this contract is included in the price of this contract.

ARTICLE 6 INSPECTION OF FACILITY AND SERVICES

(a) Definitions. “Services,” as used in this clause, includes all activities involved in the furnishing of a payload processing facility and supporting services in the conduct of payload processing.

(b) The Contractor shall provide and maintain an inspection system covering the facility and services under this contract which is acceptable to the Government. Complete records of all inspection work performed by the Contractor shall be maintained and made available and accessible, in a timely fashion, to the Government during contract performance and for as long afterwards as the contract requires.

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(c) The Government has the right to attend, observe and otherwise participate in the inspection and testing of all facilities and services called for by the contract, to the extent practicable at all times and places during the term of the contract. The Government shall provide its assessment of those inspections and tests that, in the judgment of the Government, do not satisfy or conform to the requirements of the contract, in a manner that will not unduly disrupt or delay the work.

(d) From receipt of certificate of facility readiness (DRL 7) through the facility occupancy period, if the facility or any of the services do not conform with contract requirements, NASA may require the Contractor to provide the facility or perform the services again in conformity with contract requirements, at no increase in contract price. When the defects in the facility or services cannot be corrected by re-performance, the Government may (1) require the Contractor to take necessary action to ensure that future performance conforms to contract requirements and (2) reduce the contract price to reflect the reduced value of the facility provided or services performed.

(e) If the Government performs inspections or tests on the premises of the Contractor or a subcontractor, the Contractor shall furnish, and shall require subcontractors to furnish, without additional charge, all reasonable facilities and assistance for the safe, clean and convenient performance of these duties.

(f) From receipt of certificate of facility readiness (DRL 7) through the facility occupancy period, if the Contractor fails to promptly provide the facility or perform the services or to take the necessary action to ensure future performance in conformity with contract requirements, the Government may (1) by contract or otherwise, provide the facility or perform the services and charge to the Contractor any cost incurred by the Government that is directly related to the performance of such service or (2) terminate the contract for cause.

ARTICLE 7 TIME OF PERFORMANCE

The period of performance is contract award through May 15, 2005. The Government requires performance of CLIN 1 through launch (April 15,2005) and removal of all GSE from the facility (30 days after launch).

ARTICLE 8 PLACE OF PERFORMANCE

The place of performance shall be on Vandenberg Air Force Base, CA.

ARTICLE 9 ACCOUNTING AND APPROPRIATION DATA

  76-278-30-CA/FC400000/76VA000/SAEX220004D

  76-285-30-CA/FC400000/76VA000/SAEX220004D

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ARTICLE 10 CONTRACTING OFFICER’S TECHNICAL REPRESENTATIVE

The Contracting Officer’s Technical Representative (COTR) for the purposes of monitoring and coordinating the technical requirements of this contract is (to be appointed at contract award).

Specific duties and responsibilities of the COTR, including certification of services performed in accordance with this contract, are those delegated in the Contracting Officer’s Technical Representative Delegation Letter (NASA Form 1634) for this contract.

ARTICLE 11 LIABILITY

A. Definitions

For purposes of this clause, the following definitions are applicable:

1. A “Party” is a person or entity that signs this contract.

2. The term “related entity” means:

(a) a Contractor or subcontractor of a Party at any tier;

(b) a user or Customer of a Party at any tier; or

(c) a Contractor or subcontractor of a user or Customer of a Party at any tier. “Contractors” and “subcontractors” include suppliers of any kind.

3. The term “damage” means:

(a) bodily injury to, or other impairment of health of, or death of, any person;

(b) damage to, loss of, or loss of use of any property;

(c) loss of revenue or profits; or

(d) other direct, indirect or consequential damage.

4. The term “launch vehicle” means an object (or any part thereof) intended for launch, launched from Earth, or returning to Earth which carries payloads or persons, or both.

5. The term “payload” means all property to be flown or used on or in a launch vehicle.

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6. The term “Protected Space Operations” means all launch vehicle and payload activities on Earth, in outer space, or in transit between Earth and outer space performed under this contract. It includes, but is not limited to:

(a) research, design, development, test, manufacture, assembly, integration, operation, or use of: launch vehicles, transfer vehicles, payloads, related support equipment and facilities and services;

(b) all activities related to ground support, test, training, simulation, or guidance and control equipment, and related facilities or services.

“Protected Space Operations” excludes activities on Earth which are conducted on return from space to develop further a payload’s product or process for use other than for launch vehicle related activities in implementation of this Contract.

7. The term “Unusually Hazardous Risks” means those risks, beginning with payload arrival at the landing site or Payload Processing Facility, which result from the pressures, gasses, propellants, ordnance, fuels or radiation sources (such as ionized or non-ionized) utilized on the specific payload. Payload processing itself may involve hazardous situations (e.g. fueling, hoisting/lifting of the flight hardware and GSE) as would potential accidents resulting in burning, combustion, explosion or fuel leaks, (e.g. hydrazine) encountered during the processing flow.

B. Liability for Unusually Hazardous Risks - Third Party

1. Liability Scheme

(a) The Contractor shall continue in effect any insurance which protects the Contractor and/or the Government from third party claims for Unusually Hazardous Risks. If existing insurance is not applicable, or the amount is considered insufficient to cover the probable liability to third parties, then the Contractor shall obtain additional insurance to cover the third party claims. The cost for obtaining such additional insurance shall be subject to an equitable adjustment. The Contractor shall consult with and obtain the approval of the Contracting Officer before it modifies or cancels any such insurance that would affect the protection provided to the Contractor or the Government.

2. Procedures

(a) Upon Contract award the Contractor shall provide to the Contracting Officer: A copy of the terms and conditions of any existing policy and/or the proposed insurance policy which covers third party liability and the premium cost to the Government for such proposed policy.

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(b) The proposed insurance policy shall meet at a minimum the following requirements:

(1) The insurance shall protect the Contractor, and, to the extent insurance may be obtained without additional cost to the Government, it shall protect the Government.

(2) The Contractor shall propose an amount of insurance protection that is available in the world market at reasonable premium cost.

(3) The policy shall provide that coverage will attach upon commencement of initial facility occupancy date and shall remain in force through facility departure date and may not be revised or canceled prior to the facility departure date, unless the Contracting Officer agrees in writing to the revision or cancellation.

(c) Within 7 days after receiving the information described in paragraph B.2.(a) of this Article, the Contracting Officer shall approve the proposed insurance policy or require modifications to the policy and establish a date for submission of a revised proposed policy.

(d) If the Government approves a proposed insurance policy, the Contractor shall provide proof of the required insurance by:

(1) Certifying to the Contracting Officer, in a writing signed by an authorized officer of the Contractor, that it has obtained the approved insurance policy; and

(2) Filing with the Contracting Officer a certificate of insurance showing insurance coverage by the insurer of a currently effective and properly endorsed policy which has been approved by the Contracting Officer. The Contractor shall provide to the Government a copy of the approved insurance policy as soon as it becomes available.

C. Cross-waiver of Liability

1. The objective of this Paragraph C is to establish a cross-waiver of liability by the parties and related entities in the interest of encouraging participation in the exploration, exploitation, and use of outer space. This cross-waiver of liability shall be broadly construed to achieve this objective.

2.     (a) Each Party agrees to a cross-waiver of liability pursuant to which each Party waives all claims against any of the entities or persons listed in such paragraphs (1) through (3) of this paragraph based on damage arising out of

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Protected Space Operations. This cross-waiver shall apply only if the person, entity, or property causing the damage is involved in Protected Space Operations and the person, entity, or property damaged is damaged by virtue of its involvement in Protected Space Operations. The cross-waiver shall apply to any claims for damage, whatever the legal basis for such claims, including but not limited to delict and tort (including negligence of every degree and kind) and contract, against:

(1) another Party;

(2) a related entity of another Party;

(3) the employees of any of the entities identified in subparagraphs (1) and (2) of this paragraph.

(b) In addition, each Party shall extend the crosswaiver of liability as set forth in paragraph 2.(a) of this paragraph to its own related entities by requiring them, by contract or otherwise, to agree to waive all claims against the entities or persons identified in paragraphs 2.(a)(1) through (3) of this paragraph.

(c) For avoidance of doubt, this cross-waiver of liability includes a cross-waiver of liability arising from the Convention on International Liability for Damage by Space Objects (Mar 29,1972,24 United States Treaties and Other International Agreements (U.S.T) 2389, Treaties and other International Acts Series (T.I.A.S.)(No. 7762) where the person, entity, or property causing the damage is involved in Protected Space Operations and the person, entity, or property damage is damaged by virtue of its involvement in Protected Space Operations.

(d) Notwithstanding the other provisions of this paragraph C, this cross-waiver of liability shall not be applicable to:

(1) claims between a Party and its own related entity or between its own related entities;

(2) claims made by a natural person, his/her estate, survivors, or subrogees for injury or death of such natural person;

(3) claims for damage caused by willful misconduct;

(4) intellectual property claims;

(5) contract claims between the Parties based on the express contractual provisions of this contract, except for this Cross-Waiver of Liability clause;

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(e) Nothing in this paragraph shall be construed to create the basis for a claim or suit where none would otherwise exist.

D. Limitation of Contractor and Customer Liability

Notwithstanding the definition of the term “Damage”, to the extent that a risk of Damage is not dealt with expressly in this Contract, contractor’s liability to customer, and Customer’s liability to Contractor arising out of this Contract, whether or not arising as a result of an alleged breach of this Contract, 1. shall be limited to direct damages only and shall not include any loss of revenue, profits or other indirect or consequential damages, and 2. shall not exceed the total price paid to Contractor by Customer for the Services to be provided for the particular Payload under this Contract.

ARTICLE 12 LICENSES AND PERMITS FOR A PAYLOAD PROCESSING FACILITY/OPERATOR

The Contractor shall assume all responsibility for obtaining the necessary licenses, permits, site plans (per EWR 127-1), and clearances, with the exception of radioactive materials, that may be required by the Department of Transportation, Department of Commerce, Department of Defense, or other Federal, State, or local governmental bodies or subdivisions thereof, or of any other duly constituted public authority in performance of the work whether performed by the Contractor or the Customer housed in the facility unless otherwise directed by the Contracting Officer. The Contractor shall obey and abide by all applicable laws, regulations or ordinances in order to operate as a commercial payload processing Contractor under this contract. All applicable costs and fees associated with obtaining licenses, permits, site plans, and clearances are included in the contract price.

ARTICLE 13 UNDERSTANDING REGARDING THE USE OF GOVERNMENT PROPERTY, FACILITIES AND ASSETS

The Contractor shall obtain and maintain any necessary agreements between the Contractor and any Government Agency authorizing the use of Government property, facilities, assets or services which are required in performance of this contract.

The Government makes no warranty whatsoever as to the suitability for use of Government property, facilities and other assets made available under the terms and conditions of other Government Use Agreements. All costs necessary to maintain, restore and/or refurbish these assets, for use under this contract, are included in the contract price.

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ARTICLE 14 GOVERNMENT INSIGHT AND APPROVAL

In order for the Government to ensure the highest practical probability of mission success for each payload processed through the Contractor’s facility, the Government must be provided an adequate level of insight into and/or approval of certain Contractor products, tasks and milestones. The Contractor shall maintain all documentation requiring insight or approval at the Contractor’s facility. This includes insight into and/or approval of certain subcontractor tasks where some hands-on operations are performed (e.g. payload transportation).

The Government’s monitoring of payload processing facilities and services provided by the private sector has two elements: approval and insight. Government approval is defined as providing authority to proceed and/or formal acceptance of requirements, plans, designs, analyses, tests, or success criteria in specified areas. Where Government approval is required, the payload processing facility Contractor shall submit the necessary documentation to the Government Contracting Officer and copies to the Government COTR.

Government insight is defined as gaining understanding necessary to knowledgeably concur with the Contractor’s action through watchful observation, inspection, or review of program events, documents, meetings, tests, audits, hardware, etc., without approval/disapproval authority. Where Government insight is required, the payload processing facility provider shall notify the Government COTR at the processing site of meetings, reviews, or tests in sufficient time to permit meaningful Government participation.

Should approval or insight identify noncompliance with the terms and conditions of the contract, a difference in interpretation of test results, or disagreement with the Contractor technical directions, the Government will take appropriate action under the terms of the contract to ensure contract compliance or resolve differences with the Contractor.

NASA shall have insight into and/or approval of Contractor initiated changes that affect NASA missions, in accordance with SOW 3.1.3. This insight/approval shall be accommodated with no increase to the contract price.

Specific areas where the Government requires the right of approval and/or insight are listed in the following paragraphs. Additional requirements applicable to new and modified payload processing facilities and systems that have not been proven are defined in paragraph F.

A. PAYLOAD PRE-SHIP FACILITY INSPECTION

Approval is required for the following:

1. Certificate of Facility Readiness (COFR)

2. Selection of Processing bay/site, controls rooms, and office areas for spacecrafts and for associated launch vehicle hardware

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3. Mission Specific Safety Requirements Tailoring

Insight is required for the following:

1. Facility and facility systems analyses, tests and configurations

2. Mission reviews, plans, and schedules

3. Major/Critical problems

4. Operations and maintenance procedures

5. Facility operating permits, licenses or other authorizing documents

6. Safety procedures and processes

B. EQUIPMENT/PAYLOAD OFFLOAD, TRANSPORT, AND DELIVERY

Approval is required for the following:

1. Offload and transport operation and procedure

2. Transportation route survey

Insight is required for the following:

1. Security escort, badging, and permit arrangements

2. Handling GSE

3. Safety procedures and processes

C. PAYLOAD PROCESSING FACILITY AND SERVICES

Approval is required for the following:

1. Manifest Schedule (NASA missions only)

2. Sample analysis of propellants, gasses, and fluids

3. Payload Processing Facility cleanliness

4. Storage of GSE and flight hardware

Insight is required for the following:

1. Work schedules and plans (facility and facility systems)

2. Other tenants processing schedules

3. Major/critical problems

4. Anomaly resolution

5. Failure analysis

6. Operations and maintenance procedures

7. Maintenance history logs

8. Maintenance schedules

9. Storage, handling and sample analysis of propellants

10. Facility Security procedures (non mission unique)

11. Facility Safety procedures and processes (non mission unique)

12. Mishap Reports

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D. POST LAUNCH EQUIPMENT DEPARTURE

Insight is required for the following:

1. Handling of GSE

2. Facility and facility systems analysis and test

E. ANALYSIS FOR NASA MISSIONS AND NON-NASA MISSIONS

Insight is required for NASA missions, only reports are required for non-NASA missions:

1. Anomaly Investigation/closeout

F. NEW AND MODIFIED PAYLOAD PROCESSING FACILITIES AND SYSTEMS

For the systems listed below, NASA will approve hardware design specifications, plans for analyses and tests of such hardware and the suitability of the manufactured hardware for payload processing operations. This approval requires that NASA receive insight into design reviews, analyses and test results, and test procedures and operations, for the following systems:

1. Cranes and material handling equipment

2. HVAC Systems

3. Communication Systems

4. UPS

5. Pressure systems

6. Safety systems (fire detection/suppression, toxic vapor monitoring, lightning protection, etc.)

Notwithstanding the insight and approvals set forth above, the Contractor assumes full payload processing facility system performance responsibility as set forth in ARTICLE 17, MISSION SUCCESS DETERMINATION.

ARTICLE 15 JOINT FACILITY OCCUPANCY

The Contractor shall provide dedicated and distinct processing space and control room space for each payload covered by this contract. If multiple operations are on-going in this facility the Contractor shall ensure the following:

1. CALIPSO and CloudSat communications (including voice, video and data) are not impacted by other payload communications usage and requirements.

2. CALIPSO and CloudSat schedules are not impacted by other non-hazardous operations within the facility,

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3. CALIPSO and CloudSat cleanliness/contamination requirements shall not be compromised due to sharing of common A/C systems, access doors, etc.,

4. CALIPSO and CloudSat payloads shall be physically safe from effects of other operations,

5. CALIPSO, CloudSat and the Launch Service Provider operations shall have access to work space without interference from other ongoing operations within the facility (e.g. Paging and area warning system, use of facility power systems, personnel access, crane usage, facility lighting, etc.),

6. The Contractor shall ensure that there are no RF or magnetic disturbances in the assigned work areas created by other facility occupants. The Contractor should be prepared to work with the Customer to establish other unique environments as required, and

7. When hazardous operations are planned/anticipated, the Contractor shall coordinate with all parties/facility occupants to minimize schedule impacts.

8. The Contractor shall ensure that all personnel are notified regarding hazards from other occupants’ programs.

ARTICLE 16 SAFETY AND HEALTH

The Contractor is responsible for assuring that a high level of safety is maintained in facility operation and ground operations support of NASA missions in accordance with this contract and in accordance with NASA FAR Supplement Clause 1852.223-70, Safety and Health. NASA and their spacecraft contractors will be responsible for safety of their personnel in the operations they perform. The Launch Service Provider will be responsible for safety of Launch Service Provider personnel in performing operations on launch vehicle hardware and integrated operations involving the spacecrafts. The Contractor shall be responsible for the safety of their personnel and providing safe operating facility and environment.

The Contracting Officer will designate a Safety representative to serve as the Government (NASA) interface to the Contractor to facilitate identification of safety requirements and approval of facility readiness with the Payload Safety Office. The Contractor shall identify a Safety Representative to resolve safety and health issues in a manner consistent with Article 14 and SOW Sections 2.4 and 3.2. The Contractor shall be responsible for establishing and maintaining safety procedures and controls in compliance with all Federal, State and local laws and regulations applicable to safety and health (paragraph (a) of the Safety and Health clause (NFS 1852.223-70). The Contractor’s Safety and Health Plan will be evaluated using NPR 8715.3, NASA Safety Manual Appendix H. The Contractor Safety representative will work with the Payload Safety Representative to assure that all parties involved in facility activities are cognizant of safety hazards and controls in the facility. The Contractor Safety Representative and Payload Safety Representative will perform coordination of safety aspects of operations and resolve safety and health issues during processing.

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All accidents, mishaps, close calls or other incidents as defined by NASA shall be reported as required by NFS 1852.223-70, Safety and Health. The Contractor shall immediately report to the Contracting Officer, Contracting Officer’s designated Safety Representative, and Payload Safety Representative, any accidents, mishaps, close calls or other incidents. Reporting requirement, format, etc. to comply with KSC and the NASA Payload Safety organization requirements will be identified in the mission specific tailoring.

The contractor’s Facility Safety Manual shall be tailored for each mission to reflect mandatory NASA safety standards and operational safety requirements that will vary for the payload organizations occupying the Contractor’s facility. This mission specific tailoring shall reflect current safety policy, and criteria applicable to ground support equipment (GSE) and to ground operations processing at the facility. The Contractor will support tailoring, in accordance with NASA STD 8719.8, Expendable Launch Vehicle Payload Safety Review Process Standard. Tailoring will be conducted to accomplish the following:

1. The Contractors “Facility Safety Manual” shall be the baseline document to be Tailored. NASA Payload Safety organizations shall assess their individual programs and provide additional requirements to supplement NASA Standards, as needed, for inclusion in the tailored document.

2. Tailoring will reflect the requirements of the Contractor, NASA Payload Safety Organization, NASA KSC LSP SMA, the Launch Vehicle Contractor, and will be supported by their representatives.

3. The Final Mission Specific Tailoring shall be completed 120 calendar days prior to Initial facility occupancy, and be approved by the Contractor, KSC Launch Services Program, and the NASA Payload Organization.

The Contractor, through the variance process defined in the Mission Specific Tailoring, will document any non-compliance to NASA Standards or higher-level requirements. A written report, as defined in SOW Section 3.1.3.1, shall be provided within 5 days of the occurrence.

ARTICLE 17 MISSION SUCCESS DETERMINATION

A. DEFINITION

For purposes of this clause, the definition of “successful” means the Contracting Officer has determined that the Contractor has fully met all of the assigned milestones and required tasks in a timely manner.

B. PURPOSE AND AUTHORITY

The Contracting Officer will determine the performance price based upon evaluation of the Contractor’s performance at each event. This determination will be based upon the success criteria defined in C of this Article and data input from the Customer and the COTR.

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C. PROCEDURES

The Contracting Officer will authorize payment based upon how well the Contractor completes four predefined performance events. Performance events one through three will have fixed percentage payments of the CLIN price, and the Contractors performance will be graded, but the percentage will not be changed (except as authorized by Article 6). The Contracting Officer may defer payment at any performance event when the Contractor has failed to meet the requirements of the event. The payment will only be deferred until that time when all requirements have been met. Performance event four will have a maximum percentage payment, based upon the initial CLIN price, which may be reduced based on the Contractor’s performance on events one through four. The four performance events, associated criteria, and percentages are defined as follows:

(1) Facility Reservation

For the CALIPSO/CloudSat mission, issuance of this contract constitutes the reservation of the facility during the time specified elsewhere in this contract. Upon receipt of the contractor’s invoice after contract issuance, as applicable, the Contracting Officer will authorize payment of 5 percent of the CLIN price.

(2) The Certificate of Facility Readiness (COFR)

The Contractor shall submit the COFR no later than 40 calendar days prior to Initial Facility Occupancy. The Government will provide approval/disapproval of the COFR within 5 working days. The approval will include inspection of back-up documentation used in the preparation of the COFR, audit of Contractor data, and may include an inspection or walkthrough of the facility, by the COTR or her designee(s). The COFR shall be submitted as DRL Item 7 and prepared in accordance with the instructions for that DRL provided in Attachment 2.

In addition, all facility services and systems shall be in place and ready to support Customer activities not later than 5 working days prior to initial facility occupancy. This shall include but not be limited to:

• Proof that operational systems (communications, television, RF, etc.) are validated and ready to support

• Proof the administrative systems (desks, telephones, LAN, Fax machines, copiers, etc.) are ready for use

• Proof the facility systems (material handling equipment, power, gases, compressed air) have required necessary certifications, tests, and calibrations, and are in place to support the payload and associated GSE

• Proof that cleanroom specifications have been maintained

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• Proof that safety systems (toxic vapor monitors, lightning protection, etc) have been certified and are ready for use.

Should any items be identified by the Contractor or NASA as requiring completion or resolution, a closure log will be developed with mutually agreed actions, closure dates and required verification. These items will be tracked to completion.

Upon approval of the COFR, the Contracting Officer will authorize the payment of 45 percent of the CLIN price.

(3) Payload processing period

The Contractor shall have provided the necessary equipment and personnel and transported the payloads and their respective GSE from the arrival points to the inside of the PPF without incident. The Contractor shall demonstrate that all facility systems have met the Government’s minimum requirements as defined in the SOW, all necessary support services and materials have been provided in a timely manner, and any facility system failures or deficiencies have been corrected without causing delay to the processing schedule or impact to flight hardware. When the spacecrafts departs the facility for the launch pad, the Contracting Officer will authorize payment of 30 percent of the CLIN price.

(4) Facility departure

The Contractor shall have demonstrated that all facility systems have met the Government’s minimum requirements as defined in the SOW, all necessary support services and materials required at the PPF have been provided in a timely manner during the pad processing and launch periods, and any facility system failures or deficiencies have been corrected without causing delay to the processing or launch schedule. The Contractor shall have provided the necessary equipment and personnel to load and transport the GSE and payload (if required) from the PPF to the departure point without incident. When all Customer hardware has departed the facility, the Contracting Officer will authorize payment of up to (or percentage thereof) 20 percent of the initial CLIN price, as defined by the table in Section D, and any increase/decrease due to contract modification.

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D. PERFORMANCE PRICE

In the event the Contracting Officer determines that the Contractor has had less than successful performance ratings on any of the four performance events, the Contracting Officer may reduce payment of event four based on the following schedule:

Performance Event	Reduction of Initial CLIN price
1	Up to 1 percent of Initial CLIN price
2	Up to 9 percent of Initial CLIN price
3	Up to 6 percent of Initial CLIN price
4	Up to 4 percent of Initial CLIN price

E. DETERMINATION OF PERFORMANCE PAYMENT

The Contracting Officer’s determination under this clause is final and not subject to the “Disputes” clause of this contract. The following procedures will be used to determine the earned performance payment applicable to each CLIN.

1. An initial decision of the performance payment percentage earned by the Contractor will be made by the Government within five work days (goal) after the Facility Departure Date. Verbal and/or written reports of the Customers as well as the verbal and/or written reports of the Contractor will be considered.

2. The Government will make an initial decision of the earned performance payment and discuss the decision with the Contractor. The Government will send a written initial decision to the Contractor which will briefly outline the Contractor’s performance on each event. Any less than successful performance ratings will be fully documented.

3. In the event the Contractor disagrees with the initial decision, the Contractor may, within seven work days (requirement), notify the Contracting Officer in writing (facsimile is acceptable) of the Contractor’s rationale for disagreement with the initial decision. The Contractor will send a copy of his rationale to the Director, Procurement Office and the Program Manager for Launch Services Program at John F. Kennedy Space Center.

4. Within five work days (goal) of receipt of the Contractor’s rationale, the Contracting Officer will consider the initial decision, the Contractor’s rationale, and any other facts or discussions with the COTR, the Payload User, the Contractor, and KSC management, if applicable, and make a determination of the performance payment earned by the Contractor. The Contractor shall have no right of appeal of the Contracting Officer’s determination.

5. The Contracting Officer will issue a unilateral modification to the contract within one work day (goal) of the determination of performance payment authorizing payment to the Contractor of the earned amount.

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ARTICLE 18 PAYMENT SCHEDULE

(a) A payment will be made to the Contractor upon completion of each performance event specified in paragraph (d) of this clause in the amount specified for the relevant performance event.

(b) Upon completion of each performance event, the Contractor shall notify the contracting officer in writing, accompanied by a voucher and certification, that the performance event has been completed. The Contractor’s written notification shall contain a brief narrative of the work activity accomplished for the particular performance event. The contracting officer shall promptly verify that successful completion of the performance event has occurred, notify the Contractor of NASA’s concurrence, and forward the Contractor’s voucher with a copy of the verification to the designated paying office.

(c) The Contractor represents and warrants that it maintains (1) insurance on plant and equipment against fire and other hazards, to the extent that similar properties are usually insured by others operating plants and properties of similar character in the same general locality; (2) adequate insurance against liability on account of damage to persons or property; and (3) adequate insurance under all applicable workers’ compensation laws. The Contractor agrees that, until work under this contract have been liquidated, it will maintain this insurance and furnish any certificates with respect to its insurance that the administering office may require.

(d) Upon successful completion of a performance event, the Contractor may request payments based on the following data (each performance event is applicable to each CLIN identified in the schedule).

Performance event		Amount (% of CLIN Price)	Estimated date of completion
(1)	Facility Reservation	5%	Contract Award
(2)	Certification of Facility Readiness Approval	45%	3 days prior to Initial Facility Occupancy Date
(3)	Payload processing period	30%	Spacecraft departs facility and goes to the Launch Pad
(4)	Facility Departure Date (Mission Success Determination)	Up to 20%	Launch plus 30 days

(h) (1) A performance event may be successfully completed in advance of the date appearing in paragraph (d) of this clause. However, payment shall not be made prior to that date without the prior written consent of the Contracting Officer.

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(2) The Contractor is not entitled to partial payment for less than successful completion of a performance event.

(3) All preceding performance events must be successfully completed before payment can be made for the next performance event, unless the prior written consent of the Contracting Officer is obtained.

ARTICLE 19 INVESTIGATIONS AND CORRECTIVE ACTIONS

1. In the event that the facility, facility systems, and/or facility support equipment do not achieve performance requirements or if any processing anomaly occurs, the Contractor shall investigate this anomaly or failure at its expense. The Contractor shall determine the scope of the investigation and shall conduct and control the investigation. There may be a Government overview team to assess and approve the Contractor’s investigative and corrective actions. The Government’s designated representatives may observe and participate in the investigation.

2. The Contractor shall present to the Government its findings resulting from the investigation and the proposed corrective actions, if any. The Contractor has the burden of proof to show that the corrective action is sufficient. The Contracting Officer may either accept or reject any finding or corrective action. If the Contracting Officer accepts a finding and the related corrective action, the costs of the corrective actions will be borne by the Contractor including re-validation for NASA’s use. The Government may at its option and its expense conduct its own investigation of the anomaly or failure. The Contractor shall cooperate with and fully support the Government’s investigation.

3. If the Government determines that additional or corrective action other than that proposed by the Contractor is required, the Contractor shall implement the Contracting Officer’s written direction to perform the corrective action. The costs of implementing the Contracting Officer’s directed corrective action may be a basis for an equitable adjustment.

ARTICLE 20 FAR 52.212-4 CONTRACT TERMS AND CONDITIONS – COMMERCIAL ITEMS (OCT 2003)

(a) Inspection/Acceptance. The Contractor shall only tender for acceptance those items that conform to the requirements of this contract. The Government reserves the right to inspect or test any supplies or services that have been tendered for acceptance. The Government may require repair or replacement of nonconforming supplies or reperformance of nonconforming services at no increase in contract price. The Government must exercise its post-acceptance rights-

(1) Within a reasonable time after the defect was discovered or should have been discovered; and

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(2) Before any substantial change occurs in the condition of the item, unless the change is due to the defect in the item.

(b) Assignment. The Contractor or its assignee may assign its rights to receive payment due as a result of performance of this contract to a bank, trust company, or other financing institution, including any Federal lending agency in accordance with the Assignment of Claims Act (31 U.S.C. 3727). However, when a third party makes payment (e.g., use of the Government-wide commercial purchase card), the Contractor may not assign its rights to receive payment under this contract.

(c) Changes. Changes in the terms and conditions of this contract may be made in accordance with FAR 52.243-1, Changes—Fixed Price (Aug 1987) - Alt. II (Apr 1984).

(d) Disputes. This contract is subject to the Contract Disputes Act of 1978, as amended (41 U.S.C. 601-613). Failure of the parties to this contract to reach agreement on any request for equitable adjustment, claim, appeal or action arising under or relating to this contract shall be a dispute to be resolved in accordance with the clause at FAR 52.233-1, Disputes, which is incorporated herein by reference. The Contractor shall proceed diligently with performance of this contract, pending final resolution of any dispute arising under the contract.

(e) Definitions. The clause at FAR 52.202-1, Definitions, is incorporated herein by reference.

(f) Excusable delays. The Contractor shall be liable for default unless nonperformance is caused by an occurrence beyond the reasonable control of the Contractor and without its fault or negligence such as, acts of God or the public enemy, acts of the Government in either its sovereign or contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, unusually severe weather, and delays of common carriers. The Contractor shall notify the Contracting Officer in writing as soon as it is reasonably possible after the commencement of any excusable delay, setting forth the full particulars in connection therewith, shall remedy such occurrence with all reasonable dispatch, and shall promptly give written notice to the Contracting Officer of the cessation of such occurrence.

(g) Invoice.

(1) The Contractor shall submit an original invoice and three copies (or electronic invoice, if authorized) to the address designated in the contract to receive invoices. An invoice must include-

(i) Name and address of the Contractor;

(ii) Invoice date and number;

(iii) Contract number, contract line item number and, if applicable, the order number;

(iv) Description, quantity, unit of measure, unit price and extended price of the items delivered;

(v) Shipping number and date of shipment, including the bill of lading number and weight of shipment if shipped on Government bill of lading;

(vi) Terms of any discount for prompt payment offered;

(vii) Name and address of official to whom payment is to be sent;

(viii) Name, title, and phone number of person to notify in event of defective invoice; and

(ix) Taxpayer Identification Number (TIN). The Contractor shall include its TIN on the invoice only if required elsewhere in this contract.

(x) Electronic funds transfer (EFT) banking information.

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(A) The Contractor shall include EFT banking information on the invoice only if required elsewhere in this contract.

(B) If EFT banking information is not required to be on the invoice, in order for the invoice to be a proper invoice, the Contractor shall have submitted correct EFT banking information in accordance with the applicable solicitation provision, contract clause (e.g., 52.232-33, Payment by Electronic Funds Transfer-Central Contractor Registration, or 52.232-34, Payment by Electronic Funds Transfer-Other Than Central Contractor Registration), or applicable agency procedures.

(C) EFT banking information is not required if the Government waived the requirement to pay by EFT.

(2) Invoices will be handled in accordance with the Prompt Payment Act (31 U.S.C. 3903) and Office of Management and Budget (OMB) prompt payment regulations at 5 CFR part 1315.

(h) Patent indemnity. The Contractor shall indemnify the Government and its officers, employees and agents against liability, including costs, for actual or alleged direct or contributory infringement of, or inducement to infringe, any United States or foreign patent, trademark or copyright, arising out of the performance of this contract, provided the Contractor is reasonably notified of such claims and proceedings.

(i) Payment. Payment shall be made for items accepted by the Government that have been delivered to the delivery destinations set forth in this contract. The Government will make payment in accordance with the Prompt Payment Act (31 U.S.C. 3903) and OMB prompt payment regulations at 5 CFR part 1315. In connection with any discount offered for early payment, time shall be computed from the date of the invoice. For the purpose of computing the discount earned, payment shall be considered to have been made on the date which appears on the payment check or the specified payment date if an electronic funds transfer payment is made.

(j) Risk of loss. Unless the contract specifically provides otherwise, risk of loss or damage to the supplies provided under this contract shall remain with the Contractor until, and shall pass to the Government upon:

(1) Delivery of the supplies to a carrier, if transportation is f.o.b. origin; or

(2) Delivery of the supplies to the Government at the destination specified in the contract, if transportation is f.o.b. destination.

(k) Taxes. The contract price includes all applicable Federal, State, and local taxes and duties.

(1) Termination for the Government’s convenience. The Government reserves the right to terminate this contract, or any part hereof, for its sole convenience. In the event of such termination, the Contractor shall immediately stop all work hereunder and shall immediately cause any and all of its suppliers and subcontractors to cease work. Subject to the terms of this contract, the Contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges the Contractor can demonstrate to the satisfaction of the Government using its standard record keeping system, have resulted from the termination. The Contractor shall not be required to comply with the cost accounting standards or contract cost principles for this purpose. This paragraph does not give the Government any right to audit the Contractor’s records. The Contractor shall not be paid for any work performed or costs incurred which reasonably could have been avoided.

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(m) Termination for cause. The Government may terminate this contract, or any part hereof, for cause in the event of any default by the Contractor, or if the Contractor fails to comply with any contract terms and conditions, or fails to provide the Government, upon request, with adequate assurances of future performance. In the event of termination for cause, the Government shall not be liable to the Contractor for any amount for supplies or services not accepted, and the Contractor shall be liable to the Government for any and all rights and remedies provided by law. If it is determined that the Government improperly terminated this contract for default, such termination shall be deemed a termination for convenience.

(n) Title. Unless specified elsewhere in this contract, title to items furnished under this contract shall pass to the Government upon acceptance, regardless of when or where the Government takes physical possession.

(o) Warranty. The Contractor warrants and implies that the items delivered hereunder are merchantable and fit for use for the particular purpose described in this contract.

(p) Limitation of liability. Except as otherwise provided by an express warranty, the Contractor will not be liable to the Government for consequential damages resulting from any defect or deficiencies in accepted items.

(q) Other compliances. The Contractor shall comply with all applicable Federal, State and local laws, executive orders, rules and regulations applicable to its performance under this contract.

(r) Compliance with laws unique to Government contracts. The Contractor agrees to comply with 31 U.S.C. 1352 relating to limitations on the use of appropriated funds to influence certain Federal contracts; 18 U.S.C. 431 relating to officials not to benefit; 40 U.S.C. 327, et seq., Contract Work Hours and Safety Standards Act; 41 U.S.C. 51-58, Anti-Kickback Act of 1986; 41 U.S.C. 265 and 10 U.S.C. 2409 relating to whistleblower protections; 49 U.S.C. 40118, Fly American; and 41 U.S.C. 423 relating to procurement integrity.

(s) Order of precedence. Any inconsistencies in this solicitation or contract shall be resolved by giving precedence in the following order:

(1) The schedule of supplies/services.

(2) The Assignments, Disputes, Payments, Invoice, Other Compliances, and Compliance with Laws Unique to Government Contracts paragraphs of this clause.

(3) The clause at 52.212-5.

(4) Addenda to this solicitation or contract, including any license agreements for computer software.

(5) Solicitation provisions if this is a solicitation.

(6) Other paragraphs of this clause.

(7) The Standard Form 1449.

(8) Other documents, exhibits, and attachments.

(9) The specification.

(End of clause)

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ARTICLE 21 FAR 52.212-5 CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR EXECUTIVE ORDERS–COMMERCIAL ITEMS (JAN 2004)

(a) The Contractor shall comply with the following Federal Acquisition Regulation (FAR) clause, which is incorporated in this contract by reference, to implement provisions of law or Executive orders applicable to acquisitions of commercial items: 52.233-3, Protest after Award (Aug 1996) (31 U.S.C. 3553).

(b) The Contractor shall comply with the FAR clauses in this paragraph (b) that the Contracting Officer has indicated as being incorporated in this contract by reference to implement provisions of law or Executive orders applicable to acquisitions of commercial items:

[Contracting Officer check as appropriate.]

x (1) 52.203-6, Restrictions on Subcontractor Sales to the Government (Jul 1995), with Alternate I (Oct 1995) (41 U.S.C. 253g and 10 U.S.C. 2402).

¨ (2) 52.219-3, Notice of Total HUBZone Set-Aside (Jan 1999) (15 U.S.C. 657a).

x (3) 52.219-4, Notice of Price Evaluation Preference for HUBZone Small Business Concerns (Jan 1999) (if the offeror elects to waive the preference, it shall so indicate in its offer) (15 U.S.C. 657a).

¨ (4)(i) 52.219-5, Very Small Business Set-Aside (June 2003) (Pub. L. 103-403, section 304, Small Business Reauthorization and

    Amendments Act of 1994).

¨ (ii) Alternate I (Mar 1999) of 52.219-5. D

¨ (iii) Alternate II (June 2003) of 52.219-5.

¨ (5) (i) 52.219-6, Notice of Total Small Business Set-Aside (June 2003) (15 U.S.C. 644).

¨ (ii) Alternate I (Oct 1995) of 52.219-6.

¨ (6) )(i) 52.219-7, Notice of Partial Small Business Set-Aside (June 2003) (15 U.S.C. 644).

¨ (ii) Alternate I (Oct 1995) of 52.219-7.

x (7) 52.219-8, Utilization of Small Business Concerns (Oct 2000) (15 U.S.C. 637(d)(2) and (3)).

x (8) (i) 52.219-9, Small Business Subcontracting Plan (Jan 2002) (15 U.S.C. 637(d)(4).

¨ (ii) Alternate I (Oct 2001) of 52.219-9.

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¨ (iii) Alternate II (Oct 2001) of 52.219-9.

¨ (9)  52.219-14, Limitations on Subcontracting (Dec 1996) (15 U.S.C. 637(a)(14)).

x (10) (i) 52.219-23, Notice of Price Evaluation Adjustment for Small Disadvantaged Business Concerns (June 2003) (Pub. L. 103-355, section 7102, and 10 U.S.C. 2323) (if the offeror elects to waive the adjustment, it shall so indicate in its offer).

x (ii) Alternate 1 (June 2003) of 52.219-23.

¨ (11) 52.219-25, Small Disadvantaged Business Participation Program-Disadvantaged Status and Reporting (Oct 1999) (Pub. L. 103-355, section 7102, and 10 U.S.C. 2323).

¨ (12) 52.219-26, Small Disadvantaged Business Participation Program-Incentive Subcontracting (Oct 2000) (Pub. L. 103-355, section 7102, and 10 U.S.C. 2323).

x (13) 52.222-3, Convict Labor (June 2003) (E.O. 11755).

¨ (14) 52.222-19, Child Labor-Cooperation with Authorities and Remedies (Jan 2004) (E.O. 13126).

x (15) 52.222-21, Prohibition of Segregated Facilities (Feb 1999).

x (16) 52.222-26, Equal Opportunity (Apr 2002) (E.O. 11246).

x (17) 52.222-35, Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans (Dec 2001) (38 U.S.C. 4212).

x (18) 52.222-36, Affirmative Action for Workers with Disabilities (Jun 1998) (29 U.S.C. 793).

x (19) 52.222-37, Employment Reports on Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans (Dec 2001) (38 U.S.C. 4212).

¨ (20) (i) 52.223-9, Estimate of Percentage of Recovered Material Content for EPA- Designated Products (Aug 2000) (42 U.S.C. 6962(c)(3)(A)(ii)).

¨ (ii) Alternate I (Aug 2000) of 52.223-9 (42 U.S.C. 6962(i)(2)(C)).

¨ (21) 52.225-1, Buy American Act-Supplies (June 2003) (41 U.S.C. lOa-lOd).

¨ (22)  (i) 52.225-3, Buy American Act- Free Trade Agreement-Israeli Trade Act

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(January 2004) (41 U.S.C. lOa-lOd, 19 U.S.C. 3301 note, 19U.S.C. 2112 note).

¨ (ii) Alternate I (Jan 2004) of 52.225-3.

¨ (iii) Alternate II (Jan 2004) of 52.225-3

¨ (23)  52.225-5, Trade Agreements (January 2004) (19 U.S.C. 2501, et seq., 19 U.S.C. 3301 note).

x (24)  52.225-13, Restrictions on Certain Foreign Purchases (October 2003) (E.o.s., proclamations, and statues administered by the Office of Foreign Assets Control of the Department of the Treasury).

¨ (25)  52.225-15, Sanctioned European Union Country End Products (Feb 2000) (E.O. 12849).

¨ (26)  52.225-16, Sanctioned European Union Country Services (Feb 2000) (E.O. 12849).

¨ (27)  52.232-29, Terms for Financing of Purchases of Commercial Items (Feb 2002) (41 U.S.C. 255(f), 10 U.S.C. 2307(f)).

¨ (28)  52.232-30, Installment Payments for Commercial Items (Oct 1995) (41 U.S.C. 255(f), 10 U.S.C. 2307(f)).

¨ (29)  52.232-33, Payment by Electronic Funds Transfer-Central Contractor Registration (Oct 2003) (31 U.S.C. 3332).

x (30)  52.232-34, Payment by Electronic Funds Transfer-Other than Central Contractor Registration (May 1999) (31 U.S.C. 3332).

¨ (31)  52.232-36, Payment by Third Party (May 1999) (31 U.S.C. 3332).

¨ (32)  52.239-1, Privacy or Security Safeguards (Aug 1996) (5 U.S.C. 552a).

¨ (33)  (i) 52.247-64, Preference for Privately Owned U.S.-Flag Commercial Vessels (Apr 2003) (46 U.S.C. Appx 1241 and 10 U.S.C. 2631)..

¨ (ii)  Alternate I (Apr 1984) of 52.247-64.

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(c) The Contractor shall comply with the FAR clauses in this paragraph (c), applicable to commercial services, that the Contracting Officer has indicated as being incorporated in this contract by reference to implement provisions of law or Executive orders applicable to acquisitions of commercial items:

[Contracting Officer check as appropriate.]

¨ (1)  52.222-41, Service Contract Act of 1965, as Amended (May 1989) (41 U.S.C. 351, et seq.).

¨ (2)  52.222-42, Statement of Equivalent Rates for Federal Hires (May 1989) (29 U.S.C. 206 and 41 U.S.C. 351, et seq.).

¨ (3)  52.222-43, Fair Labor Standards Act and Service Contract Act-Price Adjustment (Multiple Year and Option Contracts) (May 1989) (29 U.S.C. 206 and 41 U.S.C. 351, et seq.).

¨ (4)  52.222-44, Fair Labor Standards Act and Service Contract Act-Price Adjustment (Feb 2002) (29 U.S.C. 206 and 41 U.S.C. 351, et seq.).

¨ (5)  52.222-47, SCA Minimum Wages and Fringe Benefits Applicable to Successor Contract Pursuant to Predecessor Contractor Collective Bargaining Agreements (CBA) (May 1989) (41 U.S.C. 351, et seq.).

(d) Comptroller General Examination of Record. The Contractor shall comply with the provisions of this paragraph (d) if this contract was awarded using other than sealed bid, is in excess of the simplified acquisition threshold, and does not contain the clause at 52.215-2, Audit and Records-Negotiation

(1) The Comptroller General of the United States, or an authorized representative of the Comptroller General, shall have access to and right to examine any of the Contractor’s directly pertinent records involving transactions related to this contract.

(2) The Contractor shall make available at its offices at all reasonable times the records, materials, and other evidence for examination, audit, or reproduction, until 3 years after final payment under this contract or for any shorter period specified in FAR Subpart 4.7, Contractor Records Retention, of the other clauses of this contract. If this contract is completely or partially terminated, the records relating to the work terminated shall be made available for 3 years after any resulting final termination settlement. Records relating to appeals under the disputes clause or to litigation or the settlement of claims arising under or relating to this contract shall be made available until such appeals, litigation, or claims are finally resolved.

(3) As used in this clause, records include books, documents, accounting procedures and practices, and other data, regardless of type and regardless of form. This does not require the Contractor to create or maintain any record that the Contractor does not maintain in the ordinary course of business or pursuant to a provision of law.

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(e)(l) Notwithstanding the requirements of the clauses in paragraphs (a), (b), (c), and (d) of this clause, the Contractor is not required to flow down any FAR clause, other than those in paragraphs (i) through (vi) of this paragraph in a subcontract for commercial items. Unless otherwise indicated below, the extent of the flow down shall be as required by the clause-

(i) 52.219-8, Utilization of Small Business Concerns (Oct 2000) (15 U.S.C. 637(d)(2) and (3)), in all subcontracts that offer further subcontracting opportunities. If the subcontract (except subcontracts to small business concerns) exceeds $500,000 ($1,000,000 for construction of any public facility), the subcontractor must include 52.219-8 in lower tier subcontracts that offer subcontracting opportunities.

(ii) 52.222-26, Equal Opportunity (Apr 2002) (E.O. 11246).

(iii) 52.222-35, Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans (Dec 2001) (38 U.S.C. 4212).

(iv) 52.222-36, Affirmative Action for Workers with Disabilities (June 1998) (29 U.S.C. 793).

(v) 52.222-41, Service Contract Act of 1965, as Amended (May 1989), flow down required for all subcontracts subject to the Service Contract Act of 1965 (41 U.S.C. 351, et seq.).

(vi) 52.247-64, Preference for Privately Owned U.S.-Flag Commercial Vessels (Apr 2003) (46 U.S.C. Appx 1241 and 10 U.S.C. 2631). Flow down required in accordance with paragraph (d) of FAR clause 52.247-64.

(2) While not required, the contractor may include in its subcontracts for commercial items a minimal number of additional clauses necessary to satisfy its contractual obligations.

ARTICLE 22 LISTING OF CLAUSES INCORPORATED BY REFERENCE

NOTICE: The following clauses are hereby incorporated by reference:

I. FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSES

FAR 52.204-4 FAR 52.204-7 FAR 52.242-15 FAR 52.246-4 FAR 52.246-11	Printed or Copied Double-Sided on Recycled Paper (Aug 2000) Central Contractor Registration (Oct 2003) Stop Work Order (Aug 1989) Inspection of Services—Fixed Price (Aug 1996) Higher-Level Contract Quality Requirement (Feb 1999)
		Title	Number	Date	Tailoring
		ISO	9000	2000
		AS9100	AS9100	2001

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II. NASA FAR SUPPLEMENT (48 CFR CHAPTER 18) CLAUSES:

NFS 1852.215-84 Ombudsman (Oct 2003)

{Fill in: Insert “Dr. Woodrow Whitlow Jr., Kennedy Space Center, Code AA-A, Kennedy Space Center FL 32899, telephone number 3212-867-2355, fax 321-867-7787, email woodrow.whitlow-1@nasa.gov.”}

NFS 1852.223-70	Safety and Health (Apr 2002)
NFS 1852.223-75	Major Breach of Safety and Security (Feb 2002)

III. KSC CLAUSES (in full text):

KSC 52.246-103 Quality Assurance Requirements (Jul 2002)

1.0 The contractor shall establish and maintain a quality control system, which satisfies the requirements of ANSI/ISO/ASQ Q9001-2000, Quality management systems— Requirements, and amendments/exclusions described below.

2.0 A detailed quality manual shall be prepared in accordance with paragraph 4.2.2 of the ANSI/ISO/ASQ document. Two copies of the manual shall be submitted to the Contracting Officer within thirty (30) calendar days after contract award for approval. If the contractor has received ISO 9001-2000 accreditation from a 3^rd party registrar, then the contractor may submit a copy of their certification in lieu of the Quality Manual submittal.

3.0 NASA/KSC maintains the right to conduct quality audits, as required, in order to validate the contractors compliance with the applicable sections of this specification.

4.0 EXCLUSIONS: The following paragraphs of the Q9001 document do not apply to this procurement.

4.0 a. Section 7.3 DESIGN AND DEVELOPMENT

ARTICLE 23 LIST OF ATTACHMENTS

ATTACHMENT NO.	TITLE	NO. OF PAGES
1	Statement of Work – March 2004	29
	Appendix A – B (Reserved)
2	Appendix C to SOW	3
2	Appendix D to SOW	54

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CALIPSO/CloudSat Payload Processing Attachment 1

Attachment 1

STATEMENT OF WORK:

CALIPSO/CloudSat Payload Processing Capability

for the

National Aeronautics and Space Administration

March 2004

i

CALIPSO/CloudSat Payload Processing Attachment 1

TABLE OF CONTENTS

1.0 Scope, Objectives, and Payload Processing	1
1.1 SCOPE	1
1.2 OBJECTIVES	1
1.3 PAYLOAD PROCESSING	1
1.3.1 Occupancy Period	2
2.0 TECHNICAL REQUIREMENTS	2
2.1 Facility	2
2.2 Facility Systems	3
2.2.1 Mechanical Systems	3
2.2.2 Electrical Systems	4
2.2.3 Communications, Telemetry and Video	4
2.2.3.1 Voice Systems	4
2.2.3.2 Television System	5
2.2.3.3 Timing System	5
2.2.3.4 Paging and Warning System	5
2.2.3.5 Data System	5
2.2.3.6 Radio Frequency System	6
2.2.3.7 Local Area Network System	6
2.2.3.8 Telephone System	6
2.3 Services	7
2.4 Processing Methodology	8
3.0 MANAGEMENT	9
3.1 Management Approach and Processes	9
3.1.1 Manifesting and Scheduling	9
3.1.2 Customer Communications and Support	9
3.1.2.1 Payload Planning Support	10
3 1.2.2 Daily Schedule Coordination Meetings	10
3.1.2.3 Training	10
3 1.3 NASA Insight and Approval	11
3.1.3.1 Anomaly Investigations	11
3.1.4 Documentation	11
3.1.5 Environmental Assessments	12
3.1.6 ISO Certification	12
3.2 Key Personnel and Staffing	12
ATTACHMENT 2	1
DOCUMENTATION REQUIREMENTS LIST	1
ATTACHMENT 3	1

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ACRONYMS AND ABBREVIATIONS	1
ATTACHMENT 4	1
DEFINITIONS	1
ATTACHMENT 5	1
CALIPSO AND CLOUDS AT PRELIMINARY OPERATIONS SCHEDULE	1
ATTACHMENT 6	1
LIST OF APPLICABLE DOCUMENTS	1

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CALIPSO/CloudSat Payload Processing Attachment 1

1.0 Scope, Objectives, and Payload Processing

1.1 Scope

This Statement of Work (SOW) defines the tasks required of the Contractor to provide processing facilities and services for the Cloud Aerosol Lidar and Infrared Pathfinder Satellite Observations (CALIPSO) and CloudSat Spacecrafts and for the Delta Dual Payload Attach Fitting (DPAF). The two spacecraft are flying on the same Delta II rocket using the DPAF. The Contractor shall provide the following: advance planning, facilities, supplies, commodities, and services necessary for Payload User and Launch Service Provider to perform prelaunch processing of the CALIPSO and CloudSat satellites and the Launch Vehicle (LV) DPAF, fueling (by others) of both satellites, integration with the DPAF and encapsulation/transport of the completed payload stack to the Pad.

1.2 Objectives

The Contractor shall perform advance planning necessary to furnish facilities, supplies, commodities, and services necessary for processing the CALIPSO and CloudSat Spacecrafts and providing for launch vehicle integration operations, when required. The Contractor shall be responsible for the following: (1) ensuring the facility is operated and maintained to appropriate requirements; (2) providing services for the offload, transportation, and receipt of the payloads/Ground Support Equipment (GSE) from the VAFB arrival location to the Payload Processing Facility (PPF); (3) providing the required commodities and services necessary to support payload processing; and (4) providing facilities and services to house support personnel. NASA will approve the choice of the processing site for this mission if more than one site is capable of providing support.

1.3 Payload Processing

The Contractor shall be responsible for operating and maintaining a facility for processing flight hardware under this contract. The Contractor is responsible for providing all services necessary for the Payload Users to successfully prepare their flight hardware for launch. The Contractor shall abide by all Customer guidelines required to maintain the payload during processing operations in the PPF. During the occupancy period, the Contractor shall provide necessary facility access, including access by foreign national personnel, and support as required for payload processing. The Payload Users will coordinate planned off-shift and 24-hour operations, but off-shift and 24-hour facility access and payload operations may also be required in the event of anamolies or unplanned processing schedule changes. In the event of a launch cancellation or postponement after payload erection, the Contractor shall provide facilities and services for further processing, off-loading propellants, or deservicing the payload for shipment back to the manufacturing plant or launch site. The Contractor shall provide support for packing and shipping GSE after the launch campaign is concluded. The work schedule for CALIPSO and CtoudSat Payload Users may include

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CALIPSO/CloudSat Payload Processing Attachment 1

any or every day between arrival and launch. However, standard work schedules will be set prior to arrival and for work outside of those hours, in the case of contingency operations, the Contractor shall be responsible for providing processing facilities and services.

1.3.1  Occupancy Period

The period of time for use of the Contractor’s facilities shall be from the initial facility occupancy date through 30 calendar days after the Target Launch Date or removal of all Customer support equipment which ever comes first. The occupancy periods are shown in Attachment 5. During the occupancy period, the Contractor shall provide insight on activities of other facility tenants as they affect NASA’s payload processing schedules. NASA and the Contractor recognize that the nature of space flight activity is such that schedules must sometimes be changed, often for reasons beyond the control or reasonable predictive capability of NASA or the Contractor.

2.0 Technical Requirements

The Contractor shall be responsible for providing, operating, and maintaining the facility, facility systems, and facility support equipment using industry’s best practices. Use of Contractor’s industry best practices will not supersede the maintenance and operational requirements set forth in Appendix D of this Statement of Work. In the event there is a conflict between the SOW and appendices to the SOW, the SOW shall prevail. Appendix D was originally generated for, and will be included in the respective CALIPSO and CloudSat Launch Site Support Plans (LSSPs). Verification of performance will be in accordance with the “Government Insight and Approval” and “Mission Success Determination” contract Articles.

2.1 Facility

The Contractor shall meet the minimum facility requirements stated in SOW Appendix D. Processing and support space requirements provided in SOW Appendix D represent NASA’s estimated needs based on spacecraft size and support equipment. The contractor shall accommodate CALIPSO and CloudSat and their respective launch vehicle integration operations in the PPF without compromising the requirements listed for the spacecraft. These integrated operations include the build-up and processing of the DPAF prior to mating each spacecraft. The contractor shall accommodate the outdoor facility requirements in support of the CALIPSO Atmospheric Test as listed in SOW Appendix D.

Access shall be provided for the spacecrafts and Launch Service Provider to become familiar with the facility capabilities for the support of their respective activities. The Contractor shall provide data/information relative to the expected RF and magnetic environment within the PPF during the facility occupancy period and external to the PPF during the Contractor provided transportation of the payload. The Contractor shall work as a team with the Customer and Range to optimize the RF and magnetic

2

CALIPSO/CloudSat Payload Processing Attachment 1

environment for the specific payloads. The Contractor shall provide data/information relative to the historical performance of the environmental control systems in the PPF and the expected environment during processing. The contractor shall provide data/information relative to the materials that will be present in the facility and their compatibility with the spacecraft systems and materials.

2.2 Facility Systems

The Contractor shall meet the minimum facility system requirements stated in SOW Appendix D for the CALIPSO and CloudSat payloads. The Contractor shall be responsible for providing back-up capability for all critical facility systems. The Contractor shall be responsible for submittal of the Certificate of Facility Readiness (COFR) in accordance with the “Mission Success Determination” contract Article.

2.2.1  Mechanical Systems

For all mechanical systems, the Contractor shall meet the requirements stated in SOW Appendix D and those stated in the following paragraphs.

The Contractor shall provide an overhead traveling bridge crane in the cleanroom and airlock that is designed, operated, and maintained in compliance with all applicable Occupational Safety and Health Administration (OSHA), American National Standard Institute (ANSI)/American Society of Mechanical Engineers (ASME), Crane Manufactures Association of America (CMA 70) documents, and EWR 127-1 documents. Prior to this mission, the Contractor shall perform an inspection, operational test, and rated load test on the cranes to be used during the processing flow per EWR 127-1 Section 6.6 and ANSI/ASME B30.2 Chapter 2-2 Sections 2-2.1.2, 2-2.1.3, 2-2.2.1, and 2-2.2.2. The Contractor shall submit the inspection and test results as part of the COFR.

The Contractor shall provide a Heating, Ventilating, and Air Conditioning (HVAC) System to supply the following areas: airlock, cteanroom, control room, GSE storage room, break room, restrooms, conference room, office rooms, garment change room, and any other areas where flight hardware is processed. This system shall meet temperature, humidity, and cleanliness class requirements under normal processing operations during payload operations as listed in SOW Appendix D for the appropriate payload. The HVAC system shall comply with the American Society of Heating Refrigeration and Air Conditioning Engineers (ASHRAE) guidelines for design, operation, and maintenance practices. In addition, the Contractor shall provide backup HVAC contingency capability.

The Contractor shall provide an environmental monitoring system that has the capability to monitor a clean work area as required in SOW Appendix D.

The Contractor shall provide verification of oxygen levels prior to the beginning of each work shift.

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CALIPSO/CloudSat Payload Processing Attachment 1

In accordance with EWR 127-1, the contractor shall continuously monitor toxic vapor levels (Section 6.11.5.2.4f) and provide toxic vapor checks every eight hours and prior to entry if the facility has been left unattended for eight hours (Section 6.11.5.2.1f). Monitoring shall be performed at American Conference of Governmental Industrial Hygienists (ACGIH) levels of 0.01 ppm for hydrazine.

2.2.2  Electrical Systems

For all electrical systems, the Contractor shall meet the requirements stated in SOW Appendix D and those stated in the following paragraph.

The Contractor shall provide per National Electrical Code (NEC) Class I, Division 2, Group C and D hazard proofing for both the cleanroom and airlock electrical power receptacles. The Contractor shall also provide European power systems as defined in Appendix D. As a minimum, the Contractor’s grounds shall be equipped with grounding plates available for Customer use in the cleanrooms, airlock, control rooms and outside pad area. In addition, the Contractor shall be responsible for switching to facility back-up power for the cleanrooms (and associated Payload Users GSE), HVAC, Environmental Monitoring system, and emergency lighting loads during a facility power outage and maintaining until facility power restoration. The Contractor shall ensure that the electrical systems are designed, operated, and maintained in accordance with the NEC and the National Fire Protection Association (NFPA) where applicable.

2.2.3  Communications, Telemetry, and Video

The Contractor shall be responsible for providing, operating, and maintaining the necessary equipment to handle the flow of voice, video, and telemetry both internal and external to the PPF facility during payload processing and launch. The Contractor shall make all necessary arrangements with the appropriate Government agencies for interfacing signals that need to be transported to other Government facilities at Vandenberg Air Force Base (VAFB). The Contractor shall be responsible for all equipment up to the VAFB/Govemment interface demarcation point. The Government will make arrangements for the NISN circuit assignments as needed, but the Contractor shall deliver the specified signals to the VAFB/Government interface demarcation point. Certain operations will require redundancy in the voice and data systems to prevent single point failures from halting operations. The Contractor shall ensure its systems provide the necessary level of redundancy at all times during facility occupancy and including launch operations as specified by the Customer.

2.2.3.1  Voice Systems

The Contractor shall provide a voice system capable of handling a combination of internal channels as well as channels extended to various external locations such as Space Launch Complex 2 (SLC-2), Remote Launch Control Center (RLCC), Launch

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Operations Control Center (LOCC), Buildings 836 and 840, and other NASA centers via NISN. The system shall be capable of concurrent operation of all stations, and each station shall be able to access multiple channels simultaneously. The voice system shall have growth capability with respect to the number of stations available to Payload Users. Stations located in areas where hazardous materials may be used shall meet the requirements defined in Eastern and Western Range 127-1.

2.2.3.2  Television System

The Contractor shall provide a television system consisting of closed circuit television cameras located in the cleanrooms and airlock areas and fitted with remote control pan, tilt, zoom, and focus to be controlled by the Payload customers in the control rooms specified for each Payloads GSE. The system shall be capable of extending internally generated video to external locations such as Building 836, Building 840, and other NASA centers, as well as distributing internally various signals generated at external locations such as the space launch complex. Cameras located in areas where hazardous materials may be used shall meet requirements defined in Eastern and Western Range 127-1.

2.2.3.3  Timing System

The Contractor shall provide a timing system capable of accepting, distributing, and displaying Range generated timing signals. Displays located in areas where hazardous materials may be used shall meet the requirements defined in Eastern and Western Range 127-1.

2.2.3.4  Paging and Warning System

The Contractor shall provide a paging and warning system capable of paging personnel in all occupied areas of the facility. Paging microphones shall be located in the control rooms and at the secretaries’ desks. The paging and warning system shall be capable of alerting personnel inside and outside the facility in the event of a hazardous situation as specified by Eastern and Western Range 127-1. Control of the warning system shall be located in the control rooms.

2.2.3.5  Data System

The Contractor shall provide a data system capable of routing payload customer data from the cleanrooms to external locations such as Bldg. 836. The system shall be capable of accepting Electronic Industry Association (EIA) RS-422 data, in various bit rates, and fiber optic based signals, and extending them to the VAFB/Government interface demarcation point for transmission to other centers via NISN, or to the launch complex area. The system shall have either the necessary redundancy to automatically reestablish any/all circuits in the event of a failure in system hardware/software or

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provide duplicate circuits per the SOW Appendix D requirements. The system shall be able to support late requirements and have a minimum growth capability of 25 percent.

2.2.3.6  Radio Frequency System

The Contractor shall provide a Radio Frequency (RF) system capable of radiating S-Band frequencies between the PPF and various existing Government facilities on VAFB, in particular to the Vandenberg Tracking Station. The system shall be capable of supporting three separate simultaneous signals (two transmit and one receive). The Contractor shall provide antenna alignment services, obtain RF authorization, and obtain clearance from the appropriate Government agency before system use.

2.2.3.7  Local Area Network System

The Contractor shall provide two Local Area Network (LAN) systems that will be used for administrative data only, one for U.S. Citizens and one for Foreign Nationals. The Payload Customers will provide their own workstation security. The Contractor shall not be required to provide workstations or software for workstations. The Contractor shall provide all hardware and software (i.e., network switches/routers, network cable drops, etc.) necessary to establish and maintain connectivity between the facility systems and the appropriate VAFB interface point and serve as an interface between the Payload User and VAFB for coordination, troubleshooting, and network management.

2.2.3.8  Telephone System

The Contractor shall provide a standard multi-line commercial telephone system, with station-to-station intercom and local (VAFB) dialing capability. The Customers will also require commercial telephone lines to support faxes and analog modems. The Contractor will not be responsible for the payment of charges associated with the commercial services but shall assist the Customer in making arrangements with the commercial carrier and appropriate VAFB agency for service and installation. Stations located in areas where hazardous materials may be used shall meet the requirements defined in Eastern and Western Range 127-1.

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CALIPSO/CloudSat Payload Processing Attachment 1

2.3  Services

The Contractor shall provide services in support of mission processing at the PPF, including arrangements for receipt of flight hardware and GSE.

Appendix D of this Statement of Work lists the minimum services to be provided by the Contractor for each payload. These service categories include:

• Administrative support

• Analysis/Sampling

• Fluids and Gases

• Cleanroom garments & supplies

• Transportation

• Propellant loading support equipment and support services

• Material handling

• Photography support

• Janitorial support

• Security

• Forklift and crane operators

• Miscellaneous equipment and services

The Contractor shall be responsible for coordinating the arrival of the flight hardware and GSE and providing all handling equipment necessary to off-load and transport it into the PPF (See DRL 8). This includes arranging for badging, the arrival site, security, and any material handling equipment needed at the point of arrival, including at the runway for flight hardware or GSE arrival by aircraft. The contractor shall coordinate with all necessary agencies for the arrival by aircraft including the USAF, U.S. Customs, Immigration and Naturalization Service, and the Department of Agriculture. The CloudSat Spacecraft is expected to arrive via ground transport. The CALIPSO Spacecraft is expected to arrive via aircraft to the VAFB airfield.

Both CALIPSO and CloudSat require mono-propellant fueling with ultra-pure hydrazine. The Contractor Facility shall accommodate CALIPSO and CloudSat fueling operations and their respective sets of servicing equipment. The Contractor shall arrange for the payload fueling activities and provide those items specified in Appendix D (e.g. breathing air, spill containment). The Contractor should note one exception; the Government (or the Payload Users through the Government) will purchase and deliver the propellants to VAFB. The Payload Users will perform the fueling activity in the PPF. The Contractor shall provide for the storage and transportation on VAFB, and the storage and handling of propellants at the PPF. The Contractor shall be responsible for the integrity of the propellants from the time of receipt at VAFB to the time of loading into the Payload User provided propellant cart. Sample analysis of the propellant, or any gases or fluids, shall be provided by the Contractor (See DRL 10). All other commodities such as gaseous helium, gaseous nitrogen, liquid nitrogen, isopropyl alcohol, and other general purpose cleaning agents and solvents shall be supplied by the Contractor. The Contractor shall provide certification that all delivered fluids and gases meet the required specifications.

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CALIPSO/CloudSat Payload Processing Attachment 1

The Contractor shall dispose of all domestic, industrial, and hazardous waste generated at the PPF and is responsible for spill containment, clean-up, and facility decontamination in the event of a hazardous mishap.

The Contractor shall provide the ability for priority turnaround on sampling and analysis. On all other services the Contractor shall state his intended response time from time of request to delivery of services.

The contractor shall ensure the security of the payloads flight hardware and information. The contractor shall control access to each payloads assigned areas, including controlling the access from each other. The contractor shall ensure full and free access by the payload users to their assigned areas, including for foreign national payload users.

The contractor shall coordinate and schedule with outside sources for payload customer requirements. The contractor shall provide troubleshooting and platform services for the payload customers where required to include coordinating with outside sources until resolution of the problem.

In addition to the services described in this section and in Appendix D the Contractor shall provide minor technical shop support. Examples of this support include sling proof load, electrical test equipment maintenance and repair, test equipment calibration, manufacturing of small mechanical parts, welding, pressure system component maintenance, precision cleaning, NDE, etc.

To the extent that this support is not available at the Contractor facility, the Contractor will arrange for Customer support from other local capability.

2.4 Processing Methodology

As part of payload processing the Payload Users will perform hazardous operations. Typical hazardous operations include spacecraft fueling, ordnance installation and checkout, non-ionizing radiation sources (e.g. RF, laser, bright light), and payload handling. The Contractor’s facility should be sited and otherwise approved for these operations (Reference the “Licenses and Permits For a Payload Processing Facility/Operator” contract Article). The Contractor shall work with and provide support to the Payload Users to help mitigate hazards associated with processing operations.

Prior to the initial facility occupancy of this mission, NASA will submit documents to the Contractor including: Payload Processing Procedures, Payload Safety Documentation, and Final Processing Requirements and Flight Hardware Flows. The Contractor shall review and provide a written response to these procedures and safety documentation per the timelines specified in the “Government Provided Documents” contract Article. The Contractor may be required to provide signature concurrence to comply with Customer Payload processing procedures (e.g. Contamination Control Implementation Plan). The Contractor shall inform the Customers of any processes that do not meet

8

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Contractor facility, safety, or environmental guidelines or violate any facility operational permits or licenses. The Contractor shall provide input to Customer procedures regarding facility capability, safety, and hazard mitigation.

For the final processing requirements and flight hardware flows, the Contractor shall provide a response that indicates understanding of the requirements and certifies that it will meet the specified requirements. Exceptions to meeting the requirements must be documented and provided to the Customer per the timelines defined in the “Government Provided Documents” contract Article.

At the Customer’s request, the Contractor shall assist the Payload Customers in the development of the flight hardware flow in the PPF. This shall include optimizing the use of floor space and facility systems, such as the cranes, high pressure gas, etc. for operations such as fueling, encapsulation, or canning.

During normal processing operations, Contractor trained Payload Users will have coordinated access to operate the following facility systems including, but not limited to: cranes, forklifts, fire protection system, and doors. The Contractor shall be responsible for ensuring that all facility, facility systems, and facility services are available when required per the processing flows and any subsequent planning and scheduling meetings.

3.0 Management

The Contractor shall provide a team of personnel necessary to manage all the requirements in this SOW and appendices.

3.1 Management Approach and Processes

For Management Approach and Processes, the Contractor shall meet the requirements stated in the following paragraphs.

3.1.1 Manifesting and Scheduling

The Contractor shall maintain a payload processing manifest schedule to be provided upon request. The payload processing manifest schedule shall include a facility readiness schedule, the initial facility occupancy, planned facility outages, dates, and the processing durations for all manifested payloads or launch vehicles whether they are commercial or government.

3.1.2 Customer Communications and Support

The Contractor shall establish lines of communication with the Customers, which includes: teleconferences, discussions, and formal and informal requests for technical, status, and progress information on the PPF. The Contractor shall ensure that

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CALIPSO/CloudSat Payload Processing Attachment 1

Customer’s requirements are met in a timely manner such that on-going operations within the Contractor’s facility are not impacted.

3.1.2.1  Payload Planning Support

At the Customer’s request, the Contractor shall be required to support advanced planning working sessions. To assist the Customers, the Contractor shall provide a Facility Handbook. This handbook shall have a complete description of the facility and facility systems capabilities (See DRL 4). The Contractor shall present the status of its facilities and preparation for facility payload processing support at all Ground Operation Working Group Meetings, Payload Safety Working Group Meetings, the Ground Operations Review and the Spacecraft Pre-Ship Reviews (to be held at the spacecraft customer facilities) as requested by COTR.

3.1.2.2  Daily Schedule Coordination Meetings

The Contractor shall support Customer chaired daily coordination meetings during the facility occupancy period. The coordination meetings will status work-in-progress and services required for the current and following days activities. NASA will provide detailed schedule and service requirements to the Contractor.

The Contractor shall provide insight on all activities including other facility tenants as they affect NASA’s payload processing operations and schedules. The Contractor shall ensure that the Customer’s operations have priority over routine facility maintenance operations. Support conflicts will be resolved with a spirit of cooperation among tenants, commensurate with respective launch dates.

3.1.2.3  Training

For this mission, the Contractor shall provide facility orientations as requested by the COTR. The orientation briefing and handouts shall include, but not be limited to, information summarizing the Contractor’s key personnel contacts, facility layout, and operation methodology (See DRL 6). Payload User’s will be trained by the Contractor to operate those facility systems and equipment needed to perform various processing tasks, including crane and forklift operations.

The Contractor shall provide safety training required to assure that payload personnel are fully informed relative to facility hazards, alarm system operation, escape routes, fire suppression systems, etc. The Contractor is also responsible for providing/coordinating training for ELSA and for SCAPE. The Contractor shall maintain facility access control to assure personnel have received the necessary training before they are permitted unescorted access to the facility.

The Contractor shall notify and provide specific requirements to the Customers of all certifications (e.g. medical, safety) required to perform operations (e.g. fueling, crane) in

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the Contractor’s facility. The Contractor shall be responsible for obtaining all required VAFB crew certifications on behalf of the Payload Users.

The Contractor shall insure that their team of personnel receive Payload User dictated training as required by the COTR. This training may include familiarization or safety training on the spacecraft unique systems (e.g. Cleanliness, Laser),

3.1.3  NASA Insight and Approval

Specific areas in which NASA requires insight and/or approval are defined in the “Government Insight and Approval” contract Article 14. In addition, the Contractor shall acknowledge and be responsive to the inquiries, requests, technical coordination, and recommendations of NASA independent assessment teams, panels, or commissions within the scope of contract requirements.

The Contractor shall support technical coordination and interaction including, but not limited to: telephone discussions, formal and informal written correspondence, video conferences, meetings, and any other form of communication or sharing of information necessary to accomplish the cooperation required to provide for NASA insight of the payload processing facilities. Working level relationships shall be encouraged between NASA and Contractor personnel to expedite insight and approval activities. The COTR will be the Primary point of contact for technical guidance.

3.1.3.1  Anomaly Investigations

The Contractor shall conduct an investigation, with insight by NASA, in the event of any facility component or equipment failure or anomaly. In addition, the Contractor shall report all accidents, mishaps, close calls or other incidents as defined by NASA shall be reported as required by NFS 1852.223-70, Safety and Health. The Contractor shall immediately report to the Contracting Officer, Contracting Officer’s designated Safety Representative, Payload(s) Safety Representative, and the 30 SW any accidents, mishaps, close calls or other incidents. Reporting requirement, format, etc. to comply with 30 SW, KSC and the NASA Payload Safety organization requirements will be identified in the mission specific tailoring of the facility safety manual. This tailoring, required by Article 16, reflects mandatory NASA safety requirements specific to the payload organizations occupying the facility. Upon completion of the investigation, the Contractor shall submit a written report (See DRL 5). Certain requirements of the “Safety and Health” contract Article also apply to non-NASA mission failures and anomalies.

3.1.4  Documentation

The Contractor shall produce and make the appropriate distribution of all items on the Data Requirements List (DRL), which shall be made a part of this contract. As a contractually controlled document, changes to the DRL shall be submitted for NASA

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approval. The Contractor shall develop and maintain a schedule for providing the deliverables specified in the DRL. The DRL in Attachment 2 defines the scope of documentation required; however, NASA will utilize the Contractor’s existing documentation to the maximum extent possible.

3.1.5  Environmental Assessments

The Contractor shall be responsible for ensuring that its facilities have been evaluated as required under the provisions of the National Environmental Policy Act (NEPA) as outlined in Air Force Regulation (AFR) 19-2.

3.1.6  ISO Certification

The Contractor shall be ISO 9000/2000 third party certified, from either the International Registrar of Certified Auditors (IRCA) or Registrar Accreditation Board (RAB).

3.2 Key Personnel and Staffing

The Contractor shall provide a readily available, single point of contact to serve as the liaison with Customers. This single point of contact shall have the authority to commit, sign, authorize, and schedule activities at the processing facility. All staffing of personnel necessary to operate and maintain the facility as necessary to support payload processing during the occupancy period shall be the responsibility of the Contractor.

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CALIPSO/CloudSat Payload Processing Attachment 2

Attachment 2

DOCUMENTATION REQUIREMENTS LIST

CALIPSO and CloudSat Payload Processing Capability

for the

National Aeronautics and Space Administration

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CALIPSO/CloudSat Payload Processing Attachment 2

1.0 Data Requirements List

The Data Requirements List (DRL) described in SOW 3.1.4 identifies critical elements of the contracted effort where aspects of payload processing insight are required by NASA and where NASA approval is required. The following DRL defines the scope of documentation required; however, NASA will utilize the Contractor’s existing documentation to the extent practicable. The numbers of copies listed are to be mailed to the NASA KSC Resident Office at VAFB. The submittal dates specified represent “on-dock” dates at the resident office. The Contractor shall be notified of approval or disapproval in 15 calendar days unless otherwise specified.

DRL Item	Document	Submittal Date	Insight (I) Approval (A)	Subsequent Submittal/ Changes	No. of Copies
1-3	RESERVED
4	Facility Handbook	With Contract	I	As Required	30
5	Mishap Reporting and Investigation	Immediate**	I	As Required	3
6	Orientation Presentation	No Later Than 3 Days After facility occupancy date	I	As Required	50
7	Certificate Of Facility Readiness (COFR)	See “Mission Success Determination” Article	A	As Required	5
8	Off-loading and Transport Operation Procedures and Transportation route survey	10 Days Prior to facility occupancy date	A	As Required	5
9	Facility Safety Manual (CD or hardcopy acceptable)	With Contract	A*	As Required	30
10	Sample Analysis Result of Gases, Propellants & Fluid Commodities	Upon turn over to Contractor	I	No earlier than 2 Days before Payload first Use	3

** Immediate notification to NASA is required within 1 hour (initial phone notification requires a written-follow-up within 1 hour.)

1-3 RESERVED

4 Facility Handbook

As the facility or facilities systems are modified, the Contractor shall revise the Facility Handbooks to reflect the current facility and facility systems capabilities.

5 Mishap Reporting and Investigation

All accidents, mishaps, close calls or other incidents as defined by NASA shall be reported as required by NFS 1852.223-70, Safety and Health. The Contractor shall immediately report to the Contracting Officer, Contracting Officer’s designated Safety Representative, and Payload Safety Representatives, any accidents, mishaps, close calls or other incidents. Reporting requirement, format, etc. to comply with KSC and the NASA Payload Safety organization requirements will be identified in the mission

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CALIPSO/CloudSat Payload Processing Attachment 2

specific tailoring of the facility safety manual. This tailoring, required by Article 16, reflects mandatory NASA safety requirements specific to the payload organizations occupying the facility.

6 Orientation Presentation

The presentation and hand-out material shall include: status of the PPF and its associated systems, open deviation/waivers, anomalies currently open or under investigation, safety training information, delivery dates of commodities, and agreements for services. Also, the package shall address mission unique requirements, support and services. An overview of the PPF and mission flow shall be provided.

7 Certificate of Facility Readiness (COFR)

The Contractor shall generate a detailed report on the facility, facility systems and facility support equipment documenting that the square footage required is provided for, and that contamination and environmental control, electrical, communication and video systems comply with the requirements as stated in the SOW and associated Appendices. As a minimum, the COFR shall:

• Identify all systems by name

• Identify each system as critical/non-critical

• Provide a brief description of status and readiness of the facility and each facility system

• Provide a copy of the certification for each systems proofload, calibration, compliance or inspection

• List supporting documentation for each system

• Provide a summary of facility modifications implemented since last NASA usage

• Have an Open items, Issues, and Concerns Section with associated correction plan and date

• Have an Exception, waivers, and deviation Section

• Provide a Safety statement of readiness

8 Off-loading and Transport Operation Procedures and Transportation Route Survey

The Contractor shall be notified of approval or disapproval in five calendar days. For offloading Flight hardware and GSE, any operation procedures used shall be submitted by the Contractor. The survey will include but not be limited to: road conditions, overhead obstruction, bridge conditions and a map identifying the transportation route.

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CALIPSO/CloudSat Payload Processing Attachment 2

9 Facility Safety Manual

As standard operating safety requirements for organizations occupying the facility change, the Contractor shall revise the safety manual to reflect current safety policy and criteria applicable to ground support equipment (GSE) and to ground operations processing at the facility.

10 Sample Analysis Results of Propellants, Gases or Fluids

At the request of the Customer, the Contractor shall generate a report detailing the results of the propellant, gases, or fluids sample analysis. Parameters to be analyzed will be specified by the Customer prior to taking the sample.

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CALIPSO/CloudSat Payload Processing Attachment 3

Attachment 3

ACRONYMS AND ABBREVIATIONS

CALIPSO and CloudSat Payload Processing Capability

for the

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CALIPSO/CloudSat Payload Processing Attachment 3

Acronyms and Abbreviations List

30SW	30th Space Wing
A	amps
A	approval by NASA
A/C	air conditioning
AC	alternating current
AFB	Air Force Base
AIT	Assembly, Integration and Test
ANSI	American National Standard Institute
ASHRAE	American Society of Heating Refrigeration and Air Conditioning Engineers
ASME	American Society of Mechanical Engineers
ASO	Astrotech Space Operations
ATC	Atmospheric Test Container
ATP	Atmospheric Test Pad
AUX	Auxiliary SCOE
BATC	Ball Aerospace & Technologies Corporation
BATSIM	Battery Simulator
BCC	Battery Conditioning Console
BCU	Battery Cooling Unit
BTU	British thermal unit
C	Celsius
CALIPSO	Cloud Aerosol Lidar and Infrared Pathfinder Satellite Observations
CDRL	Contract Data Requirement List
CGMU	Compagnie Generale Maritime (Maritime Transport Container)
CloudSat	Cloud Profiling Satellite
CMAA	Crane Manufacture Association of America
CNES	Centre National D’Etudes Spatiales [French National Space Agency]
COFR	Certificate of Facility Readiness
CoLT	Correlative Lidar Trailer
COTR	Contracting Officer Technical Representative
CPR	Cloud Profiling Radar
CS	CloudSat
CSS	Coarse Sun Sensor
CWA	Clean Work Area
dB	decibel
DC	direct current
Deg	degree
DHU	Data Handling Unit (PROTEUS on board computer)
DMVT	Dispositif Mobile de Vidange et de Transfert (Fuel Offloading Cart)
DoD	Depth of Discharge
DPAF	Dual Payload Attach Fitting
DRL	Data Requirements List
e.g.	for example (exempli gratia)
EEB	Electrical Equipment Building (SLC-2W)
EED	Electro-Explosive Devices

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CALIPSO/CloudSat Payload Processing Attachment 3

EGSE	Electrical Ground Support Equipment
EIA	Electronic Industry Association
EIS	Environment Impact Statement
ELSA	Emergency Life Support Apparatus
ELV	Expendable Launch Vehicle
EMI	electromagnetic Interference
EOS	Earth Observing System
EPD	Electrical Power Distribution
ESD	Electrostatic Discharge
ESSP	Earth System Science Pathfinder
Est	estimated
EWR	Eastern/Western Range
F	Fahrenheit
F/D	Fill & Drain
FAR	Federal Acquisition Regulation
FFP	firm fixed price
FLC	Fuel Loading Cart
FltHW	flight hardware
Ft	feet
FUT	Fixed Umbilical Tower
GFE	government furnished equipment
GHe	gaseous helium
GMT	Greenwich Mean Time
GN2	gaseous nitrogen
GPS	Global Positioning System
GSE	Ground Support Equipment
GSET	Ground Support Equipment Trailer
GSFC	Goddard Space Flight Center
He	Helium
HEPA	High Efficiency Particle Accumulator
HPF	Hazardous Processing Facility
HSF	Hazardous Servicing Facility
HU	Hampton University
HVAC	Heating, Ventilating & Air Conditioning
Hz	hertz
I	Insight by NASA
I&T	Integration and Test
i.e.	that is (id est)
I/F	Interface
IEEE	Institute of Electrical and Electronic Engineers
IEGSE	Instrument Electrical Ground Support Equipment
IIR	Imaging Infrared Radiometer
In	inch
IPF	Integrated Processing Facility
IPSL	Institute Pierre Simon LaPlace
IRIG	Inter-Range Instrumentation Group

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CALIPSO/CloudSat Payload Processing Attachment 3

JPL	Jet Propulsion Laboratory
Kb	kilobyte
Kg	kilogram
Km	kilometer
KSC	John F. Kennedy Space Center
Kva	kilovots Amps
Kw	kilowatts
LaRC	Langley Research Center
Lb	pounds
LIDAR	Light Detection and Ranging
LN2	Liquid Nitrogen
LOCC	Launch Operations Control Center
LSC	Launch Support Contractor (Boeing)
LSIM	Launch Site Integration Manager
LSP	Launch Service Provider
LSP	Launch Services Program
LSSE	Launch Site Support Engineer
LSSP	Launch Site Support Plan
LV	Launch Vehicle
M	Months
M	meter
MCDT	Main Control Data Test
Med-Lite	Medium Light
MEOP	Maximum Expected Operating Pressure
Mg	Milligram
MGSE	Mechanical Ground Support Equipment
MHz	Mega-Hertz (Hertz x 10E6)
MIL-STD	military standard
MLI	Multi Layer Insulation
MSM	Moyen Sol Mécanique (Mechanical Ground Support Equipment)
MSPSP	Missile System Prelaunch Safety Package
MST	Mobile Service Tower
MTB	Magneto-Torquer Bar
N/F	nose fairing
N2	Gaseous Nitrogen
NA	Not Applicable
NASA	National Aeronautics and Space Administration
NDE	non-destructive evaluation
NEC	National Electrical Code
NFPA	National Fire Protection Association
NFS	NASA FAR Supplement
NHB	NASA Handbook
NISN	NASA Integrated Science Network
NLT	no later than
NSI	NASA standard initiator

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CALIPSO/CloudSat Payload Processing Attachment 3

OD	Operations Directive
OR	Operations Requirements (Document)
OSHA	Occupational Safety and Health Administration
PAF	Payload Attach Fitting
PAO	Public Affairs Office
PAT	Payload Atmospheric Test
PC	Personal Computer
PCC	Power Control Console
PCR	Payload Control Room
PCU	Power Control Unit
PDP	Power Distribution Panel
PDS	Power Distribution System
PF	PROTEUS Platform
PHE	propellant handlers ensemble
PI	Program Introduction (Document)
PL	Payload
PLC	Spacecraft Payload Controller
PLF	Payload Fairing
PPF	Payload Processing Facility
Ppm	parts per million
PPVD	Portable Propellant Vapor Detector
PRD	Payload Requirements Document
PROTEUS	Plateforme Reconfigurable pour I’Observation de la Terre et les Usages Scientifiques (Reconfigurable Platform for Earth Observation and Scientific Missions)
psi	pounds per square inch
PTS	Pressurization Test Set
QA	Quality Assurance
RF	radio frequency
RFI	radio frequency interference
RFQ	Request For Quotation
RFTC	RF Test Console
RLCC	Range Launch Control Center
RM	Reconfiguration module (of the PROTEUS DHU)
rpm	revolutions per minute
RSC	Research, Development, Test, and Evaluation Support Complex
RWA	Reaction Wheel Assembly
S/C	Spacecraft
SADM	Solar Array Drive Mechanism
SCAPE	Self Contained Atmospheric Protective Ensemble
SCBA	Self Contained Breathing Apparatus
scfm	standard cubic feet per minute
SCOE	Satellite Check Out Equipment
sec	second
SLC	Space Launch Complex

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CALIPSO/CloudSat Payload Processing Attachment 3

SLC-2W	Space Launch Complex - 2 West
SOW	statement of work
sq	square
SSI	Spaceport Systems International
STD	Standard
STOC	Spacecraft Test Operations Console
STR	Star Tracker
SW	Space Wing (USAF)
TBC	To Be Confirmed
TBD	To Be Determined
TBR	To Be Resolved
TBS	To Be Supplied
TM/TC	Telemetry & Tele Command (TTC also used)
UP	Umbilical Plug
UPS	Un-interruptible Power Supply
USAF	United States Air Force
V	volts
VAFB	Vandenberg Air Force Base
VLS	Vandenberg Launch Services
VTS	Vandenberg Tracking Station
W	Weeks
WFC	Wide Field Camera
WR	Western Range (U.S. Air Force, 30th Space Wing)
WTR	Western Test Range

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CALIPSO/CloudSat Payload Processing Attachment 4

Attachment 4

DEFINITIONS

CALIPSO and CloudSat Payload Processing Capability

for the

National Aeronautics and Space Administration

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CALIPSO/CloudSat Payload Processing Attachment 4

	Definitions
Airlock:	An area, with a controlled environment, designed to accept the payload and its transporter. The airlock provides isolation from both the outside and cleanroom environment, and allows stabilization of temperature, humidity, and minimization of contamination.
Anomaly:	Any unexpected event. This may be a communications problem, an excursion outside of facility cleanliness specifications, or other unwanted occurrence.
Canning:	Building up the transportation canister used to transport the Payloads and associated vehicle launch hardware.
Clean room:	An environmentally controlled area for processing spacecraft. A facility or area where contamination such as hydrocarbons, non volatile residue, and particulate are limited to predefined levels based on the class of the cleanroom. Monitoring of contamination levels is mandatory to ensure they stay within specified limits.
Control Room:	An area which houses Payload Users provided electrical GSE and personnel during payload testing and launch operations.
Customer:	The Kennedy Space Center Contracting Officer or the designated representative (e.g. COTR).
Dual Payload Attach Fitting (DPAF):	Launch Service Provider flight hardware used to launch two payloads on the same launch vehicle.
Hydraset:	A device installed between the crane hook and payload lifting device used to control the upward or downward movement of the payload in very precise increments.
Launch Service Provider (LSP):	Contractor providing Launch Vehicle services. For CALIPSO/CloudSat, the LSP is Boeing and the launch vehicle is a Delta II with a DPAF.
Mission:	The overall flow or processing of the payloads.
NISN:	NASA Integrated Science Network. The NASA communications infrastructure used to provide connectivity between geographically dispersed locations for voice, video and data.

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CALIPSO/CloudSat Payload Processing Attachment 4

Payload:	Any of a class of satellite or probe that is ultimately to be placed into space. It may also be referred to as a Spacecraft or an Observatory.
Payload User:	The Government or Contractor organization responsible for processing a payload or its associated launch vehicle components (e.g. DPAF) in the PPF.
Propellant:	Any of a class of solid, liquid, or gaseous substances used to produce thrust. Propellants may be toxic, corrosive, or capable of producing severe injury due to cold.
Range:	The Government or Government agency responsible for controlling Government resources on VAFB.
Target Launch Date:	The Launch date, for a specific mission, as specified in the Contract.

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CALIPSO/CloudSat Payload Processing Attachment 5

Attachment 5

CALIPSO AND CLOUDSAT PRELIMINARY OPERATIONS SCHEDULE

CALIPSO and CloudSat Payload Processing Capability

for the

National Aeronautics and Space Administration

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CALIPSO/CloudSat Payload Processing Attachment 5

RFQ-04-KTE-001 CALIPSO/CloudSat Payload Processing Attachment 6

Attachment 6

LIST OF APPLICABLE DOCUMENTS

CALIPSO and CloudSat Payload Processing Capability

for the

National Aeronautics and Space Administration

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RFQ-04-KTE-001 CALIPSO/CloudSat Payload Processing Attachment 6

Applicable Documents List

Government Documents
AFR 19-2	Air Force Regulation 19-2, Environmental Impact Analysis Process
CFR 49	Code of Federal Regulations (CFR) 49: Transportation
DOD 6055.9-STD	Ammunition and Explosives Safety Standards
EWR 127-1	Eastern and Western Range 127-1 Range Safety Requirements
ISO 14644-1-1999	Cleanrooms and Associated Controlled Environments - Classification of Air Cleanliness
ISO 14644-2-1999	Cleanrooms and Associated Controlled Environments - Specifications for testing and monitoring to prove continued compliance with ISO 14644-1
MIL-PRF-27407	Propellant, Pressurizing Agent, Helium
MIL-PRF-27401	Propellant, Pressurizing Agent, Nitrogen
MIL-PRF-26536	Propellant, Hydrazine
NASA-STD-8719.8	Expendable Launch Vehicle Payload Safety Review Standard
NPG 8715.3	NASA Safety Manual
Voluntary Commercial Standards
ANSI/ASME B30.2	Overhead and Gantry Cranes (Top Running Bridge, Single or Multiple Girder, Top Running Trolley Hoist)
ANSI/CGA G-7.1	Commodity Specification for Air (from Compressed Gas Association Inc.)
CMA 70	Specifications for Top Running Bridge & Gantry Type Multiple Girder Electric Overhead Traveling Cranes.( from Crane Manufacturers Association of America, Inc.)
EIA RS-170	Electrical Performance Standards for Monochrome TV Studio Facilities (from Electronic Industry Association)

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RFQ-04-KTE-001 CALIPSO/CloudSat Payload Processing Attachment 6

EIA RS-422	Electrical Characteristics of Balanced Voltage Digital Interface Circuits (from Electronic Industry Association)
IEEE 802.3	Information Technology - Local and Metropolitan Area Networks
ES-RP-CC006.2	Testing Cleanrooms (from Institute of Environmental Sciences).
NEC	National Electric Code
NFPA	National Fire Protection Association (Codes and Standards)
NFPA 780	Lightning Protection Code

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NNK04LA75C CALIPSO/CloudSat Payload Processing Appendix C

Appendix C

CALIPSO and CloudSat GSE Reference Tables

CALIPSO/CloudSat Payload Processing Capability

for the

National Aeronautics and Space Administration

February 2004

NNK04LA75C CALIPSO/CloudSat Payload Processing Appendix C

Table C-1 CloudSat EGSE Power Requirements

DESCRIPTION	EGSE Connector	Voltage (All 60Hz)	Maximum Current Rating	Facility
BATC-PROVIDED EGSE
*POWER CONTROL CONSOLE (PCC)	L21-30P 5-20P	208, 3 Phase 125,1 Phase	30A 20A	PPF EEB
*SOLAR ARRAY SIMULATOR (SAS)	L21-20P	208, 3 Phase	20A	PPF
*BATC UNINTERRUPTIBLE POWER SUPPLY (UPS)	PS560R9- W PLUG	125/208 3 Phase	60A, 20KVA	PPF
*BATTERY COOLING UNIT (BCU)	L6-20P	250,1 Phase	20A	PPF/MST
*BATTERY CONDITIONING CONSOLE (BCC) BCC & BCU REQUIRE SEPARATE CIRCUITS IN THE MST	5-20P	125,1 Phase	20A	PPF/MST
*SPACECRAFT TEST OPERATIONS CONSOLE (STOC)	5-20P	125,1 Phase	20A	PPF/CS Control Rm
*RF TEST CONSOLE (RFTC)	5-20P	125,1 Phase	20A	PPF
*ATTITUDE CONTROL CONSOLE (ACC)	5-20P	125,1 Phase	20A	PPF
*DIGITAL MULTIMETER	5-15P	125,1 Phase	15A	PPF/MST
PROPELLANT SERVICE UNIT (PSU)	5-20P	125,1 Phase	20A	PPF
PROPELLANT LOADING TEST SET (PLTS)	ECP-2023	125,1 Phase	20A	PPF/MST
MISCELLANEOUS TEST EQUIPMENT *EPDS TEST BOX *TT&C TEST BOX *THERMAL TEST BOX	5-15P on each box	125,1 Phase	15A	PPF
BATC POWER DISTRIBUTION PANEL (PDP)	PS560R9- W PLUG	125/208, 3 Phase	60A	PPF
NASA JPL-PROVIDED EGSE
CPR TEST EQUIPMENT RACK	5-20P	125,1 Phase	20A	PPF
CPR TEST COMPUTERS (X2)	5-20P	125,1 Phase	20A	PPF

* Powered Via PDP at PPF

NNK04LA75C CALIPSO/CloudSat Payload Processing Appendix C

Table C-2: -CALIPSO GSE Power Requirements, Size and Location

Component	Location	Size CM (in.)	Weight Kg (Lb)	Power Requirements
Power Distribution Box (PDB)	HPF EEB	40.0 x 30.0 x 20.0 (15.75x11.8x7.9)	8.2(18)	380 V, 50 Hz, 8 kVA, 3Ø + N + G
Power Distribution Box - (26 V)	HPF EEB	22 x 9.0 x 35 (8.66x3.54x13.78)	5.5(12)	Powered by PDB (220 V, 50 Hz, 1.5 A, 1Ø)
S/C Auxiliary Power SCOE	HPF EEB	60x150x70 (23.62 x 59.06 x 27.56)	91(200)	Powered by PDB (220 V, 50 Hz, 2.4 A, 1Ø)
TIWTC SCOE	HPF EEB	53.5x6.2x63 (21.06x7.87x24.8)	9.1(20)	Powered by PDB (220 V, 50 Hz, 1.7 A, 1Ø)
10 MHz Generator (RF SCOE part)	HPF EEB	49x13.5x64.5 (19.29x5.31 x 25.39)	18.2(40)	Powered by PDB (220 V, 50 Hz. 2.0 A, 1Ø)
Umbilical Plug (UP) Case	MST Level 5	46.0 x 22 x 34 (16.14x8.66x13.39)	5(11)	208 V, 60 Hz
Off-loading Cart (DMVT)	MST Level 4	50.0x120x74 (19.69 x 47.25 x 29.13)	80.2(176.4)	None
Off-Load GN2 Bottle	MST Level 4	Ø 23x152(9.0x60)	67.8(149)	None
4BW Hydrazine Waste Container	MST Level 4	Ø58.4x125(23.0x49)	131.8(290)	None
TM/TC Amplifier	FUT J-box	48.3x13.25x18.41 (9.0 x 5.22 x 7.24) (3 U-rack)	7.3(16)	Powered by the PDB (26 V) in EEB
Atmospheric Test Container (ATC)	HPF-Outside	8m x 2.6m x4m high,	N/A	208 VAC, single phase, 100A
Correlative LIDAR Trailer (CoLT)	HPF-Outside	12mx 2.5m x3m high	N/A	208VAC, 3-phase, 100A
Ground Support Equipment Trailer (GSET)	HPF-Outside	12m x 2.5m x 3 m high	N/A	208 VAC, 3-phase, 100A plus 220 VAC, 50 Hz for GSE

CALIPSO/CloudSat Payload Processing Appendix D

Appendix D

CALIPSO and CloudSat Requirements

CALIPSO/CloudSat Payload Processing Capability

for the

National Aeronautics and Space Administration

May 2004

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CALIPSO/CloudSat Payload Processing Appendix D

APPENDIX D

Table D-1:	CALIPSO Support Requirements Matrix	Pages 3-25
Table D-2:	CloudSat Support Requirements Matrix	Pages 26-35
Table D-3:	CloudSat Telemetry and Communications Requirements Matrix	Pages 36-44
Table D-4:	CALIPSO Telemetry and Communications Requirements Matrix	Pages 45-53

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-1: CALIPSO General Support Requirements Matrix

NUMBERING AND LOCATION KEY - Sequentially ordered

00 – 24	SC CNTL	CALIPSO S/C Control Room (PROTEUS Control Room)
25 – 49	INS CNTL	Instrument Control Room (Payload Control Room)
50 – 99	OFFICE	HPF General Office Room Requirements
100 – 200	HPF-	Hazardous Processing Facility Requirements
400 – 499	HPF-ATC	Clean room area for installation of S/C into ATC
500 – 599	ATP	Atmospheric Test Pad – Pad area outside of HPF where the atmospheric test will be conducted.
600 – 699	Fueling	Area denoted for preparing the fueling equipment and fueling the spacecraft
700 – 799	DECON	Area designated for decontamination of fueling equipment
800 – 899	Pad	SLC-2W requirements
900 – 999	VAFB	Non-facility specific items/services – generally applies entire time S/C is on VAFB

SUPPLIER

NASA- Supplied by NASA from in-house or otherwise contracted resources

HPF- HPF Contractor Supplied Item

Boeing- To be submitted to Boeing as either a Mission Spec or OD requirement

NOTES

Items sorted by LOCATION (sequential), TYPE (alphabetical), then ITEM (alphabetical).

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
1	SC CNTL	Facilities	PROTEUS Control Room	Provide an exclusive and secured Control Room for CALIPSO EGSE adjacent to Clean Room (within 20m max.) with the following properties: •       30m2 floor space •       Temperature - 22±3deg •       Humidity between 40-60% •       Cable fed thru to Clean Room. •       Access door height 1.8 m and width of 1.8 m (5 ft 11 in) •       Provide a white board in the control room if it is separate from the clean work area Maximum cable length from Spacecraft to control room is 100 m	HPF	This is the PROTEUS (MCDT) Control Room
2	SC CNTL	Facilities	Power, Proteus Control Room	Provide un-interruptible electrical power support for CALIPSO in the HPF Control Room: •       UPS outputs of 380V, 50Hz, 3 phase 10A and European Standard Plugs. •       UPS output of 110 VAC, Single Phase, 60 HZ to 4 separate 20A circuits with 4 outlets per circuit. See attached drawings for details Alcatel will provide a Power Distribution box with pigtail cables out, HPF to provide plugs/receptacles to connect power distribution pigtails to HPF supplied power outputs	HPF
5	SC CNTL	Facilities	Telephones	3 telephones/3 lines in control room, 1 of which shall have international access	HPF
10	SC CNTL	Equipment	Furniture	Provide the following in the Spacecraft (PROTEUS) control room:	HPF
				•       TBD Tables
				•       TBD Chairs
11	SC CNTL	Safety	Fire Extinguishers	Provide at least two CO2 fire extinguishers in the Spacecraft Control Room	HPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
25	INS CNTL	Facilities	Payload EGSE	Provide a 20 m2 space, very near or adjacent to the satellite in the CWA for unpacking, inspection, set up and checkout of payload GSE. •      Access door height to area to be at least 1.8 m and width of 1.8 m (5 ft 11 in) •      Cable feed through to clean room (if INS CNTL outside control room) •      European power supply from Alcatel power distribution box UPS output of 110 VAC, Single Phase, 60 HZ to 4 separate 20A circuits with 4 outlets per circuit. The Instrument Test and Operations Console (ITOC) must be located within 12m of the spacecraft. The Payload control room (workstations) can be located up to 30m from the ITOC.	HPF	This is the Instrument (payload) Control Room/Control Area
30	INS CNTL	Equipment	Furniture	Provide the following in the Payload (Instrument) control room: •      6 Tables •      8 Chairs Must be clean room compatible furniture if INS CNTL located inside clean room.	HPF
31	SC CNTL	Safety	Fire Extinguishers	Provide at least two CO2 fire extinguishers in the Instrument Control Room	HPF
50	OFFICE	Facilities	S/C Office Space	Provide, for exclusive use by Alcatel, an office area With a total of 20 desks. Provide at least 1 double door storage cabinet, 5 bookcases and 3 file cabinets. In this area there shall be at least one private office and one room capable of serving as a conference room for 10 people. This conference room to have telephone capable of international conference calls.	HPF	Alcatel
51	OFFICE	Facilities	CNES Project Management Office Space	Provide a separate area with at least 20 desks (10 desks for CNES and 10 for VAFB). Provide at least 1 double door storage cabinet, 5 bookcases and 3 file cabinets. Included in this area there shall be at least one private office for CNES, and one private office for VAFB. There shall also be one room capable of serving as a conference room for 10 people. This conference room to have telephone capable of international conference calls.	HPF	CNES, VAFB

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
52	OFFICE	Facilities	NASA Project Management and Payload Office Space	Provide, in a separate room, an office area with at 20 desks for NASA and payloaders. Provide at least 1 double door storage cabinet, 2 bookcases and 1 file cabinet. In this area there shall be at least one private office and an area capable of serving as a conference room for 10 people	HPF	NASA LaRC and GSFC Ball Aerospace
53	OFFICE	Facilities	Power,	Provide un-interruptible electrical power support for CALIPSO in the Alcatel and CNES office areas:	HPF
				220 V, 50 Hz, single phase, 30A.
				120VAC, 60Hz, 30A
				See attached drawings for details
				Alcatel will provide a Power Distribution box with pigtail cables out,
				HPF to provide plugs/receptacles to connect power distribution pigtails to HPF supplied power outputs
54	OFFICE	Facilities	Telephones	Within the assigned office facilities provide the following services:	HPF
				For Alcatel:
				•       20 phones in the office area, minimum 10 of which shall have international access (may be restricted to calling card)
				For CNES/VAFB:
				•       20 office area phones, 10 of which shall have international access
				For NASA/Payloaders:
				•       20 office area phones, all of which shall be FTS lines, 5 of which shall have international access For Foreign National Escort:
				•       One telephone with local access
55	OFFICE	Facilities	Conference Room	Provide a conference room, suitable for at least 30 people near the CALIPSO office areas, equipped with	HPF
				•       speaker phone with both FTS and international dialing capability,
				•       video monitor capable of displaying CWA and SLC-2 video, and
				•       transparency projector
				•       internet access

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
56	OFFICE	Facilities	Break Room	Provide a break room in the administrative area with 2 refrigerator/freezers, 2 microwave ovens, coffee machine, capable of seating at least 15 at once	HPF
57	OFFICE	Facilities	Foreign National Escort	Provide one office, with desk and local access telephone, for Foreign National Escort	HPF
60	OFFICE	Equipment	Admin support	Provide following administrative support: 2 fax machine (capable of handling European paper and with international access), mail distribution, 2 copy machine capable of handling European and US paper, daily janitorial service Machines to be located in or very near to the office areas, such that each separate office area has a machine or easy access to one.	HPF
62	OFFICE	Equipment	Partitions	Provide desk partitions for bullpen areas. Each of the three open office areas (Alcatel, CNES and NASA) will require 20 partitions of 60 x 60 in (150 x 150 cm)	HPF
90	OFFICE	Supplies	Paper	Provide paper supplies for use in the copier and fax machines. Minimum: 10 cases of US letter size paper Minimum: 10 cases of ISO A4 size paper	HPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
100	HPF	Facilities	Clean Work Area	Provide class 10,000 clean room for processing CALIPSO in the HPF (per ISO 14644-1 and ISO 14644-2). SC Processing area required: 80m2 GSE space required: 75m2 Access door: Height > 6m and Length > 4m, Temperature: not to exceed 22±3 deg C Humidity: 40-50%. Maintain positive pressure Continuous oxygen level monitoring required during fueling and DPAF operations Continuous toxic vapor detection is required from the arrival of hydrazine until the spacecraft departs HPF. This clean room space must be exclusive and secured for CALIPSO use only. The CALIPSO Project requires weekly control reports. Weekly control reports shall provide the last weeks history for temperature, humidity and cleanliness with reports on any discrepancies with the stated requirements (positive pressure, oxygen levels, etc).	HPF
101	HPF	Facilities	Airlock	Provide a Class 100,000 airlock space (adjacent to clean room) with a minimum door height of 9.1m (30 ft) X 5.1m (17 ft) wide. The airlock temp is not to exceed 22±3deg C and maintain humidity of 40-60% with the door closed.	HPF
102	HPF	Facilities	Power	Provide un-interruptible electrical power support for Calipso in the HPF CWA: •      380 V, 50 Hz, 3 phases, 50A. •      110VAC, 60 HZ, single phase 4 each 20A circuits with 4 outlets per circuit •      See drawings in Appendix B for details Alcatel will provide a Power Distribution box with pigtail cables out, HPF to provide plugs/receptacles to connect power distribution pigtails to HPF supplied power outputs	HPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
103	HPF	Facilities	Power, tilt over fixture	Provide the following power requirements in CWA for the tilt dolly: Outputs: 380V, 50Hz, 3 phase, 15 A. European standard male & female plugs provided by Alcatel.	HPF	Use of a generator is acceptable as this requirement occurs infrequently
104	HPF	Facilities	Grounding	Provide “low noise” ground points for technical grounds in CWA and all control rooms. To the maximum extent practical, technical grounds shall be separate or shielded from facility grounds	HPF
105	HPF	Facilities	Telephones	Provide 2 telephones in CWA, 1 of 1 of which shall have international access	HPF
110	HPF	Facilities	Crane	In all areas where S/C will be handled (i.e.: CWA, airlock, transfer aisles etc) provide a 5400kg (6 tons) capacity crane, equipped with drip protection and possessing, a speed of 0.2 m/min to 1.5 m/min (8 ipm to 5 fpm) and, a minimum hook height of 7.6m (25ft)	HPF
110.1	HPF	Facilities	Certification	Provide crane certificate of compliance/inspection confirming that the crane is in compliance with Range safety requirements and all required inspections/maintenance have been completed to include maintenance dates.	HPF	To be included in Facility Cert.
111	HPF	Facilities	RF Characteristics	Provide RF characterization of the CWA	HPF
112	HPF	Facilities	Seismic Restraints, Anchors	Provide anchor points in facility floor to secure S/C stands and equipment tiedowns.  1/4”-3/8” Stainless steel anchors for racks and  1/2” for S/C tie down. Appropriate bolts to be provided. Anchors to be drilled per spacecraft provided template.	HPF	Final size, location and number to be provided by S/C
113	HPF	Facilities	Seismic Restraints	Provide cargo tie down straps (non shedding nylon) to meet Seismic restraint requirements for EGSE racks in CWA and Control Rooms	HPF
115	HPF	Facilities	Storage for tools and equipment	Provide at least 20 m2 of locked storage space for storage of tools, payload shipping container and other equipment. Area will be maintained at 22±3°C and relative humidity is to be 40-60% Minimum door size is a standard double door, 2.13 m x1.83m(7’Hx6’W)	HPF

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
116	HPF	Facilities	Storage for containers	Provide 100 m2 covered storage area for shipping containers The largest item for storage is the satellite shipping container at 5.3m x 3.384m x 3m, 5 tons (17.4’ x 11.1’ x 9.8’)	HPF
117	HPF	Facilities	Cold Storage	Provide a shelf in a refrigerator located in or near the cleanroom to store spacecraft GSE mirrors for nitrogen quality check.	HPF
120	HPF	CWA	Clean room Change room	Provide for use a personnel airlock/Change room with storage lockers for a minimum of 25 lockers dedicated to project member garment storage. Provide easy access from control room to cleanroom & garment cases/storage. Provide locking devices (padlocks, combo locks, etc) for the lockers Provide clean polyethylene zip lock bags for garment storage Provide a garment hanging rack	HPF
121	HPF	CWA	Class 10K polyester ESD Clean Room garments	Provide sufficient garments to support 25 CALIPSO personnel, 15 NASA personnel and 6 visitors with a twice weekly change out Garments should be sets of full bunny suits with elastic leg and arm openings, hoods, masks, and shoe covers (bootie style) Size distribution ranging from S to XXXL.	HPF	For use prior to fueling
122	HPF	CWA	Class 10 K ESD, Fire retardant Nomex clean room garments, to include hoods and boots	Provide sufficient garments to support 25 CALIPSO personnel, 15 NASA personnel and 6 visitors with a twice weekly change out Garments should be sets of full bunny suits with elastic leg and arm openings, hoods, masks, and shoe covers (bootie style) Size distribution ranging from S to XXXL.	NASA	For use post-fueling

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
123	HPF	CWA	Garment cleaning	Provide laundry service for all clean room garments listed, to include polyester and Nomex. Service to include up to an additional 40 garments/week of Alcatel or CNES provided clean smocks/coveralls not shown in requirements above. Garments must be laundered per class 10,000, ISO 14644 at the rate of at least two garment sets per person per week.	HPF	See requirements 121 & 122
124	HPF	CWA	Facility Vacuum	Provide facility vacuum or portable HEPA vacuum in Airlock, Clean Room and all clean areas	HPF
125	HPF	CWA	2 technicians/ shift for 2 shifts/day	Assist in the wipedown cleaning of GSE on the day of arrival and on the following day	HPF
126	HPF	CWA	Contamination Analysis Report	Provide analysis of: Witness Plates (per ASTME E 1216-87 and ASTM F24-65); particle tape lift classification (ASTM E 1235-88); NVR rinses (ASTM E 1234-88) and /or swabs. Test submittals weekly with a 48 hour response required	HPF
127	HPF	CWA	Cleanliness recording	Provide environmental cleanliness and verification (continuous particle monitoring) in all CALIPSO clean room work areas per ISO 14644-1 and ISO 14644-2 that includes: Particle counter (1.0 or 0.1 CFM) Particle fallout plate NVR plate Hydrocarbon monitor	HPF
128	HPF	CWA	Inspection Lights	Provide High Intensity Whitelight (650 W) and Blacklight (3200 to 3800 Angstroms) inspection lights.	HPF
129	HPF	CWA	Contamination Control	NASA and PPF provider to provide those Items/services as agreed to in a signed Contamination Control Plan Memorandum of Agreement.	HPF NASA
130	HPF	Fluids & Gases	Isopropyl Alcohol	Provide 200 liters (55 gallons) of TTI-735A Grade A isopropyl alcohol to be used for cleaning. Provide manufacturers part number or product description to confirm compliance with specification.	HPF

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
130.1	HPF	Fluids & Gases	Certification	Provide analysis (chemical composition and particulate contamination) or Certificate of Compliance for: •      IPA (TTI-735A Grade A). Certificates shall be delivered upon launch team arrival (just prior to spacecraft arrival)	HPF
131	HPF	Fluids & Gases	Instrument Purge	Provide sufficient quantity of GN2 at a flow rate of between 28.3 liters/hour to 35.4 liters/hour (1 to 1.25 SCFH) for payload purge for the entire time the spacecraft is in the PPF Spec: MIL-P-27401D, Type 1, Grade C	HPF
132	HPF	Fluids & Gases	Alcohol	Provide Isopropyl Alcohol to the DPM 530 spec •      40 liters fisher optima grade (or equivalent) for flight hardware cleaning •      40 liters reagent grade for GSE cleaning	HPF
133	HPF	Fluids & Gases	Deionized Water	Provide sufficient Deionized water (or Reverse Osmosis water) for facility cleaning	HPF
134	HPF	Fluids & Gases	Detergent	Provide two each 3.8 liter (1 gallon) bottles of Simple green non-ionic detergent for facility cleaning	HPF
141	HPF	Equipment	Manlifts	Provide man lifts (2 each) with 8 m (26.2 ft) height capability for: •      installation/removal of S/C from ATC •      access above DPAF stand during attaching lift fixture in the high bay •      S/C bagging procedures An alternative to the manlifts is acceptable if the height/locations can be reached.	HPF
141.1	HPF	Equipment	Certification	Provide certification from Manufacturer/supplier that man-lifts meet all current OSHA safety and proof load requirements	HPF
142	HPF	Equipment	Pallet Jacks	Provide at least 1 pallet jack, 2 furniture dolly’s and 2 appliance trucks (hand trucks)	HPF
143	HPF	Equipment	Ladders	Provide two 6’ (2 m) and one 10’ (3.25m) clean room ladders	HPF
144	HPF	Equipment	Shoe Cleaners	Provide a shoe cleaner at the personnel entrance to the garment change room	HPF

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
145	HPF	Equipment	Bag/Film Sealer	Provide Impulse bag & film sealers •      1 bench top model •      1 portable model	HPF
146	HPF	Equipment	ESD Control	Provide ESD protection to include: Wrist straps Grounding wires Wrist strap tester	HPF
150	HPF	General Support	Manpower	Provide manpower to assist in S/C and GSE installation into HPF and movement (including transport) of GSE. To consist of at least two people per shift, 2 shifts per day for: •      4 (four) days upon arrival •      2 days before Atmospheric Test Ops •      2 days following Atmospheric test Ops •      4 days during transport to pad and 4 days upon departure post launch. At least one person on first shift during arrival and prior to ATP Ops shall be an electrician	HPF
160	HPF	Safety	Video Recording	Provide a continuous video recording, using fixed or pan/tilt video cameras in HPF CWA, of all hazardous operations	HPF	Format to be VHS,
161	HPF	Safety	Fire Extinguishers	Provide at least two CO2 fire extinguishers in the airlock and CWA and at least one in any adjacent annexes	HPF
162	HPF	Safety	Fixed Vapor Detection	Provide a continuous fixed vapor detection system for the CWA, airlock and any areas the spacecraft will be located in after fueling. System required to be set to alarm at 0.01 ppm.	HPF
163	HPF	Safety	Portable Vapor Detector	Provide a portable vapor detector that can be placed adjacent (within one meter) to the spacecraft or its workstand and has the capability to detect and alarm on Hydrazine at the 0.01 ppm level and can be run continuously.	HPF	A fixed vapor detector with probes extending to the desired location is a suitable substitute. The PPVD required for fueling may meet this requirement

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
163.1	HPF	Safety	Certification	Provide certification of propellant vapor detectors to the 0.01ppm level	HPF
164	HPF	Safety	Fire Sensors	Provide, in all S/C areas, fire detectors with local and remote alarm	HPF
165	HPF	Safety	Fire Suppression	Provide fire suppression system in all S/C areas,	HPF
166	HPF	Safety & General Support	Training	Provide training (in French and English) pertinent to operations in HPF areas including: •      ELSA •      HPF clean-room •      HPF familiarization/training •      Crane operation training Note that this training shall be performed upon arrival at HPF.	HPF
167	HPF	Safety	Safe Environment	Check for contamination of ambient air with DRAGGER portable vapor detectors each time activities are resumed at the HPF after fueling and/or at the start of each shift,	HPF
170	HPF	Security	Access Control	Provide a security system 24 hour/7 days per week to all S/C facilities and offices (controlled access). HPF Contractor will provide access as required for off-shift activities. A 24 hour contact and response at the HPF will be provided for emergencies.	HPF	Individual area security may be provided by swipe cards or combo locks
171	HPF	Security	Access Control	Provide CALIPSO authority to review and approve, prior to issue, all requests for unrestricted access cards or combinations for access to the S/C or to the CALIPSO office areas	HPF
190	HPF	Supplies	Face covers	Provide disposable masks and beard covers for CALIPSO operation. Provide as necessary- 2000 predicted	HPF
192	HPF	Supplies	Tape	Provide cleanroom compatible tape for spacecraft use: •      18 rolls Polyethylene (3M 480 or 3M 810) for particle sampling •      24 rolls Kapton (603A), assorted widths •      18 rolls Mylar (3M850)	HPF
193	HPF	Supplies	Tacky Mats	Provide tacky mats at all entrances to the cleanroom and to the control room areas.	HPF

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
194	HPF	Supplies	Gloves	Provide cleanroom gloves for working in and around the spacecraft: •      500 pairs, assorted sizes, CHEM SOFT CE •      7500 pairs, assorted sizes, Miller Products Latex or Nitrile equivalent •      1000 pairs, assorted sizes, polyethylene (for solvent cleaning only)	HPF
195	HPF	Supplies	Cleanroom Wipes	Provide 40 bags of cleanroom wipes for cleaning GSE	HPF
197	HPF	Supplies	Bagging Material	Provide bagging material for the spacecraft. Llumalloy (preferred) or NMD FR-190N-PA1-NN 929 Sq. Meter (10,000 sq. ft).	HPF
198	HPF	Supplies	Bagging Material	Provide protective bagging material for the GSE. The facility shall provide 36” and 48” rolls of bagging material with a clean room approved dispensing rack. The material may any low density polyethylene (LDPE) bagging material (shrink wrap and ziploc’s) that does NOT contain vinyl.	HPF
400	HPF-ATC	Facilities	ATC Facility Area	Provide dedicated 10m x 15m of facility clean space to accommodate installation of CALIPSO satellite into Atmospheric Test Container. Space must have doors of at least 3m wide by 4.5m high and be equipped with a flight hardware certified crane with a minimum 9m (27 foot) hook height.	HPF	Space to be available at least three weeks prior to atmospheric test start to one week after atmospheric test finish.
401	HPF-ATC	Facilities	Cleaning	Provide a powerwasher and effluent disposal for the external washing and cleaning of the Atmospheric Test Container and Ground Support Equipment Trailer, (possibly) the Correlative Lidar Trailer and shipping containers at a location adjacent to the HPF ATC entry. This will be required for the initial arrival and entry Into the ATC facility area and any subsequent reentries following atmospheric tests of the LIDAR	HPF
402	HPF-ATC	Facilities	ATC Facility Area Power	One (1) 208VAC, 60HZ, 1Ø, 100A, 4wire power to the ATC area of the facility.	HPF

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
403	HPF-ATC	Facilities	ATC Facility Area Power	Provide a source of emergency backup power for ATC in the ATC area of the Facility capable of 220VAC, 1Ø, 100A for 4 hours	HPF
404	HPF-ATC	Facilities	ATC Facility Area Ground	Provide single point earth ground within the ATC facility area.	HPF
410	HPF-ATC	Facilities	Telephones	Provide 1 telephone in the ATC facility area.	HPF
412	HPF	Facilities	Seismic Restraints, Anchors	Provide anchor points in facility floor to secure the ATC. Appropriate bolts to be provided. Anchors to be drilled per spacecraft provided template.	HPF	Final size, location and number to be provided by S/C
430	HPF-ATC	Fluids & Gases	ATC Facility Water	Provide source of tap water, with standard hose bib fitting and valve, in the vicinity of ATC facility area. Used for the ATC environmental control system.	HPF
500	ATP	Facilities	Atmospheric Test Pad	Provide an exterior 25m x 20m external, level pad area, to support the three atmospheric test trailers(ATC, GSET, CoLT) and equipment. Pad Requirements include: •      Pad should be within 100 m (300 Ft) of the S/C control room for GSE connections. •      ATC cannot travel more than 500 meters with spacecraft installed •      Maximum cable length between HPF power and electrical panels for each trailer is 30 meters respectively •      Level shall mean that there are no obstructions and that the three trailers using the area can, using standard trailer jacks without added equipment, achieve the same floor height. •      Required 4 weeks prior to initiation of atmospheric testing until one week after scheduled completion of testing.	HPF	ATC = Atmospheric Test Container: 8m length x 2.6m width x 4 m height. GSET = GSE Trailer: 12m length x 2.5m width x 3m height CoLT = Correlative Lidar Trailer: 12m length x 2.5m width x 3m height

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
501	ATP	Facilities	ATP Power	Provide following power sources to the atmospheric test pad: One (1) 208VAC, 60HZ, 1Ø, 100A, 4wire (ATC) Two (2) 208VAC 60HZ, 3Ø, 100A, 5wire (1-GSET, 1- CoLT) One (1) 380VAC, 50HZ 3Ø, 50A (GSET)	HPF	All to be within 30 m (100 feet) of ATP. LaRC will provide the 208 VAC female connectors.
502	ATP	Facilities	ATP Standby Power	Provide one source of emergency backup power for ATC at the ATP capable of 208VAC, 1ø, 100A for 4 hours	HPF
503	ATP	Facilities	ATP Ground	Provide single point earth ground within 30 m (100 feet) of ATP	HPF
504	ATP	Facilities	ATP Seismic and wind Restraints	Provide anchor points in paved ATP to secure all three trailers (ATC, GSET, CoLT) against winds up to 80 miles per hour (135km/hr).	HPF	Details to be provided by S/C. Straps to be provided by S/C
505	ATP	Facilities	ATP Comm	Provide the following communication capabilities to the trailers in the ATP area: Phones - minimum two telephone lines each per GSET and CoLT trailers, one with international capability, Internet - two internet drops each per GSET and CoLT Trailers Wireless Comm - 4 wireless communications devices Have Wired/unwired headsets in trailers – need approval on use or provide alternate unites. Provide capability to tie units into the base voice comm. system.	HPF
506	ATP	Facilities	Extinguish lighting	Provide capability and support to extinguish all exterior lighting within ~200ft (60m) of the ATP during the atmospheric testing.	HPF
530	ATP	Fluids & Gases	ATP Water	Provide source of tap water, with standard hose bib fitting and valve, for ATC humidifier system. Source to be within 35m of the ATP	HPF
550	ATP	General Support	Control Air Space	Provide support to control air traffic and provide a warning to if aircraft is entering the area during the atmospheric test. Ensure that NASA supplied OD is implemented during these periods.	HPF	Required during the two week atmospheric test time.

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
550.1	ATP	General Support	Control Air Space	Prepare and coordinate an OD with the range to cover range and Frontier Control support required for laser operation	NASA
551	ATP	General Support	Range Clearance	Obtain clearance for the GSET radar (Common marine radar) use during the atmospheric testing. Specs: 9410 MHz, has a directional horn providing a radar cone with a 14 degree divergence, range over 10 miles, reaction time < 5 milliseconds Prepare standard frequency protection and frequency clearance documentation for the range. Frequency for clearance to be 8330 MHz and 2268.465, protected frequencies to be 2088.8782	NASA
600	Fueling	Facilities	Fueling Cart setup space	Provide class 10,000 clean room for preparation of the fueling carts (PTS, FLC, DMVT) and hydrazine tank. This area requires: •      Exclusive use for fueling preparation •      Grounding reference point •      Water feed facilities •      Exhaust hose output (for GN2 venting) •      Cell crane, TBD capability •      Toxic vapor detector •      Min space 7 x 7 m Power 220 V, 50 Hz, single phase, 3kVA.	HPF
601	Fueling	Facilities	Conductive Floor/Safety	Provide a room with conductive floor for fueling operations and for combined operations after the S/C is fueled. If floor is not conductive, provide an adequate mean to evacuate static charge from the SCAPE suits (e.g. anti-static wrist straps, approved staticide spray or equivalent))	HPF
602	Fueling	Facilities	Lightning Protection HPF	Provide lightning protection of the HPF	HPF
603	Fueling	Facilities	Evacuation Plan	Post an HPF Emergency Evacuation Plan	HPF

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
604	Fueling	Facilities	Evacuation	Provide emergency exits fitted with anti panic doors in fueling room and ramps at all access doors to eliminate door sill tripping hazard.	HPF
605	Fueling	Facilities	Facilities/ Safety	Cells to be normally maintained in atmospheric overpressure with air exhaust/extraction system in case of emergency	HPF
606	Fueling	Facilities	Emergency Shower	Verify presence and operability of emergency showers and eyewashes before fueling	HPF
607	Fueling	Facilities	Propellant Support/Floor	Provide fueling exhaust grids/retention basin in fueling area of CWA	HPF
630	Fueling	Fluids & Gases	Hydrazine	Provide High Purity Hydrazine (MIL P 26536 Issue E). 50 liters plus a stabilization tank is required (50+ 50 liters minimum (in 2 tanks)). CALIPSO fueling is expected to be 28 Kg. (30 gallon tanks are acceptable). Five (5) days stabilization in the facility is required. Provide ICD (dimensions, mass, handling interface, hydrazine mass, connection type) of the delivered drums.	NASA HPF	Contractor will coordinate, on behalf of the program, with the base fuels contractor to ensure that Hydrazine is sampled and analyzed.
630.1	Fueling	Fluids & Gases	Certification	Provide analysis (chemical composition and particulate contamination) and Certificate of Compliance for: •      Hydrazine, for nominal and spare tank (MIL-P-26536, Issue E, High Purity Grade Certificates shall be delivered upon launch team arrival for HPF readiness verification (just prior to spacecraft arrival)	HPF
631	Fueling	Fluids & Gases	Helium	Provide 300 liters of Helium (MIL-P-27407B Grade A) at 190 bar at HPF. Equivalent quantity in standard ambient conditions is 60,000 liters. Bottles to use standard CGA bottle fitting.	HPF	Interface to French equipment will be provided by Alcatel.

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
631.1	Fueling	Fluids & Gases	Certification	Provide analysis (chemical composition and particulate contamination) and Certificate of Compliance for: •      He (MIL-P-27407B, Grade A), Certificates shall be delivered upon launch team arrival for HPF readiness verification (just prior to spacecraft arrival)	HPF
632	Fueling	Fluids & Gases	Nitrogen	Provide 350 liters of gaseous Nitrogen (GN2) (MIL-P-27401D grade C) at 190 bar at HPF (60 liters for pressurization, with specific Certificate of control, and 300 liters for fueling operations).	HPF	Contractor will coordinate, on behalf of the program, with the base fuels contractor
				Equivalent quantity in standard ambient conditions is 70,000 liters
632.1	Fueling	Fluids & Gases	Certification	Provide analysis (chemical Composition and particulate contamination, plus water rate for one GN2 bottle) and Certificate of Compliance for: •      GN2 (MIL-P-27401D) Grade C Certificates shall be delivered upon launch team arrival for HPF readiness verification (just prior to spacecraft arrival)	HPF
633	Fueling	Fluids & Gases	Cold Trap	Provide 100 liters of liquid Nitrogen (LN2) (MIL-P-27401D, Grade C) in two tanks or one 200 liter dewar for fueling cart (cold trap).	HPF	Contractor will coordinate, on behalf of the program, with the base fuels contractor
633.1	Fueling	Fluids & Gases	Certification	Provide analysis (chemical composition and particulate contamination) and Certificate of Compliance for: •      LN2 (MIL-P-27401 D, Grade C) Certificates shall be delivered upon launch team arrival for HPF readiness verification (just prior to spacecraft arrival)	HPF
634	Fueling	Fluids & Gases	Breathing Air	Provide breathing air supply with 4 supply points in the fueling area. Breathing air to be compliant with CGA-G7.1 Grade D. Provide appropriate interface to SCAPE suits in requirement 640.	HPF
634.1	Fueling	Fluids & Gases	Certificate	Provide Certificate of Compliance for SCAPE breathing air to CGA-G7.1 Grade D.	HPF

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
635	Fueling	Fluids & Gases	Facilities supply points	Provide Water, Nitrogen, and Helium supply points in HPF CWA. If GN2 &/or Helium provided in bottles, provide a 6- bottle manifold with standard US connections able to provide a constant gas reserve without having to change connections during fueling operations. Require one for GN2 and one for Helium. CALIPSO will provide the adapter from the end of the manifold (US) to the CALIPSO GSE (French).	HPF
640	Fueling	Equipment	SCAPE Suits	Provide 6 SCAPE suits for fueling operations (and first decontamination in the cell after fueling) with the following characteristics: •      Removable helmet with earphone, microphone and panoramic visor •      Inner air conditioning •      Air exhaust adjustment valve •      Tight attaching system for gloves and boots •      Safety boots •      Breathing air supply •      VHF full duplex explosion proof voice communication system	HPF	Contractor will coordinate, on behalf of the program, with the base fuels contractor
640.1	Fueling	Equipment	Certification	Provide certification of compliance and certificate of validity for the provided SCAPE suits Certification for the SCAPE suits would include confirmation of the make/model of suits to be used, and then typically a “Go-Tag” that indicates the suit has been cleaned and inspected for damage since the last use.	HPF
642	Fueling	Equipment	ELSA	Provide at least 20 ELSA, 10 in CWA and 10 in Airlock	HPF
643	Fueling	Equipment	Waste Management	Provide drip pan, mop and sop kits and disposal for small amounts of hydrazine spills or contaminated waste.	HPF
644	Fueling	Equipment	Vent Trailer	Provide R-17 vent trailer, gulp trailer or fume removal system at HPF during fueling	HPF

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
645	Fueling	Equipment	Emergency Offload	Provide an empty hydrazine container (4BW drum, for instance) in the event of contingency off-loading at HPF	HPF
646	Fueling	Equipment	Blast Shield	Provide a blast shield or equivalent protection for operators protection against splinters or explosion (dimensions 2.5 m x 2.5 m) during fueling and pressurization activities	HPF
660	Fueling	Safety	Training	Provide the SCAPE training (in French) for 4 CALIPSO operations personnel.	HPF
661	Fueling	Safety	SCAPE Ops Rescue	Provide two SCAPE qualified individuals to serve as rescue team members during SCAPE ops	HPF
662	Fueling	Safety	Hazard Warning	Provide a Safety restricted area when performing hazardous operations, indicated by flashing lights	HPF
663	Fueling	Safety	Medical Support	Provide for an emergency Fire & Medical rescue team on stand-by at the HPF during fueling operations. Medical team shall be comprised of at least one doctor or EMT-Paramedics, one ambulance driver, and one ambulance equipped with resuscitation hardware. This support is required to be on location at the HPF during SCAPE operations.	HPF
664	Fueling	Safety	Conductivity Tester	Provide one personal conductivity tester for use during fueling	HPF
665	Fueling	Safety	Propellant Support/Spills	Provide decontamination procedure to be followed in the CWA in the event of a major fuel spill.	HPF	Note: Alcatel will clean any minor spills that occur during the normal process of fueling
666	Fueling	Safety	Vapor Detection Safety	Provide 2 PPVD detectors for fueling activities at HPF. Detection threshold shall be set at 0.01 ppm.	HPF

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TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
701	DECON	Facilities	Decontamination Area	Provide a sheltered and ventilated area for fueling cart decontamination with: Grounding reference point Water feed facilities GN2 gas supply Toxic vapor detector Hazard Warning Lights Lightning Protection Waste Vapor Collection system Compressed air facilities 2 drums x 200 liters of de-ionized H2O 2 drums x 200 liters IPA 4 drums for recuperation 4 complete decontamination suits (garment, boots, gloves, gas mask) 220V, 50 Hz, 1 ph. + N, 15A power supply	HPF	Contractor will be responsible for obtaining generator to meet 50 Hz power requirements and to provide a generator watch/operator for night/off shift periods if decontamination area is unmanned but generator must be left running to support decontamination (approx 12hours/day for 7 days)
702	DECON	Facilities	EYEWASH	Provide emergency shower and eyewash at decontamination area	HPF
703	DECON	Facilities	Lightning Protection Decontamination Area	Provide lightning protection of the decontamination area	HPF
730	DECON	Fluids & Gases	Dl water	Provide 2 barrels x 200 liters each of Deionized water and dip-tube	HPF	Contractor will coordinate, on behalf of the program, with the base fuels contractor
731	DECON	Fluids & Gases	Alcohol	Provide standard TTI-735A Grade A isopropyl alcohol, 2 tanks of 200 liters with pneumatics interface (dip tube) at decontamination area	HPF	Contractor will coordinate, on behalf of the program, with the base fuels contractor
732	DECON	Fluids & Gases	Nitrogen	Provide 600 liters of gaseous Nitrogen (MIL-P-27401D grade C) at 190 bar in order to flush the FLC during decontamination operations at decontamination area Manifold shall have the following I/F: •      female end on bottle •      21.7 mm diameter (0.85 inch) •      1.814 mm (0.07 inch) right thread	HPF	Contractor will coordinate, on behalf of the program, with the base fuels contractor

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
740	DECON	Equipment	Splash Suits	Provide 4 Splash Suits (Securacid, Kappler CPF2) or SCAPE suits at decontamination area.	HPF	Contractor will coordinate, on behalf of the program, with the base fuels contractor
740.1	DECON	Equipment	Certification	Provide certification or manufacturer statement for Splash/SCAPE suits of fitness for use near hydrazine
761	DECON	Safety	SCBA Training	Provide training on Self Contained Breathing Apparatus (SCBA) for 4 personnel for use with splash suit operation at the decontamination area	HPF	Contractor will coordinate, on behalf of the program, with the base fuels contractor
762	DECON	Safety	Safe Environment	Check for contamination of ambient air with DRAGGER portable vapor detectors each time activities are resumed at the decontamination area and/or at the start of each shift,	HPF
900	VAFB	General Support	Transport RF	Control RF emissions to limit exposure of CALIPSO spacecraft to peak electric field intensities to less than 10 V/m in all frequency ranges during transport of the spacecraft on VAFB.	NASA HPF	NASA OD will request. HPF to schedule with the WR.
901	VAFB	General Support	Weather Warnings	Provide warning to project of forecasted hazardous weather	HPF
902	VAFB	General Support	Waste Management	Provide hazardous waste disposal and waste management - from arrival to L+2 days	HPF
903	VAFB	General Support	Photography	Schedule photographic and/ or video documentation, upon request	NASA
910	VAFB	General Support	PMEL Service	Provide precision measurement equipment lab (PMEL) services for re-calibration of test equipment during S/C processing, as required	NASA
911	VAFB	General Support	Shop Support	Provide up to 100 man-hours of technical, electrical, mechanical and transport support	HPF NASA
912	VAFB	General Support	Logistics and Shipping	Provide shipping and receiving services for CALIPSO and GSE while at VAFB. Services to include loading, unloading, packing, general packing materials, and logistics support. (Does not include cost of transport which will be borne by shipper)	HPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
960	VAFB	Safety	Emergency Services	Provide life emergency and fire protection support 24 hr/ 7 days per week. This includes, local medical aid, fire extinguishers, water deluge system, and local fire department	HPF
971	VAFB	Security	FN Escort	Provide 24 hour/ 7 days per week transportation to processing facilities and launch facilities when required (normally 2 shifts/6 days per week + normal office hours).	NASA	NASA/KSC will provide badging of foreign nationals and all required launch base training to gain access. Foreign National Access is governed by AF1 16-201. NASA/KSC will coordinate with 30 SW for access
972	VAFB	Security	Transport Security	Provide a security escort for S/C transportation from arrival to HPF	HPF
980	VAFB	Transportation	Offload Support, Trucks	Provide up to 5 trucks and trailers to transport the CALIPSO S/C and GSE from the VAFB airfield to the HPF Provide one driver and an assistant per truck to perform loading/offloading operations Trucks must be equipped for sun, rain and splash protection. Trucks shall have hydropneumatic suspension.	HPF
981	VAFB	Transportation	Offload Support, Forklift	Provide the following forklifts: •      10-ton metric (11 tons English), 3.7 m (12 ft) extensions •      3-ton metric (3.3 tons English) with extenders compatible with the S/C container (1CD to be provided by CALIPSO). Provide a certified operator to unload shipping containers and CALIPSO from trailers.	HPF
982	VAFB	Transportation	On-Load Support	Provide same forklifts as for off load support (see item 981). Provide 4 persons, 1 shift per day, for 5 days to support packing and return of equipment post launch	HPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-1: CALIPSO General Support Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
983	VAFB	Transportation	General Haulage	Provide enclosed truck (2 to 5 ton) with liftgate to move GSE between HPF to SLC-2W or DECON area. Trucks must be equipped for sun, rain and splash protection. Trucks shall have hydropneumatic suspension. One driver and a helper to be provided, 1 shift/day	HPF	Truck will be scheduled 2 to 3 days in advance. Anticipated usage is approximately 10 days spread over the time at VAFB

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-2: CloudSat General Support Requirements Matrix

LOCATION KEY – Sequentially ordered

1000 – 1024	PPF CNTRL	- Control room used when CS at the PPF
1025 – 1049	CS CNTRL	- Control room used when CS at the Pad
1050 – 1099	OFFICE	- Office and administrative area requirements
1100 – 1199	PPF	- Requirements for the PPF
1600 – 1699	Fueling	- Requirements for fueling operations
1900 – 1999	VAFB	- Requirements that apply basewide or are not facility specific

SUPPLIER

NASA	Supplied by NASA from in-house or otherwise contracted resources
PPF	Contractor Supplied Item
Boeing	To be submitted to Boeing as either a Mission Spec or OD requirement

NOTES

Items sorted by LOCATION (sequential), TYPE (alphabetical), then ITEM (alphabetical).

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-2. CloudSat General Support Requirements Matrix

1001	PPF CNTL	Facilities	Work Area	Provide a control room for use while in PPF.	PPF	Note: Due to ITAR issues, separate control room from CALIPSO required.
				Minimum of 500 sq-ft floor area.
				Entry is to be standard commercial double door (approx 60-in x 84-in).
				Control room is to be located so that EGSE is not sharing a clean space with the satellite. Requires facility wall pass-throughs to accommodate a maximum of 30-ft cable runs from EGSE to centerline of satellite.
1003	PPF CNTL	Facilities	Furniture	Provide minimum of six tables and six chairs in PPF Control Room.	PPF
1004	PPF CNTL	Facilities	Phones	Provide telephones in the PPF Control room with minimum three numbers with long-distance capability and three instruments	PPF	For admin use.
				Make numbers the same as those in the PPF SC processing area (Req #1107)
1025	CS CNTL	Facilities	Work Area	Provide a CloudSat Control Room with 8’x10” minimum work area.	PPF
				Required for GSE when S/C is at SLC-2.
				For the PCC control computer and Spacecraft Test Operations Console (STOC)
1030	CS CNTL	Facilities	Phones / Fax	Provide three long distance capable telephone lines with three multi-line phones in the CS Control Room area. Provide four analog long distance capable lines for modem/fax	PPF
1040	CS CNTL	Facilities	Office Space	Provide a minimum of 5 offices in close proximity to the CS Control room. Office area should have the following capabilities:	PPF
				•      Three long distance capable telephone lines

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-2. CloudSat General Support Requirements Matrix

1041	CS CNTL	Facilities	Conference Room	Provide use of conference room for 25+ personnel in close proximity to the CS Control Room. Amenities: Teleconference, overhead or LCD projector, and CCTV.	PPF
1050	OFFICE	Facilities	Office Space	Provide lockable office area for 10 BATC and a separate lockable office area for 15 JPL/NASA occupants with normal office amenities: desks, filing cabinets, whiteboards, and copier. Office area capability to be provided during PPF operations and during Pad operations.	PPF
1051	OFFICE	Facilities	Phones /Fax	Provide telephones with six long distance lines with 12 multi-line phones in the assigned office areas. Provide four analog long distance capable lines for modem/fax	PPF	This requirement shall be split equally such that each office area will have three long distance lines with 6 multi-line phones, and two modem/fax lines.
1052	OFFICE	Facilities	Conference Room	Shared use of conference room for 25+ personnel. Amenities: Teleconference, overhead or LCD projector, and CCTV.	PPF	B840 conference rooms may also be scheduled for large conferences
1100	PPF	Facilities	Work Area	Provide a clean room work area Min. sq. footage: 2,200 Min. door size: 30’H x 10’W	PPF	BATC to provide floor layouts.
1101	PPF	Facilities	Airlock	Provide an Airlock with 10-ton crane Required for S/C container loading / offloading	PPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-2. CloudSat General Support Requirements Matrix

1102	PPF	Facilities	Environment	Provide the following environment in the spacecraft processing area: a.      Class 100,000 cleanliness b.      Temperature: 68° +/-5° F c.      Humidity: 40 to 50% non-condensing d.      The spacecraft should be maintained at a temperature which is at least 2 degrees above ambient dew point temperatures, In order to avoid water from condensing on the surface of flight components. Provide continuous monitoring of RH and temperature. Provide recordings of S/C environment to S/C project on request	PPF
1103	PPF	Facilities	Crane	Provide a crane in the spacecraft processing area: Min. capacity: 10-Ton Min. hook height: TBR ( 35-ft)	PPF	The canning of the DPAF will drive minimum requirements. BATC / Boeing will provide certified crane operators. Crane operators must have medical certification
1104	PPF	Facilities	Crane	In all areas where S/C will be handled (i.e.: CWA, airlock, transfer aisles etc) provide a 10 ton crane, equipped with drip protection. (Speed and hook height TBD)	PPF
1105	PPF	Facilities	Power	Provide the following power in the spacecraft processing area: e.      Six 120VAC, 20A outlets, explosion proof and on UPS backup power.	PPF	See Table C-1 for list of EGSE power requirements.
1106	PPF	Facilities	Work Stand	Provide bolt holes in CWA floor for work stand installation. Bolt hole pattern will be provided in the LSTOP.	PPF
1107	PPF	Facilities	Telephones	Provide three Telephones with long-distance capability in CWA Make telephone numbers the same as those in the PPF CNTRL area (Req #1004)	PPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-2. CloudSat General Support Requirements Matrix

1108	PPF	Facilities	Storage	Provide 2000 sq-ft of covered storage for GSE/shipping containers. Minimum width shall be 120 inches. The door width into the facility and along the route to the SC processing area and the GSE/shipping container storage area shall be a minimum of 120 inches.	PPF
1109	PPF	Facilities	Coax cable for GPS Antenna	Provide a GPS antenna low loss coax cable with feed into the CloudSat clean work area. (1575.42 MHz) Coax cable is required to have: f.       < 4.5 db loss/100 ft over TBD frequency range g.      terminated w/’N’ connector	PPF	BATC will supply the GPS antenna
1110	PPF	Facilities	Electrical Outlets	Provide the following power in the SC processing area: h. 60A, 208VAC, 3ø for the Power Distribution Panel All power required to be on UPS	PPF	See Table C-1 for list of EGSE and power requirements (voltage, amperage, and plug types).
1111	PPF	Facilities	Furniture	Provide minimum of six tables and six chairs in PPF spacecraft processing area. Tables and chairs must be cleanroom compatible.	PPF
1112	PPF	Facilities	GPS Antenna	Provide support for installation of the spacecraft provided GPS antenna onto the roof of the processing facility. Including routing of the cable from the antenna to the CloudSat CWA.	PPF
1120	PPF	CWA	Contamination Control	NASA and PPF provider to provide those items/services as agreed to in a signed Contamination Control Plan Memorandum of Agreement.	PPF
1121	PPF	CWA	Personnel Airlock	Provide a personnel airlock/Change room with storage lockers for a minimum of 25 lockers dedicated to project member garment storage	PPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-2. CloudSat General Support Requirements Matrix

1122	PPF	CWA	Garments	Provide class 100,000 compatible, non-static generating clean room garments (smocks, disposable hair nets, gloves, beard covers and shoe covers) to support CloudSat team. Size distribution ranging from M to XXXL. Provide sufficient garments to support 15 CloudSat personnel, ~10 NASA personnel and ~6 visitors with a twice weekly change out	PPF	Used prior to fueling
1123	PPF	CWA	Garments	Provide class 10,000 compatible fire retardant Nomex, non-static generating clean room garments (hood, bunny-suits, boots, beard covers and disposable nitrile gloves) to support CloudSat team. Size distribution ranging from M to XXXL. Provide sufficient garments to support 15 CloudSat personnel, ~10 NASA personnel and ~6 visitors with a twice weekly change out	NASA	Used after fueling Will require laundering when dirty.
1124	PPF	CWA	Laundry Service	Provide laundry service for clean room garments. Service to include up to an additional 40 garments/week of BATC provided garments not shown in requirements 1122 and 1123. Garments must be laundered per class 10,000, ISO 14644 at the rate of at least one garment set per person per week.	PPF
1140	PPF	Equipment	Mobile lift	Provide a clean room compatible mobile lift. Quantity: Two Access height: 26.2-ft (min) Required for DPAF integration operations. Includes PPF-provided operator.	PPF	Boeing Requirement
1142	PPF	Equipment	Seismic Restraints	Provide cargo tie down straps (non shedding nylon) to meet Seismic restraint requirements for EGSE racks in CWA and Control Rooms	PPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-2. CloudSat General Support Requirements Matrix

1150	PPF	General Support	Training	Provide training pertinent to operations in PPF areas including ELSA, clean-room, PPF familiarization/training, crane operation training and SCAPE. Note that this training shall be performed upon arrival at PPF.	PPF	BATC will provide the required proper Medical certification for SCAPE and crane training. SCAPE training via contract with UPC.
1155	PPF	General Support	Manpower	Provide manpower (2 people) to assist in S/C and GSE installation after arrival and for departure from PPF	PPF
1156	PPF	General Support	Custodial support	Provide custodial support in Control room, office, and other non-CWA support areas for cleanliness maintenance	PPF
1160	PPF	Safety	Audio / video recording	Tape all hazardous operations (and other operations, if requested)	PPF	Ref Comm Annex for camera / taping details.
1161	PPF	Safety	Oxygen monitors	Provide Two oxygen monitor units required for personnel safety due to GN2 purges Required for fueling	PPF
1170	PPF	Security	Access Control	Provide a security system 24 hour/7 days per week to all S/C facilities and offices (controlled access). PPF Contractor will provide access as required for off-shift activities.	PPF	Individual area security may be provided by swipe cards or combo locks
1171	PPF	Security	Access Control	Provide CloudSat authority to review and approve, prior to issue, all requests for unrestricted access cards or combinations for access to the S/C or to the CloudSat office areas	PPF
1180	PPF	Transportation	Pressure wash	Provide a pressure wash to clean exterior of shipping container and air ride trailer prior to entering the airlock. Provide wash down area.	PPF
1181	PPF	Transportation	Flat-bed tractor-trailer	Provide a tractor with flatbed trailer to transport empty GSE containers to temporary storage facility.	PPF	Following S/C off-load and removal of the S/C shipping container from the airlock cleanroom, the container will transported back to Ball Aerospace (BATC). Truck provided/arranged by BATC.
1182	PPF	Transportation	Forklift, 5K lbs	Provide a 5000 Ib forklift, required for GSE loading / offloading	PPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-2. CloudSat General Support Requirements Matrix

1183	PPF	Transportation	Forklift, 20K lbs	Provide a 20K Ib Forklift in a Contingency for S/C container loading / offloading The SC container forklift tine channels will accept a tine with maximum cross section dimensions of 9.375 in wide x 3.375 in high. The tine channels run the entire container pallet width (102 in) and are open on each side to allow forklifting from either side. The channel center-to center spacing is 51 in.	PPF
1600	Fueling	Facilities	Vent	Provide vent outlet to exterior of PPF for vacuum pump exhaust (during fueling operations).	PPF	S/C will provide tubing.
1601	Fueling	Facilities	Emergency showers and eye washers	Provide Emergency showers and eye washers and verify operational.	PPF
1630	Fueling	Fluids & Gases	Breathing air	Provide a tube bank trailer of breathing air, air regulation and distribution system to support four personnel in SCAPE operations	PPF
1631	Fueling	Fluids & Gases	Gaseous nitrogen (GN2)	Provide Facility-supply or K-bottle, Gaseous nitrogen (GN2) regulated to 150 psig (max), MIL-PRF-27401D, Type 1, Grade B. Regulator to facility provided by NASA/UPC. Required for propellant system purge.	PPF
1631.1	Fueling	Fluids & Gases	Certification	Certification of Facility-supply or K-bottle, Gaseous nitrogen (GN2) to be provided to S/C.	PPF
1632	Fueling	Fluids & Gases	Gaseous nitrogen (GN2),	Provide Gaseous nitrogen (GN2), K or A bottles Two K-bottles, 2,250 psi (min), MIL-PRF- 27401D, Type 1, Grade B Required for propellant system pressurization.	PPF
1632.1	Fueling	Fluids & Gases	Certification	Certification of Gaseous nitrogen (GN2) for propellant system pressurization to be provided to S/C.	PPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-2. CloudSat General Support Requirements Matrix

1633	Fueling	Fluids & Gases	Ultra-Pure Hydrazine	Provide Ultra Pure Hydrazine, MIL-PRF-26536E (NASA-supplied), in 4BW cylinder (BATC supplied) 36 Gallons (TBC) CloudSat will load 76 kg (TBC) Deliver to PPF 1 day prior to fueling	NASA
1634	Fueling	Fluids & Gases	Liquid nitrogen (LN2)	Provide Liquid nitrogen (LN2) to fill S/C-provided 20-liter dewar Required for cold trap operations.	PPF
1634.1	Fueling	Fluids & Gases	Certification	Certification of Liquid nitrogen (LN2) to be provided to S/C.	PPF
1635	Fueling	Fluids & Gases	Water, de-ionized	Provide deionized water, minimum 15 gallons	PPF
1636	Fueling	Fluids & Gases	Water supply	Provide Tap water at 30 psig (minimum)	PPF
1640	Fueling	Equipment	SCAPE suits	Provide SCAPE Suits, 4 suits, sizes TBD, including personnel to provide full valet service.	PPF
1641	Fueling	Equipment	ELSA Packs	Provide 30 packs to be provided when hydrazine is present.	PPF
1644	Fueling	Equipment	Hazardous waste containers	Provide three hazardous waste containers for hydrazine contaminated hardware. Minimum container dimensions should be 18” high x 24” diameter	PPF
1645	Fueling	Equipment	Spill containment	Provide resources for spill containment Containers and cleaning supplies for hydrazine.	PPF
1650	Fueling	General Support	Comm	Provide voice nets (prime & backup) and CCTV between PPF CWA and Fueling Control Center	PPF
1660	Fueling	Safety	Hydrazine vapor detection	Provide Hydrazine vapor detection Continuous monitoring to 0.01 ppm required when hydrazine is present.	PPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-2. CloudSat General Support Requirements Matrix

1661	Fueling	Safety	Vapor detection	Provide a portable vapor detection unit and recharger, required for the day of fueling for leak checks Require hand-held unit with sensitivity to .01 ppm and that can operate continuously	PPF
1662	Fueling	Safety	Fire & rescue	Schedule WR Fire & Rescue support on alert during hydrazine ops.	PPF
1950	VAFB	General Support	Monitor (Weather)	Provide daily Weather forecast briefings and severe weather warnings. PPF coordinate with WR to provide information to spacecraft.	PPF WR
1951	VAFB	General Support	RF clearances	Provide RF clearance for spacecraft Up-link Frequency: 1811.6Mhz Down-link Frequency: 2217.5MHZ and 2262.3 MHz GPS Frequency: 1575.42MHZ CPR TX/RX: 94GHz Origin: PPF Destination: PPF, Cook	PPF WR	S/C to provide frequency information for any range RF clearance approvals. Will be scheduled by PPF RF used during LBCT, CPR test and Bus functional.
1952	VAFB	General Support	Photos and video support	Color photographic and video support for processing major milestones, closeout photos, and red-tag accounting	NASA WR	S/C to provide support schedule. PPF to help schedule.
1955	VAFB	General Support	Electrical / Machine Shop	Provide Electrical / Machine Shop support on an as-available, non-interference basis, at B831.	PPF NASA	PPF to provide prime support
1956	VAFB	General Support	Shipping & receiving	Provided shipping and receiving support, as required	PPF	PPF to provide prime support
1960	VAFB	Safety	Training	Provide Safety training/orientation for: Crane at PPF	PPF
1980	VAFB	Transportation	RF restrictions	Limit RF levels to 20 V/m over all frequencies during transports. PPF to Schedule transport times with NASA or the WR	PPF NASA WR

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-2. CloudSat General Support Requirements Matrix

1981	VAFB	Transportation	Covered truck with lift gate and driver	Provide a covered truck with lift gate and driver for transportation of GSE and packed shipping containers between facilities on VAFB.	PPF	BATC will ship BATC GSE to Boulder. NASA-JPL GSE will be shipped directly from the PPF to JPL, by JPL.
1982	VAFB	Transportation	Pallet Jacks	Provide pallet jacks for moving shipping containers.	PPF
1983	VAFB	Transportation	Traffic Escort	Provide Traffic escorts for all S/C transports: From VAFB N. Gate to PPF	PPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-3 CloudSat Telemetry and Communications Requirements Matrix

CloudSat QUICK REFERENCE GUIDE

CloudSat LSSP# System 40XX = ADMIN DATA 41XX = DATA 42XX = RF 43XX = TIMING 44XX = VIDEO 45XX = VOICE
CloudSat LSSP#
4000    ADMIN	PPF, PSCN Ethernet
4005    ADMIN	CS CNTL, STOC, PSCN Ethernet
4009    ADMIN	CS BATC, JPL, GSFC LAN Support
4010    ADMIN	CS CNTL SC Office Area, PSCN Ethernet,
4020    ADMIN/DATA	w/IP Address CNA SUPPORT
4100    DATA	2ea (PRI / BU) Ethernet Links via T1 Carrier, SLC-2W EEB to CS CNTL STOC
4200    RF	RF CMD / TLM Link between PPF and COOK (VTS–AFSCN)
4400    VIDEO	PPF Cameras and Monitors, Extend video to CS CNTL STOC
4405    VIDEO	PPF VHS Recording of Mobil Camera during fueling Operations
4410    VIDEO	SLC-2W Cameras (MST Lvl 5, Lvl 6 and EEB), Extended to CS CNTL STOC
4415    VIDEO	SLC-2W Camera (EEB), Extended to CS CNTL STOC
4500    VOICE	PPF (Internal)
4505    VOICE	PPF Ctrl Room to CS CNTL room STOC, SC Operations
4510    VOICE	SLC-2W (MST Lvl 5, Lvl 6 and EEB) to CS CNTL STOC, Pad Operations
4520    VOICE	CloudSat Consoles, CS CNTL STOC, Launch Operations

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-3: CloudSat Telemetry and Communications Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
4000	PPF NASA	Admin Data	LAN	ADMIN DATA (PSCN LAN in PPF) Provide three (3) 10Base-T Ethernet connections with world wide web connectivity in the PPF CloudSat Spacecraft processing area, the PPF Control Room, the BATC office area, and the JPL/GSFC office area. NASA will extend PSCN to the PPF	PPF NASA	LAN will support SAS, PCC, and STOC
4005	CS CNTL	Admin Data	LAN	ADMIN DATA (PSCN LAN in STOC) Provide three (3) 10Base-T Ethernet connections with world wide web connectivity in CS Control Room (STOC area). PSCN ADMIN network will be used for this requirement	PPF NASA
4009	CS OFFICE	Admin Data	LAN	ADMIN DATA (CS BATC, JPL, & GSFC LAN Support) Provide twenty five (25) 10Base-T Ethernet connections with world wide web connectivity in the BATC office area, and the JPL/GSFC office area.	PPF
4010	CS OFFICE CS CNTL	Admin Data	LAN	ADMIN DATA (OFFICES & CNTL RM LAN) Provide twenty five (25) DHCP IP Addresses in CloudSat office and CS Control Room Areas with connection to the PSCN ADMIN Network	PPF

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-3: CloudSat Telemetry and Communications Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
4020	PPF, B836, PAD	ADMIN DATA / DATA	LAN / DATA	ADMIN DATA / DATA COMPUTER NETWORKS ACCREDITATION SUPPORT (WR CNA) PPF/NASA/BOEING to provide appropriate facility Computer Network Accreditation (CNA) documentation to 30SCS / 30ROPS to support Spacecraft Processing. Spacecraft program office to provide computer N/W supporting data as needed / upon request to satisfy WR CNA concerns.	PPF, NASA, BOEING
				UDS OR INPUT STATEMENT: COMPUTER NETWORKS ACCREDITATION (CNA) FOR CLOUDSAT SPACECRAFT PROCESSING WILL BE HANDLED BY THE INDIVIDUAL CNA DOCUMENT(S) FOR EACH SUPPORTING FACILITY AT VAFB.

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-3: CloudSat Telemetry and Communications Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
4100	PAD PPF B836	Data	TLM and CMD Data	DATA (CS TLM & CMD – PRI & B/U) Provide dedicated 10Base-T ethernet data circuit via T1 Carrier, between SLC-2W EEB Power Control Console (PCC) and CS Control Room for Power Control Console (PCC) and Spacecraft Test and Operations Center (STOC) The following DATA will also be transported transported (via GD-AIS Comm Interface Portable Racks): 2ea TLM links (PRI/BU), 16.384Kbps, RS-422 BiPhase-L 2ea CMD links (PRI/BU), 2.048Kbps, RS-422 NRZ-L Each CMD function requires 3ea signals synchronous Within 40 microseconds as follows, a) CTU GSE 1 b) CTU GSE CLK c) CTU GSE S 1ea Remote Master Off connection Switch closure, 5V to ground Use twisted shielded pair for “MASTER OFF” and “MASTER OFF Return” signals 1ea Analog circuit for Test Command Echo Signal is 50 microsecond 15V pulse Use twisted shielded pair. NOTE: All signals are terminated with a cannon connector, type MS27467T19F35P.	NASA (GD-AIS) Boeing	NOTE: GD-AIS Comm Interface Racks for S/C TLM & CMD Data

41

CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-3: CloudSat Telemetry and Communications Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
4200	PPF AFSCN VTS	RF	RF TLM and CMD Links	DATA (CS TLM & CMD – PRI & B/U) Provide Open Loop RF Link between PPF CloudSat CWA and COOK (Vandenberg Tracking Station—AFSCN) for CMD and TLM FREQ: TLM 2217.5 and 2262.3 MHz (Two (2) S-Band)   CMD 1811.6 MHz (One (1) L-Band) PPF will provide PPF roof mounted antenna(s) and coax cabling to CloudSat Clean Work Area (CWA)_for CloudSat. Antenna(s) and cabling must be able to pass all the TLM and CMD frequencies simultaneously. In the absence of Line-of-sight, a repeater system would be acceptable. Coax cables to be terminated with Type ‘N’ connectors	PPF/ VTS (AFSCN)
4400	PPF B836	Video	CAM	VIDEO (PPF HI-BAY/XFER AISLE CAMERAS) Provide existing PPF Cameras in Hi-bay/Transfer Aisle and Video Monitors in CloudSat control room for surveillance of Spacecraft operations during spacecraft processing. Provide two (2) cameras in PPF Hi-Bay for processing with pan/zoom/tilt capabilities. Extend video to NASA Building 836 and CS Control Room – STOC area.	PPF/ NASA

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CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-3: CloudSat Telemetry and Communications Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
4405	PPF	Video	VHS RCRD	VIDEO (PPF RECORD S/C HAZARDOUS OPS) Provide VHS recorder of to record MOBILE video camera during Spacecraft Fueling/Hazardous Operations in PPF. Cameras in Hazardous Ops areas will meet safety explosion proof requirements	PPF
4410	PAD B836	Video	CAM	VIDEO (SLC-2W MST LVL 5/6 & EEB CAMERA VIEWS) Provide existing SLC-2W MST cameras (Level 5, Level 6 and EEB) for surveillance of spacecraft operations during Spacecraft operations pad integration, checkout and test operations. Provide two (2) cameras with pan/zoom/tilt capabilities. Extend video to NASA Building 836 and CS Control Room STOC	BOEING/ NASA PPF
4415	PAD B836	Video	CAM	VIDEO {EEB CAMERA PCC MONITOR) Provide existing SLC-2W EEB camera for monitoring of PCC Switching Extend video to NASA Building 836 and CS Control Room - STOC	BOEING/ NASA PPF

43

CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-3: CloudSat Telemetry and Communications Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
4500	PPF	Voice	Voice comm. H/W and Nets	VOICE (CS PPF & CNTL RM) Provide voice comm hardware and the following voice net configuration between the CloudSat Spacecraft Processing Area and the PPF Control Room during spacecraft operations. Provide four (4) light weight headsets for CloudSat Test ops personnel. Voice nets: 1. SC1                     CloudSat Test Conductor 2. SC2                     CloudSat Test Operations 3. SC3                     CloudSat CALIPSO Coord 4. RSC COORD     CloudSat RSC Coordination Net	PPF/ NASA
4505	PPF B836	Voice	Voice comm. H/W and Nets	VOICE (CS PPF CNTL RM, B836, & STOC) Provide voice comm hardware and the following voice net configuration between the CloudSat PPF Control Room, and NASA Building 836 and CS Control Room STOC during Spacecraft operations. Voice nets: 1. SC1                     CloudSat Test Conductor 2. SC2                     CloudSat Test Operations 3. SC3                     CloudSat CALIPSO Coord 4. RSC Coord         CloudSat RSC Coordination Net	PPF/ NASA

44

CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-3: CloudSat Telemetry and Communications Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
4510	PAD	Voice	Voice comm. H/W and Nets	VOICE (SLC-2W MST LVLV 5/6, EEB, B836, STOC) Provide voice comm hardware and the following voice net configuration between SLC-2W MST Level 5, MST Level 6, EEB, and NASA Building 836 and CS Control Room STOC during Spacecraft processing at SLC-2W. Voice nets: 1. SC1     Test Conductor 2. SC2     Test Conductor 3. SC3     CloudSat CALIPSO Coord	BOEING/ NASA PPF

45

CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-3: CloudSat Telemetry and Communications Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
4520	PAD B836 CS CNTL	Voice	Voice comm. H/W and Nets	VOICE (CS CNTL RM and STOC for REHEARSALS and LAUNCH OPS) Provide voice comm hardware and the following voice net configuration for the CloudSat Console positions in CS Control Room STOC during Rehearsals and Launch operations. Provide (Qty- TBD) lightweight headsets for CloudSat test ops personnel. Voice nets: 1. CD NET 1              (M)    Countdown Net 2. CD NET 2              (M)     Backup CD Net 3. WX CONF             (M)    Weather Conference 4. FLT CMNTRY      (M)    +Time Flight Commentary 5. TROUBLE                        NASA Trouble Net 6. SC1                                    CloudSat Test Conductor 7. SC2                                    CloudSat Test Operations 8. SC3                                    CloudSat CALIPSO Coord 9. RSC Coord                        CloudSat RSC Coordination Net	NASA PPF Boeing

46

CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-4: CALIPSO Telemetry and Communications Requirements Matrix

CALIPSO QUICK REFERENCE GUIDE

CALIPSO LSSP Comm # System
60XX = ADMIN DATA
61XX = DATA
62XX = RF
63XX = TIMING
64XX = VIDEO
65XX = VOICE
CALIPSO LSSP Comm #
6000 ADMIN	CALIPSO Admin network
6010 ADMIN	CNA Support
6100 DATA	NISN Open I/O Network (Spacecraft Down range Telemetry to CALIPSO Ctrl Rrn)
6105 DATA	CALIPSO Spacecraft data from HPF Hi-bay to CALIPSO Ctrl Rm
6110 DATA	CALIPSO Spacecraft data from SLC-2W to B836 and CALIPSO Ctrl Rm
6400 VIDEO	HPF Cameras and Monitors
6401 VIDEO	CALIPSO Offices Video Monitors
6405 VIDEO	SLC-2W Cameras MST Lvls 5/6) (Extended to B836 CTRL Room)
6410 VIDEO	SLC-2W Camera, EEB (Extended to B836 CALIPSO Ctrl Rm)
6500 VOICE	CALIPSO HPF & CNTL RM Voice Comm (Internal)
6501 VOICE	CALIPSO Voice to Atmospheric Pad Areas (GSET/ATC Trailers)
6505 VOICE	CALIPSO CNTL RM and SLC-2W Lvls 5/6/EEB Voice Comm
6510 VOICE	CALIPSO B840 for Rehearsals and Launch Operations

47

CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-4: CALIPSO Telemetry and Communications Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
6000	HPF B836	Admin Data	LAN	ADMIN DATA (CALIPSO ADMIN LAN) Provide access to the World Wide Web/internet for CALIPSO Admin Data Network support. Requires two (2) separate local access networks for US Citizens and for foreign nationals with appropriate security network configuration constraints/controls. Require network drops in HPF CWA, HPC-ATC area, ATP, CALIPSO Control room, Payload Control Room, and assigned office spaces. DATA SPECIFICS:                                     .	HPF/ NASA

48

CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-4: CALIPSO Telemetry and Communications Requirements Matrix

REQ #	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
6010	HPF, B836, PAD	ADMIN DATA/ DATA	LAN/ DATA	ADMIN DATA / DATA COMPUTER NETWORKS ACCREDITATION SUPPORT (WR CNA) HPF/NASA/BOEING to provide appropriate facility Computer Network Accreditation (CNA) documentation to 30SCS / 30ROPS to support Spacecraft Processing. Spacecraft program office to provide computer N/W supporting data as needed / upon request to satisfy WR CNA concerns. UDS OR INPUT STATEMENT: COMPUTER NETWORKS ACCREDITATION (CNA) FOR CALIPSO SPACECRAFT PROCESSING WILL BE HANDLED BY THE INDIVIDUAL CNA DOCUMENT(S) FOR EACH SUPPORTING FACILITY AT VAFB.	HPF, NASA, BOEING
6100	B836	Data	Open I/O NET	DATA (CALIPSO DATA VIA OPEN I/O NET) Provide CALIPSO Spacecraft Telemetry Data via Open I/O network from CALIPSO Ground Network sites to B836 and to the CALIPSO Control Room during launch operations plus 48 hours. We will need two dark single mode fibers terminated with ST connectors into the commercial PPF. Additionally two T-1s from the Commercial PPF’s local sonet node. NASA will use the ATM network to make all the connectivity to and from the PPF. The T-1s will be used as backups to the ATM.	NASA HPF	NOTE: CNES will provide DRPPC computer in CALIPSO Control Room

49

CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-4: CALIPSO Telemetry and Communications Requirements Matrix

REQ#	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
6105	HPF	Data		DATA (CALIPSO DATA FROM HPF TO CNTL RM) Provide CALIPSO Spacecraft data from HPF Hi-bay to CALIPSO control room. Provide Calipso Spacecraft data from PPF Hi-bay to Calipso control room. This will require 2 cat-5 ethernet links for 10baseT data.	HPF
6110	PAD B836 HPF	Data	DATA Pre-launch	DATA (CALIPSO DATA FROM SLC-2W) Provide pre-launch CALIPSO Spacecraft hardline/landline data from SLC-2W Level 5 and 6 to B836 and CALIPSO control room. DATA SPECIFICS: We will need two dark single mode fibers terminated with ST connectors into the commercial PPF. Additionally two T-1s from the Commercial PPF’s local sonet node. NASA will use the ATM network to make all the connectivity to and from the PPF/ The T-1s will be used as backups to the ATM.	HPF Boeing NASA

50

CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-4: CALIPSO Telemetry and Communications Requirements Matrix

REQ#	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
6400	HPF B836	Video	CAM	VIDEO (CALIPSO HPF CAMERAS & MONITORS) Provide existing HPF cameras in Hi-bay/adjacent areas and monitors in CALIPSO control room for surveillance of operations during Spacecraft processing. Provide two (2) cameras in HPF with pan/zoom/tilt features. Extend video to B836 for CALIPSO personnel.	HPF NASA
6401	HPF	Video	MON	VIDEO (CALIPSO OFFICE VIDEO MONITORS) Provide monitors in CALIPSO offices areas (all three (3)) for surveillance of operations during Spacecraft processing.	HPF
6405	PAD MST B836 HPF	Video	CAM	VIDEO (CALIPSO SLC-2W LVL 5/6 CAMERAS) Provide existing SLC 2W cameras (Level 5, Level 6) for surveillance of operations during Pad Integration, checkout and test operations. Extend video to B836 and CALIPSO Control Room.	Boeing NASA HPF

51

CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-4: CALIPSO Telemetry and Communications Requirements Matrix

REQ#	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION	SUPPLIER/ COMMIT	COMMENTS
6410	PAD EEB B836 HPF	Video	CAM	VIDEO (CALIPSO SLC-2W EEB CAMERAS) Provide existing SLC 2W EEB cameras for surveillance of operations during Pad Integration, checkout and test operations. Extend video to B836 and CALIPSO Control Room.	Boeing NASA HPF
6500	HPF B836	Voice	Voice Comm H/W and Nets	VOICE (CALIPSO HPF & CNTL RM) Provide voice comm hardware and voice net configuration between the HPF SC Processing Area, Instrument Control room and the CALIPSO Control room during spacecraft processing operations. Provide six (6) lightweight headsets for CALIPSO test ops personnel. Voice nets: 1. SC 3     CloudSat CALIPSO Coord 2. SC 4     CALIPSO Operations Extend voice nets to B836.	HPF NASA

52

CALIPSO/CloudSat Payload Processing Appendix D

TABLE D-4: CALIPSO Telemetry and Communications Requirements Matrix

REQ#	LOCATION	TYPE	ITEM	REQUIREMENT DESCRIPTION		SUPPLIER/ COMMIT	COMMENTS
6501	HPF	Voice	Voice Comm H/W	VOICE (CALIPSO VOICE TO ATMOSPHERIC TEST PAD AREAS (GSET / ATC TRAILERS))		HPF
			and Nets	Provide voice comm.. connectivity of the CALIPSO voice nets to the GSET and ATC trailers in the Atmospheric Test Pad Area.
				Provide connection to the GSET and ATC trailers.
				Voice nets: 1. SC 3 2. SC 4	CloudSat CALIPSO Coord CALIPSO Operations
6505	PAD B836 HPF	Voice	Voice Comm H/W and Nets	VOICE (CALIPSO CNTL RM and SLC-2W LVLS 5/6/EEB) Provide voice comm hardware and voice net configuration between SLC-2W MST Level 5, MST Level 6, EEB and the CALIPSO Control room during spacecraft pad operations.		Boeing/ NASA/ HPF
				Provide four (4) lightweight headsets for CALIPSO test ops personnel.
				Voice nets: 1. SC 3 2. SC 4	CloudSat CALIPSO Coord CALIPSO Operations
				Extend voice nets to B836.

53

EX-10.34

Exhibit 10.34

PURCHASE CONTRACT NO. 220957-BA

AMENDMENT 3

AGREEMENT & STATEMENT OF WORK

BETWEEN

ASTROTECH SPACE OPERATIONS, INC.

AND

SEA LAUNCH COMPANY, L.L.C.

FOR

SERVICES PROVIDED

IN SUPPORT OF THE

SEA LAUNCH PROGRAM

TABLE OF CONTENTS

				Page
Cover page & Agreement Number
Table of Contents				i
Amendment 1				vi
Amendment 2				vii
Amendment 3				viii
Title & Preamble				1
Recitals				1
	1.	Basic Agreement		2
		1.1	Scope of Work	2
		1.2	Payment Terms	3
		1.3	Assignment of Agreement to Sea Launch	3
		1.4	Order of Precedence	3
		1.5	Documents and Plans Incorporated by Reference	3
		1.6	Data to be furnished to Astrotech	4
		1.7	Data to be furnished by Astrotech	4
		1.8	Contract Compliance/Reference Documentation	4
	2.	Definitions		4
	3.	Administration of the Contract		6
		3.1	Authorized Representatives	6
		3.2	Phase I Services	7
		3.3	Phase II Services	8
	4.	Performance of Work		9
		4.1	Work Performed	9
		4.2	Inspection of Work	9
		4.3	Performance Criteria	9
		4.4	Sea Launch Customer Out-Brief	9
		4.5	Performance Reviews	9
		4.6	Meetings	10
		4.7	Out-of-Scope Support	10
		4.8	Key Schedule Dates	10
	5.	Labor and Personnel		10
		5.1	Key Personnel	10
		5.2	Qualified Workforce	10
		5.3	Independent Contractor	11
		5.4	U.S. Citizenship Requirements	11
		5.5	Employee Background Investigation/Release of Information	11
		5.6	Employee Drug Screening	11
		5.7	Sea Launch Site Rules and Requirements	12

i Amendment 3 12/03/2002

TABLE OF CONTENTS (CONT’D)

			Page
6.	Sea Launch Furnished Accommodations & Training		12
	6.1	Office Accommodations	12
	6.2	Technical Shop Accommodations	12
	6.3	Shared Office Equipment	12
	6.4	Tools and Equipment	12
	6.5	Training	12
7.	Procurement of Supplies and Hardware		13
8.	Sea Launch Furnished Equipment/Property		13
	8.1	General	13
	8.2	Identification	14
	8.3	Title and Sea Launch Records	14
	8.4	Astrotech Accountability and Record Keeping	14
	8.5	Repair and Replacement	14
	8.6	Sea Launch Access to Property	14
	8.7	Risk of Loss	14
	8.8	Sea Launch Liability	15
	8.9	Final Accounting and Disposition	15
9.	Reserved		15
10.	Site Configuration and Process Control		15
11.	Transfer of Title		16
12.	Subcontracts		16
13.	Subcontractor’s Work Area at the Site		16
	13.1	Assignment of Work Area	16
	13.2	Utility Shut-Off	16
14.	Work Dependent on Others		16
15.	Permits and Licenses		17
16.	Field Radios		17
17.	Environmental Requirements		17
	17.1	Compliance with Laws	17
	17.2	Solid Waste Handling and Disposal	17
	17.3	Identification of Known Work Site Hazardous Materials	18
	17.4	Latent Work Site Hazardous Materials	18
	17.5	Astrotech Relieved of Responsibility	18
	17.6	Hazardous Waste Handling and Disposal	18
	17.7	Industrial Waste Water Handling	19
	17.8	Emergency Response and Reporting of Spills or Releases	19
	17.9	Nuisance and Polluting Activity Prohibited	19

ii Amendment 3 12/03/2002

TABLE OF CONTENTS (CONT’D)

			Page
18.	Safety at the Site		20
	18.1	Astrotech’s Sole Responsibility for Safety	20
	18.2	No Sea Launch Responsibility for Safety	20
	18.3	Compliance with Laws and Directions	20
	18.4	Observations	20
	18.5	Safety Plans	21
	18.6	Safety/Environmental Representative	21
	18.7	Safety Meetings and Equipment	21
	18.8	Accident Reports	22
	18.9	Payment for Emergency Services	22
	18.10	Emergency Notification	22
	18.11	Specific Safety Issues	22
19.	Site Security and Fire Prevention		25
	19.1	Security	25
	19.2	Protection of Property	25
	19.3	Fire Prevention	25
20.	Insurance		25
	20.1	Property Insurance	25
	20.2	Sea Launch Risk of Loss	26
	20.3	Astrotech’s Liability	26
	20.4	Astrotech’s Insurance Requirements	26
21.	Warranty		27
	21.1	Warranty of Services	27
	21.2	Exercise of Warranty Rights	27
	21.3	Remedy for Breach of Warranty	28
	21.4	Exclusivity of Warranties and Remedies	28
22.	Indemnification and Hold Harmless		29
	22.1	Definitions	29
	22.2	Damage to Persons or Property Involved in Payload Processing Activity	30
	22.3	Inter-Party Indemnification Against Third Party Claims	31
23.	Contract Changes		31
	23.1	Changes to Scope of Work	31
	23.2	Cost Estimates	31
	23.3	Issuance of Change Orders	32
	23.4	Request for Cost Proposal	32
	23.5	Definitization of Change	32
24.	Reserved Launch		32
25.	Excusable Delays		32
	25.1	Notice	32
	25.2	Excusable Delays	32

iii Amendment 3 12/03/2002

TABLE OF CONTENTS (CONT’D)

			Page
26.	Default		33
	26.1	Definition of Default	33
	26.2	Notice of Default	33
	26.3	Sea Launch’s Rights	33
	26.4	Termination for Default	33
27.	Disputes and Arbitration		34
	27.1	Continuation of Performance	34
	27.2	Management Consultation	34
	27.3	Arbitration Process	34
28.	Intellectual Property Infringement		36
	28.1	Definitions	36
	28.2	Rights in Intellectual Property	36
29.	Proprietary and Technical Information		36
	29.1	Definitions	36
	29.2	Confidentiality of Proprietary Information	37
	29.3	Use of Proprietary Information	37
	29.4	Exclusions from Confidentiality	37
	29.5	Nonrestrictive Markings	37
	29.6	Ownership of Technical Information	37
	29.7	Data Retention	38
	29.8	Proprietary and Trade Secret Data	38
	29.9	Financial and Commercial Data	38
30.	Patent and Data Rights		39
	30.1	Patent and Data Rights	39
	30.2	Indemnification	39
	30.3	Assistance with Third Party Claims	40
31.	U.S. Export Control Laws and Regulations		40
	31.1	General	40
	31.2	Export of Data and Assistance	40
	31.3	Technology Assistance Agreements (TAA’s)	41
32.	Reserved		41
33.	Illegal Payments and Anti Boycott Laws		41
	33.1	Illegal Payments; Compliance with Law	41
	33.2	Anti-Boycott Law Compliance	41
34.	Records and Audits		41
	34.1	Audit Rights	41
	34.2	Retention of Records	41
35.	Payment Terms and Financial Considerations		42
	35.1	General	42
	35.2	Phase I Service Fees and Other Charges	42
	35.3	Phase II Service Fees and Other Charges	42
	35.4	Invoicing and Payment	43
	35.5	Billing Schedule	43

iv Amendment 3 12/03/2002

TABLE OF CONTENTS (CONT’D)

			Page
36	Miscellaneous Provisions		43
	36.1	Publications and Photographs: Commercial Activities	43
	36.2	Waiver and Partial Invalidity	44
	36.3	Survival of Provisions	44
	36.4	Binding Effect	44
	36.5	Severability	44
	36.6	Waiver	44
	36.7	Headinas	44
	36.8	Assianability	45
	36.9	Disclaimer of Authority	45
	36.10	Governing Law	45
	36.11	Complete Agreement	45
37.	Effective Date and Duration of Agreement		45

EXHIBIT A	Statement of Work, Phase I Services
EXHIBIT B	Statement of Work, Phase II Services
EXHIBIT C	Price Schedule
EXHIBIT D	List of Customer/BCSC Activity Documentation to be furnished to Astrotech
EXHIBIT E	Compliance and Reference Documents
EXHIBIT F	Contract Data Requirements List (CDRL)
EXHIBIT G	Listing of Agreement Modifications

v Amendment 3 12/03/2002

AMENDMENT 1

1. Description of Amendment. Amendment 1 (i) recognizes the change of Astrotech from a limited partnership to a corporation, (ii) provides for an Astrotech Resident Technical Representative to reside at the BCSC office, (iii) reflects a BCSC personnel designation change, (iv) incorporates miscellaneous changes and clarifications requested by BCSC, and (v) corrects several typographical errors in the original issue of this Agreement.

2. Incorporation of Amendment 1 Change Pages. Amendment 1 consists of the following change pages: Coverpage; i; ii; iii; 1; 5-9; 15; and 17; Appendix 1 in its entirety; Appendix 2 in its entirety; Appendix 3 in its entirety; and Appendix 4 in its entirety. Where change pages in Amendment 1 have the same page number as pages in the previous issue of this Contract, the Amendment 1 change pages are to be substituted for and replace the corresponding previous issue pages in their entirety. All pages of this Agreement affected by Amendment 1 carry the notation “AMENDMENT 1” in either the upper or lower right-hand corner. The update of this Agreement to Amendment 1 is accomplished by the addition or substitution, as appropriate, of all Amendment 1 change pages.

3. Effective Date. This Amendment 1 shall enter into force as of the date of the last signature of the parties shown on Page 17.

vi Amendment 3 12/03/2002

AMENDMENT 2

1. Description of Amendment. Amendment 2 incorporates changes and clarifications requested by Astrotech Space Operations, Inc. and BCSC. The changes result from the completion of Phase I activities as specified in the contract and provide for further definition and clarification of Phase II activities. In addition, administrative changes have been made where applicable. Amendment 2 is a complete revision to the contract, replacing both the original issue and Amendment 1 pages in their entirety.

2. Effective Date. This Amendment 2 shall enter into force as of the date of the last signature of the parties shown on Page 19.

vii Amendment 3 12/03/2002

AMENDMENT 3

1. Description of Amendment. Amendment 3 incorporates changes and clarifications requested by United States Sea Launch and Astrotech Space Operations, Inc. resulting from the assignment of this Agreement from BCSC to USSL. These changes include: (i) assignment of the Agreement from USSL to Sea Launch upon execution of Amendment 3, (ii) modification to the standard Terms & Conditions to be more consistent with other Sea Launch contracts, (iii) recognition that the Phase I portion of this Agreement has been completed, (iv) updates to the Key Personnel responsible for contractual and technical management of this Agreement, and (v) update to the Statement of Work to more accurately reflect the scope of work being performed under this Agreement. Amendment 3 is a complete revision to the contract, replacing Amendment 2 in its entirety.

2. Effective Date. This Amendment 3 shall enter into force as of the date of the last signature of the parties shown in Article 37.

viii Amendment 3 12/03/2002

SUBCONTRACT AGREEMENT

AND

STATEMENT OF WORK

BETWEEN

ASTROTECH SPACE OPERATIONS, INC.

AND THE

SEA LAUNCH COMPANY, L.L.C.

FOR

SERVICES PROVIDED

IN SUPPORT OF THE

SEA LAUNCH PROGRAM

This Subcontract Agreement and Statement of Work (hereinafter called “Agreement”) is entered into by and between Astrotech Space Operations, Inc., a wholly owned subsidiary of SPACEHAB, Inc., with principal offices at 1515 Chaffee Drive, Titusville, Florida 32780 (hereinafter called “Astrotech”) and Sea Launch Company, L.L.C., a Delaware Limited Partnership, located at One World Trade Center, Suite 950, Long Beach, CA 90831-0950 (hereinafter called “Sea Launch”) and sets forth the terms and conditions under which Astrotech shall perform the work and provide the services as described in Exhibits A and B, herein in support of the Sea Launch Program. In the event of any conflict between the terms and conditions of this Agreement and those called out in the purchase order, the terms and conditions of this Agreement shall take precedence.

RECITALS

A. The Sea Launch Limited Partnership (hereinafter called “SLLP”) is an international venture to provide expendable launch vehicle launch services on a commercial basis using a sea-going launch system based in the Port of Long Beach, California (hereinafter called “Home Port”) to launch satellites from international waters. Sea Launch will have contracts with various customers (hereinafter called “Customers”) for such launch services, which will include supporting the prelaunch preparation of each Customer satellite (hereinafter called “Spacecraft”) at the Home Port. A Spacecraft with all associated property to be flown aboard the Sea Launch launch vehicle constitutes a particular Sea Launch payload (hereinafter called “Payload”).

1 Amendment 3 12/03/2002

B. The United States Sea Launch GP, L.L.C. (hereinafter called “USSL”) is a limited partner in the SLLP and, among other things, is responsible to provide the Home Port facilities and support for the Sea Launch Project, including Payload processing capability and the capability to service the vessels operated by SLLP.

C. Boeing Commercial Space Company (hereinafter called “BCSC”) and USSL have contracts with SLLP to build and operate a facility for Payload processing at the Home Port. Under this contract BCSC and USSL will provide the specialized facilities and support required at the Home Port by the Sea Launch Customer for the prelaunch preparation of each Customer Payload. In addition, BCSC will require similar specialized facilities and support for the preparation of the launch vehicle adapter and fairing, mating of the Spacecraft to the launch vehicle adapter, encapsulation of the Spacecraft/launch vehicle adapter in the launch vehicle fairing, and related activities. To establish the Sea Launch launch capability and in conjunction with Sea Launch launches, Sea Launch seeks to obtain services for payload processing facility development, operations support, facility/system maintenance and other related services (hereinafter called “Services”).

D. Astrotech has designed, constructed, operates and maintains payload processing facilities at Kennedy Space Center/Cape Canaveral Air Force Station, Florida and Vandenberg Air Force Base, California, wherein Astrotech has demonstrated its ability to provide such Services.

E. The purpose of this Agreement between Sea Launch and Astrotech is to have Astrotech provide support to BCSC, SLLP, and USSL by providing the following services in two phases. Phase I, (i) oversee the design and construction of the Home Port, (ii) select a construction contractor(s) with BCSC participation and approval, (iii) serve as the owner’s representative at the construction site during construction, and Phase II, with Sea Launch/USSL coordination and approval, (iv) operate and maintain the payload processing facilities physical infrastructure, and (v) provide support to operations and Sea Launch Management.

F. Astrotech desires to perform the Work pursuant to the terms of this Agreement.

NOW THEREFORE, The Parties agree as follows:

ARTICLE 1 – BASIC AGREEMENT

1.1 Scope of Work. Under this Agreement, Astrotech will perform all Work and provide the Services in two phases in full compliance with the Subcontract Agreement Documents, as such work is more particularly described in Exhibits A and B (Statement of Work).

2 Amendment 3 12/03/2002

1.1.1 Phase 1 Scope of Work. Astrotech Phase I Services consisted of managing the design and construction activities associated with establishing the facilities and other support capabilities in the Home Port (hereinafter called “Home Port Project”) during the period up to first launch of the Sea Launch demonstration launch vehicle, as described in Exhibit A, Statement of Work. (Phase I was completed as of 9 October 1998, reference BCSC contract Y00020).

1.1.2 Phase II Scope of Work. The Astrotech Phase II Services began with preparations for the first launch of the Sea Launch launch vehicle and shall continue through expiration or termination of this Agreement. The Astrotech Phase II Services are detailed and set forth in Exhibit B, Statement of Work, of this Agreement. It is recognized by the parties that BCSC, USSL, Sea Launch and the Sea Launch Customer, or their respective contractors or subcontractors (other than Astrotech) shall perform all activity involving assembly, servicing and checkout of the Payload and use of its associated ground support equipment, unless otherwise expressly provided for in this Agreement.

1.2 Payment Terms. Astrotech will be paid in accordance with Article 35, Payment Terms and Exhibit C, Price Schedule.

1.3 Assignment of Agreement to Sea Launch. The Parties recognize and agree that as of the date of execution of this Amendment 3 that all rights and obligations of U.S. Sea Launch under Amendment 2 to this Agreement are assigned to Sea Launch Company, L.L.C. Such assignment shall not, in and of itself, result in any adjustments to the prices set forth in Exhibit C.

1.4 Order of Precedence. Any inconsistency in this Agreement shall be resolved by giving precedence in the following order:

(a) The Agreement

(b) Exhibits

(c) Attachments

(d) Plans

(e) Specifications

(f) Purchase Order

1.5 Documents and Plans Incorporated by Reference. The parties agree that the requirements and obligations outlined in the documents and plans listed in this Agreement, to include all Exhibits and Attachments attached hereto, will have the same force and effect as if they were included in the Agreement in full text.

1.5.1 The documents and plans listed in this Agreement may contain references to additional documents, plans, etc. Information contained in those lower-tier references will be used by the Parties for guidance only.

3 Amendment 3 12/03/2002

1.5.2 Notwithstanding Article 1.5.1 above, Astrotech shall perform it’s assigned operations activities in accordance with approved Operational Documentation.

1.5.3 Astrotech’s internal documentation shall be issued and changed in accordance with Astrotech’s internal procedures.

1.6 Data to be furnished to Astrotech. Under the Launch Services Agreement with the Customer, Sea Launch will obtain and /or provide to Astrotech the documentation described in Exhibit D applicable to the Customer and BCSC activities planned to occur at the Home Port Site. While it is essential that the required content of this documentation be complete as defined per Exhibit D, Astrotech will accept the documentation in any format convenient to Customer and Sea Launch. Astrotech will evaluate such documentation only from the standpoint of facility compatibility and safety, and will not attempt to evaluate, in any way, the probability of Payload or mission success. Astrotech will review and provide written comments/input regarding said documentation directly to the designated Sea Launch Representative in a timely manner.

1.7 Data to be furnished by Astrotech. The parties recognize that certain data are required from Astrotech in order for Sea Launch to properly evaluate and monitor the work effort performed by Astrotech in support of this Agreement. The Contract Data Delivery Requirements (CDRL) items associated with Astrotech’s performance of the Work are documented in Exhibit F to this Agreement.

Failure of Astrotech to provide such data shall be handled in accordance with the Articles of this Agreement including, but not limited to Article 26, Default.

1.8 Contract Compliance/Reference Documentation. Compliance and reference documents applicable to Astrotech’s performance of the Work, as defined by Sea Launch, are included in Exhibit D and Exhibit E to this Agreement.

ARTICLE 2 – DEFINITIONS

As used in this Agreement, the following words and expressions shall have the following meaning, except where the context clearly otherwise requires:

2.1 “Affiliate” means a legal entity that is a Subsidiary of a Party, a legal entity that is the Parent of a Party or a legal entity that is the Subsidiary of the Parent of a Party.

2.2 “Assembly and Command Ship” or “ACS” means the Assembly and Command Vessel used as part of the Project.

2.3 “Associate Contractor” shall mean any of DBTM, BCSC, BMM, Yuznoye, Yuzhmash, and Energia which is not itself a Party to this Agreement.

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2.4 “Change” and “Change Order” are synonymous and mean substitutions in, or additions, modifications or deletions to the Work, contract terms, and Contract Documents pursuant to Article 23, Changes.

2.5 “Contract Documents” means, collectively, this Agreement, which has been signed by Sea Launch and Astrotech, any supplements or amendments to this Agreement and the documents indicated below which are attached to and made a part of this Agreement:

Exhibit A:	Phase 1, Statement of Work
Exhibit B:	Phase 2, Statement of Work
Exhibit C:	Payment Schedule
Exhibit D:	List of Customer/BCSC Activity Documentation to be furnished to Astrotech
Exhibit E:	Compliance and Reference Documents
Exhibit F:	Contract Data Requirements List (CDRL)
Exhibit G:	Listing of Agreement Modifications

2.6 “Contract Term” has the meaning set forth in Article 36, Subparagraph 12.

2.7 “Contractor” and “Astrotech” are synonymous and means the entity listed in the introductory section of this Agreement, which has entered into this Agreement with Sea Launch.

2.8 “Customer” shall mean the Sea Launch spacecraft customer and/or any person to whom the Customer has sold, leased, assigned, or otherwise transferred its rights in the Payload (or any part thereof) to be launched by the licensee, including a conditional sale, lease, assignment, or transfer of rights, any person who has placed property on board the Payload for launch or payload services, and any person to whom the Customer has transferred its rights to the launch services.

2.9 “Excusable Delay” has the meaning set forth in Article 25, Excusable Delays.

2.10 “Hazardous Substances” has the meaning set for the Article 17, Environmental Requirements.

2.11 “Home Port” means the permanent facility constructed in Long Beach, California by Sea Launch, as part of the Project.

2.12 “Launch Platform” means the semi-submersible, mobile launch platform to be used as part of the Project.

2.13 “Project” means the entire Sea Launch commercial satellite launching services project.

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2.14 “Site” or “Job Site” means the Home Port, the Assembly and Command Ship, Launch Platform, and other places on or through which the Work is to be performed, together with any buildings or other structures, which are owned or leased by or under the control of Sea Launch.

2.15 “Stop Work” means written direction issued by the Authorized Sea Launch Contract Representative to the Authorized Astrotech Contract Representative to stop performance of all Work, or a portion of Work, under this Agreement.

2.16 “Sea Launch/USSL Subcontractor” means any subcontractor, and its agents or assigns, or other third party, which performs, or assists Astrotech in performing, any of the Work and is under contract to Contractor or a Subcontractor.

2.17 “Astrotech Subcontractor” means any manufacturer, fabricator, supplier, distributor, material supplier, or vendor having a direct contract with Astrotech or any supplier to Astrotech to furnish labor, materials or supplies to be incorporated in the Work.

2.18 “Work” means those activities performed by Astrotech under this contract as defined in Exhibits A and B (Statement of Work).

ARTICLE 3 – ADMINISTRATION OF THE CONTRACT

3.1 Authorized Representatives.

3.1.1 Sea Launch Authorized Contract Representative. Sea Launch has designated Pam Sims as its Authorized Contract Representative to act for Sea Launch. All notices, determinations, instructions and other communications given to the Astrotech Authorized Contract Representative by the Sea Launch Authorized Contract Representative shall be regarded as officially received by Astrotech. Sea Launch shall notify Astrotech in writing prior to any change to the Sea Launch Authorized Contract Representative or any limitation on such representative’s authority. Sea Launch Authorized Contract Representative shall designate in writing other individuals to act as a representative of Sea Launch for activity described elsewhere in this Agreement as appropriate. Such designations shall define the scope of the authority granted.

3.1.2 Astrotech Authorized Contract Representative. Astrotech has designated John Satrom as its Authorized Contract Representative to act for Astrotech. All notices, determinations, instructions and other communications given to the Sea Launch Authorized Contract Representative by the Astrotech Authorized Contract Representative shall be regarded as officially received by Sea Launch. Astrotech shall notify Sea Launch in writing prior to any change to the Astrotech Authorized Contract Representative or any limitation on such Representative’s authority. The Astrotech Authorized Contract Representative shall designate in

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writing other individuals to act as a representative of Astrotech for activity described elsewhere in this Agreement as appropriate. Such designations shall define the scope of the authority granted.

3.1.3 Powers. Only the Authorized Contract Representatives of each Party shall have authority to sign any document affecting its rights and obligations under this Agreement. All notices and communications regarding the rights and obligations of each Party will be sent to the other Party’s Authorized Contract Representative.

3.1.4 Notices. All notices, requests, demands, and other communications hereunder related to the administration of this agreement, shall be in writing, in English, and shall be delivered to the other parties Authorized Contracts Representatives as provided in this Article 3. The effective date of each notice, demand, request, or other communication shall be deemed to be the Date of confirmed receipt by the other party. If multiple transmission means are used, the earliest date of confirmed receipt shall be applicable. Either party may change its address or designee for purposes hereof by informing the other party of such action and the effective date of change.

3.1.5 Delegation. Either party’s Authorized Contract Representative may delegate some or all of his authority to another person, by signing a letter identifying the person to whom he is delegating authority, the extent of authority delegated, and the duration of the delegate’s authority.

Sea Launch Authorized Contract Representative:	Ms. Pam Sims Director Contracts and Purchasing US Sea Launch/Sea Launch Sea Launch Home Port 2700 Nimitz Road Long Beach, CA 90802 Telephone:    (562) 951-7362 Facsimile:      (562) 951-7015 Cellular:         (562) 884-9982
Astrotech Authorized Contract Representative:	Mr. John B. Satrom Senior Vice President & General Manager Astrotech Space Operations, Inc. 1515 Chaffee Drive Titusville, FL 32780 Telephone:    (321) 268-3830, Ext. 4004 Facsimile:      (321) 360-1908

3.2 Phase I Services. In addition to the Agreement Coordinators, BCSC designated a Development Manager and Astrotech designated a Construction Manager who together were responsible for coordinating all technical activities, including the day-to-day activity schedules, performed under Phase I of this Agreement, and Astrotech provided a Resident Technical Representative who resided at the BCSC office. In case of doubt as to whether a matter was technical or contractual, a determination was made through coordination by the Agreement Coordinators. No direction from the Development Manager increased the obligations of either party to the other. The Development Manager used the Home Port Integrated Product

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team (hereinafter called “Home Port IPT”) to assist in making decisions, but all technical direction to Astrotech came from the Development Manager. The Home Port IPT consisted of representatives from BCSC and Astrotech, including the BCSC and Astrotech Agreement Coordinators, the BCSC Development Manager, and the Astrotech Construction Manager. Astrotech could not enter into any contracts without the approval of the BCSC Agreement Coordinator; however, when necessary to maintain schedule the Astrotech Construction Manager was authorized to issue individual contract change orders up to $5,000 in amount. The following representatives of the parties were designated as BCSC Development Manager and Astrotech Construction Manager:

BCSC Development Manager:	Ms. Leslie V. Atkins Home Port Development Team Leader Boeing Commercial Space Company
Astrotech Construction Manager:	Mr. Michael A. Shue Director, Facility Operations Astrotech Space Operations, Inc.

3.3 Phase II Services. In addition to the Authorized Contract Representatives, Sea Launch and Astrotech shall each designate a Technical Manager who will coordinate the Technical effort associated with the Payload Processing Support Services and related activities and a Safety/Environmental (SHEA) Representative. The Sea Launch Home Port Technical Manager identified below will work closely with the Astrotech Home Port Technical Manager to monitor the work effort pertaining to the services to be performed by Astrotech under this Agreement. The Astrotech SHEA Representative shall be Astrotech’s interface with the Sea Launch SHEA Representative in matters pertaining to Safety and Environmental compliance at the Site.

Sea Launch Home Port Technical Manager:	Mr. Shawn Murphy Facilities Director Sea Launch Sea Launch Home Port 2700 Nimitz Road Long Beach, CA 90802 Telephone:    (562) 951-7383 Facsimile:      (562) 951-7015 Cell Phone:    (714) 803-5957
Sea Launch SHEA Representative:	Robin Summerhill Sea Launch Sea Launch Home Port 2700 Nimitz Rd. Long Beach, Ca. 90802 Telephone:    (562) 951-7381 Facsimile:      (562) 951-7390 Cell Phone:    (562) 254-7664

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Astrotech Home fort Technical Manager:	Mr. Udeepta (Bruno) Ganguli Astrotech Space Operations, Inc. Sea Launch Home Port 2700 Nimitz Road Long Beach, CA 90802 Telephone:    (562) 951-7328 Facsimile:      (562) 951-7335 Cell Phone:    (562) 254-5364
Astrotech SHEA Representative:	Mr. Timothy Cologne Astrotech Space Operations, Inc. Sea Launch Home Port 2700 Nimitz Rd. Long Beach, Ca. 90802 Telephone:    (562) 951-7553 Facsimile:      (562) 951-7335 Cell Phone:    (562) 254-8899

ARTICLE 4 – PERFORMANCE OF WORK

4.1 Work Performed. Work performed under this Agreement shall be coordinated between the parties listed in Article 3.3 above. All technical direction from Sea Launch to Astrotech relative to the performance of this agreement shall be provided to the Astrotech Home Port Technical Manager.

4.2 Inspection of Work. Work performed by Astrotech under this agreement shall be subject to the direction, inspection and acceptance by a Sea Launch/USSL designated representative in accordance with the terms of this Agreement. Sea Launch/USSL designated representatives shall have the right to review all Work being performed by Astrotech at any time during the performance of such Work at the Site.

4.3 Performance Criteria. Astrotech and Sea Launch shall jointly develop performance-based metrics to evaluate and measure the performance of Astrotech in providing the Phase II services under this Agreement.

4.4 Sea Launch Customer Out-Brief. At the conclusion of each mission, Astrotech shall provide input to Sea Launch that will assist Sea Launch in performing a Customer out-brief to solicit feedback on the services provided and to develop applicable lessons learned for implementation on future missions.

4.5 Performance Reviews. The Authorized Contract Representatives, Phase II Technical Managers and the SHEA Representatives listed in Article 3.3 shall meet on a regular basis, but at least once every six months, to review Astrotech’s performance on this Agreement. Outstanding performance issues shall be documented by Sea Launch and presented to Astrotech for submittal of a formal resolution plan to Sea Launch by Astrotech.

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4.6 Meetings. Astrotech shall be responsible for attending various meetings related to the Work, and coordination of the Work with other work on the Project and related matters, in accordance with this Agreement and the Statement of Work.

4.7 Out-of -Scope Support. Failure to comply with reasonable requirements within the Scope of this Agreement shall constitute a failure to perform the Work in accordance with the terms of this Agreement. If Astrotech’s believes the direction provided by Sea Launch is outside the scope of this Agreement, the Astrotech Authorized Contract Representative will immediately notify the Sea Launch Authorized Contract Representative. Issues relating to out of scope work will be handled in accordance with Article 23, Changes. If Astrotech and Sea Launch are unable to reach a mutual agreement on any proposed revision, resolution shall be pursuant to Article 26, Default or Article 27, Disputes and Arbitration.

4.8 Key Schedule Dates. Key milestone dates relating to all critical events that could affect the Services to be performed under this Agreement shall be established and monitored by the Astrotech Technical Manager and the Sea Launch Home Port Technical Manager. Each party shall immediately notify the other of any event which occurs that would significantly alter the agreed to schedule of services or the ability of the other party to meet the Key Milestone Dates.

ARTICLE 5 – LABOR AND PERSONNEL

5.1 Key Personnel. Astrotech shall furnish all the personnel necessary for the expeditious and satisfactory performance of the Work, including, when required by Sea Launch, management staff on Site capable of supporting and managing the Work (hereinafter referred to as “Key Personnel”). The Key Personnel on Astrotech’s management staff shall be as set forth in Article 3 to the Agreement and shall include the Astrotech Technical Manager and the Astrotech Safety/Environmental Representative. All such Key Personnel shall be specifically dedicated to the Project. Astrotech shall not hire or assign an individual to one of the Key Personnel positions without the prior written approval of the Sea Launch Authorized Contract Representative, which approval shall not be unreasonably withheld; provided that in considering any such replacement, Sea Launch may take into account the replacement’s education, experience, references, character and other general qualifications for the position. Such Key Personnel shall be shown on an organization chart that shall be kept current and on Site throughout the term of the Agreement.

5.2 Qualified Workforce. Astrotech shall only employ personnel to perform the Work who are competent, well qualified, experienced, certified (when applicable) and skilled to perform the Work required. The average efficiency of the Astrotech employees assigned to the Sea Launch Program shall not be less than the average efficiency of all Astrotech’s employees. If requested by Sea Launch, Astrotech shall remove from the Site, with no permitted delay in the Work, any personnel of Astrotech, including any Key Personnel or staff, whom Sea Launch determines to be incompetent, dishonest, uncooperative, or otherwise unsatisfactory, or is not legally authorized to continue to work at a particular location where such person is

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employed, if other, measures of Astrotech did not resolve the issue. Astrotech is responsible for maintaining labor relations in such a manner that there is harmony among workers.

5.3 Independent Contractor. Astrotech acknowledges and agrees that Astrotech is providing services under this Agreement as an independent contractor and not as an employee, partner, associate, agent or teammate of Sea Launch. Astrotech shall be responsible for compliance with all requirements under local, state, and federal laws and regulations, including but not limited to laws and regulations governing minimum wage, social security, immigration and naturalization, unemployment insurance, income tax, comprehensive general liability and worker’s compensation insurance relating to individuals performing services under this Agreement consistent with the provisions of Article 20, Insurance. Astrotech shall be solely responsible for any employee/employer tax obligations associated with performance by Astrotech under this Agreement.

5.4 U.S. Citizenship Requirements. The requirement for U.S. Citizenship applies to all Contractor and Subcontractor personnel requiring access to the Sea Launch Home Port facility for the purpose of performing services under this Agreement. The Home Port Facility also includes Pier 16, the Assembly and Command Ship and the Launch Platform. Astrotech’s Employees doing work at the U.S. Sea Launch Home Port facility must be either a United States citizen or a Permanent Resident alien (1-151 or 1-551). Astrotech’s employees will be required to provide proof of U.S. citizenship or Resident Alien status prior to commencing work under this Agreement. The U.S. citizenship requirement identified in this paragraph also applies to any subcontractor that is provided ITAR marked and controlled information for the purpose of performance under this Agreement.

5.5 Employee Background Investigation/Release of Information. All Astrotech Employees doing work at the Sea Launch Home Port facility shall be required to grant authorization for the release of any and all information as may be required by the Sea Launch Security Office for the purposes of performing a background investigation, successful completion of which is required for resident access to the Site. Standard background investigation includes a review of the following: local criminal records check, SSAN verification and check of federal debarment list.

5.6 Employee Drug Screening. The use, possession, distribution, or sale of drugs or alcohol or being under the influence of drugs or alcohol is strictly prohibited while on the Sea Launch Site, or while operating a vehicle or other machinery owned or leased by Sea Launch/USSL. Violation of this policy may result in removal from the Sea Launch Home Port facility and removal from the Sea Launch Program. Sea Launch reserves the right to require Astrotech’s employees doing work at the Sea Launch Home Port Site to submit to a drug screening at any time during their assignment at Home Port when an Astrotech employee shows signs of impairment on the Sea launch Site; after any accident or occurrence that results in an injury on the Site as defined by the Occupational Safety and Health Administration; after any vehicular accident when it appears that the Astrotech employee might reasonably have avoided the accident or minimized the consequences, but did not do so. Incident Commanders and Emergency Response personnel may be

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subject to random testing. Astrotech employees who refuse to submit to drug and alcohol testing when requested will be removed from the Site. Any Astrotech employee who is confirmed positive for alcohol or illegal drugs, narcotics or other unlawful substances will be removed from the Sea Launch Program and Home Port facility by Sea Launch Security without notice or liability. Sea Launch maintains the right to address each circumstance of drug abuse or alcohol abuse on a case by case basis.

5.7 Sea Launch Site Rules and Requirements. All Astrotech employees working at the Site shall comply with site-specific company rules, including security and safety rules, emergency plans and procedures which have been and will continue to be posed or otherwise communicated to Astrotech. In the event Astrotech believes a company rule of Sea Launch is in conflict with Astrotech’s obligations under the Contract, Astrotech shall immediately advise the Sea Launch Authorized Contract Representative of the perceived conflict.

ARTICLE 6 – SEA LAUNCH FURNISHED ACCOMMODATIONS & TRAINING

6.1 Office Accommodations. Sea Launch agrees to provide Astrotech office accommodations with adequate heat and light, and access to telephone lines, office equipment and other equipment, at no charge to Astrotech, in support of the Work to be performed under this Agreement. Accommodations will be provided within the available facilities at the Site.

6.2 Technical Shop Accommodations. Sea Launch agrees to provide Astrotech storage space for: (i) the secure storage of tools, maintenance supplies and materials, technical manuals and related reference material, and the Site facility drawings, and (ii) bench-level maintenance of Site equipment. Accommodations will be provided within the available facilities at the Site. Astrotech will also be provided access to the Sea Launch shop work area to support off-line maintenance activities.

6.3 Shared Office Equipment. Sea Launch will provide Astrotech access, on a shared-use basis, of the following administrative office equipment and services: (i) copy reproduction machine, (ii) PC color printer, (iii) PC scanner, (iv) PC E-size drawing plotter, (v) digital camera, and (vi) Sea Launch document disposal (document burn barrels).

6.4 Tools and Equipment. Sea Launch will provide Astrotech with access to common Site resource material and services such as support shops, tools and equipment managed by Sea Launch designated logistics personnel. Astrotech will provide its own standard hand tools for use in performing the Work. Sea Launch will provide all unique and specialized tools and equipment required to maintain the Site facilities and systems, per the provisions of Article 8, Sea Launch Furnished Equipment/Property.

6.5 Training. Sea Launch will provide access, on a space-available basis, to Sea Launch provided training courses at the Site for resident Astrotech personnel.

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ARTICLE 7 – PROCUREMENT OF SUPPLIES AND HARDWARE

7.1 Sea Launch/USSL will procure all hardware, equipment, supplies and outside services deemed by Sea Launch to be required in order for Astrotech to successfully provide the Work identified in Exhibit B, Phase II Services. Upon identification, coordination and mutual agreement of each such requirement, Astrotech shall prepare and submit to the designated Sea Launch Representative a Procurement Request for such procurements. All such procurements shall be funded, procured, and administered directly by USSL. Sea Launch reserves the right to reject or alter any request deemed unnecessary in the performance of this Agreement and will promptly notify Astrotech of such rejection or modification.

7.2 In order to curtail down time, rush or emergency orders, Astrotech shall develop and provide a schedule identifying all materials and outside services necessary in order for Astrotech to maintain the operational readiness of the Site facilities at all times including such things as calibration requirements, annual maintenance and certification requirements.

7.3 Astrotech’s Request for Procurements related to scheduled preventative maintenance and inspection activities shall be submitted to the Authorized Sea Launch Representative allowing ample lead time, nominally 30 days in advance, to avoid any delay in Work. Sea Launch shall keep Astrotech informed regarding outside services or materials, etc, procured to support the Astrotech Phase II services. Astrotech shall not be held responsible for delays related to the responsiveness of Sea Launch or vendors contracted by Sea launch pursuant to the terms of Article 25, Excusable Delays.

ARTICLE 8 – SEA LAUNCH FURNISHED EQUIPMENT/PROPERTY

8.1 General. Sea Launch may provide to Astrotech, for use in connection with this Agreement, property described as Sea Launch/USSL or Customer furnished property. Such property may include, but is not limited to, unique and specialized tools and equipment, safety equipment and office equipment.

8.1.1 Sea Launch/USSL property furnished to Astrotech shall be used only in the performance of this Agreement. The requirements of these terms shall apply to all Sea Launch/USSL or Customer property in Astrotech’s possession from receipt of such property by Astrotech, through expiration or termination of this Agreement or until Sea Launch releases Astrotech from accountability for such property in writing or final disposition per Article 8.9.

8.1.2 Astrotech may not modify any such property without the prior written approval of the designated Sea Launch Representative.

8.1.3 If Sea Launch/USSL furnished property is received by Astrotech in a condition not suitable for the intended use, Astrotech shall, upon receipt, notify the designated Sea Launch Authorized Contract

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Representative detailing the facts, and, as directed by the Sea Launch Authorized Contract Representative, either effect repairs or modifications or return or otherwise dispose of the property.

8.1.4 The designated Sea Launch Authorized Contract Representative may decrease the Sea Launch/USSL furnished property provided or to be provided under this contract or substitute other Sea Launch/USSL furnished property for the property to be provided by Sea Launch/USSL. Astrotech shall promptly take such action as the Sea Launch Authorized Contract Representative may direct regarding the removal, shipment, or disposal of the property covered by this notice.

8.2 Identification. All property furnished to Astrotech will generally have been identified prior to delivery by Sea Launch/USSL. Otherwise all required identification shall be furnished by Sea Launch to Astrotech.

8.3 Title and Sea Launch Records. Title to all property provided by Sea Launch/USSL to Astrotech in performance of this Agreement will vest with Sea Launch/USSL. Sea Launch shall maintain the Sea Launch/USSL official property records in connection with any Sea Launch/USSL property furnished to Astrotech for use in the performance of this Agreement.

8.4 Astrotech Accountability and Record Keeping. Astrotech shall be responsible and accountable for all Sea Launch/USSL property provided under this Agreement. Astrotech shall establish written procedures and implement a Property Control System which is fully compliant with all provisions herein. Sea Launch will evaluate Astrotech’s Property Control System, that shall maintain a written record of the Sea Launch furnished property in Astrotech’s possession. Astrotech’s Property Control System shall document a description of the furnished property, the date the property was provided to Astrotech by Sea Launch/USSL, the normal storage/working location of the furnished property and when applicable, the date the property was returned by Astrotech to Sea Launch/USSL. Astrotech shall submit a copy of their Property Control System procedure per Exhibit F. Contract Data Delivery Requirements of this Agreement.

8.5 Repair and Replacement. If damage occurs to Sea Launch/USSL property, the risk of which has been assumed by Sea Launch under the provisions of Article 22 of this Agreement, Sea Launch/USSL shall replace the property or Astrotech shall make such repairs as Sea Launch directs.

8.6 Sea Launch Access to Property. Sea Launch/USSL and its designees shall have access at all times to the premises in which any Sea Launch/USSL property is located for the purpose of inspecting the Sea Launch/USSL property.

8.7 Risk of Loss. Astrotech assumes the risk of and shall be responsible for any loss of Sea Launch/USSL property provided for under this Article 8 upon its delivery to Astrotech. However, Astrotech is not responsible for reasonable wear and tear to Sea Launch/USSL property or for Sea Launch/USSL property properly consumed in the performance of this Agreement. If Astrotech transfers Sea Launch /U. S.

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Sea Launch property to the possession and/or control of a subcontractor, the transfer shall not affect the liability of Astrotech for the loss of the property as set forth above. Upon loss, destruction or damage of Sea Launch/USSL property provided under this Agreement, Astrotech shall so notify the Sea Launch Authorized Contract Representative and shall take all reasonable action to protect Sea Launch/USSL property from further damage, separate the damaged and undamaged Sea Launch/USSL property, put all the affected Sea Launch/USSL property in the best possible order, and furnish to Sea Launch designated representative a statement of the lost, destroyed, or damaged Sea Launch/USSL property along with a statement of the time and origin of the loss, destruction, or damage.

8.8 Sea Launch Liability. Sea Launch shall not be liable to suit for breach of contract for: (i) any delay in delivery of Sea Launch/USSL furnished property; (ii) delivery of Sea launch/USSL furnished property in a condition not suitable for its intended use; (iii) a decrease in or substitution of Sea Launch/USSL furnished property; or (iv) failure to repair or replace Sea Launch/USSL property for which Sea launch/USSL is responsible.

8.9 Final Accounting and Disposition: Upon expiration or termination of this Agreement, or at such earlier dates as may be fixed by the Contract Representatives, Astrotech shall submit, in a form acceptable to the Sea Launch Contracts Representative, inventory schedules covering all items of Sea Launch/USSL property not consumed in the performance of this Agreement or otherwise delivered to Sea Launch/USSL. Astrotech shall follow the instructions of the Sea Launch Contract Representative regarding the disposition of all Sea Launch/USSL furnished property.

ARTICLE 9 – RESERVED

ARTICLE 10 – SITE CONFIGURATION AND PROCESS CONTROL

Astrotech shall submit to Sea Launch, for its review and approval, Astrotech Data for any Work which involves any modification to any equipment, hardware, or process to be provided by Astrotech or any subcontractor in accordance with Sea Launch’s Configuration Control procedures. Any Astrotech data required shall be submitted to the Authorized Sea Launch Representative allowing ample lead time to avoid any delay in performance of the Work. Sea Launch review of such Data shall not constitute acceptance or approval of the design details, computations, test method, materials developed or installation procedures selected by Astrotech or relieve Astrotech of its responsibility of the correctness of such data, nor shall it relieve Astrotech of its responsibility to fully comply with the terms of this Agreement. This provision shall apply to any of the Work performed by Astrotech, Astrotech’s suppliers, or Sea Launch subcontractors under Astrotech’s direct supervision.

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ARTICLE 11 – TRANSFER OF TITLE

Astrotech warrants and guarantees all supplies, materials and services performed by any subcontractor under Astrotech’s direct supervision and for which Astrotech signs for acceptance of such supplies, materials or services will be delivered with good title, free and clear of all liens, claims, charges and encumbrances of any kind whatsoever, except any that may be imposed by Sea Launch/USSL.

ARTICLE 12 – SUBCONTRACTS

Astrotech shall not enter into a subcontract for Services to be performed under this Agreement without the prior written consent of the Sea Launch Authorized Representative, provided that Sea Launch approval of any subcontract or any provisions thereof shall not in any way be construed as a ratification thereof or relieve Astrotech of any responsibility for performance of the effort under this Agreements. Astrotech Personnel labor contracts shall be exempt from the provisions of this Article.

ARTICLE 13 – SUBCONTRACTOR’S WORK AREA AT THE SITE

13.1 Assignment of Work Area. Assignment of all work areas on the Site will be subject to the coordination and direction of the Sea Launch Home Port Facility Manager.

13.2 Utility Shut-Off. If any Contractor or Subcontractor requires the temporary shut-off of any Utility at the Sites (which term, as used in this Agreement, shall include all pipelines, telephone supplies, electric transmission lines, heating and air conditioning systems and all other supply, disposal, distribution and communication systems, and similar facilities) (“Utility”), it shall, unless otherwise directed by Sea Launch, notify the Sea Launch Home Port Facility Manager for approval of the Utility interruption schedule, such that the interruption of such services will not interfere with other activities on the Site. Contractor or any Subcontractor shall then perform the Work requiring shut-off on such days and at such hours as the Sea Launch Home Port Facility Manager may direct. Under no circumstances will Astrotech or its subcontractors proceed with Work affecting any Utility without the prior approval, including scheduling approval, of the Sea Launch Home Port Facility Manager.

ARTICLE 14 – WORK DEPENDENT ON OTHERS

If proper execution of the Work performed by Astrotech under this agreement, depends, in part, upon actions by Sea Launch/USSL or work of another contractor/subcontractor of Sea Launch/USSL, Astrotech shall promptly report to the Sea Launch Authorized Representative any discrepancies or defects in such other work or any situation of which Astrotech becomes aware of that would adversely affect Astrotech’s Work.

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ARTICLE 15 – PERMITS AND LICENSES

Astrotech shall assist Sea Launch in identifying and in obtaining any permits or license that may be required to construct and operate the Site including on going/recurring payload processing operations. Other than the foregoing, Astrotech shall obtain any permit or license that Astrotech requires to perform the Work under this Agreement. Sea Launch will require it’s Customer to be responsible for obtaining any permit or license that may be required for the Customer to perform an activity unique to the Payload that is not included in the permits and licenses obtained by Astrotech and/or Sea Launch including, but not limited to, tests involving use of radioactive materials.

ARTICLE 16 – FIELD RADIOS

Should Astrotech require the use of field radios on the site, Astrotech shall coordinate with the Sea Launch Representative to allocate all frequency channels. All radios or walkie-talkies used by Astrotech and other contractor vendors on the Site will be capable of operating in the UHF or VHF frequency bands selected by Sea Launch.

ARTICLE 17 – ENVIRONMENTAL REQUIREMENTS

17.1 Compliance with Laws. Astrotech shall comply with, and shall ensure that all Astrotech’s direct Subcontractors and On-site Suppliers and other Sea Launch/USSL contractors working under Astrotech’s direct supervision comply with, all applicable federal, state and local laws, regulations, ordinances and standards related to environmental matters. Astrotech shall coordinate with other Sea Launch/US Sea Launch contractors and subcontractors working on the Site regarding environmental matters. Astrotech shall promptly comply with, and shall ensure that all Astrotech’s direct Subcontractors and On-site Suppliers and other Sea Launch/Sea Launch contractors under Astrotech’s direct supervision promptly comply with, any specific instructions or directions given to Astrotech by the Sea Launch Representative regarding environmental matters.

17.2 Solid Waste Handling and Disposal. Sea Launch shall provide and Astrotech shall use covered containers for collection of solid waste at the Site. Solid Waste Containers shall be located in areas approved by the Sea Launch Representative. Such containers shall have lids or otherwise be provided with covers, and the containers shall remain covered except when solid waste is being added or removed there from. Segregation, recycling and/or disposal of solid waste shall be as approved by the Sea Launch SHEA Representative. Astrotech shall not bury or burn solid waste materials at the Site. Astrotech shall place an emphasis on project planning to maximize reuse and recycling of solid waste to the greatest extent feasible with consideration for cost. Under no circumstances shall Hazardous Wastes be handled, stored, or disposed of using the procedures related to Solid Waste.

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17.3 Identification of Known Work Site Hazardous Materials. Not less than thirty (30) days prior to commencement of performance of the Contract, Sea Launch shall notify Astrotech of the existence of any known asbestos, petroleum, polychlorinated biphenyls (PCBs), or other Hazardous Substances not rendered harmless at the Site. Sea Launch shall at the same time furnish to Astrotech all documents and information, known to Sea Launch, that relate to the identity, location, quantity, nature or characteristics of any such Hazardous Substances at the Site.

17.4 Latent Work Site Hazardous Materials. If, in the course of performing the Work at the Site, Astrotech encounters materials reasonably believed to be asbestos, petroleum, PCBs, or other Hazardous Substances, which were not previously disclosed by Sea Launch and have not been rendered harmless, Astrotech shall immediately suspend the Work in the area affected and shall immediately report the condition to the Sea Launch Representative, to be followed up within one (1) business day by the submission of a written report. The Work in the affected area shall not thereafter be resumed except by written agreement of Sea Launch and Astrotech if in fact the substances are asbestos, petroleum, PCBs or other Hazardous Substances and have not been rendered harmless. The Work in the affected area shall be resumed, in the absence of the Hazardous Substances or when they have been rendered harmless, by written agreement of Sea Launch and Astrotech.

17.5 Astrotech Relieved of Responsibility. Except as provided under paragraph 17.7 below, this Contract is not intended to require Astrotech to handle, transport, relocate, dispose of, or perform any Work related to asbestos, petroleum, PCBs or other Hazardous Substances.

17.6 Hazardous Waste Handling and Disposal. All Hazardous Materials and Waste will be stored, handled and identified in accordance with Sea Launch’s documents. Hazardous Waste Management Plan (HPD- 30025) and Hazardous Materials Management Plan (HPD-30024) as well as all applicable Federal, State, and local regulations including the Uniform Building and Uniform Fire Codes. All personnel handling hazardous materials shall be trained in accordance with California Hazard Communication Standard and the Sea Launch Hazardous Communication Program (HPD-30023). Astrotech shall maintain training records of all Astrotech personnel relative to all Safety/Environmental matters. Astrotech to provide the Sea Launch Representative with copies of all related training certifications of Astrotech employees working at the Site.

17.6.1 Immediately upon generation of Hazardous Wastes, Astrotech shall advise the Sea Launch SHEA Representative. Astrotech is hereby directed to coordinate with the Sea Launch SHEA office regarding the proper packaging and management of Hazardous Wastes.

17.6.2 Astrotech is obligated to relocate any Hazardous Wastes, which Astrotech generates, as directed by the Sea Launch SHEA Representative, to a designated on-Site Hazardous Waste accumulation or storage area for eventual disposal by Sea Launch. Should Astrotech leave any Hazardous Waste

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improperly packaged, or abandoned, and, as a result, Sea Launch incurs additional costs, Astrotech shall be liable for all fines and/or expenses associated with (a) repackaging or other measures reasonably necessary to assure compliance with applicable federal, state and local laws; (b) any resulting violations of applicable federal, state or local laws; and (c) the remediation of any contamination caused by such improper packaging or such abandonment.

17.7 Industrial Waste Water Handling. Contractor shall develop a written plan to be approved by the Sea Launch Representative, for handling Industrial Waste Water to be produced during the Work.

17.8 Emergency Response and Reporting of Spills or Releases. Astrotech shall comply with all Sea Launch emergency response and reporting procedures as detailed in the Sea Launch Integrated Contingency Plan (HPD-30015). The Sea Launch Representative shall provide Astrotech with information regarding the Site’s plans and procedures for emergency response to spills or releases of hazardous chemicals, Hazardous Substances and Hazardous Wastes. Astrotech and Astrotech’s direct Subcontractors and On-site suppliers, and other Sea Launch contractors under Astrotech’s direct supervision, shall undertake response to such spills or releases only to the extent such response can be taken immediately to contain the spill or release and prevent spreading without posing a physical danger to the respondent. Whether or not Astrotech or a Subcontractor undertakes such response, Astrotech or the Subcontractor shall immediately notify the Sea Launch SHEA Representative as well as any other Sea Launch Emergency Response personnel identified in the Sea Launch Emergency Response Plan/Procedures provided. Unless the duty to report any such spills or releases to a governmental agency is imposed by law directly upon Astrotech or a Subcontractor, the Sea Launch SHEA Representative shall perform such reporting. Astrotech and its Subcontractors shall cooperate fully with the Sea Launch SHEA Representative in assuring timely and complete reporting. If Astrotech or a Subcontractor is itself required by law to report a spill or release, then Astrotech or any Subcontractor undertaking such reporting shall immediately inform the Sea Launch SHEA Representative in detail regarding such reporting.

17.9 Nuisance and Polluting Activity Prohibited. Polluting, dumping, or discharging of any harmful, nuisance, or regulated materials (such as concrete, truck washout, vehicle maintenance fluids, residue from saw cutting operations, solid waste and/or other Hazardous Substances) into the building drains, site drains, storm drains, streams, waterways, holding ponds or to the ground surface shall NOT BE PERMITTED and Astrotech shall be held responsible for any and all damages which may result. Further, Astrotech shall conduct its activities in such a fashion which avoids creating any legal nuisance, including but not limited to, the suppression of noise and dust, control of erosion, and implementation of other measures as necessary to minimize off-Site impacts of Work activities.

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ARTICLE 18 – SAFETY AT THE SITE

18.1 Astrotech’s Sole Responsibility for Safety. Astrotech shall at all times be solely responsible for all aspects of safety in connection with the Work performed by Astrotech’s personnel and their direct subcontractors/suppliers, including initiating, maintaining and supervising all safety precautions and programs. Such responsibility for safety includes, without limitation, the obligations set forth in the remainder of this Clause 1 (Safety). Astrotech shall take all necessary precautions and shall at all times perform all Work at the Site, in a manner to avoid the risk of bodily injury to persons, damage to the environment or risk of damage to any property. Astrotech shall continuously work to identify, report and correct safety deficiencies at the Site, to include inspecting all Work, materials, equipment, and services to aid in identifying the existence of any such conditions. Astrotech shall be solely responsible for the identification of any such conditions and immediately upon discovery, reporting them to the authorized Sea Launch Representative.

18.2 No Sea Launch Responsibility for Safety. Sea Launch shall have no responsibility for the safety performance by Astrotech of the Work, to include all safety precautions and programs of Astrotech, for those procedures and operations conducted solely by Astrotech and their direct subcontractors.

18.3 Compliance with Laws and Directions. Astrotech shall comply, and shall ensure that all Astrotech’s direct subcontractors /suppliers and other subcontractors/suppliers working under Astrotech’s direct supervision on Site comply, with all applicable federal, state and local laws, regulations, ordinances and standards related to safety. Astrotech shall cooperate and coordinate with other Sea Launch/US Sea Launch contractors and their subcontractors working on the Site regarding safety matters. Astrotech shall promptly comply, and ensure that all its direct Subcontractors / Suppliers and other subcontractors/ suppliers working under Astrotech’s direct supervision on the Site promptly comply, with requirements as set forth in the applicable Contract Documents.

18.4 Observations. Sea Launch personnel will inspect Astrotech’s Work at various times to ensure Astrotech’s performance is compliant with the applicable Contract Documents. Sea Launch will not, however, be required to make such inspections/ observations –whether they are periodic, continuous, exhaustive, or otherwise. Astrotech recognizes and agrees that any Sea Launch inspections of the work and/or observations made as a result of those inspections will not in any manner relieve Astrotech of its sole responsibility for all aspects of safety in connection with the Work, nor will such inspections or observations create or constitute responsibility for such safety by Sea Launch. Neither Sea Launch’s inspections, observations, visits, or omissions, nor any actions or inactions during or as a result of such inspections, visits or observations, give rise to a duty, responsibility, or liability of Sea Launch to Astrotech, their Subcontractors, Suppliers, agents or employees or other persons performing portions of the Work on Site.

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18.5 Safety Plains. Astrotech shall develop a Home Port specific Site Safety Plan (SSP) that shall document the safety procedures and safeguards to be used by Astrotech during performance of the Work at the Home Port Site. The SSP shall identify anticipated Site work hazards; appropriate methods of control in order to minimize the risk of injury to all Site personnel and property, and will include an Injury and Illness Prevention Program. Astrotech’s work instructions shall reference and highlight the applicable portions of the SSP that relate to the operations at the Site. Astrotech shall submit the SSP to Sea Launch for review, comment and approval. Review/approval of Astrotech’s SPP by Sea Launch shall not: (i) relieve Astrotech in any manner of its sole responsibility for safety, (ii) be construed as limiting in any manner Astrotech’s obligation to undertake any action which may be necessary or required to establish and maintain safe working conditions at the Site, nor (iii) create any liability for Sea Launch not already specified in the Contract. It shall be the responsibility of Astrotech to ensure that all of its employees, and the employees of its direct contractors / subcontractors at the Site, are knowledgeable on the requirements of the SPP and that these requirements are followed during performance of the Work.

18.6 Safety/Environmental Representative. Astrotech shall appoint a competent Safety/Environmental Representative with full authority to coordinate, implement, and enforce Astrotech’s Site Safety Plan. Astrotech’s Safety/Environmental Representative shall be authorized sufficient work time to properly perform such duties. The Astrotech Safety/ Environmental Representative shall be Astrotech’s interface to the Sea Launch Safety/ Environmental Representative.

18.7 Safety Meetings and Equipment. Astrotech shall hold regularly scheduled meetings to instruct its personnel, as well as personnel of Astrotech’s direct Subcontractors’ and on-Site Suppliers’, on relevant safety practices. Summary minutes shall be recorded at all group meetings and shall be included in Astrotech’s weekly status report, which shall be submitted to Sea Launch to demonstrate compliance with this Contract requirement. Astrotech, at their own expense, shall furnish all personnel-specific protective equipment (PPE), as required by Astrotech’s Company Site Safety Plan. Examples shall include safety shoes, safety goggles, gloves, etc. Sea Launch shall provide all safety equipment required to support processing operations at the Site to include fall protection, breathing support, and propellant handling equipment. Any request for safety-related equipment shall be approved by the Sea Launch SHEA Representative prior to purchase in accordance with Sea Launch Controlling Procurement and Use of Safety Equipment Document (HPD-30029). All equipment purchased by Sea launch/USSL shall remain the property of Sea Launch/ US Sea Launch and will be controlled in accordance with the provisions of the Contract. Astrotech is responsible for training the appropriate Astrotech personnel in the use of the equipment and enforcing the use of such equipment by its employees. Astrotech shall ensure that Subcontractors and on-site Suppliers working under Astrotech’s direct supervision furnishes appropriate safety equipment to their personnel for the Work in progress, trains appropriate personnel in the use of the equipment and enforces the use of such equipment by its employees. Similarly, when working with other Sea Launch subcontractors and suppliers in joint operations on the Site, Astrotech will work with the Sea Launch SHEA Representative to ensure safety equipment compliance as described above.

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18.8 Accident Reports. Accident and/or Incidents involving Astrotech’s personnel that occur at the Site resulting in time away from work, medical cases (not including first aid cases) or incidents that require an ambulance, security, hazardous material emergency response or fire department response must be reported to the designated Sea Launch Representative immediately and followed up in writing within one (1) business day of the accident or incident. Further, Astrotech shall maintain accurate accident and injury reports as required by applicable state and federal regulations, and shall furnish copies of such reports to the Sea Launch Representative.

18.9 Payment for Emergency Services. In the event any employee of Astrotech, or employees of Astrotech’s direct Subcontractor or on-site Supplier’s, who are engaged in any activity related to the Work to be performed at the Site requires the services of an ambulance, physician, hospital or other health provider, Astrotech shall pay or arrange for such Subcontractor or Supplier or employee to pay all charges for any such services directly to the provider of such services.

18.10 Emergency Notification. Astrotech shall follow all emergency notification procedures as described in the Home Port Integrated Contingency Plan (HPD-30015).

18.11 Specific Safety Issues. Astrotech shall emphasize the following safety-related topics during the performance of the Work at the Site. The scenarios described in this paragraph apply to Astrotech’s use of Sea Launch/USSL facilities and/or the potential effects of Astrotech’s performance of the Work on Sea Launch/USSL employees or other persons working at the Site. These requirements are not intended to be all-inclusive, but rather represent matters that, in Sea Launch’s experience, are directly applicable to Astrotech’s Work at the Site. By providing these requirements, Sea Launch/USSL assumes no responsibility whatsoever for any aspect of the safety of the Work performed solely by Astrotech or Astrotech’s direct Subcontractors and On-Site Suppliers. Responsibility shall remain solely with Astrotech.

18.11.1 Suspended Loads Over Personnel and Property.

18.11.1.1 Astrotech shall coordinate with the Sea Launch Representative regarding any operation that involves the lifting of loads over the heads of personnel or above critical equipment at the Site. Such operations shall also be coordinated with Sea Launch operations to relocate personnel and equipment to minimize the risk of personnel injury and equipment damage.

18.11.1.2 Astrotech shall provide and use, while working overhead, an effective method to prevent falling objects from injuring personnel and damaging equipment below, consistent with OSHA/California OSHA regulations.

18.11.2 Operation of Sea Launch Equipment. Astrotech personnel shall not operate Sea Launch owned or controlled equipment unless specifically coordinated, scheduled and instructed in operation by

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Sea Launch. Astrotech to ensure that all Astrotech personnel are trained and Certified (where applicable) prior to operating any Sea Launch owned or controlled equipment. Astrotech shall maintain training records of all Astrotech personnel relative to all applicable equipment training/certification for the Work at the Site. Astrotech to provide the Sea Launch Representative with copies of all related training certifications of Astrotech employees working at the Site. Astrotech shall operate such equipment at its own risk and liability within the Terms and Conditions of this contract.

18.11.2.1 Astrotech shall coordinate and/or schedule any work that requires access on Sea Launch cranes, adjacent to Sea Launch cranes, or work around Sea Launch cranes.

18.11.3 Excavations, Trenches, and Floor Holes.

18.11.3.1 Prior to opening an excavation or trench, Astrotech will identify and locate the exact location of any underground utility and notify the appropriate Sea Launch Representative.

18.11.3.2 Astrotech shall adhere to applicable OSHA/California OSHA regulations with regards to the protection of excavations, trenches, open floor holes, etc. This shall include the barricading of all excavations, open-sided floors, and floor holes and openings. Barricades shall be provided at all times, regardless of shift or day of week. Barricades shall be of sufficient strength and construction to withstand all anticipated loads.

18.11.4 Vehicles and Other Motorized Equipment.

18.11.4.1 Astrotech shall be responsible for proper operation of its vehicles and shall abide by all Sea Launch in-plant speed limits and traffic regulations. Astrotech’s responsibility shall include vehicles owned and operated by Astrotech employees of as well as Astrotech’s direct Subcontractors and On-site Suppliers. Astrotech shall also assist in enforcing these rules and regulations with other Sea Launch contractors working under Astrotech’s direct supervision.

18.11.4.2 While operating internal combustion powered vehicles or similar equipment within a building or structure; Astrotech must be sensitive to diesel fuel exhaust odors that may require additional means of ventilation. Astrotech shall also monitor levels of carbon monoxide gas created by such equipment in an effort to minimize exposure levels and to ensure that readings do not exceed permitted levels. Control measures may include portable exhaust piping, blowers, fans, filters, scrubbers, and ventilation hoses. When possible, operations using such equipment should be scheduled when the structure is not occupied. In addition, the building should be properly ventilated before occupancy takes place.

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18.11.5 Chemical Hazard Communication.

18.11.5.1 Astrotech shall provide an inventory list of chemicals and a copy of the Material Safety Data Sheets (MSDS) to the Sea Launch Representative for all hazardous chemicals to be used on the Site. Prior authorization is required by the Sea Launch SHEA Representative before any hazardous chemicals or other hazardous materials are brought to the Home Port Site. Inventory list of hazardous materials/chemicals shall be updated on a monthly basis and submitted to the authorized Sea Launch SHEA Representative. The file of MSDSs shall be kept by Astrotech in an accessible location at the Site separated from the hazardous chemicals themselves.

18.11.5.2 Astrotech personnel shall be cognizant as to the location where the Sea Launch MSDS Notebooks are stored. Astrotech personnel shall be responsible for reviewing the MSDSs applicable to the areas in which they will be working, prior to the start of the Work.

18.11.5.3 All hazardous chemicals arriving at or departing from the Site shall be processed through, or coordinated with, Sea Launch’s/US Sea Launch’s checkpoint (Sea Launch Logistics) mechanism for tracking and control of hazardous chemicals. When Astrotech anticipates that hazardous chemicals will be delivered during off-hours, Astrotech shall notify the Sea Launch Representative and make arrangement for off-hours delivery, with Astrotech personnel present at the Site at the time of delivery to receive the materials.

18.11.5.4 Astrotech shall not stockpile hazardous chemicals on the Site. Quantities of hazardous chemicals shall be limited to the amounts needed to accomplish the immediate job.

18.11.6 Confined Spaces.

18.11.6.1 Astrotech shall have a written confined space entry program, to include a permit system for controlling personnel entry to confined spaces and provisions for monitoring rescue and observation personnel.

18.11.6.2 For jointly occupied spaces, Astrotech shall coordinate its confined space plan with Sea Launch’s plan.

18.11.7 Special Hazards. Astrotech shall instruct each of its employees to be alert for asbestos (present in insulation, pipe lagging, and exterior building sheathing), lead paint, and other potential hazardous materials. If suspected asbestos or other hazardous materials are encountered at any time at the Site, Astrotech shall immediately suspend operations at that location and contact the Sea Launch Representative for guidance.

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18.11.8 Lockout/Tagout. Astrotech shall have a written lockout/tagout plan.

ARTICLE 19 – SITE SECURITY AND FIRE PREVENTION

19.1 Security. Sea Launch Home Port Security shall be responsible for overall security of the Home Port, the Assembly and Command Vessel, and the Launch Platform. Astrotech shall ensure that its employees perform the Work and all related operations so as to avoid the risk of loss, theft or damage to any property, including but not limited to portions of the Work already performed, by vandalism or sabotage. Astrotech’s employees shall promptly take all action needed to alleviate any such risk. Astrotech shall comply with all Sea Launch Home Port Security Procedures, Directives or Requirements. Astrotech shall prepare, and maintain accurate reports of any loss, theft or vandalism related to Astrotech’s Work. Astrotech shall furnish such reports to Sea Launch Home Port Security in a timely manner.

19.2 Protection of Property. Astrotech shall use suitable precautions in protecting Sea Launch/USSL property from damage. If Sea Launch/USSL property is damaged, then Astrotech will advise Sea Launch/USSL and protect Sea Launch/USSL property from further damage and assist in assessing damage at the Site caused by another Sea Launch/USSL Affiliate, Associate Contractor, Subcontractor, or Customer.

19.3 Fire Prevention. Astrotech shall comply with all Sea Launch Home Port Safety plans, policies and Procedures for fire prevention and fire protection of Sea Launch property and personnel at any site. Astrotech shall provide Sea Launch Home Port Safety with all updated Material Safety Data Sheet (MSDS) defining the proper handling of any special chemicals or other fire hazardous materials provided by Astrotech under this Agreement.

ARTICLE 20 – INSURANCE

20.1 Property Insurance. Throughout the period when the Work is being performed. Sea Launch shall maintain “all risk” physical damage insurance covering property of Sea Launch, USSL, its affiliates, Associate Contractors, and its Subcontractors (Astrotech), while such Work in process is located at any Sea Launch Site. Unless such property was to be included in Work provided to Sea Launch, this insurance will not cover the property of Astrotech, its subcontractors or their employees. Sea Launch shall require its insurance company to waive all rights of subrogation against Astrotech and Subcontractors for damage to Sea Launch property protected by the insurance policy obtained by Sea Launch. Any policy which provides the insurance under this paragraph will; (i) name Astrotech, its Subcontractors and their respective employees, as additional insureds; (ii) be endorsed to be primary to and noncontributory with any insurance maintained by Astrotech; (iii) contain a waiver of any rights of subrogation against Astrotech and its Subcontractors. The policies providing such insurance will be provided upon request.

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20.2 Sea Launch Risk of Loss. Except as provided under Article 20.3, Sea Launch shall bear the risk of loss of, damage to or destruction of Sea Launch/USSL property or any Work in process at any Site with the exception of the loss of Sea Launch/USSL property under the control of Astrotech per the terms of Article 8.7 of this Agreement. If Astrotech or any of its employees damage Sea Launch/USSL property or equipment (including rocket components) in performing Work, Sea Launch will bear all costs resulting from such damage. Sea Launch waives all claims against Astrotech or its employees for damage to Sea Launch/USSL property.

20.3 Astrotech’s Liability. Astrotech shall be liable to Sea Launch/USSL for damage to Sea Launch/USSL property or to Work in process caused by the willful act of an employee of Astrotech, such as sabotage, or failure to take the steps set forth in Article 20.4, Astrotech’s Insurance Requirements. All Associate Contractors, Contractors on the Sea Launch Program and their Subcontractors shall agree to the cross- waiver of liability set forth in Article 22.2, and each Party shall bear the risk of loss of any of its own property damaged at the Site or injury to their personnel caused by another Associate Contractor, Contractor or its Subcontractor.

20.4 Astrotech’s Insurance Requirements. Throughout the entire period of performance under this Agreement. Astrotech shall carry and maintain the following insurance:

20.4.1 Comprehensive General Liability insurance with available limits of not less than One Million dollars ($1,000,000) per occurrence for bodily injury, including death, and property damage combined. Astrotech shall ensure that all Astrotech Subcontractors carry and maintain Commercial General Liability insurance with available limits of not less than One Million dollars ($1,000,000) per occurrence for bodily injury, including death, and One Million Dollars ($1,000,000) property damage or One Million Dollars ($1,000,000) combined Single Limit Bodily Injury and Property Damage. Such per occurrence limits of insurance may be satisfied through a combination of “primary” and “umbrella” or “excess” policies. Such insurance shall be in an occurrence form, with insurers reasonably acceptable to USSL/Sea Launch and contain coverage for all premises and operations, broad form property damage, contractual liability and products and completed operations coverage with limits of not less than One Million Dollars ($1,000,000) per occurrence. Any policy which provides the insurance required under this paragraph shall (I) be endorsed to name Sea Launch/USSL, its Affiliates and their respective directors, officers, agents, and employees as additional insured (herein after “Additional Insured”) with respect to liability arising out of work performed by Contractor, or Subcontractor, as applicable; (ii) be endorsed to be primary to and noncontributory with any insurance maintained by the Sea Launch Company, (iii) provide a waiver of any rights of subrogation against the Additional Insured; and (iv) contain a severability of interest provision in favor of the Additional Insured.

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20.4.2 Comprehensive Automobile Liability insurance covering all vehicles, whether owned, hired, rented, borrowed, or otherwise, with limits of liability of not less than One Million Dollars ($1,000,000) for bodily injury, death, per person or per accident and One Million Dollars ($1,000,000) property damage per accident or One Million Dollars ($1,000,000) combined single limit bodily injury and property damage. Any policy which provides such insurance shall contain a waiver of rights of subrogation against USSL and the Sea Launch Company, its affiliates and their directors, officers, agents and employees.

20.4.3 Worker’s Compensation in accordance with the applicable laws of the State of California with respect to all of Astrotech’s employees working on or about the Site, regardless of whether such coverage or insurance is mandatory or elective under the law. To the extent permitted by law, any policy which provides the insurance required by this Paragraph shall contain a waiver of rights of subrogation against USSL and the Sea Launch Company, its Affiliates, and their respective directors, officers, agents and employees. In jurisdictions requiring mandatory participation in a monopolistic state workers’ compensation fund, or if Astrotech or subcontractors self insure, the insurance certificate requirements for the coverage required under this paragraph will be satisfied by a letter from the appropriate state agency confirming participation in accordance with statutory requirements.

20.4.4 Prior to commencement of work Astrotech shall provide for Sea Launch’s approval, Certificates of Insurance reflecting full compliance with the requirements set forth herein. Such certificates shall be kept current and in compliance through the period of performance of this Agreement and shall provide for thirty (30) days advance written notice to Sea Launch in the event of cancellation or material change adversely affecting compliance with the foregoing requirements. Failure of Astrotech or any subcontractor thereof to furnish Certificates of Insurance, or to procure and maintain the insurance required herein, or failure of Sea Launch to request such certificates, endorsements, or other proof of coverage, shall not constitute a waiver of the obligations hereunder.

ARTICLE 21: WARRANTY

21.1 Warranty of Services. Astrotech shall perform the Work called for by this Agreement in accordance with the requirements specified in: (i) the Agreement Documents and operational documentation; and (ii) industry practice, provided such practice does not conflict with the Agreement Documents. Astrotech warrants that the Services rendered will be free of defects and will conform to the highest standards of competent professional knowledge, judgment and workmanship. Acceptance of any Services by Sea Launch/USSL shall not be deemed to alter or affect the obligations of Astrotech or the rights of Sea Launch under the Warranty provisions herein.

21.2 Exercise of Warranty Rights. Sea Launch shall provide Astrotech notice of any defect covered by this warranty. Promptly after receipt of such notice, Astrotech shall redesign, and repair, replace or repeat any portion of the Work affected by a defect covered by the warranty set forth in Article 21. Astrotech shall

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perform all necessary tests required to verify that any such redesign, and repair, replacement or repetition, complies with the requirements of the Agreement Documents. All Astrotech cost and expenses related to such redesign, repair, replacement or repetition and testing, including the removal, replacement and reinstallation of supplies and materials necessary to gain access to the defective Work or repetition of services by Astrotech shall be borne solely by Astrotech, at no additional cost or charge to Sea Launch. Astrotech warrants such redesigned and repaired, replaced or repeated Work against defective design, materials and workmanship per Article 21.1.

21.3 Remedy for Breach of Warranty. If Astrotech fails to respond to any written notice of defect or fails to proceed with reasonable promptness to accomplish any redesign, repair, replacement, repetition or testing required under this Article 21, it shall be considered a Breach of Warranty by Astrotech. Under such conditions, Sea Launch may accomplish such redesign, repair, replacement, repetition or testing and charge to Astrotech any cost occasioned Sea Launch thereby, or may reduce any amount otherwise payable under this Agreement (or require repayment of any amount theretofore paid) in such amount as may be equitable under the circumstances. If Sea Launch determines that it is impracticable to redesign, repair, replace or repeat any defective portion of the Work found within the period of time of this Agreement, Sea Launch may reduce the amount payable under this Agreement (or require repayment of any amount theretofore paid) in such amount as may be equitable under the circumstances. In any case, the amount payable to Sea launch shall not exceed the total amount incurred by Sea Launch for the work deemed defective. In the event that any technical opinion, including design changes and/or recommendation including design changes, modifications, repairs, process, procedure changes and/or equipment recommendations, furnished by Astrotech to Sea Launch/USSL provided under this contract fails to comply with this warranty obligation including fitness for a particular purpose, and Sea Launch/USSL is required to expend additional funds to correct deficiencies resulting from its acceptance of the Astrotech technical opinion and/or recommendation, Remedy for Breach of Warranty shall apply based on the level of participation of Astrotech.

21.4 Exclusivity of Warranties and Remedies. THE WARRANTIES SET FORTH IN THIS ARTICLE 21 ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES WHETHER STATUTORY, EXPRESS, OR IMPLIED (INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE). The remedies set forth in this Article 21 are the exclusive remedies of Sea Launch/USSL for any failure by Astrotech to comply with its warranty obligations. Correction of nonconformance or refund of compensation paid in the manner provided herein, shall constitute complete fulfillment of all the liabilities of Astrotech for defective or nonconforming Services, whether the claims by Sea Launch/USSL are based in contract, in tort (including negligence and strict liability), or otherwise.

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ARTICLE 22 – INDEMNIFICATION AND HOLD HARMLESS

22.1 Definitions. The following definitions shall apply only to terms as used in this Article 22:

22.1.1 Liability. “Liability” shall include payments made pursuant to any judgment by a court of competent jurisdiction or award of an arbitration tribunal and administrative and litigation costs, and settlement payments made after consultation between the parties.

22.1.2 Damage. “Damage” shall mean bodily injury to or death of any person, damage to or loss of any property, and loss of revenue or profits or other direct, indirect or consequential damages arising therefrom.

22.1.3 Payload Processing Activity. “Payload Processing Activity” shall mean all activity conducted at the Home Port Facility Site associated with the preparation of a Payload for launch aboard the Sea Launch launch vehicle, preparation of the launch vehicle fairing, adapter and other launch vehicle hardware, encapsulation activity, and the handling and transportation of all or a portion of a Payload and/or its associated equipment outside the confines of the Home Port Facility by Astrotech or its contractors or subcontractors.

22.1.4 Claims. The term “Claims” means all claims, liabilities, damages, losses and judgments, including costs and expenses and attorneys’ fees incident thereto, which may be suffered by, accrue against, be charged to or be recoverable from Astrotech, Sea Launch/U.S. Launch or its Affiliates by reason of injury to or death of personnel or damage to or loss of property by any Third Party. The term “Claim” also includes any action to establish entitlement to receive indemnification.

22.1.5 Contractors. The term “Contractors” means Astrotech and its officers, directors, personnel, employees, agents or representative.

22.1.6 Customer. The term “Customer” means the person who procures launch services from the licensee, any person to whom the customer has sold, leased, assigned, or otherwise transferred its rights in the payload (or any part thereof) to be launched by the licensee, including a conditional sale, lease, assignment, or transfer of rights, any person who has placed property on board the payload for launch or payload services, and any person to whom the customer has transferred its rights to the launch services.

22.1.7 Related Third Party. As used in this Article, the term “Related Third Party” means: (a) as to Sea Launch/USSL, (i) customers of Sea Launch/USSL; (ii) contractors, associate contractors and subcontractors at any tier of Sea Launch/USSL; (iii) any Affiliate of Sea Launch/USSL; and (iv) employees of Sea Launch/USSL and its customers; and (b) as to Astrotech, (i) contractors and subcontractors at any

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tier of Astrotech; (ii) any Affiliate of Astrotech; (iii) the Parent Company and (iv) employees of Astrotech or its Subcontractors.

22.2 Damage to Persons or Property Involved in Payload Processing Activity.

22.2.1 Investigation. If a Launch Failure or an Incident occurs, Sea Launch Company, LLC, will appoint an investigation committee to determine the cause of the Launch Failure or Incident. All Parties, including Astrotech, will cooperate in the investigation and will use their best efforts to provide access to their employees and to provide all data and analyses, reasonably requested by the investigation committee, to determine the cause of the Launch Failure or Incident. Unless otherwise agreed, all Parties will bear their own costs incurred in complying with the requests of the investigation committee for information that the investigation committee deems necessary to determine the cause of the Launch Failure or Incident, except that with prior authorization, Sea Launch will pay the reasonable travel and per diem expenses of Astrotech’s employees who provide such information and/or who participate in the investigation committee. This investigation will be concluded when the investigation committee report and recommendations are formally accepted via resolution at a Members’ meeting of Sea Launch Company, LLC.

22.2.2 Reciprocal Waivers. Except as specifically provided otherwise under this Agreement, including, without limitation, in Article 20, Insurance, Sea Launch/USSL and Astrotech agree to a reciprocal waiver of liability pursuant to which each party agrees not to bring a claim in arbitration or otherwise or to sue the other party or Related Third Parties of the other party or the Customer, for any damage it sustains and any property loss or damage or bodily injury, including death, sustained by any of its employees, directors, officer and agents, arising in any manner in connection with the performance of the Work under this Agreement. Such waiver of liability shall also extend to any indirect, special, incidental or consequential damages or loss of revenue or business injury or loss resulting from any delay in the launch schedule, damages to the spacecraft before or after Launch, or failure to operate properly.

22.2.3 Extent of Waivers. Except as specifically provided otherwise under this Agreement, the Parties waive all claims against each other regardless of whether the loss, damage or injury arises from the acts or omissions, negligence or otherwise of either Party or its Related Third Parties. This waiver shall extend to all theories of recovery including claims in contract for property loss or damage, tort (intentional negligence, including active or passive or gross negligence), strict liability or product liability.

22.2.4 Extension to Related Third Parties. Sea Launch/USSL and Astrotech shall each extend the waiver and release of claims of liability as provided in the two preceding subparagraphs to their Related Third Parties, except employees, by requiring them to waive and release all claims of liability they may have against the other Party and the Related Third Parties of the other Party. If either party fails to fulfill its obligation under this Section 22.2.4, that party will indemnify the other party and its Related Third Parties for any Liability they may sustain as a result of such failure. Failure of any party or Related Third Party to

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obtain the waiver agreement required above shall not affect such party’s or Related Third Party’s right to the protections otherwise provided by this Article 22.

22.2.5 Extension to Successors and Assigns. The inter-party waiver and release by each party and its Related Third Parties of claims of Liability against the other party and the Related Third Parties of the other party extend to the successors and assigns, whether by subrogation or otherwise, of the party and its Related Third Parties. Each party shall obtain a waiver of subrogation and release of any right of recovery against the other party and the Related Third Parties of the other party from any insurer providing coverage for the risks of loss for which the party hereby waives claims of Liability against the other party and the Related Third Parties of the other party.

22.3 Inter–Party Indemnification Against Third Party Claims.

22.3.1 Indemnification. The parties will defend, indemnify and hold each other and their Relate Third Parties harmless from and against all Claims arising out of or in any way connected with the performance by either party and their Related Third Parties of the work or services provided under this Agreement at any Sea Launch Site or arising out of or in any way connected with the performance of this Agreement at any Sea Launch Site. This indemnification obligation does not extend to activity of either party or their Related Third Parties performed away from a Sea Launch Site. Such indemnification shall be effective upon signing of this Agreement, shall permanently remain in effect for all such Claims, and shall apply regardless of any fault or negligence (actual or imputed, active or passive, simple or gross negligence) on the part of either party or its Related Third Parties, regardless of possession and control considerations and regardless of any actual or alleged failure or default by either party or its Related Third Parties in performing its obligations under this agreement.

ARTICLE 23 – CONTRACT CHANGES

23.1 Changes. Changes to the Services defined herein to be provided by Astrotech to Sea Launch and BCSC under this Agreement may be agreed to by the parties and shall be evidenced by an amendment to this Agreement. Such amendment shall specify the change to the Services to be provided by Astrotech, the charge or credit to Sea Launch or BCSC for said change or additional Service, the payment schedule, the schedule for performance, and any other relevant terms.

23.2 Cost Estimates. Prior to commencing any work related to a Change Order, unless otherwise directed in writing by the Sea Launch Authorized Representatives, Astrotech shall submit to the Sea Launch Authorized Contract Representative, a written change proposal and cost breakdown. The cost breakdown shall be in sufficient detail to permit an evaluation of the projected number of hours, a projection of Astrotech’s costs and a projection of other expenses, and shall cover all affected Work and resulting

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impacts. Such proposals shall indicate the increase or decrease in the time for and/or cost to Astrotech of performing the Work.

23.3 Issuance of Change Orders. As may be appropriate under the circumstances, a Change Order may be issued directing changes in the Work before an agreement has been reached regarding an equitable adjustment with respect to the change. Notwithstanding any dispute or delay in reaching an agreement regarding an equitable adjustment with respect to a Change, if directed by the Sea Launch Authorized Representative, Astrotech shall immediately proceed to perform the Work in accordance with such written Change Order. Astrotech shall commence the Work contemplated by a Change Order so that all the dates set forth in the Work schedule, as the same may be adjusted, will be met. Failure to commence Work pursuant to a Change Order in a timely fashion shall constitute a default to which the provisions of Article 26, Default shall apply.

23.4 Request for Cost Proposal. Prior to issuing a Change and before mutual agreement has been reached, the Sea Launch Authorized Representative may request a written not-to-exceed (NTE) cost proposal from Astrotech for the increase or the decrease in the prices contained in Exhibit C for the Change. This cost proposal will include the statement of work upon which the NTE cost estimate is based. Unless otherwise agreed to by the Parties, Astrotech’s NTE cost estimate shall be provided within fifteen (15) Working Days from receipt of request of same from the Sea Launch Authorized Representative.

23.5 Definitization of Change. Astrotech shall use its best reasonable efforts to provide Sea Launch with a firm cost and/or price proposal within ten (10) Working Days from submittal of the NTE cost estimate provided in accordance with Article 23.4. Thereafter, Sea Launch and Astrotech shall use their best reasonable efforts to reach final agreement on the Change Order price within thirty (30) working days.

ARTICLE 24 – RESERVED

ARTICLE 25 – EXCUSABLE DELAYS

25.1 Notice. Astrotech shall notify the Sea Launch Authorized Representative in writing within seven (7) Working Days of discovery of any events, facts and circumstances which may result in a delay in performance or failure to perform any of the Work to be performed under this Agreement for any cause.

25.2 Excusable Delays. Astrotech shall not be deemed in default hereunder by reason of any delay in performance or failure to perform the Work pursuant to this Agreement (including any failure by Astrotech) to make progress in the performance of the Work if such delay or failure arises out of causes which are beyond the control and without the fault or negligence of Astrotech (“Excusable Delays”). Such causes may include, but are not restricted to: acts of God or of the public enemy; acts of any government (expressly to include export decisions); acts of Sea Launch; Associate Contractors, and Partners; fires; floods; major

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earthquakes; epidemics; quarantine restrictions; riots; insurrections; civil commotion’s; strikes, freight embargoes; and unusually severe weather.

ARTICLE 26 – DEFAULT

26.1 Definition of Default. The following will constitute a default by Astrotech under the Contract:

26.1.1 Astrotech becomes insolvent or is adjudicated bankrupt; or has an involuntary petition in bankruptcy filed against it; or makes an assignment for benefit of creditors, files a petition for an arrangement, composition or compromise with its creditors under any applicable laws; or has a trustee or other officer appointed to take charge of its assets;

26.1.2 Astrotech fails to perform the Work in accordance with the terms of this Agreement;

26.1.3 Astrotech abandons all or any portion of the Work;

26.1.4 Astrotech fails to make prompt payment to Astrotech Subcontractors; or

26.1.5 Astrotech disregards laws, ordinances, statutes, rules, permits, licenses, visas, regulations, or orders of any public authority having jurisdiction, in a manner that results in liability to Sea Launch/USSL, its Affiliates, Associate Contractors or Customer or prevents fulfillment of this contract.

26.2 Notice of Default. If Sea Launch determines that a default under Subparagraphs 26.1.1 through 26.1.5 above has occurred and is continuing, Sea Launch will give Astrotech notice in writing thereof. Astrotech shall have the right to cure any such default within ten (10) Working Days of receipt of such notice, or, if such default cannot be cured within such ten (10) Working Days, to commence the cure within such ten (10) Working Days and thereafter diligently proceed to complete such cure.

26.3 Sea Launch’s Rights. In the event of any Default under this Agreement, and, if applicable, Astrotech’s failure to cure such Default per the provisions of subparagraph 26.1.6, Sea Launch will have the right to terminate this Agreement as to all or any portion of the uncompleted Work.

26.4 Termination for Default. In the event of any termination pursuant to this Article 26: (i) Astrotech shall not receive any payment related to the terminated Work; (ii) Sea Launch shall not be required to pay Astrotech any termination charge associated with the terminated Work; and (iii) Astrotech shall return to Sea Launch all monies previously paid by Sea Launch to Astrotech for the terminated Work. Sea Launch shall have the right to complete the terminated Work by whatever method Sea Launch may deem expedient, including without limitation, by employing another contractor under such form of contract as Sea

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Launch may deem advisable, or by having Sea Launch provide the labor and materials and performing such Work.

ARTICLE 27 – DISPUTES AND ARBITRATION

27.1 Continuation of Performance. The decision to submit a dispute under this Section shall not excuse Astrotech from the timely performance of its obligations hereunder and Astrotech will perform the Work as set forth in this Agreement. If Sea Launch requires Astrotech to perform work that Astrotech does not believe is within the existing scope of this Agreement, as set forth in Exhibits A and B (Statement of Work), (hereafter referred to as “Disputed Work”), then Astrotech will perform the Disputed Work and will start the dispute resolution procedure in accordance with this Article 27, to determine whether Astrotech should be paid additional money for this work. Disputed Work includes any performance of Work on which Sea Launch and Astrotech disagree, whether or not such Work satisfies the warranty requirement of Article 21, Warranty.

27.2 Management Consultation. Any dispute which cannot be resolved in a timely manner by the mutual agreement of the Authorized Contract Representatives of Astrotech and Sea Launch will first be submitted in writing, by either the Astrotech or Sea Launch Authorized Contract Representative, to the President or equivalent Senior Official of Sea Launch and the President of Astrotech for resolution, who shall enter into good faith negotiations to resolve the dispute and issue a joint written decision within thirty (30) days. In the event any controversy or claim submitted for joint resolution hereunder is not jointly resolved within thirty (30) days from the date after such submittal, either party shall have the right to seek relief by arbitration.

27.3 Arbitration Process. Any dispute arising out of or relating to this Agreement or any breach of this Agreement, that the Parties have been unable to resolve by management consultation as provided in Article 27.2, will be resolved exclusively by arbitration. The arbitration will be in accordance with the rules prepared by the American Arbitration Association except as specifically modified in this Agreement.

27.3.1 Agreement to Arbitrate. The award of the arbitrator shall be final and binding upon the Parties.

27.3.2 Governing Rules. The arbitration shall be in accordance with the rules of commercial arbitration of the American Arbitration Association, except that in the event of any conflict between those rules and the arbitration provisions of this contract, the provisions of this Agreement shall govern. The arbitrator shall determine the matters in dispute in accordance with the substantive law, excluding choice of law rules, of the State of California.

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27.3.3 Appointment of Arbitrator. The number of the arbitrators shall be one. Upon application of one of the Parties to this Agreement, the American Arbitration Association in California shall appoint the arbitrator. The arbitration, including the making of the award, shall take place in California.

27.3.4 Commencement of Arbitration. Either Party may commence arbitration by applying to the American Arbitration Association office for appointment of an arbitrator. The application for appointment will identify the other Party to this Agreement by name and address. A copy of the application for appointment of an arbitrator will be sent to the other Party.

27.3.5 Issues in Dispute. The application for appointment will specify the issues that are in dispute, the position of the initiating Party as to those issues, the identity of the Parties with whom the initiating Party is in dispute, and will state the remedy that the initiating Party seeks.

27.3.6 Award. The arbitrator is authorized to award damages to the prevailing Party and to order specific performance of any contractual obligation that he finds a Party is failing to perform. The arbitrator will make the award within thirty (30) Working Days from the date established for final submittal of oral or written statements and documents to the arbitrators. An award will be in writing, will state the precise reasons for the award and will specify the remedy or relief granted, if any.

27.3.7 Enforcement. An award by the arbitrator will be final and conclusive as to the issue or issues that were the subject of the arbitration. The Parties to this Agreement exclude any right of application or appeal to any court and, in particular, in connection with any questions of jurisdiction or question of law arising in the arbitration or out of the award. The award will be enforceable in any court having jurisdiction over the Party against whom enforcement is sought. The award of the arbitrator shall be final and binding upon the Parties.

27.3.8 Interim or Provisional Remedies. Any Party commencing arbitration under this Agreement may seek from any court of competent jurisdiction in California a temporary remedy (such as an injunction or order to refrain from taking certain action) that is needed to preserve assets or the rights of that Party while the arbitration is being conducted. Once an arbitrator is appointed, the arbitrator may impose a temporary remedy, in addition to or to supplement any temporary remedy imposed by the court.

27.3.9 Attorneys’ Fees and Expenses. If either Party shall initiate an arbitration or brings suit to seek a temporary remedy as provided in Subparagraph 27.3.8, or to enforce the award of the arbitration, the substantially prevailing Party shall be entitled to a reasonable sum as attorneys’ fees (including attorneys’ fees on appeal), court costs and all costs and expenses in connection with such action (including reasonable costs and expense incurred on appeal), which sum shall be included in any such resulting judgment or decree.

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ARTICLE 28 – INTELLECTUAL PROPERTY INFRINGEMENT

28.1 Definitions. The following definitions shall apply only to terms as used in this Article 28:

28.1.1 Intellectual Property. “Intellectual Property” shall mean know-how, as well as all technology based data and information (including without limitation, computer software, computer data-bases, computer software documentation, drawings, specifications, reports, designs, know-how, show-how, processes, procedures and the like) including any and all inventions, discoveries, or improvements along with all applications for and letters Patent covering the same, as well as any reissues, divisions, and extensions of said applications or Letters Patent.

28.1.2 Relevant Intellectual Property. “Relevant Intellectual Property” shall mean any and all pre existing Astrotech Intellectual Property or Astrotech Intellectual property created in the performance of the Work which is necessary for Sea Launch/USSL or a Subcontractor or a sublicensee to have in order to perform its Sea Launch/USSL obligations.

28.2 Rights in Intellectual Property.

28.2.1 Right. Title and Interest. Except as expressly stated herein, Astrotech shall transfer to Sea Launch/USSL all right, title and interest in any Intellectual Property created during the performance of the Work under this Agreement by Astrotech.

28.2.2 Grant. Astrotech grants Sea Launch/USSL a non-exclusive, irrevocable right to use and sublicense Astrotech’s relevant intellectual Property solely for the Sea Launch/USSL purposes intended under the scope of this Agreement. Except as expressly noted above, nothing herein shall grant, by implication or otherwise, any rights in or licenses under any present or future Intellectual Property.

ARTICLE 29 – PROPRIETARY AND TECHNICAL INFORMATION

29.1 Definitions. The term “Proprietary Information”, for purposes of this Article 29 shall mean all information and data, including that received from Sea Launch/USSL, or Affiliate of Sea Launch/USSL, or Associate Contractor’s, Contractors or subcontractors of Sea Launch/U. S. Sea Launch, or the Customer, which is disclosed: (a) by one Party to the other in connection with this agreement; or (b) by one Associate Contractor of Sea Launch/USSL to another Associate Contractor of Sea Launch/U. S. Sea Launch; provided that, when disclosed, such information is in written or other permanent form and is identified as proprietary to the originating party by clear and conspicuous markings. Any such information in other form, when disclosed, shall be considered Proprietary Information under this Agreement, but only to the extent identified as proprietary at the time of the original disclosure and thereafter summarized in writing and

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transmitted by the originating third party, with such clear and conspicuous markings, to the receiving party within thirty (30) days of the non-written disclosure.

29.2 Confidentiality of Proprietary Information. Each party shall preserve Proprietary Information received from the other Party, it’s Affiliates, or from a Subcontractor /Associate Contractor or Customer in confidence for a period of fifteen (15) years from the transfer of the Proprietary Information. During this period, each Party shall refrain from disclosing such Proprietary Information to any third party without written authorization from the other Party. The confidentiality obligations shall be considered satisfied by each Party through the exercise of the same degree of care used to restrict disclosure and use of its own information of like importance. For the purpose of this Article 29, the term “third party” means any party other than Astrotech, Sea Launch/ US Sea Launch, and Associate Contractors.

29.3 Use of Proprietary Information. Until such time as this Agreement shall terminate, each Party may use Proprietary Information received from the other Party, but only for the purposes of fulfilling their obligations under this Agreement. Upon the expiration of the period set forth in Article 29.2, all limitations on use of Proprietary Information shall cease.

29.4 Exclusions from Confidentiality. This Agreement shall not restrict disclosure or use of Proprietary Information that is:

(a) Known to the receiving party without restriction as to further disclosure when received, or thereafter is developed independently by the receiving party; or

(b) Obtained without restriction as to further disclosure from a source other than the originating party through no breach of confidence by such source; or

(c) In the public domain when received, or thereafter enters the public domain through no fault of the receiving party; or

(d) Disclosed by the originating party to a third party without restriction as to further disclosure.

29.5 Nonrestrictive Markings. To the maximum extent possible, Technical data furnished to Astrotech under this Agreement shall be provided for use by Astrotech without a restrictive legend, except as provided pursuant to Sections 29.9 and 29.10 below, including the right to use, and duplicate. It is the intent of the parties that the designation of Technical Data as Proprietary or a Trade Secret shall be kept to a minimum in order to facilitate implementation of this Agreement.

29.6 Ownership of Technical Information. All information and data, regardless of form, generated in the performance of or delivered under this Agreement to Astrotech, as well as any information provided to

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Astrotech by Sea Launch/U. S. Sea Launch, BCSC, Associate Contractor’s, or Customer shall be and remain the sole property of Sea Launch. Astrotech shall keep all such information in confidence and not disclose or use it for any purpose other than for the purpose of performance under this agreement. Any other use of such Information by Astrotech shall be made only upon the receipt of the prior written consent of the Sea Launch Authorized Contract Representative. Astrotech further agrees that upon the termination of this Agreement Astrotech shall leave with the Sea Launch Authorized Contract Representative any information that is in tangible form, whether written or computer software, or otherwise, including all copies thereof.

29.7 Data Retention. All technical data necessary to perform the Project, generated pursuant to any Sea Launch contract, existing at the time of signature of this Agreement or generated from this point on, including but not limited to design, operational and process documentation and parts lists as it relates to systems, subsystems, components and parts, as well as software provided to or developed for Sea Launch, shall be maintained for the life of the Sea Launch Project or the termination of this Agreement.

29.8 Proprietary and Trade Secret Data. In the event any of the technical data required to be furnished to Astrotech under this Agreement is considered by Sea Launch/U. S. Sea Launch, BCSC, Associate Contractors or Customer to be proprietary or a trade secret (such as detailed design, manufacturing and processing information) and Sea Launch/U. S. Sea Launch, BCSC, Associate Contractors or Customer desires to maintain proprietary or trade secret rights for such data, the Sea Launch Authorized Representative and the Sea Launch Home Port Technical Manager shall make every attempt to ensure that the data is marked “Boeing and/or Sea Launch and/or Customer Proprietary” or as a “Trade Secret” and shall make every attempt to only provide such data to Astrotech with advance coordination with the Astrotech Home Port Technical Manager or Astrotech’s Authorized Representative. Any data so provided to Astrotech in writing, shall be marked by Sea Launch/U. S. Sea Launch, BCSC or Customer as “PROPRIETARY” or “TRADE SECRET” prior to submittal to Astrotech. Astrotech agrees that such data will not, without permission of Sea Launch, be duplicated, used or disclosed by Astrotech or its contractors and subcontractors for any purpose other than as necessary to carry out Astrotech’s obligations under this Agreement. Further, if such data is required by Astrotech’s contractors and subcontractors, the data will only be furnished to them after receipt of prior written consent from the Sea Launch Authorized Representative and upon receipt of contractors and subcontractors written agreement to protect the data from unauthorized use, duplication and disclosure and agreement to returned to Astrotech all such data upon completion of work and/or its intended use

29.9 Financial and Commercial Data. It is recognized that Astrotech may receive or otherwise have access to certain financial and commercial (business) data of Sea Launch/USSL, BCSC, Associate Contractors or Customer, or their respective contractors and subcontractors, which may be considered confidential or privileged, and which, if subsequently disclosed to the public, could cause substantial harm to Sea Launch/USSL, BCSC, Associate Contractors or Customer’s competitive positions and/or impair

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Astrotech’s ability to obtain necessary information in the future. Such data shall be considered by Astrotech to be proprietary and handled pursuant to this Article 29.

ARTICLE 30 – PATENT AND DATA RIGHTS

30.1 Patent and Data Rights. Astrotech will not acquire, as a result of the Services provided under this Agreement, any rights to copyrights, trade secrets, inventions, or patents of Sea Launch/USSL, its affiliates, Contractors, Associate Contractors or Customer which may be used in, or result from the Payload, Payload processing or Sea Launch launch vehicle, or any rights to proprietary or trade secret data of Sea Launch/USSL, its affiliates, Contractors, Associate Contractors or Customer, except for the right to use, duplicate, and disclose such data as set forth in this Article 30.

30.2 Indemnification

30.2.1 Astrotech Indemnification of Sea Launch. Astrotech shall indemnify and hold harmless Sea Launch/USSL, its Affiliates, Contractors, Associate Contractors and Customers, agents and employees from and against all claims, losses, costs, damages and expenses (including without limitation, attorneys’ fees) incurred by Sea Launch/USSL or any of its Affiliates, Contractors, Associate Contractors or Customers as a result of or in connection with any claims or actions based upon infringement or alleged infringement of any patent or copyright, or wrongful use of any trade secret or other proprietary information, which arises out of the use of the services, supplies or materials furnished under this Agreement by Astrotech or any Astrotech subcontractor, or out of the processes or actions employed by, or on behalf of Astrotech or any Astrotech subcontractor in connection with the performance of the Work. Astrotech shall, at its sole expense, promptly defend Sea Launch/USSL and its Affiliates, Contractors, Associate contractors and Customer against any such claim or action unless directed otherwise by Sea Launch. The foregoing obligation of Astrotech is subject to Sea Launch’s provision of notice to Astrotech upon Sea Launch’s becoming aware of any such claims or actions, and shall not apply to services, supplies, materials or processes furnished or specified by Sea Launch/USSL.

30.2.2 Sea Launch Indemnification of Astrotech. Sea Launch shall indemnify and hold harmless Astrotech, its Affiliates, agents and employees from and against all claims, losses, costs, damages and expenses (including without limitation, attorneys’ fees) incurred by Astrotech or any of its Affiliates, agents or employees as a result of or in connection with any claims or actions based upon infringement or alleged infringement of any patent or copyright, or wrongful use of any trade secret or other proprietary information, which arises out of the use of the services, supplies or materials furnished under this Agreement by Sea Launch/USSL or any Sea Launch/USSL subcontractor, or out of the processes or actions employed by, or on behalf of Sea Launch/USSL or any Sea Launch/USSL subcontractor in connection with the performance of the Work. Sea Launch shall, at its sole expense, promptly defend Astrotech and its Affiliates, agents and employees against any such claim or action unless directed otherwise by Astrotech. The foregoing

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obligation of Sea Launch is subject to Astrotech’s provision of notice to Sea Launch upon Astrotech becoming aware of any such claims or actions, and shall not apply to services, supplies, materials or processes furnished or specified by Astrotech.

30.3 Assistance with Third Party Claims. In the event a third party claim is asserted against Sea Launch/USSL, Astrotech, their affiliates, Contractors, Associate Contractors, or Customer (as applicable) 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 Astrotech under this Agreement, Astrotech and Sea Launch/USSL agree to give prompt notice to the other party of any such claim and agree to provide each other with all assistance practicable in the defense against such claim. If a claim asserted against one party is a claim against which the other has agreed to indemnify the other party 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.

ARTICLE 31 – U.S. EXPORT CONTROL LAWS AND REGULATIONS

31.1 General. Astrotech represents and warrants that no technical data furnished to it by Sea Launch/USSL, its affiliates, Contractors, Associate Contractors or The Sea Launch Customer or developed by Sea Launch, USSL, its affiliates, Contractors, Associate Contractors or the Sea Launch Customer directly from such data during performance of the work under this Agreement will be disclosed to any “foreign person” (as such term is defined in 22 CFR § 120.16), without first complying with the licensing, approval, and all other requirements of the U.S. export control laws, regulations, and directives, including but not limited to the Arms Export Control Act (22 USC § 2778), International Traffic in Arms Regulations (22 CFR. Parts 120-130), Export Administration Act (50 USC §§ 2401-2410 as amended), Export Administration Regulations (15 CFR Parts 730-799) and DOD Directive 5230.25, Withholding of Unclassified Technical Data from Public Disclosure.

31.1.1 Astrotech will obtain the written consent of Sea Launch prior to submitting any request for authority to export any such technical data.

31.1.2 Astrotech will indemnify and hold Sea Launch/USSL, its affiliates, Contractors, Associate Contractors and the Sea Launch Customer harmless from all claims, demands, damages, costs, fines, penalties, attorneys’ fees, and all other expenses arising solely from failure of Astrotech to comply with this Article 31.

31.2 Export of Data and Assistance. Nothing in this Agreement shall be construed as obligating Sea Launch or Astrotech to export data or provide assistance except as may be permitted under the export control laws of the United States government.

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31.3 Technology Assistance Agreements (TAAs). Sea Launch and Astrotech will conduct all operations associated with this contract under the provisions of the applicable program Technology Assistance Agreements (TAAs) and the program Technology Transfer Control Plan (TTCP).

ARTICLE 32 – RESERVED

ARTICLE 33 – ILLEGAL PAYMENTS AND ANTI-BOYCOTT LAWS

33.1 Illegal Payments; Compliance with Law. In performing its obligations under this Agreement, Astrotech represents that it shall comply with all applicable laws and regulations of the government of the United States. In particular, Astrotech shall not make any payment or gift to any third party for any purpose related to this Agreement if such payment would constitute a bribe or illegal payment under the United States Foreign Corrupt Practices Act or any other law or regulation of the United States government. No cash distributions or payments made to Astrotech under this Agreement will be used by Astrotech to benefit any employee of a government or a political party.

33.2 Anti-Boycott Law Compliance. The law of the United States prohibits United States companies from participating in or furthering an economic boycott of one country by another. United States tax law penalizes United States companies that participate in or further such a boycott, and other laws provide for fines for such participation or furtherance of a boycott. Sea Launch and Astrotech agree that nothing in this Agreement constitutes a commitment or agreement on behalf of either Party to comply with any law of a country, if such compliance would constitute compliance with an economic boycott by one country of another.

ARTICLE 34 – RECORDS AND AUDITS

34.1 Audit Rights. For the purpose of evaluating Astrotech’s incurred costs with respect to Astrotech’s invoices for cost reimbursement, progress payment, Astrotech’s claim(s) arising out of a termination or partial termination of this contract, and Astrotech’s proposals for incentive price revisions or elements of Astrotech’s change proposals which must be verified by audit, Astrotech agrees that Sea Launch or any of its duly authorized representatives shall have access to and the right to audit any pertinent books, documents, paper, and records which support direct and indirect costs including Labor hours and material costs. Sea Launch will have no audit rights against Astrotech with regards to the current Fixed Priced Services provided for under Phase II of the Agreement.

34.2 Retention of Records. If this agreement is completely or partially terminated, the records relating to the Work shall be preserved and made available for a period of three (3) years from the date of any resulting final settlement.

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34.2.1 Records which relate to claims arising out of the performance of this Agreement, or cost and expenses of this Agreement as to which exception has been taken by Sea Launch, its auditor or its representatives, shall be retained by Astrotech until such appeals, litigation’s, claims or exceptions have been fully and finally concluded.

ARTICLE 35 – PAYMENT TERMS AND FINANCIAL CONSIDERATIONS

35.1 General. Sea Launch/BCSC shall pay Astrotech for Services furnished under this Agreement in accordance with this Article 35. USSL shall be responsible for obtaining and maintaining the lease of the Home Port site from the Port of Long Beach, and all costs related thereto. Where the Astrotech Phase I Services include the procurement of facilities, hardware, equipment or services, upon full payment to Astrotech, as defined below, for such procurement of facilities, hardware, equipment and services, all title and rights to said facilities, hardware, equipment and services shall vest with U.S. Sea Launch. For Phase II, USSL will procure all consumables, additional hardware, additional equipment, and outside services required in performance of the Astrotech Phase II Services. Upon identification and Sea Launch approval of each such requirement pursuant to Article 3, Administration of the Contract, Astrotech shall prepare and submit to Sea Launch Home Port Facilities Manager, as applicable, a Procurement Request for such procurements. All such procurements shall be funded, procured, and administered directly by Sea Launch/USSL Procurement.

35.2 Phase I Service Fees and Other Charges. For Phase I Services furnished by Astrotech under this Agreement, BCSC shall pay Astrotech only for that portion of the BCSC authorized Services provided by the Astrotech Construction Manager, the Astrotech Facility Manager and the Astrotech Resident Technical Representative, plus reimbursement, without any Astrotech markup, of (i) BCSC authorized travel expenses associated with the provision of Services by all Astrotech personnel (air fare not to exceed regular coach), and (ii) all BCSC authorized costs incurred by Astrotech for consultant services (e.g., environmental consultant), plus any additional charges that may be agreed to in writing by the Agreement Coordinators of the parties. The Service Fees for the Astrotech Construction Manager and the Home Port Astrotech Technical Manager shall be $100.00 per hour, and for the Astrotech Resident Technical Representative shall be $50.00 per hour, respectively. Regardless of the hours actually expended, Astrotech shall charge BCSC a maximum of eight hours in any one-day.

35.3 Phase II Service Fees and Other Charges. For Phase II Services furnished by Astrotech under this Agreement, Sea Launch shall pay Astrotech a Firm Fixed Price Service Fee determined by the actual launch date of each Payload and calculated in accordance with the price schedule set forth in Exhibit C of this Agreement, plus (i) reimbursement of any costs pre-approved by the Sea Launch Authorized Representative or Sea Launch Home Port Facility Manager incurred by Astrotech for other goods and Services, and (ii) any additional charges authorized by the Sea Launch Authorized Representative and payable under this Agreement. The Service Fee as determined in accordance with Exhibit C, Price

42 Amendment 3 12/03/2002

Schedule is exclusive of any federal, state or local tax, if applicable. Although as of the effective date of this Agreement no such taxes are applicable, should such taxes become applicable they shall be added to the amount to be paid by Sea Launch to Astrotech.

35.4 Invoicing and Payment. Astrotech shall submit invoices for all payments due under this Agreement. Invoices for Phase I and Phase II Services shall include the number of this Agreement, invoice number, invoice date, line item number, and a detailed summary of all charges being billed. In all cases (Phase I and Phase II) where charges are for reimbursement of pre-approved costs incurred, suitable documentation including receipts shall accompany each invoice to support requests for reimbursement. All payments defined in this Agreement shall be (i) in United States Dollars, (ii) payable to Astrotech Space Operations, Inc., and (iii) wire transferred, at Sea Launch expense, to the Riggs Bank, N.A., 808 17^th Street, NW, Washington, DC 20006 (or other address specified by Astrotech in writing) within thirty (30) days of receipt of an acceptable original invoice to Sea Launch Accounts Payable.

Account Name: Relationship Banking

Account Number: 25-384-215

ABA Routing No.: 054000030

Remarks: Astrotech Invoice #XXXXX

Astrotech shall deliver invoices as follows (U.S. Mail/Express Overnight):

Sea Launch Company, LLC

Attn: Accounts Payable

One World Trade Center

Suite 950

Long Beach, CA 90831-0950

35.5 Billing Schedule.

35.5.1 Phase I. Invoices for Phase I Services may be issued by Astrotech on a monthly basis.

35.5.2 Phase II. Invoices for Phase II Services associated with a Payload launch will be issued by Astrotech on the day following such launch. Invoices for additional separately priced services provided under Phase II may be issued by Astrotech on a monthly basis.

ARTICLE 36 – MISCELLANEOUS PROVISIONS

36.1 Publications and Photographs: Commercial Activities. Astrotech shall not make, and shall ensure reasonable efforts that no Subcontractor or Supplier or their respective employees or agents makes, any announcement or release of any information or photographs concerning this Agreement or the Project, or any part thereof, to any member of the public or press, unless prior written consent is obtained from Sea Launch. Astrotech shall not establish any commercial activity or issue concessions or permits of any kind to

43 Amendment 3 12/03/2002

third parties for establishing commercial activities on any Sites. Astrotech shall not allow its employees to engage in any commercial activities on the Site.

36.2 Waiver and Partial Invalidity. None of the provisions of this Agreement shall be considered waived by either party to this agreement unless such waiver is given in writing by the Sea Launch Authorized Representative. No such waiver shall be a waiver of any past or future default, breach or modification of any of the provisions of this Agreement unless expressly stipulated in such waiver. If any provision of this Agreement becomes void or unenforceable by force of law, the remainder shall remain valid and enforceable.

36.3 Survival of Provisions. In addition to the provisions of this Agreement which, by their terms, continue in effect after acceptance and final payment under expiration or termination of this Agreement, the following provisions shall continue in effect after acceptance and final payment under or termination of the Contract per the terms of the Contract Articles specified herein and all applicable local, state, and federal regulations: Article 17 Environmental Requirements, Article 28 Intellectual Property Infringement, Article 29 Proprietary and Technical Information, Article 21 Warranty, Article 22 Indemnification and Hold Harmless, Article 27 Disputes and Arbitration, Article 33 Illegal payments and Anti Boycott Laws, Article 34 Records and Audits, Article 29.8 Data Retention, and Article 36.10 Governing Law.

36.4 Binding Effect. This Agreement shall extend to and be obligatory upon the legal representatives, successors, and assigns of the respective Parties to the extent such succession or assignment is permitted under Article 36.8, Assignability. This Agreement is not intended to benefit any person or entity other than Sea Launch and Astrotech and no third-party beneficiary rights are created by this Agreement.

36.5 Severability. Any provision of this Agreement that is invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality, or unenforceability without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal, or unenforceable in any other jurisdiction.

36.6 Waiver. A failure by either party hereto to assert its rights under this Agreement shall not be deemed a waiver of such rights, nor shall any waiver be implied from any such act or omission. No waiver by either party hereto with respect to any right shall extend its effect to any subsequent breach of the terms hereof of like or different kind, unless such waiver explicitly provides otherwise.

36.7 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

44 Amendment 3 12/03/2002

36.8 Assignability. Neither party to this Agreement shall be entitled to assign, directly or indirectly, by operation of law or otherwise, this Agreement or its rights or obligations hereunder or any interest herein, except to a related or successor entity, or with the prior written consent of the other.

36.9 Disclaimer of Authority. This Agreement shall not constitute either party as the legal representative, agent, or attorney-in-fact of the other, nor, except as expressly set forth herein, shall either party have the right or authority to assume, create or incur any liability or obligation of any kind, express or implied, against or in the name of or on behalf of the other party.

36.10 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with the laws in the State of California, and the parties further agree that they will not commence any action, whether in a court of law or equity or before an arbitration panel, other than in the State of California.

36.11 Complete Agreement. This Agreement and the Exhibits hereto, together with the documents herein incorporated by reference, as amended and supplemented, and any Amendments to this Agreement constitute the entire agreement between the parties hereto with respect to the transactions contemplated hereby and supersede all previous oral and written and all contemporaneous oral negotiations, commitments, agreements, and understandings. The terms of this Agreement may not be waived, altered, modified or amended, except by a written agreement of the parties hereto executed by duly authorized officers or representatives thereof.

ARTICLE 37 – EFFECTIVE DATE AND DURATION OF AGREEMENT

This Agreement, which entered into force on 25 April 1996, is hereby amended as indicated by this Amendment 3 and shall continue in force through 31 May 2011, unless further amended or terminated pursuant to the provisions of this Agreement prior to said expiration date.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have executed this Amendment 3 to this Agreement.

SEA LAUNCH COMPANY, L.L.C.		ASTROTECH SPACE OPERATIONS, INC.
By:	/s/    PAMELA C. SIMS	By:	/s/    JOHN B. SATROM
	Pamela C. Sims		John B. Satrom
	Director Contracts and Purchasing		Senior Vice President and General Manager
Date:	06 December 2002	Date:	06 December 2002

45 Amendment 3 12/03/2002

APPENDIX 2

PAGE 1 OF 5

APPENDIX 2

PHASE II SERVICES

This Appendix 2 describes the Services to be provided by Astrotech under this Agreement in conjunction with the operation of the Home Port.

1. Payload Processing Support Documentation. Astrotech shall periodically review and update the facility accommodations document for BCSC and USSL describing the Home Port Facilities and equipment available to support payload processing operations and environmental capabilities pertaining to payload processing operations. These documents will be provided to BCSC for use and incorporation into the overall Home Port documentation.

2. Customer Coordination. Astrotech shall assist BCSC in preparing the Payload ICD with each BCSC Customer for each Payload to be processed at the Home Port. Additionally, Astrotech shall participate in coordination meetings with each Customer to understand and define the Customer payload processing requirements. Astrotech shall identify to BCSC any Customer requirements which exceed the existing capabilities of the Home Port and, pursuant to Section 4.2 of this Agreement, shall prepare, submit, and track the procurement request(s) to obtain the required additional capability.

3. Operations and Maintenance.

3.1 Astrotech shall (i) operate and maintain the Home Port payload processing facilities, (ii) maintain the other Home Port facilities, with the exception of the pier, to include identification and implementation of periodic maintenance requirements, and (iii) checkout, operate, and maintain the systems onboard the ACS, which support Block-DM fueling operations, in cooperation with Barber Kvaerer, to include scrubbers, breathing air system and the toxic gas monitoring systems.

3.2 Astrotech shall identify the equipment and furnishings required to configure the payload processing facilities to support the customer requirements specified in the Payload ICD for each mission . Following coordination pursuant to Section 4.1 of this Agreement, Astrotech shall prepare, submit, and track the required procurement requests, and upon delivery, Astrotech shall receive, install, set up, and check out all such equipment and furnishings. Astrotech shall assist BCSC and USSL in defining the equipment and furnishings required for the other land-based facilities, the marine support facilities and the Block DM fueling facilities onboard the ACS, and, as mutually agreed, receive, install, set up, and check out all such equipment and furnishings.

AMENDMENT 2

APPENDIX 2

PAGE 2 OF 5

4. Arrival and Departure Transportation. Astrotech shall arrange for spacecraft customer transportation of crated flight hardware and associated ground support equipment by commercially available ground transportation vehicles from and to terminals as requested by BCSC.

5. Facility Scheduling. Astrotech shall provide regular inputs to the BCSC/USSL scheduling group related to operations in the Payload Processing facilities and other Astrotech activities at the Home Port.

6. Ordnance Handling and Storage. Astrotech shall manage the receiving, inspection, and storage of ordnance items. Astrotech shall arrange for cold soak and x-ray of solid rocket motors as required. Astrotech shall follow any BCSC or USSL developed program specific guidelines for ordnance handling and storage.

7. Communications. Astrotech shall configure and implement the communications requirements for each Payload to be processed at the Home Port as defined in the Payload ICD, including command, data, and voice circuits, closed-circuit television between the High Bays and selected points in Buildings 1, 3 and 4; and coordinate local and long distance telephone service for spacecraft customers.

8. Electrical Power. Astrotech shall configure and implement the electrical power and distribution requirements for each Payload to be processed at the Home Port as defined in the Payload ICD.

9. Security. Astrotech will provide configuration of the card-reader security locks on all internal and external doors leading into the Payload processing areas and 24 hour-a-day electronic monitoring of all Home Port facilities for smoke/fire/intrusion detection.

10. Solvents and Gases. Astrotech shall arrange for provision of gaseous nitrogen, liquid nitrogen, gaseous helium, isopropyl alcohol, deionized water, and other general purpose cleaning agents and solvents, as defined in the Payload ICD.

11. Propellant Procurement. Astrotech shall assist BCSC/USSL in the procurement of Spacecraft and Block DM propellants . Astrotech shall provide transportation/handling services for Block DM propellants from the delivery contractor to the fueling rooms onboard the ACS, including staging to and from the PPF if necessary.

AMENDMENT 2

6 December 2002

USSL-PCS02-015

To:	John B. Satrom
	Senior Vice President & General Manager Astrotech Space Operations, Inc. 1515 Chafee Drive Titusville, FL 32780
Cc:	Bruno Ganguli
	Gary Goodwin Ken Hill Tod Milton Shawn Murphy
Subject:	Amendment 3 to Contract Agreement 220957-BA between Astrotech Space Operations, Inc. and Sea Launch Company, L.L.C.
Reference:	(1)    Amendment 3 to Contract Agreement 220957-BA, dated 6 December 2002.
	(2)    Change Order #001 to Amendment 2 of the Contract Agreement, dated 24 October 2002.

Please find enclosed herewith reference (1) Amendment 3 of the Contract Agreement 220957-BA. Amendment 3 incorporates the agreed to provisions of Change Order #001 and replaces the previous Amendment 2 provisions Table of Contents; Amendment Summaries; Title & Preamble; Recitals; and Terms and Conditions (Article 1 through Article 37) in their entirety. Appendix 1 is now entitled Exhibit A, Phase I Services; Appendix 2 is now entitled Exhibit B, Phase II Services; Appendix 3 Model Payload Mission Annex is deleted in its entirety; Appendix 4 is now entitled Exhibit C Price Schedule.

This change shall enter into full force and effect as of the date of the last signature of the parties shown below.

Additional changes to Amendment 3 will be incorporated upon final definitization of the proposed revisions to Exhibit B “Statement of Work, Phase II Services” and the development of Exhibit D, List of Customer /BCSC Activity Documentation to be furnished to Astrotech; Exhibit E, Compliance and Reference Documents; Exhibit F, Contract Data Requirements List (CDRL); and Exhibit G, Listing of Agreement Modifications, as identified on page V of the table of contents.

Pamela C. Sims, Director Subcontracts & Purchasing

Sea Launch

2700 Nimitz Road

Long Beach, CA 90802

Telephone: 562-951-7362 Fax: 562-951-7015

Please complete implementation of Amendment 3 by signing the two originals of this document and returning one copy to the undersigned.

If you have any questions, please don’t hesitate to call me. Once again thank you for your continued support in this effort.

/s/    PAM C. SIMS	06 Dec. 2002	/s/    JOHN B. SATROM	06 Dec. 2002
Pam C. Sims	Date	John B. Satrom	Date
Director		Senior Vice President &
Subcontracts & Purchasing		General Manager
Sea Launch		Astrotech Space Operations

Pamela C. Sims, Director Subcontracts & Purchasing

Sea Launch

2700 Nimitz Road

Long Beach, CA 90802

Telephone: 562-951-7362 Fax: 562-951-7015

APPENDIX 2

PAGE 3 OF 5

12. Hazardous Waste Disposal. Astrotech shall assist in the disposal of any hazardous waste associated with the spacecraft operations in the Payload Processing Facility. Astrotech shall follow any BCSC or USSL developed program specific guidelines for hazardous waste disposal.

13. Sampling and Analysis. Astrotech shall arrange for sampling and analysis of samples of gases, propellants, and cleaning materials, as defined in the Payload ICD.

14. Photographic Services. Astrotech shall arrange for photographic services to support Payload Processing Activity, as defined in the Payload ICD.

15. Emergency Medical and Fire Protection. Astrotech shall assist BCSC/USSL to coordinate with the appropriate local government agencies for emergency medical assistance, fire protection, and hazardous materials incident response at the Home Port.

16. Training. Astrotech shall assist BCSC/USSL in developing and providing all training required for Customers to use the Home Port payload processing facilities for payload processing activities. Astrotech personnel will be provided access to BCSC and USSL sponsored training courses on a space available basis.

17. Test Equipment. Astrotech shall arrange for test equipment and tools, as defined in the Payload ICD.

18. Calibration. Astrotech shall arrange for equipment calibration services, as defined in the Payload ICD.

19. Personnel Protective Suits. Astrotech shall arrange for air hose-type personnel protective suits, splash suits, and provide the related training and support of both Spacecraft Customer and Energia personnel for liquid propellant handling, transfer, and fueling operations for the payload and Block DM. Astrotech will support BCSC/USSL by providing famliarization training on the use of the personnel protective suits.

20. Technical Shop Support. Astrotech shall arrange for unplanned shop support, as available in the local area.

21. Weighing. Astrotech shall arrange for the availability of weighing equipment and weigh the Payload, as defined in the Payload ICD.

AMENDMENT 2

APPENDIX 2

PAGE 4 OF 5

22. U.S. Customs Clearance. Astrotech shall assist BCSC/USSL in arranging for entry of the Payload and any Payload processing materials and equipment entering the U.S. from another country for the duration of the Occupancy Period.

23. Home Port Design and Construction Activity. At the request of BCSC/USSL, Astrotech shall provide the Services described in Appendix 1 of this Agreement for any subsequent Home Port design and construction activity. Astrotech shall maintain control of the “as-built” drawings for the Home Port Facilities.

24. Vehicle Maintenance. Astrotech shall administer the maintenance program for all Home Port motor vehicles including forklift and man-lifting vehicles used not including LP or ACS assigned vehicles. This shall include arrangement of the necessary service contracts, pursuant to Section 4.1, required to support this effort.

25. Tracking Metrics. Astrotech and BCSC/USSL shall develop performance-based metrics to evaluate and measure the performance of Astrotech in providing Phase II Services on a monthly basis. At the conclusion of each mission, Astrotech shall assist BCSC/USSL in performing a customer out-brief to solicit feedback on the services provided and develop applicable lessons learned for implementation on future missions.

26. Property Management Coordination. Astrotech shall support the property inventory management process established by USSL. Astrotech shall use customer provided software (MP2) for accomplishing operations and maintenance activities. Customer will provide access to MP2 and associated databases at Astrotech personnel workstations.

27. Equipment Sharing. Where practical, Astrotech shall share tools and materials with resident Home Port BCSC and USSL personnel. Similarly, BCSC and USSL shall provide Astrotech with access to common Home Port resource material and services such as support shops, tools, and material managed by USSL-designated logistics personnel.

28. Oversight of Custodial Services. Astrotech shall direct the USSL custodial contractor in the daily cleaning requirements of the PPF. Astrotech shall assist USSL in assuring custodial maintenance activities support the Home Port maintenance requirements.

29. Block DM Hypergol Fueling Operations Procedure. Astrotech shall develop and maintain a top level operating procedure and pre-ops checklist for hypergol operations conducted onboard the ACS. These documents shall be prepared in cooperation with Energia, Barber Kvaerner, USSL Safety and the

AMENDMENT 2

APPENDIX 2

PAGE 5 OF 5

USSL operations manager to ensure that the necessary equipment and personnel are ready to support Enegia fueling operations.

30. Block DM Hypergol Fueling Operations Oversight. Astrotech shall support the USSL/BCSC test conductor in integrating and managing the operations associated with Block DM fueling operations conducted onboard the ACS. This shall include coordination between Energia, USSL Safety, Barber Kvaerner to ensure safe operations conduct. Astrotech shall checkout and operate fueling support equipment as required.

AMENDMENT 2

APPENDIX 3

PAGE 1 OF 3

APPENDIX 3

MODEL PAYLOAD MISSION ANNEX

PAYLOAD MISSION ANNEX (No.)

(Payload Name)

MISSION SPECIFIC DETAILS AND REQUIREMENTS

FOR

ASTROTECH SERVICES

This Payload Mission Annex (No.) sets forth the mission specific details and requirements for the Services to be provided by Astrotech to BCSC (hereinafter called the “Customer”) under Purchase Contract No. Y00020 (hereinafter called “this Agreement”) to support the launch of the (Name) Payload.

1. Launch Date. The (Name) Payload is scheduled for launch on (Date), which is the planned launch date for purposes of this Agreement.

2. Occupancy Period. The Occupancy Period and facility assignments at the Home Port for the Payload established pursuant to Section 5.1 of this Agreement are set forth in Attachment A, which is attached to and made part of this Payload Mission Annex.

3. Service Fee. Based on the launch date set forth in Section 1 above, the (Name) Payload is the (Number) payload to be launched in calendar year         . Pursuant to Section 6.3 of this Agreement, the Service Fee applicable to the (Name) Payload is $            .

4. Customer Technical Manager. The representative of Customer designated as Customer Technical Manager is as follows:

(Name)

(Title)

(Customer Organization)

(Address)

(Address)

Telephone: 

Facsimile:

5. Alterations and Exceptions to the terms and Conditions of this Agreement. Under this Payload Mission Annex (No.) there are (no alterations or exceptions to the terms and Conditions of this Agreement) or (the following alterations or exceptions to the terms and Conditions of this Agreement:).

AMENDMENT 2

APPENDIX 3

PAGE 2 OF 3

6. Effective Date. This Payload Mission Annex (No.) shall be incorporated into and amend the Services to be provided by Astrotech under Purchase Contract No. Y00020, and the commitment of Astrotech to provide Services for the (Name) Payload shall commence as of the date of the last signature of the parties below.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have executed this Payload Mission Annex.

BOEING COMMERCIAL SPACE COMPANY		ASTROTECH SPACE OPERATIONS, INC.
By:	(Signature)	By:	(Signature)
	(Name)		(Name)
	(Title)		(Title)
Date:		Date:

APPENDIX 3

PAGE 3 OF 3

ATTACHMENT A

OCCUPANCY PERIOD AND FACILITY ASSIGNMENTS

FOR THE

(NAME) PAYLOAD

LAUNCH DATE:                                     

OCCUPANCY PERIOD:                                      TO                                         

FACILITY ASSIGNMENTS:

BUILDING/ROOM	ENTRY DATE	DEPARTURE DATE
Building 1/High Bay Complex “___”
Building 2/Ordnance Storage
Building “__”/Warehouse Storage
Building “__”/Office Space

APPENDIX 4

PAGE 1 OF 1

APPENDIX 4

PRICE SCHEDULE

PHASE II PAYLOAD PROCESSING SERVICES

	FIRM FIXED PRICE (PER PAYLOAD)
LAUNCH DATE	PAYLOADS 1-6 IN SAME YEAR		PAYLOADS 7-10 IN SAME YEAR		PAYLOADS 11+ IN SAME YEAR
CY 1998	$	350,000	$	200,000	$	100,000
CY 1999	$	364,000	$	208,000	$	104,000
CY 2000	$	379,000	$	216,000	$	108,000
CY 2001	$	394,000	$	225,000	$	112,000
CY 2002	$	409,000	$	234,000	$	117,000
CY 2003	$	426,000	$	243,000	$	122,000
CY 2004	$	443,000	$	253,000	$	127,000
CY 2005	$	461,000	$	263,000	$	132,000
CY 2006	$	479,000	$	274,000	$	137,000
CY 2007	$	498,000	$	285,000	$	142,000
CY 2008	$	518,000	$	296,000	$	148,000
CY 2009	$	539,000	$	308,000	$	154,000
CY 2010	$	560,000	$	320,000	$	160,000
CY 2011	$	583,000	$	333,000	$	167,000

NOTE 1. Prices stated are exclusive of any taxes, if applicable.

AMENDMENT 2

EX-10.35

Exhibit 10.35

EMPLOYMENT AND NON-INTERFERENCE AGREEMENT

This Employment and Non-Interference Agreement (this “Agreement”), is dated as of May 12, 2005, by and between Michael E. Bain (the “Executive”) and SPACEHAB, Incorporated, a Washington corporation (the “Company”).

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 Senior Vice President and Chief Operating Officer and to undertake such duties and responsibilities as may be reasonably assigned to Executive from time to time by the Chief Executive Officer, Board of Directors of the Company, or such other appropriately authorized or designated executive officer of the Company.

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 Chief Executive Officer, Chief Operating Officer, 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 all of his 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 and reasonable periods of illness or other incapacity), consistent with past practices and norms with respect to similar positions.

(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 May 12, 2005 and shall continue through June 12, 2007 (the “Initial Term”), subject to automatic annual renewal for two-year terms thereafter (the “Additional Term”), unless either the Company or Executive notifies the other party of its intent not to renew at least one hundred eighty (180) days prior to the end of the Initial Term or Additional Term as the case may be. 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

(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;

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(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.

(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 7 and 8 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

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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 one year anniversary of termination; and (B) pay to Executive (or his estate or representative) the benefits described in Section 6 through the one year 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 7 and 8. 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.

(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.

(iii) Notwithstanding the provisions of paragraphs (i) and (ii) above, in the event Executive’s employment is terminated within twelve months following a Change in Control pursuant to Section 3(b)(v) [by the Company for any other reason or no reason] or Section 3(c)(iii) [by the Executive for material reduction], the Company will (A) pay to Executive (or his estate or representative) a lump-sum amount equal to one times the sum of (1) the Executive’s then-current base salary and (2) the average of the last two annual bonuses paid to the Executive and (B) pay to Executive (or his estate or representative) the benefits described in Section 6 through the twelfth month anniversary of termination.

If the Company makes the payments required by this Section 3(d)(iii), 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,

Except as expressly set forth above, all other terms and conditions of the Employment Agreement shall remain in full force and effect.

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(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 have 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 be mitigated and reduced by and to the extent of Executive’s compensation under such alternative employment during the period for which payments are owed by the Company pursuant to Section 3(d)(i). Moreover, in the event that Executive is employed by or engaged in a Competitive Business as contemplated by Section 8(a)(i), then the Company will thereupon no longer be obligated to make payments under Section 3(d)(i).

(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 7 through 21.

4. Compensation

During the Term of Employment, the Company shall pay to Executive:

(a) As a base compensation for his services hereunder, in bi-weekly installments, a base salary at a rate of not less than $162,750.12 per annum. The base salary shall be increased to a rate of $200,000.00 per annum; effective May 23, 2005 and 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 incentive bonus, if any, based on Executive’s and/or Company’s performance as determined and approved by the Compensation Committee of the Board of Directors.

(c) An annual stock option grant, if any, based on Executive’s, Company’s and/or Company Stock 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 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. Travel outside the United States shall be subject to the prior approval of an executive officer of the Company.

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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. 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 10), 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 10). 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, 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.

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(b) In the event that Executive breaches his obligations in any material respect under this Section 7, 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 7 shall survive the termination of this Agreement regardless of who terminates this Agreement or the reasons therefor.

8. Non-interference

(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

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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.

(iii) The scope and term of this Section 8 would not preclude him from earning a living with an entity that is not a Competitive Business.

(b) The terms of this Section 8 shall survive termination of this Agreement regardless of who terminates this Agreement or the reasons therefor.

9. 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 7, 8 or this Section 9, 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.

10. Definitions

“Business” means (a) the design, manufacture, lease and operation of pressurized and unpressurized space modules, flight hardware and subsystems, and those other businesses and activities that are described in the Company’s Form 10-K for the fiscal year ended June 30, 2005, and Form 10-Q for the quarter ending December 31, 2005, or (b) any similar, incidental or related business conducted or pursued by, or engaged in, or

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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).

“Change in Control” of the Company shall be deemed to occur on: (i) the date that any person or group deemed a person under Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Act”), other than the Company and its subsidiaries as determined immediately prior to that date, in a transaction or series of transactions has become the beneficial owner, directly or indirectly (with beneficial ownership determined as provided in Rule 13d-3, or any successor rule, under such Act) of 20% or more of the outstanding securities of the Company having the right under ordinary circumstances to vote at an election of the Board of Directors of the Company; (ii) the date on which one-third or more of the members of the Board of Directors of the Company shall consist of persons other than Current Directors (for these purposes, a “Current Director” shall mean any member of the Board of Directors of the Company as of the effective date of the Plan and any successor of a Current Director whose nomination or election has been approved by a majority of the Current Directors then on the Board of Directors of the Company); or (iii) the date of approval by the shareholders of the Company of an agreement providing for (A) the merger or consolidation of the Company with another corporation where the shareholders of the Company, immediately prior to the merger or consolidation, would not beneficially own, immediately after the merger or consolidation, shares entitling such shareholders to 50% or more of all votes (without consideration of the rights of any class of stock to elect directors by a separate class vote) to which all shareholders of the corporation issuing cash or securities in the merger or consolidation would be entitled in the election of directors or where the members of the Board of Directors of the Company, immediately prior to the merger or consolidation, would not be members of the Board of Directors of the Company immediately after the merger or consolidation or (B) the sale or other disposition of all or substantially all the assets of the Company.

“Companies” means the Company and any of its direct or indirect subsidiaries, now existing or hereafter existing.

“Company” is defined in the introduction.

“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

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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 his 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).

“Restricted Period” means the period commencing on the date of this Agreement and continuing through the one year anniversary of termination.

“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.

“Term of Employment” is defined in Section 3(a).

11. 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:	Michael E. Bain
	14818 Elk Hill Court
	Houston, TX 77062
If to Company:	SPACEHAB, Incorporated
	Attention: Chief Financial Officer
	12130 Highway 3, Bldg. 1
	Webster, Texas 77598-1504

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Any such notices shall be deemed to be given on the date personally delivered or such return receipt is issued.

12. Executive’s Representation

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 breached or violated by Executive’s execution of this Agreement or by Executive’s performance of his duties hereunder.

13. 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.

14. 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.

15. 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 8 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.

16. 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

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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 7, 8 and 9 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 judgment 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.

17. 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 7, 8 and 9.

18. 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.

19. Litigation

THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF THE STATE OF TEXAS, 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 20, 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 HARRIS COUNTY, TEXAS. OR THE UNITED STATES DISTRICT COURTS IN THE STATE OF TEXAS. 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.

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THE CHOICE OF FORUM SET FORTH IN THIS SECTION 19 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.

20. Arbitration

EXECUTIVE AND THE COMPANY AGREE THAT ANY DISPUTE BETWEEN OR AMONG THE PARTIES TO THIS AGREEMENT RELATING TO OR 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 HOUSTON, HARRIS COUNTY, TEXAS, AND SHALL BE SUBJECT TO THE SUBSTANTIVE LAW OF THE STATE OF TEXAS. 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 19 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.

21. 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.

22. 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.

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IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first written above.

EXECUTIVE:

Michael E. Bain

SPACEHAB, INCORPORATED:

Michael E. Kearney,

President and Chief Executive Officer

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EX-10.36

Exhibit 10.36

EMPLOYMENT AND NON-INTERFERENCE AGREEMENT

This Employment and Non-interference Agreement (this “Agreement”), is dated as of May 12, 2005, by and between E. Michael Chewning (the “Executive”) and SPACEHAB, Incorporated, a Washington corporation (the “Company”).

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 Senior Vice President and to undertake such duties and responsibilities as may be reasonably assigned to Executive from time to time by the Chief Executive Officer, Board of Directors of the Company, or such other appropriately authorized or designated executive officer of the Company.

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 Chief Executive Officer, Chief Operating Officer, 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 all of his 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 and reasonable periods of illness or other incapacity), consistent with past practices and norms with respect to similar positions.

(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 May 12, 2005 and shall continue through June 12, 2006 (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 at least ninety (90) days prior to the end of the Initial Term or Additional Term as the case may be. 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

(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;

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(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.

(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 7 and 8 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

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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 sixth month anniversary of termination; and (B) pay to Executive (or his estate or representative) the benefits described in Section 6 through the sixth 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 7 and 8. 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.

(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 have 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 be mitigated and reduced by and to the extent of Executive’s compensation under such alternative employment during the period for which payments are owed by the Company pursuant to Section 3(d)(i). Moreover, in the event that Executive is employed by or engaged in a Competitive Business as contemplated by Section 8(a)(i), then the Company will thereupon no longer be obligated to make payments under Section 3(d)(i).

(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.

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(g) Termination of the Term of Employment will not terminate Sections 3(d), 3(f), and 7 through 21.

4. Compensation

During the Term of Employment, the Company shall pay to Executive:

(a) As base compensation for his services hereunder, in bi-weekly installments, a base salary at a rate of not less than $183,380.08 per annum. The base salary shall be increased to a rate of $195,000.00 per annum; effective as of May 23, 2005 and 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 incentive bonus, if any, based on Executive’s and/or Company’s performance as determined and approved by the Compensation Committee of the Board of Directors.

(c) An annual stock option grant, if any, based on Executive’s, Company’s and/or Company Stock 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 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. Travel outside the United States shall be subject to the prior approval of an executive officer of the Company.

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. 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

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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 10), 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 10). 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, 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 7, 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 7 shall survive the termination of this Agreement regardless of who terminates this Agreement or the reasons therefor.

8. Non-interference

(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

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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.

(iii) The scope and term of this Section 8 would not preclude him from earning a living with an entity that is not a Competitive Business.

(b) The terms of this Section 8 shall survive termination of this Agreement regardless of who terminates this Agreement or the reasons therefor.

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9. 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 7, 8 or this Section 9, 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.

10. Definitions

“Business” means (a) the design, manufacture, lease and operation of pressurized and unpressurized space modules, flight hardware and subsystems, and those other businesses and activities that are described in the Company’s Form 10-K for the fiscal year ended June 30, 2005, and Form 10-Q for the quarter ending December 31, 2005, 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).

“Change in Control” of the Company shall be deemed to occur on: (i) the date that any person or group deemed a person under Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Act”), other than the Company and its subsidiaries as determined immediately prior to that date, in a transaction or series of transactions has become the beneficial owner, directly or indirectly (with beneficial ownership determined as provided in Rule 13d-3, or any successor rule, under such Act) of 20% or more of the outstanding securities of the Company having the right under ordinary circumstances to vote at an election of the Board of Directors of the Company; (ii) the date on which one-third or more of the members of the Board of Directors of the Company shall consist of persons other than Current Directors (for these purposes, a “Current Director” shall mean any member of the Board of Directors of the Company as of the effective date of the Plan and any successor of a Current Director whose nomination or election has been approved by a majority of the Current Directors then on the Board of Directors of the Company); or (iii) the date of approval by the shareholders

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of the Company of an agreement providing for (A) the merger or consolidation of the Company with another corporation where the shareholders of the Company, immediately prior to the merger or consolidation, would not beneficially own, immediately after the merger or consolidation, shares entitling such shareholders to 50% or more of all votes (without consideration of the rights of any class of stock to elect directors by a separate class vote) to which all shareholders of the corporation issuing cash or securities in the merger or consolidation would be entitled in the election of directors or where the members of the Board of Directors of the Company, immediately prior to the merger or consolidation, would not be members of the Board of Directors of the Company immediately after the merger or consolidation or (B) the sale or other disposition of all or substantially all the assets of the Company.

“Companies” means the Company and any of its direct or indirect subsidiaries, now existing or hereafter existing.

“Company” is defined in the introduction.

“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 his 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.

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“Material Breach” is defined in Section 3(d).

“Restricted Period” means the period commencing on the date of this Agreement and continuing through the sixth month anniversary of termination.

“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.

“Term of Employment” is defined in Section 3(a).

11. 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:	E. Michael Chewning 2225 Scenic Shore Drive Seabrook, TX 77586
If to Company:	SPACEHAB, Incorporated Attention: Chief Financial Officer 12130 Highway 3, Bldg. 1 Webster, Texas 77598-1504

Any such notices shall be deemed to be given on the date personally delivered or such return receipt is issued.

12. Executive’s Representation

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 breached or violated by Executive’s execution of this Agreement or by Executive’s performance of his duties hereunder.

13. 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

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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.

14. 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.

15. 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 8 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.

16. 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 7, 8 and 9 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 judgment 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.

17. 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

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are intended to be third party beneficiaries of, and have rights and interests in respect of, Executive’s agreements set forth in Sections 7, 8 and 9.

18. 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.

19. Litigation

THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF THE STATE OF TEXAS, 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 20, 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 HARRIS COUNTY, TEXAS. OR THE UNITED STATES DISTRICT COURTS IN THE STATE OF TEXAS. 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 19 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.

20. Arbitration

EXECUTIVE AND THE COMPANY AGREE THAT ANY DISPUTE BETWEEN OR AMONG THE PARTIES TO THIS AGREEMENT RELATING TO OR 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 HOUSTON, HARRIS COUNTY, TEXAS, AND SHALL BE SUBJECT TO THE SUBSTANTIVE LAW OF THE STATE OF TEXAS. DECISIONS PURSUANT TO SUCH ARBITRATION SHALL BE FINAL,

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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 19 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.

21. 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.

22. 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.

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IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first written above.

EXECUTIVE:

/s/    E. MICHAEL CHEWNING        

E. Michael Chewning

SPACEHAB, INCORPORATED:

/s/    MICHAEL E. KEARNEY        

Michael E. Kearney,

President and Chief Executive Officer

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EX-10.37

Exhibit 10.37

SETTLEMENT AGREEMENT AND

MUTUAL GENERAL RELEASE OF ALL CLAIMS

The parties to this Settlement Agreement And Mutual General Release of All Claims are SPACEHAB, Inc., a Washington corporation (“SPACEHAB”), on the one hand, and four insurance syndicates at Lloyd’s of London, United Kingdom, Goshawk Syndicate No. 102, Euclidian Syndicate No. 1243, Ascot Underwriting Ltd. Syndicate No. 1414 and R.J. Kiln Syndicate No. 510 (hereinafter referred to collectively as “Underwriters”), on the other hand.

WHEREAS, on or about December 18, 1997, SPACEHAB and the United States National Aeronautics & Space Administration (“NASA”) entered into a contract entitled the Research and Logistics Mission Support (“ReALMS”) contract, contract no. NAS9-97199, whereby SPACEHAB leased its Research Double Module (“RDM”) and other flight hardware to NASA for use onboard a Space Shuttle, which, inter alia, provided in Article H.11 that the government agrees to pay the contractor [SPACEHAB] for any loss of the contractor’s flight hardware that occurs during the flight risk period, up to a maximum of $8 million, and

WHEREAS, on or about December 17, 2002, SPACEHAB and Underwriters entered into two policies of excess property insurance, policy number CG 6882 and CG 6883, for $10 million and $7.67 million, respectively, which insured SPACEHAB’s RDM and other flight hardware, and these policies were excess over NASA’s above $8 million, and the value of the RDM was significantly more than the amount of this insurance, and

WHEREAS, on or about January 16, 2003, Space Shuttle Columbia was launched with SPACEHAB’s RDM and other flight hardware onboard, and

WHEREAS, on February 1, 2003, SPACEHAB’s RDM and other flight hardware were destroyed when Space Shuttle Columbia disintegrated over Texas upon re-entry into Earth’s atmosphere (“the ACCIDENT”), and

WHEREAS, on February 3, 2003, SPACEHAB made claim to Underwriters for the total of the policy limits of the two policies of $17.67 million, and SPACEHAB signed a sworn Proof of Loss

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for each policy; and SPACEHAB signed a release for each policy; and Underwriters paid SPACEHAB the above policy limits on or about 14 February 2003; and

WHEREAS, a dispute arose after the ACCIDENT between SPACEHAB and Underwriters, Underwriters instituted suit against SPACEHAB in connection with the above policies insuring SPACEHAB’s above property on the flight of the Space Shuttle Columbia (the suit is docketed as Certain Underwriters at Lloyds of London v. SPACEHAB, Inc., No. 04-2-04823-1 SEA in the Superior Court of the State of Washington for King County), and

WHEREAS, SPACEHAB has appealed the National Aeronautics and Space Administration (“NASA”) contracting officer’s denial of SPACEHAB’s claim demanding that NASA pay SPACEHAB the value of the SPACEHAB property lost in the crash of the Space Shuttle Columbia to the Armed Services Board of Contract Appeals (“ASBCA”) (the appeal is docketed as ASBCA No. 54880), and

WHEREAS, SPACEHAB has filed an administrative claim under the United States Federal Tort Claims Act (“FTCA”) demanding that NASA pay SPACEHAB the value of the SPACEHAB property lost in the crash of the Space Shuttle Columbia, and

WHEREAS, SPACEHAB has been awarded and received indemnification in the amount of $8 million from NASA for lost property in the crash of the Space Shuttle Columbia, and

WHEREAS, it is the intention of Underwriters and Spacehab to settle finally and fully all of their disputes, differences and litigation described above in Certain Underwriters at Lloyds of London v. SPACEHAB, Inc. and to provide for the mutual, general release of each other as more fully set forth herein below,

NOW THEREFORE, SPACEHAB and Underwriters agree as follows:

1. FOR AND IN CONSIDERATION of the agreement by SPACEHAB to pay and guarantee to Underwriters the minimum sum of Five Hundred Thousand Dollars ($500,000), and for and in further consideration of the above payment, the sharing agreement described below, this release, the mutual promises of the parties, and the filing of a dismissal with prejudice of the complaint described above, both parties, for themselves and for their respective officers, directors, shareholders, managers, representatives, insurers, adjusters, attorneys,

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employees, agents, executors, administrators, successors and assigns do each hereby fully and finally release, waive, abandon and forever discharge each other from any and all claims, counter claims, actions, suits, causes of action, obligations, controversies, debts, costs, expenses, damages, losses, and liabilities of whatever kind or nature, in law, equity, or otherwise, demands, agreements, contracts, covenants, torts, rights, compensatory damages, including but not limited to damages for property damage, breach of contract, bad faith, negligence, misrepresentation, fraud, extracontractual damages, punitive or exemplary damages, interest, costs, attorneys’ fees, expenses, controversies, and damages of any kind and nature whatsoever, past and future, whether known or unknown, which either party has asserted or alleged or could have asserted or alleged against each other, by reason of, arising out of, or included in the above complaint filed by Underwriters relating to the disputes between the parties arising out of the ACCIDENT.

2. SPACEHAB hereby agrees to pay Underwriters the following percentage of any amounts that SPACEHAB recovers from NASA under either ASBCA No. 54880 or the FTCA:

Amount Recovered	Percentage(s) to be Paid to Underwriters
$0-8	0
$8.0-8.5	100% ($0.5)
$8.50-28	13.125% ($.5 & $2.56 = $3.06)
$28-48	16.56% ($.5 & $2.56 &$3.31 = $6.37)
$48-70	21% ($.5 & $2.56 & $3.31 $4.62 = $10.99)
$70-87.7	38% ($.5 & 2.56 & $3.31 $4.62 & $6.73 = $17.72)

(All amounts shown are in millions of U.S. dollars.) Payment is due to Underwriters upon NASA’s payment of the amount(s) to SPACEHAB.

3. Except with respect to the second tranch (i.e. $8.0 – $8.5), Underwriters will pay SPACEHAB the same percentage of the total costs, including discovery costs, experts, etc, and attorneys fees SPACEHAB incurs in pursuing claims against NASA from May 15, 2005 through termination of ASBCA No. 54880 and the FTCA claim whether by final decision (including any and all appeals), settlements or otherwise in which Underwriters share in any amounts recovered from NASA. (For example, if SPACEHAB were to recover $48 million

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from NASA, Underwriters would pay SPACEHAB 16.56% of the costs and attorneys’ fees that SPACEHAB incurs in pursuing NASA from May 15, 2005 through termination of ASBCA No. 54880 and the FTCA claim whether by final decision (including any and all appeals), settlements or otherwise. Underwriters are not required to share in any costs and attorney fees that SPACEHAB incurs in pursuing NASA if the amount SPACEHAB recovers from NASA is less than, or equal to, $8.5 million. Underwriters’ obligation to pay a percentage of the above fees and costs is not due until thirty (30) days after Underwriters have received full payment of their percentage of the recovery SPACEHAB finally obtains from NASA. Alternatively, SPACEHAB will credit any Underwriters’ share of the costs and fees against the sums due Underwriters before paying Underwriters’ their share of any recovery from NASA.

4. In addition to the amounts set forth above in Article 2, SPACEHAB guarantees the payment to Underwriters of $500,000 U.S. dollars regardless of the amount, if any or none (other than the $8 million NASA has already paid), that SPACEHAB recovers from NASA. Payment of the $500,000 is due upon termination of ASBCA No. 54880 and the FTCA claim whether by final decision (including any and all appeals), settlement or otherwise.

5. If it becomes necessary under the Contract Disputes Act, SPACEHAB agrees to sign a certification that that part of its claim which includes Underwriters’ $17.67 million is made in good faith, pursuant to 41 U.S.C. §605.

6. SPACEHAB and Underwriters agree to reformation of the above policies of insurance to delete the WAIVER OF RECOURSE by Underwriters against NASA, so that NASA can not use the purported waiver in the policies against Underwriters. SPACEHAB agrees that it was a mistake to include the waiver in the policies to the extent it pertains to NASA.

7. SPACEHAB will keep all parties fully appraised of any and all significant developments, and upon execution by both parties of this Settlement Agreement and Mutual Release of All Claims, the firm of Seyfarth Shaw LLP will agree to jointly represent SPACEHAB and Underwriters going forward in the prosecution of the claims against NASA.

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8. SPACEHAB will consider Underwriters’ advice with respect to legal strategies, retention of legal counsel and the pursuit, settlement or termination of ASBCA No. 54880 and the FTCA claim. SPACEHAB, however, will have final say with respect to these matters.

9. Underwriters and SPACEHAB acknowledge: (i) that communications made pursuant to Article 7 are for the purpose of promoting their joint interest in pursuing NASA, and (ii) their intention that all such communications are entitled to the protection of applicable attorney-client privileges.

10. Underwriters will, within seven calendar days of the signing by both sides of this Settlement Agreement and Mutual General Release of All Claims dismiss with prejudice the complaint and entire action in Certain Underwriters at Lloyds of London v. SPACEHAB, Inc., (Case No. 04-2-04823-1SEA).

11. SPACEHAB and Underwriters agree to execute all documents which may be required to implement, and take any further action necessary to effect the intentions and provisions of this Settlement Agreement.

12. Excepting the outcome of the sharing agreement set forth above, SPACEHAB and Underwriters hereby acknowledge full and complete satisfaction of, and do hereby fully and finally release and discharge each other, their officers, directors, shareholders, managers, representatives, attorneys, employees, agents, successors and assigns.

13. It is further agreed that each releasing party will never commence, voluntarily aid, prosecute or cause to be commenced or prosecuted against the other releasing party any action or proceeding based directly or indirectly upon any of the matters set forth above.

14. SPACEHAB and Underwriters rely wholly upon their own judgment, belief and knowledge of the nature, extent and duration of their damages, and represent and warrant that they have not been influenced to any extent whatever in making this Release by any representations or statements regarding said damages or regarding any other matters, made by the persons, companies, syndicates or corporations who are hereby released, or by any person or persons representing the parties being released.

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15. SPACEHAB and Underwriters hereby declare and represent that they are entering into this settlement and executing this mutual release after having received full legal advice as to their rights from the respective attorneys representing them herein.

16. It is further understood and agreed that this settlement is the compromise of disputed claims, and that the settlement is not to be construed as an admission or presumption of liability on the part of SPACEHAB or Underwriters, by which liability is expressly denied.

17. SPACEHAB and Underwriters agree to waive costs and to bear their own attorneys’ fees incurred prior to the execution by both parties of this Settlement Agreement and Mutual Release of All Claims.

18. This agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, representatives and assigns.

19. This agreement is made and entered into in the District of Columbia and shall be interpreted, applied and enforced under and pursuant to the laws of the District of Columbia.

20. This agreement may be executed in counterparts and in duplicate originals. Photocopies of the agreement, disclosing affixed signatures to other copies, may be relied upon as prima facie evidence of the fact of counterpart execution. If executed in duplicate, each duplicate copy shall be deemed as valid as an original copy. No distinction shall be made between typed documents and photocopied documents, provided that the copies contain original signatures.

21. This mutual release contains the ENTIRE AGREEMENT between the parties hereto, and the terms of this mutual release are contractual and not a mere recital.

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IN WITNESS THEREOF, the parties hereby affix their signatures.

APPROVED AS TO FORM AND CONTENT
	Seyfarth Shaw LLP
DATED: May 19, 2005	By:	/s/    JOSEPH J. DYER
		Joseph J. Dyer, attorneys for SPACEHAB
	SPACEHAB, Inc.
DATED: May 20, 2005	By:	/s/    BRIAN K. HARRINGTON
		Brian K. Harrington
		Sr. Vice President
APPROVED AS TO FORM AND CONTENT
	Michaelis, Montanari & Johnson
DATED: May 23, 2005	By:	/s/    JAMES I. MICHAELIS
		James I. Michaelis, attorneys for Underwriters
	Underwriters
DATED: May 25, 2005	By:	Goshwak Syndicate No. 102
		/s/    Illegible
	By:	Euclidian Syndicate No. 1243
		/s/    Illegible
	By:	Ascot Underwriting Ltd. Syndicate                 No. 1414
		/s/    Illegible
	By:	R.J. Kiln Syndicate No. 510
		/s/    Illegible

Page 7 of 7

AGREEMENT OF REFORMATION OF INSURANCE POLICIES

The parties to this Agreement of Reformation of Insurance Policies are SPACEHAB, Inc., a Washington corporation (“SPACEHAB”), on the one hand, and four insurance syndicates at Lloyd’s of London, United Kingdom, Goshawk Syndicate No. 102, Euclidian Syndicate No. 1243, Ascot Underwriting Ltd. Syndicate No. 1414 and R.J. Kiln Syndicate No. 510 (hereinafter referred to collectively as “Underwriters”), on the other hand.

WHEREAS, on or about December 17, 2002, SPACEHAB and Underwriters entered into two policies of excess property insurance, policy numbers CG 6882 and CG 6883, which insured SPACEHAB’s Research Double Module and other flight hardware, and

WHEREAS, the policies included a provision entitled “WAIVER OF RECOURSE,” whereby, at the request of SPACEHAB, Underwriters purported to waive their right of recourse against the National Aeronautics and Space Administration (“NASA”),

NOW, THEREFORE, SPACEHAB and Underwriters agree as follows:

1. SPACEHAB and Underwriters agree to reform the above policies of insurance, and the policies are hereby reformed, to delete the waiver of recourse by Underwriters against NASA. SPACEHAB agrees that it was a mistake to include the waiver in the policies to the extent it pertains to NASA.

2. Inasmuch as this waiver should not have been included in the policies in the first place, this agreement is made retroactive and effective as of the inception date of the policies, December 1, 2002.

3. This agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, representatives and assigns.

1

4. This agreement is made and entered into in the District of Columbia and shall be interpreted, applied and enforced under and pursuant to the laws of the District of Columbia.

APPROVED AS TO FORM AND CONTENT

DATED: June     , 2005	Seyfarth Shaw LLP
	By:
		Joseph J. Dyer, attorneys for SPACEHAB

DATED: June     , 2005	SPACEHAB, Inc.
	By:

APPROVED AS TO FORM AND CONTENT

DATED: June     , 2005	Michaelis, Montanari & Johnson
	By:
		James I. Michaelis, attorneys for Underwriters
DATED: June     , 2005	Underwriters
	By:	Goshawk Syndicate No. 102
	By:	Euclidian Syndicate No. 1243
	By:	Ascot Underwriting Ltd. Syndicate No. 1414
	By:	R.J. Klin Syndicate No. 510

2

EX-10.38

Exhibit 10.38

SUBLEASE AGREEMENT

THIS SUBLEASE AGREEMENT (“SUBLEASE”) is made and entered into as of May 14, 2004, by and between SPACEHAB, Inc., a State of Washington corporation (“Sublessor”) and PARAGON PERSONNEL, INC., located at 815 Connecticut Ave., NW, Suite 610 Washington, DC (“Sublessee”).

RECITALS

A. Sublessor and 601 THIRTEENTH STREET, N.W. ASSOCIATES LIMITED PARTNERSHIP (“Landlord” or “Lessor”) are parties to a Lease Agreement dated as of October 7, 2002 (hereby known as the “Master Lease Agreement”). Pursuant to the Master Lease Agreement, Sublessor leases space from Landlord in the building located at 601 Thirteen Street, NW, Washington, D.C. (as more fully described in the attached lease agreement, the “Leased Premises”).

B. Sublessee wishes to acquire from Sublessor and Sublessor wishes to grant to Sublessee the right to lease the Leased Premises, better known as Suite 900S, located on the ninth floor of the Leased Premises and being approximately 5,920 square feet of office space, such premises so subleased to Sublessee are referred to in this Agreement as the “Subleased Premises.”

AGREEMENTS

In consideration of the mutual promises of the parties and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Sublease of Subleased Premises. Sublessor hereby subleases to Sublessee and Sublessee subleases from Sublessor the Subleased Premises, subject and pursuant to the terms and conditions of this Sublease Agreement.

2. Term of Sublease. The term of the Sublease (“Sublease Term”) shall commence on June 01, 2004 (or such later date as Sublessor obtains the consent of the Landlord to this Sublease as contemplated in Section 13 hereof) and shall terminate at midnight on May 30, 2006.

3. Rent. Sublessee agrees to pay Sublessor at such place as Sublessor may designate without deduction, offset, prior notice or demand, and the Sublessor agrees to accept, as rent for the Leased Premises, the sum of Fifteen Thousand Seven Hundred Eighty Six dollars and Sixty Six cents ($15,786.66.) monthly in lawful money of the United States (payable each month) during the term of this Lease, the first such monthly rental being due on June 1, 2004, and a like amount being due on the first day of each month thereafter during the term of this Sub-Lease.

The amount of $15,786.66 is paid herewith to Sublessor upon the execution of this SubLease, receipt of which is hereby acknowledged, which shall represent the first month’s rental and as consideration for entering into this Agreement with an additional amount equal to one month’s rent ($15,786.66) to be held as a Security Deposit throughout the Sublease Term.

Commencing on June 01, 2005, Sublessee’s Base Rent will be escalated by an amount of our (4%) percent to a new monthly rental amount of Sixteen Thousand Four Hundred Eighteen dollars and Thirteen cents ($16,418.13), this amount being due the first day of each month thereafter during the remaining term of this Sub-Lease.

If Sublessee fails to pay any installment of Rent on or before the fifth (5^th) day of the calendar month when such installment becomes due and payable, Sublessor may require Sublessee pay a late charge of five percent (5%) of the amount of such installment, and, in addition, such unpaid installment shall bear interest at the Default Rate from the date such installment became due and payable to the date of payment.

4 . Return of Subleased Premises. At the expiration or earlier termination of this Sublease, Sublessee shall return the Subleased Premises to the Sublessor in the same condition as at the commencement of the Sublease Term (as documented pursuant to Section 8 hereof), except for normal wear and tear and damage by fire, the elements, or any other cause beyond Sublessee’s control. At Sublessor’s option, Sublessor may require Sublessee to remove any fixtures or alterations installed by Sublessee and to repair any damage occasioned by such removal. If this Sublease ends later than one month prior to the termination of the Lease Agreement (such one month period being referred to as the “Restoration Period”), Sublessee agrees that Sublessor shall have the right to access the Subleased Premises during the Restoration Period (including any portion of the Restoration Period falling during the Sublease Term) to perform restoration that Sublessor is obligated to perform under the Lease Agreement to the extent that Sublessee is not required to perform under this Sublease Agreement.

5. Additional Obligations of Sublessee.

(a) In addition to the obligation under Section 3 above, Sublessee agrees, for the benefit of the Sublessor and the Lessor, that Sublessee shall perform the obligations of the “Lessee” under the provisions of the Master Lease Agreement to the extent applicable to Sublessee and Sublessee’s actions and the Subleased Premises during the term of this Sublease as if Sublessee were originally the Lessee under the Lease Agreement.

Sublessee shall not attempt to exercise any of Sublessor’s options (if any exist) to extend the Master Lease Agreement. Sublessee has read and understood the Master Lease Agreement attached as Exhibit A. Notwithstanding anything to the contrary in this Sublease or the Master Lease Agreement, Sublessee does not assume any pre-existing obligations or liabilities of Sublessor under the Master Lease Agreement or any other agreement.

(b) This Sublease Agreement is subject and subordinate to the Master Lease Agreement. During the term of the Sublease, the Sublessee shall be provided with all of the services and utilities provided to Sublessor under the terms of the Master Lease Agreement with respect to the Subleased Premises, and Sublessee shall enjoy all the rights and benefits of Sublessor under the terms of the Master Lease Agreement with respect to the Subleased Premises, except that it shall not be entitled to exercise any of Sublessor’s options (if any).

(c) Notwithstanding anything herein contained to the contrary, the only services or rights to which Sublessee is entitled are those to which Sublessor is entitled with respect to the Subleased Premises under the Master Lease Agreement and for all such services and rights Sublessee will look to the Sublessor under the Master Lease Agreement.

(d) Sublessee shall neither do nor permit anything to be done by Sublessee or its employees, agents, contractors or representatives which would cause the Master Lease Agreement to be terminated or forfeited by reason of any right of termination or forfeiture or default reserved or vested in the Lessor under the Master Lease Agreement, and Sublessee shall indemnify and hold Sublessor harmless from and against all claims to the extent that the negligence or willful misconduct of Sublessee or its employees, agents, contractors or representatives causes the Master Lease Agreement to be terminated or forfeited.

(e) Sublessee shall use the Subleased Premises for office purposes in connection with its business and for no other purpose. Sublessee shall not use the Subleased Premises for any unlawful purpose.

(f) Sublessee agrees to forward to Sublessor, immediately upon receipt thereof, copies of any notices relating to Sublessee’s occupancy or use of the Subleased Premises received by Sublessee from Landlord or from any governmental authority.

6 . Indemnity and Insurance.

(a) Sublessee shall indemnify and hold Sublessor and Lessor and their respective subsidiaries and affiliated corporation, and their respective officers, directors, agents, employees, attorneys, and assigns (the “Indemnified Parties”) harmless from and against any and all claims or liability for bodily injury to or death of any person or loss of or damage to any third party property to the extent arising out of Sublessee’s use of the Subleased Premises or property of which it is a part, or from the conduct of Sublessee’s business in the Subleased Premises, or from any activity, work, or thing done, permitted, or suffered by Sublessee, its employees, agents, contractors, or invitees (other than the Indemnified Parties) in or about the Subleased Premises except:

(1) claims and liabilities to the extent caused by any negligence of or willful misconduct on the part of an Indemnified Party, or

(2) claims and liabilities for property damage addressed in paragraph 6(c).

In the absence of any negligence or willful misconduct on the part of the Indemnified Parties, such indemnity shall include all reasonable costs, attorneys’ fees, and expenses incurred in the defense of any such claim or any action or proceeding brought thereon. In the event any action or proceeding is brought against Sublessor by reason of any claim falling within the scope of the foregoing indemnity, and in the absence of any claim by the plaintiff in such action of any negligence on the part of the Sublessor, Sublessee upon written notice from Sublessor to Sublessee within sixty days after Sublessor receives notice of the claim shall defend the same at Sublessee’s expense by counsel reasonably satisfactory to Sublessor.

The foregoing indemnity is conditioned upon Sublessor or Lessor providing notice to Sublessee within sixty (60) days after Sublessor or Lessor, as appropriate, receives notice of any claim or occurrence that is likely to give rise to a Claim that will fall within the scope of the foregoing indemnity and cooperating with Sublessee in any defense or settlement of such claim or liability.

(b) Sublessee at Sublessee’s own cost and expense, will provide and keep in full force and effect during the term of this Sublease Agreement, commercial general liability insurance with limits of not less than One Million Dollars ($1,000,000.00) covering bodily injury

to any person, including death, and loss of or damage to third party real and personal property. Such insurance may be provided under Sublessee’s blanket comprehensive liability insurance policy. During the Sublease Term, Sublessor and each of the Indemnified Parties shall be named as an additional insured under such insurance to the extent of Sublessee’s undertaking set forth in paragraph 6(a). Sublessee shall cause the insurer issuing such insurance policy to waive all rights of subrogation against the Indemnified Parties to the extent of Sublessee’s undertaking set forth in paragraph 6(a). Evidence of such insurance coverage and the coverage required by this paragraph 6(b) shall be made available to Sublessor prior to the commencement date of the Sublease Term. Such evidence of insurance will provide for not less than fifteen days’ advance notice in the event of cancellation or material alteration of such insurance.

(c) Each of Sublessor and Sublessee hereby releases and relieves (and Sublessor shall arrange that Lessor shall release and relieve) the others for loss of or damage to property arising out of or incident to fire, lightning, or any other perils normally included in a standard “All Risk” physical damage insurance policy containing an extended coverage and special extended coverage endorsement, when such property constitutes the Subleased Premises or the Leased Premises or is in on or about the Subleased Premises or the Leased Premises, whether or not such loss or damage is due to the negligence of Sublessor, Lessor, Sublessee, or their respective agents, employees, guests, licensees, invitees, or contractors.

(d) Each of Sublessor and Sublessee shall cause (and Sublessor shall arrange that Lessor shall cause) its insurance carriers to waive all rights of subrogation against the other parties hereto to the extent of such party’s undertakings set forth in paragraph 6(c).

7. Obligations of the Sublessor. Sublessor covenants, so long as Sublessee is not in default of its obligations under this Sublease Agreement, that Sublessee shall have the right to quietly enjoy the Subleased Premises without hindrance by any person claiming by or through Sublessor. Sublessor shall make all payments required to be made to Lessor pursuant to the Master Lease Agreement. Sublessor warrants that the copy of the Master Lease Agreement set forth in Exhibit A is a true and correct copy of the Lease Agreement as amended, that the Master Lease Agreement is in full force and effect in accordance with its terms, and that Sublessor is not aware of any event of default thereunder.

8. Walk Through and Inventory. Prior to the commencement of the Sublease Term, representatives of Sublessor and Sublessee shall conduct a walk-through of the Subleased Premises and shall note, in writing, any damage or defects in the Subleased Premises. At the termination of the Sublease Term, representatives of Sublessor and Sublessee shall conduct a similar walk-through and shall note, in writing, any damage to the Subleased Premises occurring during the Sublease Term. During the Sublease Term, Sublessor shall have the right to enter the Subleased Premises upon reasonable notice (except in case of emergency) and at reasonable time (except in case of emergency) to inspect the Subleased Premises, to make necessary repairs, and to ensure itself that Sublessee is complying with Sublessee’s obligations under this Sublease Agreement.

9. Acceptance of Premises; Alterations.

(a) Sublessee hereby confirms that it has examined and inspected the Subleased Premises, and accepts them in their “AS IS” condition. Sublessor makes no warranty of any kind concerning the Subleased Premises OR the building of which they are a part, including any warranty concerning latent defects, any warranty of fitness for use, and any other express or implied warranty (including any warranty of MERCHANTABILITY). Notwithstanding the foregoing, Sublessor represents that it is not aware of any condition that would prevent Sublessee from using the Subleased Premises for general office purposes.

(b) Sublessee shall be responsible for all alterations necessary to the Subleased Premises to render the Subleased Premises satisfactory to Sublessee.

(c) All alterations to be performed by Sublessee under this Agreement shall require the prior approval of the Sublessor (which approval shall not be unreasonably withheld or delayed) and Landlord and shall otherwise comply with all requirements of applicable codes and of the Lease Agreement.

10. Holding Over. Sublessee acknowledges that the term of the Lease expires on May 31, 2006. Consequently, if Sublessee remains in possession of the Subleased Premises after May 30, 2006, Sublessor may be treated by Landlord as being in breach of the Master Lease Agreement. Sublessor may be obligated to pay damages to the Lessor, including consequential damages which are presently difficult or impossible to calculate. Sublessee agrees to indemnify, defend and hold harmless the Sublessor from any and all reasonable losses, costs, and damages to the extent they arise out of holding over by Sublessee following the expiration of the term of the Master Lease Agreement. In such event the Sublessee shall be required to pay each month of such hold-over tenancy at the rate of three times the Rent, stated for that period in time of the Master Lease Agreement. Such monthly tenancy shall commence with the first day next after the expiration of the Term of this Sublease. Except as otherwise provided above with respect to payment of Rent, Sublessee shall, as a monthly tenant, be subject to all the terms, conditions, covenants and agreements of the Sublease.

11. Environmental Matters.

(a) Compliance with Laws and Requirements. Except as otherwise agreed by Sublessor in writing, Sublessee shall be solely responsible at its expense for obtaining any permits, licenses or approvals, and for preparing, maintaining and submitting any records or reports, as required under applicable Environmental Laws and Requirements for its operations hereunder. Sublessee shall comply with any and all Environmental Laws and Requirements and shall not cause, permit or allow the presence of and shall not generate, release, store, or deposit any Hazardous Substances on or about the Leased Premises in violation of any Environmental Laws and Requirements, or in a manner which may give rise to liability for environmental cleanup, damage to property, or personal injury to Landlord, Sublessor, or any other person. Sublessee shall not release any Hazardous Substances into the soil, water (including groundwater) or air of the Leased Premises or onto any other adjoining property in violation of Environmental Laws and Requirements, or in a manner which may give rise to liability for environmental cleanup, damage to property, or personal injury to Landlord, Sublessor, or any other person. In the event of a spill or other release of Hazardous Substances caused by Sublessee, its agents, employees or invitees at or from the Leased Premises, Sublessee shall undertake immediate response as required by law, including but not limited to reporting to appropriate agencies, and shall notify Sublessor of same as soon as possible.

(b) Definitions:

1) As used herein, the term “Hazardous Substance” means any hazardous, toxic, chemical, or dangerous substance, pollutant, contaminant, waste or material, including petroleum, which is regulated under any and all federal, state, or local statute, ordinance, rule, regulation, or common law relating to chemical management, environmental protection, contamination, or cleanup including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 as amended (42 U.S.C. § 9601 et seq.), the Resource Conservation and Recovery Act as amended (42 U.S.C. § 6901 et seq.) or any other Federal, state, county, or city law, or any other ordinance or regulation existing or which may exist.

2) As used herein the term “Environmental Laws and Requirements” means any and all federal, state, local laws, statutes (including without limitation the statutes referred to in paragraph 8(b)(1), above), ordinances, rules, regulations and/or common law relating to environmental protection, contamination, the release, generation, production, transport, treatment, processing, use, disposal, or storage of Hazardous Substances, and the regulations promulgated by regulatory agencies pursuant to these laws, and any applicable federal, state, and/or local regulatory agency-initiated orders, requirements, obligations, directives, notices, approvals, licenses, or permits, including but not limited to those for the reporting, investigation, cleaning, or remediation of any Hazardous Substances on the Leased Premises.

(c) Remediation. Should Sublessee fail to perform any of its obligations pursuant to this agreement or to any and all Environmental Laws and Requirements, Sublessee shall at its own expense promptly remedy such noncompliance. Sublessee shall at its own expense remove or remediate any unsafe condition that Sublessee has caused to occur and clean up or remediate any Hazardous Substance which Sublessee has caused to be released at or from the Leased Premises. Should Sublessee fail so to do, Sublessor shall have the right, but not the duty, to enter the Leased Premises personally or through its agents, consultants, or contractors to perform the same. Further, Sublessee shall hold Sublessor harmless from any losses, including claims of third parties, resulting from any noncompliance with Environmental Laws and Requirements, or from any unsafe condition or release of Hazardous Substances caused by Sublessee.

(d) Documentation and Right to Inspect. Sublessee shall provide copies to Sublessor of any reports regarding its operations at the Subleased Premises which are submitted to governmental agencies pursuant to any Environmental Laws and Requirements. Sublessee shall also make available to Sublessor upon request all permits and approvals with respect to the Subleased Premises, and all records maintained by Sublessee with respect to the Subleased Premises pursuant to any Environmental Laws and Requirements. During the Sublease Term, Sublessor and/or its agents or employees shall have the right to periodically inspect the Subleased Premises at reasonable times to confirm that Sublessee is in compliance with the terms of this Agreement, including compliance with any and all Environmental Laws and Requirements. Further, if Sublessor at any time should have any cause to believe that any Hazardous Substances are or at any time during the term of this Sublease have been released at or from the Subleased Premises without strict compliance with all Environmental Laws and Requirements or in a manner which may give rise to liability for environmental cleanup, damage to property, or personal injury to Landlord, Sublessor, or any other person, Sublessor shall have the right at its discretion, but not the duty, to enter, at any reasonable time, and conduct an inspection of the Subleased Premises including invasive tests to determine whether, and the extent to which, Hazardous Substances have been released. Sublessee hereby grants to Sublessor, and its employees, agents, employees, consultants, and contractors the right to enter the property upon reasonable notice to Sublessee and to perform such tests on the property as are reasonably necessary in the opinion of Sublessor to conduct such investigations. Sublessor may retain any independent qualified professional consultant to enter the property to conduct such inspections. Such consultant’s reasonable fee shall be payable by Sublessee if such consultant determines that Sublessee’s activities constitute a material violation of Environmental

Laws and Requirements or have resulted in the release of Hazardous Substances into the environment which may give rise to liability for environmental cleanup, damage to property, or personal injury to Landlord, Sublessor, or any other person; otherwise, such fee shall be payable by Sublessor.

(e) Indemnification. Sublessee shall indemnify, hold harmless, and defend Sublessor, and its directors, officers, employees, agents, assigns, and attorneys from any and all claims, losses, damages, response costs, and expenses arising out of or in any way relating to the violation of any Environmental Laws and Requirements, or to the generation, release, storage, deposit or disposal of Hazardous Substances, to the extent caused by Sublessee, its agents, employees and invitees at any time during the term of this Sublease, including but not limited to: (1) claims of third parties, including governmental agencies, for damages (including personal injury and/or property damage), response costs, fines, penalties, injunctive or other relief; (2) the cost, expense, or loss to Sublessor of any injunctive relief, including preliminary or temporary injunctive relief, applicable to the Sublessor or the Leased Premises; and (3) the expense of reporting the existence of Hazardous Substances to any agency of any state government or the United States as required by applicable laws or regulations, before and after any trial or appeal there from whether or not taxable as costs; all of which shall be paid by Sublessee when accrued.

(f) Sublessor represents to Sublessee that to the best of its knowledge and belief there is currently no Hazardous Substance or other environmental hazard in or around the Subleased Premises released by Sublessor and that, to the best of its knowledge and belief, there are not, and have not been, any violations of the Environmental Laws and Requirements during the term of the Master Lease Agreement by Sublessor.

12. Transfers. Sublessee shall not, without the prior consent of Sublessor and Prime Landlord: (i) assign, mortgage, pledge, hypothecate, encumber or otherwise transfer, any interest of Sublessee in this Sublease; (ii) permit any matter described in item (i) by operation of Law or otherwise; or (iii) sublet the Sublease Premises or any part thereof, or permit the use of the Sublease Premises by any person other than Sublessee, or (iv) dissolve (all of the foregoing are hereinafter sometimes referred to collectively as “Transfers” and any person to whom any Transfer is made or sought to be made is hereinafter sometimes referred to as a “Transferee”). If Sublessee shall desire to make a Transfer, Sublessee shall deliver notice (the “Transfer Notice”) to Sublessor and Prime Landlord which shall include: (a) the proposed effective date of the Transfer, which shall not be less than thirty (30) days nor more than one hundred eighty (180) days after the date of delivery of the Transfer Notice; (b) a description of the portion of the Sublease Premises to be transferred (the “Subject Space”); (c) all of the terms of the Transfer and the consideration therefor; (d) the name and address of the Transferee; (e) a copy of all existing and/or proposed documentation pertaining to the Transfer; (f) current financial statements of the Transferee; (g) any other information reasonably required by Sublessor, which will enable Sublessor to determine the financial responsibility, character and reputation of the Transferee, the nature of such Transferee’s business and the proposed use of the Subject Space; and (h) such other information as Sublessor may reasonably require. Sublessor’s right to approve a Transfer shall include the right to approve, which approval shall not be unreasonably withheld, conditioned or delayed, all documents (including, but not limited to, the sublease or assignment instrument) and other information required to be delivered to Sublessor with respect to the same. Any Transfer made without Sublessor’s or Prime Landlord’s prior consent shall, at Sublessor’s option, be void and of no effect, and shall constitute an Event of Default.

Each sublease, license or other agreement for use or occupancy of all or any portion of the Sublease Premises shall expressly provide, and Sublessor and Sublessee agree, that: (i) the same shall not be valid, and the Transferee shall not take possession of the Subject Space until, the same and all other documents relating to the same are in form reasonably satisfactory to Sublessor and fully executed copies of all such documents have been delivered to Sublessor; (ii) the Transferee shall agree to perform and observe the terms of this Sublease on Sublessee’s part to be performed and observed relative to the Subject Space from and after the effective date of the subject Transfer; (iii) except with respect to an assignment of Sublessee’s interest in this Sublease, the term of the same (including all options to extend the same) shall expire no later than one (1) day prior to the last day of the Sublease Term; (iv) the same and all rights of the Transferee under the same are and shall be subject and subordinate to this Sublease and to all matters to which this Sublease is or shall be subject and subordinate; and (v) in the event this Sublease is terminated by reason of an Event of Default or any other reason or in the event Sublessor re-enters the Sublease Premises pursuant to the terms of this Sublease in connection with an Event of Default, then, at Sublessor’s election, the Transferee shall (A) attorn to Sublessor, except that Sublessor shall not be (1) liable for any previous act or omission of Sublessee, (2) subject to any defense, offset or deduction previously accrued in favor of the Transferee against Sublessee, (3) bound by any prior amendment or modification of such sublease, license or other agreement made without Sublessor’s prior consent, (4) obligated to recognize any payment made by the Transferee more than one (1) month in advance, or (5) liable for any security deposit or other deposit delivered by the Transferee in connection with the transfer unless the same was delivered to Sublessor, or (B) enter into a direct lease with Sublessor on the same terms contained in the subject sublease, license or other agreement. With respect to each Transfer, Sublessee shall deliver to Sublessor, promptly after execution and prior to the date the same shall become effective, an original executed copy of all documentation pertaining to the Transfer in form reasonably acceptable to Sublessor. All terms of this Sublease to be observed or performed by Sublessee relative to the Subject Space shall be deemed to extend to each Transferee, and Sublessee shall cause each Transferee to comply with the same. Notwithstanding any Transfer, whether with or without Sublessor’s consent, Sublessee shall remain fully liable for the performance and observance of all terms of this Sublease to be observed or performed by Sublessee and for all acts and omissions of any Transferee or anyone

claiming under or through any Transferee. Any violation of a term of this Sublease by any Transferee shall be deemed a violation of such term by Sublessee, it being the intention of the parties that Sublessee shall be liable to Sublessor for any and all acts and omissions of all Transferees. Sublessor’s acceptance or collection of rent from any Transferee shall not be construed as Sublessor’s consent to or acceptance of the subject Transferee or Transfer. Sublessor’s consent to any Transfer shall not be construed as relieving Sublessee or any Transferee from the obligation of obtaining Sublessor’s prior consent to any subsequent Transfer. In the event Sublessee is in default under this Sublease beyond the expiration of any applicable cure period set forth herein, Sublessee authorizes each Transferee to pay such rent directly to Sublessor if it receives notice from Sublessor specifying that such rent shall be paid directly to Sublessor.

13. Condition Precedent. Sublessee acknowledges that the Sublessor’s right to sublease the Subleased Premises is subject to obtaining the prior written consent of the Lessor. If such consent is not obtained within thirty days of the execution date of this Sublease Agreement, either party may, at its option, terminate this Sublease Agreement.

14. Notices. Any notice or demand which either party may or must give pursuant to or in connection with this Sublease Agreement shall be in writing, delivered personally, sent by prepaid courier, by first class mail, postage prepaid, or by facsimile transmission as follows:

To Sublessor:	Via U.S. Mail SPACEHAB, Inc. 12130 Hwy 3 Webster, TX 77598 Attn: Chief Financial Officer
To Sublessee:	Prior to sublease commencement:
	LEGALSOURCE 815 Connecticut Ave., NW, Suite 610 Washington, DC 20006
	Upon commencement of the sublease:
	LEGALSOURCE 601 Thirteenth Street, NW, Suite 900 South Washington, DC 20005

Either party may, by notice in writing, direct that future notices or demands be sent to a different address. Notices will be deemed delivered when received.

15. Entire Agreement. This Sublease Agreement represents the entire agreement of the Sublessor and Sublessee with respect to this subject matter and supersedes all prior oral and written understandings and agreements of the parties, all of which are merged within this Sublease Agreement. The Exhibits attached hereto and the Application to Sublease Real Property (if any) executed by Sublessee (whether or not attached to this Sublease Agreement) are part of this Sublease Agreement. This Sublease Agreement may not be amended, modified, or supplemented in any manner other than by the written agreement of the parties signed by the authorized representatives of the parties.

16. No Recording. Neither party shall record this Sublease Agreement. At the request of either party, the parties shall execute a memorandum of this Sublease Agreement in recordable form identifying the Subleased Premises and the term of this Sublease Agreement.

17. Successors and Assigns; Survival of Obligations. The covenants and agreements in this Sublease Agreement shall bind and inure to the benefit of Sublessor, Sublessee and their respective successors and permitted assigns. The obligations of Sublessee under paragraph 6 (Indemnity and Insurance) and paragraph 11 (Environmental Matters) shall survive the end of the Sublease Term with respect to events occurring during the Sublease Term or while Sublessee is in possession of the Subleased Premises.

18. Confidentiality. Sublessee agrees that neither it nor its employees will disclose to any third party or to anyone not directly involved in the negotiation of this transaction any of the terms and conditions of this Sublease Agreement, including without limitation the rental payable by Sublessee hereunder.

19. Access/Inspection. Sublessee will allow and does hereby grant to Landlord and to Sublessor or their respective agents the right of free access at all reasonable times to the Subleased Premises for the purpose of inspecting or of making repairs, additions or alterations to the Subleased Premises, the Leased Premises, or any property owned by or under the control of Landlord subject to the provisions of the Lease. Reasonable prior notification of Landlord’s or Sublessor’s need to access the Subleased Premises shall be provided to Sublessee.

20. Attorneys’ Fees. In the event suit is brought for the recovery of rent due under the provisions of this Sublease Agreement, or for Sublessee’s breach of any other conditions or covenants contained in this Sublease Agreement, Sublessee shall pay the reasonable fees and disbursements of Sublessor’s attorneys provided, however, to the extent Sublessee is the prevailing party in any action or suit brought to enforce any of the provisions of this Sublease Agreement, then, in that event only, Sublessor shall pay the fees and disbursements of its attorneys and shall reimburse the reasonable fees and disbursements of Sublessee’s attorneys.

21. Sublessee’s Default. If Sublessee fails to perform any material obligation of Sublessee under this Sublease Agreement or makes a material misrepresentation in this Agreement or in the Application to Sublease Real Property (“Default”), and if after written notice from Sublessor specifying such Default and permitting Sublessee five business (5) days to cure a monetary default or thirty (30) days to remedy a nonmonetary Default, Sublessee shall have failed to remedy such Default, then Sublessor may cancel this Sublease Agreement, upon giving any notice required by law, and re-enter the Subleased Premises; provided however, is such Default requires more than thirty (30) days to cure Sublessor may not so cancel this Sublease agreement if Sublessee has commenced such remedy within such thirty (30) days and is diligently pursuing such remedy. Notwithstanding such re-entry by Sublessor, the liability of Sublessee for the rent provided in this Sublease Agreement shall not be extinguished but shall continue for the balance of the Sublease Term. Sublessee covenants and agrees to make good to Sublessor (a) any reasonable costs incurred by Sublessor in re-entering the Subleased Premises and in reletting the Subleased Premises; (b) during each month throughout the Sublease Term the amount by which the rent payable by the Sublessee hereunder during each month following Sublessor’s re-entry exceeds the amount of rent received by the Sublessor during such month; (c) the reasonable costs of any necessary repairs incurred by Sublessor; and (d) the reasonable fees and disbursements of Sublessor’s attorneys as provided in paragraph 20. The amounts payable by Sublessee pursuant to clause (b) shall be paid on the first day of each month throughout the Sublease Term; the amounts payable by Sublessee pursuant to clauses (a), (c), and (d) shall be payable within thirty days of written demand as they are incurred.

22. Liens. Sublessee shall not cause the Subleased Premises to become subject to any liens, claims, charges, or encumbrances (each a “Lien”) or allow any such Lien as a result of actions of Sublessee or any of its employees, agents or contractors. If the Subleased Premises become subject to one or more Liens as the result of Sublessee’s acts or omissions or sufferance as described above, Sublessee shall promptly, and in any event within five (5) days, remove such Liens or obtain a release of such Lien from the lienor. If the Sublessee fails to take timely action in this regard, Sublessor shall have the right, but not the obligation, to take any action reasonably necessary to remove and/or release such Liens. Such action shall be taken at Sublessee’s sole risk and expense.

23. Brokerage. Sublessor and Sublessee acknowledge and agree Sublessor is represented by Equis Corporation in connection with the transaction contemplated by this Sublease (“Equis”), and Sublessee is represented by The John Akridge Management Company (“Akridge”; and Equis and Akridge may sometimes hereinafter be collectively referred to as the “Brokers”), in each case, in connection with the transaction contemplated by this Sublease. Other than performance of certain activities by the Brokers, each Party represents no real estate broker or agent is involved in this Sublease, and each shall indemnify and hold the other harmless from any breach by it of this representation. Sublessor shall be responsible for the payment of any commission due to the Brokers pursuant to the provisions of separate agreements between the Brokers and Sublessor, in each case, negotiated independently of the transaction contemplated by this Sublease.

24. Estoppel Certificates. If reasonably requested by Sublessor or Landlord, Sublessee shall have the same obligation to execute an estoppel certificate with respect to the Subleased Premises and this Sublease Agreement as Sublessor has to execute an estoppel certificate with respect to the Master Lease Agreement.

25. Signs. No sign, advertisement or notice shall be inscribed, painted, affixed or otherwise displayed on any part of the exterior or interior of the building except as stated in the Master Lease Agreement.

26. Access to Property. Sublessee shall have 24 hour/7 days per week access to Subleased Premises.

27. Sublessor waives Option to Extend. Sublessor shall waive any option to extend as stated in paragraph 21 (n) of the Master Lease Agreement.

28. Parking. Sublessee shall have the right to contract for parking spaces as specified in paragraph 21 (t) Master Lease Agreement

29. Furniture, Fixtures, and Equipment. Upon dual execution of this Sublease and receipt of Landlord’s Consent, ownership of all furniture, fixtures and equipment located in the Subleased Premises as of Sublessee’s April 14, 2004 walk-through (as specified on Exhibit C), including but not limited to Sublessor’s complete telephone system including all hand sets (collectively the “FF&E”) shall convey to Sublessee. Sublessee agrees to pay Sublessor Fifteen Thousand and 00/100 Dollars ($15,000.00) for the FF&E. Said payment shall be remitted to Sublessor upon dual execution of this Sublease and receipt of Landlord’s Consent. Sublessor agrees to assist Sublessee in the transfer of Sublessor’s phone numbers to Sublessee.

EXECUTED IN TRIPLICATE as of the date first written above.

SPACEHAB, INC.
By:	/s/    Illegible
Its:	Sr. Vice President

Witness:	Illegible
PARAGON PERSONNEL, INC.
By:	/s/    Illegible
Its:	Director

Witness: Illegible

EXHIBIT A

TRUE COPY OF MASTER LEASE AGREEMENT

EXHIBIT B

LANDLORD’S CONSENT

LESSOR’S CONSENT

The undersigned Landlord under the Master Lease Agreement dated October 15, 2002, as amended, hereby consents, as contemplated in Lease Agreement, to the foregoing Sublease Agreement (all of the defined terms of which are used herein with the same meaning as they are given there) and all of the terms and conditions contained therein on the express condition that Spacehab, Inc. remains fully liable under the Master Lease Agreement to perform all of the obligations of the Lessee (provided that performance of such obligations by the Sublessee identified in the foregoing Sublease Agreement shall be accepted by the Landlord as performance of the Tenant pro tanto). Landlord expressly acknowledges that the Master Lease Agreement is in full force and effect and that Landlord is not aware of any default by the Tenant or the Landlord thereunder. This Consent shall apply only to this Sublease Agreement and shall not be deemed to be either (a) a consent to any other sublease or assignment or (b) a release from or waiver of the obligation to obtain Landlord’s consent in the event of any future sublease or assignment.

LANDLORD:

601 THIRTEENTH STREET, N.W. ASSOCIATES

LIMITED PARTNERSHIP

By:

Title:

Date:

EXHIBIT C

THE FF&E

EX-10.39

Exhibit 10.39

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 Astrotech Space Operations, L.P. (hereafter “Commercialization Agreement”) is hereby incorporated into this Lease Agreement as Attachment B. Each time the Commercialization 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, DSN 276-4964.

(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 as 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 national defense requires it. If the lease is terminated by the Government without fault of the lessee, the

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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.

8. Termination by Lessee. 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 lease 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 APB, without permission in writing from said officer;

(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.

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 of 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.

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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

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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.

(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. All 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.

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(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

6

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 shall 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.

(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 of 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.

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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 national 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.

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 environmental 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

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(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 premises.

(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 lessee’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 not limited to, individuals, corporations, businesses, etc.) or any governmental 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 environmental 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).

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IN WITNESS WHEREOF, I have hereunto set my hand by authority of the Secretary of the Air Force this 10^th day of December 1993.

By:	/s/ Lance W. Lord
	LANCE W. LORD, Brig Gen, USAF
Title:	Commander, 30 SPW

THIS LEASE is also executed by the lessee this 6 day of October 1993.

By:	/s/ Richard G. Wolf
	RICHARD G. WOLF
Title:	President, Astrotech Space Operations, L.P.

Signed and sealed in the presence of:

(1) Illegible

(2) Kimberly J. Lloyd

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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-10.40

Exhibit 10.40

STRATEGIC COLLABORATION AGREEMENT

THIS AGREEMENT is entered into this 5th day of August 1999, by and between DaimlerChrysler Aerospace AG (“DASA”), a German corporation, acting through its Space Infrastructure Division, with offices located at Hunefeldstrasse 1-5, PO Box 105909, D-28059 Bremen, Germany (“DASA-RI”); and Spacehab, Inc., a Washington State corporation with offices located at Suite 814, 300 D Street, S.W., Washington, D.C. 20024, U.S.A. (“Spacehab”) (DASA and Spacehab are hereafter collectively referred to as the “parties”).

W I T N E S S E T H:

WHEREAS, Spacehab develops, owns and operates pressurized and unpressurized modules and other equipment for use in transportation, research and logistical support on board the United States National Aeronautics and Space Administration (“NASA”) Space Shuttle; and

WHEREAS, DASA has been a shareholder in Spacehab since 1995; and

WHEREAS, pursuant to a Collaboration Agreement effective July 24, 1995 (the “1995 Collaboration Agreement”), the parties have cooperated in the joint pursuit of technological innovations and new business opportunities in the environment of space; and

WHEREAS, DASA has, as of August 2, 1999, entered into a Preferred Stock Purchase Agreement with Spacehab to increase its equity participation in Spacehab to approximately Eleven and One-Half Percent (11.50%) through the acquisition of shares in a new class of preferred stock (the “Spacehab Stock”) with the view to becoming Spacehab’s leading strategic investor (the “Subscription Agreement”); and

WHEREAS, the parties have agreed to update and expand the scope of their Collaboration Agreement to reflect their current objectives in cooperating with one another on technical and financial grounds;

WHEREAS, the parties envisage also cooperating beyond the scope defined in this Collaboration Agreement and will be free to propose additional business opportunities for one another’s consideration;

NOW, THEREFORE, in consideration for the mutual covenants and undertakings herein contained, the parties have agreed as follows:

1. Exclusive Common Business Segments.

1.1 The parties agree, during the term hereof, to collaborate technically and financially in the following areas of mutual technological interest (the “Exclusive Common Business Segments”):

(a) Human space flight support and research services in the unpressurized domain, including the development and procurement of required flight and ground hardware, software and related payloads; and

(b) Acquisition, preparation and performance of sounding rocket missions excluding, however, DASA-RI’s ongoing TEXUS and MAXUS programs, and

(c) Inflatable structures excluding, however, the Inflatable Reentry and Descent Technology and its applications.

Schedule 1.1 attached hereto and hereby incorporated into and made a part of this Agreement sets forth the parties’ agreed areas of collaboration within the Exclusive Common Business Segments as of the execution of this Agreement. It is understood that, except as set forth in sections 1.5, 1.6 and 2.4.2 below, the parties’ engagement in new lines of business and activities falling within the Exclusive Common Business Segments beyond those addressed in Schedule 1.1 will hereafter be decided by the parties’ Joint Management Committee pursuant to article 2 of this Agreement. The parties intend to invest jointly in the procurement of flight hardware and software as a prerequisite for offering to NASA and other customers a commercial service based on these assets and will also pursue other upcoming business opportunities in the Exclusive Common Business Segments.

1.2 Within the framework of this cooperation, DAS A will receive and Spacehab will place with DASA-RI contracts (preferably development contracts) with a value of at least $12 million (U.S.) by December 31, 2000 (“DASA-RI Minimum Contract Award”).

1.3 Based on their joint market assessment the parties agree that, during calendar year 2001 at least $13 million (U.S.) and in calendar year 2002 and beyond an average of $26 million in annual revenues (but in no event less than an aggregate of $65 million by the end of 2003) will be generated for DASA-RI through the parties’ collaboration on the projects listed in Schedule 1.1 in sales to NASA and other customers. These revenues will be generated from (1) customer contracts for integration and operation services and (2) contracts for the leasing of hardware procured through the parties’ joint investments, if any

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(“DASA-RI Minimum Revenue”). These amounts are understood to be in addition to and not to include the value of the Minimum Contract Award defined in section 1.2 above. The average annual and aggregate revenues generated referred to in the first sentence of this Section 1.3 are subject to unforeseen events beyond the control of Spacehab which prevent Spacehab from generating such revenues despite Spacehab’s reasonable best efforts to do so. Spacehab will take reasonable best efforts to minimize the effects of any unforeseen events.

1.4 Spacehab agrees that, except as permitted under section 2.4.2 below, during the term of this Agreement, it will not enter into agreements with any third parties for engagement in work or cooperation falling within the Exclusive Common Business Segments.

1.5 The parties hereby agree that any program already in development by either party shall be exempted from the terms of this Agreement.

1.6 DASA-RI shall be free to pursue new business opportunities falling within the Exclusive Common Business Segments (except for projects in the United States in competition with business opportunities pursued by Spacehab), whether in Europe or elsewhere, without the participation of Spacehab.

1.7 The parties may agree to collaborate jointly with third parties in any activities which they jointly undertake within the Exclusive Common Business Segments.

2. Joint Management Committee.

2.1 The parties’ collaboration in the Exclusive Common Business Segments shall be conducted under the direction and oversight of a Joint Management Committee (the “Committee”).

2.2 The Committee shall be comprised of an equal number of representatives designated by Spacehab and DASA-RI. They shall choose their own chairman and adopt procedural rules of governance.

2.3 The Committee shall meet at least four times a year and shall operate by consensus. Meetings may be held by telephone or other electronic means by which all members present may hear and be heard by one another.

2.4 The Committee shall be responsible for overseeing the parties’ implementation of the schedule of agreed lines of business and activities set forth in Schedule 1.1 hereto. To this end the Committee will periodically review all active joint projects. Spacehab will and DASA-RI, at its sole election, may

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present to the Committee during the term hereof additional or new commercial opportunities not reflected or addressed in Schedule 1.1 but falling within the Exclusive Common Business Segments. Such presentation will include a preliminary business plan indicating the key business parameters of the opportunity. Upon receipt of such a plan the Committee will do one of the following at its next meeting

(a) Agree that the candidate project shall be considered further, or

(b) Agree that the candidate project should not be pursued as a joint project, in which case the proposing party shall be free to pursue the opportunity independently, or

(c) Fail to agree on either (a) or (b), in which case section 2.4.2 below shall apply.

2.4.1 In the case a decision is taken under paragraph (a) above, a project manager from each party shall be assigned to draft a business plan and a project plan to include proposed investments by the parties, if any, as well as the development and operations structures for implementation of the opportunity. The Committee shall review the completed business and project plan and either approve the project for implementation or decide that the project should not be pursued as a joint project. The Committee may approve complete implementation, or require the project manager to return for incremental authorization at specific milestones in the project plan.

2.4.2 If the parties elect by consensus not to collaborate on any commercial opportunity within the Exclusive Common Business Segments, the proposing party shall be free to pursue such commercial opportunity independently from the other party, including, should it so elect, jointly with one or more third parties. If the parties, following repeated good faith efforts, fail to reach consensus on how to respond to any commercial opportunity within the Exclusive Common Business Segments presented to the Committee, the Committee shall refer the issue for resolution by the Chairman of Spacehab and the President of DASA-RI, who shall meet and confer on the subject in good faith. If, following such effort to resolve a bona fide deadlock between the parties, the parties are still unable to reach consensus on how to respond to the commercial opportunity within the Exclusive Common Business Segments, then either party shall be free to engage in the business opportunity in question.

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2.4.3 If the parties fail to reach consensus following the procedure defined in section 2.4.2 above, and one party elects to pursue the business opportunity on its own (the “Electing Party”), then the other party will have a right of first refusal to match bona fide proposals by third parties for subcontract work in pursuit of such opportunity for the Electing Party. Spacehab expressly agrees in such instance, however, not to compete with a then existing business opportunity of DASA-RI in Europe.

2.5 As part of its consideration of any commercial opportunity for the parties falling within the Exclusive Common Business Segments (other than in cases where one party is acting in the capacity of a contractor to the other party pursuant to Section 2.4.3), the Committee shall determine the parties’ respective ownership of intellectual property interests (including rights to seek patent protection) in any technology which will be jointly developed as a result of the parties’ engagement in the commercial opportunity.

2.6 In their consideration of new commercial opportunities within the Exclusive Common Business Segments, the parties, acting through their appointed members on the Committee, shall work in good faith to reach consensus. Neither party shall be entitled to abstain from good faith consideration of any opportunity brought before the Committee or deliberately to block or hinder the achievement of consensus on any such issue.

2.7 The Spacehab Executive Committee and/or Board of Directors and the DASA-RI Board of Management shall have final authority on behalf of the respective party hereto to accept or reject any major determination by the Joint Management Committee, including any financial commitments required from the parties hereto, but they shall have no authority to alter or amend any such determination.

3. Executive Exchange Program. Both parties agree to exchange executive level representatives of their companies for a period of up to three months each with the goal to achieve a better understanding of each other’s structures and processes and thereby to optimize the efficiency of the collaboration.

4. Term.

4.1 The term of this Agreement shall commence concurrently with the initial closing of the Subscription Agreement and shall remain in effect until the earliest of the following:

(a) Following the expiration of four (4) years from the effective date of this Agreement, upon sixty (60) days prior written notice of termination by either party (the “Notifying Party”) to the other (the “Notified Party”);

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(b) In the event that the DASA-RI Minimum Revenue is not met in 2001 or in 2002, upon thirty (30) days prior written notice of termination by DASA-RI to Spacehab; or

(c) In the event that the DASA-RI Minimum Contract Award is not met by December 31, 2000, upon thirty (30) days prior written notice of termination by DASA-RI to Spacehab;

(d) Immediately upon written notice of termination by the Notifying Party in the event the Notified Party breaches any material undertaking hereunder or in the Subscription Agreement and fails to cure such breach within fifteen (15) days of receiving notice of default from the Notifying Party.

4.2 In the event of termination of this Agreement pursuant to paragraph (a) above, the parties will promptly enter into good faith negotiations to reach a mutual agreement on the discontinuation of joint projects and they will ensure that ongoing contractual obligations toward third parties are professionally fulfilled or wound up.

5. Notices. Any notices provided under this Agreement shall be given in writing by facsimile, confirmed by registered mail postage prepaid, and shall be addressed as follows:

If to DASA-RI:	DaimlerChrysler Aerospace AG
	Space Infrastructure
	1-5 Huenefeldstrasse
	D-28199 Bremen
	Germany
	Attention: Dr. Eckart Wolff
	Fax No.: 011-49-421-539-5000
If to Spacehab:	Spacehab, Incorporated
	300 D Street, S.W., Suite 814
	Washington, DC 20024
	Attention: President
	Fax No.: (202) 488-3100

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Notices provided in accordance with the terms hereof shall be deemed received upon receipt of the facsimile copy. Any changes to the foregoing addresses during the term hereof shall be promptly notified to the other party in accordance with the terms of this provision.

6. Dispute Resolution. All disputes arising out of the interpretation or enforcement of this Agreement and not settled previously in an amicable manner shall be finally settled under the rules of conciliation and arbitration of the International Chamber of Commerce by a panel of three arbitrators appointed in accordance with said rules. The arbitration proceeding shall take place in London, England, or at such other location as the parties may mutually agree, and shall be conducted in the English language. The arbitration award shall be final and binding on the parties. Judgment upon the award may be entered in any court of appropriate jurisdiction upon application by a party hereto.

7. Miscellaneous Provisions.

7.1 Governing Law. This Agreement, and any disputes arising under it, shall be governed by the laws of the State of New York without reference to the conflict of laws provisions thereof.

7.2 Assignment. Neither party hereto may assign any of its rights or delegate or otherwise transfer any of its duties under this Agreement without the prior written consent of the other party. This provision shall not apply in the event of any reorganization of either party or merger or acquisition of a party with or by a third party where the reorganized, merged or successor party is qualified to perform the terms of this Agreement.

7.3 Waiver. The waiver of any right hereunder shall not be deemed to constitute a waiver of such right on any future occasion.

7.4 Entire Agreement. This Agreement constitutes the full understanding of the parties regarding the subject matter hereof and supersedes all previous representations, communications and understandings of the parties, whether written or oral, including, but not limited to, the 1995 Collaboration Agreement, provided, however, that the Subscription Agreement, and the Non- Disclosure Agreement executed by the parties on March 30, 1999, shall survive in full force and effect in accordance with their terms.

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IN WITNESS WHEREOF, the parties hereto have affixed their signatures and seals below the first date indicated above, intending to be bound thereby.

DAIMLERCHRYSLER AEROSPACE		SPACEHAB, INCORPORATED
AG 08.02.99
By:	/s/ Illegible	By:	/s/ Illegible
Title:		Title:

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Schedule 1.1

AGREED AREAS OF COLLABORATION WITHIN

EXCLUSIVE COMMON BUSINESS SEGMENTS

AS OF THE EXECUTION OF THIS AGREEMENT

It is agreed that Spacehab shall, by December 31, 2000, award contracts to DASA-RI for work within the following areas of collaboration valued in the aggregate at no less than $12 million (U.S.):

1. Consolidated Resupply/ISS Logistics

2. ISS Services

(a) Commercial Station Reboost and Resupply Service

(b) Carrier Hardware Interface Adapters

3. External ISS Research Facilities

(a) Quick External Science Tray

(b) Commercial Attached Payload Service

(c) EXPRESS/TEF

4. Experiment Integration Services/ISS Research Services

5. ISS Research Facilities

(a) Space-DRUMS^™

(b) TEMPUS

6. X-37 Cradle

7. Spacehab Universal Communication System (provided DASA co-invests in the system), excepting developments and projects on said system already in process in accordance with Section 1.5 of the Agreement.

EX-10.41

Exhibit 10.41

GUARANTY AGREEMENT

This Guaranty Agreement (the “Guaranty”) is made and given as of the 30th day of August, 2001, by SPACEHAB, INCORPORATED, a Washington state corporation whose address is 300 D Street SW, Suite 814, Washington, DC 20024 (hereafter referred to as the “Guarantor”) to SOUTHTRUST BANK, an Alabama banking corporation (the “Bank”).

A. Astrotech Florida Holdings, Inc. (“Borrower”) and the Bank are parties to a Credit Agreement (the “Credit Agreement”) of even date herewith relating to an Acquisition and Construction Loan (the “Construction Loan”) in the amount of up to $20,000,000.00 that is subject to renewal and conversion as a Term Loan (the “Term Loan”) of up to $20,000,000.00 (collectively, the “Loan”) pursuant to the Credit Agreement. The Construction Loan is evidenced by Borrower’s Acquisition and Construction Loan Note of even date herewith in the principal amount of up to $20,000,000.00 and the Term Loan shall be evidenced by Borrower’s Term Loan Note in the amount of up to $20,000,000.00 (collectively, the “Note”). Capitalized terms not expressly defined herein shall have the meanings ascribed thereto in the Credit Agreement (the Credit Agreement, the Note and all documents executed in connection with the transactions contemplated thereby being referred to collectively as the “Loan Documents”).

B. The Bank has required this Guaranty from Guarantor as a condition of and as consideration for Bank’s entering into the Credit Agreement and Bank would not enter into the Credit Agreement or make the Loan to Borrower without being given this Guaranty.

In consideration of and as an inducement to Bank’s entering into the Credit Agreement, the undersigned Guarantor hereby absolutely and unconditionally guarantees to the Bank payment and collection in full of all sums due to Bank under and pursuant to the Note and the Loan Documents including, without limitation, all interest and expenses payable to Bank thereunder, whether at maturity or otherwise and the full performance of all obligations of the Borrower under the Notes and the Loan Documents all within the applicable grace or curative periods provided in the Loan Documents (all of the foregoing guarantied obligations of the Borrower being referred to collectively as the “Obligations”). Guarantor’s obligations hereunder shall be unconditional irrespective of, among other things, the lack of genuiness, validity, regularity or enforceability of the Loan Documents or of the obligations of the Borrower evidenced thereby, any and all suretyship defenses otherwise available to Guarantor which are hereby expressly waived and any other bar to the enforceability of this Guaranty or of the Loan Documents against either the Guarantor or the Borrower, as the case may be. Guarantor shall, in an Event of Default under the Loan Documents, pay all amounts due to the Bank under the Loan Documents on demand by the Bank without defense or set off, and Bank shall not be required, as a condition of such payment, to first proceed to preserve, utilize or exhaust any other right or remedy against the Borrower, any other guarantor or any collateral or security.

The Guarantor expressly waives acceptance of this Guaranty by the Bank, presentment and demand for payment, protest, notice of protest and notice of dishonor or non payment of any obligation of the Borrower other than as set forth above; any right to require suit against the Borrower or any other party before enforcing this Guaranty; any right to have security applied

before enforcing this Guaranty; and any right of subrogation to the Bank’s rights against the Borrower until Borrower’s obligations to the Bank are paid in full.

The Guarantor hereby consents and agrees that renewals and extensions of time of payment, surrender, release, exchange, substitution, dealing with or taking of additional collateral security, taking or release of other guaranties, abstaining from taking advantage of or realizing upon any collateral security or other guaranties and any and all other forebearances or indulgences granted by the Bank to the Borrower or any other party may be made, granted and effected by the Bank without notice to the Guarantor and without in any manner affecting its liability hereunder.

Subject to any applicable curative period provided in the Credit Agreement, in the event that a petition in bankruptcy or for an arrangement or reorganization of the Borrower under the bankruptcy laws or for the appointment of a receiver for the Borrower or any of its property is filed by or against the Borrower, or if the Borrower shall make an assignment for the benefit of creditors or shall become insolvent, all indebtedness of the Borrower shall, for the purposes of this Guaranty, be deemed to have become immediately due and payable.

Any notice to Guarantor by the Bank at any time shall not imply that such notice or any further or similar notice was required.

The Guarantor further agrees to pay to the Bank any and all costs, expenses and reasonable attorneys’ fees paid or incurred by the Bank in collecting or endeavoring to collect the indebtedness of the Borrower or in enforcing or endeavoring to enforce this Guaranty whether out of court, in trial, on appeal, in bankruptcy or otherwise.

The Guarantor further covenants and agrees with the Bank that during such time as this Guaranty is in effect, the Guarantor will make no material adverse change in its financial status as determined by the Bank in the exercise of its reasonable discretion. In the event of any breach of said covenant and agreement, all obligations of the Borrower under the Notes and the Loan Documents, regardless of their terms shall, at the Bank’s discretion, be deemed for the purposes of this Guaranty to have become matured, and at the Bank’s election, the Guarantor shall promptly pay and perform all of obligations of Borrower to the Bank, and the Bank may take any action deemed necessary or advisable to enforce this Guaranty.

In the event of any breach of the covenants and agreements of Guarantor under this Guaranty which (except for a payment default for which no curative period is applicable) are not cured within thirty (30) days after the earlier to occur of actual notice by Guarantor or receipt of written notice by Guarantor of such breach from Bank, all obligations of the Borrower under the Notes and the Loan Documents, regardless of their terms shall, at the Bank’s discretion, be deemed for the purposes of this Guaranty to have become matured, and at the Bank’s election, the Guarantor shall promptly pay and perform all of the obligations of Borrower to the Bank, and the Bank may take any action deemed necessary or advisable to enforce this Guaranty.

The provisions of this Guaranty are for the benefit of Bank and its respective successors and assigns, and nothing herein contained shall impair as between any obligor and Bank the obligations of any obligor under the Loan Documents.

This Guaranty contains the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements relating to such subject matter and cannot be amended or supplemented, except by a written agreement signed by such Guarantor and Bank.

In the event that any one or more of the provisions contained in this Guaranty shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision or provisions in every other respect and of the remaining provisions of this Guaranty shall not be in any way impaired.

The failure of Bank to enforce any right or remedy hereunder, or promptly to enforce any such right or remedy, shall not constitute a waiver thereof, nor give rise to any estoppel against Bank, nor excuse Guarantor from Guarantor’s obligations hereunder. Any waiver of any such right or remedy must be in writing and signed by Bank.

This Guaranty shall not expire until all of the Obligations to Bank have been satisfied. This Guaranty shall be binding upon the Guarantor and its respective heirs, executors, administrators and assigns jointly and severally, and shall inure to the benefit of the Banks, its successors and assigns. The terms “Guarantor” and any pronouns referring thereto and used herein shall be construed in the masculine, feminine, neuter, singular or plural as the context may require.

IN WITNESS WHEREOF, this Guaranty has been executed and delivered to the Banks by the undersigned Guarantor as of the day and year first written above.

SPACEHAB, INCORPORATED
By:	/s/    JULIA PULZONE
Name:	Julia Pulzone
Its:	Chief Financial Officer

EX-10.42

Exhibit 10.42

GUARANTY AGREEMENT

This Guaranty Agreement (the “Guaranty”) is made and given as of the 30th day of August, 2001, by ASTROTECH SPACE OPERATIONS, INC., a Delaware corporation whose address is 300 D Street SW, Suite 814, Washington, DC 20024 (hereafter referred to as the “Guarantor”) to SOUTHTRUST BANK, an Alabama banking corporation (the “Bank”).

A. Astrotech Florida Holdings, Inc. (“Borrower”) and the Bank are parties to a Credit Agreement (the “Credit Agreement”) of even date herewith relating to an Acquisition and Construction Loan (the “Construction Loan”) in the amount of up to $20,000,000.00 that is subject to renewal and conversion as a Term Loan (the “Term Loan”) of up to $20,000,000.00 (collectively, the “Loan”) pursuant to the Credit Agreement. The Construction Loan is evidenced by Borrower’s Acquisition and Construction Loan Note of even date herewith in the principal amount of up to $20,000,000.00 and the Term Loan shall be evidenced by Borrower’s Term Loan Note in the amount of up to $20,000,000.00 (collectively, the “Note”). Capitalized terms not expressly defined herein shall have the meanings ascribed thereto in the Credit Agreement (the Credit Agreement, the Note and all documents executed in connection with the transactions contemplated thereby being referred to collectively as the “Loan Documents”).

B. The Bank has required this Guaranty from Guarantor as a condition of and as consideration for Bank’s entering into the Credit Agreement and Bank would not enter into the Credit Agreement or make the Loan to Borrower without being given this Guaranty.

In consideration of and as an inducement to Bank’s entering into the Credit Agreement, the undersigned Guarantor hereby absolutely and unconditionally guarantees to the Bank payment and collection in full of all sums due to Bank under and pursuant to the Note and the Loan Documents including, without limitation, all interest and expenses payable to Bank thereunder, whether at maturity or otherwise and the full performance of all obligations of the Borrower under the Notes and the Loan Documents all within the applicable grace or curative periods provided in the Loan Documents (all of the foregoing guarantied obligations of the Borrower being referred to collectively as the “Obligations”). Guarantor’s obligations hereunder shall be unconditional irrespective of, among other things, the lack of genuiness, validity, regularity or enforceability of the Loan Documents or of the obligations of the Borrower evidenced thereby, any and all suretyship defenses otherwise available to Guarantor which are hereby expressly waived and any other bar to the enforceability of this Guaranty or of the Loan Documents against either the Guarantor or the Borrower, as the case may be. Guarantor shall, in an Event of Default under the Loan Documents, pay all amounts due to the Bank under the Loan Documents on demand by the Bank without defense or set off, and Bank shall not be required, as a condition of such payment, to first proceed to preserve, utilize or exhaust any other right or remedy against the Borrower, any other guarantor or any collateral or security.

The Guarantor expressly waives acceptance of this Guaranty by the Bank, presentment and demand for payment, protest, notice of protest and notice of dishonor or non payment of any obligation of the Borrower other than as set forth above; any right to require suit against the Borrower or any other party before enforcing this Guaranty; any right to have security applied before enforcing this Guaranty; and any right of subrogation to the Bank’s rights against the Borrower until Borrower’s obligations to the Bank are paid in full.

The Guarantor hereby consents and agrees that renewals and extensions of time of payment, surrender, release, exchange, substitution, dealing with or taking of additional collateral security, taking or release of other guaranties, abstaining from taking advantage of or realizing upon any collateral security or other guaranties and any and all other forebearances or indulgences granted by the Bank to the Borrower or any other party may be made, granted and effected by the Bank without notice to the Guarantor and without in any manner affecting its liability hereunder.

Subject to any applicable curative period provided in the Credit Agreement, in the event that a petition in bankruptcy or for an arrangement or reorganization of the Borrower under the bankruptcy laws or for the appointment of a receiver for the Borrower or any of its property is filed by or against the Borrower, or if the Borrower shall make an assignment for the benefit of creditors or shall become insolvent, all indebtedness of the Borrower shall, for the purposes of this Guaranty, be deemed to have become immediately due and payable.

Any notice to Guarantor by the Bank at any time shall not imply that such notice or any further or similar notice was required.

The Guarantor further agrees to pay to the Bank any and all costs, expenses and reasonable attorneys’ fees paid or incurred by the Bank in collecting or endeavoring to collect the indebtedness of the Borrower or in enforcing or endeavoring to enforce this Guaranty whether out of court, in trial, on appeal, in bankruptcy or otherwise.

The Guarantor further covenants and agrees with the Bank that during such time as this Guaranty is in effect, the Guarantor will make no material adverse change in its financial status as determined by the Bank in the exercise of its reasonable discretion. In the event of any breach of said covenant and agreement, all obligations of the Borrower under the Notes and the Loan Documents, regardless of their terms shall, at the Bank’s discretion, be deemed for the purposes of this Guaranty to have become matured, and at the Bank’s election, the Guarantor shall promptly pay and perform all of obligations of Borrower to the Bank, and the Bank may take any action deemed necessary or advisable to enforce this Guaranty.

In the event of any breach of the covenants and agreements of Guarantor under this Guaranty which (except for a payment default for which no curative period is applicable) are not cured within thirty (30) days after the earlier to occur of actual notice by Guarantor or receipt of written notice by Guarantor of such breach from Bank, all obligations of the Borrower under the Notes and the Loan Documents, regardless of their terms shall, at the Bank’s discretion, be deemed for the purposes of this Guaranty to have become matured, and at the Bank’s election, the Guarantor shall promptly pay and perform all of the obligations of Borrower to the Bank, and the Bank may take any action deemed necessary or advisable to enforce this Guaranty.

The provisions of this Guaranty are for the benefit of Bank and its respective successors and assigns, and nothing herein contained shall impair as between any obligor and Bank the obligations of any obligor under the Loan Documents.

This Guaranty contains the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements relating to such subject matter and cannot be amended or supplemented, except by a written agreement signed by such Guarantor and Bank.

In the event that any one or more of the provisions contained in this Guaranty shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision or provisions in every other respect and of the remaining provisions of this Guaranty shall not be in any way impaired.

The failure of Bank to enforce any right or remedy hereunder, or promptly to enforce any such right or remedy, shall not constitute a waiver thereof, nor give rise to any estoppel against Bank, nor excuse Guarantor from Guarantor’s obligations hereunder. Any waiver of any such right or remedy must be in writing and signed by Bank.

A. REPRESENTATIONS AND WARRANTIES:

In order to induce the Bank to accept this Guaranty, the Guarantor represents, warrants covenants and agrees that:

1. Incorporation, Good Standing, and Due Qualification. Guarantor is a corporation duly organized, validly existing, and having an active status under the laws of the State of Delaware; has the corporate power and authority to own its assets and to transact the business in which it is now engaged or proposed to be engaged; and is duly qualified and in good standing under the laws of each jurisdiction in which such qualification is required, if any.

2. Corporate Power and Authority. The execution, delivery, and performance by the Guarantor of this Guaranty has been duly authorized by all necessary corporate action and do not and will not (1) require any consent or approval of the stockholders or of any other corporation or business entity; (2) contravene either Guarantor’s Certificate of Incorporation or By-Laws; (3) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination, or award presently in effect having applicability to Guarantor; (4) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease, or instrument to which Guarantor is a party or by which it or its properties may be bound or affected; (5) result in or require the creation or imposition of any Lien upon or with respect to any of the properties now owned or hereafter acquired by the Guarantor other than those created by the Loan Documents in favor of the Bank; or (6) cause the Guarantor to be in default under any law, rule, regulation, order, writ, judgment, injunction, decree, determination, or award or any such indenture, agreement, lease, or instrument.

3. Legally Enforceable Agreement. This Guaranty and each of the other Loan Documents to which Guarantor is a party are legal, valid and binding obligations of the Guarantor enforceable against the Guarantor in accordance with their respective terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, and other similar laws affecting creditors’ rights generally, and principles of equity. Guarantor represents and warrants that it is not insolvent or contemplating filing a voluntary petition for bankruptcy nor is Guarantor aware of any possibility or threat of being subject to any petition for involuntary bankruptcy.

4. Financial Statements. All financial statements of Guarantor which have been furnished to the Bank by the Guarantor are complete and correct and fairly present, in all material respects, the financial condition of the Guarantor and the results of the operations of the Guarantor for the periods covered by such statements, all in accordance with GAAP and there has been no material adverse change in the condition (financial or otherwise), business, or operations of the Guarantor. There are no liabilities of the Guarantor fixed or contingent, which are material but are not reflected in financial statements provided to the Bank or in the notes thereto, other than liabilities arising in the ordinary course of business. No information, exhibit, or report relating to the Guarantor furnished by the Guarantor to the Bank in connection with the negotiation of or pursuant to the Loan Documents or this Guaranty contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statement contained therein not materially misleading. Any financial projections in respect of Guarantor provided to the Bank have been prepared based upon present facts and using assumptions which Guarantor believes to be fair and reasonable.

5. Labor Disputes and Acts of God. Neither the business nor the properties of the Guarantor or any Affiliate are now affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy, or other casualty, nor does the Borrower have any reason to believe that either of them will be affected in the future, by any strike, lockout or other labor dispute or embargo (whether or not any of the foregoing are covered by insurance) materially and adversely affecting such business or properties or the operation of the Guarantor or any Affiliate.

6. Other Agreements. Guarantor is not a party to any indenture, loan, or credit agreement or, to Guarantor’s knowledge, to any lease or other agreement or instrument, or subject to any charter or corporate restriction which could have a material adverse effect on the business, properties, assets, operations, or conditions, financial or otherwise, of the Guarantor, or the ability of the Guarantor to carry out its obligations under this Guaranty or under any Loan Documents to which Guarantor is a party. Guarantor is not in default in respect of payment or, to its knowledge, in any other respect in the performance, observance, or fulfillment of any of the obligations, covenants, or conditions contained in any agreement or instrument material to its business to which it is a party except where such default does not have and will not have a material adverse effect on guarantor, its business, assets, properties or financial condition.

7. Litigation. There is no pending or, to Guarantor’s knowledge, threatened action or proceedings against or affecting either of the Guarantor before any court, governmental agency or arbitrator which may, in any one case or in the aggregate, materially adversely affect the financial condition, operations, properties, or business of the Guarantor or the ability of the Guarantor to perform its obligation under this Guaranty or under the Loan Documents to which Guarantor is a party.

8. No Defaults on Outstanding Judgments or Orders. The Guarantor is not in default with respect to any judgment, writ, injunction, decree, rule, or regulation of any court, arbitrator, or federal, state, municipal, or other governmental authority, commission, board, bureau, agency or instrumentality, domestic or foreign.

9. Ownership and Liens. The Guarantor has title to, or valid leasehold interests in, all of its properties and assets, real and personal, including the properties and assets and leasehold interest reflected in the financial statements referred to above and all properties and assets pledged as collateral to the Bank to secure Guarantor’s obligations under the Stock Pledge and Security Agreement in support of this Guaranty (the “Guaranty Collateral”), and none of the Guaranty Collateral is subject to any Lien, except the Lien of the Bank.

10. ERISA. The Guarantor represents and warrants that it has no Plans that are subject to ERISA.

11. Operation of Business. To the best of Guarantor’s knowledge, the Guarantor possesses all licenses, permits, franchises, patents, copyrights, trademarks, and trade names, or rights thereto (except where the failure to obtain same does not have and will not have a material adverse effect on the Guarantor, its business, assets, properties or financial condition), to conduct its business substantially as now conducted and as presently proposed to be conducted, and the Guarantor is not in violation of any valid rights of others with respect to any of the foregoing.

12. Taxes. The Guarantor has filed (or has timely filed extensions for) all tax returns (federal, state and local) required to be filed and has paid all taxes, assessments, and governmental charges and levies thereon which are due, including interest and penalties, except for such taxes as may be contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP.

B. AFFIRMATIVE COVENANTS

So long as the Notes shall remain unpaid the Guarantor shall:

1. Maintenance of Existence. Preserve and maintain its corporate existence and good standing in the jurisdiction of its incorporation, and qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification is required.

2. Maintenance of Records. Keep adequate records and books of account, in which complete entries will be made in accordance with GAAP, reflecting all financial transactions of the Guarantor.

3. Maintenance of Properties. Maintain, keep, and preserve, all of its properties (corporeal or incorporeal) necessary or useful in the proper conduct of its business, in the aggregate, in reasonable working order and condition, ordinary wear and tear excepted.

4. Conduct of Business. Continue to engage in an efficient and economical manner in the business conducted by Guarantor on the date of Closing the Acquisition and Construction Loan.

5. Maintenance of Insurance. Maintain insurance with financially sound and reputable insurance companies or associations in such amounts and covering such risks as are usually carried by companies engaged in the same or a similar business and similarly situated, which insurance may provide for reasonable deductibility from coverage thereof, and shall include, without limitation, as applicable to Guarantor’s business activities (i) Builder’s Risk

Insurance, (ii) fire, theft and casualty insurance in an amount of not less than full insurable value of the covered assets, and (iii) public liability insurance including, without limitation automobile and appropriate liability coverage in not less than the amounts of present coverage in existence on the date of this Agreement, and (iv) business interruption insurance. Guarantor shall immediately notify the Bank upon the occurrence of any business interruption or of any casualty, damage or loss to its assets or seizure of any assets in excess of $1,000,000 for any reason including, without limitation, action of any foreign government.

6. Compliance with Laws. Guarantor shall comply in all material respects with all applicable laws, rules, regulations, and orders, 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 provided, however, that Guarantor shall have the right in good faith to contest the imposition of any tax or the levy of any assessment or governmental charge so long as non-payment during such contest does not result in the imposition of a Lien upon the Guaranty Collateral.

7. Right of Inspection. Guarantor shall, at any reasonable time and from time to time and upon reasonable notice to Guarantor, permit the Bank or any agent or representative thereof to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Guarantor, and to discuss the affairs, finances, and accounts of the Guarantor with any of their respective officers and directors and the Guarantor’s independent accountants. Such inspection shall be conducted during normal business hours and, to the extent practicable, shall not unreasonably interfere with Guarantor’s normal business affairs.

8. Reporting Requirements. Furnish to the Bank:

(1) Interim financial statements. As soon as available and in any event within forty five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Guarantor, combining and combined balance sheets of the Guarantor as of the end of such quarter, statements of income and retained earnings of the Guarantor for the period commencing at the end of the previous fiscal year, if any, and ending with the end of such quarter, and a balance sheet and statement of change in financial position of the Guarantor for the portion of the fiscal year ended with the last day of such quarter, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the previous fiscal year, if any, and all prepared in accordance with GAAP consistently applied and certified by their respective chief financial officers (subject to year-end adjustments);

(2) Annual financial statements. (a) As soon as available and in any event within one hundred twenty (120) days after the end of each fiscal year of Guarantor, financial statements of Guarantor on a consolidated and consolidating basis including, without limitation, a balance sheet as of the end of such fiscal year and a statement of income and retained earnings for such fiscal year, and a statement of change in financial position, all in reasonable detail and . stating in comparative form the respective figures for the corresponding date and period in the prior fiscal year, if any, and all prepared in accordance with GAAP consistently applied by an independent accounting firm selected by Guarantor and reasonably acceptable to the Bank; and

(b) (a) As soon as available and in any event within one hundred twenty (120) days after the end of each fiscal year of Guarantor, combining and combined balance sheets of the Guarantor as of the end of such fiscal year, statements of income and retained earnings of the Guarantor for the period commencing at the end of the previous fiscal year, and a balance sheet and statement of change in financial position of the Guarantor for the fiscal year just ended, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the previous fiscal year, if any, and all prepared in accordance with GAAP consistently applied and certified by their respective chief financial officers (subject to year-end adjustments);

(3) Environmental Reports. Within thirty (30) days after Guarantor or any Subsidiary sending same to any federal, state or local environmental regulatory agency, copies of any reports or assessments relating to the environmental condition of the Real Property Collateral including, without limitation, reports or assessments relating to the presence, suspected presence, release or discharge or suspected release or discharge of any Hazardous Material or Hazardous Substance in or into the air, soil, surface water, groundwater or soil vapor at, on, about, under, or within any of the Real Property Collateral or any portion thereof. For the purposes hereof, the terms “Hazardous Material” and “Hazardous Substance” shall have the meanings ascribed thereto in the Mortgage and in the Environmental Indemnification Agreement between the Bank and the Guarantor relating to the Real Property Collateral.

(4) Notice of litigation. Promptly after the commencement thereof, notice of all actions, suits, and proceedings before any court or governmental department, commission, board, bureau, agency, or instrumentality, domestic or foreign, against or, to Guarantor’s knowledge, materially affecting the Guarantor or any Subsidiary, which, if determined adversely to the Guarantor or such Subsidiary, would have a material adverse effect on the financial condition, properties, or operations of the Guarantor or such Subsidiary;

(5) Notice of Defaults and Events of Default. Immediately after the occurrence of each Default or 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 Guarantor with respect thereto;

(6) Reports to other creditors. Upon reasonable request by the Bank made not more frequently than quarterly, promptly after the furnishing thereof by Guarantor or any Affiliate, copies of any statement or report furnished to any other party pursuant to the terms of any indenture, loan, or credit or similar agreement and not otherwise required to be furnished to the Bank;

(7) Notice of acquisition, bulk sale, merger or change in control. Prior to any (i) proposed acquisition of control of or purchase of all or any substantial part of the assets of any corporation or business entity by Guarantor; (ii) sale of all or any substantial part of the assets of the Guarantor; (iii) any merger by the Guarantor with any other entity whether or not Guarantor is to survive the merger; or (iv) change in ownership or voting control of 5% or more of the common stock of Guarantor entitled to vote; Guarantor shall provide the Bank with not less than thirty (30) days advance written notice.

(8) Notice of Business Interruption, etc. After the Completion Date Guarantor shall, within ten (10) Business Days of Guarantor becoming aware of the occurrence thereof, notify the Bank of the occurrence of any business interruption (other than a planned seasonal shutdown), casualty or damage or loss of property which could have a material adverse effect on the business of the Guarantor for any reason including, but not limited to, any action of any foreign government.

(9) General information. Such other information respecting the condition or operations, financial or otherwise, of the Guarantor or any Subsidiary as the Bank may from time to time reasonably request.

C. NEGATIVE COVENANTS:

So long the Notes remain unpaid the Guarantor will not, without the prior written consent of the Bank:

1. Liens. Create, incur, assume, or suffer to exist, or permit any Subsidiary to create, incur, assume, or suffer to exist, any Lien upon or with respect to any Guaranty Collateral now owned or hereafter acquired, except:

(a) Liens for taxes or assessments or other government charges or levies if not yet due and payable or, if due and payable, if they are being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained;

(b) Liens imposed by law, such as mechanics’, materialmen’s, landlords’, warehousemen’s, and carriers’ Liens, and other similar Liens, securing obligations incurred in the ordinary course of business which are not past due or which are being contested in good faith by appropriate proceedings and which have been transferred to appropriate bond; and

(c) The Liens given to the Bank pursuant to the Loan Documents.

2. Mergers, Etc. Merge or consolidate with, or sell, assign, lease, or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to any Person.

3. Sale and Leaseback. Sell, transfer, or otherwise dispose of, or permit any Subsidiary to sell, transfer, or otherwise dispose of, any real or personal property to any person and thereafter directly or indirectly lease back the same or similar property other than for fair market value.

4. Sale of Assets. The Guarantor shall not sell, lease, assign, transfer, or otherwise dispose of any of its now owned or hereafter acquired assets other than for fair market value.

5. Investments. Make, or permit any Subsidiary to make, any loan or advance to any Person, or purchase or otherwise acquire, or permit any Subsidiary to purchase or otherwise acquire, any capital stock in any Person other than Guarantor or any Subsidiary, or investment other than in the ordinary course of business or other securities of, make any capital contribution

to, or otherwise invest in or acquire any interest in any Person, except: (1) direct obligations of the United States or any agency thereof with maturities of one year or less from the date of acquisition; (2) commercial paper of a domestic issuer rated at least “A-1” by Standard & Poor’s Corporation or “P-1” by Moody’s Investors Service, Inc.; (3) other securities rated as investment grade quality by Standard & Poor’s Corporation, Moody’s Investors Service, Inc. or Fitch Investors Service, Inc.; (4) certificates of deposit with maturities of one year or less from the date of acquisition issued by any commercial bank having capital and surplus in excess of Twenty Million Dollars ($20,000,000.00); and (5) stock, obligations, or securities received in settlement of debts (created in the ordinary course of business) owing to the Guarantor or any Subsidiary.

6. Debt. Guarantor shall not incur any Debt that would result in impairment of Guarantor’s ability to perform its obligations under this Guaranty.

D. FINANCIAL COVENANTS

1. Minimum Tangible Net Worth. The Guarantor shall, as of March 31, 2002 and thereafter, maintain a combined minimum Tangible Net Worth of $19,500,000.00. Thereafter, the minimum Tangible Net Worth shall increase by a minimum of 90% of pre-tax income annually on a cumulative basis, provided that a minimum combined Tangible Net Worth requirement determined by such formula shall not thereafter decrease as a result of any subsequent decrease in pre-tax income.

2. Ratio of Total Liabilities to Tangible Net Worth. The Guarantor shall maintain at all times a combined ratio of Total Liabilities divided by combined Tangible Net Worth of less than 1.75 to 1.0.

3. Fixed Charge Coverage Ratio. The Guarantor shall maintain at all times a minimum combined Fixed Charge Coverage Ratio of greater than 1.15 to 1.0. Compliance with this covenant shall be determined quarterly on a rolling quarter basis for the fiscal quarter just ended and the prior three fiscal quarters of the Guarantor.

This Guaranty shall not expire until all of the Obligations to Bank have been satisfied. This Guaranty shall be binding upon the Guarantor and its respective heirs, executors, administrators and assigns jointly and severally, and shall inure to the benefit of the Banks, its successors and assigns. The terms “Guarantor” and any pronouns referring thereto and used herein shall be construed in the masculine, feminine, neuter, singular or plural as the context may require.

IN WITNESS WHEREOF, this Guaranty has been executed and delivered to the Banks by the undersigned Guarantor as of the day and year first written above.

ASTROTECH SPACE OPERATIONS, INC.
By:	/s/    JULIA PULZONE
Name:	Julia Pulzone
Its:	Chief Financial Officer

EXHIBIT “A”

QUARTERLY REPORT FORM

Quarterly Compliance Certificate

This information is provided as of the          day of                     ,              from Astrotech Space Operations, Inc.

		Required		Calculated		Compliance
						(Y/N)
1. Tangible Net Worth		$		$		__________
2. a. Total Liabilities	$
b. Tangible Net Worth	$
Debt / Tangible Net Worth Ratio (a/b)			1.    :1.0		:1.0	__________
3. Pre-Tax Income	$
- Taxes & dividends	$
+Lease Expense	$
+Interest Expense	$
+Depreciation	$
a. sum	$
Interest Expense	$
+Lease Expense
+CM of Long Term Debt
b. sum
Fixed Charge Coverage Ratio (a/b)			1.    :1.0		:1.0	__________

The undersigned hereby certify that to the best of their knowledge the above information is true and correct as of the date written.

ASTROTECH SPACE OPERATIONS, INC.		ASTROTECH FLORIDA HOLDINGS, INC.
By:		By:
	Name:		Name:
	As Its:		As Its:

EX-10.43

Exhibit 10.43

STOCK PLEDGE AND SECURITY AGREEMENT

THIS STOCK PLEDGE AND SECURITY AGREEMENT (this “Agreement”) is made and entered into as of the 30th day of August, 2001, by SPACEHAB, INCORPORATED (“Pledgor”) in favor of SOUTHTRUST BANK, an Alabama Banking corporation (“Bank”).

WHEREAS, Pledgor is, on the date hereof, the owner and holder of 100 shares of common stock (the “ASO Stock”) which constitutes 100% of the authorized voting stock of Astrotech Space Operations, Inc. (“ASO”) (the ASO Stock being referred to herein as the “Stock Collateral”); and

WHEREAS, Bank and Astrotech Florida Holdings, Inc. (referred to herein as the “Borrower”) have entered into a Credit Agreement (the “Credit Agreement”) of even date herewith relating to an Acquisition and Construction Loan in the amount of up to $20,000,000, renewable and convertible as a Term Loan in like amount (collectively, the “Loan”); and

WHEREAS, Pledgor has guaranteed payment and performance of certain obligations of the Borrower in connection with the Loan pursuant to Pledgor’s Guaranty Agreement (the “Guaranty”) of even date herewith in favor of Lender; and

WHEREAS, Lender has required, as a condition precedent to Lender’s entering into the Credit Agreement and making Advances to Borrower thereunder, that the Pledgor grant to Lender, as Collateral for the performance of Pledgor’s obligations under the Guaranty, a security interest in the Stock Collateral (capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement); and

WHEREAS, Pledgor has determined that the transactions contemplated by the Credit Agreement are beneficial to Pledgor, and it is thus in the best interest of Pledgor to enter into this Agreement;

NOW, THEREFORE, in consideration of the premises, and of the mutual covenants and agreements herein set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Representations of Pledgor. Pledgor represents and warrants as follows:

(a) The Stock Collateral constitutes 100% of the authorized voting stock of ASO and has been duly and validly issued, is fully paid and non-assessable, and is without restrictions (other than SEC Reg. 144 restrictions on the transfer of shares or on Pledgor’s right to pledge the shares as Stock Collateral);

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(b) This Agreement has been duly authorized, executed and delivered by Pledgor and constitutes a legal, valid and binding obligation of Pledgor, enforceable in accordance with its terms;

(c) The making and performance of this Agreement by Pledgor (i) is not and will not be in violation of any law or any regulation promulgated pursuant to law, by any governmental agency or body; (ii) does not require the approval or consent of any governmental agency or body; (iii) will not conflict with, or result in a breach of, any term, condition or provision of, or constitute a default under, any instrument to which either Pledgor is a party or may be bound or affected, or constitute (with or without the giving of notice or the passage of time or both) a default under any such instrument, or result in the acceleration of any indebtedness, or result in the breach of any regulation, order, writ, injunction or decree of any court or any commission, board or other administrative agency entered in any proceeding to which either Pledgor is a party or by which it may be bound or affected; and (iv) does not require the approval of any other secured or unsecured creditor.

(d) Upon consummation of the pledge and assignment of the Stock Collateral to Lender pursuant to this Agreement, and delivery to the Lender or its agent of the share certificates representing the Stock Collateral or the execution by a transfer agent or securities depository to which the Stock Collateral has been delivered or which holds the Stock Collateral in uncertificated form for the account of Pledgor of an agreement in form and substance sufficient to perfect the Lender’s security interest, such pledge and assignment will create a valid lien on and a perfected, first priority security interest in the Stock Collateral. The form of agreement and acknowledgment of the Lender’s security interest attached hereto as Exhibit “A” shall be acceptable for such purposes.

(e) No Stock Collateral has been heretofore pledged to any person or entity and all Stock Collateral is free of all liens of any kind whatsoever.

2. Pledge and Assignment of Stock Collateral and of Right to Receive Stock Collateral as Pledged. Pledgor hereby assigns, hypothecates, transfers and pledges to Lender all of the Pledgor’s right, title and interest in and to all of the Stock Collateral whether now owned or hereafter acquired including, without limitation, the right to receive dividends, and hereby grants to Lender a first lien on and a security interest in such Stock Collateral, all as collateral security for (a) the prompt and complete performance and payment when due of the obligations of the Guarantor under the Guaranty; (b) the prompt and complete performance of the obligations of Pledgor under, or pursuant to the terms of this Agreement; and (c) all costs and expenses incurred by Lender in connection with the enforcement, maintenance and preservations of its rights under any of the Loan Documents including, without limitation, the Guaranty and this Agreement, including all attorneys’ fees and including all of such costs herein. Anything to the contrary in this Agreement notwithstanding, so long as there is no default in existence under the Loan Documents or under the Guaranty, the Pledgor shall be entitled to receive or to direct payment and distribution of dividends paid or interest earned on the

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Stock Collateral and to exercise voting rights associated with the Stock Collateral all of which right shall terminate upon the occurrence of a default under any of such Loan Documents.

If ownership of the Stock Collateral is transferred, then each such transfer shall be subject to the Bank’s security interest which shall continue in full force and effect undiminished and without interruption by reason of such transfer.

3. Redelivery of Stock Collateral. Upon performance and satisfaction in full of the Borrower’s obligations under the Loan Documents and Pledgor’s obligations under the Guaranty, this Pledge and Security Agreement shall immediately cease and terminate as herein provided, and any Stock Collateral then held by Lender shall be deemed immediately transferred to the owner thereof, and this Agreement shall thereupon have no further force or effect. Upon the happening of the events specified in the immediately preceding sentence, the Lender shall be deemed to be holding such Stock Collateral in trust for Pledgor until such Stock Collateral, together with appropriate instruments of reassignment and release as requested by Pledgor, are delivered to Pledgor or to Pledgor’s designee. Upon such delivery of Stock Collateral or any part thereof to Pledgor or to Pledgor’s designee hereunder or otherwise, the receipt thereof by Pledgor shall be a complete and full acquittance for the Stock Collateral so delivered, and Lender shall thereafter be discharged from any liability or responsibility therefor.

4. Default. Upon default under the Loan Documents including, without limitation, the Guaranty, the Lender without demand of performance or other demand, advertisement, or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon Pledgor or any other person (all and each of which demands, advertisements and/or notices are hereby expressly waived to the extent permitted by law), may collect, receive, appropriate and realize upon the Stock Collateral, or any portion thereof, and/or may forthwith sell, assign, grant options to purchase, contract to sell or otherwise dispose of and deliver the Stock Collateral, or any part thereof, in one or more units, at public or private sale or sales, at any exchange, broker’s board or at any of Lender’s offices or elsewhere, upon such terms and conditions as the Lender may deem advisable and at such prices as Lender may deem reasonable, for cash or on credit or for future delivery without assumption of any credit risk, with the right to Lender upon any such sale or sales, public or private, to purchase the whole or any portion of the Stock Collateral so sold, free of any right or equity of redemption in Pledgor, which right or equity is hereby expressly waived and released to the extent permitted by law. Unless Stock Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market (in which event no notification is required), the Lender shall give at least five days’ notice of the time and place of any public sale or of the time after which a private sale or other intended disposition is to take place and that such notice is reasonable notification of such matters. Such notice shall be given in the manner prescribed in the Florida Uniform Commercial Code for giving notice of notice by secured parties to debtors. Such reasonable notification shall be given to Pledgor unless it has signed after default a statement renouncing or modifying any right to notification of

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sale or other intended disposition. In addition to the rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Loan, Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code of the State of Florida.

5. Rights of Lender. Upon (a) the failure by Guarantor to pay when due the obligations evidenced by the Guaranty and secured by this Pledge and Security Agreement, in accordance with the respective terms thereof, and (b) Lender’s consummation of a sale of or other realization upon Stock Collateral in accordance with this Pledge and Security Agreement, the Stock Collateral so sold or realized upon may be registered in the name of the purchaser or Lender, as the case may be, and thereafter, Pledgor and any individual having rights that arise through Pledgor shall not be entitled to exercise any voting and corporate rights with respect to such Stock Collateral or exercise any rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any of such Stock Collateral.

6. Distribution of Proceeds. The proceeds of any sale of all of any part of the Stock Collateral may be applied by Lender, at its option, to any of the following:

(a) First, to the payment of all of the costs and expenses of sale of Stock Collateral, including, without limitation, reasonable fees and expenses of the Lender and its agents, attorneys and counsel; and, all other expenses, liabilities and advances made or incurred by Lender in connection herewith or with respect to the Loan Documents or this Agreement;

(b) Second, to the payment of all of the costs, fees and expenses to which the Lender is entitled under the Loan Documents including, without limitation, Lender’s attorneys’ fees and costs of collection, whether or not suit for enforcement of Lender’s rights has been commenced or consummated;

(c) Third, to the payment in full of the interest on and principal due under the Loan Documents (whether or not the same shall have been declared forthwith due and payable) and all other indebtedness secured by the pledge hereunder, or, if not sufficient to pay all such amounts in full, then to payment of accrued but unpaid interest, and then unpaid principal due under the Agreement until the Borrower’s obligations under the Agreement are paid in full, and next, if any amounts remain, to any other indebtedness or obligation secured by the pledge hereunder in such order as Lender may elect; and

(d) Fourth, after all payments described in Subparagraphs (a) through (c) of this section shall have been made in full, any surplus remaining from such proceeds shall be paid to Pledgor or whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

7. Presentments. Lender shall be under no duty or obligation whatsoever, other than as set forth in this Pledge and Security Agreement and the Loan Documents

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including, without limitation the Guaranty, to make or give any presentments, demands for performances, notices of nonperformance, protests, notice of protest or notice of dishonor in connection with the obligations evidenced by the Loan Documents or the whole or any part of the obligations secured hereunder.

8. No Waiver. No delay on the part of Lender in exercising any right, power or privilege under this Pledge and Security Agreement or failure to exercise the same shall operate as a waiver of or otherwise affect any such right, power or privilege, 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. No notice to or demand on the Pledgor shall be deemed to be a waiver of any of the obligations of the Pledgor or of the right of Lender to take further action or to exercise any rights hereunder without notice or demand or prejudice the rights of Lender in any respect; nor in any event shall any alternative, amendment, modification or waiver of the provisions of this Pledge Agreement be effective unless in writing by the party to be charged thereby, nor shall any such waiver be applicable except in the specific instance for which given.

9. No Disposition. Without the prior written consent of Lender, Pledgor agrees that it will not sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to the Stock Collateral, nor will it create, incur or permit to exist any Lien on any of the Stock Collateral, or any interest thereon, or any proceeds thereof, except for the Liens thereon in favor of Lender. Without the prior written consent of Lender, Pledgor agrees that it will not take any action that would compromise Lender’s rights under the Agreement.

10. Other Rights. The rights, powers and remedies given to Lender by this Agreement shall be in addition to all rights, powers and remedies given to Lender by virtue of any statute or rule of law. Every right, power and remedy of Lender shall continue in full force and effect until either (a) termination of this Agreement or (b) such right, power or remedy is specifically waived by an instrument in writing executed by Lender.

11. Further Assurances. Pledgor hereby agrees to execute and deliver, from time to time, any and all further, or other, instruments, and to perform such acts, as Lender may reasonably request to effect the purposes of this Agreement and to secure to Lender and to all persons who may from time to time be holders of any of the Stock Collateral hereunder the benefits of all rights, authorities and remedies conferred upon Lender by the terms of this Pledge Agreement.

12. Binding Effect. This Agreement shall be binding upon the parties hereto and their respective heirs, legal representatives, successors and assigns.

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13. Notices. All notices, demands and communications given or made hereunder or pursuant hereto shall be in writing and shall be given by certified mail return receipt requested, or by telefacsimile, addressed as follows:

To Pledgors:	SPACEHAB, INCORPORATED 300 D Street SW Suite 814 Washington, DC 20024 Fax: (202) 488-8241
To Lender:	SouthTrust Bank 420 North 20th Street Birmingham, AL 35203 Attn: Florida Corporate Banking (St. Petersburg) Fax: (727) 898-5319
	With copy to:
	SouthTrust Bank 150 Second Avenue North Suite 400 St. Petersburg, FL 33701 Fax: (727) 898-5319

or to such other address or to such other person as any party shall designate to the others for such purpose in the manner hereinabove set forth.

14. Specific Performance. The parties hereto agree that the remedies at law for damages under this Pledge and Security Agreement in the event of any actual or threatened breach or default hereunder are not and will not be adequate, and that the obligations may therefore be specifically enforced.

15. Gender; Defined Terms. Whenever in this Pledge and Security Agreement the context so requires, the singular shall include the plural and the plural the singular. It is also understood that designations of parties hereto in a particular gender shall be read to include other genders as applicable. All capitalized terms not otherwise defined in this Pledge and Security Agreement shall have the meanings given them in the Agreement or in the Guaranty as the context may require.

16. Severability. If any provision of this Pledge and Security Agreement is determined by a court to be invalid or unenforceable, such determination shall not affect any other provision, each of which shall be construed and enforced as if such invalid or unenforceable portion were not contained herein. Such invalidity or unenforceability shall not affect any valid and enforceable application thereof, and each such provision shall be deemed to be effective, operative, made, entered into or taken in the manner and to the full extent permitted by law.

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17. Amendments; Governing Law. This Pledge and Security Agreement may not be amended or supplemented except by an instrument in writing executed by Lender and the Pledgor. The validity and interpretation of this Pledge and Security Agreement and performance of the parties hereto of their respective duties and obligations hereunder shall be governed by the laws of the State of Florida.

18. Jurisdiction and Venue. The Pledgor agrees that by executing and delivering this Pledge and Security Agreement to the Lender the Pledgor submits to personal jurisdiction in any court of competent jurisdiction in Hillsborough County, Florida, agrees that service of process may be had on the Pledgor by service upon the Secretary of State of the State of Florida with a copy sent by certified mail to Pledgor at its address for notices set forth in this Agreement, and that venue of any action arising under or relating to this Agreement shall lie exclusively in Hillsborough County, Florida.

19. Waiver of Right to Jury Trial. The Pledgor, for itself, its successors and assigns, hereby waives its right to trial by jury in any action, whether in contract or tort, arising under or in any way related to this Pledge and Security Agreement or to the Loan Documents.

20. Assignment. Pledgor acknowledges and agrees that Lender shall have the right to assign this Pledge and Security Agreement and all of Lender’s rights hereunder.

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

SPACEHAB, INCORPORATED
By:	/s/    JULIA PULZONE
Name:	Julia Pulzone
Its:	Chief Financial Officer

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EXHIBIT “A”

[Date]

SouthTrust Bank

420 North 20th Street

Birmingham, AL 35203

Gentlemen:

As of this date, SPACEHAB, INCORPORATED, (the “Pledgor”) is the registered owner by book entry of                          shares of common stock of Astrotech Space Operations, Inc. (collectively, the “Pledged Stock”). Upon execution and delivery of this letter, SouthTrust Bank (the “Pledgee”), as Pledgee of the Pledgor, has been established by book entry by                                      (the “Intermediary”) as the registered owner of the Pledged Stock.

Neither the Pledgor nor any third party shall have the right to withdraw the Pledged Stock from control of the Pledgee or the Intermediary without the written consent of the Pledgee nor shall the Intermediary take directions from any party other than the Pledgee regarding transfer or other disposition of the Pledged Stock. The Pledgor shall, however, be entitled to receive or to direct payment and distribution of dividends paid or interest earned on the Pledged Stock which right shall terminate upon notification by the Pledgee to the Intermediary of the occurrence of an event of default under the obligations secured by the Stock Pledge and Security Agreement between Pledgor and Pledgee dated as of August     , 2001 (an “Event of Default”). Upon receipt by the Intermediary of a notice from the Pledgee of the occurrence of an Event of Default, the Intermediary shall take and act exclusively in accordance with directions from the Pledgee regarding the transfer or other disposition of the Pledged Stock and any dividends accruing thereunder.

The Intermediary shall maintain the Pledged Stock in the Pledgee’s name as registered owner by book entry until instructed by the Pledgee in writing (i) upon occurrence of an Event of Default, to transfer ownership of the Pledged Stock to a third party or to otherwise dispose of the Pledged Stock as directed by the Pledgee, or (ii) to transfer the Pledged Stock to another intermediary or to cause certificated securities representing the Pledged Stock endorsed in blank to be delivered to the Pledgee or to another intermediary or securities depository, or (iii) upon payment in full of the obligations secured by the Pledged Stock, to release the Pledged Stock to the Pledgor or Pledgor’s designee.

In the event that the Intermediary shall have a lien on any of the Pledged Stock, the Intermediary agrees that such lien shall be subordinated to the security interest of the Pledgee.

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The Intermediary shall be under an absolute duty of safekeeping to the Pledgee with respect to the registration of ownership, custody, protection and preservation of the Pledged Stock. The Intermediary shall maintain the Pledged Stock in book entry form in trust for the benefit of the Pledgee. With respect to any Pledged Stock that it holds or controls, the Intermediary shall be a fiduciary of the Pledgee.

This Agreement shall be governed and construed in accordance with the laws of the State of Florida regardless of which state this Agreement is executed in.

This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.

The Intermediary agrees that by executing and delivering this Agreement to the Pledgee it submits to personal jurisdiction in any court of competent jurisdiction in Florida, agrees that service of process may be had on it by service upon the Secretary of State of the State of Florida with a copy sent by certified mail to the Intermediary, and that venue of any action arising under or relating to this Agreement shall lie exclusively in Florida.

The Intermediary, for itself, its successors and assigns, hereby waives its right to trial by jury in any action, whether in contract or tort, arising under or in any way related to this Agreement.

The Pledgor, by its execution of this letter below, hereby consents and agrees to the matters set forth hereinabove, and to the granting of control of the Pledged Stock to the Pledgee by the Intermediary.

[INTERMEDIARY]
By:
	Print Name:
	Its:

Consented and agreed to by SPACEHAB, INC.

SPACEHAB, INCORPORATED
By:
	Print Name:
	Its:

9

EX-10.44

Exhibit 10.44

STOCK PLEDGE AND SECURITY AGREEMENT

THIS STOCK PLEDGE AND SECURITY AGREEMENT (this “Agreement”) is made and entered into as of the 30th day of August, 2001, by ASTROTECH SPACE OPERATIONS, INC. (“Pledgor”) in favor of SOUTHTRUST BANK, an Alabama Banking corporation (“Bank”).

WHEREAS, Pledgor is, on the date hereof, the owner and holder of 1000 shares of common stock (the “AFH Stock”) which constitutes 100% of the authorized voting stock of Astrotech Florida Holdings, Inc. (“AFH”) (the AFH Stock being referred to herein as the “Stock Collateral”); and

WHEREAS, Bank and Astrotech Florida Holdings, Inc. (referred to herein as the “Borrower”) have entered into a Credit Agreement (the “Credit Agreement”) of even date herewith relating to an Acquisition and Construction Loan in the amount of up to $20,000,000, renewable and convertible as a Term Loan in like amount (collectively, the “Loan”); and

WHEREAS, Pledgor has guaranteed payment and performance of certain obligations of the Borrower in connection with the Loan pursuant to Pledgor’s Guaranty Agreement (the “Guaranty”) of even date herewith in favor of Lender; and

WHEREAS, Lender has required, as a condition precedent to Lender’s entering into the Credit Agreement and making Advances to Borrower thereunder, that the Pledgor grant to Lender, as Collateral for the performance of Pledgor’s obligations under the Guaranty, a security interest in the Stock Collateral (capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement); and

WHEREAS, Pledgor has determined that the transactions contemplated by the Credit Agreement are beneficial to Pledgor, and it is thus in the best interest of Pledgor to enter into this Agreement;

NOW, THEREFORE, in consideration of the premises, and of the mutual covenants and agreements herein set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Representations of Pledgor. Pledgor represents and warrants as follows:

(a) The Stock Collateral constitutes 100% of the authorized voting stock of AFH and has been duly and validly issued, is fully paid and non-assessable, and is without restrictions (other than SEC Reg. 144 restrictions on the transfer of shares or on Pledgor’s right to pledge the shares as Stock Collateral);

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(b) This Agreement has been duly authorized, executed and delivered by Pledgor and constitutes a legal, valid and binding obligation of Pledgor, enforceable in accordance with its terms;

(c) The making and performance of this Agreement by Pledgor (i) is not and will not be in violation of any law or any regulation promulgated pursuant to law, by any governmental agency or body; (ii) does not require the approval or consent of any governmental agency or body; (iii) will not conflict with, or result in a breach of, any term, condition or provision of, or constitute a default under, any instrument to which either Pledgor is a party or may be bound or affected, or constitute (with or without the giving of notice or the passage of time or both) a default under any such instrument, or result in the acceleration of any indebtedness, or result in the breach of any regulation, order, writ, injunction or decree of any court or any commission, board or other administrative agency entered in any proceeding to which either Pledgor is a party or by which it may be bound or affected; and (iv) does not require the approval of any other secured or unsecured creditor.

(d) Upon consummation of the pledge and assignment of the Stock Collateral to Lender pursuant to this Agreement, and delivery to the Lender or its agent of the share certificates representing the Stock Collateral or the execution by a transfer agent or securities depository to which the Stock Collateral has been delivered or which holds the Stock Collateral in uncertificated form for the account of Pledgor of an agreement in form and substance sufficient to perfect the Lender’s security interest, such pledge and assignment will create a valid lien on and a perfected, first priority security interest in the Stock Collateral. The form of agreement and acknowledgment of the Lender’s security interest attached hereto as Exhibit “A” shall be acceptable for such purposes.

(e) No Stock Collateral has been heretofore pledged to any person or entity and all Stock Collateral is free of all liens of any kind whatsoever.

2. Pledge and Assignment of Stock Collateral and of Right to Receive Stock Collateral as Pledged. Pledgor hereby assigns, hypothecates, transfers and pledges to Lender all of the Pledgor’s right, title and interest in and to all of the Stock Collateral whether now owned or hereafter acquired including, without limitation, the right to receive dividends, and hereby grants to Lender a first lien on and a security interest in such Stock Collateral, all as collateral security for (a) the prompt and complete performance and payment when due of the obligations of the Guarantor under the Guaranty; (b) the prompt and complete performance of the obligations of Pledgor under, or pursuant to the terms of this Agreement; and (c) all costs and expenses incurred by Lender in connection with the enforcement, maintenance and preservations of its rights under any of the Loan Documents including, without limitation, the Guaranty and this Agreement, including all attorneys’ fees and including all of such costs herein. Anything to the contrary in this Agreement notwithstanding, so long as there is no default in existence under the Loan Documents or under the Guaranty, the Pledgor shall be entitled to receive or to direct payment and distribution of dividends paid or interest earned on the

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Stock Collateral and to exercise voting rights associated with the Stock Collateral all of which right shall terminate upon the occurrence of a default under any of such Loan Documents.

If ownership of the Stock Collateral is transferred, then each such transfer shall be subject to the Bank’s security interest which shall continue in full force and effect undiminished and without interruption by reason of such transfer.

3. Redelivery of Stock Collateral. Upon performance and satisfaction in full of the Borrower’s obligations under the Loan Documents and Pledgor’s obligations under the Guaranty, this Pledge and Security Agreement shall immediately cease and terminate as herein provided, and any Stock Collateral then held by Lender shall be deemed immediately transferred to the owner thereof, and this Agreement shall thereupon have no further force or effect. Upon the happening of the events specified in the immediately preceding sentence, the Lender shall be deemed to be holding such Stock Collateral in trust for Pledgor until such Stock Collateral, together with appropriate instruments of reassignment and release as requested by Pledgor, are delivered to Pledgor or to Pledgor’s designee. Upon such delivery of Stock Collateral or any part thereof to Pledgor or to Pledgor’s designee hereunder or otherwise, the receipt thereof by Pledgor shall be a complete and full acquittance for the Stock Collateral so delivered, and Lender shall thereafter be discharged from any liability or responsibility therefor.

4. Default. Upon default under the Loan Documents including, without limitation, the Guaranty, the Lender without demand of performance or other demand, advertisement, or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon Pledgor or any other person (all and each of which demands, advertisements and/or notices are hereby expressly waived to the extent permitted by law), may collect, receive, appropriate and realize upon the Stock Collateral, or any portion thereof, and/or may forthwith sell, assign, grant options to purchase, contract to sell or otherwise dispose of and deliver the Stock Collateral, or any part thereof, in one or more units, at public or private sale or sales, at any exchange, broker’s board or at any of Lender’s offices or elsewhere, upon such terms and conditions as the Lender may deem advisable and at such prices as Lender may deem reasonable, for cash or on credit or for future delivery without assumption of any credit risk, with the right to Lender upon any such sale or sales, public or private, to purchase the whole or any portion of the Stock Collateral so sold, free of any right or equity of redemption in Pledgor, which right or equity is hereby expressly waived and released to the extent permitted by law. Unless Stock Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market (in which event no notification is required), the Lender shall give at least five days’ notice of the time and place of any public sale or of the time after which a private sale or other intended disposition is to take place and that such notice is reasonable notification of such matters. Such notice shall be given in the manner prescribed in the Florida Uniform Commercial Code for giving notice of notice by secured parties to debtors. Such reasonable notification shall be given to Pledgor unless it has signed after default a statement renouncing or modifying any right to notification of

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sale or other intended disposition. In addition to the rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Loan, Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code of the State of Florida.

5. Rights of Lender. Upon (a) the failure by Guarantor to pay when due the obligations evidenced by the Guaranty and secured by this Pledge and Security Agreement, in accordance with the respective terms thereof, and (b) Lender’s consummation of a sale of or other realization upon Stock Collateral in accordance with this Pledge and Security Agreement, the Stock Collateral so sold or realized upon may be registered in the name of the purchaser or Lender, as the case may be, and thereafter, Pledgor and any individual having rights that arise through Pledgor shall not be entitled to exercise any voting and corporate rights with respect to such Stock Collateral or exercise any rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any of such Stock Collateral.

6. Distribution of Proceeds. The proceeds of any sale of all of any part of the Stock Collateral may be applied by Lender, at its option, to any of the following:

(a) First, to the payment of all of the costs and expenses of sale of Stock Collateral, including, without limitation, reasonable fees and expenses of the Lender and its agents, attorneys and counsel; and, all other expenses, liabilities and advances made or incurred by Lender in connection herewith or with respect to the Loan Documents or this Agreement;

(b) Second, to the payment of all of the costs, fees and expenses to which the Lender is entitled under the Loan Documents including, without limitation, Lender’s attorneys’ fees and costs of collection, whether or not suit for enforcement of Lender’s rights has been commenced or consummated;

(c) Third, to the payment in full of the interest on and principal due under the Loan Documents (whether or not the same shall have been declared forthwith due and payable) and all other indebtedness secured by the pledge hereunder, or, if not sufficient to pay all such amounts in full, then to payment of accrued but unpaid interest, and then unpaid principal due under the Agreement until the Borrower’s obligations under the Agreement are paid in full, and next, if any amounts remain, to any other indebtedness or obligation secured by the pledge hereunder in such order as Lender may elect; and

(d) Fourth, after all payments described in Subparagraphs (a) through (c) of this section shall have been made in full, any surplus remaining from such proceeds shall be paid to Pledgor or whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

7. Presentments. Lender shall be under no duty or obligation whatsoever, other than as set forth in this Pledge and Security Agreement and the Loan Documents

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including, without limitation the Guaranty, to make or give any presentments, demands for performances, notices of nonperformance, protests, notice of protest or notice of dishonor in connection with the obligations evidenced by the Loan Documents or the whole or any part of the obligations secured hereunder.

8. No Waiver. No delay on the part of Lender in exercising any right, power or privilege under this Pledge and Security Agreement or failure to exercise the same shall operate as a waiver of or otherwise affect any such right, power or privilege, 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. No notice to or demand on the Pledgor shall be deemed to be a waiver of any of the obligations of the Pledgor or of the right of Lender to take further action or to exercise any rights hereunder without notice or demand or prejudice the rights of Lender in any respect; nor in any event shall any alternative, amendment, modification or waiver of the provisions of this Pledge Agreement be effective unless in writing by the party to be charged thereby, nor shall any such waiver be applicable except in the specific instance for which given.

9. No Disposition. Without the prior written consent of Lender, Pledgor agrees that it will not sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to the Stock Collateral, nor will it create, incur or permit to exist any Lien on any of the Stock Collateral, or any interest thereon, or any proceeds thereof, except for the Liens thereon in favor of Lender. Without the prior written consent of Lender, Pledgor agrees that it will not take any action that would compromise Lender’s rights under the Agreement.

10. Other Rights. The rights, powers and remedies given to Lender by this Agreement shall be in addition to all rights, powers and remedies given to Lender by virtue of any statute or rule of law. Every right, power and remedy of Lender shall continue in full force and effect until either (a) termination of this Agreement or (b) such right, power or remedy is specifically waived by an instrument in writing executed by Lender.

11. Further Assurances. Pledgor hereby agrees to execute and deliver, from time to time, any and all further, or other, instruments, and to perform such acts, as Lender may reasonably request to effect the purposes of this Agreement and to secure to Lender and to all persons who may from time to time be holders of any of the Stock Collateral hereunder the benefits of all rights, authorities and remedies conferred upon Lender by the terms of this Pledge Agreement.

12. Binding Effect. This Agreement shall be binding upon the parties hereto and their respective heirs, legal representatives, successors and assigns.

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13. Notices. All notices, demands and communications given or made hereunder or pursuant hereto shall be in writing and shall be given by certified mail return receipt requested, or by telefacsimile, addressed as follows:

To Pledgors:	Astrotech Space Operations, Inc.
	300 D Street SW
	Suite 814
	Washington, DC 20024
	Fax: (202) 488-8241
To Lender:	SouthTrust Bank
	420 North 20th Street
	Birmingham, AL 35203
	Attn: Florida Corporate Banking (St. Petersburg)
	Fax: (727) 898-5319
	With copy to:
	SouthTrust Bank
	150 Second Avenue North
	Suite 400
	St. Petersburg, FL 33701
	Fax: (727) 898-5319

or to such other address or to such other person as any party shall designate to the others for such purpose in the manner hereinabove set forth.

14. Specific Performance. The parties hereto agree that the remedies at law for damages under this Pledge and Security Agreement in the event of any actual or threatened breach or default hereunder are not and will not be adequate, and that the obligations may therefore be specifically enforced.

15. Gender; Defined Terms. Whenever in this Pledge and Security Agreement the context so requires, the singular shall include the plural and the plural the singular. It is also understood that designations of parties hereto in a particular gender shall be read to include other genders as applicable. All capitalized terms not otherwise defined in this Pledge and Security Agreement shall have the meanings given them in the Agreement or in the Guaranty as the context may require.

16. Severability. If any provision of this Pledge and Security Agreement is determined by a court to be invalid or unenforceable, such determination shall not affect any other provision, each of which shall be construed and enforced as if such invalid or unenforceable portion were not contained herein. Such invalidity or unenforceability shall not affect any valid and enforceable application thereof, and each such provision shall be deemed to be effective, operative, made, entered into or taken in the manner and to the full extent permitted by law.

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17. Amendments; Governing Law. This Pledge and Security Agreement may not be amended or supplemented except by an instrument in writing executed by Lender and the Pledgor. The validity and interpretation of this Pledge and Security Agreement and performance of the parties hereto of their respective duties and obligations hereunder shall be governed by the laws of the State of Florida.

18. Jurisdiction and Venue. The Pledgor agrees that by executing and delivering this Pledge and Security Agreement to the Lender the Pledgor submits to personal jurisdiction in any court of competent jurisdiction in Hillsborough County, Florida, agrees that service of process may be had on the Pledgor by service upon the Secretary of State of the State of Florida with a copy sent by certified mail to Pledgor at its address for notices set forth in this Agreement, and that venue of any action arising under or relating to this Agreement shall lie exclusively in Hillsborough County, Florida.

19. Waiver of Right to Jury Trial. The Pledgor, for itself, its successors and assigns, hereby waives its right to trial by jury in any action, whether in contract or tort, arising under or in any way related to this Pledge and Security Agreement or to the Loan Documents.

20. Assignment. Pledgor acknowledges and agrees that Lender shall have the right to assign this Pledge and Security Agreement and all of Lender’s rights hereunder.

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

ASTROTECH SPACE OPERATIONS, INC.
By:	/s/    JULIA PULZONE
Name:	Julia Pulzone
Its:	Chief Financial Officer

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EXHIBIT “A”

[Date]

SouthTrust Bank

420 North 20th Street

Birmingham, AL 35203

Gentlemen:

As of this date, ASTROTECH SPACE OPERATIONS, INC., (the “Pledgor”) is the registered owner by book entry of                      shares of common stock of Astrotech Florida Holdings, Inc. (collectively, the “Pledged Stock”). Upon execution and delivery of this letter, SouthTrust Bank (the “Pledgee”), as Pledgee of the Pledgor, has been established by book entry by                      (the “Intermediary”) as the registered owner of the Pledged Stock.

Neither the Pledgor nor any third party shall have the right to withdraw the Pledged Stock from control of the Pledgee or the Intermediary without the written consent of the Pledgee nor shall the Intermediary take directions from any party other than the Pledgee regarding transfer or other disposition of the Pledged Stock. The Pledgor shall, however, be entitled to receive or to direct payment and distribution of dividends paid or interest earned on the Pledged Stock which right shall terminate upon notification by the Pledgee to the Intermediary of the occurrence of an event of default under the obligations secured by the Stock Pledge and Security Agreement between Pledgor and Pledgee dated as of August     , 2001 (an “Event of Default”). Upon receipt by the Intermediary of a notice from the Pledgee of the occurrence of an Event of Default, the Intermediary shall take and act exclusively in accordance with directions from the Pledgee regarding the transfer or other disposition of the Pledged Stock and any dividends accruing thereunder.

The Intermediary shall maintain the Pledged Stock in the Pledgee’s name as registered owner by book entry until instructed by the Pledgee in writing (i) upon occurrence of an Event of Default, to transfer ownership of the Pledged Stock to a third party or to otherwise dispose of the Pledged Stock as directed by the Pledgee, or (ii) to transfer the Pledged Stock to another intermediary or to cause certificated securities representing the Pledged Stock endorsed in blank to be delivered to the Pledgee or to another intermediary or securities depository, or (iii) upon payment in full of the obligations secured by the Pledged Stock, to release the Pledged Stock to the Pledgor or Pledgor’s designee.

In the event that the Intermediary shall have a lien on any of the Pledged Stock, the Intermediary agrees that such lien shall be subordinated to the security interest of the Pledgee.

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The Intermediary shall be under an absolute duty of safekeeping to the Pledgee with respect to the registration of ownership, custody, protection and preservation of the Pledged Stock. The Intermediary shall maintain the Pledged Stock in book entry form in trust for the benefit of the Pledgee. With respect to any Pledged Stock that it holds or controls, the Intermediary shall be a fiduciary of the Pledgee.

This Agreement shall be governed and construed in accordance with the laws of the State of Florida regardless of which state this Agreement is executed in.

This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.

The Intermediary agrees that by executing and delivering this Agreement to the Pledgee it submits to personal jurisdiction in any court of competent jurisdiction in Florida, agrees that service of process may be had on it by service upon the Secretary of State of the State of Florida with a copy sent by certified mail to the Intermediary, and that venue of any action arising under or relating to this Agreement shall lie exclusively in Florida.

The Intermediary, for itself, its successors and assigns, hereby waives its right to trial by jury in any action, whether in contract or tort, arising under or in any way related to this Agreement.

The Pledgor, by its execution of this letter below, hereby consents and agrees to the matters set forth hereinabove, and to the granting of control of the Pledged Stock to the Pledgee by the Intermediary.

[INTERMEDIARY]
By:
	Print Name:
	Its:

Consented and agreed to by Astrotech Space Operations, Inc.

ASTROTECH SPACE OPERATIONS, INC.
By:
	Name:
	Its:

9

EX-10.45

Exhibit 10.45

ASSIGNMENT OF CLIN 1 RIGHTS

THIS ASSIGNMENT OF CLIN 1, made the 30th day of August, 2001, by ASTROTECH SPACE OPERATIONS, INC. (hereinafter referred to as the “ASO”) and ASTROTECH FLORIDA HOLDINGS, INC. (“Borrower”) to SOUTHTRUST BANK, an Alabama banking corporation (hereinafter called the “Bank”).

W I T N E S S E T H:

WHEREAS, ASO and Borrower are parties to that certain Agreement Between Astrotech Space Operations, Inc. and Lockheed Martin Commercial Launch Services, Inc. (“LMCLS”) for Provision of Payload Processing Facilities and Support in Conjunction with Commercial Atlas Launches, Agreement No. 48801, as amended through Amendment 6 (the “LMCLS Contract”), a copy of which is attached hereto as Exhibit “A”; and

WHEREAS, the Borrower has applied to the Bank for a loan (the “Loan”) in the amount of up to $20,000,000.00, which loan is to be evidenced by a promissory note (the “Acquisition and Construction Loan Note”) of the Borrower to be renewed and extended by a renewal promissory note of the Borrower (the “Term Loan Note”) (the Acquisition and Construction Loan Note and the Term Loan Note being referred to collectively as the “Note”) pursuant to a Credit Agreement between Bank and Borrower (the “Credit Agreement”) all of even date herewith, (the Note, the Credit Agreement and all documents contemplated thereby or related to the Loan transaction being referred to collectively as the “Loan Documents”); and

WHEREAS, ASO has guaranteed payment and performance of certain obligations of Borrower under the Loan Documents pursuant to a Guaranty Agreement of ASO of even date herewith; and

WHEREAS, as a condition for obtaining said Loan and as additional and collateral security for the payment thereof, ASO and Borrower required to execute and deliver this Assignment;

NOW, THEREFORE, in consideration of the premises, and as an inducement to the making of said Loan by the Bank to the Borrower and the Bank hereby agree as follows:

1. Capitalized terms not expressly defined herein shall have the meanings ascribed thereto in the Credit Agreement.

2. ASO and Borrower do each hereby currently and directly assign, transfer and set over to the Bank all of ASO’s and Borrower’s rights, title and interest in and to all Facility Services Fees (“CLIN1 Payments”) (the “Assigned Rights”) payable to ASO and/or Borrower under the LMCLS Contract; TO HAVE AND TO HOLD the same unto the Bank, its successors and assigns until such time as all sums due to the Bank under the Loan Documents has been paid in full. This Assignment is a current, direct assignment and NOT a collateral assignment. All CLIN 1 Payments shall be paid directly to Bank as provided in Section 9.4.1 of the LMCLS Contract subject to the billing and payment schedule provisions of Section 9.5.1 of the LMCLS

Contract. This is an assignment of rights and not an assignment of obligations. Bank does not, by acceptance of this assignment, undertake to perform any obligations of ASO or of Borrower under the LMCLS Contract.

2. ASO hereby represents and warrants to the Bank that:

(i) the LMCLS Contract is the only contract between ASO and LMCLS relating to the subject matter thereof;

(ii) there are no amendments, exhibits and/or addenda to the LMCLS Contract Contract, other than those attached to the copy of the LMCLS Contract attached hereto as Exhibit “A”:

(iii) the LMCLS Contract is in full force and effect and there has been no default by either ASO, the Borrower or LMCLS under the LMCLS Contract; and

(iv) neither ASO nor Borrower has executed any other assignments of the LMCLS Contract or any of their respective rights thereunder, or in any way transferred or encumbered or created or permitted any lien upon or charge against the LMCLS Contract or any of their respective rights thereunder.

3. ASO and Borrower each hereby covenants and agrees with Bank as follows:

(i) Without the prior written consent of the Bank in each instance, neither ASO nor Borrower will sell, transfer or assign the LMCLS Contract or any of their respective rights thereunder, nor amend, modify or waive any of the provisions thereof.

(ii) ASO and Borrower will each duly and punctually perform and observe all of its covenants and obligations under the LMCLS Contract and enforce or secure the performance and observance of all of the covenants and obligations of the other party or parties thereto.

(iii) So long as no event of default has occurred under the terms of the Loan Documents, this Assignment or any other document collateral thereto, ASO and Borrower shall have a license to exercise all of the rights of ASO and Borrower under the LMCLS Contract, except with respect to receipt of payment of CLIN 1 Payments assigned to Bank hereunder, and to receive all of the benefits accruing to ASO and Borrower under the LMCLS Contract except the right to receive CLIN 1 Payments which shall be paid directly to Bank.

(iv) Immediately upon the occurrence of any event of default under the terms of the Note, the Credit Agreement, the Mortgage, the Loan Documents, this Assignment or any other document collateral to any of the foregoing or a default by ASO or Borrower under the LMCLS Contract, the license referred to in Paragraph (iii) hereof shall cease and in such event the Bank is hereby expressly and irrevocably authorized and entitled to exercise all of Bank’s rights under the

2

Loan Documents including, without limitation, Bank’s right to appointment of a receiver for the properties and facilities that are the subject of the LMCLS Contract.

(v) Nothing contained herein shall operate or be construed to obligate the Bank to perform or observe any of the covenants or obligations contained in the LMCLS Contract.

(vi) ASO and Borrower each hereby agrees to defend, indemnify and hold the Bank harmless from and against any and all claims, demands, liability, loss, damage and expense, including reasonable attorneys’ fees, which the Bank may or shall incur under the LMCLS Contract or by reason of this Assignment, or by reason of any action taken by the Bank hereunder, by reason of any alleged undertaking on the Bank’s part to perform or observe any of the covenants or obligations contained in the LMCLS Contract.

(vii) No delay by the Bank in exercising any of its rights or remedies hereunder for any period of time, or at any time or times, shall be deemed to constitute a waiver or to preclude the exercise of any of such rights or remedies. The rights and remedies of Bank hereunder are cumulative and are not in lieu of but are in addition to any other rights and remedies which the Bank shall have under or by virtue of the Loan Documents, or as otherwise provided by law and may be exercised from time to time and as often as such exercise is deemed expedient.

(ix) ASO and Borrower each agrees to execute and deliver to the Bank at any time or times during which this Assignment is in effect, such further instruments as the Bank may deem necessary to make effective this Assignment and the various covenants, obligations and agreements of ASO and Borrower contained herein.

4. If at any time any representation or warranty made by ASO or Borrower herein shall be or become incorrect, or if an Event of Default (as defined in any Loan Document) shall occur, or if ASO or Borrower shall otherwise default under the Loan Documents or the LMCLS Contract, Bank may, at its option, upon written notice to the LMCLS, terminate the license granted in section 2(iii) hereof. In such event, Bank may thereupon exercise any and all rights and remedies of ASO and/or Borrower as landlord under the LMCLS Contract.

5. (a) Notwithstanding any of the provisions hereof, Bank shall have no obligation in favor of ASO, the Borrower, LMCLS, or any other person, firm or corporation, to perform any term, covenant, condition or undertaking contained in the LMCLS Contract (including, without limitation, the payment of any amounts due under the LMCLS Contract. In the event Bank exercises its options to demand performance under the LMCLS Contract, it shall not be obligated to bring current any default under the LMCLS Contract through that date by ASO or Borrower.

(b) The Bank may reassign its right, title and interest in the LMCLS Contract to any person or entities in the Bank’s discretion, upon notice to ASO, Borrower and LMCLS, but without any further requirement for ASO’s, Borrower’s or LMCLS’ consent. Any reassignment

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of this nature shall be valid and binding upon the ASO, Borrower and LMCLS as fully as if each had expressly approved the reassignment.

(c) ASO and Borrower each shall and does hereby agree to indemnify, defend and hold Bank harmless from, against and in respect of (i) any and all actions, causes of action, suits, claims, demands, judgments, proceedings and investigations (or any appeal thereof or relative thereto or other review thereof) of any kind or nature whatsoever, arising out of, by reason of, as a result of, or in connection with the LMCLS Contract or this Assignment; and (ii) any and all liabilities, damages, losses, costs, expenses (including counsel fees and expenses and disbursements of counsel) and amounts paid in compromise or settlement, suffered, incurred or sustained by Bank as a result of, by reason of or in connection with any of the matters covered by the immediately preceding clause (i).

6. Upon the payment in full of the Borrower’s obligations under the Loan Documents, Bank shall reassign the right to receive unpaid CLIN 1 Payments, if any, to ASO and Borrower. Upon request of ASO and Borrower, Bank shall notify LMCLS of such termination, and execute and deliver to ASO and Borrower, at ASO’s and Borrower’s expense, such instrument or instruments, if any, as ASO and Borrower may reasonably request to evidence such termination, and to re-assign to ASO and Borrower all right, title and interest in and to the unpaid CLIN 1 Payments.

7. Any notice or demand which, by provision of this Assignment is required or permitted to be given or served by one party to the other shall be deemed to have been sufficiently given and served for all purposes (if mailed) three calendar days after being deposited, postage prepaid, in the United States mail, registered or certified mail, or (if delivered by express courier) on business day after being delivered to such courier or (if by telefacsimile) upon the date shown upon machine confirmation of receipt of transmission, in each case addressed (until another address is given in writing by ASO, Borrower or Bank, as appropriate) as follows:

To ASO and Borrower:

300 D. Street SW

Suite 814

Washington, DC 20024

Fax No. (202) 488-8241

To Bank:

SouthTrust Bank

420 North 20th Street

Birmingham, AL 35203

Attention: Florida Corporate Banking (St. Petersburg)

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With a copy to;

SouthTrust Bank

150 Second Avenue North, Suite 400

St. Petersburg, FL 33701

Fax No. (727)898-5319

8. No change, amendment, modification, cancellation or discharge hereof, or of any part hereof, shall be valid unless made in writing signed by the party against whom enforcement of the change, amendment, modification, cancellation or discharge is sought.

9. The terms, covenants and conditions contained herein shall be binding upon ASO and Borrower, their respective successors and assigns and shall inure to the benefit of the Bank, its successors and assigns.

10. The rights and remedies of the Bank under this Assignment shall be cumulative, and the exercise or partial exercise of any such right or remedy shall not preclude the exercise of any other right or remedy.

11. If any section, term or provision of this Assignment is deemed to be unenforceable by a court of competent jurisdiction, then the remaining sections, terms and provisions shall remain in full force and effect.

12. This Assignment shall be construed in accordance with the laws of the State of Florida.

13. This Assignment may be executed in two or more counterparts, and it shall not be necessary that the signatures of all parties hereto be contained on any one counterpart hereof; each counterpart shall be deemed an original, but all of which together shall constitute one and the same instrument.

THUS DONE AND SIGNED on the date aforesaid.

ASTROTECH FLORIDA HOLDINGS, INC.		ASTROTECH SPACE OPERATIONS, INC.
By:	/s/    JULIA PULZONE	By:	/s/    JULIA PULZONE
Name:	Julia Pulzone	Name:	Julia Pulzone
Its:	Chief Financial Officer	Its:	Chief Financial Officer

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EX-10.46

Exhibit 10.46

TERMINATION AGREEMENT

THIS TERMINATION AGREEMENT (the “Agreement”), dated June 1, 2004, is between SPACEHAB, Incorporated, a Washington corporation (the “Company”), and Vladimir J. Fishel (the “Employee”).

WHEREAS, the Employee is employed by the Company as Part-Time employee and former Director of Russian Programs;

WHEREAS, the Employee and the Company are the parties to an employment agreement, dated March 16, 2001 (the “Prior Employment Agreement”) and a Part-Time Employment Agreement dated December 11, 2003, and;

WHEREAS, the parties wish to terminate the Employee’s part-time employment with the Company and his severance and to settle their mutual rights and obligations under the Prior Employment Agreement.

NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein, and other good and valuable consideration, the receipt of which are hereby acknowledged, the parties hereby agree as follows:

SECTION 1. Termination/Resignation

The parties agree that the Employee’s Part-Time Employment Agreement and severance under the Prior Employment Agreement with the Company will terminate effective May 31, 2004 (the “Termination Date”). The parties agree that the Employee’s last day of active part-time employment will be May 31, 2004. Employee agrees to resign from all part-time positions he holds with the Company effective as of Termination Date.

SECTION 2. Termination Payments

(a) Termination Payments. The Company shall provide the Employee with a lump sum payout in the amount of $26,073.48 (before required payroll deductions) as full and final payment under the Part-Time Employment Agreement (which includes 26 hours at $125/hour) and the severance under the Prior Employment Agreement which includes maximum amount owed under such agreements, except the amount, if any, set forth in paragraph (c) below.

(b) Termination of Benefits. All employee benefits, including the vesting of stock options, for Employee (and his eligible dependents, if applicable) shall terminate in accordance with Company policy for employees with a termination date of May 31, 2004.

(c) Other Compensation under the Prior Employment Agreement. The Company shall compute and pay to Employee (which at such time shall be paid as non-employee compensation) an amount in lieu of other compensation, if any, due Employee under Section 6 (b) of the Prior Employment Agreement at such time and in such manner as would have been

computed if the severance provisions of the Prior Employment Agreement were not terminated by this agreement.

SECTION 3. Restrictive Covenants

Executive will continue to be bound by the confidential information, non-interference and invention provisions of Sections 7, 8, 9 and 16 of the Prior part-time and severance Employment Agreement in accordance with their terms for a termination of employment. A breach by Executive of the confidential information, non-interference or invention provisions of Sections 7, 8, 9 and 16 of the Prior Employment Agreement, in addition to any other remedies available under Sections 7, 8, 9 and 16 of the Prior Employment Agreement, is still enforceable except as waived under the contract with VJF Russian Consulting, Ltd.

SECTION 4. Release

As a condition to the payments set forth in Section 2 hereof, the Executive shall execute and honor the release of claims against the Company in the form attached hereto as Exhibit A.

SECTION 5. Miscellaneous

(a) Complete Agreement. This Agreement and the Part-Time Employment Agreement constitute the entire agreement between the parties and cancels and supersedes all other agreements and understandings, whether written or oral, between the parties which may have related to the subject matter contained in this Agreement, including, without limitation, the Prior Employment Agreement (other than as provided in Section 3 hereof).

(b) Tax Withholding. All payments required to be made by the Company to the Executive under this Agreement shall be subject to the withholding of such amounts relating to income tax, employment tax and other payroll deductions as the Company may reasonably determine it should withhold pursuant to any applicable law, regulation or authorization.

(c) Indemnification. This Agreement shall not be construed or applied so as to waive or limit Executive’s rights, if any, to indemnification and/or defense in connection with claims or demands against his that arise from or relate to his acts or omissions in relation to his employment and/or investment relationship with the Company, whether such rights arise under the Company’s certificate of incorporation, bylaws, policies, procedures, contracts of insurance, or otherwise.

(d) Amendment; Waiver. No modification, amendment or waiver of any provisions of this Agreement shall be effective unless approved in writing by each of the parties hereto. The failure at any time to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of either party thereafter to enforce each and every provision hereof in accordance with its terms.

(e) Litigation. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE

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STATE OF TEXAS, EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF THE STATE OF TEXAS, 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 PARAGRAPH (F) BELOW, 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 HARRIS COUNTY, TEXAS. OR THE UNITED STATES DISTRICT COURTS IN THE STATE OF TEXAS. EXECUTIVE AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WELL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS PARAGRAPH (E) 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.

(f) Arbitration. EXCEPT FOR BREACHES RELATING TO SECTION 3 HEREOF, EXECUTIVE AND THE COMPANY AGREE THAT ANY DISPUTE BETWEEN OR AMONG THE PARTIES TO THIS AGREEMENT RELATING TO OR 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 HOUSTON, HARRIS COUNTY, TEXAS, AND SHALL BE SUBJECT TO THE SUBSTANTIVE LAW OF THE STATE OF TEXAS. 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 PARAGRAPH (E) 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.

(g) Severability. Whenever 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 held to 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.

(h) Assignment. The rights and obligations of the parties under this Agreement shall be binding upon and inure to the benefit of their respective successors, assigns, executors, administrators and heirs; provided, however, that neither the Company nor the Executive may assign any of their obligations under this Agreement without the prior written consent of the other.

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(i) Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

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

SPACEHAB, INCORPORATED
By	/s/    MICHAEL E KEARNEY
Title	President & CEO
EXECUTIVE
/s/    Illegible

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EXHIBIT A

MUTUAL RELEASE OF CLAIMS AND COVENANT NOT TO SUE

This MUTUAL RELEASE OF CLAIMS AND COVENANT NOT TO SUE (the “Release”) is made by and between Vladimir J. Fishel (the “Executive”) and SPACEHAB, Incorporated, a Washington corporation (the “Company”) on the date set forth below.

Section 1. Executive Release. In consideration of the agreement by the Company to provide the Executive with the rights, payments and benefits under the Termination Agreement by and among the Executive and the Company, dated June 1, 2004 (the “Termination Agreement”) and the Part-Time Employment Agreement between the Executive and the Company, dated December 11, 2003 (the “Part-Time Employment Agreement”), the Executive hereby agrees as follows:

(a) Release and Covenant. The Executive, of his own free will, voluntarily releases and forever discharges the Company and its respective subsidiaries, affiliates, their directors, members, officers, employees, agents, stockholders, successors and assigns (both individually and in their official capacities with the Company) from, and covenants not to sue or proceed against any of the foregoing on the basis of, any and all past or present causes of action, suits, agreements or other claims which the Executive, his dependents, relatives, heirs, executors, administrators, successors and assigns has or have against the Company upon or by reason of any matter, cause or thing whatsoever, including, but not limited to, any matters arising out of his employment by the Company and the cessation of said employment, and including, but not limited to, any alleged violation of the Civil Rights Acts of 1964 and 1991, the Equal Pay Act of 1963, the Age Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the Older Workers Benefit Protection Act of 1990, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Iowa Civil Rights Act, Iowa Code § 216 (1993); and any other federal, state or local law, regulation or ordinance, or public policy, contract or tort law having any bearing whatsoever on the terms and conditions of employment or termination of employment. This release shall not, however, constitute a waiver of any of Executive’s rights upon termination of employment under (i) the terms of any employee benefit plan of Company in which Executive is participating or (iii) of the Executive’s rights under the Termination Agreement or the Part-Time Employment Agreement.

(b) Due Care. The Executive acknowledges that he has received a copy of this Release prior to its execution and has been advised hereby of his opportunity to review and consider this Release for 21 days prior to its execution. The Executive further acknowledges that he has been advised hereby to consult with an attorney prior to executing this Release. The Executive enters into this Release having freely and knowingly elected, after due consideration, to execute this Release and to fulfill the promises set forth herein. This Release shall be revocable by the Executive during the 7-day period following its execution, and shall not become effective or enforceable until the expiration of such 7-day period. In the event of such a

revocation, the Executive shall not be entitled to the consideration for this Release set forth above.

(c) Reliance by Executive. The Executive acknowledges that, in his decision to enter into this Release, he has not relied on any representations, promises or agreements of any kind, including oral statements by representatives of the Company, except as set forth in this Release, the Termination Agreement or the Part-Time Employment Agreement and the severance of the Prior Employment Agreement.

SECTION 2 Company Release. In consideration of the agreement of the Executive to enter the Termination Agreement, the Part-Time Employment Agreement, and the severance of the Prior Employment Agreement the Company does hereby agree to forever release the Executive, his heirs, successors and assigns (hereinafter collectively referred to as the “Executive Releasees”), from any and all causes of action, agreements, damages, judgments, claims, debts, covenants, executions and demands of any kind whatsoever, which the Company ever had, now has or may have against the Executive Releasees or any of them, in law or equity, whether known or unknown, for, upon, or by reason of, any matter whatsoever occurring up to the date this Release is signed by the Company, including without limitation in connection with or in relationship to the Executive’s employment relationship with the Company or its affiliates or the termination of such relationship; PROVIDED that such released claims shall not include any claims (i) to enforce the Company’s rights under, or with respect to, the Termination Agreement, the Part-Time Employment Agreement, the Prior Employment Agreement, or Sections 7,8,9 and 16 of the employment agreement between the Company and the Executive, dated March 16, 2001, or (ii) in connection with any fraud, willful misconduct, gross negligence or criminal act on Executive’s part.

This MUTUAL RELEASE OF CLAIMS AND COVENANT NOT TO SUE is executed by the Executive and the Company on 6/1/04.

SPACEHAB, INCORPORATED
By	/s/    MICHAEL & KEARNEY
Title	President & CEO

EXECUTIVE

/s/    VLADIMIR J. FISHEL        

Vladimir J. Fishel

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EX-10.47

Exhibit 10.47

CONFIDENTIAL

MEMORANDUM OF UNDERSTANDING

This MEMORANDUM OF UNDERSTANDING (the “MOU”) is entered into as of June __, 2005, by and between SPACEHAB, Incorporated, a Washington corporation (the “Company”), and the person listed on the signature page hereto under the caption “Advisor” (the “Advisor”), with reference to the following facts:

A. The Company has previously issued $63,250,000 aggregate principal amount of its 8% Convertible Subordinated Notes due 2007 (the “Notes”);

B. The Advisor is a registered investment advisor who has been given discretionary authority by the beneficial owners (the “Beneficial Owners”) of the aggregate principal amount of the Notes set forth on the signature page hereto (the “Advisor Notes”) to sell, tender, exchange, transfer or otherwise dispose of the Advisor Notes;

C. The Company desires to refinance the Notes and has discussed on a confidential basis with the Advisor, or the Advisor’s representative, the potential terms of such a transaction;

D. The parties desire to set forth the terms that they have discussed in this MOU and the framework for the finalization of a binding transaction.

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

1. Intent of the Company. The Company intends to commence a tender offer (the “Tender Offer”) for up to all of the Notes pursuant to which the Company will exchange each Note for a new note issued by the Company under a new indenture having terms substantially similar to the terms set forth on Schedule I attached hereto (the “New Notes”). In connection with the Tender Offer, the Company intends to solicit consents (the “Consent Solicitation”) from holders of the Notes to an amendment to the indenture under which the Notes were issued (the “Indenture”), such amendments having terms substantially similar to the terms set forth on Schedule II attached hereto (the “Proposed Amendments”).

2. Intent of the Advisor. Based upon the terms of the New Notes and Proposed Amendments having terms substantially similar to the terms that are attached hereto as Schedules I and II, the Advisor intends to, on behalf of the Beneficial Owners, (a) tender the Advisor Notes in the Tender Offer and (b) consent to the Proposed Amendments in the Consent Solicitation.

3. Notice. Each of the Company and the Advisor agrees to give notice to the other party in accordance with Section 5.5 upon such party’s decision to abandon, or to change its intentions with respect to, the transactions contemplated hereby. In addition, the Advisor agrees to give notice to the Company in accordance with Section 5.5 upon being instructed by any Beneficial Holder not to tender, or to withdraw the tender of, any Advisor Notes or upon any such Beneficial Owner terminating the authority of the Advisor to tender the Advisor Notes in the Tender Offer or consent to the Proposed Amendments in the Consent Solicitation.

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4. Representations and Warranties of Advisor. The Advisor represents and warrants to the Company that the Advisor has the power of disposition, including the authority to tender the Advisor Notes in the Tender Offer and to consent to the Proposed Amendments in the Consent Solicitation, with respect to all Advisor Notes, subject only to the rights of the Beneficial Owners to give specific instructions to the Advisor concerning the disposition of the Advisory Notes or to terminate such power of disposition. The Advisor is not the beneficial owner of any Notes.

5. Miscellaneous.

5.1. Governing Law. This MOU shall be governed in all respects by the internal laws of the State of Texas without regard to principles of conflicts of law or choice of law.

5.2. Relationship of the Parties. The parties shall not be deemed to be in a relationship of partners or joint ventures by virtue of this MOU nor shall either of them be deemed to be an agent, representative, trustee or fiduciary of the other. Neither party shall have any authority to bind the other to any agreement.

5.3. Fees and Expenses. Each party shall be responsible for its own fees and expenses incurred in connection with this MOU.

5.4. Confidentiality. Until such time as this MOU or its subject matter is or becomes generally available to the public other than as a result of a disclosure by the Advisor in violation of the provisions of this MOU, this MOU and the subject matter hereof will be held in confidence and not disclosed by the Advisor to any person, including any Beneficial Owner, except that the Advisor may disclose this MOU and its subject matter to the Advisor’s affiliates, directors, officers, employees, representatives or agents (including without limitation, attorneys, consultants and financial advisors) who, in the Advisor’s reasonable judgment, need to know of this MOU and its subject matter, are informed of its confidential nature, and either agree in writing to be bound by the terms of this MOU or are otherwise bound by confidentiality obligations at least as restrictive as those contained herein. The Advisor expressly acknowledges and agrees that the Company may disclose this MOU or the subject matter hereof, including, without limitation, the Advisor’s consent as expressed in Section 2 above, in the materials that the Advisor prepares, distributes or otherwise uses in connection with the Tender Offer and Consent Solicitation, including, without limitation, registration statements, prospectuses, tender offer materials and press releases, and as otherwise required by applicable securities and other laws.

5.5. Binding Nature. This MOU neither constitutes nor should be construed as

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evidence of a binding agreement with respect to Sections 1 and 2 of this MOU. Either party may, upon at least one (1) business day’s prior written notice to the other party, discontinue its obligations with respect to the transactions contemplated hereby and abandon such transactions or change its intentions at any time. Notwithstanding anything contained in this Section 5.5, the provisions of Sections 3, 4 and 5 of this MOU shall be legally binding upon and enforceable against each of the parties.

5.6. Entire Agreement and Amendments. This MOU represents the entire agreement and understandings between the parties concerning the Tender Offer and Consent Solicitation and the other matters described therein and supersedes and replaces any and all prior agreements and understandings. This MOU may only be amended in writing signed by the Company and by the Advisor.

5.7. Notices. All notices, requests and other communications hereunder shall be in writing and shall be deemed to have been duly given at the time of receipt if delivered by hand, by reputable overnight courier or by facsimile transmission (with receipt of successful and full transmission) to the applicable parties hereto at the address stated on the signature pages hereto or if any party shall have designated a different address or facsimile number by notice to the other party given as provided above, then to the last address or facsimile number so designated.

5.8. Counterparts. This MOU may be executed in one or more counterparts each of which shall be deemed an original and all of which together shall constitute one instrument. Facsimile signatures shall constitute original signatures.

[SIGNATURE PAGE FOLLOWS]

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COMPANY’S SIGNATURE PAGE TO MOU

IN WITNESS WHEREOF the parties have executed this MOU on the date set forth below.

Dated: June 9, 2005	SPACEHAB, INCORPORATED
	By:	/s/ Brian K. Harrington
	Name:	Brian K. Harrington
	Its:	Senior Vice President and Chief Financial Officer

Notice Address:
SPACEHAB, Incorporated 12130 Highway 3 Building 1 Webster, Texas 77598 Attn: Chief Financial Officer	With a copy to: Haynes and Boone LLP 1221 McKinney, Suite 2100 Houston, Texas 77010 Attn: Arthur S. Berner

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HOLDER’S SIGNATURE PAGE TO MOU

	“Advisor”
Dated: June 8, 2005	SMH Capital Advisors, Inc.
	Advisor Name
	By:	/s/ Dwayne A. Moyers
	Name:	Dwayne A. Moyers
	Its:	Chief Investment Officer
Aggregate Principal Amount Notes Under Management:	$	40,259,000

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SCHEDULE I

Proposed Terms of New Notes

(See Attached Form of Description of Notes)

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SCHEDULE II

Proposed Amendments

Section 5.01(5) of the Indenture, which currently provides:

“5. a default under any bonds, debentures, notes or other evidences of indebtedness for money borrowed by the Company or a Subsidiary or under any mortgages, indentures or instruments under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or a Subsidiary, whether such indebtedness now exists or shall hereafter be created, other than under a Non-Recourse Obligation, which indebtedness, individually or in the aggregate, has a principal amount outstanding in excess of U.S.$3,000,000, which default shall constitute a failure to pay any portion of the principal of such indebtedness when due and payable after the expiration of any applicable grace or cure period with respect thereto or shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 10 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a “Notice of Default” hereunder; or”

shall be amended and restated in its entirety to read as follows:

“5. [Intentionally omitted]; or”

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EX-12.1

Exhibit 12.1

SPACEHAB, INC.

Consolidated Financial Information

Ratio of Earnings to Fixed Charges

(In thousands, except ratio)

	Twelve Months Ended June 30,															Nine Months Ended March 31, 2005
	2000			2001			2002			2003			2004
Earnings, as defined:
Income (loss) before income taxes	$	(5,606	)	$	(13,671	)	$	(4,417	)	$	(82,632	)	$	2,581		$	5,324
Fixed charges, as below		5,001			6,394			8,280			8,537			9,596			4,748
Amortization of capitalized interest		3,673			2,734			1,293			—			—			—
Interest capitalized		3,700			2,700			1,300			—			—			—
Total earnings as defined	$	(632	)	$	(7,243	)	$	3,856		$	(74,095	)	$	12,177		$	10,072
Fixed charges, as defined:
Interest expensed and capitalized	$	3,773		$	4,804		$	6,683		$	7,243		$	8,237		$	4,299
Amortization of debt placement costs		528			623			730			461			726			270
One third of rent expense (1)		700			967			867			833			633			179
Total fixed charges, as defined	$	5,001		$	6,394		$	8,280		$	8,537		$	9,596		$	4,748
Ratio of earnings to fixed charges (2)		—			—			—			—			1.27	x		2.12	x

(1) The interest factor represents one-third of lease expense, which management believes is representative of the interest component of lease expense.

(2) For the years ended June 30, 2000, 2001, 2002, and 2003, earnings were insufficient to cover fixed charges by $5.6 million, $13.6 million, $4.4 million, and $82.6 million, respectively. Accordingly, such ratios have not been presented.

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated September 2, 2004, accompanying the consolidated financial statements included in the Annual Report of SPACEHAB, Incorporated on Form 10-K/A for the year ended June 30, 2004. We hereby consent to the incorporation by reference of said report in this Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears elsewhere in the Registration Statement and Prospectus.

/s/    GRANT THORNTON LLP

Houston, Texas

July 21, 2005

EX-23.3

Exhibit 23.3

S4 Consent

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” in the Registration Statement (Form S-4 No. 333-00000) and related Prospectus of SPACEHAB, Incorporated for the exchange of its 5.5% Senior Convertible Notes due 2010 and to the use of our report dated August 20, 2003 (except for Note 26 as to which the date July 11, 2005), with respect to the consolidated financial statements of SPACEHAB, Incorporated and to the incorporation by reference of our report dated August 20, 2003 with respect to the financial statement schedule of SPACEHAB, Incorporated included in its Annual Report (Form 10-K) for the year ended June 30, 2004, filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

McLean, Virginia

July 18, 2005

EX-99.1

Letter of Transmittal and Consent

SPACEHAB, Incorporated

Offer to Exchange 5.5% Senior Convertible Notes due 2010

for

Any and All Outstanding 8% Convertible Subordinated Notes due 2007

($63,250,000 in principal amount outstanding)

and

Solicitation of Consents to Proposed Amendments to the

Indenture Governing the 8% Convertible Subordinated Notes due 2007

To: Holders of SPACEHAB, Incorporated’s

8% Convertible Subordinated Notes due 2007

Our records indicate that you are a holder of 8% Convertible Subordinated Notes due 2007 (“Outstanding Notes”) issued pursuant to an Indenture dated October 15, 1997 (“Indenture”) among SPACEHAB, Incorporated, a Washington corporation (“Company”) and Wachovia Bank, National Association (formerly, First Union National Bank) (“Exchange Agent”). This Letter of Transmittal (“Letter”) is being delivered to you with a copy of the Company’s prospectus dated [·], 2005 (“Prospectus”). The Letter and Prospectus together constitute the Company’s offer (“Exchange Offer”) to exchange, with the registered holders of the Outstanding Notes, up to $63,250,000 in aggregate principal amount of the Company’s 5.5% Senior Convertible Notes due 2010 (“Exchange Notes”) for a like principal amount of Outstanding Notes, and consent solicitation with respect to proposed amendments to the Indenture governing the Outstanding Notes (“Consent Solicitation”), pursuant to a registration statement of which the Prospectus is a part.

Note to Beneficial Owners. Only a registered holder of Outstanding Notes may tender Outstanding Notes in the Exchange Offer and consent to the proposed amendments in the Consent Solicitation. Any beneficial owner whose Outstanding Notes are registered in the name of his broker, dealer, commercial bank, trust company or other nominee or are held in book-entry form and who wishes to tender should contact the registered holder promptly and instruct the registered holder to execute and deliver this Letter on his behalf. For information on how a beneficial owner who wishes to tender on his own behalf may do so, see the section of the Prospectus entitled “The Exchange Offer and Consent Solicitation—Procedures for Tendering.”

This Letter and the Prospectus should be read carefully before this Letter is completed. If you elect to exchange your Outstanding Notes for Exchange Notes pursuant to the Exchange Offer and consent to the proposed amendments pursuant to the Consent Solicitation, please complete, sign and return this Letter in accordance with the instructions on the following pages. Holders who tender their Outstanding Notes will be deemed to consent to the proposed amendments to the Indenture governing such Outstanding Notes.

The Exchange Offer and Consent Solicitation will expire at 5:00 p.m., New York City time, on [·], 2005 unless extended (the “Expiration Date”). You may withdraw your tender and consent at any time prior to at 5:00 p.m., New York City time, on the Expiration Date.

Item 1. Description of Outstanding Notes. (Instruction 6)

Name(s) and Address(es) of Registered Holders:	Outstanding Note Certificate Numbers	Aggregate Principal Amount Represented by Certificates	Principal Amounted Tendered
	Total:

Item 2. Means of Tendering Outstanding Notes. (Instructions 1 through 4)

Check here if tendered Outstanding Notes held in certificated form are enclosed with this Letter.

Check here if tendered Outstanding Notes are being delivered by book-entry transfer made to the
account maintained by the Exchange Agent with DTC and complete the following:

Name of Tendering Institution:

Account Number:

Transaction Code Number:

Check here and enclose a photocopy of the notice of guaranteed delivery if tendered Outstanding
Notes are being delivered pursuant to a notice of guaranteed delivery previously sent to the Exchange
Agent and complete the following:

Name(s) of Registered Holder(s):

Date of Execution of Notice of Guaranteed Delivery:

Window Ticket Number (if available):

Name of Institution which Guaranteed Delivery:

Name of Tendering Institution (if delivered by book-entry transfer):

Account Number (if delivered by book-entry transfer):

Transaction Code Number (if delivered by book-entry transfer):

Item 3. Taxpayer Identification Number. (Instruction 9)

Please read the certification below. This certification enables the Company to certify your TIN in order to avoid backup
withholding on your account. Please provide your TIN on the line below and certify by signing and dating below.

__ __ __ –__ __ –__ __ __ __	OR	__ __ – __ __ __ __ __ __ __
Social Security Number		Employer Identification Number

W-9 Certification. Under penalties of perjury, I certify that: (1) the number shown on this form is my
correct Taxpayer Identification Number or I am waiting for a number to be issued to me, and (2) I am
not subject to backup withholding because (a) I am exempt from backup withholding, or (b) I have not
been notified by the IRS that I am subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding,
and (3) I am a U.S. person (including a U.S. resident alien).

Certification Instructions. You must cross out Certification (2) above if you have been notified by the IRS that you currently are subject to backup withholding because you have failed to report all interest and dividends on your tax return.

(Signature) Date

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Item 4. Signature. (Instruction 10)

This form must be signed by the registered holders of the Outstanding Notes as their names appear on the certificate for the Outstanding Notes or on a DTC security position listing.

(Signatures of Holders)	Date
(Signatures of Holders)	Date
Area Code and Telephone Number:
Representative Information:
Name:
Capacity (Full Title):
Address (Including Zip Code):
Signature Guarantee
Signatures Guaranteed by an Eligible Institution
(Authorized Signature)	Date
Title:
Name of Firm:
Address:
Area Code and Telephone Number:

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Item 5. Lost Notes. (Instruction 11)

Mark this box if the certificated Outstanding Note has been mutilated, lost, stolen or destroyed.

By signing this Item 5, the undersigned certifies that the undersigned is the lawful owner of the Outstanding Note described in Item 1 of this form, the undersigned has made a diligent search for the Outstanding Note, and the undersigned has been unable to find it. The undersigned hereby agrees (for the undersigned, the undersigned’s heirs, assigns and personal representatives), in consideration of the issuance of Exchange Notes in exchange for the Outstanding Notes, to completely indemnify, protect and hold harmless SPACEHAB, Incorporated and Wachovia Bank, National Association, and their respective affiliates from and against all losses, costs and damages which they may be subject to, or liable for, with respect to the cancellation of the Outstanding Notes in exchange for Exchange Notes. The undersigned agrees to surrender the Outstanding Note to SPACEHAB, Incorporated for cancellation if the undersigned finds it at any time.

(Lender Signature) Date

By:

Name:

Title:

Item 6. Soliciting Broker Fees. (Instruction 12)

Mark this box if the Outstanding Notes are being tendered by a Qualified Owner and a Soliciting Broker solicited and obtained the tender of the Outstanding Notes being tendered.

Please provide the following information regarding the Soliciting Dealer that solicited and obtained this tender:

Name of Firm Name of Individual Broker

Address, City, State Zip Code

If the Outstanding Notes specified in this Letter are held by the registered holder identified in Item 1 as a custodian or other nominee, specify below each beneficial owner of such Outstanding Notes whose tender you have solicited.

Name of Beneficial Owner Principal Amount of Outstanding Notes (Must be less than or equal to $500,000 per beneficial owner)

Issue the check for the Soliciting Broker fee to:

Name of Firm Attention:

Address, City, State Zip Code

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INSTRUCTIONS

Forming Part of the Terms and Conditions of the Exchange Offer and Consent Solicitation

1. Outstanding Notes Held in Book-Entry Form. The Outstanding Notes were issued as global securities and were deposited with Wachovia Bank, National Association (formerly, First Union National Bank) who holds the Outstanding Notes as the custodian for The Depository Trust Company (“DTC”). Beneficial interests in the Outstanding Notes are held by participants in DTC on behalf of the beneficial owners of the Outstanding Notes. Beneficial interests in Outstanding Notes held by participants in DTC are referred to as notes held in book-entry form. Beneficial interests in Outstanding Notes held in book-entry form are shown on, and transfers of such notes can be made only through, records maintained in book-entry form by DTC and its participants. Participants in DTC may make book-entry delivery of Outstanding Notes by causing DTC to transfer the Outstanding Notes into the account of the Exchange Agent for the Outstanding Notes using DTC’s procedures for transfer. See the section of the Prospectus entitled “The Exchange Offer and Consent Solicitation—Procedures for Tendering—Outstanding Notes Held in Book-Entry Form” for additional information.

2. Tendering Pursuant to ATOP. DTC participants may, instead of physically completing and signing this Letter and delivering it to the Exchange Agent, electronically transmit their acceptance of the Exchange Offer and Consent Solicitation by causing DTC to transfer Outstanding Notes held in book-entry form to the Exchange Agent in accordance with DTC’s Automated Tender Offer Program (“ATOP”) procedures for transfer. DTC will then send a confirmation of book-entry transfer of the Outstanding Notes into the Exchange Agent’s account (“book-entry conformation”), including an agent’s message. An “agent’s message” means a message transmitted by DTC, received by the Exchange Agent and forming part of the book-entry confirmation, which states that DTC has received an express acknowledgment from the participant in DTC tendering Outstanding Notes that are the subject of that book-entry confirmation that the participant has received and agrees to be bound by the terms of this Letter, and that the Company may enforce this Letter against such participant. If you use ATOP procedures to tender Outstanding Notes, you will not be required to deliver this Letter to the Exchange Agent, but you will be bound by its terms just as if you had signed it. See the section of the Prospectus entitled “The Exchange Offer and Consent Solicitation—Procedures for Tendering—Outstanding Notes Held in Book-Entry Form” for additional information.

3. Delivery of this Letter and the Outstanding Notes. In order to tender your Outstanding Notes pursuant to the Exchange Offer and consent to the proposed amendments pursuant to the Consent Solicitation, you must comply with DTC’s ATOP procedures described in Instruction 2 or complete Items 1, 2, 3 and 5, and, to the extent applicable, Items 4 and 6 of this Letter and return this Letter to the Exchange Agent. In addition to returning a completed and executed copy of this Letter to the Exchange Agent at the address set forth in Instruction 14, you must either (1) cause the certificates representing the Outstanding Notes being tendered (unless the Outstanding Notes are held in certificated form and Item 5 is completed) to be transmitted with the completed copy of this Letter to the Exchange Agent at the address set forth in Instruction 14, or (2) you must cause Outstanding Notes held in book-entry form to be transferred into the account of the Exchange Agent as described in Instruction 1. See the section of the Prospectus entitled “The Exchange Offer and Consent Solicitation—Procedures for Tendering” for additional information. You are solely responsible for ensuring that each of the items described in this paragraph are properly completed and tendered to the Exchange Agent prior to the Expiration Date.

4. Expiration Date and Guaranteed Delivery Procedures. Certificates for all physically tendered Outstanding Notes or a book-entry confirmation, and a properly completed and duly executed Letter or an agent’s message must be received by the Exchange Agent at the address set forth in Instruction 14 on or prior to the Expiration Date. If you are unable to deliver Outstanding Notes, this Letter or any other documents required by this Letter in accordance with the procedures described in Instructions 1 through 3 to the Exchange Agent on or prior to the Expiration Date, you must tender your Outstanding Notes according to the guaranteed delivery procedures set forth in the section of the Prospectus entitled “The Exchange Offer and Consent Solicitation—Guaranteed Delivery Procedures.” Pursuant to these procedures, the Exchange Agent must receive a notice of

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guaranteed delivery prior to 5:00 p.m., New York City time, on the Expiration Date. A notice of guaranteed delivery may be made using DTC’s ATOP guaranteed delivery procedures, or by causing a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an “eligible guarantor institution” within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934 (“Eligible Institution”) to properly complete and duly execute a notice of guaranteed delivery.

5. Representations and Warranties of Tendering Holders. By executing this Letter, you represent, warrant and acknowledge the following:

• You have received and reviewed the Prospectus and this Letter.

• You have full power and authority to, and, subject to your right to withdraw your tender and consent prior to the Expiration Date, hereby irrevocably, tender, exchange, sell, assign and transfer to the Company all right, title and interest in and to the Outstanding Notes, and all claims in respect of or arising or having arisen as a result of your status as a holder of the Outstanding Notes tendered hereby. You have full power and authority to acquire the Exchange Notes issuable upon the exchange of such tendered Outstanding Notes and to consent pursuant to the Consent Solicitation to the proposed amendments to the Indenture governing the Outstanding Notes. Subject to your right to withdraw your tender and consent prior to the Expiration Date, you hereby irrevocably consent pursuant to the Consent Solicitation to the proposed amendments to the Indenture governing the Outstanding Notes described in the section of the Prospectus entitled “The Exchange Offer and Consent Solicitation—Proposed Amendments to Indenture for the Outstanding Notes.” By tendering the Outstanding Notes, you are waiving any and all rights with respect to the Outstanding Notes, except for any rights that you may have now or in the future under the federal securities laws.

• When the tendered Outstanding Notes are accepted by the Company, the Company will acquire good, marketable and unencumbered title to the Outstanding Notes. The Outstanding Notes being tendered were owned as of the date of tender, and when the tendered Outstanding Notes are accepted by the Company the Company will acquire the Outstanding Notes, free and clear of all liens, restrictions, charges, interests, encumbrances and restrictions of any kind, and not subject to any adverse claims, proxies or rights. You will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or by the Company to be necessary or desirable to complete the exchange, sale, assignment and transfer of the Outstanding Notes and to perfect the consent to the proposed amendments to the Indenture governing the Outstanding Notes.

• You release and discharge the Company and the trustee under the Indenture governing the Outstanding Notes from any and all claims you may have, now or in the future, arising out of or related to the Outstanding Notes, including, without limitation, any claims that you are entitled to receive additional principal or interest payments with respect to the Outstanding Notes or to participate in any redemption of the Outstanding Notes, but excluding any such claims under the federal securities laws.

• The Company’s acceptance of properly tendered Outstanding Notes pursuant to the procedures described in the section of the Prospectus entitled “The Exchange Offer and Consent Solicitation—Procedures for Tendering” and in the instructions to this Letter will constitute a binding agreement between you and the Company upon the terms and subject to the conditions of the Exchange Offer and Consent Solicitation, including the conditions described in the section of the Prospectus entitled “The Exchange Offer and Consent Solicitation—Conditions.”

• All authority conferred or agreed to be conferred by this Letter shall survive your death or incapacity and your obligations under this Letter shall be binding upon your heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives.

6. Description of Outstanding Notes. List the name and address of the DTC participant holding an interest in the Outstanding Notes being tendered exactly as shown in the DTC security position listing, or the registered

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holder of the Outstanding Notes being tendered exactly as they appear on the Outstanding Notes in Item 1. If the Outstanding Notes are not held in book-entry form, please provide the certificate number of the Outstanding Notes being tendered. In addition, please provide the aggregate principal amount of all Outstanding Notes represented by the certificates being tendered, or in the case of notes held in book-entry form, the amount credited to your account as a DTC participant. If you are not tendering all of the Outstanding Notes held by you, please indicate, in $1,000 increments, the principal amount being tendered. A reissued certificate representing the balance of nontendered Outstanding Notes will be sent to the tendering holder promptly after the Expiration Date. If you do not complete the column labeled “Principal Amount Tendered” you will be deemed to have tendered the entire aggregate principal amount represented by the column labeled “Aggregate Principal Amount Represented by Certificates.” If the space provided in Item 1 is inadequate, list the certificate numbers and principal amount of Outstanding Notes being tendered on a separate signed schedule attached to this Letter. By executing this Letter, upon the terms and subject to the conditions of the Exchange Offer and Consent Solicitation, you hereby tender to the Company the Outstanding Notes described in Item 1. Subject to, and effective upon, the acceptance for exchange of the Outstanding Notes tendered hereby, you hereby sell, assign and transfer to, or upon the order of, the Company all right, title and interest in and to the Outstanding Notes that are being tendered hereby.

7. Withdrawal of Tenders. Outstanding Notes tendered in the Exchange Offer and Consent Solicitation may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date in accordance with the procedures set forth in the section of the Prospectus entitled “The Exchange Offer and Consent Solicitation—Withdrawal of Tenders.”

8. Delivery of Exchange Notes. The Exchange Notes and any substitute certificates representing Outstanding Notes not being exchanged in the Exchange Offer will be issued in the name of the undersigned and sent to the address indicated in Item 1 or, in the case of book-entry delivery of Outstanding Notes, will be credited to the account maintained at DTC indicated in Item 2. Please contact the Exchange Agent at the address set forth in Instruction 14 if you want to have the Exchange Notes and any substitute certificates representing Outstanding Notes not being exchanged in the Exchange Offer issued in the name of a different person, sent to a different address or credited to a different account maintained at DTC.

9. Taxpayer Identification Number. To prevent backup withholding on payments made to you, you are required to provide the Company with your correct taxpayer identification number (“TIN”) or otherwise establish a basis for an exemption from backup withholding. If you fail to provide your TIN or otherwise establish a basis for exemption from backup withholding, you may be subject to a $50 penalty, as well as other penalties, imposed by the IRS, and to backup withholding at a rate of 28% on any payments made to you by the Company. If you do not have a TIN and certify in Item 3 that you are awaiting a TIN, you must provide a TIN to the Company within 60 days in order to avoid becoming subject to backup withholding. If you are a foreign individual and need a From W-8 to attest to your exempt status or otherwise have any questions regarding completing Item 4, contact the Exchange Agent at the address indicated in Instruction 14.

10. Signatures and Signature Guarantees. This form must be signed by the DTC participant holding an interest in the Outstanding Notes being tendered exactly as shown on a DTC security position listing or the registered holders of the Outstanding Notes exactly as their names appear on the certificate for the Outstanding Notes, without any change whatsoever. If any tendered Outstanding Notes are owned of record by two or more joint owners, all of such owners must sign this Letter. If this Letter is being executed by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, please set forth the name, full title and address of such representative, and submit with this Letter proper evidence of their authority to act satisfactory to the Company. A signature guarantee by an Eligible Institution is only required if this Letter is signed by a person other than the registered holder of the Outstanding Notes being tendered or you request special registration or delivery instructions as described in the last sentence of Instruction 8. If this Letter is signed by a person other than the registered holder of any certificates specified in this Letter, such certificates must be endorsed or accompanied by appropriate bond powers and a consent proxy, in each case

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signed exactly as the name or names of the registered holders appear on the certificates and signatures on such certificates and proxies must be guaranteed by an Eligible Institution. Please contact the Exchange Agent at the address set forth in Instruction 14 to determine what endorsements and documents must being transmitted with this Letter.

11. Lost Notes. If you cannot locate your Outstanding Note, read Item 5 and mark the box in Item 5. If your Outstanding Note has been mutilated, lost, stolen or destroyed, contact the Exchange Agent at the address indicated in Instruction 14 for further instructions.

12. Soliciting Dealer Fees. Promptly after the Expiration Date, the Company will pay each Soliciting Broker a fee equal to 1.5% of the aggregate principal amount of any Outstanding Notes validly tendered by any Qualified Owner and accepted by the Company in the Exchange Offer in accordance with the procedures set forth in the section of the Prospectus entitled “The Exchange Offer and Consent Solicitation—Soliciting Dealer Fees.” A “Qualifying Owner” is a beneficial owner, other than a Soliciting Broker, of Outstanding Notes who validly tenders $500,000 or less in aggregate principal amount of Outstanding Notes in the Exchange Offer. A “Soliciting Broker” is (1) a broker or dealer in securities, including a dealer manager in its capacity as a dealer or broker, that is a member of any national securities exchange or of the National Association of Securities Dealers, Inc. (“NASD”), (2) a foreign broker or dealer not eligible for membership in the NASD that agrees to conform to the NASD’s Rules of Fair Practice in soliciting tenders outside the U.S. to the same extent as though it were an NASD member or (3) a bank or trust company legally authorized to receive such fees. In order to receive the soliciting broker fee, the Soliciting Broker must be identified as the Soliciting Broker in Item 6 of the Letter. If tendered Outstanding Notes are registered in the name of such Soliciting Broker, no soliciting broker fee shall be payable unless such Outstanding Notes are held by such Soliciting Broker as a custodian or other nominee and such Outstanding Notes are being tendered for the benefit of one or more beneficial owners identified in Item 6. The acceptance of a soliciting broker fee by a Soliciting Broker will constitute a representation by such Soliciting Broker that:

• it has complied with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder, in connection with such solicitation;

• it is entitled to such compensation for such solicitation under the terms and conditions of the Exchange Offer and Consent Solicitation;

• in soliciting a tender, it has used no solicitation materials other than those furnished by the Company;

• it is not required for any reason to transfer the amount of such soliciting broker fee to a Qualified Owner;

• the tendered Outstanding Notes are not being tendered for its own account

• if it is a foreign broker or dealer not eligible for membership in NASD, it has agreed to conform to the NASD’s Rules of Fair Practice in making solicitations.

13. Power of Attorney. By executing this Letter, you hereby irrevocably constitute and appoint the Exchange Agent as your true and lawful agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as agent of the Company) with respect to the tendered Outstanding Notes with full power of substitution, resubstitution and revocation to (1) deliver certificates for such Outstanding Notes, or transfer ownership of such Outstanding Notes on the account books maintained by DTC, to the Company and deliver all accompanying evidences of transfer and authenticity to, or upon the order of, the Company, (2) present such Outstanding Notes for transfer on the books of the Company and receive all benefits and otherwise exercise all rights of beneficial ownership of such Outstanding Notes, and (3) deliver this Letter as evidence of your consent to the proposed amendments to the Indenture governing the Outstanding Notes, all in accordance with the terms of the Exchange Offer and Consent Solicitation. The power of attorney granted in this paragraph shall be deemed irrevocable and coupled with an interest.

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14. Address for Sending Letter and Outstanding Notes. If you are required pursuant to Instruction 3 to deliver certificates for Outstanding Notes and/or a completed and executed copy of this Letter, send them to Wachovia Bank, National Association via mail (first class, registered or certified), overnight courier or hand delivery to the address set forth below*:

Wachovia Bank, National Association

Customer Information Center

Corporate Trust Operations-NC1153

1525 West W.T. Harris Boulevard –3C3

Charlotte, NC 28262-1153

Attention: Marsha Rice

Phone: (704) 590-7413

Facsimile: (704) 590-7628

* Note: Delivery of this Letter, the Outstanding Notes and all other required documents is at the option and sole risk of the tendering holders. Delivery will be deemed made only when actually received by the Exchange Agent. Neither the Company nor Wachovia Bank, National Association assumes the risk of loss of any Outstanding Notes sent by mail or overnight courier. The Company suggests that you send your Outstanding Notes to Wachovia Bank, National Association by registered or certified mail. Delivery of Outstanding Notes or this Letter to any address other than as set forth above will not constitute a valid delivery. Delivery of documents to DTC does not constitute delivery to the Exchange Agent.

15. Requests for Assistance or Additional Copies. Questions relating to the procedure for tendering Outstanding Notes and requests for assistance or additional copies of the Prospectus and this Letter may be directed to the Information Agent at the address and telephone number set forth below:

CapitalBridge

111 River Street, 10^th Floor

Hoboken, NJ 07030

Attention: Aaron Dougherty

Telephone: (877) 746-3583 (toll-free)

(201) 499-3500

Facsimile: (201) 499-3600

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EX-99.2

Notice of Guaranteed Delivery for SPACEHAB, Incorporated

This form or one substantially equivalent hereto must be used to accept the exchange offer and consent solicitation of SPACEHAB, Incorporated, a Washington corporation (“Company”), made pursuant to the Prospectus dated [·], 2005 (“Prospectus”) and the related letter of transmittal and consent (“Letter of Transmittal”) if certificates for the Company’s outstanding 8% Convertible Subordinated Notes due 2007 (“Outstanding Notes”) are not immediately available, the procedures for book-entry transfer cannot be completed on or prior to 5:00 p.m., New York City time, on [·], 2005, unless extended (“Expiration Date”), the Letter of Transmittal or any other required documents cannot be delivered to Wachovia Bank, National Association (“Exchange Agent”) on or prior to the Expiration Date, or a tender using the Automated Tender Offer Program procedures of The Depository Trust Company (“DTC”) cannot be completed on or prior to the Expiration Date. This form may be transmitted by facsimile transmission, mail or hand delivery to the Exchange Agent at the following address:

Wachovia Bank, National Association

Customer Information Center

Corporate Trust Operations-NC1153

1525 West W.T. Harris Boulevard-3C3

Charlotte, NC 28262-1153

Attention: Marsha Rice

Facsimile: (704) 590-7628

Delivery of this notice to any address other than as set forth above, or transmission of this notice via facsimile to a number other than as set forth above, will not constitute a valid delivery.

This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an eligible institution under the instructions thereto, the signature guarantee must appear in the applicable space provided in the signature box in the Letter of Transmittal.

Ladies and Gentlemen:

Upon the terms and conditions set forth in the Prospectus and the Letter of Transmittal, the undersigned hereby tenders to the Company the principal amount of Outstanding Notes set forth below, pursuant to the guaranteed delivery procedures described in the section of the Prospectus entitled “The Exchange Offer—Guaranteed Delivery Procedures.”

Principal Amount of Outstanding Notes Tendered:	If Outstanding Notes will be tendered by a DTC participant by book-entry transfer, provide account number.
$	Account Number:
Certificate Nos. (if available):
Total Principal Amount Represented by Certificates or to be tendered by book-entry transfer:
All authority conferred or agreed to be conferred by this notice shall survive the death or incapacity of the undersigned and the undersigned’s obligations under this notice shall be binding upon the undersigned’s heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives.
(Signatures of Holders)	Date
(Signatures of Holders)	Date
This notice must be signed by the DTC participant holding an interest in the Outstanding Notes being tendered exactly as shown on a DTC security position listing or the registered holders of the Outstanding Notes exactly as the names appear on the certificate for the Outstanding Notes, without any change whatsoever. If this Letter is being executed by a trustee, executor, administrator, guardian, officer or other person acting in a fiduciary or representative capacity, please set forth the full title of such representative, and submit with this notice proper evidence of their authority to act satisfactory to the Company.
Name:
Capacity (Full Title):
Address (Including Zip Code):
Area Code and Telephone Number:
Account Number:

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GUARANTEE

(Not to be used for signature guarantees)

The undersigned, a financial institution that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program, hereby guarantees that the undersigned will deliver to the Exchange Agent the certificates representing the Outstanding Notes being tendered hereby in proper form for transfer or confirmation of book-entry transfer of such Outstanding Notes into the Exchange Agent’s account at DTC pursuant to the procedures for book-entry transfer set forth in the Prospectus, in either case, together with a properly completed and duly executed Letter of Transmittal or an agent’s message in lieu thereof, and any other documents required by the Letter of Transmittal within three business days after the Expiration Date.

Name of Firm:

Address:

Area Code and Telephone Number:

Authorized Signature

Name (Please Type or Print)

Title

Date

Note: Do not send certificates for Outstanding Notes with this form. Certificates for Outstanding Notes should be sent only with a copy of the Letter of Transmittal.

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