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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED...............SEPTEMBER 30, 1996
OR
( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
COMMISSION FILE NUMBER 0-27206
SPACEHAB, INCORPORATED
1595 SPRING HILL ROAD
SUITE 360
VIENNA, VIRGINIA 22182
(703) 821-3000
Incorporated in the State of Washington I.R.S. Identification
No. 91-1273737
The number of shares of Common Stock outstanding as of the close of business on
October 22, 1996:
<TABLE>
Class Number of Shares Outstanding
----- ----------------------------
<S> <C>
Common Stock 11,071,237
</TABLE>
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
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SPACEHAB, INCORPORATED
SEPTEMBER 30, 1996 QUARTERLY REPORT ON
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION PAGE
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<S> <C>
Item 1. Unaudited Financial Statements
Condensed Balance Sheets as of June 30, and September 30, 1996 3
Condensed Statements of Operations for the
Three months ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . 4
Condensed Statements of Cash Flows for the
Three Months Ended September 30, 1996 and 1995 5
Notes to Condensed Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
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PART 1: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SPACEHAB, INCORPORATED
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1996 1996
(AUDITED) (UNAUDITED)
--------------- -----------------
ASSETS
<S> <C> <C>
Cash and Cash Equivalents $ 50,795,548 $ 44,991,827
Receivable from NASA 5,445,765 6,170,315
Prepaid and other assets 184,660 861,996
-------------- ----------------
Total current assets 56,425,973 52,024,138
Property, plant and equipment, net of
accumulated depreciation and amortization
of $27,987,042 and $30,433,697 70,490,451 68,931,035
Deferred mission costs 2,705,422 4,577,583
Other assets, net 86,769 92,822
-------------- ----------------
Total assets $ 129,708,615 $ 125,625,578
============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loan payable under credit agreement, current $ 2,500,000 $ 500,000
portion
Accounts payable and accrued expenses 3,270,882 1,415,997
Accrued consulting and subcontracting services 4,712,733 3,885,673
-------------- ----------------
Total current liabilities 10,483,615 5,801,670
Loans payable under credit agreement, net of 6,179,062 1,500,000
current portion
Notes payable to shareholder 9,968,503 10,266,201
Convertible note payable 1,170,338 1,189,463
Deferred flight revenue 30,311,227 39,047,926
-------------- ----------------
Total liabilities 58,112,745 57,805,260
-------------- ----------------
Commitments
Stockholders' equity
Common stock, no par value, authorized
30,000,000 shares, issued and outstanding
11,069,237 and 11,071,237 shares, respectively 79,862,700 79,886,700
Additional paid-in capital 16,299 16,299
Accumulated deficit (8,283,129) (12,082,681)
-------------- ----------------
Total stockholders' equity 71,595,870 67,820,318
-------------- ----------------
Total liabilities and stockholders' equity $ 129,708,615 $ 125,625,578
============== ================
</TABLE>
See accompanying notes to unaudited condensed financial statements.
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SPACEHAB, INCORPORATED
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
1995 1996
-------------------- --------------------
<S> <C> <C>
Revenue $ - $ 113,242
Cost of revenues:
Integration and operations 3,415,300 2,547,255
Depreciation 2,064,104 2,376,139
-------------------- --------------------
Total costs of revenue 5,479,404 4,923,394
Gross profit (loss) (5,479,404) (4,810,152)
Operating expenses:
Marketing, general and administrative 1,378,653 1,360,407
Research and development - -
-------------------- --------------------
Total operating expenses 1,378,653 1,360,407
-------------------- --------------------
Income (loss) from operations (6,858,057) (6,170,559)
Interest expense, net of capitalized amounts 353,035 360,282
Interest and other income - (354,909)
Other expense 52,599 897,649
-------------------- --------------------
Income (loss) before income taxes (7,263,691) (7,073,581)
Income tax expense 15,664 -
-------------------- --------------------
Net income (loss) before extraordinary item $ (7,279,355) $ (7,073,581)
Extraordinary item - gain on early
retirement of debt, net 0 3,274,029
-------------------- --------------------
Net income (loss) $ (7,279,355) $ (3,799,552)
Net (loss) per common and common equivalent share:
Net (loss) before extraordinary item (1.08) (0.64)
Extraordinary item - 0.30
-------------------- --------------------
Net income (loss) per common and common
equivalent share $ (1.08) $ (0. 34)
==================== ====================
Shares used in computing net income (loss)
per common and common equivalent share 6,764,276 11,070,910
==================== ====================
</TABLE>
See accompanying notes to unaudited condensed financial statements.
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SPACEHAB, INCORPORATED
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
1995 1996
------------------- ----------------
<S> <C> <C>
Cash flows provided by operating activities:
Net income (loss) $ (7,279,355) $ (3,799,552)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 2,120,722 2,446,655
Gain on early retirement of debt, net of taxes, before
legal expenses - (3,384,016)
Interest converted to notes payable 277,097 316,823
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (1,716,828) (724,550)
Decrease (increase) in prepaid and other
current assets (24,218) (677,336)
Decrease (increase) in deferred mission costs (1,525,431) (1,872,161)
Decrease (increase) in other assets (165,968) (6,053)
Increase (decrease) in deferred flight revenue 11,094,686 8,736,699
Increase (decrease) in accounts payable
and accrued expenses 677,460 (2,105,524)
Increase (decrease) in accrued consulting
and subcontracting services 351,342 (827,060)
------------------- ----------------
Total adjustments 11,088,862 1,903,477
------------------- ----------------
Net cash provided (used) by operating activities 3,809,507 (1,896,075)
------------------- ----------------
Cash flows used by investing activities:
Payments for modules in construction (2,905,691) (2,232)
Purchase of property and equipment (19,415) (634,368)
------------------- ----------------
Net cash used by investing activities (2,925,106) (636,600)
------------------- ----------------
Cash flows used by financing activities:
(Payment to) Proceeds of note payable to Insurers 281,660 (3,185,060)
Payment of legal fees on early retirement of debt (109,986)
Proceeds from loan payable to shareholder 837,478
Proceeds from issuance of common stock 3,600,000 24,000
------------------- ----------------
Net cash provided (used) by
financing activities 4,719,138 (3,271,046)
------------------- ----------------
Net increase (decrease) in cash
and cash equivalents 5,603,539 (5,803,721)
Cash and cash equivalents at beginning of period 1,437,481 50,795,548
------------------- ----------------
Cash and cash equivalents at end of period $ 7,041,020 $ 44,991,827
=================== ================
</TABLE>
See accompanying notes to unaudited condensed financial statements.
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SPACEHAB, INCORPORATED
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
In the opinion of management, the accompanying unaudited condensed financial
statements reflect all adjustments consisting of only normal recurring accruals
necessary for a fair presentation of the financial position of SPACEHAB,
INCORPORATED ("SPACEHAB" or the "Company") as of September 30, 1996, and the
results of its operations and cash flows for the three months ended September
30, 1995 and 1996. However, the financial statements are unaudited, and do not
include all related footnote disclosures. The results of operations for the
three months ended September 30, 1996 are not necessarily indicative of the
results that may be expected for the full year. The Company's results of
operations fluctuate significantly from quarter to quarter. The interim
unaudited condensed financial statements should be read in conjunction with the
Company's audited financial statements appearing in the Company's Form 10K for
the period ended June 30, 1996.
2. REVENUE RECOGNITION:
Revenue will continue to be recognized at the completion of each of the
remaining missions under the existing Commercial Middeck Augmentation Module
and the Russian Space Station Mir contracts, including options. For new
contract awards for which the capability to successfully complete the contract
can be demonstrated at contract inception, revenue recognition under the
percentage-of-completion method will be reported based on costs incurred over
the period of the contract. During the first quarter of fiscal 1997, SPACEHAB
began integration work on two international experiments, one for NASDA, the
Japanese Space Agency, and one for ESA, the European Space Agency. The
Company's revenue for the quarter ended September 30, 1996 was the first new
business to report revenue under this accounting method. The percentage of
completion method will result in the recognition of revenue over the period of
contract performance, thereby decreasing the quarter by quarter fluctuation of
reported revenue.
3. STATEMENTS OF CASH FLOWS - SUPPLEMENTAL INFORMATION.
(a) Cash paid for interest costs was approximately $300,000 and $360,000 for
the three months ended September 30, 1995 and 1996, respectively. The Company
capitalized interest of approximately $167,000 during the three months ended
September 30, 1995. No amounts were capitalized during the three months ended
September 30, 1996.
(b) The Company paid approximately $16,000 and $1.4 million for income taxes
during the three months ended September 30, 1995 and 1996, respectively.
4. AMENDED AND RESTATED CREDIT AGREEMENT:
Effective August 29, 1996, the Company entered into an amended and restated
credit agreement with its two senior lenders, which became effective on August
20, 1996. As a result of this agreement the Company has recognized an
extraordinary gain of approximately $4.2 million, before applicable income
taxes and other related expenses. Prior to the completion of this August 20,
1996 amendment, SPACEHAB had outstanding debt under the credit agreement of
$8.7 million to one of the senior lenders, $3.2 million bearing interest at a
rate of 1% per month and $5.5 million non-interest bearing. A payment of $2.5
million was made on August 20, 1996 and an unsecured note in the amount of $2
million was given by SPACEHAB to this senior lender. The $2 million note is
non-interest bearing and will be repaid over five years beginning in August
1997. All other remaining indebtedness to this senior lender was canceled.
There was no outstanding indebtedness to the second senior lender and the
Company projected no requirements for borrowing under the $6 million revolving
line of credit provided by the second senior lender. This lending commitment
was terminated in the August 20, 1996 amendment and restatement in exchange for
release of all liens and restrictive covenants of this second lender.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This document may contain "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including (without limitation) under the
"General" and "Liquidity and Capital Resources" sections of this Item 2. Such
statements are subject to certain risks and uncertainties, including those
discussed herein, that could cause actual results to differ materially from
those projected in such statements.
GENERAL
SPACEHAB, Incorporated ("SPACEHAB" or the "Company") was incorporated in 1984
to commercially develop space habitat modules to operate in the cargo bay of a
Space Shuttles.
SPACEHAB recognizes revenue under its two principal contracts with the U.S.
National Aeronautics and Space Administration ("NASA"), the CMAM Contract and
the Mir Contract, upon the completion of each Space Shuttle mission carrying
SPACEHAB Modules. The CMAM contract supports scientific and commercial
microgravity research on five Space Shuttle flights while the Mir Contract
provides logistics to the Russian Mir Space Station. Revenue is comprised of
payment for leasing lockers and/or volume within the SPACEHAB Modules and for
the integration and operations support services provided to scientists and
researchers responsible for the experiments and/or logistics supplies for
SPACEHAB missions aboard the shuttle system. In late September of 1996,
SPACEHAB entered into an agreement with the Japanese Space Agency (NASDA) and
with the European Space Agency (ESA), (the "NASDA/ESA" contract), pursuant to
which SPACEHAB will provide hardware and integration operations of scientific
microgravity experiments to NASDA and ESA aboard the SPACEHAB Double Module on
STS-84. This mission is currently scheduled for May of 1997. The Company
expects to recognize additional revenue during fiscal 1997 of approximately
$4.14 million.
Costs of revenue include integration and operations expenses associated with
the performance of two types of efforts: (i) sustaining engineering in support
of all missions under a contract and (ii) mission specific experiment support.
Expenses associated with sustaining engineering are expensed as incurred.
Mission specific expenses relating to the CMAM Contract and the Mir Contract
are recorded as assets and not expensed until the specific Space Shuttle
mission is flown and the related revenue is recognized. Costs associated with
performance of the NASDA/ESA contract are expensed as incurred. Other costs of
revenue include depreciation expense, which is allocated to each SPACEHAB
Module ratably over a ten year useful life. Flight related insurance covering
transportation of the SPACEHAB Modules from SPACEHAB's payload processing
facility to the Space Shuttle, in-flight insurance and third-party liability
insurance are also included in costs of revenue and are recorded as incurred.
Marketing, general and administrative, interest, and other expenses are
recognized when incurred.
RESULTS OF OPERATIONS
For the three months ended September 30, 1996 as compared to the three months
ended September 30, 1995.
Revenue. The Company recorded revenue of $113,242 and $0 for the three months
ended September 30, 1996 and 1995, respectively. In accordance with the
Company's revenue recognition policy for the Mir and the CMAM Contracts,
revenue is recorded at the completion of a mission when the SPACEHAB modules
are returned to the Company. Although a SPACEHAB module did fly aboard the
Space Shuttle during the quarter, it was not returned to the Company until the
second quarter of fiscal 1997. Revenue will be recognized for the final
portion of the CMAM contract and the second Mir mission during the second
quarter of the 1997 fiscal year. The revenue for the quarter ended September
30, 1996 was related
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to the NASDA/ESA contract and is recorded using the percentage of completion
method of revenue recognition.
Costs of Revenue. Costs of revenue for the quarter ended September 30, 1996
decreased 11.0% to $4.9 million, as compared to $5.5 million for quarter ended
September 30, 1995. This decrease is due primarily to a decrease of
approximately $900,000 of integration and operations expenses offset by an
increase in depreciation of approximately $300,000 attributable to the
completed Double Module. Integration and operations costs relating to the CMAM
and the Mir Contracts were $0.6 million and $1.8 million, respectively, for the
quarter ended September 30, 1996, as compared with $1.5 million and $1.9
million, respectively, for the quarter ended September 30, 1995. Additionally,
NASDA/ESA contract costs were approximately $0.1 million for the quarter ended
September 30, 1996.
Operating Expenses. Operating expenses were approximately $1.4 million for
the three months ended September 30, 1996 and 1995.
Interest Expense. Interest expense was approximately $360,000 for the three
months ended September 30, 1996 as compared to approximately $300,000 the three
months ended September 30, 1995. There were no capitalized interest amounts for
the quarter ended September 30, 1996 as compared to approximately $167,000 for
the quarter ended September 30, 1995. Interest was capitalized based on amounts
invested in the construction of the Company's Double Module which was placed in
service during the first quarter of fiscal year 1997.
Net Loss. Net loss before extraordinary item was $7.1 million, or $0.64 per
share for the quarter ended September 30, 1996, on 11,070,910 shares, as
compared to net loss of $7.3 million, or $1.08 per share for the quarter ended
September 30, 1995, on 6,764,276 shares. As a result of the early retirement
of debt due to a group of senior lenders, an extraordinary gain of $3.3
million, net of taxes, or $0.30 per share, was recorded during the quarter
ended September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its capital expenditures, research and
development and working capital requirements with progress payments under both
the CMAM Contract and the Mir Contract, and proceeds received from private
equity offerings and borrowings under credit facilities. During December 1995,
SPACEHAB completed an initial public offering of common stock (the "Offering")
which provided the Company with net proceeds of approximately $43.5 million.
Cash Flows From Operating Activities. Cash provided by or (used in)
operations for the three months ended September 30, 1996 and 1995, were ($1.9)
million and $3.8 million respectively. Substantially all of the decrease is the
result of a decrease in progress payments received under the CMAM Contract.
Cash Flows from Investing Activities. For the three months ended September
30, 1996 and 1995, cash flows from investing activities consisted of capital
expenditures of approximately $0.6 and $2.9 million, respectively.
Substantially all of the expenditures in the prior year were attributed to the
construction of the Company's Double Module. During the first quarter of
fiscal 1997, the Company began work on its Science Double Module which it
expects to be completed in late 1998. The Company anticipates that it will
spend between $20.0 million and $25.0 million on the project.
Cash Flows from Financing Activities. Cash flows provided by or (used in)
financing activities were approximately ($3.3) million and $4.7 million for the
three months ended September 30, 1996 and 1995, respectively. On August 20,
1996, the Credit Agreement was amended and restated. Under this amendment, the
revolving credit commitment from McDonnell Douglas was canceled. In addition,
in exchange for the full satisfaction of two term loans owed to a group of
insurance companies, the Company
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paid $2.5 million to said companies at closing and agreed to pay an additional
$2.0 million under a new non-interest bearing term loan. The new term loan is
due in installments of $0.5 million in each of August 1997 and 1998, and $0.333
million in each of August 1999, 2000 and 2001. Under the new agreement all
prior liens and encumbrances on the Company's assets and all prior restrictive
covenants have been released. A significant portion of the cash provided by
financing activities during the three months ended September 30, 1995 was
provided by the proceeds of approximately $3.6 million from the Company's
issuance of common stock in a private placement.
The Company believes that cash flows from the Offering and from a private
equity offering conducted in 1995 will be sufficient to meet its cash flow
deficit from operations and other funding requirements for at least the next
twelve months.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The separate Index to Exhibits accompanying this
filing is incorporated herein by reference.
(b) Reports on Form 8-k. No Report on Form 8-k was filed during the
period ended September 31, 1996.
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibits
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<S> <C>
10.1 NASDA Contract, dated July 1996, between the Registrant and Mitsubishi
Corporation (the "NASDA/ESA Contracts").
10.2 ESA Contract, dated September 18, 1996, between the Registrant and
INTOSPACE GmbH (the "NASDA/ESA Contracts")
10.3* Amended and Restated Credit Agreement, dated August 20, 1996, among the
Registrant, the insurers listed therein and the Chase Manhattan Bank
(National Association), as agent.
11. Statement re Computation of Per Share Earnings.
</TABLE>
* Incorporated by reference to the Registrant's Annual Report on Form
10-k for the year ending June 30, 1996 filed with the Securities
and Exchange Commission on September 17, 1996.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPACEHAB, INCORPORATED
Date: November 8, 1996 /s/ MARGARET E. GRAYSON
----------------------- -----------------------
Margaret E. Grayson
Vice President of Finance (CFO)
Treasurer, and Assistant Secretary
(Principal Financial and Accounting
Officer)
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Exhibit 10.1
AGREEMENT
This agreement ("Agreement") is made this __ day of July, 1996, between
SPACEHAB, Incorporated ("SHI"), a Washington state corporation, with principal
offices located in Vienna, Virginia and MITSUBISHI Corporation ("MITSUBISHI"),
a Japanese corporation, with principal offices located in Tokyo, Japan, on
behalf of the National Space Development Agency of Japan ("NASDA", collectively
"Buyer").
WHEREAS MITSUBISHI desires to lease from SHI the Commercial
Vapor Diffusion Apparatus protein crystal growth hardware and purchase
associated services for use by NASDA aboard the STS-84 SHI Double Module
Mission to Mir ("STS-84") currently scheduled for, and no sooner than, May
1997; and
WHEREAS SHI desires to lease to MITSUBISHI such Commercial
Vapor Diffusion Apparatus protein crystal growth hardware and sell such
associated services on STS-84;
NOW THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties agree as follows:
1. STATEMENT OF WORK
SHI will provide, at the times and locations set forth therein
and pursuant to the terms and conditions of this Agreement,
the hardware, supplies and services described in the Statement
of Work ("SOW") attached hereto as Exhibit A and incorporated
herein by this reference.
2. FIXED PRICE
MITSUBISHI shall pay SHI a fixed price of $3,280,000 for all
of the "Standard Services" provided by SHI, and $270,000 for
the "Optional Services" as set forth in the SOW. Payment to
SHI shall be made as follows:
<TABLE>
<S> <C>
60% ($2.13 million) upon execution of this Agreement
25% ($0.89 million) on or before November 1, 1996
15% ($0.53 million) on or before 30 days after launch of STS-84
</TABLE>
3. PAYMENT TERMS AND CONDITIONS
a. The initial payment set forth above shall be made by
Mitsubishi within 30 days of its execution of this Agreement,
but in no event later than October 31, 1996. SHI will bill
MITSUBISHI prior to the remaining above-referenced payment due
dates. In the event of a material change in the STS-84 launch
date only, SHI will prepare a revised Payment Schedule
corresponding to the changed launch date.
b. SHI shall send a Final Accounting/Billing to MITSUBISHI as
promptly as possible after completion of the last service
provided for by SHI under this Agreement. The Final
Accounting/Billing will address any additional payment
required from MITSUBISHI (including but not limited to
payments for Optional Services not previously paid) or refund
due MITSUBISHI as a result of a price reduction for Optional
Services pursuant to Section 4 below. If, as a result of
Final Accounting/Billing, an additional MITSUBISHI payment or
refund is required, such payment or refund shall be due 30
days after the billing date of the Final Billing.
C. In the event STS-84 is delayed, suspended, or postponed, there
may be additional charges to MITSUBISHI as specified in the
following circumstances:
Delay caused by NASA
- MITSUBISHI pays only additional service costs, if
any, required/provided by NASA and/or SHI. SHI
agrees to notify MITSUBISHI of any such costs
prior to incurring the costs, if possible, and to
negotiate terms and conditions thereof with
MITSUBISHI.
Delay caused by SHI
- MITSUBISHI pays only additional service costs, if
any, required/provided by NASA. SHI agrees to
notify MITSUBISHI of any such costs prior to
incurring the costs, if possible and payment terms
and conditions of additional service costs will be
negotiated by the parties.
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Delay caused by MITSUBISHI/NASDA
- MITSUBISHI pays any additional NASA costs charged
to SHI which may be required or caused by any
delay, suspension or postponement of the launch in
excess of the 72 hours allowable delay for which
NASA does not charge.
- MITSUBISHI pays for any additional costs incurred
by SHI for services provided by NASA and/or SHI.
- In the event NASDA delivers the payload described
in the SOW ("CVDA") so late that SHI, in its sole
judgment, is unable to process the CVDA in time to
meet the launch schedule, SHI will terminate this
Agreement and will retain as liquidated damages
all payments made by MITSUBISHI up through the
date of termination.
4. OPTIONAL SERVICES
The "Optional Services" set forth in the SOW may be requested
by MITSUBISHI. Any optional services requested by MITSUBISHI
other than those Optional Services listed in the SOW are not
included in the pricing set forth in Section 2 above, and
shall be charged to MITSUBISHI at the cost to SHI to perform
and/or purchase such optional services. To the extent any of
the Optional Services are shared with other SHI customer
payloads, the price for such Optional Services to MITSUBISHI
shall be reduced to reflect a prorata distribution of the
Optional Services costs among all SHI customer users thereof
5. APPLICABILITY OF NASA/SHI SPACE SHUTTLE AGREEMENTS
SHI and MITSUBISHI acknowledge that performance of the
services described in this Agreement and the SOW depends upon
the agreement[s] governing NASA's lease of the SHI module for
STS-84 or any other missions covered herein ("NASA
Contracts"). Any changes to these NASA/SHI agreement[s] that
are imposed by NASA and which prevent SHI from providing the
services described herein shall not constitute a breach of
this Agreement by either SHI or MITSUBISHI. In the event of
such changes by NASA, SHI and MITSUBISHI agree to negotiate an
equitable adjustment to this Agreement that satisfies both
parties as well as NASA's new requirements. If there are any
conflicts between this Agreement and the requirements of the
NASA Contracts applicable to this Agreement, the NASA
Contracts terms and conditions shall take precedence.
6. EXCHANGE OF DOCUMENTATION AND INFORMATION
a. SHI and MITSUBISHI shall exchange all documents and
information required for each party to fulfill its
responsibilities under this Agreement.
b. All technical data furnished to SHI under this Agreement shall
be provided with no restricted rights for use, duplication,
and disclosure in any manner and for any purpose whatsoever in
performance of this Agreement by SHI and its contractors and
subcontractors, and without a restrictive legend, except as
provided below. It is the intent of the parties that the
designation of proprietary technical data or trade secrets
shall be kept to a minimum in order to facilitate
implementation of this Agreement.
c. In the event any of the technical data required to be
furnished to SHI under this Agreement is considered by
MITSUBISHI to be proprietary or a trade secret (such as
detailed design, manufacturing and processing information) and
MITSUBISHI desires to maintain proprietary or trade secret
rights for such data, MITSUBISHI shall inform SHI that the
data is considered proprietary or a trade secret and any data
so provided shall be conspicuously marked by MITSUBISHI
"Proprietary" or "Trade Secret" prior to submittal to SHI.
SHI agrees that the data will not, without permission of
MITSUBISHI, be duplicated, used or disclosed by SHI or its
contractors and subcontractors for any purpose other than as
necessary to carry out SHI's obligations pursuant to the
agreements referenced in Section 5 above or this Agreement.
If required by such contractors and/or subcontractors, the
data will only be furnished after the contractors and/or
subcontractors have agreed with SHI in writing to protect the
data from unauthorized use, duplication and disclosure.
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d. SHI considers all data (including data reduction and
analysis) obtained or derived from the CVDA as a result of the
activities for which MITSUBISHI has paid SHI under this
Agreement to be property of MITSUBISHI, and, in order to
protect trade secrets and other property rights of MITSUBISHI
in such data, SHI will maintain such data in confidence. SHI
will not acquire, as a result of launch and associated
services under this Agreement, any rights to MITSUBISHI's
copyrights, trademarks, trade secrets, inventions, or patents
which may be used in or result from the CVDA or any rights to
MITSUBISHI's proprietary or trade secret data, except the
right to use duplicate, and disclose such data as set forth
above.
7. PERMITS AND LICENSES
SHI shall obtain any permit or license that may be required to
provide the services to be furnished under this Agreement.
MITSUBISHI will be responsible for obtaining any permit or
license that may be required to perform an activity unique to
the CVDA that is not included in the foregoing, such as tests
involving use of radioactive materials or particular
requirements of MITSUBISHI's own government, or governmental
authorities outside the United States.
8. ALLOCATION OF CERTAIN RISKS AND LIMITATION OF LIABILITY
a. Inter-Party Waiver of Liability.
In carrying out this Agreement, SHI, NASDA/MITSUBISHI, and
NASA, will respectively utilize their property and employees
in the SPPF, NASA facilities, and during payload processing
activities and STS Operations in close proximity to one
another and to others. Furthermore, the parties recognize
that all participants are engaged in the common goal of
meaningful exploration, exploitation and utilization of outer
space. In furtherance of this goal, the parties hereto agree
to a no-fault, no-subrogation, inter-party waiver of liability
pursuant to which each party agrees not to bring claims in
arbitration or otherwise against or sue the other party or
other customers of SHI, and agrees to absorb the financial and
any other consequences arising out of damage to its own
property and employees as a result of participation in the
payload processing activities and STS Operations, irrespective
of whether such damage is caused by SHI, MITSUBISHI, other SHI
customers, NASA, or other NASA customers participating in
payload processing activities and STS Operations and
regardless of whether such damage arises through negligence or
otherwise.
b. Extension of Inter-Party Waiver.
The parties agree that this common goal will also be advanced
through extension of the inter-party waiver of liability to
other participants in the payload processing activities and
STS Operations. Accordingly, the parties agree to extend the
waiver as set forth in Section 8a above to the other party's
and NASA's contractors and subcontractors at every tier, as
third party beneficiaries, whether or not such contractors or
subcontractors causing damage bring property or employees to
SHI's SPPF or retain title to other interest in property
provided by them to be used, or otherwise involved, in the
payload processing and Launch Activity. Specifically, the
parties intend to protect these contractors and subcontractors
from claims, including "products liability" claims, which
might otherwise be pursued by the parties, or the contractors
or subcontractors of the parties, or other customers of SHI or
the contractors or subcontractors of such other customers.
Moreover, it is the intent of the parties that each will take
all necessary and reasonable steps to foreclose claims for
damage by any participant in a payload processing and Launch
Activity, under the same conditions and to the same extent as
set forth in Section 8a above, except for claims between
MITSUBISHI and its contractors or subcontractors and claims
between SHI and its contractors and subcontractors.
c. Broad Construction of Inter-Party Waiver.
The parties intend that the inter-party waiver of liability
set forth above be broadly construed to achieve the intended
objectives.
d. Insurance Coverage In Lieu of Cross-Waiver
In the event that MITSUBISHI is unable to comply with the
above waiver provisions due to prohibitions by the laws of
Japan, SHI agrees to purchase indemnification insurance
covering participants who otherwise would have been covered by
the cross waiver provisions above in the event MITSUBISHI were
materially damaged by one or more of such participants during
the payload processing activities or STS Operations.
e. Definitions of "payload processing activity" and "STS Operations" In
Section 8
"Payload processing activity" means all activity conducted at
the SPPF or a NASA facility associated with the preparation of
the payload(s) (including but not limited to the CVDA) for
launch and SHI and/or NASA storage of all or a portion of the
payload(s), and the handling and transportation of all or a
portion of the payload(s) outside the confines of SHI's
facility by SHI, NASA, or their contractors or subcontractors:
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"STS Operations" means:
A. All Space Shuttle System Activity
B. All payload operations
C. Use of all tangible personal property
(including ground support, test,
training and simulation equipment
related to A & B above).
D. Research, design, development, test,
manufacture, assembly, integration,
transportation, or use of materials
related to the above items, A, B & C.
E. Performance of any activities related
to A through D.
f. The protection of cross waiver of liability for STS Operations herein
agreed to shall cover a period of time during which STS Operations are
being performed as follows:
Beginning with the signature of an Agreement
with NASA for Space Transportation System services and
(i) when any employee, payload or property arrives at
a United States Government Installation, or (ii)
during transportation of such to the installation by a
United States Government Conveyance, or (ii) at
ingress of such into an Orbiter, for the purpose of
fulfilling such Agreement or Arrangement, or (iv) the
commencement of extravehicular activities by the
Shuttle Crew for the purpose of retrieval of the
payload, whichever occurs first and Ending with regard
to any employee, payload or property, when such
employee, payload or property departs (i) a U.S.
Government Installation, or (ii) the Orbiter if it
lands at other than such Installation, or (iii) a U.S.
Government conveyance which transports the employee
and/or payload and related property from such
Installation or Orbiter.
g. Risk of Patent Infringement
(i) SHI agrees to indemnify MITSUBISHI, its officers,
employees and agents against any United States Patent
infringement costs (including, but not limited to, any
judgment against MITSUBISHI by a court of competent
jurisdiction, reasonable administrative and litigation costs,
and settlement payments made as a result of an administrative
claim) incurred by MITSUBISHI which are attributable to
products, processes or articles of manufacture used in the
facilities and Services to be furnished to MITSUBISHI by SHI
hereunder.
(ii) MITSUBISHI agrees to indemnify SHI AND NASA, their
officers, employees and agents against any United States
Patent infringement costs (including, but not limited to,
judgment against SHI reasonable administrative and litigation
costs, and settlement payments made as a result of an
administration claim) incurred by SHI and/or NASA which are
attributable to products, processes or articles of manufacture
used in the CVDA and any supporting equipment and facilities
brought to the SHI SPPF by MITSUBISHI or MITSUBISHI's
contractors or subcontractors and any activity performed at
SHI or NASA facilities by MITSUBISHI or MITSUBISHI's
contractors or subcontractors and any activity performed at
SHI or NASA facilities by MITSUBISHI or MITSUBISHI's
contractors or subcontractors.
h. Limitation of SHI and MITSUBISHI Liability
Notwithstanding any other provisions herein, to the extent
that a risk of damage is not dealt with expressly in this
Agreement, SHI's and the MITSUBISHI's liability under this
Agreement, whether or not arising as a result of an alleged
breach of this Agreement, shall be limited to direct damages
only and shall not include any loss of revenue, profits or
other indirect or consequential damages.
9. ASSISTANCE WITH THIRD PARTY CLAIMS
In the event a third party claim is asserted against SHI or
MITSUBISHI as a result of patent infringement, use of
proprietary data, or damage, including claims of their
respective contractors or subcontractors, arising from or in
connection with the Services provided by SHI under this
Agreement, SHI and MITSUBISHI each agree to give prompt notice
to the other of any such claim and agree to provide each other
with any
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<PAGE> 5
assistance practicable in the defense against such claim. If
a claim asserted against one party is a claim under this
Agreement, the party who has agreed to indemnify shall have
the right to intervene and defend, the right to control
litigation of, and the right to determine the appropriateness
of any settlement related to such claim.
10. WARRANTIES
SHI MAKES NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTIBILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
11. PUBLICITY RELATING TO AGREEMENT
In cases where one Party intends to use results obtained from
this Agreement or advertise his role in this Agreement, it
shall first request the other Party for its prior written
approval, which shall not be unreasonably withheld.
12. APPLICABLE LAW
The Agreement shall be governed by the law of the State of
Virginia.
13. ARBITRATION/DISPUTES
Disputes arising out of the interpretation or execution of
this Agreement which cannot be resolved by negotiation shall,
at the request of either Party, (after giving 30 days notice
to the other Party) be submitted to arbitration. The
arbitration tribunal shall sit in Washington, D.C. Disputes
shall be finally settled in accordance with the Rules of
Conciliation and Arbitration of the International Chamber of
Commerce by one or more arbitrators designated in conformity
with those Rules. The decision to submit a dispute shall not
excuse either party from the timely performance of its
obligations hereunder which are not the subject matter of the
dispute. Further, if the lack of resolution of the matter in
dispute will adversely impact the timely completion of
preparation for launch activities, MITSUBISHI and SHI will
perform the matter in dispute in the manner determined by SHI,
within the framework of this Agreement and without prejudice
to the final resolution of the matter in dispute.
14. TERMINATION OF SERVICES
Both parties have the right to terminate this Agreement
pursuant to the following conditions only:
a. SHI may terminate this Agreement:
(i) as a result of breach by MITSUBISHI if MITSUBISHI has
not cured the breach within the time specified by SHI
in its cure notice to MITSUBISHI (or immediately upon
a non-curable breach), in which case SHI shall retain
all payments made to the date of the termination, and
MITSUBISHI is further liable for all costs incurred
by SHI resulting from MITSUBISHI's breach of the
Agreement, or
(ii) as a result of any actions or inactions by NASA which
materially impair SHI's ability to perform this
Agreement, in which case MITSUBISHI shall be entitled
to any transportation costs for which SHI is
reimbursed by NASA and which were previously paid by
MITSUBISHI.
b. MITSUBISHI may terminate this Agreement
(i) without cause at any time before installation of the
CVDA into the SHI module upon sufficient written
notification to SHI of such intent, in which case
MITSUBISHI shall be liable for and SHI shall retain
all Transportation and Lease progress payments, plus
the Integration and Optional Services costs incurred
up to the time of termination, as well as all
termination charges, or
(ii) in the event of material breach by SHI which SHI
fails to cure in a reasonable time after written
notice of such material breach is received from
MITSUBISHI, in which case MITSUBISHI will be relieved
from making any further payments to SHI subsequent to
the material breach hereof. In the event NASDA
cannot complete its science objectives as set forth
herein due solely to a material breach hereof by SHI,
SHI shall forfeit the final 15% payment set forth
above, and thus any possibility of profit under this
Agreement, since previous payments go directly to
unrecoverable costs incurred by SHI in performance
hereof.
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15. ASSIGNMENTS
No party shall assign to another person or entity any part of
its rights under this Agreement, including but not limited to
rights for services related to scheduled launches, unless
otherwise expressly agreed to by the other party in writing,
or as may be required pursuant to law.
16. NOTICES
All notices, requests, demands, and other communication
hereunder shall be in writing and shall be either (1)
personally delivered, (2) sent by U. S. mail or reputable
overnight delivery service, or (3) transmitted by facsimile
machine as follows:
To SHI at: Nelda Wilbanks
Contracts Administrator
SPACEHAB, Inc.
1595 Spring Hill Rd.
Vienna, Virginia 22182
To MITSUBISHI at: Mr. Kazushi Ochi
Assistant General Manager
Aerospace Department
Mitsubishi Corporation
6-3 Marunouchi 2-Chome
Chiyoda-ku, Tokyo 100
Japan
The effective date of each notice, demand, request or other
communication shall be deemed to be: (1) the date of receipt
if delivered personally or by mail or overnight delivery
service, or (2) the date of transmission if by facsimile.
Either party may change its address or designee for purposes
hereof by informing the other party in writing of such action
and the effective date of such change.
17. FORCE MAJEURE
Neither party shall be liable for delays or breaches hereof
resulting from events or acts beyond the control of such
party, including but not limited to acts of God, strikes,
lockouts, riots, acts of war, epidemics, governmental
regulations, and natural disasters. Upon the occurrence of
such event, the party whose performance is affected shall use
reasonable efforts to notify the other party of the nature and
extent of any such condition and negotiate its affects.
18. COMPLETE AGREEMENT
This Agreement constitutes the complete agreement and
understanding with respect to the subject matter hereof
between the parties.
MITSUBISHI Corporation SPACEHAB, Inc.
By: By:
---------------------- ----------------------
Name: Name:
-------------------- --------------------
Title: Title:
------------------- -------------------
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<PAGE> 1
Exhibit 10.2
AGREEMENT
This agreement ("Agreement") is made this 18th day of Sept., 1996, between
SPACEHAB, Incorporated ("SHI"), a Washington state corporation with its
principal office located in Vienna, Virginia and INTOSPACE GmbH, with its
principal office located in Hannover, Germany ("INTOSPACE"), as contractor to
the European Space Agency ("ESA", collectively "Buyer").
WHEREAS INTOSPACE desires to lease from SHI space in a
SPACEHAB pressurized module ("SPACEHAB" or "Module") and retain SHI to act as
the carrier and interface between the NASA Space Shuttle and ESA's Spacelab
Self-Standing Drawer/Morphological Transition and Model Substances payload
("SSD/MOMO") aboard the STS-84 SHI Double Module Mission to Mir ("STS-84")
currently scheduled for, and no sooner than, May 1997; and
WHEREAS SHI desires to lease to INTOSPACE such space in the
Module and to act as the carrier and interface between the NASA Space Shuttle
and the SSD/MOMO aboard STS-84;
NOW THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties agree as follows:
1. STATEMENT OF WORK
SHI will provide, at the times and locations set forth therein
and pursuant to the terms and conditions of this Agreement,
the supplies and services described in the Statement of Work
("SOW") attached hereto as Exhibit A and incorporated herein
by this reference.
2. FIXED PRICE
INTOSPACE shall pay SHI a fixed price of 1993 US$ 610,000 for
all of the "Standard Services" provided by SHI, as set forth
in the SOW. Payment to SHI shall be made as follows:
<TABLE>
<S> <C>
2% (93US$ 10,000) prepaid earnest money installment
58% (93US$ 356,000) upon execution of this Agreement
25% (93US$ 152,500) on or before six months before committed launch date
15% (93US$ 91,500) after return of STS-84 and completion of all tasks due under the Agreement
</TABLE>
3. PAYMENT TERMS AND CONDITIONS
a. The initial payment set forth above shall be made by INTOSPACE
within 30 days of its execution of this Agreement. SHI will
bill INTOSPACE prior to the remaining above-referenced payment
due dates, and payments shall be made within 30 days of
invoice. Payments shall be escalated from 1993 US$ as
determined by the US Bureau of Labor Statistics news release
entitled "Productivity and Costs" to July 1, 1996 for all
payments. In the event of a material change in the STS-84
launch date only, SHI will prepare a revised Payment Schedule
corresponding to the changed launch date. Each revised
payment schedule, if any, shall supersede all previous payment
schedules and will be accompanied by an explanation to a
reasonable level of detail, substantiating the changes
reflected therein.
b. SHI shall send a Final Accounting/Billing to INTOSPACE as
promptly as possible after completion of the last service
provided for by SHI under this Agreement. The Final
Accounting/Billing will contain a final accounting under the
Agreement and address additional payment requirements, if any,
from INTOSPACE. If, as a result of final Accounting/Billing,
an additional INTOSPACE payment is required, such payment
shall be due 60 days after the billing date of the Final
Accounting/Billing.
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C. In the event STS-84 is delayed, suspended, or postponed, there
may be additional charges to INTOSPACE as specified in the
following circumstances:
Delay caused by NASA
- INTOSPACE pays only additional service costs, if any,
required/provided by NASA and/or SHI.
Delay caused by SHI
- INTOSPACE pays only additional service costs, if any,
required/provided by NASA.
Delay caused by INTOSPACE/ESA
- INTOSPACE pays any additional NASA costs charged to SHI
which may be required or caused by any delay,
suspension or postponement of the launch in excess of
the 72 hours allowable delay for which NASA does not
charge.
- INTOSPACE pays for any additional costs incurred by SHI
for services provided by NASA and/or SHI.
- In the event ESA delivers the payload described in the
SOW ("SSD/MOMO") so late that SHI, in its sole
judgment, is unable to process the SSD/MOMO in time to
meet the launch schedule, SHI will terminate this
Agreement and will retain as liquidated damages all
payments made by INTOSPACE up through the date of
termination.
4. OPTIONAL SERVICES
There are no optional services currently anticipated under
this Agreement. Any optional services requested by INTOSPACE
are not included in the pricing set forth in Section 2 above,
and shall be charged to INTOSPACE at the cost to SHI to
perform and/or purchase such optional services.
5. APPLICABILITY OF NASA/SHI SPACE SHUTTLE AGREEMENTS
SHI and INTOSPACE acknowledge that performance of the services
described in this Agreement and the SOW depends upon the
agreement[s] governing NASA's lease of the Module for STS-84
or any other missions covered herein ("NASA Contracts"). Any
changes to these NASA/SHI ageement[s] that are imposed by NASA
and which prevent SHI from providing the services described
herein shall not constitute a breach of this Agreement by
either SHI or INTOSPACE. In the event of such changes by
NASA, SHI and INTOSPACE agree to negotiate an equitable
adjustment to this Agreement that satisfied both parties as
well as NASA's new requirements. If there are any conflicts
between this Agreement and the requirements of the NASA
Contracts applicable to this Agreement, the NASA Contracts
terms and conditions shall take precedence.
6. EXCHANGE OF DOCUMENTATION AND INFORMATION
a. SHI and INTOSPACE shall exchange all documents and information
required for each party to fulfill its responsibilities under
this Agreement.
b. All technical data furnished to SHI under this Agreement shall
be provided with no restricted rights for use, duplication,
and disclosure in any manner and for any purpose whatsoever in
performance of this Agreement by SHI and its contractors and
subcontractors, and without a restrictive legend, except as
provided below. It is the intent of the parties that the
designation of proprietary technical data or trade secrets
shall be kept to a minimum in order to facilitate
implementation of this Agreement.
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<PAGE> 3
c. In the event any of the technical data required to be
furnished to SHI under this Agreement is considered by
INTOSPACE to be proprietary or a trade secret (such as
detailed design, manufacturing and processing information) and
INTOSPACE desires to maintain proprietary or trade secret
rights for such data, INTOSPACE shall inform SHI that the data
is considered proprietary or a trade secret and any data so
provided shall be conspicuously marked by INTOSPACE
"Proprietary" or "Trade Secret" prior to submittal to SHI.
SHI agrees that the data will not, without permission of
INTOSPACE, be duplicated, used or disclosed by SHI or its
contractors and subcontractors for any purpose other than as
necessary to carry out SHI's obligations pursuant to the
agreements referenced in Section 5 above or this Agreement.
If required by such contractors and/or subcontractors, the
data will only be furnished after the contractors and/or
subcontractors have agreed with SHI in writing to protect the
data from unauthorized use, duplication and disclosure.
d. SHI considers all data (including data reduction and analysis)
obtained or derived from the SSD/MOMO as a result of the
activities for which INTOSPACE has paid SHI under this
Agreement to be property of INTOSPACE, and, in order to
protect trade secrets and other property rights of INTOSPACE
in such data, SHI will maintain such data in confidence. SHI
will not acquire, as a result of launch and associated
services under this Agreement, any rights to INTOSPACE's
copyrights, trademarks, trade secrets, inventions, or patents
which may be used in or result from the SSD/MOMO or any rights
to INTOSPACE's proprietary or trade secret data, except the
right to use duplicate, and disclose such data as set forth
above.
7. PERMITS AND LICENSES
SHI shall obtain any permit or license that may be required to
provide the services to be furnished under this Agreement.
INTOSPACE will be responsible for obtaining any permit or
license that may be required to perform an activity unique to
the SSD/MOMO that is not included in the foregoing, such as
tests involving use of radioactive materials or particular
requirements of INTOSPACE's own government[s], or governmental
authorities outside the United States.
8. ALLOCATION OF Certain RISKS AND LIMITATION OF LIABILITY
a. Inter-Party Waiver of Liability.
In carrying out this Agreement, SHI, ESA/INTOSPACE, and NASA,
will respectively utilize their property and employees in the
SPPF, NASA facilities, and during payload processing
activities and STS Operations in close proximity to one
another and to others. Furthermore, the parties recognize
that all 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, nosubrogation, inter-party waiver of liability
pursuant to which each party agrees not to bring claims in
arbitration or otherwise against or sue the other party or
other customers of SHI, and agrees to absorb the financial and
any other consequences arising out of damage to its own
property and employees as a result of participation in the
payload processing activities and STS Operations, irrespective
of whether such damage is caused by SHI, INTOSPACE, other SHI
customers, NASA, or other NASA customers participating in
payload processing activities and STS Operations and
regardless of whether such damage arises through negligence or
otherwise.
b. Extension of Inter-Party Waiver.
The parties agree that this common goal will also be advanced
through extension of the inter-party waiver of liability to
other participants in the payload processing activities and
STS operations. Accordingly, the parties agree to extend the
waiver as set forth in Section 8a above to the other party's
and NASA's contractors and subcontractors at every tier, as
third party beneficiaries, whether or not such contractors or
subcontractors causing damage bring property or employees to
SHI's SPPF or retain title to other interest in property
provided by them to be used, or otherwise involved, in the
payload processing and Launch Activity. Specifically, the
parties intend to protect these contractors and subcontractors
from claims, including "products liability" claims, which
might otherwise be pursued by the parties, or the contractors
or subcontractors of the parties, or other customers of SHI or
the contractors or subcontractors of such other customers.
Moreover, it is the intent of the parties that
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<PAGE> 4
each will take all necessary and reasonable steps to foreclose
claims for damage by any participant in a payload processing
and Launch Activity, under the same conditions and to the same
extent as set forth in Section 8a above, except for claims
between INTOSPACE and its contractors or subcontractors and
claims between SHI and its contractors and subcontractors.
c. Broad Construction of Inter-Party Waiver.
The parties intend that the inter-party waiver of liability
set forth above be broadly construed to achieve the intended
objectives.
d. Definitions of "payload processing activity" and "STS Operations" in
Section 8.
"Payload processing activity" means all activity conducted at
the SPPF or a NASA facility associated with the preparation of
the payload(s) (including but not limited to the SSD/MOMO) for
launch and SHI and/or NASA storage of all or a portion of the
payload(s), and the handling and transportation of all or a
portion of the payload(s) outside the confines of SHI's
facility by SHI, NASA, or their contractors or subcontractors:
"STS Operations" means:
A. All Space Shuttle System Activity
B. All payload operations
C. Use of all tangible personal property
(including ground support, test, training
and simulation equipment related to A & B
above).
D. Research, design, development, test,
manufacture, assembly, integration,
transportation, or use of materials related
to the above items, A, B & C.
E. Performance of any activities related to A
through D.
e. The protection of cross waiver of liability for STS Operations
herein agreed to shall cover a period of time during which STS
Operations are being performed as follows:
Beginning with the signature of an Agreement
or Arrangement with NASA for Space
Transportation System services and (i) when
any employee, payload or property arrives at
a United States Government Installation, or
(ii) during transportation of such to the
installation by a United States Government
Conveyance, or (iii) at ingress of such into
an Orbiter, for the purpose of fulfilling
such Agreement or Arrangement, or (iv) the
commencement of extravehicular activities by
the Shuttle Crew for the purpose of retrieval
of the payload, whichever occurs first and
Ending with regard to any employee, payload
or property, when such employee, payload or
property departs (i) a U.S. Government
Installation, or (ii) the Orbiter if it lands
at other than such Installation, or (iii) a
U.S. Government conveyance which transports
the employee and/or payload and related
property from such Installation or Orbiter.
f. Risk of Patent Infringement
(i) SHI agrees to indemnify INTOSPACE, its officers,
employees and agents against any United States
Patent infringement costs (including, but not
limited to, any judgment against INTOSPACE by a
court of competent jurisdiction, reasonable
administrative and litigation costs, and
settlement payments made as a result of an
administrative claim) incurred by INTOSPACE which
are attributable to products, processes or
articles of manufacture used in the facilities
and Services to be furnished to INTOSPACE by SHI
hereunder.
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(ii) INTOSPACE agrees to indemnify SHI and NASA, their
officers, employees and agents against any United
States Patent infringement costs (including, but not
limited to, judgment against SHI by a court of
competent jurisdiction, reasonable administrative and
litigation costs, and settlement payments made as a
result of an administration claim) incurred by SHI
and/or NASA which are attributable to products,
processes or articles of manufacture used in the
SSD/MOMO and any supporting equipment and facilities
brought to the SHI SPPF by INTOSPACE or INTOSPACE's
contractors or subcontractors and any activity
performed at SHI or NASA facilities by INTOSPACE or
INTOSPACE's contractors or subcontractors and any
activity performed at SHI or NASA facilities by
INTOSPACE or INTOSPACE's contractors or subcontractors.
g. Limitation of SHI and INTOSPACE Liability
Notwithstanding any other provisions herein, to the extent
that a risk of damage is not dealt with expressly in this
Agreement, SHI's and the INTOSPACE's liability under this
Agreement, whether or not arising as a result of an alleged
breach of this Agreement, shall be limited to direct damages
only and shall not include any loss of revenue, profits or
other indirect or consequential damages.
9. ASSISTANCE WITH THIRD PARTY CLAIMS
In the event a third party claim is asserted against SHI or
INTOSPACE as a result of patent infringement, use of
proprietary data, or damage, including claims of their
respective contractors or subcontrators, arising from or in
connection with the Services provided by SHI under this
Agreement, SHI and INTOSPACE each agree to give prompt notice
to the other of any such claim and agree to provide each other
with any assistance practicable in the defense against such
claim. If a claim asserted against one party is a claim under
this Agreement, the party who has agreed to indemnify shall
have the right to intervene and defend, the right to control
litigation of, and the right to determine the appropriateness
of any settlement related to such claim.
10. WARRANTIES
SHI MAKES NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTIBILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
11. PUBLICITY RELATING TO AGREEMENT
In cases where one Party intends to use results obtained from
this Agreement or advertise his role in this Agreement, it
shall first request the other Party for its prior written
approval, which shall not be unreasonably withheld.
12. APPLICABLE LAW
The Agreement shall be governed by German law, except to the
extent that an issue is not governed expressly by the
Agreement, in which case US Federal law shall govern all such
issues.
13. ARBITRATION/DISPUTES
Disputes arising out of the interpretation or execution of
this Agreement which cannot be resolved by negotiation shall,
at the request of either Party, (after giving 30 days notice
to the other Party) be submitted to arbitration. The
arbitration tribunal shall sit in Hannover, Germany. Disputes
shall be finally settled in accordance with the Rules of
Conciliation and Arbitration of the International Chamber of
Commerce by one or more arbitrators designated in conformity
with those Rules. The decision to submit a dispute shall not
excuse either party from the timely performance of its
obligations hereunder which are not the subject matter of the
dispute. Further, if the lack of resolution of the matter in
dispute will adversely impact the timely completion of
preparation for launch
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<PAGE> 6
activities, INTOSPACE and SHI will perform the matter in
dispute in the manner determined by SHI, within the framework
of this Agreement and without prejudice to the final
resolution of the matter in dispute.
14. TERMINATION OF SERVICES
Both parties have the right to terminate this Agreement
pursuant to the following conditions only:
a. SHI may terminate this Agreement:
(i) as a result of breach by INTOSPACE if INTOSPACE has not
cured the breach within a reasonable time after written
notice to INTOSPACE (or immediately upon a non-curable
breach), in which case SHI shall retain all payments
made to the date of the termination, and INTOSPACE is
further liable for all costs incurred by SHI resulting
from INTOSPACE's breach of the Agreement or,
(ii) as a result of any actions or inactions by NASA which
materially impair SHI's ability to perform this
Agreement, in which case INTOSPACE shall be entitled to
any transportation costs for which SHI is reimbursed by
NASA and which were previously paid by INTOSPACE.
b. INTOSPACE may terminate this Agreement
(i) without cause at any time before installation of the
SSD/MOMO into the SHI module upon sufficient written
notification to SHI of such intent, in which case
INTOSPACE shall be liable for and SHI shall retain as
liquidated damages all Transportation and Lease progress
payments, plus the Integration and Optional Services
costs incurred up to the time of termination, as well as
all termination charges, or
(ii) in the event of material breach by SHI which SHI fails
to cure in a reasonable time after written notice of
such material breach is received from INTOSPACE, in
which case INTOSPACE will be relieved from making any
further payments to SHI subsequent to the material
breach hereof
c. Termination In Special Cases
INTOSPACE may at any time terminate this Agreement by giving
written notice with immediate effect in any of the following
events:
- if SHI becomes insolvent or if its financial
position is such that within the framework of its national
law, legal action leading towards bankruptcy may be taken
against it by its creditors;
- if SHI resorts to fraudulent practices in connection
with the contract, especially by deceit concerning the
nature, quality or quantity of the supplies, and the
methods or processes of manufacture employed or by the
giving or offering of gifts or remuneration for the
purpose of bribery to any person in the employ of an ESA
Member State or of ESA or acting on its behalf,
irrespective of whether such bribes or remuneration are
made on the initiative of SHI or otherwise.
15. ASSIGNMENTS
a. Assignment, delegation or use as security on a first mortgage
of this Agreement or rights or duties hereunder by SHI is
hereby consented to by INTOSPACE.
b. INTOSPACE shall not assign to another person or entity any
party of its rights under this Agreement, including but not
limited to rights for services related to scheduled launches,
except to ESA for the SSD/MOMO, and as otherwise expressly
agreed to by SHI in writing, and as may be required pursuant
to law.
6
<PAGE> 7
c. In the event that INTOSPACE receives notice that this
Agreement has been assigned to a lending institution,
INTOSPACE agrees (1) to acknowledge such assignment; (2) that
any Agreement or agreement so assigned may neither be amended
in any material respect nor terminated by SHI without the
prior consent of such lending institutions; and (3) will
promptly notify the lending institutions of any default by SHI
and will provide the lending institution with a reasonable
opportunity for the cure of such default.
16. NOTICES
All notices, requests, demands, and other communication
hereunder shall be in writing and shall be either (1)
personally delivered, (2) sent by mail or reputable overnight
delivery service, or (3) transmitted by facsimile machine as
follows:
To SHI: Nelda Wilbanks
Contracts Administrator
SPACEHAB, Inc.
1595 Spring Hill Road, Suite 360
Vienna, VA 22182
To INTOSPACE: Thomas Hauschild
INTOSPACE GmbH
Sophienstrasse 6
D-30159 Hannover 1 Germany
The effective date of each notice, demand, request or other
communication shall be deemed to be: (1) the date of receipt
if delivered personally or by mail or overnight delivery
service, or (2) the date of transmission if by facsimile.
Either party may change its address or designee for purposes
hereof by informing the other party in writing of such action
and the effective date of such change.
17. FORCE MAJEURE
Neither party shall be liable for delays or breaches hereof
resulting from events or acts beyond the control of such
party, including but not limited to acts of God, strikes,
lockouts, riots, acts of war, epidemics, governmental
regulations, and natural disasters. Upon the occurrence of
such event, the party whose performance is affected shall use
reasonable efforts to notify the other party of the nature and
extent of any such condition and negotiate its affects.
18. COMPLETE AGREEMENT
This Agreement constitutes the complete agreement and
understanding with respect to the subject matter hereof
between the parties.
INTOSPACE SHI, Inc.
BY: /s/ JURGEN VON DER LIPPE By: /s/ DAVID ROSSI
------------------------ ------------------------
Name: Jurgen Von Der Lippe Name: David Rossi
---------------------- ----------------------
Title: Managing Director Title: Sr. Vice President
--------------------- ---------------------
7
<PAGE> 8
EXHIBIT A
SHI-INTOSPACE (ESA) STATEMENT OF WORK:
I. GENERAL DESCRIPTION OF SHI INTEGRATION AND FLIGHT SERVICES
SHI will provide and maintain a pressurized module ("SPACEHAB") that
fits in the cargo bay of the National Aeronautics and Space
Administration's ("NASA") Space Shuttle Orbiter ("Shuttle") to act as
the carrier and interface between the Shuttle and the Self-Standing
Drawer / Morphological Transition and Model Substances ("SSD/MOMO")
payload. Power, thermal control, command and data management,
environmental control, and structural support facilities and systems
are available to support the SSD/MOMO. Adaptive SPACEHAB rack hardware
to permit physical integration of the SSD/MOMO into the SPACEHAB are
also provided by SHI. The SSD/MOMO will be analytically, physically
and operationally integrated with other user payloads into the
SPACEHAB. SHI services will include SSD/MOMO launch into orbit,
in-orbit operation by a trained flight crew, return of SSD/MOMO to the
launch site and to the SPACEHAB Payload Processing Facility (SPPF),
deintegration of all SSD/MOMO hardware, and return of SSD/MOMO
hardware to ESA. All SHI (and NASA) provided services for SSD/MOMO are
considered "standard" and are included in SHI's basic contract price.
There are no known requirements for SPACEHAB or NASA-provided
"optional" services (e.g. late access/early retrieval) for the
SSD/MOMO payload.
II. RESPONSIBILITIES OF SPACEHAB, INC. (SHI)
A. PROVISION OF STANDARD SERVICES
In support of the flight of the ESA-sponsored SSD/MOMO experiment
abroad the SPACEHAB module on STS 84, SHI shall perform the following
"standard" services.
1. Provision of the required agreements with NASA to provide Space
Shuttle transportation on STS-84.
SHI will negotiate and execute all agreements with NASA which are
required to manifest the SSD/MOMO experiment aboard SPACEHAB on STS
84. SHI will pay NASA's required transportation charges according to
established payment methods and milestones.
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<PAGE> 9
2. Provision of Experiment Interface Definition and Analytical
Integration
SHI will assess ESA developed SSD/MOMO data, performance analyses, and
SPACEHAB subsystem resource requirements and perform the following
experiment requirements synthesis and analysis tasks:
a. Development of the core SPACEHAB/SSD/MOMO Interface Control
Document (ICD); the ICD Appendix A (Ground Operations Interface
Requirements); the ICD Appendix B (Safety/Verification Requirements);
and the ICD Appendix C (Flight Operations Interface Requirements).
b. Integration and submittal of flight and ground safety review
packages to NASA (Phase II, III) as required.
c. Development of experiment stowage requirements.
d. Analysis of all experiment test/analytical data as it pertains to
the physical (structural) interface with the SPACEHAB rack and module.
e. Performance of a mass/center of gravity (e.g.) analysis.
f. Performance of an experiment materials analysis.
g. Performance of an experiment SPACEHAB resource requirements
assessment.
3. Provision of Mission Analytical Integration
Based upon the SSD/MOMO's data and operational requirements, provided
by ESA, SHI will locate the SSD/MOMO in a SPACEHAB rack within the
SPACEHAB pressurized volume (with a compatible complement of
payloads), will integrate the SSD/MOMO resource requirements and
safety data with those of other payloads, and will develop flight
procedures and timelines for operation of the experiment in-orbit.
Specifically, SPACEHAB will perform the following mission integration
tasks for ESA:
a. Development of an integrated Mission Requirements and Allocations
Document (MRAD) which incorporates the SPACEHAB and Shuttle mission
2
<PAGE> 10
resource requirements necessary for the successful implementation of
SSD/MOMO experiment objectives.
b. Development and submittal to NASA of the required Shuttle Payload
Integration Plan (PIP) data as it pertains to the SSD/MOMO
requirements for Shuttle resources.
c. Development and implementation of an integrated Crew Training Plan
which includes documentation of all requirements for SSD/MOMO flight
crew training, scheduling of all SSD/MOMO crew training sessions with
the NASA Training Coordinator, coordination of all SSD/MOMO training
sessions with the affected SSD/MOMO Principle Investigators and
Payload Element Developers, and direction of all integrated timeline
training sessions at the SPPF.
d. Development and production of a flight qualified SSD/MOMO
Experiment Operations Checklist (EOC) for onboard use by the flight
crew.
e. Development of SSD/MOMO crew activity timeline inputs for
inclusion by NASA in the integrated Shuttle Crew Activity Plan.
f. Integration of ESA-provided SSD/MOMO flight and ground safety data
into mission safety packages for review by the NASA Flight and Ground
Payload Safety Review Boards.
g. Representation of ESA and the SSD/MOMO to NASA at all NASA payload
integration process forums and meetings, including payload safety
reviews.
4. Provision of Hardware Physical Integration and Deintegration
This category involves the preparation for and execution of
SSD/MOMO-to-SPACEHAB and SPACEHAB-to-Shuttle physical integration and
deintegration tasks to support the SSD/MOMO's flight on STS 84. It
includes logistics and ground operations planning, ground procedures
development, integrated schedule development, hardware physical
installation, and ESA personnel accommodation elements. The activities
associated with this function are performed within the SPACEHAB
Payload Processing Facility (SPPF) at Cape Canaveral, Florida.
Specifically, SHI will provide to ESA the following services:
a. Coordination of shipping and receiving of flight and training
hardware to and from the SPPF.
3
<PAGE> 11
b. Provision of a SPPF Customer Work Area with the necessary security
and administrative/laboratory equipment to control, store and prepare
for flight all SSD/MOMO parts, experiment materials and supporting
equipment.
c. Provision at the SPPF of a high fidelity mockup of the SPACEHAB
module for use in experiment interface checks and in integrated
timeline training with the flight crew.
d. Integration of the SSD/MOMO into the SPACEHAB rack and into the
SPACEHAB module and performance of a SPACEHAB resource accommodations
Interface Verification Test (IVT) prior to the module's delivery to
KSC; and deintegration of the same hardware following the SPACEHAB
module's post-flight return to the SPPF.
5. Provision of Flight Operations Support
For the Flight Phase, SHI will provide accommodations for ESA and
INTOSPACE management, technical and scientific personnel in the
Mission Control Center (MCC) at the NASA Johnson Space Center. The
following services will be provided at the MCC:
a. Physical accommodations for personnel to monitor real-time
operations during the Prelaunch, Flight, and Postlanding phases of the
STS 84 mission.
b. Telemetry, voice and video data as required to monitor the
progress of the SSD/MOMO experiment operations over the duration of
the mission.
c. Provision of a Mission Console Handbook which provides
administrative, technical and logistics information about the SSD/MOMO
and other experiments aboard the SPACEHAB module as well as about the
cadre of NASA, ESA, INTOSPACE and SHI personnel supporting the
mission.
d. Administrative services for acquiring/copying and routing of
mission-related data and correspondence to local and remote locations.
6. Provision of Support to Post-Flight Data Analysis
4
<PAGE> 12
SHI will provide or coordinate the provision of the required
historical SSD/MOMO flight data and timeline information in support of
SSD/MOMO post flight analysis activities.
8. Provision of SSD/MOMO Project Management
To organize, schedule and manage the provision of the standard and
optional services as described above, SHI shall provide the following
SSD/MOMO project management personnel and methods:
a. SHI will designate an SHI Contract Development and Implementation
Manager (CDIM) who will be responsible for coordinating with the
INTOSPACE CDIM all financial, scheduling, implementation progress
reporting and policy matters related to this contract. The CDIM will:
1.) Coordinate SHI inputs to the development and maintenance of this
contract with INTOSPACE and ESA personnel as required
2.) Establish methods for communication of contract implementation
activities to all participants (e.g. teleconferences, e-mail lists key
meetings).
b. SHI will designate an SHI SSD/MOMO Payload Coordinator (PC) for
the SSD/MOMO experiment. The PC will:
1.) Be the principal SHI advocate for the successful flight of the
SSD/MOMO.
2.) Be responsible for coordinating with the SHI, ESA, and NASA
technical points of contract all SHI support related to the technical
and operational implementation of the standard services described
below.
3.) Be responsible for the identification and resolution of all
technical and operational issues pertaining to the flight of the
SSD/MOMO experiment.
9. Provision of SSD/MOMO Project Reporting
In order to facilitate the routine exchange of mission integration and
scheduling information and a team-oriented approach to problem
identification and resolution, the following methods of communication
will be established:
5
<PAGE> 13
a. The PC will hold biweekly teleconferences with key project
participants to plan and/or status integration activities and to
resolve issues.
b. The PC will develop and maintain a detailed, date-specific
SSD/MOMO Integration Milestones Template (IMT) which identifies all
key deliverables as well as all key mission preparation milestones.
c. The SHI CDIM will provide monthly reports to INTOSPACE on the
status of SSD/MOMO mission integration activities.
B. PROVISION OF OPTIONAL SERVICES
There have been no optional services identified for the SSD/MOMO
experiment flight aboard SPACEHAB on STS-84.
III. RESPONSIBILITIES OF INTOSPACE
INTOSPACE will serve as ESA's administrative agent for establishing a
contract relationship with SHI. Therefore, it is INTOSPACE's
responsibility to establish and maintain this contract directly with
SHI, on ESA's behalf, in order for ESA to obtain from SHI the
necessary lease and integration services required for the successful
flight of the SSD/MOMO in the SPACEHAB module. Acting in this
capacity, INTOSPACE will:
A. Facilitate ESA's completion of the following critical
preparatory functions in support of the flight of the SSD/MOMO
experiment:
1. All SSD/MOMO hardware and experiment materials shall conform
to established NASA payload safety requirements documentation
and are subject to review and approval by the NASA Flight and
Ground Safety Review Boards.
2. Timely coordination with the SHI Payload Coordinator in the
development of experiment functional objectives and flight and
ground operations protocols and procedures.
3. Timely delivery of all SSD/MOMO to the SPPF for preflight
processing.
4. ESA support to meetings, teleconferences, flight crew training
sessions, integrated mission simulations and real-time
missions operations.
6
<PAGE> 14
5. Designation of ESA technical points of contact who will be
responsible for coordinating with the SHI Payload Coordinator
all technical activities to be performed under this Agreement.
B. Designation of an INTOSPACE Contract Development and
Implementation Manager (CDIM) who will be responsible for coordinating
with the SHI CDIM all financial, scheduling, implementation progress
reporting and policy matters related to this contract.
C. Establishment and maintenance of the required contract(s) with ESA
to facilitate ESA sponsorship of the flight of the SSD/MOMO on STS-84.
D. Establishment and maintenance of the required contract with SHI to
obtain SHI lease and integration services necessary for the flight of
the SSD/MOMO in SPACEHAB on STS-84.
E. Receipt of established contract milestone payments from ESA and
provision of established contract milestone payments to SHI for
performance of these required services.
7
<PAGE> 1
EXHIBIT 11
SPACEHAB, INCORPORATED
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SEPTEMBER 30,
1995 1996
------------------------------------------------
<S> <C> <C>
Net Income (Loss) and Adjusted Earnings:
Net income (loss) applicable to common
shareholders used for primary
computations $ (7,279,355) $ (3,799,553)
======================= =====================
Fully diluted adjustments:
Savings in convertible note payable interest expense,
net of tax 17,951 19,125
----------------------- ---------------------
Adjusted net income (loss) applicable to
common shareholders assuming full dilution $ (7,279,355) $ (3,780,480)
======================= =====================
Average number of shares of common stock
common stock equivalents used for primary
computation 6,764,276 11,070,910
======================= =====================
Fully diluted adjustments (2):
Weighted Average Shares and Share
Equivalents Outstanding:
Assumed exercise of options and warrants 0 0
Assumed conversion of convertible debt 75,000 75,000
----------------------- ---------------------
Total number of shares assumed to be
outstanding after full dilution 6,839,276 11,145,910
======================= =====================
Earnings Per Share:
Income (loss) per common and common equivalent share:
Net (loss) before extraordinary item (1.08) (0.64)
Extraordinary item - 0.30
----------------------- ---------------------
Primary (1) $ (1.08) (0.34)
======================= =====================
Net (loss) before extraordinary item (1.06) (0.64)
Extraordinary item - 0.30
----------------------- ---------------------
Fully Diluted (2): $ (1.06) $ (0.34)
======================= =====================
</TABLE>
(1) The assumed exercise of options and warrants in periods of net loss are
anti-dilutive and are not included in the computation and presentation of
primary earnings per share.
(2) The assumed exercise of options, warrants, conversion of convertible debt,
and conversion of preferred stock are anti-dilutive but are included in
the calculation of fully dilutive earnings per share in accordance with
Regulation S-K Item 601 (a)(11).
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 44,991,827
<SECURITIES> 0
<RECEIVABLES> 6,170,315
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 52,024,138
<PP&E> 99,364,732
<DEPRECIATION> 30,433,697
<TOTAL-ASSETS> 125,625,578
<CURRENT-LIABILITIES> 5,801,670
<BONDS> 0
0
0
<COMMON> 79,886,700
<OTHER-SE> (12,066,382)
<TOTAL-LIABILITY-AND-EQUITY> 125,625,578
<SALES> 113,242
<TOTAL-REVENUES> 113,242
<CGS> 4,923,394
<TOTAL-COSTS> 6,283,801
<OTHER-EXPENSES> 897,649
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 360,282
<INCOME-PRETAX> (7,073,581)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 3,274,029
<CHANGES> 0
<NET-INCOME> (3,799,552)
<EPS-PRIMARY> (0.34)
<EPS-DILUTED> (0.34)
</TABLE>
