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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
[ X ] Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 [No Fee Required]
For the Fiscal Year Ended June 30, 1997.
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 [No Fee Required]
For the transition period from to
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Commission File No. 0-27206
SPACEHAB, INCORPORATED
1595 SPRING HILL ROAD, SUITE 360
VIENNA, VA 22182
(703) 821-3000
Incorporated in the State of Washington IRS Employer Identification
Number 91-1273737
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Title of Each Class Name of Each Exchange
Common Stock on which Registered
(no par value) NASDAQ National Market
Number of shares of Common Stock (no par value) outstanding as of July
25, 1997: 11,146,237.
Aggregate market value of Common Stock (no par value) held by non-affiliates
of the registrant on July 25, 1997, based upon the closing price of the
Common Stock on the Nasdaq National Market of $8.88 was approximately
$79,017,836.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO .
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ].
DOCUMENTS INCORPORATED BY REFERENCE:
Proxy Statement for the Annual Meeting of
Stockholders to be held October 21, 1997. Parts I, II and III of Form 10-K
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PART I
This document may contain "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including (without limitation) under
"Products and Services," "Company Strategy," "Dependence on a Single
Customer," "Research and Development," "Competition" and "Backlog" of Item 1
and "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- General" and "--Liquidity and Capital Resources" of Item 7.
Such statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from those projected in such
statements. In addition to those risks and uncertainties discussed herein,
such risks and uncertainties include, but are not limited to, whether the
Company will fully realize the economic benefits under its NASA and other
customer contracts, the successful development and commercialization of the
Science Double Module, the ICC system and related new commercial space
assets, technological difficulties, product demand and market acceptance
risks, the effect of economic conditions, uncertainty in government funding
and the impact of competition.
ITEM 1. BUSINESS
COMPANY BACKGROUND AND HISTORY
SPACEHAB, Incorporated ("SPACEHAB" or the "Company") was incorporated
in 1984 and is the first company to commercially develop, own and operate
pressurized habitable modules that provide space-based laboratory research
facilities and cargo services aboard the U.S. Space Shuttle system (the
"Space Shuttle" or "STS"). The Company presently offers its SPACEHAB Modules
in a single modular version (the "Single Module"), a logistics double modular
version (the "Logistics Double Module") and is currently developing a science
double module (the "Science Double Module") and an unpressurized logistics
carrier system for use in conjunction with its modules. A SPACEHAB Single
Module, when installed in the cargo bay of a Space Shuttle, more than doubles
the working and living space availability to astronauts for research,
experimentation, habitation and storage. All versions of the SPACEHAB
Modules can accommodate a combination of lockers, racks and soft stowage
arrangements which are provided as a service primarily to the U.S. National
Aeronautics and Space Administration ("NASA"). SPACEHAB Modules, which have
been outfitted with systems to facilitate laboratory research experiments in
the near-weightless ("microgravity") environment of space, are also capable
of transporting food, water, oxygen and other supplies (collectively,
"logistics") to the Russian Mir space station and the planned International
Space Station (the "ISS"). SPACEHAB also provides a full range of pre- and
post-flight experiment and payload processing services, and in-flight
operations support to assist astronauts and researchers, in space and on the
ground, in connection with the performance of experiments aboard SPACEHAB
Modules. From June 1993 through June 1997, SPACEHAB Modules have flown eight
successful missions on the Space Shuttle.
The Company is committed to expand its business with NASA while also
diversifying its revenue and customer base by targeting new and related space
services markets. On February 12, 1997, a wholly-owned subsidiary of
SPACEHAB acquired the operating assets and business of Astrotech Space
Operations, L.P. ("Astrotech") from Northrop Grumman Corporation. Astrotech
is the premier commercial provider of satellite payload processing facilities
in the United States providing launch site preparation of flight-ready
satellites to major U.S. space launch companies and satellite manufacturers,
including Lockheed Martin Corporation ("Lockheed Martin"), Motorola
Corporation ("Motorola"), The Boeing Company ("Boeing") and Orbital Sciences
Corporation ("Orbital Sciences"). The Astrotech acquisition diversified
SPACEHAB's customer base to include commercial customers of space satellite
payload processing services and broadened the Company's services to include
services in support of manned as well as unmanned space activities.
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INDUSTRY OVERVIEW
The U.S. space program encompasses four broad objectives: to advance
scientific research, to establish a permanent human presence in space, to
develop new technologies that contribute to U.S. economic growth and security
and to foster improved international relations through peaceful cooperation
in space with Europe, Japan, Russia and other nations. SPACEHAB is focused
on two markets: (i) microgravity and life sciences space research and (ii)
space support services such as space station logistics and resupply, ground
operations and payload processing.
Microgravity and Life Sciences Space Research
In orbit, the forces of inertia and gravity counterbalance each other,
thereby creating a condition of near weightlessness known as "microgravity."
In a microgravity environment, materials and living matter behave in
fundamentally different ways than they do on Earth. This phenomenon has
stimulated worldwide interest from scientists and commercial researchers who
are seeking improved ways to manipulate and process materials and to study
biological processes that cannot otherwise be achieved in ground-based
laboratories.
The demand for access to a microgravity environment can be divided into
two broad categories: scientific research and commercial applications. NASA
and other U.S. and international government research organizations provide
support for both basic scientific research and its commercial applications to
determine the fundamental effects that gravity has on physical processes.
For the 1997 Government fiscal year, NASA budgeted $366.1 million to conduct
scientific research and commercial microgravity applications aboard the Space
Shuttle (excluding the associated Space Shuttle launch costs for these
experiments).
Space Support Services
Space support services include providing logistics and payload
processing support to NASA, other governments and commercial customers of the
Space Shuttle and International Space Station ("ISS"). Permanently orbiting
facilities such as the Russian space station Mir and the planned ISS require
reliable sources of logistics: food, clothing, equipment and supplies
that sustain the astronauts and enable them to conduct research. NASA's current
plans call for the Space Shuttle to be launched at least seven times per year
for the foreseeable future. NASA has three more Space Shuttle logistics
missions to Mir scheduled during the Company's fiscal 1998. As currently
planned, the ISS will require approximately five Space Shuttle logistics
missions per year.
In order to support Space Shuttle and ISS operations, NASA requires
ground operations and payload support services before and after each
mission. Payload processing operations entail payload scheduling, mission
planning, safety/certification analysis, physical integration of the payload
into its carrier (such as SPACEHAB modules), the integration of the carriers
into the Space Shuttle's cargo bay, flight operations, technical data
gathering and synthesis, and launch and landing site activities. NASA
currently spends between $272 million and $315 million per year on processing
payloads for Space Shuttle operations. Space support services also involve
the provision of specialized services and support near launch sites for
commercial satellite manufacturers and launch services. These activities
include mechanical assembly or reassembly, electrical check, calibration,
liquid propellant loading and related activities.
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PRODUCTS AND SERVICES
SPACEHAB Single Modules are aluminum cylinders, measuring 10 feet in
length by 13.5 feet in diameter, that incorporate a patented design including
a truncated top and flat-end caps. These fully instrumented modules provide
experiment resources such as power, data management, thermal control and
vacuum venting. SPACEHAB Single Modules are employed primarily for research
missions. In fiscal 1996, the Company completed a development program and
introduced the Logistics Double Module. This module was optimized to carry
logistics and is now being used by NASA to carry vital supplies to the
astronauts and cosmonauts who reside on the Russian space station Mir.
SPACEHAB invested $13.4 million in the design, development, and production of
the Logistics Double Module. Additionally, during fiscal 1997, in an effort
to anticipate the need of customers, the Company began the full-scale
development and construction of its Science Module with double module
hardware, which when combined with a Single Module becomes the Science Double
Module. This Science Double Module will be fully dedicated to microgravity
research and is expected to be available in late 1999.
SPACEHAB's fundamental business strategy is based on carefully
anticipating customer requirements, investing capital to develop space-flight
assets, contracting with established aerospace companies for engineering and
asset production while retaining ownership of these assets and then providing
innovative, cost-effective solutions that meet customer requirements using
fixed-price service contracts. This strategy has been successful in obtaining
two significant contracts with NASA: a $184 million Commercial Middeck
Augmentation Module contract (the "CMAM Contract") for five missions and a
$52.2 million Mir contract (the "Mir Contract") for four missions.
The CMAM Contract, signed in November 1990, required SPACEHAB to
furnish NASA with SPACEHAB module accommodations for experiments developed by
the Centers for the Commercial Development of Space ("CCDS") on five Space
Shuttle missions. The fifth and final CMAM mission was completed
successfully during September 1996.
The basic Mir Contract, signed in July 1995, required the Company to
provide Single and Double Module accommodations for the provision of
logistics resupply to the Mir space station on four Space Shuttle missions.
The fourth and final mission was completed successfully in May 1997.
In June 1997, NASA exercised all three options for $38.0 million under
the Mir Contract, providing a firm backlog of logistics resupply missions
into 1998. The Mir Contract options call for two Logistics Double Module
missions and one Single Module mission scheduled for September 1997, January
1998 and May 1998, respectively.
In late September 1996, the Company entered into agreements with the
Japanese Space Agency (NASDA) and the European Space Agency (ESA)
(collectively, the "NASDA/ESA Contract"). Pursuant to the NASDA/ESA Contract,
SPACEHAB provided hardware and integration and operations for scientific
microgravity experiments to NASDA and ESA aboard the Logistics Double Module
on STS-84. This mission was completed in May 1997.
In fiscal 1997, SPACEHAB initiated the full-scale development of the
Science Double Module. The Company expects that this Module will be
available in late 1999 and will meet or exceed all of NASA's projected
requirements for dedicated microgravity and life sciences research that had
been performed by Spacelab, the U.S. government-owned habitable module which
is scheduled to be retired after its final mission in 1998. As a result of
the anticipated retirement of Spacelab, the Company believes that its
flight-proven assets position SPACEHAB to become the sole provider of
crew-tended microgravity research capabilities for the Space Shuttles.
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The Company believes that its success in capturing new business is
directly linked to its ability to identify and rapidly capitalize on emerging
market opportunities. The Company intends to foster this entrepreneurial
initiative by proposing new commercial business arrangements for services in
the space industry in each of its target markets. Additionally, the Company
plans to selectively pursue acquisitions of complementary businesses, such as
the Astrotech acquisition, engineering facilities and hardware to improve its
ability to perform work associated with the Space Shuttles and the ISS. The
Company intends to continue the SPACEHAB Incubator Program, which is intended
to evaluate, sponsor and invest in a portfolio of commercially focused,
promising microgravity research and development activities. The Company
believes that the demand for microgravity space research conducted on
SPACEHAB Modules will increase both before and after the ISS becomes
operational. There is a substantial and growing worldwide backlog for
microgravity experiments, both with NASA laboratories and among the
NASA-sponsored Centers for the Commercial Development of Space ("CCDS"),
which suggests that even after the ISS becomes operational, demand for
microgravity experimentation may continue to exceed capacity.
The Astrotech payload processing business serves the commercial
satellite manufacturing and launch services industries. Although payload
processing is generally associated with the final preparation of a satellite
or other space payload for launch, it is also the first step in the launch
process and requires specialized facilities and support usually located at
the launch site. Astrotech's payload processing activities provide the
necessary resources for mechanical assembly or reassembly, electrical check,
calibration, liquid propellant loading and numerous other related
activities. Additionally, Astrotech's specialized facility includes, but is
not limited to, clean rooms, airlock systems, overhead crane systems,
hazard-proof work areas and environmentally controlled rooms.
Astrotech has reached exclusive multiyear agreements with Lockheed
Martin to process all commercial Atlas payloads and with Boeing to process
all Delta payloads and all Sea Launch program payloads at Boeing's facility
in Long Beach, California.
COMPANY STRATEGY
SPACEHAB's strategy to enhance its position in its two core markets is
based on the following seven principles:
1. Focusing on Quality of Service. The Company intends to maintain its
reputation for product reliability, process innovation and performance
excellence.
2. Expanding Company-Owned Spaceflight Assets. The Company
successfully completed the Logistics Double Module that is being used by NASA
to provide logistics for the Mir space station. Initial design and
development of the Science Double Module and an unpressurized logistics
carrier system, has been initiated to expand the Company's assets.
3. Maintaining Position as Low-Cost Provider. The Company continues to
offer its payload processing and logistics support services to NASA and other
customers on a fixed-price basis that it believes to be the lowest in the
industry.
4. Continuing Entrepreneurial Initiative. The Company continues to
develop and offer innovative business arrangements to meet NASA and other
customer requirements.
5. Leveraging Skills of International Partners. The Company continued
to expand its international partner base in 1997. SPACEHAB entered into an
agreement with Daimler-Benz for it to design and produce pallet attachment
hardware for the Integrated Cargo Carrier, the first commercial component of
the ISS. In August 1997, SPACEHAB also contracted with RSC Energia, the
Russian commercial space agency, to develop and produce the Integrated Cargo
Carrier pallet.
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6. Acquiring Complementary Businesses and Assets. The Company
continues to evaluate opportunities to acquire complementary businesses,
engineering facilities, and hardware to improve its ability to perform work
associated with the Space Shuttle and the ISS.
7. Attracting and Recruiting Talented Personnel. The Company hired
several highly experienced executives in 1997 to expand business development
efforts in microgravity and life sciences research, the ISS program, and
Russian space activities and seeks to recruit additional experienced and
talented personnel.
Through the Company's contracts, it continues to implement its business
strategy by identifying customer requirements, creating innovative technical
solutions, raising private capital to develop assets and providing services
pursuant to those contracts.
DEPENDENCE ON A SINGLE CUSTOMER
Approximately $49.7 million (or 88%) of the Company's fiscal year 1997
revenue was generated from two NASA contracts - the CMAM Contract and the Mir
Contract. While the acquisition of Astrotech and the NASDA/ESA Contract
represent additional revenue sources, the Company anticipates that revenue
from NASA will continue to account for a significant amount of the Company's
revenue over the next several years. There are no assurances, however, that
NASA will require the Company's module services in the future. Therefore,
the Company's failure to execute new contracts with NASA would have a
material adverse effect on the Company's financial condition and results of
operations. Accordingly, the Company continues to focus its efforts on
diversifying its customer base to include commercial companies, as evidenced
with the Astrotech acquisition.
RESEARCH AND DEVELOPMENT
The Company believes that the timely development of new products and
enhancements to existing hardware are essential to maintaining its
competitive position. In the past three fiscal years, the Company has spent
an aggregate of approximately $3.0 million on research and development.
Most of the Company's research and development funds were spent on the
design, development and qualification of the new Double Modules that are
optimized to carry cargo and science experiments. The first flight of the
Logistics Double Module was successfully completed in September 1996. The
Company also performed research and development activities to enhance the
basic capabilities of its module system with new features such as a video
system switch, a digital television downlink capability, and an experiment
data interface, which would result in time savings for astronauts while
conducting experiments inside SPACEHAB Modules.
Beginning in fiscal 1996 and continuing throughout fiscal 1997, the
Company has been working on the development of a new proprietary module
communications system that will be independent of the Space Shuttle's
existing data downlink. Once implemented, it is expected that researchers
with experiments on a SPACEHAB mission will be able to have 24-hour,
real-time monitoring and control of their experiment hardware from their
laboratories anywhere in the world.
In fiscal 1997, the Company focused its research and development
efforts on another SPACEHAB Double Module that will be designed to carry
experiments, the Science Double Module. This Module is being designed to
satisfy the Space Shuttle-based research requirements of NASA, the ISS
partners and the scientific research community beginning in late 1999.
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Additional research and development has been conducted to expand the
Company's product and service lines to meet market requirements for low-cost
unpressurized carriers for science experiments and cargo. SPACEHAB is
developing an Integrated Cargo Carrier ("ICC") to carry unpressuried cargo to
the ISS, based on a patented pallet technology (the "Unpressurized Cargo
Pallet" or "UCP") that can be used independently or in tandem with the
SPACEHAB Single or Double Modules. The ICC's design is such that it would be
located in what is ordinarily unused volume in the front of the Space
Shuttle's cargo bay. By expanding the capabilities of the Space Shuttle and
by offering flexibility in the mix of pressurized and unpressurized cargo
carried on each mission, the Company believes that the ICC could become the
preferred method for providing logistics and utilization resupply to the ISS.
COMPETITION
Currently, there are no other companies that compete directly with
SPACEHAB in providing pressurized module services that are carried aboard the
Space Shuttles. NASA has a government-owned and operated system, Spacelab,
that provides services similar to those provided by SPACEHAB modules.
However, NASA has terminated the Spacelab program with its final mission
scheduled for March 1998.
The Company has contracted for the design and construction of the
Science Double Module with Boeing (formerly McDonnell Douglas Aerospace).
The Science Double Module represents a commercial replacement for NASA's
Spacelab. The Company believes that this module will significantly
outperform Spacelab in terms of technology, capacity, functionality and
cost-effectiveness.
The Company's long-term strategy for growth is to provide research,
logistics, infrastructure and payload processing services to NASA and others
during the International Space Station era. This strategy could require the
Company to compete with commercial companies such as Lockheed-Martin, Boeing
and others who have existing NASA support contracts, greater financial
resources and manufacturing capabilities, and larger marketing, sales and
technical organizations than the Company. In fiscal 1997, SPACEHAB entered
into an agreement with United Space Alliance ("USA"), a Boeing and Lockheed
Martin joint venture, to expand the commercial use of the Space Shuttle
fleet. SPACEHAB's existing strategic relationships with Boeing, Alenia
Spazio S.p.A., Mitsubishi Corporation and Daimler-Benz A.G. may provide
additional opportunities for teaming and partnerships that management
believes will enable the Company to compete for market share.
The Italian Space Agency has contracted to build a mini pressurized
logistics module ("MPLM") intended for use in connection with the ISS. Although
the MPLM is intended to be competitive with SPACEHAB's Modules for ISS logistics
missions, SPACEHAB believes that its Modules will be able to compete
favorably for such missions.
Astrotech's payload processing facilities are located in Florida and
California. At present, management believes that Astrotech's U.S.
competition is limited to the California Vandenberg Air Force Base ("VAFB")
launch site where a competitor, California Commercial Spaceport, Inc.
("CCSI") is located. CCSI was established by obtaining surplus U.S. Air
Force facilities at the VAFB launch complex before Astrotech established its
facilities there and when no commercial alternative was available. To the
Company's knowledge, CCSI has won several contracts to process NASA
spacecraft for launch from VAFB, but CCSI does not have payload processing
facilities in Florida, where the majority of U.S. commercial satellite
launches occur.
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BACKLOG
A significant portion of the Company's revenue is currently generated
from its contract with NASA, which, similar to contracts with other agencies
of the U.S. government, contain provisions for which NASA may terminate the
agreement "for convenience." The Company's contract with NASA is conditioned
by its terms upon NASA receiving an adequate annual appropriation of funds
from the U.S. Congress. Failure to receive funds from Congress or a
withdrawal by Congress of prior appropriations would permit NASA to terminate
its contracts with SPACEHAB "for convenience." For fiscal year 1997, both
the U.S. Senate and House of Representatives have authorized and approved an
annual appropriation of $13.8 billion for NASA, including $2.1 billion for
the ISS, indicating a commitment by the government to the space industry.
SPACEHAB anticipates that a portion of future revenue will be derived
from contracts with entities other than agencies of the U.S. government which
will not be subject to federal contract regulations such as termination "for
convenience of the government" or federal government funding restrictions.
As of June 30, 1997, the Company's contract backlog is estimated to be
approximately $48.5 million, of which $38.0 million represents U.S.
government funded backlog and $10.5 million represents non-U.S government
contracts.
CERTAIN REGULATORY MATTERS
The Company is subject to federal, state and local laws and regulations
designed to protect the environment and to regulate the discharge of
materials into the environment. The Company believes that its policies,
practices and procedures are properly designed to prevent unreasonable risk
of environmental damage and consequential financial liability to the Company.
Compliance with environmental laws and regulations has not had in the past,
and, the Company believes, will not have in the future, material effects on
the capital expenditures, earnings or competitive position of the Company.
EMPLOYEES
As of June 30, 1997, the Company employed 61 regular employees, 21 of
whom are employed by the Astrotech subsidiary. Of these 61 employees, 17
(approximately 28%) hold advanced degrees and 6 (approximately 10%) hold
doctorate degrees. Additionally a significant number of the Company's
employees have experience in both the space industry and/or governmental
space agencies, with a special expertise in commercial space and human space
flight. None of the Company's employees are covered by collective bargaining
agreements. Underlying all of SPACEHAB's efforts has been the dedication and
skill of its personnel. The Company believes that the dedication of its
employees is critical to its success and that its relations with its
employees are excellent.
ITEM 2. PROPERTIES
The Company and its wholly-owned subsidiary, Astrotech, currently
occupy six locations, with the corporate headquarters located at 1595 Spring
Hill Road, Suite 360, Vienna, Virginia 22182. The corporate headquarters
occupy approximately 9,700 square-feet of office space and house SPACEHAB's
18-person executive management team. The term of the present lease expires on
March 7, 2001.
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The Company's 19-person operations management team is located at 1331
Gemini Avenue, Suites 300 & 310, Houston, Texas 77058. The Houston offices
consist of approximately 7,800 square feet of non-contiguous office space
located near the Johnson Space Center. Presently there are two leases, one
expiring on February 28, 1998 and one expiring on December 14, 1999.
The Company's payload processing facility is located near the Kennedy
Space Center in Cape Canaveral, Florida. The facility is contained in an
approximately 40,000 square-foot plant. The Company owns the building which
houses the payload processing facility but leases the land upon which it is
constructed. The payload processing facility has a prime work area of
approximately 10,000 square-feet. This work area is designed to accommodate
the SPACEHAB Single and Double Modules and includes 11 secure
experiment/payload integration and work areas from 300 square-feet to 1,000
square-feet each, two off-line modification shops, a tool room, a stock room
and a conference/training room. The term of the lease for the land expires
August 6, 1998, and is renewable at the option of the Company for two
successive five-year periods. Upon expiration of the land lease, all
improvements on the property revert at no cost to the lessor.
Astrotech, occupies three locations. Astrotech's headquarters are
located at 12510 Prosperity Drive, Suite 100, Silver Spring, Maryland 20904.
The headquarters occupy approximately 3,000 square-feet of leased office
space at this site and house a 5-person management and administrative team.
The term of the present lease expires in May 1998.
Astrotech's 12-person engineering and support team is located in a six
building owned facility at 1515 Chaffee Drive, Titusville, Florida 32780.
This 80,000 square-foot facility supports non-hazardous and hazardous
material processing, payload storage and customer offices. These buildings
presently occupy one-third of the 37.5-acre property owned by Astrotech, with
the remaining two-thirds available for expansion.
Astrotech has a 4-person technical staff located at the Vandenberg Air
Force Base in Vandenberg, California. Astrotech presently rents a 60-acre
site on the Air Force Base and owns four buildings comprising 16,500
square-feet, which are dedicated to the same functions provided at the
Florida facility. The term of the present land lease expires on July 13,
2013. Upon expiration of the land lease, all improvements on the property
revert at no cost to the lessor.
The Company believes that its current facilities and equipment are
generally well maintained and in good condition and are adequate for its
present and foreseeable needs.
ITEM 3. LITIGATION
The Company is not currently involved in any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were voted upon during the final quarter of fiscal 1997.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock (the "Common Stock") trades on the NASDAQ
National Market System under the symbol "SPAB". The Common Stock has been
publicly traded since December 22, 1995, the date of the closing of the
Company's initial public offering. The quarterly high and low stock prices
for fiscal 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
Fiscal 1997:
- ------------
High Low
---- ---
<S> <C> <C>
First Quarter $11 1/4 $ 8
Second Quarter $ 8 1/2 $ 5 1/2
Third Quarter $ 7 1/8 $ 5
Fourth Quarter $ 9 1/4 $ 5 3/4
<CAPTION>
Fiscal 1996:
- ------------
High Low
---- ---
<S> <C> <C>
First Quarter $12 1/4 $12
Second Quarter $15 1/4 $11 3/4
Third Quarter $16 $ 8 3/4
</TABLE>
The Company has never paid cash dividends. It is the present policy of
the Company to retain earnings to finance the growth and development of its
business and, therefore, the Company does not anticipate paying cash
dividends on its Common Stock in the foreseeable future.
The Company has authorized 30,000,000 shares of Common Stock. At July
25, 1997, 11,146,237 shares of Common Stock were outstanding. The Company
had approximately 1,800 shareholders of record of its Common Stock on June
30, 1997.
SALES OF UNREGISTERED SECURITIES
During fiscal 1997, the Company issued warrants to purchase
53,000 shares of Common Stock to a consultant for services rendered.
Such issuance was deemed to be exempt from registration under the
Securities Act of 1933. The Company believes that the recipient of
securities in this transaction is an accredited investor who intended
to acquire the securities for investment purposes and not with a view
to or for sale in connection with any distribution thereof, and that
such recipient had adequate access to information about the Company.
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ITEM 6. SELECTED FINANCIAL DATA
The selected financial data presented below are derived from the
audited consolidated financial statements of SPACEHAB. This selected
financial information should be read in conjunction with the
Consolidated Financial Statements of the Company and the notes thereto
included elsewhere in this report.
<TABLE>
<CAPTION>
Nine
Months Year
Ended Ended
Years Ended September 30, June 30, June 30,
------------------------------------------- ------------- -------------
1993 1994 1995 1996(1) 1997
------------ --------------- -------------- ------------- -------------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenue(2) $42,467 $ 43,800 $ 46,059 $ 56,397 $ 56,601(3)
Costs of revenue 23,204 24,227 23,349 20,985 34,120
------------ --------------- -------------- ------------- -------------
Gross profit 19,263 19,573 22,710 35,412 22,481
Marketing, general and administrative expenses 7,906 5,064 3,816 4,056 8,567
Research and development expenses 3,076 - 1,600 100 1,252
------------ --------------- -------------- ------------- -------------
Operating income 8,281 14,509 17,294 31,256 12,662
Interest expense, net of capitalized amounts 4,209 4,863 1,365 699 955
Net income 4,117 8,638(4) 15,809 29,829 13,832(5)
Net income per common share $ 0.62 $ 1.30 $ 2.37 $ 3.21 $ 1.24
Shares used in computing net income
per common share 6,650 6,660 6,671 9,303 11,133
Other Data:
Cash provided by (used for) operations $ 22,246 $ 21,831 $ 26,838 $ 13,151 $(857)
Capital expenditures 16,589 76 4,943 6,266 34,446
Balance Sheet Data (at period end):
Working capital (deficit) $(31,066) $(20,589) $ 7,192 $ 45,942 $ 5,455
Total assets 118,083 95,261 86,701 129,709 114,450
Long-term debt, excluding current portion 30,325 22,884 24,886 17,318 12,725
Stockholders' equity (deficit) (29,894) (21,184) (1,715) 71,596 86,622
</TABLE>
- ------------------------------
(1) Effective October 1, 1995, the Company changed its fiscal year-end to June
30.
(2) The Company recognizes revenue upon the completion of each flight under the
Mir and CMAM Contracts. For new contract awards for which the capability to
successfully complete the contract can be demonstrated at contract inception,
revenue recognition under the percentage-of-completion method is being reported
based on costs incurred over the period of the contract.
(3) Includes revenues of $2,860 generated by Astrotech subsequent to its
acquisition on February 12, 1997.
(4) Includes an extraordinary loss of $934, net of taxes, relating to the
write-off of unamortized deferred debt issuance costs, in conjunction with a
refinancing and retirement of debt on that date.
(5) Includes an extraordinary gain of $3,274, net of taxes, relating to the
amendment and restatement of a credit agreement.
11
<PAGE> 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
SPACEHAB was incorporated in 1984 to commercially develop space habitat
modules to operate in the cargo bay of the Space Shuttles.
The Company currently operates under one contract with NASA, the Mir
Contract, with a total contract value of $90.2 million, including $38.0
million for the three Mir option missions scheduled to be flown in fiscal
1998. The Company's revenues for fiscal 1997 were generated primarily from
the Mir Contract, the CMAM Contract, the NASDA/ESA Contract and through the
customer contracts of Astrotech.
SPACEHAB generates revenue by leasing lockers and/or volume within the
SPACEHAB Modules and by integration and operations support services provided to
scientists and researchers responsible for the experiments and/or logistics
supplies for missions aboard the shuttle system. Under the CMAM and Mir
Contracts, the Company recognizes revenue only at the completion of each Space
Shuttle mission utilizing Company assets. Accordingly, the Company's quarterly
revenue and profits have fluctuated dramatically based on NASA's launch
schedule and will continue to do so under the Mir Contract and any other
contract for which revenue is recognized only upon completion of a mission. For
new contract awards for which the capability to successfully complete the
contract can be demonstrated at contract inception, revenue recognition under
the percentage-of-completion method is being reported based on costs incurred
over the period of the contract. The percentage-of-completion method results in
the recognition of revenue over the period of contract performance, thereby
decreasing the quarter-by-quarter fluctuations of reported revenue.
In September 1996, SPACEHAB entered into the NASDA/ESA Contract with
NASDA and ESA, pursuant to which SPACEHAB provided hardware and integration and
operations for scientific microgravity experiments aboard the SPACEHAB
Logistics Double Module on STS-84. SPACEHAB began integration work on the
NASDA/ESA Contract during the first quarter of fiscal 1997. This mission was
completed in May 1997, concurrently with the final mission under the basic Mir
Contract.
The expenses associated with the operations of SPACEHAB are recorded
differently based on the type of expense. Costs of revenue include integration
and operations expenses associated with the performance of two types of
efforts: (i) sustaining engineering in support of all missions under a contract
and (ii) mission specific experiment support. Expenses associated with
sustaining engineering are expensed as incurred. Mission specific expenses
relating to the CMAM Contract and the Mir Contract are recorded as assets and
not expensed until the specific Space Shuttle mission is flown and the related
revenue is recognized. Costs associated with performance of the NASDA/ESA
Contract were expensed as incurred. Other costs of revenue include depreciation
expense and costs associated with the Astrotech payload processing facilities.
Flight related insurance covering transportation of the SPACEHAB Modules from
SPACEHAB's payload processing facility to the Space Shuttle, in-flight
insurance and third-party liability insurance are also included in costs of
revenue and are recorded as incurred. Marketing, general and administrative and
interest and other expenses are recognized when incurred.
Astrotech revenue is derived from various multiyear fixed price
contracts with satellite and launch vehicle manufacturers. The services and
facilities Astrotech provides to its customers support the final assembly,
checkout and countdown functions associated with preparing a satellite for
launch. This preparation includes: the final assembly and checkout of the
satellite, installation of the solid rocket motors, loading of the liquid
propellant, encapsulation of the satellite in the launch vehicle,
transportation to the launch pad and command and control of the satellite
during pre-launch countdown. Revenue provided by the Astrotech payload
processing facilities is recognized ratably over the occupancy period of the
satellites in the Astrotech facilities.
12
<PAGE> 13
RESULTS OF OPERATIONS
In 1996, the Company elected to change its fiscal year end from
September 30 to June 30. Financial information for 1996, therefore, reflects
nine months of operations. Further, fiscal 1997 results include the operations
of Astrotech subsequent to its acquisition on February 12, 1997. Due to the
Company's rate of growth and its contract schedule, information for fiscal 1996
has not been annualized.
Fiscal 1997 as Compared to Fiscal 1996
Revenue. Revenue for the year ended June 30, 1997 increased 0.4% to
$56.6 million, as compared to $56.4 million for the nine months ended June
30, 1996. This increase is primarily due to the additional revenue generated
by Astrotech, offset by the decrease in revenue related to the completion of
the CMAM Contract during the fiscal year 1997.
Costs of Revenue. Costs of revenue for fiscal year 1997 increased
62.7% to $34.1 million, as compared to $21.0 million for the nine months
ended June 30, 1996. Integration, operations and transportation expenses for
fiscal year 1997 increased 67.4% to $23.8 million, as compared to $14.2
million for the nine months ended June 30, 1996. There were three missions
flown during fiscal year 1997, as compared to two missions flown during the
nine months ended June 30, 1996. Because mission specific expenses are
reported at the time of a flight under the Mir Contract and CMAM Contract,
these expenses are significantly higher during a period in which there are
more flights. Additionally, all of the fiscal 1997 missions were Double
Module missions, which require a significantly higher amount of integration
and operations effort and costs than a Single Module mission. Integration
costs related to the CMAM Contract and Mir Contract were $18.4 million and
$3.5 million respectively, for the year ended June 30, 1997 as compared to
$7.6 million and $6.5 million, respectively, for the nine months ended June
30, 1996.
Operating Expenses. Operating expenses for fiscal year 1997 increased
136.2% to $9.8 million, as compared to $4.2 million for fiscal year 1996.
Research and development expenses for fiscal year 1997 were $1.2 million, as
compared to $0.1 million for the nine months ended June 30, 1996. During
fiscal 1997, the Company increased its investment in research and development
in order to facilitate future contracts. Included in the Company's fiscal
1997 research and development budget was the Company's Science Double Module,
as previously discussed, and the SPACEHAB Universal Communications System
("SHUCS"), which is being developed to provide reliable and
Shuttle-independent data communication channels that are responsive to
payload user requirements. Marketing, general and administrative expenses
for fiscal year 1997 increased 111.2% to $8.6 million, as compared to $4.1
million during the nine months ended June 30, 1996. This increase is
primarily attributable to the Company's efforts to increase the strength of
its engineering, design and research and development departments and reflects
twelve months of operations as compared to nine months.
Interest Expense. Interest expense, net of capitalized amounts, for
fiscal year 1997 increased 36.6% to $1.0 million as compared to $0.7 million
for the nine months ended June 30, 1996.
Interest Income. Interest income for fiscal year 1997 increased to
$1.8 million from $1.2 million for the nine months ended June 30, 1996. This
is due to the fact that there were three additional months of interest
proceeds from short term, commercial paper and interest bearing cash accounts
in fiscal 1997.
Net Income. Net income for fiscal year 1997 decreased 53.6% to $13.8
million (or $1.24 per share), as compared to $29.8 (or $3.21 per share)
million for the nine months ended June 30, 1996. This decrease is primarily
due to an increase in costs of revenue and an increase in operating expenses,
partially offset by an extraordinary gain of $3.3 million, net of taxes (or
$0.29 per share), which was recorded in fiscal 1997 as a result of the early
retirement of debt owed to a group of senior lenders. Income tax expense for
these periods was $3.0 million and $1.9 million, respectively, due to the
Company's use of available net operating loss carryforwards, offset by
alternative minimum taxes. As of June 30, 1997, the Company had
13
<PAGE> 14
approximately $4.4 million of available net operating loss carryforwards
expiring between 2006 and 2009 to offset future regular taxable income.
Utilization of these net operating loss carryforwards may be subject to
limitations in the event of significant changes in the stock ownership of the
Company. There are no restrictions on transfers or sales of shares of Common
Stock that would prevent such a change from occurring.
The effects of inflation and changing prices have not significantly
impacted the Company's net sales and revenue or income from continuing
operations during fiscal 1997.
Nine Months Ended June 30, 1996 as Compared to the Fiscal Year Ended September
30,1995
Revenue. Revenue for the nine months ended June 30, 1996 increased
22.4% to $56.4 million, as compared to $46.1 million for fiscal year 1995.
The results of operations for this new fiscal period include revenue for two
missions completed during the quarter ended June 30, 1996. This revenue is
attributable to the Company's completion in April 1996 of the first mission
under the Mir Contract and the completion in June 1996 of the Company's
fourth CMAM mission. In comparison, during fiscal year 1995, SPACEHAB
completed one mission under the CMAM Contract, providing all of the revenue
reported for fiscal year 1995.
Costs of Revenue. Costs of revenue for the nine months ended June 30,
1996 decreased 10.1% to $21.0 million, as compared to $23.3 million for fiscal
year 1995. Integration, operations and transportation expenses for each of the
nine months ended June 30, 1996 and the fiscal year ended September 30, 1995
were $14.2 million. These amounts are approximately equal in absolute dollars
but, when compared on a basis of nine months to twelve months, the fiscal 1996
cost is proportionately higher. First, mission specific costs of $8.4 million
for the nine months ended June 30, 1996 supported two missions, while mission
specific costs of $8.2 million in fiscal year 1995 supported only one mission.
Second, sustaining engineering costs were $5.8 million in fiscal 1996, as
compared to $6.0 million in fiscal 1995. Total integration, operations and
transportation costs were only marginally higher in fiscal 1996 even though
they supported two flights, thereby reducing the cost per flight for sustaining
engineering and reducing total costs per mission in fiscal 1996.
Operating Expenses. Operating expenses for the nine months ended June
30, 1996 decreased 23.3% to $4.2 million, as compared to $5.4 million for
fiscal year 1995. The decrease is primarily due to the shortened reporting
period for fiscal 1996 of nine months, as compared to the twelve-month
reporting period for fiscal year 1995, coupled with a decrease in research and
development expenses. There was $0.1 million incurred for research and
development expense for the nine months ended June 30, 1996, as compared to
$1.6 million for fiscal year 1995. The research and development expenditures
for fiscal 1995 were used in the development of the SPACEHAB Logistics Double
Module that was required to perform the Mir Contract. Expenditures for research
and development associated with the new SPACEHAB Science Double Module for
microgravity and life sciences did not commence until July 1996. Marketing,
general and administrative expenses for the nine months ended June 30, 1996
increased 6.3% to $4.1 million, as compared with $3.8 million during fiscal
year 1995. Components of the increase in fiscal 1996 include increases in
salaries and benefits of approximately $0.6 million for additional staff needed
for business development and project management, offset by a decrease of $0.4
million in expenses due to the shorter fiscal year.
Interest Expense. Interest expense, net of capitalized amounts, for
the nine months ended June 30, 1996 decreased 48.8% to $0.7 million, as
compared to $1.4 million for fiscal year 1995, primarily due to substantially
lower average revolving loan indebtedness under the Company's credit agreement
(the "Credit Agreement") for the nine months ended June 30, 1996. The lower
average revolving loan indebtedness was a result of repayments by the Company
during the nine months ended June 30, 1996 of $7.4 million on interest bearing
debt. An amount outstanding of $5.5 million due to a group of insurance
companies under the Credit Agreement during the nine months ended June 30, 1996
remained non-interest bearing.
14
<PAGE> 15
Interest Income. Interest income for the nine months ended June 30,
1996 increased to $1.2 million from $0.1 million, due to the investment of
approximately $40.0 million of initial public offering proceeds in short term,
low risk commercial paper and interest bearing cash accounts.
Net Income. Net income for the nine months ended June 30, 1996
increased 88.7% to $29.8 million, as compared to $15.8 million for fiscal year
1995. Income tax expense for these periods was $1.9 million and $0.2 million,
respectively, due to the Company's use of available net operating loss
carryforwards, offset by alternative minimum taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its capital expenditures,
research and development and working capital requirements through payments
received under both the CMAM Contract and the Mir Contract, investments
received in private and public equity offerings and borrowings under credit
facilities. During December 1995, SPACEHAB completed an initial public offering
of 4,014,500 shares of Common Stock, which provided the Company with net
proceeds of approximately $43.3 million. On June 16, 1997, the Company signed
an agreement with a financial institution securing a $10.0 million revolving
line of credit (the "Revolving Line of Credit") that the Company may use for
working capital purposes. As of June 30, 1997, no amounts were drawn on this
line of credit. Further, on July 14, 1997, Astrotech obtained a five-year term
loan (the "Term Loan Agreement"), which is guaranteed by SPACEHAB and provides
drawdowns of up to $15.0 million for general corporate purposes.
Cash Flows From Operating Activities. Cash provided by (used for)
operations for fiscal year 1995, the nine months ended June 30, 1996 and fiscal
year 1997 was $26.8 million, $13.1 million and ($0.9) million, respectively.
Under both the CMAM Contract and the Mir Contract, progress payments are
structured such that expenses incurred under these contracts are billed to
NASA. NASA made progress payments under the CMAM Contract on specified dates
for specified amounts. Progress payments under the Mir Contract are billed to
NASA monthly at 95% of the costs incurred in the prior month. As the Company
projected, net cash flows were used in completing the CMAM Contract and Mir
Contract for which significant progress payments had previously been received.
Additionally, cash flows were used for operating activities during fiscal year
1997 due to increases in research and development costs associated with
expanding the client base of the Company.
Cash Flows Used in Investing Activities. For fiscal years 1995, the
nine months ended June 30, 1996 and fiscal 1997, cash flows used in investing
activities consisted only of capital expenditures of $4.9 million, $6.3 million
and $34.4 million, respectively. Expenditures during fiscal year 1995 and the
nine months ended June 30, 1996 were for (i) the development and construction
of a tunnel and an adapter ring to be used in conjunction with the Logistics
Double Module and (ii) structural upgrade work performed on the SPACEHAB
structural test article so that it can be attached to an existing Single Module
to form a Logistics Double Module. The Company invested a total of $11.9
million in the development and construction of the Logistics Double Module
during fiscal 1995 and the nine months ended June 30, 1996. The Company paid
approximately $20.1 million for Astrotech during fiscal 1997. In addition,
during fiscal 1997, the Company began the construction of its Science Double
Module. The Company spent approximately $12.7 million on the project during
fiscal 1997 and anticipates that it will spend between $35.0 million and $38.0
million in the aggregate to complete this project.
The Company expects to continue funding any additional capital
expenditures and working capital requirements from internally generated cash
flow, drawdowns on existing credit facilities and through future debt and/or
equity offerings.
Cash Flows From Financing Activities. For fiscal 1995, the nine months
ended June 30, 1996 and fiscal 1997, cash flows provided by (used for)
financing activities were ($1.2) million, $36.9 million and
15
<PAGE> 16
($2.6) million, respectively. On August 20, 1996, an existing credit agreement
was amended and restated. Under this amendment, the revolving credit commitment
from McDonnell Douglas was canceled and, in exchange for the full satisfaction
of two term loans owed to a group of insurance companies, the Company paid $2.5
million to said companies at closing and agreed to pay an additional $2.0
million under a new non-interest bearing term loan. The new term loan is due in
installments of $0.5 million in each of August 1997 and 1998, and $0.3 million
in each of August 1999, 2000 and 2001. Under this new agreement, all prior
liens and encumbrances on the Company's assets and all prior restrictive
covenants pursuant to this credit agreement were released.
The Company believes that its available cash and cash equivalents plus
borrowings under its existing credit facilities will be sufficient to meet
its cash flow from operations and other funding requirements for at least the
next 12 months. The Company anticipates requirements for additional financing
to complete the design and development of additional spaceflight hardware and
will initiate such financing as the timing of its asset development efforts
and financial market conditions dictate.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 128, "Earnings per
Share," (Statement 128). Statement 128 supersedes Accountings Principles Board
Opinion No. 15, "Earnings per Share" (APB 15) and its related interpretations
and promulgates new accounting standards for the computation and manner of
presentation of the Company's earnings per share. The Company is required to
adopt the provisions of Statement 128 during the second quarter of fiscal 1998.
Earlier application is not permitted; however, upon adoption the Company will
be required to restate previously reported annual and interim earnings per
share data in accordance with the provisions of Statement 128. The Company does
not believe that the adoption of Statement 128 will have a material impact on
the computation or manner of presentation of its earnings per share data as
currently of previously presented under APB 15.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" (Statement 130). Statement 130 establishes standards for the reporting
and display of comprehensive income and its components in the financial
statements. The Company is required to adopt the provisions of Statement 130
for the year ended June 30, 1999. Earlier application is not permitted;
however, upon adoption, the Company will be required to reclassify previously
reported annual and interim financial statements. The Company believes that the
disclosure of comprehensive income in accordance with the provisions of
Statement 130 will not materially impact the manner of presentation of its
financial statements as currently and previously reported.
16
<PAGE> 17
SPACEHAB, INCORPORATED AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1997
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
17
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
The Board of Directors
SPACEHAB, Incorporated and Subsidiary:
We have audited the accompanying consolidated balance sheets of SPACEHAB,
Incorporated and subsidiary (the Company) as of June 30, 1996 and 1997, and the
related consolidated statements of income, stockholders' equity (deficit), and
cash flows for the year ended September 30, 1995, the nine months ended June
30, 1996 and the year ended June 30, 1997. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of SPACEHAB,
Incorporated and subsidiary as of June 30, 1996 and 1997, and the results of
their operations and their cash flows for the year ended September 30, 1995,
the nine months ended June 30, 1996 and the year ended June 30, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
McLean, Virginia
August 15, 1997
18
<PAGE> 19
SPACEHAB, INCORPORATED AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
==============================================================================================
June 30,
------------------------
ASSETS 1996 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 50,795,548 12,886,731
Accounts receivable (note 4) 5,445,765 5,176,255
Prepaid expenses and other current assets 184,660 199,247
- ----------------------------------------------------------------------------------------------
Total current assets 56,425,973 18,262,233
- ----------------------------------------------------------------------------------------------
Property and equipment:
Flight modules 94,477,790 95,045,548
Module improvements in progress - 13,012,819
Payload processing facility 3,384,667 17,650,915
Furniture, fixtures and equipment 615,036 3,368,211
- ----------------------------------------------------------------------------------------------
98,477,493 129,077,493
Less accumulated depreciation (27,987,042) (38,115,620)
- ----------------------------------------------------------------------------------------------
Property and equipment, net 70,490,451 90,961,873
Goodwill, net of accumulated amortization of $55,947 - 3,394,773
Deferred mission costs 2,705,422 1,438,910
Other assets 86,769 392,587
- ----------------------------------------------------------------------------------------------
Total assets $129,708,615 114,450,376
==============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------
Current liabilities:
Loans payable under credit agreement, current portion (note 6) $ 2,500,000 500,000
Accounts payable and accrued expenses 3,270,882 2,408,111
Accrued consulting and subcontracting services due to McDonnell
Douglas 4,712,733 9,052,308
Advanced billings - 846,855
- ----------------------------------------------------------------------------------------------
Total current liabilities 10,483,615 12,807,274
Loans payable under credit agreement, net
of current portion (note 6) 6,179,063 1,500,000
Notes payable to shareholder (note 7) 9,968,503 11,225,246
Convertible note payable (note 8) 1,170,338 -
Deferred flight revenue 30,311,227 2,295,898
- ----------------------------------------------------------------------------------------------
Total liabilities 58,112,746 27,828,418
- ----------------------------------------------------------------------------------------------
Commitments (notes 9, 14, 15 and 16)
Stockholders' equity (notes 8, 12 and 13):
Common stock, no par value, authorized 30,000,000 shares, issued
and outstanding 11,069,237 and 11,146,237 shares, respectively 79,862,700 81,057,164
Additional paid-in capital 16,299 16,299
Retained earnings (deficit) (8,283,130) 5,548,495
- ----------------------------------------------------------------------------------------------
Total stockholders' equity 71,595,869 86,621,958
- ----------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $129,708,615 114,450,376
==============================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE> 20
SPACEHAB, INCORPORATED AND SUBSIDIARY
Consolidated Statements of Income
<TABLE>
<CAPTION>
=======================================================================================================
Year ended Nine months ended Year ended
September 30, 1995 June 30, 1996 June 30, 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $ 46,059,000 56,397,000 56,600,766
- -------------------------------------------------------------------------------------------------------
Costs of revenue:
Integration, operations and transportation 14,155,419 14,220,334 23,799,089
Depreciation 8,256,417 6,192,313 9,824,535
Insurance and other 937,250 572,500 496,400
- -------------------------------------------------------------------------------------------------------
Total costs of revenue 23,349,086 20,985,147 34,120,024
- -------------------------------------------------------------------------------------------------------
Gross profit 22,709,914 35,411,853 22,480,742
- -------------------------------------------------------------------------------------------------------
Operating expenses:
Marketing, general and administrative 3,815,536 4,055,680 8,567,268
Research and development 1,600,000 100,000 1,251,394
- -------------------------------------------------------------------------------------------------------
Total operating expenses 5,415,536 4,155,680 9,818,662
- -------------------------------------------------------------------------------------------------------
Income from operations 17,294,378 31,256,173 12,662,080
Interest expense, net of capitalized interest (note 3) (1,364,520) (698,997) (955,015)
Interest and other income, net 114,662 1,183,462 1,821,472
- -------------------------------------------------------------------------------------------------------
Net income before income taxes and extraordinary item 16,044,520 31,740,638 13,528,537
Income tax expense (note 14) 235,664 1,911,895 2,970,943
- ----------------------------------------------------------------------- ------------------------------
Net income before extraordinary item 15,808,856 29,828,743 10,557,594
Extraordinary item - gain on early retirement of debt,
net of taxes and legal fees (note 6) - - 3,274,031
- -------------------------------------------------------------------------------------------------------
Net income $ 15,808,856 29,828,743 13,831,625
- -------------------------------------------------------------------------------------------------------
Net income per common and common equivalent share:
Net income before extraordinary item $ 2.37 3.21 0.95
Extraordinary item - - 0.29
- -------------------------------------------------------------------------------------------------------
$ 2.37 3.21 1.24
=======================================================================================================
Shares used in computing net income per common
and common equivalent share 6,671,346 9,303,487 11,133,243
=======================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
20
<PAGE> 21
SPACEHAB, INCORPORATED AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
===================================================================================================================================
Convertible preferred stock Common stock
--------------------------------- -------------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at September 30, 1994 4,011,345 $ 2,310,670 4,908,427 $ 30,410,094
Common stock issued upon stock option exercises - - 25,000 60,000
Common stock issued in private placement (note 12) - - 150,000 3,600,000
Net income - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1995 4,011,345 2,310,670 5,083,427 34,070,094
Common stock issued upon stock option exercises - - 75,000 180,000
Common stock issued in public offering, net of expenses
(note 12) - - 4,014,500 43,301,936
Common stock issued upon conversion of preferred
stock (note 12) (4,011,345) (2,310,670) 1,671,312 2,310,670
Common stock issued in private placement guarantee (note 12) - - 224,998 -
Net income - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1996 - - 11,069,237 79,862,700
Common stock issued upon stock option exercises - - 2,000 24,000
Common stock issued upon conversion of debt (note 8) - - 75,000 1,170,464
Net income - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1997 - $ - 11,146,237 $ 81,057,164
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================
Additional Retained Total
paid-in earnings stockholders'
capital (deficit) equity (deficit)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at September 30, 1994 16,299 (53,920,729) (21,183,666)
Common stock issued upon stock option exercises - - 60,000
Common stock issued in private placement (note 12) - - 3,600,000
Net income - 15,808,856 15,808,856
- --------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1995 16,299 (38,111,873) (1,714,810)
Common stock issued upon stock option exercises - - 180,000
Common stock issued in public offering, net of expenses
(note 12) - - 43,301,936
Common stock issued upon conversion of preferred
stock (note 12) - - -
Common stock issued in private placement guarantee (note 12) - - -
Net income - 29,828,743 29,828,743
- --------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1996 16,299 (8,283,130) 71,595,869
Common stock issued upon stock option exercises - - 24,000
Common stock issued upon conversion of debt (note 8) - - 1,170,464
Net income - 13,831,625 13,831,625
- --------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1997 16,299 5,548,495 86,621,958
====================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
21
<PAGE> 22
SPACEHAB, INCORPORATED AND SUBSIDIARY
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
====================================================================================================================================
Year ended Nine months ended Year ended
September 30, 1995 June 30, 1996 June 30, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income $ 15,808,856 29,828,743 13,831,625
Adjustments to reconcile net income to net cash provided by
(used for) operating activities:
Depreciation and amortization 8,489,642 6,387,245 10,184,525
Gain on early retirement of debt -- -- (4,092,537)
Interest converted to notes payable 1,480,772 1,424,513 1,300,077
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (5,565,092) 119,327 1,842,565
Decrease (increase) in prepaid expenses and
other current assets (9,360) (131,686) (14,587)
Decrease in deferred mission costs 251,494 445,267 1,266,512
Decrease (increase) in other assets (227,872) 193,490 (256,887)
Increase (decrease) in deferred flight revenue 3,955,856 (27,752,069) (28,015,329)
Increase (decrease) in accounts payable and
accrued expenses 674,600 1,993,470 (1,003,796)
Decrease in advanced billings -- -- (239,040)
Increase in accrued consulting and
subcontracting services 1,978,940 642,753 4,339,575
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) operating activities 26,837,836 13,151,053 (857,297)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Payments for modules under construction -- -- (13,580,577)
Purchase of Astrotech, net of cash acquired -- -- (20,133,945)
Purchases of property and equipment (4,942,876) (6,266,330) (731,138)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (4,942,876) (6,266,330) (34,445,660)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from note payable to insurers 150,000 -- --
Payments of note payable to insurers (9,707,045) (3,854,079) (2,520,000)
Proceeds from note payable to shareholder 11,229,054 7,358,661 --
Payments of note payable to shareholder (21,537,965) (10,116,713) --
Payments of legal fees on early retirement of debt -- -- (109,860)
Proceeds from exercise of stock options 60,000 180,000 24,000
Proceeds from issuance of common stock, net of expenses 3,600,000 43,301,936 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities (16,205,956) 36,869,805 (2,605,860)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 5,689,004 43,754,528 (37,908,817)
Cash and cash equivalents at beginning of year 1,352,016 7,041,020 50,795,548
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 7,041,020 50,795,548 12,886,731
====================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
22
<PAGE> 23
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 1996 and 1997
- ------------------------------------------------------------------------------
(1) DESCRIPTION OF THE COMPANY
SPACEHAB, Incorporated (the Company) is the first company to
commercially develop, own and operate habitable modules that provide
space-based laboratory research facilities and cargo services aboard
the U.S. Space Shuttle system. The Company currently owns and operates
three pressurized laboratory and logistics supply modules which
significantly enhance the capabilities of the Space Shuttle fleet. The
Company is currently constructing a new science module with associated
double module hardware. The Company's modules are unique to the U.S.
Space Shuttle.
To date, the Company has successfully completed eight missions aboard
the Space Shuttle and substantially all of the Company's revenue has
been generated under contracts with NASA. The Company's contracts are
subject to periodic funding allocations by NASA. NASA's funding is
dependent on receiving annual appropriations from the United States
government.
On February 12, 1997, the Company acquired the assets and certain of
the liabilities of Astrotech Space Operations, L.P., a subsidiary of
Northrop Grumman, nationally recognized as the leading provider of
commercial satellite launch processing services and payload processing
facilities in the United States. These services are provided at the
Astrotech facilities in Cape Canaveral, Florida and Vandenberg Air
Force Base in California, and are provided to launch service providers
on a fixed-price basis. Additionally, Astrotech provides management
and consulting services to the Boeing Company for its Sea Launch
program at the Boeing facility in Long Beach, California.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of SPACEHAB,
Incorporated and its wholly owned subsidiary, Astrotech Space
Operations, Inc. (Astrotech). All significant intercompany
transactions have been eliminated in consolidation.
FISCAL YEAR
Effective October 1, 1995, the Company changed its fiscal year-end from
September 30 to June 30. Accordingly, the accompanying consolidated
financial statements present the Company's results of operations for
the year ended September 30, 1995, the nine months ended June 30, 1996,
and the year ended June 30, 1997.
(Continued)
23
<PAGE> 24
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(2) CONTINUED
CASH AND CASH EQUIVALENTS
For purposes of its statements of cash flows, the Company considers
short-term investments with original maturities of 3 months or less to
be cash equivalents. The Company intends to hold all of these
investments to maturity and as such are recognized at cost plus accrued
interest, which approximates market value.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. The Company's flight
modules are depreciated over a ten-year period using the straight-line
method. All furniture, fixtures and equipment are depreciated using
the straight-line method over the estimated useful lives of the
respective assets. The Company's payload processing facilities are
depreciated using the straight-line method over their estimated useful
lives ranging from sixteen to thirty years.
During fiscal year 1997, SPACEHAB adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-lived Assets and for Long-lived Assets to be Disposed Of"
(Statement 121). Statement 121 requires that long-lived assets to be
held and used, including goodwill, be reviewed by the Company for
impairment whenever events or circumstances indicate that the carrying
amount of an asset may not be recoverable. An impairment loss is
recognized when the undiscounted net cash flows associated with the
asset are less than the asset's carrying amount. Impairment losses, if
any, are measured as the excess of the carrying amount of the asset
over its estimated fair market value. The adoption of Statement 121
did not have a material impact on the Company's results of operations
for the year ended June 30, 1997.
GOODWILL
The excess of the cost over the fair value of Astrotech's net tangible
and identifiable intangible assets acquired has been assigned to
goodwill. Goodwill is being amortized on a straight-line basis over
twenty years.
DEFERRED MISSION COSTS
Deferred mission costs are expenses directly related to specific
missions and are recognized as costs of revenue as the respective
missions are completed.
(Continued)
24
<PAGE> 25
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(2) CONTINUED
STOCK-BASED COMPENSATION
During fiscal year 1997, the Company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-based Compensation"
(Statement 123), which encourages, but does not require, the
recognition of stock-based employee compensation at fair value. The
Company has elected to continue to account for stock-based employee
compensation using the intrinsic value method as prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for
Stock-Issued to Employees", and related interpretations. Accordingly,
compensation cost for options to purchase common stock granted to
employees is measured as the excess, if any, of the fair value of
common stock at the date of the grant over the exercise price an
employee must pay to acquire the common stock.
Warrants to purchase common stock granted to other than employees as
consideration for goods or services rendered are recognized at fair
market value.
REVENUE RECOGNITION
Revenue is recognized upon completion of each module flight for the
CMAM and Mir contracts. Total contract price is allocated to each
flight based on the amount of services the Company provides on the
flight relative to the total services provided for all flights under
contract. Obligations associated with a specific mission, e.g.,
integration services, are also recognized upon completion of the
mission. For new contract awards for which the capability to
successfully complete the contract can be reasonably assured and costs
at completion can be reliably estimated at contract inception, revenue
recognition under the percentage-of-completion method is being reported
based on costs incurred over the period of the contract. Revenue
provided by the Astrotech payload processing facilities is recognized
ratably over the occupancy period of the facilities.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred.
INCOME TAXES
The Company recognizes income taxes under the asset and liability
method. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
(Continued)
25
<PAGE> 26
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(2) CONTINUED
NET INCOME PER SHARE
Income per common and common equivalent share is calculated by dividing
net income by the weighted average number of common and common
equivalent shares, to the extent dilutive, during the period. Common
stock equivalents are comprised of common stock options and warrants.
Pursuant to Securities and Exchange Commission Staff Accounting
Bulletin Topic 4:D, stock issued and stock options granted during the
12-month period preceding the date of the Company's initial public
offering have been included in the calculation of weighted average
shares of common and common equivalent shares outstanding for all
periods through the date of the initial public offering using the
treasury stock method, based on the initial public offering price per
share (note 12).
The computation of income per common and common equivalent share,
assuming full dilution, includes all other common stock that
potentially may be issued as a result of conversion privileges,
including the convertible note payable (note 8). Any reduction of less
than 3 percent in the aggregate has not been considered dilutive in the
presentation of income per common share, assuming full dilution.
All computations of income per common share include the effect of the 1
for 2.4 reverse split of common stock (note 12).
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per
Share," (Statement 128). Statement 128 supersedes Accounting
Principles Board Opinion No. 15, "Earnings per Share" (APB 15) and its
related interpretations, and promulgates new accounting standards for
the computation and manner of presentation of the Company's earnings
per share. The Company is required to adopt the provisions of
Statement 128 during the year ending June 30, 1998. Earlier
application is not permitted; however, upon adoption the Company will
be required to restate previously reported annual and interim earnings
per share data in accordance with the provisions of Statement 128. The
Company does not believe that the adoption of Statement 128 will have a
material impact on the computation or manner of presentation of its
earnings per share data as currently or previously presented under APB
15.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts
of revenue and expenses during the reported periods. Actual results
could differ from these estimates.
(Continued)
26
<PAGE> 27
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(2) CONTINUED
RECLASSIFICATIONS
Certain 1995 and 1996 amounts have been reclassified to conform to the
1997 consolidated financial statement presentation.
(3) STATEMENTS OF CASH FLOWS - SUPPLEMENTAL INFORMATION
Cash paid for interest costs was approximately $513,000, $264,000 and
$1,300,000 for the year ended September 30, 1995, the nine months ended
June 30, 1996, and the year ended June 30, 1997, respectively. The
Company capitalized interest of approximately $262,000, $766,000 and
$345,000 during the year ended September 30, 1995, the nine months
ended June 30, 1996, and the year ended June 30, 1997, respectively,
related to the module improvements in progress.
The Company paid approximately $140,000, $248,000, and $2,385,000 for
income taxes during the year ended September 30, 1995, the nine months
ended June 30, 1996 and the year ended June 30, 1997, respectively.
During fiscal year 1997, the Company's convertible note payable, with a
carrying value of approximately $1.2 million, was converted into 75,000
shares of common stock (note 8).
(4) ACCOUNTS RECEIVABLE
At June 30, 1996 and 1997, accounts receivable consisted of:
<TABLE>
<CAPTION>
1996 1997
- ------------------------------------------------------------------
<S> <C> <C>
U.S. government contracts:
Billed $ 3,724,476 -
Unbilled 1,721,289 3,520,742
- ------------------------------------------------------------------
Total U.S. government contracts 5,445,765 3,520,742
- ------------------------------------------------------------------
Commercial contracts:
Billed - 1,344,302
Unbilled - 311,211
- ------------------------------------------------------------------
Total commercial contracts - 1,655,513
- ------------------------------------------------------------------
Total accounts receivable $ 5,445,765 5,176,255
==================================================================
</TABLE>
The Company anticipates collecting substantially all receivables within
one year.
(Continued)
27
<PAGE> 28
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(5) ACQUISITION OF ASTROTECH
The Company paid $20,135,987, including transaction costs, to acquire
substantially all of the assets and certain of the liabilities of
Astrotech. The purchase was effective on February 12, 1997. The
business combination has been accounted for using the purchase method.
The purchase price has been allocated to the assets and liabilities
acquired based on appraisals and other studies. The purchase price was
allocated as follows:
<TABLE>
<S> <C>
Cash $ 2,042
Receivables 1,573,055
Land 580,000
Buildings 13,389,000
Furniture, fixtures and equipment 2,319,159
Goodwill 3,450,720
Other assets 48,931
Accounts payable (141,025)
Advanced billings (1,085,895)
- ----------------------------------------------------------------
Total purchase price $ 20,135,987
================================================================
</TABLE>
The following represents pro forma combined results of operations for
the current year and preceding year as if the acquisition of Astrotech
had occurred as of October 1, 1995:
<TABLE>
<CAPTION>
Nine months ended Year ended
June 30, 1996 June 30, 1997
- ----------------------------------------------------------------------
<S> <C> <C>
Revenue $ 62,716,117 59,980,318
Gross profit 39,902,147 23,531,400
Income before extraordinary item 31,621,920 10,309,377
Net income 31,621,920 13,583,408
- ----------------------------------------------------------------------
Net income per common and common
equivalent share $ 3.40 1.21
======================================================================
</TABLE>
The Company has generated revenues of approximately $2,900,000 from
Astrotech's operations since the date of acquisition.
(6) LOANS PAYABLE UNDER CREDIT AGREEMENT
Previous to an August 1996 amendment, the Company's credit agreement
consisted of a $6,458,000 term loan bearing interest at 1 percent per
month and a $5,495,000 noninterest-bearing term loan with several
insurance companies. In addition, a revolving credit commitment with
McDonnell Douglas, a shareholder, provided a maximum outstanding
balance of $6,000,000 and bore interest at a rate of 1 percent per
month.
(Continued)
28
<PAGE> 29
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(6) CONTINUED
In August 1996, the Company's credit agreement was amended. Under the
amendment, the revolving credit commitment from McDonnell Douglas was
canceled. In exchange for the full satisfaction of the Company's term
loans with the various insurance companies, the Company paid the
insurance companies $2,500,000 and agreed to pay an additional
$2,000,000 under a new noninterest-bearing term loan. The new term
loan is due in installments of $500,000 on each of August 1, 1997 and
1998, and $333,333 on each of August 1, 1990, 2000 and 2001. As a
result of this amended and restated agreement, the Company recognized
an extraordinary gain of $3,274,031, net of income taxes and other
related expenses of $818,506 and $109,860, respectively, during the
year ended June 30, 1997.
Aggregate interest cost incurred on the debts due under the various
credit agreements was approximately $524,000, $561,000, and $64,000 for
the year ended September 30, 1995, the nine months ended June 30, 1996
and the year ended June 30, 1997, respectively.
(7) NOTES PAYABLE TO SHAREHOLDER
The Company issued subordinated notes for a portion of the amount due
to Alenia Spazio S.p.A. (Alenia), a shareholder, under a previously
completed construction contract for the Company's flight modules. Such
notes had aggregate outstanding balances of $9,968,503 and $11,225,246
at June 30, 1996 and 1997, respectively. The notes bear interest at an
annual rate of 12 percent, compounded quarterly with all accrued
interest originally payable 45 days after the first mission under the
CMAM contract and semiannually thereafter. During the year ended
September 30, 1995, Alenia agreed to defer the payment of interest and
principal until November 1998. Principal on the notes was due at the
earlier of 45 days after the seventh launch under the Mir contract, or
June 15, 1997; however, no amount of principal or interest on the notes
is due until all amounts under the amended and restated credit
agreement (note 6) are repaid. As such, no principal payments are due
under these notes until August 1, 2001. Interest cost accrued on the
notes to Alenia was approximately $1,017,000, $846,000, and $1,300,000
for the year ended September 30, 1995, the nine months ended June 30,
1996 and the year ended June 30, 1997, respectively.
(Continued)
29
<PAGE> 30
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(8) CONVERTIBLE NOTE PAYABLE
On August 12, 1992, the Company issued a subordinated promissory note
to an investment bank in the amount of $900,000, carrying interest at
LIBOR plus 3 percent, and maturing six months after the payment of all
other indebtedness due under the amended and restated credit agreement
and the subordinated notes to Alenia. Through June 30, 1996, the
Company had elected to defer the payment of interest under the note,
which accrued and was converted to additional outstanding principal.
The note was convertible at the option of the holder into 75,000 shares
of the Company's common stock at any time prior to maturity. On
October 25, 1996, the investment bank exercised its option to convert
the note into the Company's common stock. In accordance with the terms
of the agreement, interest that accrued during fiscal year 1997 of
approximately $25,000 through the date of conversion was waived.
Interest cost incurred on this note was approximately $82,000 and
$58,000 for the years ended September 30, 1995 and the nine months
ended June 30, 1996, respectively.
(9) CREDIT FACILITIES
On June 16, 1997, the Company entered into a $10,000,000 line of credit
agreement with a financial institution. Outstanding balances on the
line of credit accrue interest at either the lender's prime rate or a
LIBOR-based rate. This loan is collateralized by certain assets of the
Company. The term of the agreement is through October 1998. At June
30, 1997, the Company has not drawn against the line of credit.
On July 14, 1997, the Company's subsidiary, Astrotech, entered into
another credit facility for loans of up to $15,000,000 with a financial
institution. This loan is collateralized by the assets of Astrotech
and certain other assets of the Company, and is guaranteed by the
Company. Interest accrues at LIBOR plus three percent.
(10) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair
values of the Company's financial instruments as of June 30, 1997 in
accordance with Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments."
<TABLE>
<CAPTION>
Carrying Fair
amount value
- --------------------------------------------------------------------
<S> <C> <C>
Financial liabilities:
Loans payable under credit
agreement $ 2,000,000 1,629,679
Notes payable to shareholder 11,225,246 11,225,246
====================================================================
</TABLE>
(Continued)
30
<PAGE> 31
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(10) CONTINUED
The fair value of the Company's long-term debt is estimated based on
the current rates offered to the Company for debt of the same remaining
maturities. The carrying amounts of cash and cash equivalents,
short-term investments, receivables, and accounts payable and accrued
expenses approximate their fair market value because of the relatively
short duration of these instruments.
(11) NASA CONTRACTS
COMMERCIAL MIDDECK AUGMENTATION MODULE CONTRACT
On November 30, 1990, NASA and the Company entered into the Commercial
Middeck Augmentation Module contract (CMAM) to lease to NASA a portion
of the middeck augmentation modules and related integration services at
an aggregate firm fixed price of $184,236,000 over six missions.
During the year ended September 30, 1994, the terms of the CMAM
contract were amended to reduce the number of missions from six to
five, although the total locker space leased by NASA and the contract
value remained the same.
NASA paid the Company progress payments based on achieving certain
integration milestones. During the year ended September 30, 1995, the
nine months ended June 30, 1996, and the year ended June 30, 1997, NASA
made progress payments of $35,377,000, $8,857,000, and $0,
respectively, to the Company.
During the year ended September 30, 1995, and the nine months ended
June 30, 1996 and the year ended June 30, 1997, the Company recognized
approximately $46,059,000, $45,634,000, and $7,963,000, respectively,
of revenue under the CMAM contract. The CMAM contract was completed
during fiscal year 1997.
MIR SPACE STATION CONTRACT
On July 14, 1995, NASA and the Company completed final negotiations to
lease the Company's flight modules and provide related integration
services over four missions to the Russian Space Station Mir during
1996 and 1997, at an aggregate firm fixed price of $53,980,000. During
December 1995, the contract was amended whereby the contract price was
adjusted to $52,506,600 in exchange for the indemnification by NASA of
certain damage to, or loss of, the modules during flight.
During July 1997, the Company and NASA further amended the terms of the
basic contract to provide for three additional missions to take place
in September 1997, January 1998, and May 1998, for an additional
$38,000,000.
(Continued)
31
<PAGE> 32
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(11) CONTINUED
NASA pays the Company progress payments on a monthly basis. During the
year ended September 30, 1995, the nine months ended June 30, 1996, the
year ended June 30, 1997, the Company received approximately
$9,073,000, $19,907,000, and $20,438,000, respectively, from NASA
relating to the contract.
During the nine months ended June 30, 1996 and the year ended June 30,
1997, the Company recognized $10,772,000 and $41,734,600, respectively,
of revenue under the original contract relating to completion of the
first four missions. As of June 30, 1997, the Company has $2,940,513
of unbilled retainages due from NASA. These amounts are expected to be
collected within the next 12 months.
(12) STOCKHOLDERS' EQUITY
INITIAL PUBLIC OFFERING
In December 1995 and January 1996, the Company sold, through an
underwritten initial public offering, 4,014,500 common shares at $12.00
per share, which resulted in net proceeds to the Company of $43,301,936
after associated commissions and discounts, and other expenses of the
offering.
REVERSE STOCK SPLIT
Prior to the initial public offering, on December 11, 1995, the
Company's Board of Directors effected a 1 for 2.4 reverse split of
common stock whereby each 2.4 shares of existing common stock were
exchanged for one share of common stock. All share and per share data
appearing in the consolidated financial statements and notes thereto
have been retroactively adjusted for this reverse split.
PRIVATE EQUITY PLACEMENT
During August 1995, the Company completed the sale of 150,000 shares of
its common stock to five investors for an aggregate price of
$3,600,000. The terms of sale included a guarantee by the Company that
in the event of the completion of an initial public offering prior to
December 31, 1996, the investors would realize no less than a 25
percent premium on their investment based on the initial offering
price. Based on the initial public offering price, the Company issued
an aggregate of 224,998 common shares to the investors in settlement of
the guarantee.
(Continued)
32
<PAGE> 33
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(12) CONTINUED
CONVERTIBLE PREFERRED STOCK
As a result of the initial public offering of the Company's common
stock, all of the Company's preferred stock was automatically converted
into common stock on a 2.4 shares of common stock for each share of
preferred stock in accordance with the terms of the preferred stock.
(13) COMMON STOCK OPTION AND STOCK PURCHASE PLANS
NON-QUALIFIED OPTIONS
Prior to the adoption of the 1994 Stock Incentive Plan (the 1994 Plan),
stock options granted to the Company's officers and employees were part
of their employment contract or offer. The number and price of the
options granted was defined in the employment agreements and such
options vest incrementally over a period of four years and generally
expire within ten years of the date of grant.
THE 1994 PLAN
Under the terms of the 1994 Plan, the number and price of the options
granted to employees is determined by the Board of Directors and such
options vest, in most cases, incrementally over a period of four years
and expire no more than ten years after the date of grant.
THE DIRECTORS' STOCK OPTION PLAN
Under the terms of the Directors' Stock Option Plan (the Directors'
Plan), each nonemployee member of the Board of Directors is annually
granted options to purchase 5,000 shares of common stock at exercise
prices equal to the fair market value at the date of grant. Options
under the Directors' Plan vest after one year and expire seven years
from the date of grant.
1997 EMPLOYEE STOCK PURCHASE PLAN
During the year ended June 30, 1997, the Company adopted, pending
shareholder approval, an employee stock purchase plan that permits
eligible employees to purchase shares of common stock of the Company at
prices no less than 85 percent of the current market price. The plan
will be implemented, and all full-time employees will be eligible to
participate, effective October 1, 1997.
(Continued)
33
<PAGE> 34
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(13) CONTINUED
STOCK OPTION ACTIVITY SUMMARY
The following table summarizes the Company's stock option plans:
<TABLE>
<CAPTION>
Non-qualified Options 1994 Plan Directors' Plan
--------------------------- ------------------------- ----------------------
Weighted Weighted Weighted
average average average
Shares exercise Shares exercise Shares exercise
outstanding price outstanding price outstanding price
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Outstanding at 9/30/94 723,444 $ 10.72 212,492 $ 12.00 - $ -
Granted 235,408 12.16 43,664 12.00 - -
Exercised 25,000 2.40 - - - -
Forfeited - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Outstanding at 9/30/95 933,852 11.31 256,156 12.00 - -
Granted 8,133 24.00 744,582 13.85 - -
Exercised 75,000 2.40 - - - -
Forfeited 246,523 12.00 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Outstanding at 6/30/96 620,462 12.28 1,000,738 13.35 - -
Granted 14,166 8.88 1,027,350 6.90 50,000 7.00
Exercised - - 2,000 12.00 - -
Forfeited 186,309 12.00 776,088 13.14 - -
- ------------------------------------------------------------------------------------------------------------------------------------
Outstanding at 6/30/97 448,319 12.01 1,250,000 8.20 50,000 7.00
Options exercisable at:
September 30, 1995 708,862 11.09 45,831 12.00 - -
June 30, 1996 543,585 12.07 58,247 12.00 - -
June 30, 1997 442,219 12.15 819,132 8.49 - -
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted-average fair value at
date of grant during the
fiscal year ended:
June 30, 1996 8,133 $ 24.00 744,582 $ 13.85 - $ -
June 30, 1997 14,166 8.88 1,027,350 6.90 50,000 7.00
====================================================================================================================================
</TABLE>
(Continued)
34
<PAGE> 35
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidation Financial Statements
- --------------------------------------------------------------------------------
(13) CONTINUED
The following table summarizes information about the Company's stock
options outstanding at June 30, 1997:
<TABLE>
<CAPTION>
Options outstanding Options exercisable
------------------------------------- -----------------------
Weighted-
average Weighted- Weighted-
remaining average average
Range of exercise Number contractual exercise Number exercise
prices outstanding life (years) price exercisable price
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$24.00 8,133 4.01 $24.00 2,033 $24.00
$12.00 to $14.88 682,454 2.48 $12.70 656,890 $12.62
$5.75 to $8.88 1,057,732 5.73 $ 6.78 602,428 $ 5.73
- -----------------------------------------------------------------------------------
1,748,319 1,261,351
===================================================================================
</TABLE>
The Company applies APB Opinion 25 and related interpretations in
accounting for its plans. Accordingly, as all options have been
granted at exercise prices equal to the fair market value as of the
date of grant, no compensation cost has been recognized under these
plans in the accompanying consolidated financial statements. Had
compensation cost been determined consistent with Statement 123, the
Company's net income and earnings per common share would have been
reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
Nine months ended Year ended
June 30, 1996 June 30, 1997
- -----------------------------------------------------------------------------------
<S> <C> <C>
Net income before extraordinary item:
As reported $ 29,828,743 10,557,594
Pro forma 29,256,916 8,964,083
===================================================================================
Net income per common and common equivalent
share:
As reported $ 3.21 0.95
Pro forma 3.14 0.80
===================================================================================
</TABLE>
The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted average assumptions used for grants in fiscal years 1996 and
1997: 0.0 percent dividend growth; expected volatility of 38 percent;
risk-free interest rates ranging from 5.50 percent to 6.82 percent; and
expected lives ranging from two to six years.
(Continued)
35
<PAGE> 36
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(13) CONTINUED
The effects of compensation cost as determined under Statement 123 on
net income in fiscal year 1996 and 1997 may not be representative of
the effects on pro forma net income in future periods.
WARRANTS
The Company also has 744,246 currently exercisable warrants outstanding
to purchase the Company's common stock at prices ranging from $9.00 to
$14.40 per share, with various expiration dates through February 2002.
All such warrants were issued at exercise prices equivalent to, or in
excess of, the determined fair market value of the Company's common
stock at the date of issuance.
(14) INCOME TAXES
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
Year ended Nine months ended Year ended
September 30, 1995 June 30, 1996 June 30, 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 235,664 1,911,895 3,084,500
State and local - - 704,949
=========================================================================================
235,664 1,911,895 3,789,449
- -----------------------------------------------------------------------------------------
Deferred:
Federal - - -
State and local - - -
- -----------------------------------------------------------------------------------------
- - -
- -----------------------------------------------------------------------------------------
Income tax expense $ 235,664 1,911,895 3,789,449
=========================================================================================
</TABLE>
(Continued)
36
<PAGE> 37
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(14) CONTINUED
A reconciliation of the expected amount of income tax expense
calculated by applying the statutory federal income tax rate, of
34 percent to income before taxes, to the actual amount of income
tax expense recognized follows:
<TABLE>
<CAPTION>
Year ended Nine months ended Year ended
September 30, 1995 June 30, 1996 June 30, 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Expected expense $ 5,455,137 10,791,817 5,865,338
Change in valuation (5,222,201) (8,884,006) (2,639,848)
allowance
State income tax -- -- 563,959
Other 2,728 4,084 --
- --------------------------------------------------------------------------------
Income tax expense $ 235,664 1,911,895 3,789,449
================================================================================
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities as of
June 30, 1996 and 1997 are presented below:
<TABLE>
1996 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 6,791,224 1,503,751
General business credit carryforwards 2,189,414 2,189,414
Alternative minimum tax credit carryforwards 2,270,234 5,043,547
Capitalized research and development costs 6,099,099 4,222,712
Other 248,000 63,588
- -----------------------------------------------------------------------------
Total gross deferred tax assets 17,597,971 13,023,012
Less - valuation allowance 6,712,732 2,058,156
- -----------------------------------------------------------------------------
Net deferred tax assets 10,885,239 10,964,856
- -----------------------------------------------------------------------------
Deferred tax liabilities:
Property and equipment, principally due to
differences in depreciation
10,819,784 10,873,300
Other 65,455 91,556
- -----------------------------------------------------------------------------
Total gross deferred tax liabilities 10,885,239 10,964,856
- -----------------------------------------------------------------------------
Net deferred taxes $ - -
=============================================================================
</TABLE>
(Continued)
37
<PAGE> 38
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(14) CONTINUED
The valuation allowances for deferred tax assets as of October 1, 1994
and 1995 were $23,028,141 and $16,857,228, respectively. The net
changes in the total valuation allowance for the year ended September
30, 1995, the nine months ended June 30, 1996, and the year ended June
30, 1997 were decreases of $6,170,913, $10,144,496, and $4,654,576,
respectively.
At June 30, 1997, the Company had accumulated net operating losses of
$4,422,796 available to offset future regular taxable income. These
operating loss carryforwards expire between the years 2006 and 2009.
Utilization of these net operating losses may be subject to limitations
in the event of significant changes in stock ownership of the Company.
Additionally, the Company has approximately $10,556,779 and $5,043,547
of research and experimentation and alternative minimum tax credit
carryforwards, respectively, available to offset future regular tax
liabilities. The research and experimentation credits expire between
the years 2001 and 2007; the alternative minimum tax credits
carryforward indefinitely.
(15) EMPLOYEE BENEFIT PLAN
The Company has a defined contribution retirement plan which covers all
employees and officers. The Company contributed $85,114 into the Plan
during the year ended June 30, 1997. No contributions were made by the
Company during the year ended September 30, 1995 or the nine months
ended June 30, 1996. The Company has the right, but not the
obligation, to make contributions to the plan in future years at the
discretion of the Company's Board of Directors.
(16) COMMITMENTS
INTEGRATION AND OPERATIONS CONTRACTS
During fiscal year 1994, the Company entered into a cost-plus-fee
contract, as amended, with McDonnell Douglas, a shareholder, for
standard integration and operation services for up to seven missions
aboard the Space Shuttle relating to missions to the Mir Space
Station. The maximum estimated amount to be payable under this
contract is approximately $48,500,000. The period of performance on
this contract began in November 1994 and continues through July 1998.
As of June 30, 1996 and 1997, approximately $11,700,000 and
$28,300,000, respectively, had been cumulatively incurred by the
Company under this contract.
(Continued)
38
<PAGE> 39
SPACEHAB, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
(16) CONTINUED
MODULE CONSTRUCTION CONTRACT
During fiscal year 1997, the Company entered into a $36,800,000
cost-plus-fee contract with McDonnell Douglas, a shareholder, to
construct a new science module with associated double module hardware.
The Company expects to take delivery of the module in the spring of
1999. The Company has incurred approximately $12,700,000 in
construction costs through June 30, 1997.
LEASES
The Company is obligated under noncancelable operating leases for
office space, storage space, and the land for a payload processing
facility. Future minimum payments under these noncancelable operating
leases are as follows:
<TABLE>
Year ending June 30,
-------------------------------------------
<C> <C>
1998 $ 623,000
1999 421,000
2000 313,000
2001 223,000
2002 and thereafter 414,000
-------------------------------------------
$ 1,994,000
===========================================
</TABLE>
Rent expense for the year ended September 30, 1995, the nine months
ended June 30, 1996, and the year ended June 30, 1997, was
approximately $211,000, $183,000, and $456,000, respectively.
- ------------------------------------------------------------------------------
39
<PAGE> 40
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information concerning the Company's directors and executive
officers; as well as with respect to Item 405 of Regulation S-K will be
contained in the Company's definitive 1997 Proxy Statement in accordance with
the Company's annual meeting of stockholders and is hereby incorporated by
reference thereto.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item will be contained in the
Company's definitive 1997 Proxy Statement with respect to the Company's
annual meeting of stockholders and is hereby incorporated by reference
thereto.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item will be contained in the
Company's definitive 1997 Proxy Statement with respect to the Company's
annual meeting of stockholders and is hereby incorporated by reference
thereto.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item will be contained in the
Company's definitive 1997 Proxy Statement with respect to the Company's
annual meeting of stockholders and is hereby incorporated by reference
thereto.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of the report:
1. Financial Statements.
The following consolidated financial statements of SPACEHAB,
Incorporated and subsidiary and related notes, together with the
report thereon of KPMG Peat Marwick LLP, the Company's independent
auditors, are set forth herein as indicated below.
PAGE
Report of KPMG Peat Marwick LLP, Independent Public 18
Accountants
Consolidated Balance Sheets 19
Consolidated Statements of Income 20
Consolidated Statements of Stockholders' Equity 21
Consolidated Statements of Cash Flows 22
Notes to Consolidated Financial Statements 23
40
<PAGE> 41
2. Financial Statement Schedules.
All financial statement schedules required to be filed in Part IV, Item
14 (a) have been omitted because they are not applicable, not required,
or because the required information is included in the financial
statements or notes thereto.
3. Exhibits.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
2.1*/ Asset Purchase Agreement, dated February 5, 1997, by and among
Spacehab Acquisition Corp.; SPACEHAB, Incorporated; Astrotech
Space Operations, L.P.; and Northrop Grumman Corporation.
2.2*/ Amendment No. 1 to Asset Purchase Agreement, dated as of February
12, 1997, by and among Spacehab Acquisition Corp; SPACEHAB,
Incorporated; Astrotech Space Operations, L.P.; and Northrop
Grumman Corporation.
3.1* Amended and Restated Articles of Incorporation of the Company.
3.2* Amended and Restated By-Laws of the Company.
10.1* NAS 9-18371, dated November 30, 1990, between the National
Aeronautics and Space Administration ("NASA") and the Registrant
(including the amendments thereto) (the "CMAM Contract").
10.2* Cost Plus Incentive Fee Contract (Number SHB 1002), dated July
11, 1990, between the Registrant and McDonnell Douglas
Corporation, McDonnell Douglas Aerospace-Huntsville Division
("McDonnell Douglas") (including the amendments thereto) (the
"CMAM I/O Contract").
10.3* Cost Plus Incentive Fee Contract (Number SHB 1009), dated
November 23, 1994, between the Registrant and McDonnell Douglas
(including the amendments thereto) (the "Mir I/O Contract").
10.4* Cost Plus Incentive Fee Contract (Number SHB 1010), dated
November 23, 1994, between the Registrant and McDonnell Douglas
(including the amendments thereto) (the "Double Module Contract").
10.5* NAS 9-19250, dated July 14, 1995, between NASA and the Registrant
(including amendments thereto) (the "Mir Contract").
10.6* Amended and Restated Representation Agreement, dated August 15,
1995, by and between the Registrant and Mitsubishi Corporation.
10.7* Letter Agreement dated August 15, 1995, by and between the
Registrant and Mitsubishi Corporation.
10.8* Exclusive European Broker Agreement, dated February 15, 1989, by
and between Intospace, GmbH and the Registrant.
41
<PAGE> 42
10.9* Memorandum of Agreement, dated July 28, 1995, between the
Registrant and McDonnell Douglas Corporation.
10.10* Amended and Restated Credit Agreement (the "Credit Agreement"),
dated December 29, 1993, among the Registrant, the Insurers
listed therein, McDonnell Douglas Corporation, the Chase
Manhattan Bank (National Association), as agent.
10.11* Amendment No. 1 to the Credit Agreement, dated July 18, 1995.
10.12*** Amended and Restated Credit Agreement, dated August 20, 1996
among the Registrant, the Insurers listed therein and the Chase
Manhattan Bank (National Association), as agent.
10.13* SPACEHAB, Incorporated Directors' Stock Option Plan.
10.14* SPACEHAB, Incorporated 1994 Stock Incentive Plan.
10.15*** Office Building Lease Agreement, dated November 30, 1995, between
The Equitable Life Assurance Society of The United States and the
Registrant (Vienna, Virginia headquarters lease).
10.16* Agreement of Sublease, dated April 9, 1991, by and between
Eastern American Teak Corporation and the Registrant (land lease
for Cape Canaveral, Florida facility).
10.17* Letter Agreement, dated March 24, 1995, between Alenia Spazio and
the Registrant.
10.18* Consulting Agreement, dated August 7, 1995, by and between CSP
Associates, Inc. and the Registrant.
10.19*** Extension of Consulting Agreement between CSP Associates, Inc.
and the Registrant, dated February 21, 1996.
10.20*** Consulting Agreement, dated August 14, 1996, by and between
Gordon S. Macklin and the Registrant.
10.21** Employment and Non-Interference Agreement, dated December 27,
1995, between the Company and Chester M. Lee.
10.22** Employment and Non-Interference Agreement, dated December 27,
1995, between the Company and David A. Rossi.
10.23** Employment and Non-Interference Agreement, dated December 27,
1995, between the Company and Nelda J. Wilbanks.
10.24** Employment and Non-Interference Agreement, dated December 27,
1995, between the Company and M. Dale Steffey.
10.25** Employment and Non-Interference Agreement, dated December 27,
1995, between the Company and Margaret E. Grayson.
10.26** Employment and Non-Interference Agreement, dated December 27,
1995, between the Company and Richard P. Hora.
42
<PAGE> 43
10.27** Indemnification Agreement, dated December 27, 1995, between the
Company and Dr. Shelley A. Harrison.
10.28** Indemnification Agreement, dated December 27, 1995, between the
Company and Dr. Edward E. David, Jr.
10.29** Indemnification Agreement, dated December 27, 1995, between the
Company and Richard P. Hora.
10.30** Indemnification Agreement, dated December 27, 1995, between the
Company and Robert A. Citron.
10.31** Indemnification Agreement, dated December 27, 1995, between the
Company and Alvin L. Reeser.
10.32** Indemnification Agreement, dated December 27, 1995, between the
Company and James R. Thompson.
10.33** Indemnification Agreement, dated December 27, 1995, between the
Company and Jeffrey Schuss.
10.34** Indemnification Agreement, dated December 27, 1995, between the
Company and Dr. Brad S. Meslin.
10.35** Indemnification Agreement, dated December 27, 1995, between the
Company and Chester M. Lee.
10.36** Indemnification Agreement, dated December 27, 1995, between the
Company and David A. Rossi.
10.37** Indemnification Agreement, dated December 27, 1995, between the
Company and Dr. Shi H. Huang.
10.38** Indemnification Agreement, dated December 27, 1995, between the
Company and Nelda J. Wilbanks.
10.39** Indemnification Agreement, dated December 27, 1995, between the
Company and M. Dale Steffey.
10.40** Indemnification Agreement, dated December 27, 1995, between the
Company and Margaret E. Grayson.
10.41** Indemnification Agreement, dated December 27, 1995, between the
Company and Dr. Udo Pollvogt.
10.42** Indemnification Agreement, dated December 27, 1995, between the
Company and Ernesto Vallerani.
10.43** Indemnification Agreement, dated December 27, 1995, between the
Company and Hironori Aihara.
10.44***** NASDA Contract, dated July 1996, between the Registrant and
Mitsubishi Corporation (the "NASDA/ESA Contracts").
43
<PAGE> 44
10.45***** ESA Contract, dated September 1996, between the Registrant and
INTOSPACE GmbH (the "NASDA/ESA Contracts").
10.46 Amendment to the Agreement, dated as of August 27, 1996, between
the Registrant and Mitsubishi Corporation.
10.47 Letter Contract Number SHB 1014, dated August 13, 1997, between
the Registrant and McDonnell Douglas Aerospace - Huntsville.
10.48 Letter Agreement, dated July 23, 1997, between the Registrant and
Daimler-Benz.
10.49 Cost Plus Fee Contract (Number SHB 1013), dated July 31, 1997,
between the Registrant and McDonnell Douglas Corporation,
McDonnell Douglas Aerospace Huntsville Division (the "Science
Double Module Contract").
10.50 Amendment dated March 8, 1996, to Office Building Lease
Agreement, dated November 30, 1995, between The Equitable Life
Assurance Society of the United States and the Registrant
(Vienna, Virginia headquarters lease).
10.51 Agreement of Sublease, dated February 26, 1996, by and between
Barrios Technology, Inc. and the Registrant (Expansion of Houston
Facility).
10.52 Office Building Lease Agreement, dated October 6, 1993, between
Astrotech and the Secretary of the Air Force (Lease number SPCVAN
-2-94-0001).
10.53 Office Building Lease Agreement, dated May 30, 1983, between
Astrotech and Randolph Park Associates II Limited Partnership
(Silver Spring, Maryland headquarters lease).
10.54 Loan and Security Agreement, dated June 16, 1997, between the
Registrant, Astrotech and Signet Bank. (the "Revolving Credit
Agreement").
10.55 Loan and Security Agreement, dated July 14, 1997, between
Astrotech and the CIT Group/Equipment Financing, Inc. (the "Term
Loan Agreement").
10.56 Employment and Non-Interference Agreement, dated April 1, 1997,
between the Company and Dr. Shelly A. Harrison.
10.57 Employment and Non-Interference Agreement, dated April 10, 1997,
between the Company and John M. Lounge.
10.58 Indemnification Agreement, dated October 22, 1996, between the
Company and John M. Lounge.
10.59 Consulting Agreement, dated August 15, 1997, between Gordon S.
Macklin and the Registrant.
10.60 Extension of Consulting Agreement, dated August 18, 1997, between
CSP Associates, Inc. and the Registrant.
10.61 Consulting Agreement, dated October 24, 1996, between Harbor
Securities and the Registrant.
44
<PAGE> 45
10.62 Teaming Agreement, dated May 29, 1997, between United Space
Alliance, LLC (USA) and the Registrant.
10.63 Letter Agreement, dated July 30, 1997, between RSC Energia
(Energia) and the Registrant.
10.64 Letter of Cancellation, dated June 10, 1997, of the Memorandum of
Agreement, dated July 28, 1995, between McDonnell Douglas and the
Registrant (with attachment thereto).
10.65 Royalty Agreement, dated May 1, 1997, between the University of
Maryland Biotechnical Institute (UMBI) and the Registrant.
10.66 Agreement, dated July 15, 1997, between UAB Research Foundation
on behalf of the University of Alabama at Birmingham, Center for
Macromolecular Crystallography and the Registrant (including
amendments thereto).
10.67 Letter Agreement, dated April 26, 1996, between Pennsylvania
State University, Center for Cell Research and the Registrant.
10.68 SA42, dated July 16, 1997, between NASA and the Registrant
(Amendment to the Mir Contract).
11. Statement regarding Computation of Per Share Earnings.
21. Subsidiary of the Registrant.
23. Consent of KPMG Peat Marwick LLP.
27. Financial Data Schedule.
* Incorporated by reference to the Registrant's Registration
Statement on Form S-1 (File No. 33- 97812) and all amendments
thereto, originally filed with the Securities and Exchange
Commission on October 5, 1995.
** Incorporated by reference to the Registrant's Report on Form 10-Q
for the quarter ended December 31, 1995, filed February 14, 1996.
*** Incorporated by reference to the Registrant's Report on Form 10-K
for the fiscal year ended June 30, 1996, filed with the
Securities and Exchange Commission on September 17, 1996.
**** Incorporated by reference to the Registrant's Annual Report on
Form 10-K/A for the year ended June 30, 1996, filed with the
Securities and Exchange Commission on December 20, 1996.
***** Incorporated by reference to the Registrant's Report on Form
10-Q/A for the quarter ended September 30, 1996, filed with the
Securities and Exchange Commission on December 20, 1996.
*/ Incorporated by reference to the Registrant's Report on Form 8-K
filed with the Securities and Exchange Commission on February 27,
1997.
45
<PAGE> 46
(b) The following report on Form 8-K was filed by the Registrant
during the period covered by this report.
1. Report on Form 8-K filed on February 27, 1997 disclosing
the Registrant's acquisition of substantially all of the
assets of Astrotech Space Operations, L.P.
46
<PAGE> 47
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, hereunto duly authorized.
SPACEHAB, Incorporated
By: /S/ DR. SHELLY A. HARRISON
---------------------------------
Dr. Shelley A. Harrison
Chairman of the Board and
Chief Executive Officer
Date: September 12, 1997
By: /S/ MARGARET E. GRAYSON
----------------------------------
Margaret E. Grayson Vice
President of Finance, Treasurer
and Assistant Secretary (Principal
Accounting Officer and CFO)
Date: September 12, 1997
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on
behalf of this registrant in the capacities and on the dates indicated.
Director
- ------------------------------
Hironori Aihara
/s/ Robert A. Citron Director September 12, 1997
- ------------------------------
Robert A. Citron
/s/ Dr. Edward A. David, Jr. Director September 12, 1997
- ------------------------------
Dr. Edward A. David, Jr.
- ------------------------------
Dr. Shi H. Huang Director
/s/ Chester M. Lee Director September 12, 1997
- ------------------------------
Chester M. Lee
/s/ Dr. Brad M. Meslin Director September 12, 1997
- ------------------------------
Dr. Brad M. Meslin
/s/ Gordon S. Macklin Director September 12, 1997
- ------------------------------
Gordon S. Macklin
/s/ Dr. Udo Pollvogt Director September 12, 1997
- ------------------------------
Dr. Udo Pollvogt
/s/ Alvin L. Reeser Director September 12, 1997
- ------------------------------
Alvin L. Reeser
47
<PAGE> 48
Director
- ------------------------------
James R. Thompson
Director
- ------------------------------
Prof. Ernesto Vallerani
48
<PAGE> 1
EXHIBIT 10.46
AMENDMENT TO AGREEMENT BETWEEN
SPACEHAB, INC. AND MITSUBISHI CORPORATION ("AGREEMENT")
DATED AUGUST 27, 1996
SECTION TWO OF THIS AGREEMENT IS AMENDED AS FOLLOWS:
2.0 Fixed Price
"Mitsubishi shall pay SHI a fixed price of $3,280,000 for all of the
"Standard Services" provided by SHI, and $152,548.50 for the "Optional Services"
as set forth in the SOW (a total of $3,432,548.50).
The "Optional Services" price of $152,548.50 is composed of the following price
elements" provided in support of the PCRS experiment on STS 84.
<TABLE>
<S> <C>
1. Use of UAB-CMC analytical facilities and services, postflight $93,750.00
2. Mitsubishi/NASDA's share of total mission
late access/early retrieval service charges $44,062.50
3. Transportation of selected crystals to Japan $14,736.00
</TABLE>
Payment to SHI shall be made as follows:
<TABLE>
<S> <C> <C>
62.05% ($2,130,000.00) Upon execution of this agreement
25.93% ($ 890,000.00) On or before November 1, 1996
12.02% ($412,548.50) On or before 30 days after launch of STS-84"
</TABLE>
EXHIBIT A OF THIS AGREEMENT IS AMENDED AS FOLLOWS:
II. RESPONSIBILITIES OF SPACEHAB, INC. (SHI)
B. PROVISION OF OPTIONAL SERVICES, ITEM 5.
"Provision by the UAB-CMC of two X-ray collection facilities (two image plate
detectors) from the UAB-CMC for a one week period immediately following the
mission."
MITSUBISHI CORPORATION SPACEHAB, INC.
<TABLE>
<S> <C> <C> <C>
By: /s/ Kazushi Ochi By: /s/ Nelda Wilbanks
-------------------------------------- --------------------------------
Name: Kazushi Ochi Name: Nelda Wilbanks
-------------------------------------- --------------------------------
Title Manager, Space Systems Unit Title: Contracts Administrator
-------------------------------------- --------------------------------
Information Systems & Services
--------------------------------------
Division C
--------------------------------------
Date: Date: 25 June 1997
-------------------------------------- --------------------------------
</TABLE>
<PAGE> 2
AMENDMENT TO AGREEMENT BETWEEN
SPACEHAB, INC. AND MITSUBISHI CORPORATION ("AGREEMENT")
DATED AUGUST 27, 1996
SECTION TWO OF THIS AGREEMENT IS AMENDED AS FOLLOWS:
2.0 Fixed Price
"Mitsubishi shall pay SHI a fixed price of $3,280,000 for all of the
"Standard Services" provided by SHI, and $284,736 for the "Optional Services" as
set forth in the SOW (a total of $3,564,736). Payment to SHI shall be made as
follows:
<TABLE>
<S> <C> <C>
59.75% ($2,130,000) Upon execution of this agreement
24.97% ($ 890,000) On or before November 1, 1996
15.28% ($ 544,736) On or before 30 days after launch of STS-84"
</TABLE>
The "Optional Services" price of $284,736.00 is composed of the following price
elements provided in support of the PCRS experiment on STS-84.
<TABLE>
<S> <C> <C>
1. Use of UAB-CMC analytical facilities, post flight $93,750.00
2. Mitsubishi/NASDA's share of total mission late access/
Early retrieval service charges $176,250.00
3. Transportation of selected crystals of Japan $14,736.00
</TABLE>
SOW ADDENDUM, SECTION B., PROVISION OF OPTIONAL SERVICES, ADD THE FOLLOWING AS
NEW ITEM 7.
"Provision of passive thermal containers and internal refrigerant and
packing materials required to transport the required quantity of sample blocks
from the UAB CMC to Tokyo's Narita Airport via commercial airliner. Purchase of
a dedicated passenger compartment seat onboard the aircraft to safely
accommodate and protect these containers. Provision of a trained technician to
accompany these crystal-laden containers to a designated place in NASDA's TSKUBS
Space Center." head office of Mitsubishi Corporation.
MITSUBISHI CORPORATION SPACEHAB, INC.
<TABLE>
<S> <C> <C> <C>
By: /s/ Kazushi Ochi By: /s/ Nelda Wilbanks
-------------------------------------- --------------------------------
Name: Kazushi Ochi Name: Nelda Wilbanks
-------------------------------------- --------------------------------
Title Manager, Space Systems Unit Title: Contracts Administrator
-------------------------------------- --------------------------------
Information Systems & Services
--------------------------------------
Division C
--------------------------------------
Date: Date: 25 June 1997
-------------------------------------- --------------------------------
</TABLE>
AGREEMENT
This agreement ("Agreement") is made this 27th day August, 1996, between
SPACEHAB, Incorporated ("SHI"), a Washington state corporation, with principal
offices located in Vienna, Virginia and MITSUBISHI Corporation ("MITSUBISHI"), a
Japanese corporation, with principal offices located in Tokyo, Japan, on behalf
of the National Space Development Agency of Japan ("NASDA", collectively
"Buyer").
<PAGE> 3
WHEREAS MITSUBISHI desires to lease from SHI the Commercial Vapor
Diffusion Apparatus protein crystal growth hardware and purchase associated
services for use by NASDA aboard the STS-84 SHI Double Module Mission to Mir
("STS-84") currently scheduled for, and no sooner than, May 1997; and
WHEREAS SHI desires to lease to MITSUBISHI such Commercial Vapor
Diffusion Apparatus protein crystal growth hardware and sell such associated
services on STS-84;
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties agree as follows:
1. STATEMENT OF WORK
SHI will provide, at the times and locations set forth therein and
pursuant to the terms and conditions of this Agreement, the hardware,
supplies and services described in the Statement of Work ("SOW")
attached hereto as Exhibit A and incorporated herein by this reference.
2. FIXED PRICE
MITSUBISHI shall pay SHI a fixed price of $3,280,000 for all of the
"Standard Services" provided by SHI, and $270,000 for the "Optional
Services" as set forth in the SOW. Payment to SHI shall be made as
follows:
<TABLE>
<S> <C> <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.
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Delay caused by SHI
- MITSUBISHI pays only additional service costs, if
any, required/provided by NASA. SHI agrees to notify
MITSUBISHI of any such costs prior to incurring the
costs, if possible and payment terms and conditions
of additional service costs will be negotiated by the
parties.
Delay caused by MITSUBISHU NASDA
- MITSUBISHI pays any additional NASA costs charged to
SHI which may be required or caused by any delay,
suspension or postponement of the launch in excess of
the 72 hours allowable delay for which NASA does not
charge.
- MITSUBISHI pays for any additional costs incurred by
SHI for services provided by NASA and/or SHI.
- In the event NASDA delivers the payload described in
the SOW ("CVDA") so late that SHI, in its sole
judgment, is unable to process the CVDA in time to
meet the launch schedule, SHI will terminate this
Agreement and will retain as liquidated damages all
payments made by MITSUBISHI up through the date of
termination.
4. OPTIONAL SERVICES
The "Optional Services" set forth in the SOW may be requested by
MITSUBISHI. Any optional services requested by MITSUBISHI other than
those Optional Services listed in the SOW are not included in the
pricing set forth in Section 2 above, and shall be charged to
MITSUBISHI at the cost to SHI to perform and/or purchase such optional
services. To the extent any of the Optional Services are shared with
other SHI customer payloads, the price for such Optional Services to
MITSUBISHI shall be reduced to reflect a prorate distribution of the
Optional Services costs among all SHI customer users thereof
5. APPLICABILITY OF NASA/SHI SPACE SHUTTLE AGREEMENTS
SHI and MITSUBISHI acknowledge that performance of the services
described in this Agreement and the SOW depends upon the agreement[s1
governing NASA's lease of the SHI module for STS-84 or any other
missions covered herein ("NASA Contracts"). Any changes to these
NASA/SHI agreement[s] that are imposed by NASA and which prevent SHI
from providing the services described herein shall not constitute a
breach of this Agreement by either SHI or MITSUBISHI. In the event of
such changes by NASA, SHI and MITSUBISHI agree to negotiate an
equitable adjustment to this Agreement that satisfies both parties as
well as NASA's new requirements. If there are any conflicts between
this Agreement and the requirements of the NASA Contracts applicable to
this Agreement, the NASA Contracts terms and conditions shall take
precedence.
6. EXCHANGE OF DOCUMENTATION AND INFORMATION
a. SHI and MITSUBISHI shall exchange all documents and
information required for each party to fulfill its
responsibilities under this Agreement.
b. All technical data furnished to SHI under this Agreement shall
be provided with no restricted rights for use, duplication,
and disclosure in any manner and for any purpose whatsoever in
performance of this Agreement by SHI and its contractors and
subcontractors, and without a restrictive legend, except as
provided below. It is the intent of the parties that the
designation of proprietary technical data or trade secrets
shall be kept to a minimum in order to facilitate
implementation of this Agreement.
c. In the event any of the technical data required to be
furnished to SHI under this Agreement is considered by
MITSUBISHI to be proprietary or a trade secret (such as
detailed design, manufacturing and processing information) and
MITSUBISHI desires to maintain proprietary or trade secret
rights for such data MITSUBISHI shall inform SHI that the data
is considered proprietary or a trade secret and any data so
provided shall be conspicuously marked by MITSUBISHI
"Proprietary" or "Trade Secret" prior to submittal to SHI. SHI
agrees that the data will not without permission of
MITSUBISHI, be duplicated,
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used or disclosed by SHI or its contractors and subcontractors
for any purpose other than as necessary to carry out SHl's
obligations pursuant to the agreements referenced in Section 5
above or this Agreement. If required by such contractors
and/or subcontractors, the data will only be furnished after
the contractors and/or subcontractors have agreed with SHI in
writing to protect the data from unauthorized use, duplication
and disclosure.
d. SHI considers all data (including data reduction and analysis)
obtained or derived from the CVDA as a result of the
activities for which MITSUBISHI has paid SHI under this
Agreement to be property of MITSUBISHI, and, in order to
protect trade secrets and other property rights of MITSUBISHI
in such data SHI will maintain such data, in confidence. SHI
will not acquire, as a result of launch and associated
services under this Agreement, any rights to MITSUBISHI's
copyrights, trademarks, trade secrets, inventions, or patents
which may be used in or result from the CVDA or any rights to
MITSUBISHI's proprietary or trade secret data except the right
to use duplicate, and disclose such data, as set forth above.
7. PERMITS AND LICENSES
SHI shall obtain any permit or license that may be required to provide
the services to be furnished under this Agreement. MITSUBISHI will be
responsible for obtaining any permit or license that may be required to
perform an activity unique to the CVDA that is not included in the
foregoing, such as tests involving use of radioactive materials or
particular requirements of MITSUBISHI's own government, or governmental
authorities outside the United States.
8. ALLOCATION OF CERTAIN RISKS AND LIMITATION OF LIABILITY
a. Inter-Party Waiver of Liability.
In carrying out this Agreement, SHI, NASDA/MITSUBISHI, and
NASA, will respectively utilize their property and employees
in the SPPF, NASA facilities, and during payload processing
activities and STS Operations in close proximity to one
another and to others. Furthermore, the parties recognize that
all participants are engaged in the common goal of meaningful
exploration, exploitation and utilization of outer space. In
furtherance of this goal, the parties hereto agree to a
no-fault, no-subrogation, inter-party waiver of liability
pursuant to which each party agrees not to bring claims in
arbitration or otherwise against or sue the other party or
other customers of SHI, and agrees to absorb the financial and
any other consequences arising out of damage to its own
property and employees as a result of participation in the
payload processing activities and STS Operations, irrespective
of whether such damage is caused by SHI, MITSUBISHI, other SHI
customers, NASA, or other NASA customers participating in
payload processing activities and STS Operations and
regardless of whether such damage arises through negligence or
otherwise.
b. Extension of Inter-Party Waiver.
The parties agree that this common goal will also be advanced
through extension of the inter-party waiver of liability to
other participants in the payload processing activities and
STS Operations. Accordingly, the parties agree to extend the
waiver as set forth in Section 8a above to the other party's
and NASA's contractors and subcontractors at every tier, as
third party beneficiaries, whether or not such contractors or
subcontractors causing damage bring property or employees to
SHI's SPPF or retain title to other interest in property
provided by them to be used, or otherwise involved, in the
payload processing and Launch Activity. Specifically, the
parties intend to protect these contractors and subcontractors
from claims, including "products liability" claims, which
might otherwise be pursued by the parties, or the contractors
or subcontractors of the parties, or other customers of SHI or
the contractors or subcontractors of such other customers.
Moreover, it is the intent of the parties that each will take
all necessary and reasonable steps to foreclose claims for
damage by any participant in a payload processing and Launch
Activity, under the same conditions and to the same extent as
set forth in Section 8a above, except for claims between
MITSUBISHI and its contractors or subcontractors and claims
between SHI and its contractors and subcontractors.
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c. Broad Construction of Inter-Party Waiver.
The parties intend that the inter-party waiver of liability
set forth above be broadly construed to achieve the intended
objectives.
d. Insurance Coverage In Lieu of Cross-Waiver
In the event that MITSUBISHI is unable to comply with the
above waiver provisions due to prohibitions by the laws of
Japan, SHI agrees to purchase indemnification insurance
covering participants who otherwise would have been covered by
the cross waiver provisions above in the event MITSUBISHI were
materially damaged by one or more of such participants during
the payload processing activities or STS Operations.
e. Definitions of "payload processing activity" and "STS
Operations" In Section 8
"Payload processing activity" means all activity conducted at
the SPPF or a NASA facility associated with the preparation of
the payload(s) (including but not limited to the CVDA) for
launch and SHI and/or NASA storage of all or a portion of the
payload(s), and the handling and transportation of all or a
portion of the payload(s) outside the confines of SHl's
facility by SHI. NASA, or their contractors or subcontractors:
"STS Operations" means:
A. All Space Shuttle System Activity
B. All payload operations
C. Use of all tangible personal property (including
ground support, test, training and simulation
equipment related to A & B above).
D. Research, design, development, test, manufacture,
assembly, integration, transportation, or use of
materials related to the above items, A, B & C.
E. Performance of any activities related to A through D.
f. The protection of cross waiver of liability for STS Operations
herein agreed to shall cover a period of time during which STS
Operations are being performed as follows:
Beginning with the signature of an Agreement with
NASA for Space Transportation System services and (i)
when any employee, payload or property arrives at a
United States Government Installation, or (ii) during
transportation of such to the installation by a
United States Government Conveyance, or (ii) at
ingress of such into an Orbiter, for the purpose of
fulfilling such Agreement or Arrangement, or (iv) the
commencement of extravehicular activities by the
Shuttle Crew for the purpose of retrieval of the
payload, whichever occurs first and Ending with
regard to any employee, payload or property, when
such employee, payload or property departs (i) a U.S.
Government Installation, or (ii) the Orbiter if it
lands at other than such Installation, or (iii) a
U.S. Government conveyance which transports the
employee and/or payload and related property from
such Installation or Orbiter.
g. Risk of Patent Infringement
(i) SHI agrees to indemnify MITSUBISHI,. its officers,
employees and agents against any United States Patent
infringement costs (including, but not limited to,
any judgment against MITSUBISHI by a court of
competent jurisdiction, reasonable administrative and
litigation costs, and settlement payments made as a
result of an administrative claim) incurred by
MITSUBISHI
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which are attributable to products, processes or
articles of manufacture used in the facilities and
Services to be furnished to MITSUBISHI by SHI
hereunder.
(ii) MITSUBISHI agrees to indemnify SHI AND NASA, their
officers, employees and agents against any United
States Patent infringement costs (including, but not
limited to, judgment against SHI reasonable
administrative and litigation costs, and settlement
payments made as a result of an administration claim)
incurred by SHI and/or NASA which are attributable to
produce, processes or articles of manufacture used in
the CVDA and any supporting equipment and facilities
brought to the SHI SPPF by MITSUBISHI or MITSUBISHI's
contractors or subcontractors and any activity
performed at SHI or NASA facilities by MITSUBISHI or
MITSUBISHI's contractors or subcontractors and any
activity performed at SHI or NASA facilities by
MITSUBISHI or MITSUBISHI's contractors or
subcontractors.
h. Limitation of SHI and MITSUBISHI Liability
Notwithstanding any other provisions herein. to the extent
that a risk of damage is not dealt with expressly in this
Agreement. SHI's and the MITSUBISHI's liability under this
Agreement. whether or not arising as a result of an alleged
breach of this Agreement, shall be limited to direct damages
only and shall not include any loss of revenue. profits or
other indirect or consequential damages.
9. ASSISTANCE WITH THIRD PARTY CLAIMS
In the event a third party claim is asserted against SHI or MITSUBISHI
as a result of patent infringement, use of proprietary data, or damage,
including claims of their respective contractors or subcontractors,
arising from or in connection with the Services provided by SHI under
this Agreement, SHI and MITSUBISHI each agree to give prompt notice to
the other of any such claim and agree to provide each other with any
assistance practicable in the defense against such claim. If a claim
asserted against one party is a claim under this Agreement, the party
who has agreed to indemnify shall have the right to intervene and
defend, the right to control litigation of, and the right to determine
the appropriateness of any settlement related to such claim.
10. WARRANTIES
SHI MAKES NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTBILITY OR FITNESS FOR A PARTICULAR PURPOSE.
11. PUBLICITY RELATING TO AGREEMENT
In cases where one Party intends to use results obtained from this
Agreement or advertise his role in this Agreement, it shall first
request the other Party for its prior written approval, which shall not
be unreasonably withheld.
12. APPLICABLE LAW
The Agreement shall be governed by the law of the State of Virginia
13. ARBITRATION/DISPUTES
Disputes arising out of the interpretation or execution of this
Agreement which cannot be resolved by negotiation shall, at the request
of either Party, (after giving 30 days notice to the other Party) be
submitted to arbitration. The arbitration tribunal shall sit in
Washington, D.C. Disputes shall be finally settled in accordance with
the Rules of Conciliation and Arbitration of the International Chamber
of Commerce by one or more arbitrators designated in conformity with
those Rules. The decision to submit a dispute shall not excuse either
party from the timely performance of is obligations hereunder which are
not the subject matter of the dispute. Further, if the lack of
resolution of the matter in dispute will adversely impact the timely
completion of preparation for launch activities, MITSUBISHI and SHI
will perform the matter in dispute in the manner determined by SHI,
within the framework of this Agreement and without prejudice to the
final resolution of the matter in dispute.
14. TERMINATION OF SERVICES
Both parties have the right to terminate this Agreement pursuant to the
following conditions only:
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a. SHI may terminate this Agreement:
(i) as a result of breach by MITSUBISHI if MITSUBISHI has
not cured the breach within the time specified by SHI
in its cure notice to MITSUBISHI (or immediately upon
a non-curable breach), in which case SHI shall retain
all payments made to the date of the termination, and
MITSUBISHI is further liable for all costs incurred
by SHI resulting from MITSUBISHI's breach of the
Agreement, or
(ii) as a result of any actions or inactions by NASA which
materially impair SHl's ability to perform this
Agreement, in which case MITSUBISHI shall be entitled
to any transportation costs for which SHI is
reimbursed by NASA and which were previously paid by
MITSUBISHI.
b. MITSUBISHI may terminate this Agreement
(i) without cause at any time before installation of the
CVDA into the SHI module upon sufficient written
notification to SHI of such intent, in which case
MITSUBISHI shall be liable for and SHI shall retain
all Transportation and Lease progress payments, plus
the Integration and Optional Services costs incurred
up to the time of termination, as well as all
termination charges, or
(ii) in the event of material breach by SHI which SHI
fails to cure in a reasonable time after written
notice of such material breach is received from
MITSUBISHI, in which case MITSUBISHI will be relieved
from making any further payments to SHI subsequent to
the material breach hereof. In the event NASDA cannot
complete its science objectives as set forth herein
due solely to a material breach hereof by SHI, SHI
shall forfeit the final 15% payment set forth above,
and thus any possibility of profit under this
Agreement, since previous payments go directly to
unrecoverable costs incurred by SHI in performance
hereof.
15. ASSIGNMENTS
No party shall assign to another person or entity any part of is rights
this Agreement, including but not limited to rights for services
related to scheduled launches, unless otherwise expressly agreed to by
the other party in writing, or as may be required pursuant to law.
16. NOTICES
All notices, requests, demands, and other communication hereunder shall
be in writing and shall be either (1) personally delivered, (2) sent by
U. S. mail or reputable overnight delivery service, or (3) transmitted
by facsimile machine as follows:
To SHI at : Nelda Wilbanks
Contracts Administrator
SPACEHAB, Inc.
1595 Spring Hill Rd.
Vienna, Virginia 22182
To MITSUBISHI at: Mr. Kazushi Ochi
Assistant General Manager
Aerospace Department
Mitsubishi Corporation
6-3 Marunouchi 2-Chome
Chiyoda-ku, Tokyo 100
Japan
The effective date of each notice, demand, request or other
communication shall be deemed to be: (1) the date of receipt if
delivered personally or by mail or overnight delivery service, or (2)
the date of transmission if by
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facsimile. Either party may change is address or designee for purposes
hereof by informing the other party in writing of such action and the
effective date of such change.
17. FORCE MAJOURE
Neither party shall be liable for delays or breaches hereof resulting
from events or acts beyond the control of such party, including but not
limited to acts of God, strikes, lockouts, riots, acts of war,
epidemics, governmental regulations, and natural disasters. Upon the
occurrence of such event, the party whose performance is affected shall
use reasonable efforts to notify the other party of the nature and
extent of any such condition and negotiate is affects.
18. COMPLETE AGREEMENT
This Agreement constitutes the complete agreement and understanding
with respect to the subject matter hereof between the parties.
MITSUBISHI Corporation SPACEHAB, Inc.
By: /s/ Tatsuo Sato By: /s/ Margaret E. Grayson
------------------- --------------------------
Name: Tatsuo Sato Name: Margaret E. Grayson
------------------- --------------------------
Title General Manager Title: Vice President - Finance
------------------- --------------------------
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EXHIBIT A
SHI - MITSUBISHI (NASDA) STATEMENT OF WORK
I. GENERAL DESCRIPTION OF SHI INTEGRATION AND FLIGHT SERVICES
SHI will provide and maintain a pressurized module ("SPACEHAB") that
fits in the cargo bay of the National Aeronautics and Space
Administration's ("NASA") Space Shuttle Orbiter ("Shuttle") to act as
the carrier and interface between the Shuttle and the Commercial Vapor
Diffusion Apparatus payload ("CVDA"). (For the purposes herein, the
term CVDA includes but is not limited to the crystal growth hardware,
Commercial Refrigerator Incubation Module, and all experiment support
hardware.) Power, thermal control, command and data management,
environmental control, and structural support facilities and systems
are available to support the CVDA. Adaptive hardware to permit physical
integration of the CVDA into the SPACEHAB are also provided by SHI. The
CVDA will be analytically, physically and operationally integrated with
other user payloads into the SPACEHAB. SHI services will include
integration, launch into orbit, in-orbit operation by a trained flight
crew, return to launch site, and Reintegration and may include support
to post flight analysis of space-grown crystals. Most SHI (and NASA)
provided services are considered "standard" and are included in SHI's
basic contract price. A few SHI and NASA-provided services are
considered "optional" and are priced separately. In some cases, an
optional service will be required due to the nature of the CVDA
experiment (e.g. late access/early retrieval). In other cases, NASDA
may choose whether or not to request the service (e.g. UAB-CMC post
flight analysis support to space grown crystals).
II. RESPONSIBILITIES OF SPACEHAB, INC. (SHI)
A. PROVISION OF STANDARD SERVICES
In support of the flight of the NASDA-sponsored CVDA
experiment aboard the SPACEHAB module on STS 84, SHI shall
perform the following "standard" services.
1. PROVISION OF THE REQUIRED AGREEMENTS WITH NASA TO
PROVIDE SPACE SHUTTLE TRANSPORTATION ON STS-84.
SHI will negotiate and execute all agreements with
NASA which are required to manifest the CVDA
experiment aboard SPACEHAB on STS 84. SHI will pay
NASA's required transportation charges.
2. PROVISION OF COMMERCIAL VAPOR DIFFUSION APPARATUS
(CVDA) HARDWARE AND EXPERIMENT DEVELOPMENT SERVICES
The CVDA hardware used by NASDA Principle
Investigators (PI's) to conduct microgravity
investigations aboard SPACEHAB on STS 84 will be
provided to NASDA by the University of Alabama -
Birmingham (UAB), Center for Macromolecular
Crystallography (CMC) under separate agreement
between the UAB-CMC and SHI. Under this agreement,
the UAB-CMC will also provide a variety of experiment
development and support services for NASDA during
periods of experiment planning, preflight hardware
and science materials preparation, inflight
operations and postflight analysis. More
specifically, the UAB-CMC will provide the following
services for NASDA:
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a. Provide all required CVDA protein crystal
growth flight hardware, training hardware
and experiment support hardware.
b. Provide ground based hardware and procedures
for determining the proper protein crystal
growth conditions in microgravity.
c. Act as the primary point of contact for
hardware and operational requirements
development and implementation.
d. Obtain all certifications necessary for
flight (e.g. flight and ground safety
certifications).
e. Provide mission specific experiment
familiarization and "hands on" training
sessions to the flight crew and to NASDA
technical and scientific personnel as
required to support ground operator, PI, and
flight crew training at U.S. and Japanese
locations. This includes provision of the
required training and/or flight hardware at
the location of the training session.
f. Support timeline specific training at the
SPACEHAB Payload Processing Facility (SPPF).
g. Support all Johnson Space Center (JSC)
mission simulations required to complete
flight and ground control team mission
preparation milestones.
h. Develop an "Acceptance Data Package" that
will enable the CVDA hardware to be
processed at the Kennedy Space Center (KSC)
- preflight and postlanding.
i. Provide all necessary equipment and
personnel at the KSC and JSC to support
premission integration and real-time mission
operations.
j. Provide badging for all NASDA personnel
required at KSC to support loading of the
space hardware and at JSC to support
real-time mission operations.
k. Provide transportation, personnel and
equipment at the landing site in order to
bring the samples back to UAB for
deintegration and analysis.
l. Provide photo documentation of flight grown
crystals, if required by NASDA.
3. PROVISION OF EXPERIMENT INTERFACE DEFINITION AND
ANALYTICAL INTEGRATION
SHI will assess NASDA and UAB CMC-developed CVDA
data, performance analyses, and SPACEHAB subsystem
resource requirements and perform the following
experiment requirements synthesis and analysis tasks:
a. Development of the core SPACEHAB/CVDA
Interface Control Document (ICD); the ICD
Appendix A (Ground Operations Interface
Requirements); the ICD Appendix B
(Safety/Verification
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Requirements); and the ICD Appendix C
(Flight Operations Interface Requirements).
b. Integration and submittal of flight and
ground safety review packages to NASA (Phase
II, III) as required.
c. Development of experiment stowage
requirements.
d. Analysis of all experiment test/analytical
data as it pertains to the physical
(structural) interface with the SPACEHAB
module.
e. Performance of a mass/center of gravity
(c.g.) analysis.
f. Performance of an experiment materials
analysis.
g. Performance of an experiment SPACEHAB
resource requirements assessment.
4. PROVISION OF MISSION ANALYTICAL INTEGRATION
Based upon the CVDA's data and operational
requirements, provided by NASDA, SHI will locate the
CVDA in the SPACEHAB pressurized volume with a
compatible complement of payloads, will integrate the
CVDA resource requirements and safety data with those
of other payloads, and will develop flight procedures
and timelines for operation of the experiment
inorbit. Specifically, SPACEHAB will perform the
following mission integration tasks for NASDA:
a. Development of an integrated Mission
Requirements and Allocations Document (MRAD)
which incorporates the SPACEHAB module and
Shuttle mission resource requirements
necessary for the successful implementation
of CVDA experiment objectives.
b. Development and submittal to NASA of the
required Shuttle Payload Integration Plan
(PIP) data as it pertains to the CVDA
requirements for Shuttle resources.
c. Development and implementation of an
integrated Crew Training Plan which includes
documentation of all requirements for CVDA
flight crew training, scheduling of all CVDA
crew training sessions with the NASA
Training Coordinator, coordination of all
CVDA familiarization and hands-on training
with UAB-CMC, and direction of all
integrated timeline training sessions at the
SPPF.
d. Development and production of a flight
qualified CVDA Experiment Operations
Checklist (EOC) for onboard use by the
flight crew.
e. Development of CVDA crew activity timeline
inputs for inclusion by NASA in the
integrated Shuttle Crew Activity Plan.
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f. Integration of NASDA and UAB-CMC-provided
CVDA flight and ground safety data into
mission safety packages for review by the
NASA Flight and Ground Payload Safety Review
Boards.
g. Representation of NASDA and the CVDA to NASA
at all NASA payload integration process
forums and meetings, including payload
safety reviews.
5. PROVISION OF HARDWARE PHYSICAL INTEGRATION AND
DEINTEGRATION
This category involves the preparation for and
execution of CVDA-to-SPACEHAB and SPACEHAB-to-Shuttle
physical integration and deintegration tasks to
support the CVDA's flight on STS 84. It includes
logistics and ground operations planning, ground
procedures development, integrated schedule
development, hardware physical installation, and
NASDA/UAB-CMC personnel accommodation elements. The
activities associated with this function are
performed within the SPACEHAB Payload Processing
Facility (SPPF) at Cape Canaveral, Florida and in the
pressurized volumes of the Shuttle and SPACEHAB at
the launch pad and at the landing site. Specifically,
SHI will provide to NASDA and UAB-CMC the following
services:
a. Coordination of shipping and receiving of
flight and training hardware to and from the
SPPF.
b. Provision of a SPPF Customer Work Area with
the necessary security and
administrative/laboratory equipment to
control, store and prepare for flight all
CVDA parts, protein materials and supporting
equipment.
c. Provision at the SPPF of a high fidelity
mockup of the SPACEHAB module for use in
experiment interface checks and in
integrated timeline training with the flight
crew.
d. Provision at the SPPF of a vertical late
access trainer for use in developing
procedures for late installation of the CVDA
hardware into SPACEHAB on the launch pad.
e. Integration of the CVDA-to-SPACEHAB
interface hardware into the SPACEHAB prior
to delivery to KSC and Reintegration of same
hardware following the SPACEHAB's
post-flight return to the SPPF.
6. PROVISION OF FLIGHT OPERATIONS SUPPORT
For the Flight Phase, SHI will provide accommodations
for NASDA, MITSUBISHI and UAB-CMC management,
technical and scientific personnel support in the
Mission Control Center (MCC) at the NASA Johnson
Space Center. The following services will be provided
at the MCC:
a. Physical accommodations for personnel to
monitor real-time operations during the
Prelaunch, Flight, and Postlanding phases of
the STS 84 mission.
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b. Telemetry, voice and video data as required
to monitor the progress of the CVDA
experiment operations over the duration of
the mission.
c. Provision of a Mission Console Handbook
which provides administrative, technical and
logistics information about the CVDA and
other experiments aboard the SPACEHAB module
as well as about the cadre of NASA, NASDA,
Mitsubishi, UAB-CMC and SHI personnel
supporting the mission.
d. Administrative services for
acquiring/copying and routing of
mission-related data and correspondence to
local and remote locations.
7. PROVISION OF SUPPORT TO POST-FLIGHT DATA ANALYSIS
SHI will provide or coordinate the provision of the
required historical CVDA flight data and timeline
information in support of CVDA post flight analysis
activities.
8. PROVISION OF CVDA PROJECT MANAGEMENT
To organize, schedule and manage the provision of the
standard and optional services as described above,
SHI shall provide the following CVDA project
management personnel and methods:
a. SHI will designate an SHI Contract
Development and Implementation Manager
(CDIM) who will be responsible for
coordinating with the Mitsubishi CDIM all
financial, scheduling, implementation
progress reporting and policy matters
related to this contract. The CDIM will:
1.) Coordinate SHI inputs to the
development and maintenance of this
contract with Mitsubishi and NASDA
personnel as required.
2.) Establish methods for communication
of contract implementation
activities to all participants
(e.g. teleconferences, e-mail
lists, key meetings).
b. SHI will designate an SHI CVDA Payload
Coordinator (PC) for the CVDA experiment.
The PC will:
1.) Be the principal SHI advocate for
the successful flight of the CVDA.
2.) Be responsible for coordinating
with the SHI, NASDA,UAB-CMC and
NASA technical points of contact
all SHI support related to the
technical and operational
implementation of the standard and
optional services described above.
3.) Be responsible for the
identification and resolution of
all technical and operational
issues pertaining to the flight of
the CVDA experiment.
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<PAGE> 15
9. PROVISION OF CVDA PROJECT REPORTING
In order to facilitate the routine exchange of
mission integration and scheduling information and a
team-oriented approach to problem identification and
resolution, the following methods of communication
will be established:
a. The PC will hold biweekly teleconferences
with key project participants to plan and/or
status check integration activities and to
resolve issues.
b. The PC will develop and maintain a detailed,
date-specific CVDA Integration Milestones
Template (IMT) which identifies all key
NASDA and UAB-CMC deliverables as well as
all key mission preparation milestones.
c. The SHI CDIM will provide monthly reports to
Mitsubishi on the status of CVDA mission
integration activities.
d. The CDIM will provide a comprehensive report
to Mitsubishi following the end of the FY
1996 budget year which describes the status
of all contract services provided and key
contract milestones accomplished. (The IMT
described above will be the technical basis
for this report, which will be submitted no
later than April 15, 1996). A similar report
will be provided within 30 days of the
completion of the STS 84 mission.
B. PROVISION OF OPTIONAL SERVICES
SHI will provide or facilitate the provision of the following
optional services as required by the CVDA experiment
objectives and at special request by NASDA.
1. Provision by SHI of (powered) transport to the launch
pad of the flight ready CVDA assembly for late
installation into the SPACEHAB.
2. Provision by SHI and NASA of installation of the CVDA
assembly into the SPACEHAB at the launch pad during
the latest allowable period prior to the Shuttle
launch. This includes the performance of an
electrical Interface Verification Test after the CVDA
is installed in SPACEHAB. Many SHI experiments are
characterized by experiment science or research
materials which are perishable, have a predetermined
shelf life, or cannot be delivered to the SHI Payload
Processing Facility until after the module has been
taken to Kennedy Space Center (KSC) and loaded into
the orbiter's cargo bay. These experiments or their
science and research materials can be loaded into the
SHI module or onto the Shuttle middeck during
specific "access windows" which are part of KSC's
orbiter flight preparation process. These late access
periods may occur as far out as one month or as close
to launch as approximately 24 hours (for module
access) or 12 hours (for middeck access).
3. Provision by SHI and NASA of Support to all launch
scrub/turnaround activities at the launch site.
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<PAGE> 16
4. Provision by SHI and NASA of support to early CVDA
retrieval activities at the primary or first
alternate landing site. In many cases, experiments
which must be loaded during late access periods prior
to launch must also be unloaded during "early
retrieval" periods following landing in order to
preserve the scientific value of their internal
materials. For a landing at the prime KSC, Florida
landing field, early retrieval is normally completed
by landing plus five hours. For landings at the
first-alternate landing field at Edwards Air Force
Base, California, early retrieval is normally
completed by landing plus seven hours.
5. Provision by the UAB-CMC of three X-ray data
collection facilities (one image plate detector and
two multi-wire detectors) from the UAB-CMC for a one
week period immediately following the mission.
6. Provision by the UAB-CMC of an expert
Crystallographer to render technical assistance
during this data collection and analysis period.
III. RESPONSIBILITIES OF MITSUBISHI
Mitsubishi will serve as NASDA's administrative agent for establishing
a contract relationship with SHI. Therefore, it is Mitsubishi's
responsibility to establish and maintain this contract directly with
SHI, on NASDA's behalf, in order for NASDA to obtain from SHI the
necessary UAB-CMC hardware and SHI lease and integration services
required for the successful flight of the CVDA in the SHI module.
Acting in this capacity, Mitsubishi will:
A. Facilitate NASDA's completion of the following critical
preparatory functions in support of the flight of the CVDA
experiment:
1. Timely selection and identification of all NASDA
-sponsored PI's
2. Timely selection of all protein crystal growth
materials for flight in the CVDA hardware. All
materials shall conform to established NASA payload
safety requirements documentation and are subject to
review and approval by the NASA Flight and Ground
Safety Review Boards.
3. Timely coordination with UAB-CMC personnel in the
development of experiment functional objectives and
flight and ground operations protocols and
procedures.
4. Timely delivery of all protein crystal materials to
the UAB-CMC in support of prelaunch sample loading
activities.
5. Support to meetings, teleconferences, flight crew
training sessions, integrated mission simulations and
real-time missions operations
6. Designation of NASDA technical points of contact who
will be responsible for coordinating with the SHI
Payload Coordinator all technical activities to be
performed under this Agreement
B. Designation of a Mitsubishi Contract Development and
Implementation Manager (CDIM) who will be responsible for
coordinating with the SHI CDIM all financial,
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<PAGE> 17
scheduling, implementation progress reporting and policy
matters related to this contract.
C. Establishment and maintenance of the required contract(s) with
NASDA to facilitate NASDA sponsorship of the flight of the
CVDA on STS 84.
D. Establishment and maintenance of the required contract with
SHI to obtain SHI lease and integration services necessary for
the flight of the CVDA in SPACEHAB on STS 84.
E. Receipt of established contract milestone payments from NASDA
and provision of established contract milestone payments to
SHI for performance of these required services.
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<PAGE> 18
AGREEMENT
This agreement ("Agreement") is made this 18th day of September, 1996 between
SPACEHAB, Incorporated ("SHI"), a Washington state corporation with its
principal office located in Vienna, Virginia and INTOSPACE GmbH, with its
principal office located in Hannover, Germany ("INTOSPACE"), as contractor to
the European Space Agency ("ESA", collectively "Buyer").
WHEREAS INTOSPACE desires to lease from SHI space in a SPACEHAB
pressurized module ("SPACEHAB" or "Module") and retain SHI to act as the carrier
and interface between the NASA Space Shuttle and ESA's Spacelab Self-Standing
Drawer/Morphological Transition and Model Substances payload ("SSD/MOMO") aboard
the STS-84 SHI Double Module Mission to Mir ("STS-84") currently scheduled for,
and no sooner than, May 1997; and
WHEREAS SHI desires to lease to INTOSPACE such space in the Module and to act as
the carrier as follows: and interface between the NASA Space Shuttle and the
SSD/MOMO aboard STS-84;
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth.
the Parties agree
1. STATEMENT OF WORK
SHI will provide, at the times and locations set forth therein and
pursuant to the terms and conditions of this Agreement, the supplies
and services described in the Statement of Work ("SOU"') attached
hereto as Exhibit A and incorporated herein by this reference.
2. FIXED PRICE
INTOSPACE shall pay SHI a fixed price of 1993 US$ 610,000 for all of
the "Standard Services" provided by SHI, as set forth in the SOW.
Payment to SHI shall be made as follows:
<TABLE>
<S> <C> <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$91,500) after return of STS-84 and completion of all tasks due under the
Agreement
</TABLE>
3. PAYMENT TERMS AND CONDITIONS
a. prepaid earnest money installment upon execution of this
Agreement on or before six months before committed launch date
after return of STS-84 and completion of all tasks due under
the Agreement. The initial payment set forth above shall be
made by INTOSPACE within 30 days of its execution of this
Agreement. SHI will bill INTOSPACE prior to the remaining
above-referenced payment due dates, and payments shall be made
within 30 days of invoice. Payments shall be escalated from
1993 US$ as determined by the US Bureau of Labor Statistics
news release entitled "Productivity and Costs" to July 1, 1996
for all payments. In the event of a material change in the
STS-84 launch date only, SHI will prepare a revised Payment
Schedule corresponding to the CHANGED LAUNCH DATE. EACH
revised payment schedule, if any, shall supersede all previous
payment schedules and will be accompanied by an explanation to
a reasonable level of detail, substantiating the changes
reflected therein.
b. SHI shall send a Final Accounting/Billing to INTOSPACE as
promptly as possible after completion of the last service
provided for by SHI under this Agreement. The Final
Accounting/Billing will contain a final accounting under the
Agreement and address additional payment requirements, if any,
from INTOSPACE. If, as a result of foal Accounting/Billing, an
additional INTOSPACE payment is required, such payment shall
be due 60 days after the billing date of the Final
Accounting/Billing.
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<PAGE> 19
c. In the event STS-84 is delayed, suspended, or postponed, there
may be additional charges to INTOSPACE as specified in the
following circumstances:
Delay caused by NASA
- INTOSPACE pays only additional service costs, if any,
required/provided by NASA and/or SHI.
Delay caused by SHI
- INTOSPACE pays only additional service costs, if any,
required/provided by NASA.
Delay caused by INTOSPACE/ESA
- INTOSPACE pays any additional NASA costs charged to
SHI which may be required or caused by any delay,
suspension or postponement of the launch in excess of
the 72 hours allowable delay for which NASA does not
charge.
- INTOSPACE pays for any additional costs incurred by
SHI for services provided by NASA and/or SHI.
- In the event ESA delivers the payload described in
the SOW ("SSD/MOMO") so late that SHI, in its sole
judgment, is unable to process the SSD/MOMO in time
to meet the launch schedule, SHI will terminate this
Agreement and will retain as liquidated damages all
payments made by INTOSPACE up through the date of
termination.
4. OPTIONAL SERVICES
There are no optional services currently anticipated under this
Agreement. Any optional services requested by INTOSPACE are not
included in the pricing set forth in Section 2 above, and shall be
charged to INTOSPACE at the cost to SHI to perform and/or purchase such
optional services.
5. APPLICABILITY OF NASA/SHI SPACE SHUTTLE AGREEMENTS
SHI and INTOSPACE acknowledge that performance of the services
described in this Agreement and the SOW depends upon the agreement[s]
governing NASA's lease of the Module for STS-84 or any other missions
covered herein ("NASA Contracts"). Any changes to these NASA/SHI
agreement[s] that are imposed by NASA and which prevent SHI from
providing the services described herein shall not constitute a breach
of this Agreement by either SHI or INTOSPACE. In the event of such
changes by NASA, SHI and INTOSPACE agree to negotiate an equitable
adjustment to this Agreement that satisfied both parties as well as
NASA's new requirements. If there are any conflicts between this
Agreement and the requirements of the NASA Contracts applicable to this
Agreement, the NASA Contracts terms and conditions shall take
precedence.
6. EXCHANGE OF DOCUMENTATION AND INFORMATION
a. SHI and INTOSPACE shall exchange all documents and information
required for each party to fulfill its responsibilities under
this Agreement.
b. All technical data furnished to SHI under this Agreement shall
be provided with no restricted rights for use, duplication,
and disclosure in any manner and for any purpose whatsoever in
performance of this Agreement by SHI and its contractors and
subcontractors, and without a restrictive legend, except as
provided below. It is the intent of the parties that the
designation of proprietary technical data or trade secrets
shall be kept to a minimum in order to facilitate
implementation of this Agreement.
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<PAGE> 20
c. In the event any of the technical data required to be
furnished to SHI under this Agreement is considered by
INTOSPACE to be proprietary or a trade secret (such as
detailed design, manufacturing and processing information) and
INTOSPACE desires to maintain proprietary or trade secret
rights for such data, INTOSPACE shall inform SHI that the data
is considered proprietary or a trade secret and any data so
provided shall be conspicuously marked by INTOSPACE
"Proprietary" or "Trade Secret" prior to submittal to SHI. SHI
agrees that the data will not, without permission of
INTOSPACE, be duplicated, used or disclosed by SHI or its
contractors and subcontractors for any purpose other than as
necessary to carry out SHI's obligations pursuant to the
agreements referenced in Section 5 above or this Agreement. If
required by such contractors and/or subcontractors, the data
will only be furnished after the contractors and/or
subcontractors have agreed with SHI in writing to protect the
data from unauthorized use, duplication and disclosure.
d. SHI considers all data (including data reduction and analysis)
obtained or derived from the SSD/MOMO as a result of the
activities for which INTOSPACE has paid SHI under this
Agreement to be property of INTOSPACE, and, in order to
protect trade secrets and other property rights of INTOSPACE
in such data, SHI will maintain such data in confidence. SHI
will not acquire, as a result of launch and associated
services under this Agreement, any rights to INTOSPACE's
copyrights, trademarks, trade secrets, inventions, or patents
which may be used in or result from the SSD/MOMO or any rights
to INTOSPACE's proprietary or trade secret data, except the
right to use duplicate, and disclose such data as set forth
above.
7. PERMITS AND LICENSES
SHI shall obtain any permit or license that may be required to provide
the services to be furnished under this Agreement. INTOSPACE will be
responsible for obtaining any permit or license that may be required to
perform an activity unique to the SSD/MOMO that is not included in the
foregoing, such as tests involving use of radioactive materials or
particular requirements of INTOSPACE's own government[s], or
governmental authorities outside the United States.
8. ALLOCATION OF CERTAIN RISKS AND LIMITATION OF LIABILITY
a. Inter-Party Waiver of Liability. In carrying out this
Agreement, SHI, ESA/INTOSPACE, and NASA, will respectively
utilize their property and employees in the SPPF, NASA
facilities, and during payload processing activities and STS
Operations in close proximity to one another and to others.
Furthermore, the parties recognize that all participands are
engaged in the common goal of meaningful exploration,
exploitation and utilization of outer space. In furtherance of
this goal, the parties hereto agree to a no-fault, no
subrogation, inter-party waiver of liability pursuand to which
each party agrees not to bring claims in arbitration or
otherwise against or sue the other party or other customers of
SHI, and agrees to absorb the financial and any other
consequences arising out of damage to its own property and
employees as a result of participation in the payload
processing activities and STS Operations, irrespective of
whether such damage is caused by SHI, INTOSPACE, other SHI
customers, NASA, or other NASA customers participating in
payload processing activities and STS Operations and
regardless of whether such damage arises through negligence or
otherwise.
b. Extension of Inter-Party Waiver. The parties agree that this
common goal will also be advanced through extension of the
inter-party waiver of liability to other participands in the
payload processing activities and STS Operations. Accordingly,
the parties agree to extend the waiver as set forth in Section
8a above to the other party's and NASA's contractors and
subcontractors at every tier, as third party beneficiaries,
whether or not such contractors or subcontractors causing
damage bring property or employees to SHI's
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<PAGE> 21
SPPF or retain title to other interest in property provided by
them to be used, or otherwise involved, in the payload
processing and Launch Activity. Specifically, the parties
intend to protect these contractors and subcontractors from
claims, including "products liability" claims, which might
otherwise be pursued by the parties, or the contractors or
subcontractors of the parties, or other customers of SHI or
the contractors or subcontractors of such other customers.
Moreover, it is the intent of the parties that each will take
all necessary and reasonable steps to foreclose claims for
damage by any participant in a payload processing and Launch
Activity, under the same conditions and to the same extent as
set forth in Section 8a above, except for claims between
INTOSPACE and its contractors or subcontractors and claims
between SHI and its contractors and subcontractors.
c. Broad Construction of Inter-Party Waiver. The parties intend
that the inter-party waiver of liability set forth above be
broadly construed to achieve the intended objectives.
d. Definitions of "payload processing activity" and "STS
Operations" in Section 8.
"Payload processing activity" means all activity conducted at
the SPPF or a NASA facility associated with the preparation of
the payload(s) (including but not limited to the SSD/MOMO) for
launch and SHI and for NASA storage of all or a portion of the
payload(s), and the handling and transportation of all or a
portion of the payload(s) outside the confines of SHI's
facility by SHI, NASA, or their contractors or subcontractors:
"STS Operations" means:
A. All Space Shuttle System Activity
B. All payload operations
C. Use of all tangible personal property
(including ground support, test, training
and simulation equipment related to A & B
above).
D. Research, design, development, test,
manufacture, assembly, integration,
transportation, or use of materials related
to the above items, A, B &; C.
E. Performance of any activities related to A
through D.
e. The protection of cross waiver of liability for STS Operations
herein agreed to shall cover a period of time during which STS
Operations are being performed as follows:
Beginning with the signature of an Agreement or
Arrangement with NASA for Space Transportation System
services and (i) when any employee, payload or
property arrives at a United States Government
Installation, or (ii) during transportation of such
to the installation by a United States Government
Conveyance, or (iii) at ingress of such into an
Orbiter, for the purpose of fulfilling such Agreement
or Arrangement, or (iv) the commencement of
extravehicular activities by the Shuttle Crew for the
purpose of retrieval of the payload, whichever occurs
first and Ending with regard to any employee, payload
or property, when such employee, payload or property
departs (i) a U.S. Government Installation, or (ii)
the Orbiter if it lands at other than such
Installation, or (iii) a U.S. Government conveyance
which transports the employee and/or payload and
related property from such Installation or Orbiter.
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<PAGE> 22
f. Risk of Patent Infringement
(i) SHI agrees to indemnify INTOSPACE, its officers,
employees and agents against any United States Patent
infringement costs (including, but not limited to,
any judgment against INTOSPACE by a court of
competent jurisdiction, reasonable administrative and
litigation costs, and settlement payments made as a
result of an administrative claim) incurred by
NTOSPACE which are attributable to products,
processes or articles of manufacture used in the
facilities and Services to be furnished to INTOSPACE
by SHI hereunder.
(ii) INTOSPACE agrees to indemnify SHI and NASA, their
officers, employees and agents against any United
States Patent infringement costs (including, but not
limited to, judgment against SHI by a court of
competent jurisdiction, reasonable administrative and
litigation costs, and settlement payments made as a
result of an administration claim) incurred by SHI
and/or NASA which are attributable to products,
processes or articles of manufacture used in the
SSD/MOMO and any supporting equipment and facilities
brought to the SHI SPPF by INTOSPACE or INTOSPACE's
contractors or subcontractors and any activity
performed at SHI or NASA facilities by INTOSPACE or
INTOSPACE's contractors or subcontractors and any
activity performed at SHI or NASA facilities by
INTOSPACE or INTOSPACE's contractors or
subcontractors.
g. Limitation of SHI and INTOSPACE Liability Notwithstanding any
other provisions herein, to the extent that a risk of damage
is not dealt with expressly in this Agreement, SHI's and the
INTOSPACE's liability under this Agreement, whether or not
arising as a result of an alleged breach of this Agreement,
shall be limited to direct damages only and shall not include
any loss of revenue, profits or other indirect or
consequential damages.
9. ASSISTANCE WITH THIRD PARTY CLAIMS
In the event a third party claim is asserted against SHI or INTOSPACE
as a result of patent infringement, use of proprietary data, or damage,
including claims of their respective contractors or subcontractors,
arising from or in connection with the Services provided by SHI under
this Agreement, SHI and INTOSPACE each agree to give prompt notice to
the other of any such claim and agree to provide each other with any
assistance practicable in the defense against such claim. If a claim
asserted against one party is a claim under this Agreement, the party
who has agreed to indemnify shall have the right to intervene and
defend, the right to control litigation of, and the right to determine
the appropriateness of any settlement related to such claim.
10. WARRANTIES
SHI MAKES NO WARRANDIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY
IMPLIED WARRANDY OF MERCHANDIBILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
11. PUBLICITY RELATING TO AGREEMENT
In cases where one Party intends to use results obtained from this
Agreement or advertise his role in this Agreement, it shall first
request the other Party for its prior written approval, which shall not
be unreasonably withheld.
12. APPLICABLE LAW
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The Agreement shall be governed by German law, except to the extent
that an issue is not governed expressly by the Agreement, in which case
US Federal law shall govern all such issues.
13. ARBITRATION/DISPUTES
Disputes arising out of the interpretation or execution of this
Agreement which cannot be resolved by negotiation shall, at the request
of either Party, (after giving 30 days notice to the other Party) be
submitted to arbitration. The arbitration tribunal shall sit in
Hannover, Germany. Disputes shall be finally settled in accordance with
the Rules of Conciliation and Arbitration of the International Chamber
of Commerce by one or more arbitrators designated in conformity with
those Rules. The decision to submit a dispute shall not excuse either
party from the timely performance of its obligations hereunder which
are not the subject matter of the dispute. Further, if the lack of
resolution of the matter in dispute will adversely impact the timely
completion of preparation for launch activities, INTOSPACE and SHI will
perform the matter in dispute in the manner determined by SHI, within
the framework of this Agreement and without prejudice to the final of
the matter in dispute.
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14. TERMINATION OF SERVICES
Both parties have the right to terminate this Agreement pursuant to the
following conditions only:
a. SHI may terminate this Agreement:
(i) as a result of breach by INTOSPACE if INTOSPACE has
not cured the breach within are a reasonable time
after written notice to INTOSPACE (or immediately
upon a non-curable breach), in which case SHI shall
retain all payments made to the date of the
termination, and INTOSPACE is further liable for all
costs incurred by SHI resulting from INTOSPACE's
breach of the Agreement or,
(ii) as a result of any actions or inactions by NASA which
materially impair SHI's ability to perform this
Agreement, in which case INTOSPACE shall be entitled
to any transportation costs for which SHI is
reimbursed by NASA and which were previously paid by
INTOSPACE.
b. INTOSPACE may terminate this Agreement
(i) without cause at any time before installation of the
SSD/MOMO into the SHI module upon sufficient written
notification to SHI of such intent, in which case
INTOSPACE shall be liable for and SHI shall retain as
liquidated damages all Transportation and Lease
progress payments, plus the Integration and Optional
Services costs incurred up to the time of
termination, as well as all termination charges, or
(ii) in the event of material breach by SHI which SHI
fails to cure in a reasonable time after written
notice of such material breach is received from
INTOSPACE, in which case INTOSPACE will be relieved
from making any further payments to SHI subsequent to
the material breach hereof.
c. Termination In Special Cases
INTOSPACE may at any time terminate this Agreement by giving
written notice with immediate effect in any of the following
events:
- if SHI becomes insolvent or if its financial position
is such that within the framework of its national
law, legal action leading towards bankruptcy may be
taken against it by its creditors;
- if SHI resorts to fraudulent practices in connection
with the contract, especially by deceit concerning
the nature, quality or quantity of the supplies, and
the methods or processes of manufacture employed or
by the giving or offering of gifts or remuneration
for the purpose of bribery to any person in the
employ of an ESA Member State or of ESA or acting on
its behalf, irrespective of whether such bribes or
remuneration are made on the initiative of SHI or
otherwise.
15. ASSIGNMENTS
a. Assignment, delegation or use as security on a first mortgage
of this Agreement or rights or duties hereunder by SHI is
hereby consented to by INTOSPACE.
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b. INTOSPACE shall not assign to another person or entity any
party of its rights under this Agreement, including but not
limited to rights for services related to scheduled launches,
except to ESA for the SSD/MOMO, and as otherwise expressly
agreed to by SHI in writing, and as may be required pursuant
to law.
c. In the event that INTOSPACE receives notice that this
Agreement has been assigned to a lending institution,
INTOSPACE agrees (1) to acknowledge such assignment; (2) that
any Agreement or agreement so assigned may neither be amended
in any material respect nor terminated by SHI without the
prior consent of such lending institutions; and (3) will
promptly notify the lending institutions of any default by SHI
and will provide the lending institution with a reasonable
opportunity for the cure of such default.
16. NOTICES
All notices, requests, demands, and other communication hereunder shall
be in writing and shall be either (1) personally delivered, (2) sent by
mail or reputable overnight delivery service, or (3) transmitted by
facsimile machine as follows:
To SHI: Nelda Wilbanks
Contracts Administrator
SPACEHAB, Inc.
1595 Spring Hill Road, Suite 360
Vienna, VA 22182
To INTOSPACE: Thomas Hauschild
INTOSPACE GmbH
Sophienstrasse 6
D-30159 Hannover I Germany
The effective date of each notice, demand, request or other
communication shall be deemed to be: (1) the date of receipt if
delivered personally or by mail or overnight delivery service, or (2)
the date of transmission if by facsimile. Either party may change its
address or designee for purposes hereof by informing the other party in
writing of such action and the effective date of such change.
17. FORCE MAJEURE
Neither party shall be liable for delays or breaches hereof resulting
from events or acts beyond the control of such party, including but not
limited to acts of God, strikes, lockouts, riots, acts of war,
epidemics, governmental regulations, and natural disasters. Upon the
occurrence of such event, the party whose performance is affected shall
use reasonable efforts to notify the other party of the nature and
extent of any such condition and negotiate its affects.
18. COMPLETE AGREEMENT
This Agreement constitutes the complete agreement and understanding
with respect to the subject matter hereof between the parties.
INTOSPACE SHI, INC.
By: /s/ Jurgen Vonder Lippe By: /s/ David Rossi
------------------------- --------------------
Name: Jurgen Vonder Lippe Name: David Rossi
------------------------- --------------------
Title Managing Director Title: Sr. Vice President
------------------------- -------------------
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Exhibit A
SHI-INTOSPACE (ESA) STATEMENT OF WORK:
I. General Description of SHI Integration Flight Services
SHI will provide and maintain a pressurized module ("SPACEHAB") that
fits the cargo bay of the National Aeronautics and Space Administration
(NASA) Space Shuttle Orbiter ("Shuttle") to act as the carrier and
interface between the Shuttle and the Self-Standing
[Drawer/Morphological Transition and Model Substances ("SSD/MOMO")
payload. Power, thermal control, command and data management,
environmental control, and structural support facilities and systems
are available to support SSD/MOMO. Adaptive SPACEHAB rack hardware to
permit physical integration of SSD/MOMO into the SPACEHAB are also
provided by SHI. The SSD/MOMO will be analytically, physically and
operationally integrated with other user payloads into the SPACEHAB.
SHI services will include SSD/MOMO launch into orbit, in-orbit
operation by a trained flight crew, return of SSD/MOMO to the launch
site and to the SPACEHAB Payload Processing Facility (SPPF);
deintegration of all SSD/MOMO hardware, and return of SSD/MOMO hardware
to ESA. All SHI (and NASA) provided services for the SSD/MOMO are
considered "standard" and are included in SHI's basic contract price.
There are no known requirements for SPACEHAB or NASA-provided
"optional" services (e.g. late access/early retrieval) for the SSD/MOMO
payload.
II RESPONSIBILITIES OF SPACEHAB, INC. (SHI)
A. PROVISION OF STANDARD SERVICE
In support of the flight of the ESA sponsored SSD/MOMO experiment
aboard the SPACEHAB module on STS 84, SHI shall perform the following
"standard" services.
1. Provision of Standard Services
SHI will negotiate and execute all agreements with NASA which are
required to manifest the SSD/MOMO experiment aboard SPCEHAB on STS 84.
SHI will pay NASA's required transportation charges according to
established payment methods and milestones.
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2. Provision of Experiment Interface Definition and Analytical
Integration
SHI will assess ESA developed SSD/MOMO data, performance analyses, and
SPACEHAB subsystem resource requirements and perform the following
experiment requirements synthesis and analysis tasks:
a. Development of the core SPACEHAB/SSD/MOMO Interface Control Document
(ICD); the ICD Appendix A (Ground Operations Interface Requirements);
the ICD Appendix B (Safety/Verification Requirements); and the ICD
Appendix C (Flight Operations Interface Requirements).
b. Integration and submittal of flight and ground safety review
packages to NASA (Phase II, III) as required.
c. Development of experiment stowage requirements.
d. Analysis of all experiment test/analytical data as it pertains to
the physical (structural) interface with the SPACEHAB rack and module.
e. Performance of a mass/center of gravity (c.g.) analysis
f. Performance of an experiment materials analysis
g. Performance of an experiment SPACEHAB resource requirements
assessment.
3. Provision of Mission Analytical Integration
Based upon the SSD/MOMO's data and optional requirements, provided by
ESA, SHI will locate the SSD/MOMO in a SPACEHAB rack within the
SPACEHAB pressurized volume (with a compatible complement of payloads),
will integrate the SSD/MOMO resource requirements and safety data with
those of other payloads, and will develop flight procedures and
timelines for operation of the experiment in-orbit. Specifically,
SPACEHAB will perform the following mission integration tasks for ESA:
a. Development of an integrated Mission Requirements and Allocations
Document (MRAD) which incorporates the SPACEHAB module and Shuttle
mission
27
<PAGE> 28
resource requirements necessary for the successful implementation of
SSD/MOMO experiment objectives.
b. Development and submittal to NASA of the required Shuttle Payload
Integration Plan (PIP) data as it pertains to the SSD/MOMO requirements
for Shuttle resources.
c. Development and implementation of an integrated Crew Training Plan
which includes documentation of all requirements for SSD/MOMO flight
crew training, scheduling of all SSD/MOMO crew training sessions with
the NASA Training Coordinator, coordination of all SSD/MOMO training
sessions with the affected SSD/MOMO Principle Investigators and Payload
Element Developers, and direction of all integrated timeline training
sessions at the SPPF.
d. Development and production of a flight qualified SSD/MOMO Experiment
Operations Checklist (EOC) for onboard use by the flight crew.
e. Development of SSD/MOMO crew activity timeline inputs for inclusion
by NASA in the integrated Shuttle Crew Activity Plan.
f. Radon of ESA-provided SSD/MOMO flight and ground safety data into
mission safety packages for review by the NASA Flight and Ground
Payload Safety Review.
g. Representation of ESA and the SSD/MOMO to NASA at all NASA payload
integration process forums and meetings, including payload safety
reviews.
4. Provision of Hardware Physical Integration and Deintegration
This category involves the preparation for and execution of
SSD/MOMO-to-SPACEHAB and SPACEHAB-to-Shuttle physical integration and
deintegration tasks to support the SSD/MOMO's flight on STS 84. It
includes logistics and ground operations planning, ground procedures
development, integrated schedule development, hardware physical
installation, and ESA personal accommodation elements. The activities
associated with this function are performed within the SPACEHAB Payload
Processing Facility (SPPF) at Cape Canaveral, Florida. Specifically,
SHI will provide to ESA the following services:
a. Coordination of shipping and receiving of flight and training
hardware to and from the SPPF.
28
<PAGE> 29
b. Provision of a SPPF Customer Work Area with the necessary security
and administrative/laboratory equipment to control, store and prepare
for flight all SSD/MOMO parts, element materials and supporting
equipment.
c. Provision at the SPPF of a high fidelity mockup of the SPACEHAB
module for use in experiment interface checks and in integrated
timeline training with the flight crew.
d. Integration of the SSD/MOMO into the SPACEHAB rack and into the
SPACEHAB module and performance of a SPACEHAB resource accommodations
Interface Verification Test (IVI) prior to the module's delivery to
KSC; and deintegration of the same hardware following the SPACEHAB
module's post-flight return to the SPPF.
5. Provision of Flight Operations Support
For the Flight Phase, SHI will provide accommodations for ESA and
INTOSPACE management, technical and scientific personnel in the Mission
Control Center (MCC) at the NASA Johnson Space Center. The following
services will be provided at the MCC:
a. Physical accommodations for personnel to monitor real-time
operations during the Prelaunch, Flight, and Postlanding phases of the
STS 84 mission.
b. Telemetry, voice and video data as required to monitor the progress
of the SSD/MOMO experiment operations over the duration of the mission
c Provision of a Mission Console Handbook which provides
administrative, technical and logistics information about the SSD/MOMO
and other experiments aboard the SPACEHAB module as well as about the
cadre of NASA, ESA, INTOSPACE and SHI personnel supporting the mission.
Administrative services for acquiring/copying and routing of
mission-related data and correspondence to local and remote locations.
6. Provision of Support to Post-Flight Data Analysis
SHI will provide or coordinate the provision of the required historical
SSD/MOMO flight data and timeline information and in support of
SSD/MOMO post flight analysis activities.
8. Provision of SSD/MOMO Project Management
29
<PAGE> 30
To organize, schedule and manage the provision of the standard and
optional services as described above, SHI shall provide the follow
SSD/MOMO project management personnel and methods:
a. SHI will designate an SHI Contract Development and Implementation
Manager (CDIM) who will be responsible for coordinating with the
INTOSPACE CDIM all financial, scheduling, implementation, progress
reporting and policy matters related to this contract. The CDIM will:
1.) Coordinate SHI inputs to the development and maintenance of this
contract with INTOSPACE and ESA persons as required.
2.) Establish methods for communication of contract implementation
activities to all participants (e.g. teleconferences, e-mail lists, key
meetings).
b. SHI will designate an SHI SSD/MOMO Payload Coordinator (PC) for the
SSD/MOMO experiment. The PC will:
1.) Be the principal SHI advocate for the successful flight of the
SSD/MOMO.
2.) Be responsible for coordinating with the SHI, ESA and NASA
technical points of contact all SHI support related to the technical
and operational implementation of the standard services described
above.
3.) Be responsible for the identification and resolution of all
technical and operational issues pertaining to the flight of the
SSD/MOMO experiment.
9. Provision of SSD/MOMO Progress Report
In order to facilitate the routine exchange of mission integration and
scheduling information and a team oriented approach to problem
identification and resolution, the following methods of communication
will be established:
a. The PC will hold biweekly teleconferences with key
project participants to plan and/or status integration
activities and to resolve issues.
b. The PC will develop and maintain a detailed,
date-specific SSD/MOMO Integration Milestones Template
(IMT) which identifies all key deliverables as well as
all key mission preparation milestones.
c. The SHI CDIM will provide monthly reports to INTOSPACE
on the status of SSD/MOMO mission integration
activities.
30
<PAGE> 31
B. PROVISION OF OPTIONAL SERVICES
There have been no optional services identified for the SSD/MOMO
experiment flight aboard SPACEHAB on STS-84.
III. RESPONSIBILITIES OF INTOSPACE
INTOSPACE will serve as ESA's administrative agent for establishing a
contract relationship with SHI. Therefore, it is INTOSPACE's
responsibility to establish and maintain this contract directly with
SHI, on ESA's behalf, in order for ESA to obtain from SHI the necessary
lease and integration services required for the successful flight of
the SSD/MOMO in the SPACEHAB module. Acting in this capacity, INTOSPACE
will:
A. Facilitate ESA's completion of the following critical
preparatory functions in support of the flight of the SSD/MOMO
experiment:
1. All SSD/MOMO hardware and experiment materials shall conform
to established NASA payload safety requirements documentation
and are subject to review and approval by the NASA Flight and
Ground Safety Review Boards.
2. Timely coordination with the SHI Payload Coordinator in the
development of experiment functional objectives and flight and
ground operations protocols and procedures.
3. Timely delivery of all SSD/MOMO to the SPPF for preflight
processing.
4. ESA support to meetings' teleconferences, flight crew training
sessions, integrated mission simulations and real-time
missions operations.
31
<PAGE> 32
5. Designation of ESA technical points of contact who will be
responsible for coordinating with the SHI Payload Coordinator
all technical activities to be performed under this Agreement.
B. Designation of an INTOSPACE Contract
Development and Implementation Manager (CDIM) who
will be responsible for coordinating with the SHI
CDIM all financial, scheduling, implementation
progress reporting and policy matters related to
this contract.
C. Establishment and maintenance of the
required contract(s) with ESA to facilitate ESA
sponsorship of the flight of the SSD/MOMO on STS-84.
D. Establishment and maintenance of the
required contract with SHI to obtain SHI lease and
integration services necessary for the flight of the
SSD/MOMO in SPACEHAB on STS-84.
E. Receipt of established contract milestone
payments from ESA and provision of established
contract milestone payments to SHI for performance
of these required services.
32
<PAGE> 1
EXHIBIT 10.47
Letter Contract No. SHB 1014
Page 1 of 4
LETTER AGREEMENT
To: McDonnell Douglas Aerospace - Huntsville
Address: 689 Discovery Drive
Huntsville, Alabama 35806
Attn: Doyle McBride
Contract Administrator
Dear Mr. McBride:
1. SPACEHAB, Inc. ("SPACEHAB"), hereby commercially contracts with
McDonnell Douglas Aerospace - Huntsville (hereinafter referred to as
"MDA-Huntsville" or "Seller"), a division of the McDonnell Douglas
Corporation, for the performance of all integration and operations
tasks required to successfully complete 4 SPACEHAB science missions (1
single module mission and 3 double module missions) and 2 SPACEHAB
cargo double module missions (Multiple Mission Integrations and
Operations (MM I/O Tasks)). The definitized contract will include
options for 3 additional cargo double module missions that may be
executed in accordance with the definitized schedule.
2. Except as otherwise expressly provided herein, Seller is directed, upon
its execution of this contract to proceed immediately to procure the
necessary materials and to commence performance of the services
contemplated herein, and to pursue such work with all diligence within
the funding parameters set forth in paragraph 3 below.
3. The maximum amount (including, but not limited to, a reasonable amount
for termination costs and for 12 percent fee) for which SPACEHAB shall
be liable under this letter contract is $998,386 ("Maximum Amount").
4. It is expected that a successor contract, incorporating and superseding
this document, will be negotiated and executed between the parties as
defined below. The parties agree to promptly begin good faith
negotiation of the terms of the successor contract in accordance with
the following schedule:
Receipt of Proposal
Proposal Supplement 29 August 1997
Evaluation Complete 12 September 1997
Negotiation Complete 19 September 1997
<PAGE> 2
Letter Contract No. SHB 1014
Page 2 of 4
Definitized Contract Signed 30 September 1997
The parties shall, as soon as possible after submission of the proposal
by Seller, negotiate and agree to a final and complete Statement of
Work (SOW).
5. This Letter Agreement shall terminate automatically (unless otherwise
agreed to by the parties in writing) when the total of all payment
obligations incurred by SPACEHAB hereunder reaches the Maximum Amount,
and SPACEHAB shall not be liable for nor pay any amount above the
Maximum Amount regardless of Seller's actual incurred costs hereunder.
Seller shall notify SPACEHAB in writing before reaching the Maximum
Amount. Such written notice shall include: (i) a proposed new Maximum
Amount; (ii) an extension of the period of performance if necessary;
and (iii) appropriate supporting information. Upon receipt of said
notice, SPACEHAB may at its sole discretion amend this Letter Agreement
to increase the Maximum Amount and/or the time of performance.
6. This contract authorizes billings hereunder to be submitted to SPACEHAB
on a monthly basis. Payments shall be due within 30 days after
SPACEHAB's receipt of invoices therefore (and, if requested, reasonable
supporting documentation) to:
McDonnell Douglas Aerospace
P.O. Box 516
St. Louis, Mo 63166
Attn: Accounts Receivable
7. SPACEHAB may unilaterally decrease the Maximum Amount by issuing to
Seller an Administrative Contract Funding Order ("Change Order") signed
by a duly authorized representative of SPACEHAB; provided, however,
that such decrease does not reduce the Maximum Amount below reasonable
costs incurred under paragraph 4, (plus an 12% fee) up to the date of
the Change Order and those reasonable costs which unavoidably continue
after such date (Seller shall discontinue incurring such costs as soon
as possible after notice of such Change Order reduction), the
reasonable costs of settling terminated subcontracts, if any, and
protecting and disposing of termination inventory. Upon receipt of such
Change Order, Seller shall immediately stop work hereunder except as
expressly permitted therein.
8. Period of performance: 7/31/97 - 9/30/97
9. This Contract shall be governed by and construed according to the laws
of the State of Delaware.
<PAGE> 3
Letter Contract No. SHB 1014
Page 3 of 4
10. The parties agree that the implied warranties of MERCHANTABILITY and
fitness for a particular purpose and all other warranties, express or
implied, are EXCLUDED and shall not apply to the goods and services
sold under this letter contract. In no event shall Seller or SPACEHAB
be liable under any legal theory for incidental or consequential
damages, including, but not limited to, incidental or consequential
damages for lost profits, lost sales, or loss of use.
11. Indemnity - SPACEHAB, Inc. shall indemnify and save harmless Seller,
its subcontractors and any officers, directors, employees, and agents
of any of them (collectively referred to hereafter as the "Indemnitee")
from any liability and expense on account of loss of or damage to the
property of third parties (including the U.S. Government) or bodily
injury to any person, including death, caused by or resulting from the
use of the goods furnished hereunder and/or arising from the provision
of services hereunder excepting only such loss, damage, or injury
caused by the Indemnitee's gross negligence or willful misconduct, and
subject to Seller's compliance with paragraph 10, SPACEHAB, Inc. shall
defend any suits or other proceeding brought against the Indemnitee
related to the use of goods furnished or services provided hereunder
and shall pay all reasonable expenses and satisfy all judgments which
may be incurred or rendered against the Indemnitee in connection
therewith to the extent such expense or judgment has not resulted from
the gross negligence or willful misconduct of the Indemnitee. Seller
shall give SPACEHAB, Inc., prompt written notice of any claim of such
loss, damage, or injury and shall cooperate with SPACEHAB, Inc. and its
insurers in every reasonable way in defending against such claim. In no
event shall the indemnitee compromise or settle any claim without
SPACEHAB's written consent. SPACEHAB, Inc. shall obtain insurance,
naming Seller as a coinsured, against such liabilities to third parties
as are referred to in this paragraph.
12. Provisions for Execution - Seller and SPACEHAB shall execute two (2)
copies of this Letter Agreement, one original for each party.
13. Confidentiality - The party receiving any data, documents, drawings,
models and other information and intellectual property pursuant to this
Letter Agreement ("receiving party") shall keep all such information
confidential and not disclose any information made available to it by
the disclosing party in connection with this Letter Agreement to 1) any
third party or 2) any receiving party employee, consultant or agent
without a need to know. The receiving party shall return to the
disclosing party all such confidential information in whatever medium
it exists upon the disclosing party's request.
<PAGE> 4
Letter Contract No. SHB 1014
Page 4 of 4
14. Key Personnel
The personnel listed below are considered essential to the work being
performed under this contract. Before removing, replacing, or diverting
any of the listed personnel, MDA shall notify SPACEHAB, Inc. in
advance, and shall provide rationale including identification and
qualifications of candidate replacement, and shall not remove, replace
or divert such personnel without SHI's written consent, which shall not
be unreasonably withheld. In such event, the list of personnel shall
then be amended accordingly.
Key Personnel Title/Position
J. H. James Director, SPACEHAB Program
R. H. Keen SPACEHAB Chief Mission Manager
D. A. Biggs Senior Manager, SPACEHAB Integration & Operations
E. L. Streams Senior Manage, SPACEHAB Product Engineering
W. H. Turner Senior Manager, SPACEHAB Ground Operations
SPACEHAB, Inc. McDonnell Douglas Aerospace
Huntsville
By /s/ Nelda Wilbanks By /s/ Doyle McBride
---------------------------------- ---------------------------------
Typed Name Nelda Wilbanks Typed Name Doyle McBride
-------------------------- -------------------------
Title Contracts Administrator Title Contract Administrator
------------------------------- ------------------------------
Date Date
-------------------------------- -------------------------------
<PAGE> 1
EXHIBIT 10.48
LETTER AGREEMENT
To: Daimler-Benz Aerospace
Address: P.O. Box 286156
D-28361 Bremen
Germany
Attn: Josef Kind
President, Space Infrastructure Division
Dear Mr. Kind:
1. Pursuant to this letter agreement ("Letter Agreement") SPACEHAB, Inc.
("SPACEHAB"), agrees to contract with Daimler-Benz Aerospace
(hereinafter referred to as "DASA" or "Seller"), to refine the SPACEHAB
conceptual design for a flight qualified Initial Integrated Cargo
Carrier ("IICC") and associated test and support equipment in
accordance with the Statement of Work ("SOW") attached hereto as
Exhibit A and incorporated herein by this reference.
2. This Letter Agreement is for all activities required to complete a
Preliminary Design Review ("PDR") for the IICC, as well as for long
lead material orders or schedule protection activities that must be
accomplished prior to PDR in order to complete the full IICC program on
a schedule to support delivery of the IICC flight hardware to SPACEHAB
in June of 1999. Any material procurements and efforts for schedule
protection activities for the aforementioned long lead items shall be
funded as a change to this Letter Agreement. The parties expect that a
successor contract for the delivery of flight qualified IICC hardware,
incorporating and superseding this Letter Agreement, will be negotiated
and executed between the parties no later than 31 December 1997
("Production Contract"). The parties agree to promptly begin good faith
negotiation of the terms of the Production Contract. If the parties are
unable to agree on terms for a production contract, and SPACEHAB
contracts with a third party for production, then SPACEHAB agrees to
reimburse DASA $120,000 (One Hundred Twenty Thousand U.S. Dollars) over
and above the payments as per Section 4 below, for DASA's in-kind
contribution to the PDR.
3. The IICC hardware includes one major element, the Unpressurized Cargo
Pallet ("UCP"), which will be integrated into the IICC under the
Production Contract. SPACEHAB has separately contracted with
RSC-Energia to perform preliminary design of the UCP and associated
test and support equipment through completion of a PDR for the UCP.
DASA is expected to work directly and informally with SPACEHAB and
Energia engineers as
<PAGE> 2
required for integration of the UCP PDR into the IICC system PDR.
SPACEHAB shall control and be responsible for all Interface Control
Documents between DASA and Energia. Deliverables under this Letter
Agreement shall be made to SPACEHAB.
4. The fixed price to be paid to DASA for the products and services under
this Letter Agreement is $150,000 (One Hundred Fifty Thousand U.S.
Dollars). This amount is to be paid in three payments. First payment
(30% of fixed price) to be paid upon execution of this Letter
Agreement. Second payment (40% of fixed price) to be paid upon
acceptance by SPACEHAB of the design trade study (deliverable item # 4
of Section 4.1 of Exhibit A) due (60) sixty days after execution of
this Letter Agreement. The final 30% payment shall be made at
successful completion of the PDR (defined as closing out of all PDR
review items and actions) fifteen (15) days after the PDR milestone.
All payments shall be made by wire transfer to the account set forth in
Exhibit B attached hereto and shall be completed within 30 days of
written ratification of completion of the associated payment milestone
by the SPACEHAB ICC Program Manager.
5. Reimbursement for Travel Expenses: The fixed price in section 4 above
is for provision of the products and services associated with the
attached SOW, with the sole exception of travel costs in support of
program reviews, technical interchange meetings and other travel
activities approved in advance by SPACEHAB. SPACEHAB shall reimburse
DASA for actual pre-approved airline expenses, and on a per diem basis
for hotel, meals, and other expenses. The per diem allowance shall be
at the rate of $180 per day in Houston and Florida, and $430 per day in
the Moscow area. Expenses for travel to any other locations shall
require the approval of SPACEHAB and will be reimbursed on an actual
cost basis.
6. Period of performance: From date of execution of this Letter Agreement
through 31 December 1997.
7. Technical Direction: Seller shall accept technical direction from one
of the following SPACEHAB individuals only:
Prime Contact - Pete Gadsby, ICC Program Manager
Alternate Contact - Clark Thompson, Director, Product Development
8. Provisions for Execution: Seller and SPACEHAB shall execute two (2)
copies of this Letter Agreement in English (one original for each
party).
9. Intellectual Property Rights: All Intellectual Property utilized in the
performance of this Letter Agreement shall remain the exclusive
property of the party(s) who developed, or had the rights in, the IP
prior to this Letter Agreement. Rights to intellectual property jointly
developed under the terms of this Letter Agreement will be negotiated
between SPACEHAB and DASA as the situation arises.
2
<PAGE> 3
10. Confidentiality: Per the Nondisclosure Agreement between the parties
dated September 9, 1996.
11. All provisions herein and performance hereunder shall be governed by
the laws of the Commonwealth of Virginia.
12. Any and all disputes hereunder shall be resolved by arbitration in the
Washington, D.C. metropolitan area pursuant to the arbitration rules of
the International Chamber of Commerce.
SPACEHAB, INC. DASA
By: /s/ Nelda Wilbanks By:
------------------------------------- -----------------------------
Typed Name: Nelda Wilbanks Typed Name:
---------------------------- ---------------------
Title: Contracts Administrator Title:
---------------------------------- --------------------------
Date: Date:
----------------------------------- ----------------------------
3
<PAGE> 4
EXHIBIT B - WIRE TRANSFER INSTRUCTIONS
Account of Daimler-Benz Aerospace - RI
Account No. 1435264741
At Bremer Laudesbank
BLZ 290 500 00
4
<PAGE> 1
EXHIBIT 10.49
Supplemental Agreement 08
July 31, 1997
COST PLUS INCENTIVE FEE CONTRACT
NUMBER SHB 1013
JULY 31, 1997
FOR
SPACEHAB SCIENCE DOUBLE MODULE CONSTRUCTION
BETWEEN
MCDONNELL DOUGLAS CORPORATION,
MCDONNELL DOUGLAS AEROSPACE
HUNTSVILLE DIVISION
689 DISCOVERY DRIVE
HUNTSVILLE, ALABAMA 35806
AND
SPACEHAB, INCORPORATED
1595 SPRING HILL ROAD
SUITE 360
VIENNA, VIRGINIA 22182
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Article 1 - Entire Agreement........................................................................ 1
Article 2 - Definitions............................................................................. 1
Article 3 - Scope of Work........................................................................... 1
Article 4 - Period of Performance................................................................... 1
Article 5 - Contract Amount......................................................................... 1
Article 6 - Payment................................................................................. 2
Article 7 - Limitation of Funds..................................................................... 3
Article 8 - Supplies/Services and Delivery Schedule................................................. 3
Article 9 - Title and Delivery...................................................................... 3
Article 10 - Packaging and Marking................................................................... 3
Article 11 - Inspection and Acceptance............................................................... 4
Article 12 - Place of Performance.................................................................... 4
Article 13 - Items, Equipment, Property, Services to be Furnished by SPACEHAB, Inc.
And/or the Government on a "No Charge" Basis............................................ 4
Article 14 - Exchange of Technical Information....................................................... 4
Article 15 - Excusable Delays........................................................................ 5
Article 16 - Changes................................................................................. 5
Article 17 - Amendments.............................................................................. 7
Article 18 - Stop Work Orders........................................................................ 6
Article 19 - Notices................................................................................. 6
Article 20 - Key Personnel........................................................................... 7
Article 21 - Termination............................................................................. 8
Article 22 - Governing Law........................................................................... 8
Article 23 - Arbitration/Disputes.................................................................... 8
Article 24 - Audit................................................................................... 8
Article 25 - Indemnity Against Patent Infringement................................................... 9
Article 26 - Limitation of Liability................................................................. 9
Article 27 - Insurance and Indemnification........................................................... 9
Article 28 - MDC Employee Injury..................................................................... 10
Article 29 - Warranty................................................................................ 10
Article 30 - Relationship of Parties................................................................. 10
Article 31 - Manned Space Flight Item................................................................ 10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Article 32 - Order of Precedence..................................................................... 11
Article 33 - Technical Data.......................................................................... 11
Article 34 - Patent Rights.......................................................................... 11
</TABLE>
ii
<PAGE> 4
THIS CONTRACT, by and between SPACEHAB, Inc. with an address at 1595 Spring Hill
Road, Suite 360, Vienna, Virginia 22182 (hereinafter referred to as "SPACEHAB,
Inc." or "SHI") and McDonnell Douglas Corporation, acting through its McDonnell
Douglas Aerospace-Huntsville Division, with an address at 689 Discovery Drive,
Huntsville, Alabama 35806, (hereinafter referred to as "MDC"). McDonnell Douglas
Aerospace - Huntsville Division represents and warrants that it is acting on
behalf of McDonnell Douglas Corporation and that it has the corporate power and
authority to legally add McDonnell Douglas corporation to the terms and
conditions of this Contract. The parties hereby agree as follows:
Article 1 - Entire Agreement
This Contract, all exhibits and other documents incorporated herein by
reference, whether or not attached hereto, constitute the complete and exclusive
statement of the Contract between the parties hereto. This Contract supersedes
any previous understanding or agreement between SHI and MDC (oral or written)
with respect to the subject matter hereof. Further, this Contract constitutes a
definitization of Letter Contract SHB 1013 dated 24 July 1996 including
modifications thereto through Change Order No. 06 dated 31 May 1997 between SHI
and MDC.
Article 2 - Definitions
A. The term "MDC" shall include McDonnell Douglas Aerospace - Huntsville
Division.
B. The terms "General Agreement," "Basic Agreement," "Basic Terms and
Conditions," "Agreement" and "Contract" shall mean this Contract and
shall be deemed to include all exhibits, specifications, drawings, or
other documents incorporated herein by reference.
Article 3 - Scope of Work
MDC is the prime Contractor responsible for performance of all work set forth in
this Contracts, including work to be performed by any subcontractor.
MDC shall provide design, manufacture, test and system integration services to
develop SPACEHAB Science Double Module configuration in accordance with
requirements identified in MDC Contract End Item (CEI) specifications ECO9000
and ECO8999 and Statement of Work (SOW) defined in document MDC 97W5614 dated
July 1997, herein referenced and incorporated in their entirety.
Article 4 - Period of Performance
MDC shall perform the work called for under this Contract in accordance with the
agreed to Statement of Work as specified in Article 3 herein, including
preparation and submission of all reports, during the period of performance
beginning 24 July 1996 and continuing through 15 November 1999, and as may be
extended by mutual agreement.
Article 5 - Contract Amount
A. General. This is a Cost Plus Incentive Fee Contract. The following
estimated target cost and target incentive fee is established for the
effort required by the Contract for services as specified in Statement
of Work defined in Article 3 above.
1
<PAGE> 5
<TABLE>
<S> <C>
Estimated Target Cost: $32,873,214
Estimated Target Incentive Fee: $ 3,944,786
Estimated Target Cost Plus Target Incentive Fee: $36,838,000
</TABLE>
B. Target Cost and Target Incentive Fee. The Target Cost and Incentive Fee
of 12% specified in paragraph A above are subject to adjustment if the
Contract is modified in accordance with Article 5.C.2 below.
1. "Target Cost," as used in this Contract, shall mean the cost
of this Contract as initially negotiated and as modified in
accordance with the Changes Clause of this Contract.
2. "Target Incentive Fee" as used in this Contract, shall mean
the fee that is subject to the Incentive formula, as described
in Article 5.C.1 below.
C. Fees payable.
1. The Total Target Incentive Fee shall be payable under this
Contract in accordance with Article 6 below and shall be
increased by 30 cents for every dollar that the actual cost
incurred (exclusive of fees) is less than the Target Cost, or
decreased by 30 cents for every dollar that the actual cost
exceeds Target Cost. In no event shall the Total Target
Incentive Fee, as modified, be more than 15% or be less than
8% of the Total Target Cost.
2. Equitable Adjustment. When the work under this Contract is
increased or decreased by a modification to this Contract,
then the Target Cost and Incentive Fee shall be modified as
appropriate in a supplemental agreement to this Contract.
D. Facilities Capital Cost of Money. Facilities capital cost of money
shall be an allowable cost under this contract.
E. Exclusion of Taxes. The parties agree that no sales or use tax, either
Alabama or Florida has been included in the target cost. Sales or use
tax, if any, shall be subject to the Changes Clause of this Contract.
Article 6 - Payment
A. MDC shall submit invoices monthly for the payment of actual costs
incurred plus the Target Incentive Fee of 12%. Such invoices shall be
submitted to SHI at:
SPACEHAB, Inc.
1595 Spring Hill Road
Suite 360
Vienna, VA 22182
Payment will be made by or on behalf of SPACEHAB, Inc. to:
McDonnell Douglas Corporation
P. O. Box 516
St. Louis, Missouri 63166
Attention: Accounts Receivable
2
<PAGE> 6
Such invoices shall be due and payable by SHI, 30 days after receipt of an
invoice. If any such invoice remains unpaid 45 days after receipt of such
invoice, MDC shall have the right to stop work under this Contract. If such
invoice continues to remain unpaid 60 days after receipt of such invoice, MDC
may at its option, consider SHI to have breached this Contract and may pursue
remedies as provided by law.
Article 7 - Limitation of Funds
A. The sum of $ 16,400,000 is presently available for payment and is
allotted to this contract covering the period of performance through
August 31, 1997. It is anticipated that from time to time additional
funds will be allotted in writing to this contract up to the total
estimated contract price. When additional funds are allotted from time
to time for continued performance of the work under this contract, the
parties shall agree on the applicable period of performance which shall
be covered by such funds.
B. MDC agrees to use its best efforts to perform, or have performed, the
work on this contract up to the point at which the total amount paid
and payable by SHI under the contract approximates but does not exceed
the amount specified in paragraph (A). Unless otherwise agreed in
writing, SHI shall not be obligated to reimburse MDC for costs incurred
in excess of the total amount allotted by SHI to this contract during
the stated period of performance.
C. Upon expenditure of 85% of allotted funds set forth in paragraph (A),
MDC shall notify SHI in writing as to the estimated amount of
additional funds required for the timely performance of the contract.
Such notice shall specify any additional funds and period of
performance required.
D. If, after the notification called for in Paragraph (C) above,
additional funds are not allotted to this contract, MDC may request
that this contract be terminated, in accordance with the provisions of
the Terminations Clause of this contract, and SHI shall comply.
E. MDC is not obligated to continue performance under this contract
(including actions under the Termination clause of this contract) or
otherwise incur costs, which when added to the applicable fee would be
in excess of the amount then allotted to the contract by SHI until SHI
notifies MDC in writing that the amount allotted has been increased.
Article 8 - Supplies/Services and Delivery Schedule
A. The scope of work to be performed under this Contract shall include,
the provision of all labor, materials, services, and equipment
necessary to perform the work as set forth in MDC SOW MDC 97W5614 dated
July 1997. Hardware Deliverables along with scheduled delivery dates
are specified in SOW MDC 97W5614.
B. MDC shall submit on a monthly basis to SHI a compliance report mutually
agreeable to MDC and SHI which documents MDC's expenditures pertaining
to this contract.
Article 9 - Title and Delivery
The point of delivery for any hardware required shall be Cape Canaveral, Florida
USA. The point of delivery for any data required shall be SPACEHAB, Inc.,
Vienna, VA. Title to the deliverable hardware shall pass to SHI upon successful
completion of final inspection and acceptance as provided in Article 11.
Article 10 - Packaging and Marking
Packaging and marking for shipment of all items ordered hereunder shall be in
accordance with good commercial practice, and adequate to ensure both acceptance
by common carrier and safe transportation at the most economical rate(s).
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<PAGE> 7
Article 11 - Inspection and Acceptance
The place of final inspection and acceptance for the services and deliverable
hardware called for under this Contract shall be SHI's facility at Cape
Canaveral, Florida, or other designated place(s) or performance. The place of
inspection and acceptance of all deliverable reports and documentation shall be
at SHI, Vienna, VA with copy to SHI Houston, Texas and SHI Cape Canaveral, FL as
specified by SHI.
Article 12 - Place of Performance
MDC shall perform the work under this contract at its facility located in
Huntsville, Alabama, at SHI's facility located at Cape Canaveral, Florida, and
at any other locations as may be required.
Article 13 - Items, Equipment, Property, Services to be Furnished by SPACEHAB,
Inc. and/or the Government on a "No Charge" Basis
A. SHI and/or the Government shall furnish to MDC, for use in connection
with and under the terms of this contract on a "no-charge" basis, the
following SHI and/or Government owned equipment, property, items,
services, etc. which are suitable for the intended use:
<TABLE>
<S> <C> <C>
1. SPACEHAB Payload Processing Facility (SPPF) 24 July 1996 - 15 November 1999
2. Items/equipment as specified in Section 4 of the In accordance with SOW identified
SOW identified in Article 3 above. in Article 3 above.
</TABLE>
B. Out of tolerance conditions, inadequacies, and delivery delays in SHI
and/or Government supplied items identified herein will be the basis
for a MDC Contract Change proposal and subsequent Contract amendment
reflecting the cost, fee, schedule, and technical impact of defective
or late delivery of SHI and/or Government supplied items.
C. MDC is authorized to commingle all material without physical
segregation or identification to the individual SHI contracts.
Article 14 - Exchange of Technical Information
During the term of this Contract, SHI and MDC, to the extent of their right to
do so, agree to exchange all such technical and management information as may
reasonably be required for each to perform its obligations hereunder. To the
extent that proprietary information of either party is disclosed, such
information or data which is (i) submitted in writing, must be designated by an
appropriate stamp, marking or legend thereon to be of proprietary or
confidential nature, or (ii) orally submitted, must be identified as proprietary
or confidential prior to disclosure and the disclosing party notifies the
receiving party, in writing, specifically identifying any such proprietary or
confidential information so orally submitted within thirty days after such oral
submission. Notwithstanding termination or expiration of this Contract, each
party will keep in confidence and prevent the disclosure of all such proprietary
information and data, whether technical or commercial, to any third party.
Neither party shall be liable for disclosure of any such proprietary information
or data, if such information:
A. Was in the public domain at the time it was disclosed, or later becomes
part of the public domain other than throughout the action of the party
receiving it; or
B. Was known to the party receiving it at the time of disclosure; or
4
<PAGE> 8
C. Is disclosed with the prior written approval of the other party; or
D. Is disclosed by the party providing the same, to others, on a
non-restricted basis; or
E. Is disclosed inadvertently despite the exercise of the same degree of
care that the receiving party takes to preserve or safeguard its own
proprietary information; or
F. Becomes known to the receiving party from a source other than the
disclosing party without breach of this Section by the receiving party;
or
G. Is disclosed one (1) year after expiration or termination of this
Contract; or
H. Is disclosed to a government agency for certification or export license
purposes, taking all reasonable precautions to prevent further
disclosure by such agency.
Article 15 - Excusable Delays
Except for default of subcontractors at any tier, MDC shall not be in default
because of any failure to perform this Contract under its terms if the failure
arises from causes beyond the control and without the fault or negligence of
MDC. Examples of these causes include but are not limited to are (1) acts of God
or of the public enemy, (2) acts of Government in either its sovereign or
contractual capacity, (3) files, (4) floods, (5) epidemics, (6) quarantine
restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe
weather. In each instance, the failure to perform must be beyond the control and
without the fault or negligence of MDC. "Default" includes failure to make
progress in the work so as to endanger performance.
MDC shall not be in default, if the failure to perform is caused by the failure
of a subcontractor at any tier to perform or make progress, and if the cause of
the failure was beyond the control of both MDC and subcontractor, and without
fault or negligence of either, unless (1) MDC knew of other sources to obtain
the subcontracted supplies or services form to meet schedule; (2) SHI ordered
MDC in writing to purchase these supplies or services from the other source; and
(3) MDC failed to comply reasonably with this order.
If SHI determined that any failure to perform results from one or more of the
causes above, the delivery schedule shall be revised, subject to the rights of
SHI under the Termination Clause of this Contract.
Article 16 - Changes
A. SHI may at any time, by written order, and with such concurrence to not
be unreasonably withheld form MDC, make changes within the general
scope of this Contract in any one or more of the following:
(1) Drawings, designs, or specifications.
(2) Method of shipment or packing of supplies.
(3) Place of delivery.
(4) Types and amounts of SHI and/or Government-Furnished Property
to be provided.
B. If any such change causes an increase or decrease in the estimated cost
of, or the time required for, performance of any part of the work under
this contract, whether or not changed by the order, or otherwise
affects any other terms and conditions of this contract, SHI shall make
an equitable
5
<PAGE> 9
adjustment in the (1) estimated cost, delivery or completion schedule,
or both; (2) amount of fee; and (3) other affected terms and shall
modify the contract accordingly.
C. MDC shall assert its right to an adjustment under this clause within 60
days from the date of receipt of the written order. However, if SHI
decides that the facts justify it, SHI may receive and act upon a
proposal submitted before final payment of the contract.
D. Failure to agree to any adjustment shall be a dispute under the
Disputes Clause. However, nothing in this clause shall excuse MDC from
proceeding with the contract as changes.
E. Notwithstanding the terms and conditions of paragraphs (a) and (b)
above, the estimated cost of this contract and, if this contract is
incrementally funded, the funds allotted for the performance of this
contract, shall not be increased or considered to be increased except
by specific written modification of the contract indicating the new
contract estimated cost and, if this contract is incrementally funded,
the new amount allotted to the contract. Until this modification is
made, MDC shall not be obligated to continue performance or incur costs
beyond the point established in the Limitation of Cost or Limitation of
Funds Clause of this Contract.
Article 17 - Amendments
Neither this Contract, nor any term or condition thereof, shall be amended or
changed in any manner except by an instrument in writing hereto, executed by
both parties acting through their duly authorized representatives.
Article 18 - Stop Work Orders
SHI may, at any time, by written order to MDC, require MDC to stop all, or any
part, of the work called for by this contract for a period of up to 90 days
after the order is delivered to MDC, and for any further period to which the
parties may agree. The order shall be specifically identified as a stop-work
order issued under this clause. Upon receipt of the order, MDC shall immediately
comply with its terms and take all reasonable steps to minimize the incurrence
of costs allocable to the work covered by the order during the period of work
stoppage.
Article 19 - Notices
A. Except as herein specifically provided otherwise, all notices, reports,
and other communications hereunder shall be given in writing either by
personal delivery, by first class mail, or by electronic transmission,
addressed to the respective parties as specified herein below.
B. The date upon which any such communication is personally delivered or,
if such communication is transmitted by mail or by electronic
transmission, the date upon which it is received by the addressee,
shall be deemed to be the effective date of such communication.
C. Each party shall promptly advise the other in the event of any change
in their respective addresses.
D. The SHI personnel authorized to issue written orders, in accordance
with the Changes Clause, are M.E. Grayson, W.S.Dawson, or Nelda
Wilbanks.
The SHI personnel authorized to give technical direction are J. M.
Lounge, SDM Program Manager and Clark Thompson, Director, Product
Development.
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<PAGE> 10
E. The addresses of SHI and MDC, for the purpose of Paragraph A above, are
as follows:
FOR COMMUNICATION TO SPACEHAB, INC.
SPACEHAB, Inc.
1595 Spring Hill Road, Suite 360
Vienna, VA 22182
Attention: Nelda Wilbanks with copies to J.M. Lounge.
When transmitted by mail: Same as above
When transmitted by electronic transmission:
Fax Number: (703) 821-3070
FOR COMMUNICATION TO MDC
McDonnell Douglas Aerospace - Huntsville, AL
689 Discovery Drive
Huntsville, AL 35806
Attention: Contract Administrator with copy to SPACEHAB
Program Manager
When transmitted by mail: Same as above
When transmitted by electronic transmission:
Fax Number: (205) 922-7600
Article 20 - Key Personnel
The personnel listed below are considered essential to the work being performed
under this contract. Before removing, replacing, or diverting any of the listed
personnel, MDA shall notify SHI in advance, and shall provide rationale
including identification and qualifications of candidate replacement, and shall
not remove, replace or divert such personnel without SHI's written consent,
which shall not be unreasonably withheld. In such event, the list of personnel
shall then be amended accordingly.
Key Personnel Title/Position
- ------------- --------------
J. H. James Director, SPACEHAB Program
E. L. Streams Senior Manager, SPACEHAB Product Engineering
J. N. Fowler Manager, SPACEHAB SDM Mechanical Hardware Development
T. C. Tripp Manager, SPACEHAB SDM Environmental Control & Avionics
Hardware Development
W. H. Turner Senior Manager, SPACEHAB Ground Operations
Article 21 - Termination
A. SHI may terminate this Contract at any time by written notice, in whole
or in part, if SPACEHAB, in its sole discretion, determines that a
termination is in its own best interest. SHI shall terminate by
delivering to the Contractor a Notice of Termination specifying the
extent of termination and the effective date.
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<PAGE> 11
B. In the event of a termination, SHI will reimburse MDC for all costs
incurred, including applicable fee and termination costs. For purposes
of the Termination Clause, incurred costs includes all outstanding
commitments not yet paid and for delivery of all hardware, software and
services, whether complete or incomplete, identified herein, to SHI.
Termination costs are those actual and reasonable costs incurred in
terminating the Contract including usual and customary severance pay
and other labor costs in the ordinary course of business or as
otherwise required by law, storage and protection costs, and costs of
settlement and termination of subcontracts.
C. SHI may terminate this contract if MDC fails to deliver the goods or
perform the services required by this contract within the time
specified and any extension thereto granted by SHI.
Article 22 - Governing Law
This agreement shall be governed by and interpreted in accordance with the law
of the State of Delaware.
Article 23 - Arbitration/Disputes
Disputes arising out of the interpretation or execution of this contract which
cannot be resolved by negotiation shall, at the request of either Party, (after
giving 30 days notice to the other Party) be submitted to arbitration. The
arbitration tribunal shall sit in Huntsville, AL. Disputes shall be finally
settled in accordance with the Rules of Conciliation and Arbitration of the
American Arbitration Association by one or more arbitrators designated in
conformity with those Rules. The decision to submit a dispute shall not excuse
either party from the timely performance of its obligations hereunder which are
not the subject matter of the dispute. Further, if the lack of resolution of the
matter in dispute will adversely impact the timely completion of preparation for
launch activities, MDC and SHI will perform the matter in dispute in the manner
determined by SHI, within the framework of this Contract and without prejudice
to the final resolution of the matter in dispute.
Article 24 - Audit
A. MDC will maintain accurate records of labor hours expended, subcontract
billings and travel costs incurred by Cost Charge Number. Such records
shall be made available for inspection by an independent certified
public account retained by SHI during normal business hours for a
period of three (3) years after completion of this Contract.
B. MDC's books, records, documents and other supporting data shall be made
available to an independent certified public accountant retained by SHI
for inspection and audit as reasonably required in conjunction with the
negotiation of any changes hereunder, including termination claims.
C. In case of any dispute, the parties agree to continue Contract
performance pending resolution.
Article 25 - Indemnity Against Patent Infringement
A. MDC shall indemnify SHI against any liabilities or losses which SHI may
be required to pay in the case of any actual or alleged infringement of
any United States patent or any negotiation or litigation based
thereon, with respect to any products purchased pursuant to the terms
of this Contract unless such products are made to a specific and detail
design furnished by SHI which is not a modification of a MDC design.
Such liabilities or losses (i) include: (a) counsel fees, (b) cost of
replacing any infringing product with a suitable non-infringing
substitute or of otherwise
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<PAGE> 12
curing any infringement, but (ii) do not include any losses by SHI due
to loss of use, at any time, of equipment or component utilizing any of
said products which are the subject of any actual or alleged
infringement.
B. With respect to any such actual or alleged patent infringement for
which MDC is obligated to indemnify SHI: (i) MDC shall, as soon as
practicable, report to SHI promptly an din reasonable written detail,
each notice of claim against MDC of patent infringement; and (ii) SHI
will notify MDC as soon as practicable after receipt by SHI of
appropriate notice of any charge of infringement or commencement of any
suit or action for infringement against SHI in either case, MDC shall
have the option to (a) conduct negotiations with the party or parties
charging infringement or (b) assume, conduct and control the defense of
any suit or action of infringement against MDC or SHI. In the event MDC
does not pursue either option, then SHI shall have the option to
conduct such negotiations and defense without expense or liability to
SHI as provided under Paragraph A above.
Article 26 - Limitation of Liability
In no event, shall MDC be liable under any legal or equitable theory (including
but not limited to contract, tort, negligence, or strict liability) for any
incidental or consequential damages, including but not limited to damages for
lost profits, lost sales, or loss of use of property.
Article 27 - Insurance and Indemnification
Upon delivery and final acceptance by SHI of a SPACEHAB module, SHI shall
indemnify and save harmless MDC, its subcontractors and any officers, directors,
employees, and agents of any of them form any liability and expense on account
of loss of damage to the property of third parties (including the US Government)
or bodily injury to any persons, including death, caused by or resulting from
the use of the goods furnished hereunder and/or arising from the provision of
services under this Contract excepting only such loss, damage, or injury caused
by the indemnities willful misconduct, and SHI shall defend any suits or other
proceedings brought against MDC and its subcontractors and the officers,
directors, employees, and agents of any of them on account thereof an shall pay
all expenses and satisfy all judgments which may be incurred or rendered against
them or any of them in connection therewith. MDC shall give SHI prompt written
notice of any claim of such loss, damage, or injury and shall cooperate with SHI
and its insurers in every reasonable way in defending against such claim. SHI
shall obtain insurance, naming MDC as an additional named insured, against such
liabilities to third parties as are referred to in this paragraph.
MDC shall indemnify SHI against any liability, loss, claim, and/or proceeding in
respect of personal injury to and/or death of any person, or loss or damage to
property, arising out of the performance of the Contract; but only if the same
is due to the negligent acts or omission of MDC, its employees or agents; or any
subcontractor, its employees or agents.
Article 28 - MDC Employee Injury
MDC shall indemnify and hold harmless SHI, its officers, agents, and employees
from any liability, loss or damage they may suffer as a result of death or
injury to any MDC employees connected with or related to the performance of
Contract work SHI's premises, and which results from the negligence of MDC, its
officers, agents, or employees.
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Article 29 - Warranty
A. MDC hereby warrants to SHI that all deliverables furnished under this
contract shall be free from defects in workmanship for a period of one
(1) year form the date of their acceptance. The cost of and associated
fees for remedies of any defects shall be paid pursuant to the payment
provisions of this contract. SHI shall notify MDC in writing, via fax
or any equivalent means within 48 hours of any defects found after
acceptance of the products. MDC's liability under this clause shall not
extend:
1. to defects arising form the misuse of the items after
acceptance.
2. to defects in materials, assemblies or other supplies issued
by SHI for incorporation therein, provided always that MDC
shall have properly exercised its duties as custodian of such
issues and shall have incorporated them in accordance with the
requirements of the contract.
B. MDC's warranty shall not extend to compensation for damage resulting
from the use of articles covered by the contract after acceptance.
Consequently, SHI and/or SHI customers shall have no claim against MDC
for damage suffered by it.
C. Where defects in items are remedied by repair under this warranty, the
repaired item shall be warranted for the remainder of the unexpired
warranty. Where defective items are replace by new ones the full
guarantee period stipulated in the Contract shall apply to such
replacement items form the date of their acceptance.
D. EXCEPT AS PROVIDED IN THIS ARTICLE, MDC MAKES NO WARRANTIES OF ANY
KIND, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Article 30 - Relationship of Parties
This Contract is not intended by the parties to constitute or create a joint
venture, partnership or formal business organization of any kind. The rights and
obligations of the parties shall be only those expressly set forth herein. The
relationship established by this Contract is exclusively that of seller and
buyer.
Article 31 - Manned Space Flight Item
MDC shall include the following statement in all subcontracts and purchase
orders placed by it in support of this Contract, without exception as to amount
or subcontractual level:
For use in manned space flight; materials, manufacturing, and
workmanship of highest quality standards are essential to astronaut
safety.
If you are able to supply the desired item with a higher quality than
that of the items specified or proposed, you are requested to bring
this fact to the immediate attention of the purchaser.
Article 32 - Order of Precedence
In the event of any conflict between Contract, Statement of Work MDC 97W5614 and
the Contract End Item Specifications, the order of precedence is as follows: (1)
Contract, (2) Statement of Work MDC 97W5614, and (3) Contract End Item
Specifications.
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Article 33 - Technical Data
All technical data produced, of whatever type or kind, under this Contract shall
be the "joint" property of SHI and MDC, and SHI and MDC shall each have a
"royalty-free" right or license to use such data for any purpose including
performance under this Contract.
Article 34 - Patent Rights
All discovery, inventions and know-how of whatever type or kind first made
and/or reduced to practice in connection with or related to the performance of
this Contract are the "joint" property of SHI and MDC, and SHI and MDC (and any
of the parties' present or future employees, agents, consultants or
subcontractors at any time, if applicable) shall each have a royalty-free right
or license therein.
IN WITNESS WHEREOF, the parties have caused their duly authorized representative
to execute this Contract in triplicate.
MCDONNELL DOUGLAS CORPORATION SPACEHAB, INC.
MCDONNELL DOUGLAS AEROSPACE - HUNTSVILLE
By: By: /s/ Nelda Wilbanks
--------------------------- -----------------------------
Name: Name: Nelda Wilbanks
------------------------ ---------------------------
Title: Title: Contracts Administrator
----------------------- --------------------------
Date: Date: 31 July 1997
------------------------ ---------------------------
11
<PAGE> 1
EXHIBIT 10.50
LEASE AGREEMENT
between
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
and
SPACEHAB, INC.
<PAGE> 2
DATA SHEET
This Data Sheet is an integral part of this Lease and all of the terms hereof
are incorporated into this Lease in all respects. In addition to the other
provisions which are elsewhere in this Lease, the following, whenever used in
this Lease, shall have the meanings set forth in this Data Sheet.
<TABLE>
<S> <C>
(a) Premises Suite No. 360 in the Building, generally outlined on the
floor plan attached hereto as Exhibit A (Section l(n)).
(b) Area of Premises Approximately 7,757 rentable square feet on the third
and New Premises (3rd) floor of the West Building (Exhibit A and Section
l(n)), and, on Substantial Completion, an additional 1,955
rentable square feet also on the third (3rd) floor of the
West Building.
(c) Building The Concourse, located at 1593-95 Spring Hill Road, Vienna,
Virginia (section l(e)).
(d) Basic Rental for S20.50 per rentable square foot per year payable in
Premises equal monthly installments of $13,251.54, subject to
adjustment as herein provided (Sections l(b) and 3).
(e) Annual Basic Rental $159,018.so (Section 3).
For Premises
(f) Annual Basic Rental Three percent (3%) of the escalated Basic Rental
Escalation then in effect (Section 4).
(g) Additional Rent See Section 41.
(h) Lease Term Five (5) years and zero (O) months, commencing on the
Commencement Date (Sections l(k) and 2).
(i) Commencement Date See Section 1(f).
(j) Building Operation Monday through Friday, 8:00 a.m. to 6:00 p.m. and
Hours Saturday, 8:00 a.m. to 6:00 p.m.
(k) Permitted Use Any general business office purposes and for no other
purpose (Sections l(m) and 9).
(l) Tenant's Proportionate 2.26% (See Section l(u)), to be adjusted to 2.83% on
Share of Basic Cost Substantial Completion of the New Premises.
& Real Estate Taxes
(m) Tenant's Proportionate 27 spaces, calculated at 3.5 per 1000 rentable square
Share of Parking feet (section 47), with Tenant receiving an additional 7
Spaces on Substantial Completion of the New Premises.
(n) Brokers Involved Compass Management and Leasing, Inc. and The Carey Winston
Company
(o) Security Deposit See Section l(p) and 5.
(p) Notices If to Landlords:
The Equitable Life Assurance society of the United States
c/o compass Management and Leasing, Inc.
1595 Spring Hill Road, Suite 110
Vienna, Virginia 22182
if to Tenants:
At the Premises.
</TABLE>
<PAGE> 3
LEASE AGREEMENT
THIS LEASE AGREEMENT is entered into the 30 day of November, 1995,
between THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES (hereinafter
called "Landlord"), whose address for purposes hereof is 1595 Spring Hill Road,
Suite 110, Vienna, Virginia 22182 and SPACEHAB, INC., a corporation
(hereinafter called "Tenant"), whose address for purposes hereof is the
Premises.
1. DEFINITIONS.
(a) "Basic Costs" The actual costs incurred by the Landlord in
operating and maintaining the Building and the Land during each calendar year
of the Lease Term for which Landlord has not been reimbursed by insurance
proceeds, condemnation awards or otherwise.
Such costs shall include, by way of example rather than of
limitation, (i) real property, front-foot benefit, metropolitan and other
similar taxes, including any taxes imposed on lessen or income generated
thereon (exclusive of federal and state income and franchise taxes) or public
or private assessments, general or special, ordinary or extraordinary, foreseen
or unforeseen (other than Lease Taxes) levied against the Building or the Land,
(ii) charges or fees for, and taxes on, the furnishing of electricity, water,
sewer service, gas, fuel, or other utility services to the Building and the
Land) (111) costs of providing elevator, Janitorial and trash removal service,
restriping, resurfacing, maintaining and repairing all walkways, roadways and
parking arena on the Land, security costs, and Cost of maintaining grounds,
common areas and mechanical systems of the Building and the Land; (iv) all
other costs of maintaining and repairing any or all of the Building or Land'
(v) all costs reasonably allocated by Landlord to the common arena of the
Building and the Land in a multi-Building development; (vi) charges or fees for
any necessary governmental permits and licenses' (vii) management fees,
overhead and expenses reasonably related to management of the Building
(including salaries for personnel directly responsible for management of the
Building)' (viii) premiums for hazard, liability, workmen's compensation or
similar insurance upon any or all of the Building and the Land' (ix) costs
arising under service contracts with independent contractors) and (x) the Cost
of any other items which, under generally accepted accounting principles
consistently applied from year to year with respect to the Building or the
Land, constitute operating or maintenance costs attributable to any or all of
the Building or the Land.
Such costs shall not include (i) the expense of principal and
interest payments made by the Landlord pursuant to the provisions of any
mortgage or deed of trust covering the Building or the Land' (ii) any deduction
for depreciation of the Building taken on the landlords income tax returns'
(iii) salaries or other compensation of any personnel whose salaries are
covered by a management fee (except that the Building Engineer salary shall be
a Basic Cost and shall not be covered by the management fee)) (iv) ground rent
payments and any other charges or payments arising under any ground lease, (v)
legal foes for negotiating leases or enforcing the lease obligations of other
tenants in the Building' (vi) any costs for capital items used for the common
areas, except as otherwise provided in this Section; (vii) real estate
brokerage fees and commissions, or (viii) the Cost of capital improvements made
to the Building, other than capital improvements, modifications or equipment
required by federal, state or local ordinance, rule, regulation or law or
determined by Landlord in good faith to result in savings or reductions in
Basic Cost generally, in which case the Cost thereof shall be included in Basic
Cost for the calendar year in which the Cost shall have been incurred and in
subsequent calendar years, on a straight line basis, such items will be
amortized over an appropriate period, in accordance with Generally Accepted
Accounting Principles, and with an appropriate reasonable interest factor
selected in good faith by Landlord. If Landlord shall have leased any such
items of capital equipment designed to result in savings or reductions in Basic
Cost, then the rental and other costs paid pursuant to such leasing shall be
included in Basic Cost for each calendar year in which they shall have been
incurred.
In determining Basic Cost, where less than 95% of the Building's
rentable square footage is occupied during all or any part of a year, those
items of the Basic Cost which vary according to occupancy, such as electricity
and janitorial services, shall be increased to that amount which would have
been incurred had the Building been 95% occupied during the entire year.
(b) "Basic Rental": $20.50 per rentable square foot per year
payable in equal monthly installments of $13,251.54, subject to adjustment as
herein provided.
(c) "Base Real Estate Taxes": The Real Estate Taxes for the
Building and the Land, payable in the calendar year 1996.
(d) "Base Year Stops" The Basic Cost incurred during the calendar
year 1996 divided by the number of rentable square feet in the Building.
<PAGE> 4
(e) "Building" The office building which has been constructed on
land located at 1593-1595 Spring Hill Road, Vienna, Virginia, and known as the
Concourse.
(f) "Commencement Date" The earlier off (i) the date of
Substantial Completion or (ii) the date the Tenant or any one claiming under or
through the Tenant first occupies the Premises or any portion thereof. The
Anticipated Commencement Date for the Premises is February 1, 1996, and for the
New Premises is November 1, 1996.
(g) "Event of Default": As defined in Section 20 of this Lease.
(h) "Excess" Is defined in Section 8 of this Lease.
(i) "Land": The entire tract of land on which the Building la
located and upon which other buildings are located which have shared common
facilities, and subject from time to time, to (1) increase through the
acquisition of adjoining properties, and (ii) reduction through the sale or
transfer by Landlord or the reservations of any such property from the
development of which the Building is a part. The term Land shall also include
any property that must be maintained by Landlord due to the existence of any
public or private easement.
(j) "landlord's Contractor" Is defined in Section 7(d) of this
lease.
(k) "Lease Term" The period commencing on the Commencement Date
and continuing for five (5) years and zero (0) months thereafter' provided,
however, if the term of this Lease commences on a date other than the first day
of a calendar month, the Lease Term shall consist of, in addition to the number
of years and months provided above, the remainder of the calendar month during
which this Lease is deemed to have commenced.
(l) "New Premises" 1,955 rentable square feet of apace adjoining
the Premises, which Tenant will Lease from Landlord upon Substantial Completion
of such space, all as more specifically outlined in Section 49 herein.
(m) "Permitted Use" General business office purposes and for no
other purpose, subject to the provisions of Section 9.
(n) "Premises" Suite No. ***** in the Building, generally
outlined on the floor plan attached hereto as exhibit A and containing of
approximately 7,757 rentable square feet. The Premises shall be measured in
accordance with the Washington, D.C. Association of Realtors Standard Method of
Measurement for Office Buildings, and may be confirmed by Tenant's architect,
at Tenant's expense. Upon Substantial Completion of the New Premises, the
Premises shall be deemed to include the New Premises.
(o) "Rules and Regulations" The Landlord's rules and regulations
sent to Tenant in writing from time to time, as amended or substituted for from
time to time, the current form of which is attached hereto as Exhibit C.
(p) Security Deposits $53,006.16.
(q) "Special Tenant Works Is defined in Section 7(d) of this
lease.
(r) "Standard Tenant Works Is defined in Section 7(d) of this
lease.
(s) "Substantial Completion": The date when the work to be
performed by Landlord in the Premises, or New Premises as applicable, In
accordance with this Lease shall have been substantially completed,
notwithstanding that certain details of construction, mechanical adjustment or
decoration remain to be performed, the noncompletion of which would not
materially interfere with the Tenant's use of the Premises or the New Premises.
For purposes of determining the date of Substantial Completion, in the event
off (i) changes in the work to be completed by Landlord in readying the
Premises or New Premises for Tenant's occupancy, which changes have been
requested by Tenant after the approval by Landlord and Tenant of the Tenant
Plane, (ii) delays, not caused by Landlord, in furnishing materials or
procuring labor required by Tenant for installations or work in the Premises or
New Premises which are not encompassed within Standard Tenant Work' (iii) any
failure by Tenant, to furnish any required plan, information, approval or
<PAGE> 5
consent (including, without limitation, the Tenant Plans) within the required
period of time, or any failure to cooperate with Landlord in the preparation of
the Tenant Plans, or (iv) the performance of any work or activity in the
Premise or New Premises by Tenant or any of its employees, agents or
contractors, the Premises or New Premises, as applicable, shall be deemed to be
Substantially Complete as of the date the Premises or New Promises would
otherwise have been Substantially Complete absent such delay. The decision of
Landlord's architect shall be finally determinative of the date of Substantial
Completion.
(t) "Tenant Plans": As defined in Section 7(a) of this Lease.
(u) "Tenant's Proportionate Share for Basic Costs 2.26~. Such
percentage is equal to a fraction, the numerator of which equals the number of
rentable square feet within the Premises and the denominator of which equals
the total number of rentable square feet in the Building. Tenant's
Proportionate Share for 8Islc Cost shall increase to 2.83% on Substantial
Completion of the New Premises.
(v) "Tenant's proportionate Share for Real Estate Taxes 2.62%.
Such percentage is equal to a fraction, the numerator of which equals the
number of rentable square feet within the Premises and the denominator of which
equals the total number of rentable square feet in the Building. Tenant's
Proportionate Share for Real Estate Taxes shall increase to 2.83% on
Substantial Completion of the New Premises.
2. LEASE TERM
(a) Landlord, in consideration of the rent to be paid and the other
covenants and agreements to be performed by Tenant and upon the terms
hereinafter stated, does hereby lease, demise and let unto Tenant the Premises,
as defined herein and generally outlined on the floor plan attached hereto as
exhibit A, commencing on the Commencement Date and ending, without the
necessity of notice from either party to the other, such notice being expressly
waived, on the last day of the Lease Term, unless sooner terminated as herein
provided.
(b) If the Landlord shall be unable to tender possession of the
Premises on the Anticipated Commencement Date, the Landlord shall not be liable
for any damage caused thereby, nor shall this Lease be void or voidable by
Tenant, but in such event, unless the delay results (i) from failure of Tenant
to provide plans or otherwise perform in accordance with the requirements of
the Lease or (ii) from any delay in Landlord's ability to tender possession of
the Premises caused by Tenant, no rental shall be payable by Tenant prior to
actual tender to Tenant of possession of the Premises.
(c) By occupying the Premises, Tenant shall be deemed to have accepted
the same as suitable for the purpose herein intended and to have acknowledged
that the Premises comply fully with Landlord's obligations, with the exception
of any latent structural defects or "punch list. type items in the Tenant Plans
which may not have been completed. Tenant agrees that its failure to deliver to
Landlord such a written "punch list" within five (5) days of occupancy shall be
conclusive proof that no such items exist. Within five (5) business days of
delivery to Tenant by Landlord, Tenant agrees to execute and return to Landlord
a letter prepared by Landlord confirming the Commencement Date, a copy of which
la attached hereto as Exhibit B. certifying that Tenant has accepted delivery
of the Premises and that the condition of the Premises complies with Landlord's
obligations hereunder, subject to any "punch list" items in the Tenant plans
which may not have been completed.
3. BASIC RENTAL.
(a) Tenant promises and agrees to pay Landlord the Basic Rental
(subject to adjustment as hereinafter provided) without demand, notice,
deduction, recoupment, counterclaim or set-off, for each month of the entire
Lease Term. The first monthly installment shall be due and payable upon
execution of this Lease. The Basic Rental for each subsequent month shall be
paid in advance beginning on the first day of the calendar month following the
expiration of the first calendar month of the Lease Term and continuing
thereafter on or before the first day of each succeeding calendar month during
the term hereof, provided, however, that Basic Rental for the second calendar
month shall be prorated based on one-three hundred sixtieth (1/360th) of the
current annual Basic Rental for each day of the first partial month, if any,
this Lease is in effect and shall be due and payable as aforesaid.
<PAGE> 6
(b) In the event any installment of the Basic Rental, or any other
sums which became owing by Tenant to Landlord under the provisions hereof, are
not received within five (5) business days after the due date thereof (without
in any way implying Landlord's consent to such late payment), Tenant shall pay,
in addition to such installment of the Basic Rental or such other sums owed,
and not as a penalty, additional rent in the form of a late payment charge
equal to five percent (5%) of such monthly installment of the Basic Rental or
such other sums owed for each month or part thereof such payment la overdue.
Notwithstanding the foregoing, the foregoing late charges shall not apply to
any sums which may have been advanced by Landlord to or for the benefit of
Tenant pursuant to the provisions of this Lease, it being understood that such
sums shall bear interest from the date of the advance until paid in full, which
Tenant hereby agrees to pay to Landlord, at the rate of fourteen percent (14%)
per annum or the highest rate permitted by law, whichever is less.
4. BASIC RENTAL ESCALATION.
The Basic Rental shall be increased annually, effective on each anniversary of
the first (1st) day of the first full month after the Commencement Date during
the term hereof if the Commencement Date la on a day other than the first (let)
day of the month, or on the anniversary of the Commencement Date if the
Commencement Date la on the first (let) day of the month, by an amount equal to
three percent (3%) of the escalated Basic Rental then in effect, payable as
follows:
<TABLE>
<CAPTION>
Year Annualized Rent Monthly Rent
----------------------------------------------------
<S> <C> <C>
1 $159,018.50 $13,251.54
2 $163,798.05 $13,649.09
3 $168,702.73 $14,058.56
4 $173,763.81 $14,480.32
5 $178,976.72 $14,914.73
</TABLE>
5. SECURITY DEPOSIT.
The Security Deposit, which shall be paid upon execution of this Lease, shall
be held by Landlord in a federally insured banking or investment institution,
as security for the performance by Tenant of Tenant's covenants and obligations
under the Lease. The Security Deposit shall accrue interest, for Tenant's
benefit, at the passbook rate of interest paid by such institution from time to
time during the term of the Lease. The Security Deposit shall not be considered
an advance payment of rental or a measure of Landlord's damages in case of
default by Tenant. Upon the occurrence of any event of Default by Tenant, and
such Event of Default continues for fifteen (15) days after written notice from
Landlord (which notice may be given simultaneously with any other notice to
which Tenant is entitled under the Lease), Landlord may, from time to time in
its sole discretion, without prejudice to any other remedy, use and apply the
Security Deposit to the extent necessary to make good any arrearages of rent
and any other damage, injury, expense or liability suffered by Landlord by such
Event of Default. Following any such application of the Security Deposit,
Tenant shall pay to Landlord on demand as additional rent the amount so applied
in order to restore Security Deposit to its original amount. If Tenant is not
then in default hereunder, any remaining balance of the Security Deposit,
together with any interest accrued thereon, shall be returned by Landlord to
Tenant within a reasonable period of time after the termination of the Lease
and (1) Tenant shall have surrendered the entire Premises to Landlord, (ii)
Landlord shall have inspected the Premises after such vacation, and (ill)
Tenant shall have complied with all of the terms, conditions and covenants in
the Lease. If Landlord transfers its interest in the Premises during the Lease
Term, Landlord may assign the Security Deposit to the transferee and thereafter
shall have no further liability for the return of such Security Deposit.
6. LANDLORD'S OBLIGATIONS.
(a) Subject to the limitations hereinafter set forth, Landlord agrees,
while Tenant la occupying the Premises and provided an Event of Default by
Tenant has not occurred, to furnish to Tenant' (1) facilities to provide water
at those points of supply both within the Premises and those provided for
general use of tenants of the Building; (ii) facilities to provide a supply of
electrical current reasonably necessary for general business office use and
occupancy of the Premises and electric lighting and a supply of electrical
current to the common areas of the 8ullding' (iii) heating and refrigerated air
conditioning in season, and (iv) elevator and janitorial service to the
Premises, all such services to be provided in scope, quality and frequency to
those services being customarily provided by landlords in comparable office
Buildings in the surrounding area. Heating, ventilation and air conditioning
requirements and standards under this Lease shall be subject, however, to such
regulations as the Department of Energy or
<PAGE> 7
other local, State or federal governmental agency, Board or commission shall
adopt from time to time. In addition, Landlord agrees to maintain the public
and common areas of the Building, such as lobbies, stairs, corridors and
restrooms, in reasonably good order and condition' provided, however, that
Tenant shall reimburse Landlord, upon demand, for all repairs and additional
maintenance resulting from damages to such public or common arena caused by
Tenant, or its employees, agents or invitees. Landlord reserves the right,
exercisable without notice and without liability to Tenant for damage or injury
to property, persons or business and without effecting an eviction,
constructive or actual, or disturbance of Tenant's use or possession of the
Premises, or giving rise to any claim by Tenant for setoff or abatement of
rent, to decorate and to make repairs, alterations, additions, modifications,
changes or improvements, whether structural or otherwise, in and about the
Building, or any part thereof, and for such purposes to enter upon the Premises
and, during the continuance of any such work, to temporarily close doors,
entryways, public apace and corridors in the Building and to interrupt or
temporarily suspend Building services and facilities. Landlord shall use
reasonable efforts not to materially interfere with the operation of Tenant's
business while decorating or making such repairs pursuant to this subsection.
(b) If Landlord, to any extent, fails to make available any of the
services to be provided by Landlord expressly set forth above or if any
slowdown, stoppage or interruption of, or any change in the quantity, character
or availability of, the services to be provided by Landlord expressly set forth
above occurs, such failure or occurrence shall not render Landlord liable in
any respect for damages to either person, property or business, nor be
construed as an eviction of Tenant or work an abatement of rent, nor relieve
Tenant from fulfillment of any covenant or agreement hereof. Should any
equipment or machinery furnished by Landlord break down or for any cause beyond
Landlord's reasonable control cease to function properly, Landlord shall use
reasonable diligence to repair same promptly, but Tenant shall have no claim
for abatement of rent or damages on account of any interruptions in service
occasioned thereby or resulting therefrom' provided, however, that if (1) any
such services are not furnished to the Premises for ten (10) or more
consecutive days after Landlord receives notice from Tenant, (11) the Premises
are thereby rendered untenable, and (111) the Landlord la not diligently
pursuing a cure of such interruption, then commencing with the eleventh (11th)
day after Landlord receives such notice, the Basic Rental shall be abated until
the Premises are again tenable.
7.IMPROVEMENT OF THE PREMISES.
(a) Landlord and Tenant agree to comply with the following schedule in
buildout of the Premises
(i) Landlord has prepared, and Tenant has approved a Space Plan
for the Premises dated November 1, 1995. Any modifications to the Space Plan
made after such date shall be made at Tenant's expense and, if delay in
occupancy occurs as a result of such modifications, Tenant shall be liable to
Landlord for Basic Rental attributable to each day beyond the Anticipated
Commencement Date that delivery of the Premises is delayed.
(ii) Landlord shall prepare and deliver to Tenant detailed floor
plan layouts, together with working drawings and written instructions
sufficiently detailed to enable Landlord to let firm contracts (herein called
"Tenant Planes) with respect to and reflecting the partitions and improvements
in the Premises. Tenant shall fully and completely cooperate with Landlord in
the preparation of the Tenant Plans, shall promptly respond to Landlord's
requests for information and approvals within three (3) business days after
Inquiry, and shall use it's best efforts to zealot Landlord to complete the
Tenant Plans as soon as possible. Tenant agrees to deliver to Landlord, not
later than three (3) business days after delivery of the Tenant Plans to
Tenant, an original executed copy of the Tenant Plans approved by Tenant,
provided, however, if Tenant, in good faith, reasonably objects to any aspect
of the Tenant Plans submitted by Landlord, Tenant shall specify in detail any
objection to such Tenant Plans as submitted to Tenant in a written notice to
Landlord within such 3-day period. Landlord shall, if applicable, modify such
Tenant Plans to address Tenant's written objections, and submit new Tenant
Plans to Tenant for approvals. Notwithstanding the foregoing, the Tenant Plans
shall remain subject to Landlord's review and
<PAGE> 8
approval, which approval shall not be unreasonably withheld, and shall be
deemed modified to take account of any changes reasonably required by Landlord.
If Tenant fails to timely deliver the Tenant Plans as required herein or makes
modifications to the Tenant Plans after the deadlines provided in this
subsection, Tenant shall (1) pay to Landlord all reasonable expenses incurred
by Landlord due to Tenant's modifications and/or delay in delivering the Tenant
Plans' and (2) pay to Landlord as additional rent a per diem Basic Rental
charge for each day beyond the Anticipated Commencement Date that occupancy is
delayed due to Tenant's failure to timely comply with the requirements in this
Section.
(iii) Time is of the essence as to all dates provided in this
subsection.
(b) Any changes to any approved Tenant Plans desired by Tenant shall
be submitted in writing and in detail to Landlord and shall be subject to
Landlord's consent, which consent shall not be unreasonably withheld.
(c) Landlord shall, in a good and workmanlike manner, diligently cause
the Premises to be improved and completed in accordance with the Tenant Plans
by "landlord 'e Contractor. (as hereinafter defined). Landlord reserves the
right however, (1) to make substitutions of material of equivalent grade and
quality when and if any specified material shall not be readily and reasonably
available, and (11) to make changes necessitated by conditions met in the
course of construction, provided that Tenant's approval of any substantial
change shall first be obtained (which approval shall not be unreasonably
withheld or delayed so long as there shall be general conformity with Tenant
Plans).
(d) In the completion and preparation of the Premises in accordance
with the Tenant Plans, Landlord agrees to perform at its own expense those
items of work eat forth on the schedules attached hereto as Exhibit D Building
Standard Materials and Exhibit A - Tenant Space Plan (herein collectively
referred to as Standard Tenant Work), to the extent required by Tenant Plans.
All work requested by or as a result of actions of Tenant to be performed by
Landlord in addition to or in substitution for Standard Tenant Work la
hereinafter referred to as "Special Tenant Work." All Special Tenant Work shall
be furnished, installed and performed by Landlord, utilizing a general
contractor or construction manager (Landlord's Contractor.) selected by
Landlord (which may be an affiliate of Landlord or a partner in Landlord or an
affiliate of a partner in Landlord) for and on behalf of Tenant and at Tenant's
sole expense, based on Landlord's out-of-pocket contract or purchase price for
materials, labor and service, including, without limit, any reasonable
contractor 'e fee for the contractors overhead and profit and charges for
cutting, patching, cleaning up and removal of waste and debris, plus architect'
and engineer' fees, plus the product obtained by multiplying all of the
foregoing (as reduced by appropriate credits for substituted Standard Tenant
Work) by fifteen percent (15%) for Landlord's expenses and profit in handling
the substitution.
(e) Tenant shall pay Landlord as additional rent for all Special
Tenant Work from time to time during the progress of the work, within five (5)
days after Landlord shall have given Tenant an invoice or invoices therefor, in
amounts representing Landlord's Cost of such Special Tenant Work performed
(including, for this purpose, material for Special Tenant Work purchased and
delivered to the Building to the date of the invoice), lease the amounts paid
by Tenant on account.
8. OPERATING EXPENSES.
(a) During the term of this Lease, Tenant shall pay as additional rent
an amount (per each square foot within the Premises) equal to the excess
("Excess") from time to time by which the per square foot Basic Cost (which
shall be calculated by dividing the Basic Cost by the total rentable square
feet in the Building) exceeds the Base Year stop. Landlord, at its option, may
collect such additional rent for each calendar year in a lump sum, to be due
and payable within thirty (30) days after Landlord furnishes to Tenant a
statement of actual Basic Cost for the previous year, or, beginning with the
first day of the thirteenth month following the Commencement Date, and on each
January 1, thereafter, Landlord shall also have the option to make a good faith
estimate of the Excess for each upcoming calendar year and may require the
monthly payment of such additional rent equal to one-twelfth (1/12) of such
estimate.
(b) By May 1 of each calendar year during Tenant Ma occupancy and the
calendar year following termination of this Lease, or as soon thereafter as
practical, Landlord shall furnish to Tenant a statement of Landlord's actual
Basic Cost for the previous year. If for any calendar year additional rent
collected for the prior year as a result of Landlord's estimate of Basic Cost
is (1) in excess of the additional rent actually due during such prior year,
then Landlord shall either credit such overpayment towards Tenant's estimated
share of operating expenses for the next year or refund to Tenant any
overpayment, or (ii) less than
<PAGE> 9
the additional rent actually due during such prior year, then Tenant shall pay
to Landlord, on demand, any underpayment with respect to the prior year.
(c) Each statement furnished by Landlord to Tenant shall be conclusive
and binding upon Tenant unless, within sixty (60) days after receipt of such
statement, Tenant delivers to Landlord a written notice specifying the
particular details for which such statement is claimed to be incorrect. Pending
the determination of such dispute, Tenant shall pay without delay the full
amount of the additional rent payable by Tenant in accordance with each such
statement that Tenant is disputing. Without limiting the preceding sentence,
Tenant, or a certified public accountant acting as Tenant's agent, shall have
the right, during Landlord's normal business hours and after reasonable notice,
to inspect the books and records of Landlord applicable to the determination of
any statement of any additional rent payable by Tenant for the purpose of
verifying in good faith the information contained in such statement for a
period of up to one year after the receipt of such statement by Tenant. In the
event that Tenant's inspection discloses that Landlord's billings to Tenant for
increased Operating Expenses exceeded by five percent (5%) the actual operating
expenses attributable to Tenant, then Landlord shall refund the difference as
noted in subsection (b) and will pay Tenant for the reasonable expense incurred
for an independent third-party in performing such inspection, but in any event
not more than 61,000.00.
(d) Should Tenant require any additional work or service, including
but not limited to heating, ventilation and sir conditioning ("HVAC") furnished
outside Landlord's normal operating hours of 8:00 a.m. to 6:00 p.m., Monday
through Friday, 8:00 a.m. to WOO p.m., Saturday, excluding holidays, Landlord
may, upon reasonable advance notice by Tenant, furnish such additional services
at a charge of $50.00 per hour, subject to upward adjustment due to increases
in utilities and wage expenses, it being agreed that the Cost to the Landlord
of such additional services shall not be considered or treated as Basic Cost.
(e) Landlord may, at any time in its sole discretion, require separate
metering for gas, electric power or for any other utility service required by
Tenant if such service la deemed by Landlord to be in exceed of Building
standard usage or for any other reason, in which case the Cost of such metering
shall be at Tenant's sole cost and expense, due and payable upon demand by
Landlord, and in which event Tenant shall pay for all such utility service in
excess of its normal and customary usage, as metered. For any utility services
that are separately metered as prescribed herein, the amount of amid services
which had been included in the calculation of the Base Year Stop or the
calculation of Basic Cost shall be excluded therefrom.
(f) Notwithstanding any expiration or termination of this Lease prior
to the end of the Lease Term, Tenant's obligations to pay any and all
additional rent pursuant to this Lease shall continue and shall cover all
periods up to the expiration or termination date of this Lease. Tenant's
obligation to pay any and all additional rent or other sums owing by Tenant to
Landlord under this Lease shall survive any expiration or termination of this
Lease.
9. USE.
Tenant shall use the Premises only for the Permitted Use. Tenant will
not occupy or use the Premises, or permit any portion of the Premises to be
occupied or used, for any business or purpose other than the Permitted Use or
for any use or purpose which is unlawful, in part or in whole, disreputable in
any manner, or extra hazardous, nor will Tenant permit anything to be done
which shall in any way cause substantial noise, vibrations or fumes, or
increase the rate of insurance on the Building or contents or cause any
cancellation of any insurance policy covering the Building or any portion of
its contents. In the event that there shall be any increase in the rate of
insurance on the Building or contents created by Tenant's acts, omissions or
conduct of business, Tenant hereby agrees to pay to Landlord the amount of such
increase on demand. Tenant will conduct its business and control its agents,
employees and invitees in such a manner as not to create any nuisance, nor
interfere with or disturb the privacy of other tenants or Landlord in the
management of the Building. Tenant shall not, without the prior written consent
of Landlord, paint, install lighting or decorations, which consent shall not be
unreasonably withheld, or install any signs, window or door lettering or
advertising media of any type on or about the Premises or any part thereof.
10. TENANT'S REPAIRS AND ALTERATIONS.
Tenant shall not in any manner deface or injure or make unapproved
modifications of the Premises or the Building and will pay the Cost of
repairing any damage or injury done to the Premises or the Building or any
<PAGE> 10
part thereof by Tenant or Tenant's agents, employees or invitees. Tenant shall
throughout the Lease Term take good care of the Premises and keep them free
from waste and nuisance of any kind. Tenant agrees, at Tenant's sole Cost and
expense, to keep the Premises, including, without limitation, all fixtures
installed by Tenant and any plate glass and special store fronts, in good
condition and make all necessary non-structural repairs and replacements except
those canard by fire, casualty, Landlord's willful misconduct or negligence, or
acts of cod covered by Landlord's fire insurance policy covering the Building.
Such repairs and replacements shall be in quality equal to the original work
and installation. If Tenant fails to make such repairs within fifteen (15) days
after the occurrence of the damage or injury, Landlord may, at its sole option,
make such repair, and Tenant shall, upon demand therefor, pay Landlord for
Landlords cost thereof plus fifteen percent (15%) for overhead costs.
Notwithstanding anything in the Lease to the contrary, Tenant will not
make or allow to be made any alterations or physical additions in or to the
Premises, including changes in locks on doors, plumbing, lighting, wiring or
partition, without the prior written consent of Landlord, such consent not to
be unreasonably withheld or delayed, as long as the alterations or additions do
not affect underlying life safety systems or common Building operating systems.
All maintenance, repairs, alterations, additions or Improvements shall be
conducted only by contractors or subcontractors approved in advance in writing
by Landlord, it being understood that Tenant shall procure and maintain, and
shall cause such contractors and subcontractors engaged by or on behalf of
Tenant to procure and maintain, insurance coverage against such claims, in such
amounts and with such companies as Landlord may require in connection with any
such maintenance, repair, alteration, addition or improvement.
At the end or other termination of this Lease, Tenant shall deliver up
the Premises with all improvements located therein in good repair and
condition, reasonable wear and tear, fire, casualty and damage caused by
Landlord's willful misconduct or negligence excepted, and shall deliver to
Landlord all keys to the Premises. All alterations, additions or improvements
(whether temporary or permanent in character) made in or upon the Premises by
Landlord or Tenant shall be Landlord's property upon termination of this Lease
and shall remain on the Premises without compensation to Tenant, provided,
however, that if Landlord elects to have Tenant remove any alteration,
addition, improvement or partition, Landlord shall make such election upon
giving consent to such alteration, addition, improvement or partition. Tenant
shall then remove such alteration, addition, improvement or partition whether
erected by Landlord or Tenant, and shall restore the Premises to its original
condition by the date of termination of this Lease or upon earlier vacating of
the Premises, except as provided herein. Landlord hereby elects to have any and
all computer and/or telephone cables installed by Tenant or which may in the
future be installed by Tenant, removed upon the termination of the Lease or
upon Tenant's earlier vacating of the Premises. If Tenant falls to restore the
Premises upon Landlord's request, Landlord shall have the right to perform such
restoration and Tenant shall be liable for all Costs and expenses incurred by
Landlord therefor.
11. ASSIGNMENT AND SUBLETTING.
(a) Landlord's Prior Consent Required. Neither Tenant nor Tenant's
representatives, successors and assigns nor any subtenant or Assignee will
assign, transfer, mortgage or otherwise encumber this Lease or sublet or rent
(or permit the occupancy or use of) the Premises, or any part thereof, without
obtaining the prior written consent of Landlord. Landlord's consent to assign
this Lease or sublet the Premises will not be unreasonably withheld, provided
Tenant justified all applicable provisions of subsection (b) below, nor shall
any Assignment or transfer of this Lease or the right of occupancy hereunder be
effectuated by operation of law or otherwise without the prior written consent
of Landlord. Any reasonable expenses incurred by Landlord with respect to the
review and consent or denial of consent of the foregoing shall be paid by
Tenant to Landlord as additional rent, and shall be due and payable with the
monthly installment of rent when billed.
(b) Qualification of Assignee or Subtenant. Subject to the provisions
of Section 11(c) hereof, Landlord shall not unreasonably withhold its consent
hereunder to any assignment or sublease by Tenant, provided that (x) in the
event of a sublease Tenant shall satisfy each of the following conditions prior
to any such sublease becoming effective) and (y) in the event of an Assignment,
Tenant shall satisfy the conditions of subsections (i), (ii), (iv), (v) and
(vi) prior to any such assignment becoming effective.
(i) Tenant must first notify Landlord, in writing, of any
proposed assignment or sublease, at least thirty (30) days prior to the
<PAGE> 11
effective date of such proposed Assignment or sublease. The notice to Landlord
must include a copy of the proposed assignment or subleasee and a copy of the
proposed assignee's or subtenant's financial statement for its most recent
fiscal year, prepared in accordance with generally accepted accounting
principles and certified by a public accountant or an executive officer of the
proposed assignee or subtenant.
(ii) The assignee or subtenant moat have a credit rating which is
better than or equal to that of Tenant, as reasonably determined by Landlord.
(iii) The subleasee must (A) be expressly subject and subordinate
to this Lease, (B) require that any subtenant comply with and abide by all of
the terms of the Lease, and (c) provide that any termination of this Lease
shall extinguish the sublease as well.
(iv) The Assignee or subtenant may not propose to change the use
of the premises to a purpose other than as stated in Section 9 hereof, may not
be a place of public accommodation as defined under the Americana with
Disabilities Act, nor conduct its business in a manner which, in Landlord's
reasonable judgment, is not appropriate for comparable office buildings in the
metropolitan Washington, D.C. area.
(v) The assignee or subtenant may not be a tenant, subtenant, or
other occupant of any part of the 8uilding, unless Landlord is unable to offer
such occupant comparable space elsewhere in the Building.
(vi) The Tenant may not be in default under this Lease.
(vii) The sublease shall contain the following claims:
"Underlying Lease Agreement." This Sublease and subtenant's rights under this
Sublease shall at all times be subject and subordinate to the underlying Lease
identified in Paragraph hereof, and Subtenant shall perform all obligations of
Tenant under said Lease, with respect to the Sublease Premises. Subtenant
acknowledges that any termination of the underlying Lease shall extinguish this
Sublease. Landlord's consent to this Sublease shall not make Landlord a party
to this Sublease, shall not create any privily of contract between Landlord and
Subtenant or other contractual liability or duty on the part of the Landlord to
the Subtenant, shall not constitute its consent or waiver of consent to any
subsequent sublease or sub-sublease, and shall not in any manner increase,
decrease or otherwise affect the rights and obligations of Landlord and Tenant
under the underlying Lease, in respect of the Sublease Premises. Subtenant
shall have no right to assign this Sublease or further sublet the Premises
without the prior written consent of Landlord. Any term of this Sublease that
in any way conflicts with or alters the provisions of the underlying Lease
shall be of no effect as to Landlord and Landlord shall not assume any
obligations as landlord under the Sublease and Tenant shall not acquire any
rights under the Sublease directly assertable against Landlord under the
underlying Lease. Tenant hereby collaterally assigns to Landlord this Sublease
and any and all payments due to Tenant from Subtenant as additional security
for Tenant's performance of all of its covenants and obligations under the
underlying Lease, and authorizes Landlord to collect the same directly from
Subtenant and otherwise administer the provisions of this Sublease, at the
option of Landlord. Subtenant hereby consents to such collateral assignment of
this Sublease to Landlord and agrees to observe its obligations created
hereby..
(c) Landlord's Consent. Tenant shall have the right to Assign the
Lease or sublet the Premises or a portion thereof after first obtaining the
written consent of Landlord as provided in Section II (a) above. Upon receipt
of Landlord's consent to such assignment or sublease, Tenant shall pay
Landlord, within ten (10) days of receipt, one-half (1/2) of the amount of rent
payable under such assignment or sublease in excess of the amount of rent
payable by Tenant hereunder with respect to the Premises or, in the event of a
sublease, that portion of the Premises sublet, offset by any direct expenses
incurred by Tenant actually incurred in assigning the Lease or subleasing such
portion of the Premises (amortized in equal monthly payments over the remaining
term of the Lease, if assigned, or, if applicable, over the initial term of
such subleased. Tenant covenants and agrees to provide Landlord with
semi-annual statements, prepared and verified by a certified public accountant
or executive officer of Tenant, stating the amount of rent or other
consideration received by Tenant from its assignee or subtenant(s) during such
semi-annual period. If such statement shows Tenant failed to make the full
payment to Landlord required herein, a late charge equal to ten percent (10%)
of the amount due shall be paid by Tenant to Landlord as additional rent, and
shall be due and payable by the assignee or Tenant with the monthly installment
of rent next becoming due.
<PAGE> 12
(d) No Waiver or Release. The consent by Landlord to any assignment or
subletting shall not be construed as a waiver or release of Tenant from the
terms of any covenant or obligation under this Lease, nor shall the collection
or acceptance of rent from any such assignee, subtenant or occupant constitute
a waiver or release of Tenant of any covenant or obligation contained in this
Lease, nor shall any such assignment or subletting be construed to relieve
Tenant from obtaining the consent in writing of Landlord to any further
assignment or subletting. Tenant hereby Assigns to Landlord the rent cue from
any subtenant of Tenant and hereby authorizes each such subtenant to pay said
rent directly to Landlord, at Landlord's option, in the event of any default by
Tenant under the terms of this Lease.
(e) Subsidiary or Affiliate. Provided Tenant delivers notice to
Landlord not less than thirty (30) days prior to any such Assignment or
sublease, Tenant may assign this Lease, or sublease all or part of the
Premises, without the consent of Landlord, to:
(i) any corporation that has the power to direct Tenant's
management and operation with a net worth comparable to Tenant's, or any
corporation whose management and operation is controlled by Tenant with a net
worth comparable to Tenant's or by Tenant, or
(ii) any corporation a majority of whose voting stock is owned.
(iii) any corporation in which or with which Tenant, its
corporate successors or assigns, is merged or consolidated, in accordance with
applicable statutory provisions for merger or consolidation of corporations, so
long as (A) the liabilities of the corporations participating in such merger or
consolidation are assumed by the corporation surviving such merger or created
by such consolidation and (B) the successor can demonstrate by balance sheets
and other financial documentation submitted to Landlord that it is capable of
servicing all of Tenant's financial obligations under this Lease.
12. INDEMNITY.
(a) Landlord shall not be liable for, and Tenant shall indemnify and
save harmless Landlord, ground lease, if any, and Landlord's managing agent, if
any, from and against and from all fines, damages, cults, claims, demands,
leans and actions (including reasonable attorneys' fees) for any injury to
person (including death) or damage to or loss of property on or about the
Premises caused by Tenant, its employees, contractors, subtenants, invitees or
by any other person entering the Premises or the Building under the express or
implied invitation of Tenant, or arising out of Tenant's use of the Premises.
Landlord shall not be liable or responsible for any lose or damage to any
property or death or injury to any person (including Tenant, its agents,
employees or invitees) occasioned by theft, fire, act of God, public enemy,
criminal conduct of third parties, injunction, riot, strike, insurrection, war,
court order, requisition or other governmental body or authority, by other
tenants of the Building or any other matter beyond the reasonable control of
Landlord, or for any injury or damage or inconvenience to Tenant which may
arise through repair or alteration of any part of the Building, or failure to
make repairs, or from any cause whatever except Landlord's negligence or
willful misconduct.
(b) Landlord hereby agrees to make no claim against Tenant, and will
indemnify and save Tenant, its agents, employees and invitees harmless from any
injury, damage or claim which shall be made against Tenant by any agent,
employee, licensee or invites of Landlord or by others claiming the right to be
on or about the common areas for any injury, lose or damage to person or
property occurring upon the common areas, unless due to Tenant's negligence or
willful malconduct.
13. SUBORDINATION.
This Lease and all rights of Tenant hereunder shall be and are subject
and subordinate at all times to any deeds of trust, mortgages, installment sale
agreements and other instruments or encumbrances, as well as to any ground
leases or primary leases, that now or hereafter cover all or any part of the
Building, the Land or an interest of Landlord therein, and to any and all
advances made on the security thereof, and to any and all increases, renewals,
modifications, consolidations, replacements and extensions of any of such deeds
of trust, mortgagee, installment sale agreements, instruments, encumbrances or
leases, as well as any substitutions therefor, all automatically and without
the necessity of any further action on the part of Tenant to effectuate such
subordination. Tenant shall, however, upon demand at any time or times execute,
acknowledge and deliver to Landlord any and all instrument and certificates
that in the reasonable
<PAGE> 13
Judgment of Landlord may be necessary or proper to confirm or evidence such
subordination. Notwithstanding the foregoing, if any mortgagee, trust
beneficiary or ground lessor shall elect to have this Lease treated as if it
became effective and Tenant had taken possession prior to the lien of its
mortgage or deed of trust or prior to its ground Lease, and shall give notice
thereof to Tenant, this Lease shall be deemed to have become effective and
Tenant's right to possession shall be considered prior to such mortgage, deed
of trust, or prior to its ground lease whether this Lease is dated prior or
subsequent to the date of said mortgage, deed of trust or ground lease or the
date of recording thereof. In the event any mortgage or deed of trust to which
this Lease is subordinate is foreclosed or a deed in lieu of foreclosure is
given to the mortgagee or beneficiary, Tenant shall attain to the purchaser at
the foreclosure sale or to the grantee under the deed in lieu of foreclosure;
in the event any ground lease to which this Lease is subordinate is terminated,
Tenant shall attain to the ground lessor. Tenant shall upon demand at any time
execute, acknowledge and deliver to Landlord's mortgagee (including the
beneficiary under any deed of trust) or other holder any and all instruments
and certificates that in the Judgment of Landlord's mortgagee may be necessary
or proper to confirm or evidence such attainment. Notwithstanding the
foregoing, Landlord shall make reasonable efforts to obtain a non-disturbance
agreement from all mortgagees and beneficiaries of any deeds of trust now or
hereafter placed on the Building, provided that the same can be obtained at no
Cost, expense, or liability to Landlord. Landlord shall, however, have no
liability to Tenant as a result of its failure to obtain any non-disturbance
agreement, provided that Landlord endeavored in good faith to obtain such an
agreement.
14. RULES AND REGULATIONS.
Tenant and Tenant's agents, contractors, employees and invitees will
comply fully with all requirements of the Rules and Regulations of the Building
and related facilities, as specified in the Rules and Regulations now or
hereafter sent by Landlord to Tenant. Landlord shall at all times have the
right to change such rules and regulations to promulgate other Rules and
Regulations in such manner as Landlord may deem advisable, in its reasonable
discretion, for safety, care or cleanliness of the Building and related
facilities or the Premises, and for preservation of good order therein, all of
which Rules and Regulations, changes and amendments will be forwarded to Tenant
in writing and shall be carried out and observed by Tenant. Any such
promulgated Rules and Regulations shall be nondiscriminatory and shall apply
fairly to all tenants of the Building. Tenant shall be responsible for
compliance therewith by the agents, contractors, employees and invitees of
Tenant.
15. Inspection.
Landlord or its officers, agents and representatives, and any ground
lessor or mortgagee thereof, shall have the right to enter into and upon any
and all parts of the Premises at all reasonable hours upon reasonable advance
notice (or, in any emergency or for the purpose of performing routine
maintenance, at any hour and without advance notice) to (a) inspect the
Premises at any time (including the right to perform periodic environmental
studies, audits and reports) (Landlord shall use retainable efforts not to
materially interfere with the operation of Tenant's business during any such
inspections and shall use reasonable efforts to notify Tenant, except in
emergency situations, of such inspections) (b) clean or make repairs or
alterations or additions as Landlord may deem necessary (but without any
obligation to do so, except as expressly provided for herein), or (c) show the
Premises to prospective tenants, purchasers or lenders and Tenant shall not be
entitled to any abatement or reduction of rent by reason thereof, nor shall
such be doomed to be an actual or constructive eviction.
16. CONDEMNATION.
If the whole or, as determined by Landlord in its sole discretion, any
substantial part of the Land or the Building should be taken for any public or
quasi-public use under governmental law, ordinance or regulation, or by right
of eminent domain, or by private purchase in lieu thereof and the taking would
prevent or materially interfere with the use of the Premises for the purpose
for which they are being used, as determined by Landlord, this Lease shall
terminate and the rent shall be abated during the unexpired portion of this
Lease, effective when the physical taking of said Land or the Building shall
occur. If part of the Land or Building shall be taken for any public or
quasi-public use under any governmental law, ordinance or regulation, or by
right of eminent domain, or by private purchase in lieu thereof, and this Lease
is not terminated as provided in the sentence above, this Lease shall not
terminate but too rent payable hereunder during the unexpired portion of this
Lease shall be adjusted to reflect Tenant's new proportionate share of the
Building. In the event of any such taking or
<PAGE> 14
private purchase in lieu thereof, Landlord and Tenant shall each be entitled to
all remedies provided by law' provided, however, that any award paid to Tenant
shall not detract from any award which Landlord is entitled to receive; and if
Landlord's award is reduced to any extent as a result of any award to Tenant,
then Tenant shall assign and pay over to Landlord the amount by which
Landlord's award wee so reduced.
17. FIRES AND OTHER CASUALTY.
In the event of damage to or destruction of the Premises or the
Building, or the entrances and other common faculties necessary to provide
normal access to the Premises, caused by fire or other casualty, Tenant shall
provide immediate notice thereof to Landlord, and Landlord shall make repairs
and restorations as hereafter expressly provided, unless this Lease shall be
terminated by Landlord or unless any mortgagee which la entitled to receive
casualty insurance proceeds fails to make available to Landlord a sufficient
amount of such proceeds to cover the Cost of such repairs and restoration.
If (i) the damage is of such nature or extent, in the judgment of Landlord's
architect, that more than two hundred ten (210) consecutive days, after
commencement of the work, would be required (with normal work crews and hours)
to repair and restore the part of the Premises or Building which has been
damaged, or (ii) a substantial portion of the Premises or the Building is so
damaged that, in Landlord's sole judgment, it is uneconomic to restore or
repair the Premises or the Building, as the case may be, Landlord shall so
advise Tenant promptly and Landlord or Tenant, for a period of ten (10) days
thereafter, shall have the right to terminate this Lease by written notice to
the other, as of the date specified in such notice, which termination date
shall be no later than thirty (30) days after the date of such notice. In the
event of such fire or other casualty, if this Lease is not terminated pursuant
to the terms of this Section 17, and if (i) sufficient casualty insurance
proceeds are available for use for such restoration or repair, and (ii) this
Lease is then in full force and effect, Landlord shall proceed promptly and
diligently to restore the Premises to its substantially similar condition prior
to the occurrence of the damage, provided that Landlord shall not be obligated
to repair or restore any alterations, additions or fixtures which Tenant or any
other tenant may have installed unless Tenant, in a manner satisfactory to
Landlord, assures payment in full of all Costs which may be incurred by
Landlord in connection therewith. Landlord shall not insure any improvements or
alterations to the Premises in excess of Standard Tenant Work (unless such
improvements or alterations become fixtures), equipment or other property of
Tenant. Tenant shall, at its sole expense, insure the value of its leasehold
improvements, fixtures, equipment or other property located in the Premises,
for the purpose of providing funds to Landlord to repair and restore the
Premises to its substantially similar condition prior to occurrence of the
damage. If there be any such alteration, fixtures or additions and Tenant done
not manure or agree to issue payment of the Cost or restoration or repair as
aforesaid, Landlord shall have the right to determine the manner in which the
Premises shall be restored so as to be substantially the same as the Premises
existed prior to the damage occurring, as if such alterations, additions or
fixtures had not been made or installed. The validity and effect of this Lease
shall not be impaired in any way by, and Landlord shall have no liability as a
result of, the failure of Landlord to complete repairs and restoration of the
Premises or of the Building within two hundred ten (210) consecutive days after
commencement of work, even if Landlord had in good faith notified Tenant that
it estimated that the repair and restoration would be completed within such
period, provided that Landlord proceeds diligently with such repair and
restoration.
In the case of damage to the Premises not caused by the negligence or
willful misconduct of the Tenant or any of its agents, employees or invitees,
and which la of a nature or extent that Tenant is continued occupancy is
substantially impaired, the rent otherwise payable by Tenant hereunder shall be
equitably abated or adjusted for the duration of such impairment as determined
by Landlord. In no event, however, shall any damages be payable by Landlord to
Tenant in respect of business interruption resulting from any fire or other
casualty on the Premises or Building. Tenant shall be responsible to insure
and/or repair all of Tenant to leasehold improvements and all equipment,
fixtures and personal property located in the Premises.
18. HOLDING OVER.
Tenant shall, at the termination of this Lease by lapse of time or
otherwise, yield up immediate possession to Landlord. If Tenant holds over
after the expiration or termination of this Lease, all of the other terms and
provisions of this Lease shall be applicable during such period, except that
Tenant shall pay Landlord from time to time upon demand, as partial damages for
the period of any holdover, an amount equal to one hundred fifty percent (1501)
of the Basic Rental in effect on the termination date, computed on a
<PAGE> 15
dally basis for each day of the holdover period. No holding over by Tenant
shall attempt to extend this Lease except as otherwise expressly provided in
this Lease. The foregoing notwithstanding, Landlord, in addition to accepting
the dally damages during the period of such holding over, shall be entitled to
pursue all remedies at law or equity, including, without limitation, rights to
ejectment and damages.
19. TAXES.
(a) During each calendar year or portion thereof included in the Lease
Term, and any renewal thereof, Tenant shall pay to Landlord as additional rent,
Tenant's Proportionate Share of Real Estate Taxes which exceed the Base Real
Estate Taxes. Real Estate Taxes shall mean (i) all real estate taxes, including
general and special assessments, if any, which are imposed upon Landlord or
assessed against the Building and/or the Land during any calendar year, and
(11) any other present or future taxes or governmental charges that are imposed
upon Landlord or assessed against the Building and/or the Land during any
calendar year which are in the nature of, in addition to or in substitutions
for real estate taxes, including, without limitation, any license fees, tax
measured by or imposed upon rents, or other tax or charge upon Landlord's
business of leasing the Building, but shall not include any capital stock tax,
excess profits tax, transfer tax, or federal, state or local corporate income
tax. Real Estate Taxes shall also include all expenses incurred by Landlord in
obtaining or attempting to obtain a reduction of Real Estate Taxes, including
but not limited to, legal fees.
(b) Commencing on January 1, 1997, and on each January let thereafter,
Landlord may deliver to Tenant a statement of Landlord's estimate of any
increase in the annual Real Estate Taxes for the then current calendar year
over the Base Real Estate Taxes and Tenant's percentage thereof, such statement
to be delivered on or before April 1st of said calendar year, or as soon
thereafter as possible. Within thirty (30) days after delivery of such
statement (including any statement delivered after the expiration or
termination of this Lease), Tenant shall pay to Landlord with each month 'e
Basic Rental, as additional rent, one-twelfth (1/12) of Tenant's aforesaid
percentage share of such estimated increase in the annual Real Estate Taxes,
except that Tenant's first payment shall include the (l/12th) monthly shares
for the months from January let through the month in which Landlord submitted
the estimate of the increase in the annual Real Estate Taxes for the then
current calendar year.
(c) Commencing on January 1, 1998, Landlord shall deliver to Tenant a
statement (including therewith a copy of the Real Estate Tax Bill) showing the
determination of the increase in the annual Real Estate Taxes for the preceding
calendar year and Tenant's total percentage thereof, such statement to be
delivered on or before April let of the than current calendar year, or as Boon
thereafter as reasonably practicable. If such statement shows that Tenant's
payments, if any, of the estimated monthly increase in the annual Real Estate
Taxes for said preceding calendar year exceeded Tenant's actual increases for
said year, then Tenant may deduct such overpayment from its next payment or
payments of monthly rent. If such statement shows that Tenant's percentage
share of Landlord's actual increases in the annual Real Estate Taxes exceeded
Tenants payments, if any, of the estimated monthly increase in the annual Real
Estate Taxes for said preceding calendar year, then Tenant shall pay the total
amount due to Landlord, which amount shall constitute additional rent hereunder
due and payable with the first monthly installment of rent due after delivery
of said statement.
(d) In the event that the expiration date or other date of termination
of this Lease is not December 31st, the increase to be paid by Tenant or any
refund to which Tenant la entitled from Landlord for the calendar year in which
the expiration date occurs shall be determined by multiplying the amount of
Tenant's share thereof for the full calendar year by a fraction with the number
of days during such calendar year prior to the expiration date as the
numerator, and with 365 as the denominator. The termination of this Lease shall
not affect the obligations of Landlord and Tenant pursuant to this Section to
be performed after such termination.
(e) Tenant shall be liable for all taxes levied or assessed against
personal property, furniture or fixtures placed by Tenant in the Premises, and
if any such taxes for which Tenant la liable are in any way levied or assessed
against Landlord, Tenant shall pay the Landlord upon demand that part of such
taxes for which Tenant la primarily liable hereunder. Should Landlord receive a
tax credit or abatement by virtue of its ownership of the Building, Operating
Expenses and Tenant's Proportionate Share of Real Estate Taxes shall be
adjusted to reflect the benefit of such credit or abatement.
20. EVENTS OF DEFAULT.
The occurrence of any of the following events shall be deemed to be an
event of default ("Event of Default") by Tenant under this Lease:
(a) Tenant shall fall to pay when due any rental or other sums payable
by Tenant hereunder (or under any other lease now or hereafter executed by
Tenant in connection with space in the Building), and same is not cured within
five (5) business days after Landlords written notice thereof to Tenant.
<PAGE> 16
(b) Tenant shall fall to comply with or observe any other provision of
this Lease (or any other lease now or hereafter executed by Tenant in
connection with apace in the Building), and same la not cured within fifteen
(15) days after Landlord's written notice thereof to Tenant. Notwithstanding
the foregoing, if (i) the default is of such a nature that fifteen (15) days is
an unreasonably abort period of time in which to cure the default' (ii) Tenant
has commenced curing the default within the fifteen (15) day period; and (iii)
Tenant. is continuing to diligently pursue a cure of such default, then Tenant
shall have an additional thirty (30) days in which to complete the cure of said
default.
(c) Tenant abandons the Premises, or removes or attempts to remove
Tenant's goods or property therefrom other than in the ordinary course of
business or dose not operate or hold the Premises open for business for more
than 10 consecutive days or for more than 30 non-consecutive days during any
three-month period, without regard to whether Tenant has paid to Landlord in
full all rent and charges that may have become due.
(d) Tenant or any partner or guarantor of Tenant, as the case may be,
shall apply for or consent to the appointment of a receiver, trustee or
liquidator of itself or himself or any of its or his property, admit in writing
its or 0a inability to pay its or his debts as they mature, make a general
assignment for the benefit of creditors, be adjudicated a bankrupt, insolvent
or file a voluntary petition in bankruptcy or a petition or an answer seeking
reorganization or an arrangement with creditors or to take advantage of any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute, or an answer admitting the material allegations of
a petition filed against it or him in any proceeding under any such law, or if
action shall be taken by Tenant or any partner or guarantor of Tenant for the
purposes of effecting any of the foregoing.
(e) Any court of competent jurisdiction shall enter an order, judgment
or decree approving a petition seeking reorganization of Tenant or all or a
substantial part of the assets of Tenant or any partner or guarantor of Tenant,
or appointing a receivor, sequestrator, trustee or liquidator of Tenant or any
partner or guarantor of Tenant or any of its or his property, and such
<PAGE> 17
order, judgment or decree shall continue unpayed and in effect for any period of
at least thirty (30) days.
21. REMEDIES.
Upon the occurrence of any Event of Default specified in this Lease,
Landlord shall have the option to pursue any one or more of the following
remedial without any notice or demand whatsoever.
(a) Distrain, collect or bring an action for such rent as may be in
arrears, and request entry of judgment therefor as provided for in case of rent
in arrears, or file a proof of claim in any bankruptcy or insolvency proceeding
for such rent, or institute any other proceedings, whether similar or
dissimilar to the foregoing, to enforce payment thereof.
(b) Declare due and payable and are for and recover, all unpaid rent
for the unexpired period of the Lease Term (and also all additional rent as the
amounts thereof can be determined or reasonably estimated) as if by the terms
of this Lease the same were payable in advance, together with all legal fees
and other expenses incurred by Landlord in connection with the enforcement of
any of Landlord's rights and remedies hereunder.
(c) Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord; and if Tenant falls to do so, Landlord may,
without prejudice to any other remedy which it may have for possession or
arrearages in rent, enter upon and take possession of the Premises and expel or
remove Tenant and any other person who may be occupying the Premises or any
part thereof, without being liable for premises or any claim for damages
therefor, and Tenant agrees to pay to Landlord on demand the amount of all lose
and damage which Landlord may suffer by reason of such termination, whether
through liability to relet the Premises on satisfactory terms or otherwise,
including the lose of rental for the remainder of the Lease Term.
(d) Without termination of the Lease, enter upon and take possession
of the Premises and expel or remove Tenant and any other person who may be
occupying the Premises or any part thereof, without being liable for premises
or any claim or damages therefor, and if Landlord so elects, relet the Premises
on behalf of the Tenant on such terms as Landlord shall deem advisable and
receive the rent therefor, and Tenant agrees to pay to Landlord on demand any
deficiency that may arise by reason of such reletting for the remainder of the
Lease Term.
(e) Without termination of the Lease, enter upon the Premises, by
force if necessary, without being liable for trespass or any claim for damages
therefor, and do whatever Tenant is obligated to do under the terms of this
Lease' and Tenant agrees to reimburse Landlord on demand for any expanses which
Landlord may incur in thus effecting compliance with Tenant's obligations under
this Lease, and Tenant further agrees that Landlord shall not be liable for any
damages resulting to the Tenant from such action.
(f) If Tenant fails to perform any covenant or observe any condition
to be performed or observed by Tenant hereunder or acts in violation of any
covenant or condition hereof, Landlord may, but shall not be required to on
behalf of Tenant, perform such covenant and/or take such steps, including
entering upon the Premises, as may be necessary or appropriate, if Landlord
shall have given Tenant at least three (3) business days prior written notice
of Landlord's intention to do so, unless an emergency situation exists, in
which case Landlord shall have the right to proceed immediately and all costs
and expenses incurred by Landlord in so doing, including reasonable legal fees,
shall be paid by Tenant to Landlord upon demand, plus interest at the overdue
interest rate sat forth herein from the date of expenditure(a) by Landlord, as
additional rent. Landlord's proceeding under the rights reserved to Landlord
under this Section shall not in any way prejudice or waive any rights Landlord
might otherwise have against Tenant by reason of Tenant's default.
(g) Exercise any other rights and remedies available to Landlord at
law or in equity. No reentry or taking possession of the Premises by Landlord
shall be construed as an election on its part to terminate this Lease, unless a
written notice of such intention be given to Tenant. Neither pursuit of any of
the foregoing remedial provided nor any other remedies provided herein or by
law shall constitute a forfeiture or waiver of any rent due to Landlord
hereunder or of any damages accruing to Landlord by reason of the violation of
any of the terms, provisions and covenants herein contained. Landlord's
acceptance of rent following an Event of Default hereunder shall not be
construed as Landlord's waiver of such Event of Default. No waiver by Landlord
of any violation or breach of any of the terms, provisions and covenants herein
contained shall be deemed or construed to constitute a waiver of any other
violation or Event of Default. The lose or damage that Landlord may suffer by
reason of termination of this Lease or the deficiency from any reletting as
provided for above shall include the expense of repossession and any repairs or
<PAGE> 18
remodeling undertaken by Landlord following possession. Should Landlord at any
time terminate this Lease for any Event of Default, Tenant shall not be
relieved of its liabilities and obligations hereunder and, in addition to any
other remedy Landlord may have, Landlord may recover from Tenant all damages
Landlord may incur by reason of such Event of Default, including the cost of
recovering the Premises and the loss of rental for the remainder of the Lease
Term. Tenant's obligations and liability under this Lease shall also survive
repossession and reletting of the Premises by Landlord pursuant to the
foregoing provisions of this Section 21. Notwithstanding anything to the
contrary contained in this Section, in computing the amount due Landlord as a
result of any Event of Default by Tenant, Tenant shall not be entitled to
receive any credit, upon reletting by Landlord after Tenant's default, for any
rent or other sums received by Landlord in excess of those for which Tenant is
otherwise obligated herein.
(h) The abatement of Basic Rental, if any, and other concessions of
the Landlord (which may Include among other items' (i) brokerage break (ii)
moving allowances, (iii) Tenant improvements, (iv) Lease Assumptions, (v)
unamortised portions of the buildout and (vi) any other cash allowances or
payments) are subject to the condition that, throughout the Lease Term, Tenant
will perform and comply with all of the terms, covenants and conditions of this
Lease to be performed or complied with by Tenant. If, after the occurrence of
an Event of Default, landlord terminates this Lease or reenters and takes
possessions of the Premises without such a termination, the abatement of Basic
Rental and other Landlord concessions shall cease to apply and Tenant shall be
obligated, within 10 days after demand, to pay to Landlord the Basic Rental
abated and the VALUE of all Landlord's concessions. Landlord' a right to
recover the Basic Rental abated and the value of all Landlord's concessions
shall be in addition to any other remedies available to Landlord as a result of
such termination or reentry.
(i) All rights and remedies of Landlord and Tenant herein enumerated
shall be cumulative, and none shall exclude any other right or remedy allowed
by law.
(j) In addition to any other rights and remedial provided in this
Lease, and with or without terminating this Lease, Landlord may with force of
law, re-enter, terminate Tenant's right of possession and take possession of
the Premises, the provisions of this Section 21 operating as a notice to quit,
any other notice to quit or of Landlord's intention to re-enter the Premises
being hereby expressly waived.
(k) Notwithstanding any of the provisions of this Section 21, Landlord
shall not seize any legally confidential information of Tenant, of any of
Tenants licensees or of the United States Government.
22. SURRENDER OF PREMISES.
No act done and no failure to act by Landlord or its agents during the
term hereby granted shall be deemed an acceptance of a surrender of the
Premises, and no agreement to accept a surrender of the Premises shall be valid
unless the same be made in writing and signed by Landlord.
23. ATTORNEYS' FEES.
In case it should be necessary or proper for Landlord to bring any
action under this Lease concerning a default of Tenant hereunder, irrespective
of whether such default is later cured, then Tenant shall pay any and all
reasonable attorney's fees, court costs and expenses of Landlord incurred in
connection with such enforcement.
24. INTENTIONALLY OMITTED.
25. MECHANICS' LIENS.
Tenant shall not permit any mechanical lien or other liens to be
placed upon the Premises or the Building or improvements thereon during the
Lease Term, canned by or resulting from any work performed, materials furnished
or obligation incurred by or at the request of Tenant. In the case of the
filing of any such lien Tenant will promptly, and in any event within thirty
(30) days after the filing thereof, satisfy or release such lien by means of
payment thereof, bonding Landlord against any lose occasioned thereby (in which
case Tenant shall have the right in due diligence to contest and dispute such
lien so long as such bond remains in place), or take such other action as may
be otherwise acceptable to Landlord.
26. WAIVER OF SUBROGATION; INSURANCE.
(a) Landlord and Tenant hereby release the other from any and all
liability or responsibility to the other or anyone claiming through or under
them by way of subrogation or otherwise for any lose or damage
<PAGE> 19
to property, but only to the extent that such lose or damage la covered by the
greater of any insurance then in force or required to be carried hereunder, even
if such fire or other casualty shall have been caused by the fault or negligence
of the other party, or anyone for whom such party may be responsible provided,
however, that such release shall be applicable and in force and effect only with
respect to any lose or damage occurring during such time as the policy or
policies of insurance covering said loss shall contain a clause or endorsement
to the effect that this release shall not adversely affect or impair said
insurance or prejudice the right of the insured to recover thereunder.
(b) Tenant shall maintain throughout the Lease Term, at Tenant's sole
cost and expense, insurance against loss or liability in connection with bodily
injury, death, property damage and destruction, in or upon the Premises or the
remainder of the Land, and arising out of the use of all or any portion of the
same by Tenant or its agents, employees, officers, invitees, visitors and
guests, under policies of comprehensive general public liability insurance
having such limits as to each as may be reasonably required by Landlord from
time to time, but in any event of not lease than One Million Dollars
($1,000,000) per occurrence for death or injury and One Million Dollars
($1,000,000) per occurrence for property damage or destruction and personal
injury. Such policies shall name Landlord and Tenant, (and, at Landlord's or
such mortgagee's or paramount Lessor's or installment seller's request) any
mortgagee of all or any portion of the Buildings and any landlord of, or
installment seller to, Landlord as additional insured portion, shall provide
that they shall not be modified or canceled without at least thirty (30) days
prior written notice to Landlord and any other party designated as aforesaid
and shall be issued by insurers of recognized responsibility licensed to do
business in the Jurisdiction in which the Building is located and acceptable to
Landlord. Copies of all such policies certified by the insurers to be true and
complete shall be supplied to Landlord and such mortgagees, paramount lessors
and installment sellers at all times.
(c) Landlord shall maintain throughout the Lease Term insurance
coverage in such amounts as are carried by owners of other comparable office
buildings in the same general area of the Building, including, without
limitation, comprehensive general liability insurance and insurance on the
Building and the structural improvements therein.
27. INTENTIONALLY OMITTED.
28. BROKERAGE.
Tenant warrants that it has had no dealings with any broker or agent other than
Compass Management and Leasing, Inc. and The Carey Winston Company in
connection with the negotiation or execution of this Lease, and Tenant agrees
to indemnify Landlord against all coats, expenses, attorneys' fees or other
liability for commissions or other compensation or charges claimed by any other
broker or agent claiming the same by, through or under Tenant.
29. ESTOPPEL CERTIFICATES.
Tenant shall from time to time, within ton (10) days after Landlord shall have
requested the same of Tenant, execute, acknowledge and deliver to Landlord a
written instrument in recordable form and otherwise in such form as required by
Landlord (i) certifying that this Lease is in full force and effect and has not
boon modified, supplemented or amended in any way (or, if shore have boon
modifications, supplements or amendments thereto, that it is in full force and
effect as modified, supplemented or amended and stating such modifications,
supplements and amendments); and (ii) stating any other fact or certifying any
other condition reasonably requested by Landlord or requested by any mortgagee
or prospective mortgagee or purchaser of the Property or of any Interest
therein. In the event that Tenant shall fail to return a fully executed copy of
such certificate to Landlord within the foregoing ten (10) day period, than
Tenant shall be deemed to have approved and confirmed all of the forms,
certifications and representations contained in such certificate, and Tenant
irrevocably authorizes and appoints Landlord as its attorney-in-fact to execute
such certificate on behalf of Tenant.
30. NOTICES.
Each provision of this Lease or of any applicable governmental laws,
ordinances, regulations and other requirements with reference to the Bonding,
mailing or delivery of any notice or the making of any payment by Landlord to
Tenant or with reference to the vending, mailing or delivery or the making of
any payment by Tenant to Landlord shall be deemed to be complied with when and
if the following steps are taken
(a) All rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at the address for Landlord set
forth below or at such other address as Landlord may specify from time to time
by written notice delivered in accordance herewith. Tenant's obligation to pay
rent and any other amounts to Landlord under the terms of this Lease shall not
be deemed satisfied until such rent or other amounts have been actually
received by Landlord.
<PAGE> 20
(b) All payments required to be made by Landlord to Tenant hereunder
shall be payable to Tenant at the address sot forth below, or at such other
address within the continental United States as Tenant may specify from time to
time by written notice delivered in accordance herewith.
(c) With the exception of subsection (a) above, any notice or document
required or permitted to be delivered hereunder shall be deemed to be delivered
(i) when delivered personally or (ii) whether actually received or not, when
deposited in the United States Mail, postage prepaid, registered or certified
mail, return receipt requested, addressed to the parties hereto at the
respective addresses set out below, or at such other address as they have
previously specified by written notice delivered in accordance herewith.
If to Landlord, at:
Compass Management and Leasing, Inc.
1595 Spring Hill Road, Suite 110
Vienna, Virginia 22182
If to Tenant, at:
The Premises.
If and when included within the term Landlord., as used in this instrument,
there are more than one person, firm or corporation, all shall Jointly arrange
among themselves for their Joint execution of such notice specifying some
individual at the specific address for the receipt of notices and payments to
Landlord' if and when included within the term Tenant, as used in this
instrument, there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such notice
specifying some individual at some specific address within the continental
United States for the receipt of notices and payment to Tenant. All parties
included within the terms "Landlord" and "Tenant", respectively, shall be bound
by notices given in accordance with the provisions of this paragraph to the
same effect as if each had received such notice.
31. FORCE MAJEURE.
Whenever a period of time is herein proscribed for action to be taken
by Landlord or Tenant or whenever Landlord or Tenant is otherwise obligated to
perform hereunder, neither Landlord nor Tenant shall be liable or responsible
for, and shore shall be excluded from the computation for any such period of
time, any delays or failures to perform duo to strikes, riots, acts of God,
shortages of labor or materials, war, governmental laws, regulations or
restrictions or any other causes of any kind whatsoever which are beyond the
retainable control of that party' provided, however, that the failure to pay
any rent or additional rent hereunder, for any reason, shall not be considered
to be beyond the reasonable control of Tenant.
32. SEVERABILITY.
If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws effective during the Lease Term,
then and in that event, the remainder of this Lease shall not be affected
thereby.
33. AMENDMENTS WAIVER: BINDING EFFECT.
The provisions of this Lease may not be waived, altered, changed or
amended, except by instrument in writing signed by both parties hereto, and
such instrument may be subject to the approval of any mortgagees, and ground
lessors of record. The acceptance of Basic Rental, additional rent or other
payments by Landlord, or the endorsement or statement on any chock, any letter
accompanying any check or other tender of Basic Rental, additional rent or
other payment shall not be deemed an accord and satisfaction or a waiver of any
obligation of Tenant, regardless of whether Landlord had knowledge of any
breach of such obligation. The terms and conditions contained in this Lasso
shall apply to, inure to the benefit of, and be binding upon the parties
hereto, and upon their respective successors in interest and legal
representative, except as otherwise heroin expressly provided.
34. QUIET ENJOYMENT.
Provided Tenant has performed all of the terms and conditions of this
Lease, including the payment of rent, to be performed by Tenant, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Lease Term, without
hindrance from Landlord or others claiming through Landlord, subject to the
terms and conditions of this Lease and to all mortgagee, ground Leases and
other encumbrances to which this Lease is subject and subordinate.
35. LIABILITY OF TENANT.
If there is more than one Tenant, the obligations hereunder imposed
upon Tenant shall be joint and several. If there is a guarantor of Tenant's
<PAGE> 21
obligations hereunder, the obligations hereunder imposed upon Tenant shall be
the joint and several obligations of Tenant and such guarantor, and Landlord
need not first proceed against Tenant before proceeding against such guarantor
nor shall any such guarantor be released from its guaranty for any reason
whatsoever, including without limitation any extensions or renewals hereof, any
amendments hereto, any waivers hereof or failure to give such guarantor any
notices hereunder.
36. LANDLORD LIABILITY.
The liability of Landlord and all officers, employees, shareholders,
venturers or partners (general or limited) of Landlord to Tenant for any
default by Landlord under the terms of this Lease shall be non-recourse and
limited to the interest of Landlord in the Building, and Landlord or any
officer, employee, shareholder, venturer or partner (general or limited) of
Landlord shall have the right to sell or transfer all or any portion of the
Land or the Building to any third party, and upon any such sale or other
transfer of all of the Building or the Land, and the corresponding assignment
of this Lease, the previous Landlord shall have no further liability or
obligation to Tenant hereunder or otherwise.
37. CERTAIN RIGHTS RESERVED BY LANDLORD.
Landlord shall have the following rights, exercisable without notice,
except as provided herein, and without liability to Tenant for damage or injury
to property, persons or business and without effecting an eviction,
constructive or actual, or disturbance of Tenant's use or possession or giving
rise to any claim or setoff or abatement of rent or affecting any of Tenant's
obligations hereunder'
(a) To change the name by which the Building is designated upon four
(4) months written notice to Tenant.
(b) To decorate and to make repairs, alterations, additions, changes
or improvements, whether structural or otherwise, in and about the Building, or
any part thereof, and for such purposes to enter upon the Premises and, during
the continuance of any such work, to temporarily close doors, entry ways,
public apace and corridors in the Building, to interrupt or temporarily suspend
Building services and facilities and to change the arrangement and location of
entrances or passageways, doors and doorways, corridors, elevators, stairs,
toilets, or other public parts of the Building, so long as the Premises are
reasonably accessible.
(c) To grant to anyone the exclusive right to conduct any business or
render any service in or to the Building, provided such exclusive right shall
not operate to exclude Tenant from the use expressly permitted herein.
(d) To take all such reasonable measures as Landlord may deem
advisable for the security of the Building and its occupants, including without
limitation, the search of all persons entering or leaving the Building, the
evacuation of the Building for cause, suspected cause, or for drill purposes,
the temporary denial of access to the Building, and the closing of the Building
after normal business hours and on Saturdays, Sundays and holidays' subject,
however, to Tenant's right to admittance when the Building is closed after
normal business hours under such reasonable regulations as Landlord may
prescribe from time to time which may include, by way of example but not of
limitation, that person entering or leaving the Building, whether or not during
normal business hours, identify themselves to a security officer by
registration or otherwise and that such persons establish their right to enter
or leave the Building.
Notwithstanding the foregoing, Landlord agrees to use reasonable
efforts while exercising the above rights, not to materially interfere with the
operation of Tenant's business.
38. FINANCIAL STATEMENTS.
Tenant agrees to provide to Landlord within 14 days of request by
Landlord but no more than once per year, the most recent audited annual
financial statements of Tenant, including balance sheets, income statements,
and financial notes ("Statements.). Tenant consents that Landlord may release
the Statements to Landlord's subsidiaries, affiliates, lenders, advisors, joint
venture partners, or potential purchasers of the property for the purposes of
evaluating Tenant's financial condition with respect to performance under the
Lease. Landlord agrees to keep the Statements confidential and to not release
the Statements to third parties except as set forth herein. Landlord further
agrees to make reasonable efforts to obtain a confidentiality agreement from
independent third parties reviewing the Statements.
39. NOTICE TO LENDER.
If the Premises or the Building or any part thereof are at any time
subject to a mortgage or a deed of
<PAGE> 22
trust or other similar instrument and the Lease or the rentals are assigned to
such mortgagee, trustee or beneficiary and the Tenant is given written notice
thereof, including the post office address of such assignee, then Tenant shall
not terminate this Lease or abate rentals for any default on the part of
Landlord without first giving written notice by certified or registered mail,
return receipt requested, to such mortgagee, trustee, beneficiary and assignee,
specifying the default in reasonable detail, and affording such mortgagee,
trustee, beneficiary and assignee a reasonable opportunity to make performance,
at its election, for and on behalf of the Landlord.
40. MISCELLANEOUS.
(a) Any approval by Landlord and Landlord's architects and/or
engineers of any of Tenants drawings, plane and specification which are
prepared in connection with any construction of improvements in the Premises
shall not in any way be construed or operate to bind Landlord or to constitute
a representation or warranty of Landlord as to the adequacy or sufficiency of
such drawings, plans and specifications, or the improvements to which they
relate, or any use, purpose, or condition, but such approval shall merely be
the consent of Landlord as may be required hereunder in connection with
Tenant's construction of improvements in the Premises in accordance with such
drawings, plans and specifications.
(b) Each and every covenant and agreement contained in this Lease is,
and shall be construed to be, a separate and independent covenant and
agreement.
(c) Neither Landlord nor Landlord's agents or brokers have made any
representations or promises with respect to the Premises, the Building or the
Land except as herein expressly set forth and no rights, easements or licenses
are acquired by Tenant by implication or otherwise except as expressly set
forth in the provisions of this Lease.
(d) Time is of the essence as to all provisions of this Lease
applicable to Tenant's obligations hereunder.
(e) The submission of this Lease to Tenant shall not be construed as
an offer, nor shall Tenant have any rights with respect thereto unless and
until Landlord shall, or shall cause its managing agent to, execute a copy of
this Lease and deliver the same to Tenant.
(f) The terms of this Lease shall be construed in accordance with the
laws of the jurisdiction in which the Building is located
41. ADDITIONAL RENT.
The Tenant shall pay as additional rent any money required to be paid
pursuant to the provisions of this Lease whether or not the same be designated
"additional rent". If such amounts or charges are not paid at the time provided
in this Lease, they shall nevertheless, if not paid when due, be collectable as
additional rent with the next installment of rent thereafter falling due
hereunder, but nothing herein contained shall be deemed to suspend or delay the
payment of any amount of money or charge at the time the same becomes due and
payable hereunder, or limit any other remedy of the Landlord.
42. ENTIRE AGREEMENT.
The Lease contains all covenants and agreements between Landlord and
Tenant relating in any manner to the rent, use and occupancy of Premises and
Tenant's use of the Building and other matters set forth in this Lease. No
prior agreement or understanding pertaining to the same shall be valid or of
any force or effect and the covenants and agreements of this Lease shall not be
altered, modified or added to except in writing signed by Landlord and Tenant.
43. LEGAL PROCEEDINGS.
Landlord and Tenant hereby waive the right to a jury trial in any
action, proceeding or counterclaim between Tenant and Landlord or their
successors arising out of this Lease or Tenant's occupancy of the Premises or
Tenant's right to occupy the same.
44. LAWS AND REGULATIONS.
Tenant agrees at Tenant's expense to comply with all applicable laws,
ordinances, rules, and regulations, whether now in effect or hereafter enacted
or promulgated, of any governmental entity or agency having jurisdiction of the
Premises.
45. AMERICANS WITH DISABILITIES ACT ("ADA").
(a) Tenant hereby represents that it is not a public accommodation, as
defined in the ADA.
<PAGE> 23
(b) The Landlord shall take whatever steps are necessary to cause the
common areas of the building to meet the requirements of Title III of the ADA.
(c) Except for the initial buildout of the Premises, which shall be
Landlord's responsibility, Tenant at its sole coat and expense shall be solely
responsible for taking any and all measures which are required to comply with
the requirements of Title I and/or Title III of the ADA within the Premises
and, if the measures required outside of the Premises are attributable to
Tenant's alterations to the Premises, outside of the Premises as well. Any
Alterations to the Premises made by Tenant for the purpose of complying with
the ADA or which otherwise require compliance with the ADA shall be done in
accordance with this Lease, provided, however, that Landlord's consent to such
Alterations shall not constitute either Landlord's assumption, in whole or in
part, of Tenant's representation or confirmation by Landlord that such
Alterations comply with the provisions of the ADA.
(d) Tenant shall indemnify the Landlord for all claims, damages,
judgments, penalties, fines, administrative proceedings, coats, expenses and
liability arising from Tenant's failure to comply with any of the requirements
of Title I and/or Title III of the ADA within the Premises.
(e) Landlord shall indemnify the Tenant for all claims, damages,
judgments, penalties, fines, administrative proceedings, cost, expenses and
Liability arising from Landlord's failure to comply with Title III of the ADA
within the common areas.
46. ENVIRONMENTAL PROTECTIONS.
(a) Notwithstanding the generality of Section 9 above, Tenant shall
conduct all activity in compliance with all federal, state, and local laws,
statutes, ordinances, rules, regulations, orders and requirements of common law
concerning protection of the environment or human health ("Environmental
Laws"). Tenant shall also cause its subtenants (if subtenants are permitted by
this Lease or are hereafter approved by Landlord), Licensee, invitees, agents,
contractors, subcontractors and employees to comply with all Environmental
Laws. Tenant and its permitted subtenants, licensees, invitees, agents,
contractors, and subcontractors shall obtain, maintain, and comply with all
necessary environmental permits, approvals, registrations and licensee.
In addition to and not in limitation of the foregoing, Tenant, its
permitted subtenants, licensees, invitees, agents, contractors, subcontractors
and employees shall not generate, refine, produce, transfer, process or
transport Hazardous Materials on, above, beneath or near the Premises, the
Building or the Land. As used herein, the term Hazardous Materials shall
include, without limitation, all of the followings (l) hazardous substances, as
such term is defined in the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 (14), as amended by the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499, 100
Stat. 1613 (Oct. 17, 1986) ("SARA"), t2) regulated substances, within the
meaning of Title I of the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6991-6991(i), as amended by SARA' (3) any element, compound or
material which can pose a threat to the public health or the environment when
released into the environment' (4) hazardous waste as defined in the Virginia
Waste Management Act, Title 10.1, Chapter 14 of the Code of Virginias (5)
petroleum and petroleum byproducts) (6) an object or material which is
contaminated with any of the foregoing' (7) any other substance designated by
any of the Environmental Laws or a federal, abate or local agency as
detrimental to public health, safety and the environment. Tenant shall be
permitted to store reasonable quantities of cleaning and office supplies,
provided, however, that such supplies are not Hazardous Materials.
(b) Tenant shall protect, indemnify and save Landlord harmless from
and against any and all liability, loss, damage, cost or expense (including
reasonable attorneys' fees) that Landlord may suffer or incur as a result of
any claims, demands, damages, losses, liabilities, costs, charges, suits,
orders, judgments or adjudications asserted, assessed, filed, or entered
against Landlord or any of the Building or the Land, by any third party,
including, without limitation, any governmental authority, arising from
Tenant's breach of Environmental Laws or otherwise arising from the alleged
generation, refining, production, storage, handling, use, transfer, processing,
transportation, release, spilling, pumping, pouring, emission, emptying,
dumping, discharge or escape of Hazardous Materials by Tenant, its agents,
employees or invitees, on, from or affecting the Premises, the Building or the
Land, including, without limitation, liability for costs and expenses of
abatement, correction, clean-up or other remedy, fines, damages, response
(including death) and property damage.
(c) Tenant, its permitted subtenants, licensees, invitees, agents,
contractors, subcontractors and employees shall not release, spill, pump, pour,
emit, empty, dump or otherwise discharge or allow to escape Hazardous Materials
onto the Land or Building, and Tenant shall take all action necessary to remedy
the results of any such release, spilling, pumping,
<PAGE> 24
pouring, emission, emptying, dumping, discharge, or escape.
(d) Tenant shall within 48 hours of receipt deliver to Landlord copies
of any written communication relating to the Building or the Land between
Tenant and any governmental agency or instrumentality concerning or relating to
Environmental Laws.
(e) Tenant's obligations under this Section shall survive the
termination or other expiration of this Lease.
(f) Landlord warrants that, to its actual knowledge as of the
execution date of this Lease, no asbestos or Hazardous Materials are present in
the Premises.
47. PARKING.
Tenant, its permitted subtenants, licensees, invitees, agents,
contractors, subcontractors and employees shall not use parking spaces on the
Land or Building in excess of that number set out on the attached Data Sheet,
which shall be provided to Tenant at no cost and which has been reasonably
determined by Landlord to be Tenant's proportionate share of the total parking
spaces available on the Building and Land. Notwithstanding anything contained
herein, if any governmental regulation or ordinance is enacted or amended after
the effective date of this Lease so as to allow or require a modification in
Tenant's number of parking spaces, Landlord reserves the right to make such
modification without modifying in any way the rent due hereunder or any other
obligations of Tenant.
48. TENANT ACCESS.
Subject to Landlord's reasonable regulations, Tenant shall have access
to the Premises 24 hours per day, 365 days per year, except in the case an
emergency or when the Building may be closed by governmental authorities.
Landlord shall provide Tenant with a restricted entry access system for
after-hours access to the Building.
49. THE NEW PREMISES.
Upon Substantial Completion of the improvements to be constructed by
Landlord in accordance with the Space Plan referenced as Exhibit F. Tenant
shall lease from Landlord an additional 1,955 rentable square feet of apace in
the Building, the outline of which is included on exhibit A (the "New
Premises"). Tenant shall lease the New Premises from Landlord on the following
terms and conditions:
(a) Tenant shall pay Landlord as Basic Rental for the New Premises at
a rate of $19.75 per rentable square foot per year, with the initial monthly
installment being $3,217.60, such amount to be paid in addition to the Basic
Rental otherwise paid to Landlord for the Premises.
(b) The Basic Rental for the New Premises shall be increased annually,
effective on each anniversary of Substantial completion of the New Premises, by
an amount equal to three percent (3%) of the escalated Basic Rental then in
effect for the New Premises, payable as follows
<TABLE>
<CAPTION>
Year Annual Rental Monthly Rental
- ---- ------------- --------------
<S> <C> <C>
11/96-11/97 $38,611.25 $3,217.60
11/97-11/98 $39,769.59 $3,314.13
11/98-11/99 $40,962.65 $3,413.56
11/99-11/00 $42,191.56 $3,515.96
11/00 $43,457.30 $3,621.44
</TABLE>
(c) Landlord shall construct improvements to the New Premises in
accordance with the Space Plan for the New Premises, a copy of which is
attached hereto as Exhibit F. and in accordance with the provisions of Section
7. Notwithstanding the foregoing, Landlord shall contribute up to $19,750.00
(the "Tenant Allowance") towards the completion of the buildout of the New
Premises, which Tenant Allowance shall include the cost of preparation of the
Space Plan and the Tenant Plans. Any coats in excess of the Tenant Allowance
shall be paid solely by Tenant and shall be considered additional rent under
the terms of the Lease.
(d) Upon Substantial Completion of the New Premises, Tenant's
Proportionate Share of Basic Cost shall be limited to 2.83% with all Excess
(as defined in Section 8) being paid by Tenant to Landlord as additional rent
in accordance with the provisions of Section 8.
(e) Except where inconsistent with the terms of this Section, all
other terms of the Lease shall apply to the New Premises, including the Lease
termination date.
50. FIRST RIGHT OF OFFER.
<PAGE> 25
After the Commencement Date, Tenant shall have a one-time first right
to lease space contiguous to the Premises and the New Premises (the "Additional
Space") in the Building, provided:
(a) This right of first offer is subordinate to the rights of (i) the
current tenant in the Additional Space to renew, extend or otherwise negotiate
a new lease for the Additional Space, (ii) all future tenants in such apace, to
renew or extend their leanest and (iii) existing tenants to the Additional
Space as of the date of execution of this Lease,
(b) Tenant is not in default under this Lease, either at the time the
Additional Space becomes available or at the time Tenant is to take occupancy
of the Additional Space;
(c) Landlord has made a good faith determination that Tenant remains
creditworthy,
(d) Tenant must lease all of the Additional Space offered;
(e) Tenant exercises its option as provided in this Section by
delivering to Landlord written notice of its intention within three (3)
business days after Landlord has notified Tenant that the Additional Space is
available;
(f) All terms of the lease of the Additional Space shall be upon those
terms and conditions as are negotiated in good faith between the parties; and
(g) Tenant executes an addendum or a new lease for the Additional
Space within twenty (20) days after Landlord's receipt of Tenant's notice to
lease the Additional Space; and
If Tenant fails to comply with each of the above conditions within the time
specified, then this right of first offer will lapse and be of no further force
and effect, and Landlord shall have the right to lease all or any part of the
Additional Space to a third party under the same or any other forms and
conditions, whether or not such terms and conditions are more or less favorable
than those offered to Tenant. This right of first offer to lease the Additional
Space is personal to Tenant and is non-transferable
51. THE EXHIBITS.
<PAGE> 26
(i) Exhibit A - Outline of Premises
(ii) Exhibit B - Tenant Acceptance Letter
(iii) Exhibit C - Rules and Regulations
(iv) Exhibit D - Building Standard Materials
(v) Exhibit E - Tenant Space Plan
(vi) Exhibit F - Space Plan for New Premises
IN WITNESS WHEREOF, the parties hereto have executed this Lease and
affixed their seals as of the date fires above written.
Tenant:
WITNESS/ATTEST: SPACEHAB, INC.
/s/ William Murray By: /s/ Nelda Wilbanks (SEAL)
Name: Nelda Wilbanks
Title: Secretary
Landlord:
THE EQUITABLE LIFE ASSURANCE
WITNESS/ATTEST: SOCIETY OF THE UNITED STATES
/s/ Lynn E. Ruckhaidt By: /s/ R. Paul Mehlman (SEAL)
Name: R. Paul Mehlman
Title: Investment Officer
<PAGE> 27
INSERT GRAPHIC OF SUITE 360 FLOOR PLAN
<PAGE> 28
The Equitable Life Assurance Society of the United States
c/o Compass Management and Leasing, Inc.
1595 Spring Hill Road
Suite 110
Vienna, Virginia 22182
The undersigned, by the execution of this letter, hereby confirms that the
Commencement Date of the Lease Term of that certain lease agreement (the "Lease
Agreement") by and between Concourse Associates Limited Partnership (the
"Landlord") and the undersigned (the "Tenant") is , 1996, and Tenant hereby
accepts delivery of the Premise" and recognizes that the Landlord has fulfilled
all obligations regarding the delivery of the Premises subject to any "punch
list" items in the Tenant Plans which may not have been completed. All
capitalized term not defined herein shall have the meanings assigned to them in
the Lease Agreement.
ACCEPTED AND AGREED to this _______ day of _______________, 1996.
TENANT:
SPACEHAB, INC.
By:
Title:
<PAGE> 29
EXHIBIT C
THE CONCOURSE
BUILDING RULES AND REGULATIONS
1. The sidewalks, entries, passages, court corridors, stairways and
elevators shall not be obstructed by any of the Tenants, their employees or
agents, or used by them for purposes other than ingress and egress to and from
their respective suites.
All safes or other heavy articles shall be carried up or into the
premises only at such times and in such manner as shall be prescribed by the
Landlord and the Landlord shall in all cases have the right to specify the
proper weight and position of any such safe or other heavy article prior to its
being brought into the Building by Tenant. Any damage done to the Building by
taking in or removing any such equipment or from overloading any floor in any
way shall be paid by Tenant. Defacing or injuring in any way any part of the
Building by the Tenant, his agents or employees, shall be paid for by the
Tenant.
2. Tenant shall refer all contractors, contractors' representative and
installation technicians rendering any service to the premises for Tenant to
Landlord for Landlord's approval and supervision before performance of any
contractual service. This provision shall apply to all installations and
improvements performed in the Building of any nature affecting floors, walls,
woodwork, trim, windows, ceilings, equipment or any other physical portion of
the Building. Such approval, if given, shall in no way make Landlord or Owner,
a party to any contract between Tenant and any such contractor, and Landlord
and Owner shall have no liability therefor.
3. No sign, advertisement or notice shall be inscribed, painted or
affixed on any part of the inside or outside of the said Building unless of
such color, else and style and in such place upon in sand Building as shall
first be designated by Landlord; there shall be no obligation or duty on
Landlord to allow any sign, advertisement or notice to be inscribed, painted or
affixed on any part of the inside or outside of said Building. Signs on doors
will be arranged for the Tenant by a sign company approved by the Landlord, the
cost of the signage to be paid by the Tenant unless the Building Standard
signage listed in Exhibit C is chosen. A directory, in a conspicuous place,
with the names of the Tenant, will be provided by Landlord, any necessary
revision in this will be made by Landlord within a reasonable time after notice
from the Tenant of the error or change making the revision necessary. No
furniture shall be placed in front of the Building or in any lobby or corridors
without written consent of Landlord. Landlord shall have the right to remove
all other signs and furniture, without notice to Tenant at the expense of
Tenant.
4. Tenant shall have the non-exclusive use in common with the
Landlord, other tenants, their guests and invitees, of the automobile parking
arena, driveways and footways, subject to rules and regulations for the use
thereof as prescribed from time to time by Landlord. Landlord shall have the
right to designate parking arena for the use of the building tenants and their
employees, and the tenants and their employees shall not park in parking arena
not so designated, specifically including driveways, fire lanes,
loading/unloading areas, walkways and building entrances. Tenant agreed that
upon written notice from Landlord, it will furnish to Landlord, within five (5)
days from receipt of such notice, the state automobile license numbers assigned
to the automobiles of the Tenant and its employees, owner and Landlord shall
not be liable for any vehicle of the Tenant or its employees that the Landlord
shall have towed from the premises when illegally or improperly parked. Owner
and Landlord will not be liable for damage to vehicles in the parking arena or
for theft of vehicles, personal property from vehicles, or equipment of
vehicles, except in the case of willful misconduct or gross negligence on the
part of Owner or Landlord.
5. Tenant shall have the non-exclusive use in common with the
Landlord, other tenants, and others approved by Landlord, of the use of the
Building's common arena, recreational arena, conference center, and designated
exterior ground arena. Tenant shall abide by any and all rules, regulations,
restrictions, requirements and procedures Landlord has imposed or may impose in
the future for use of these arena. Failure to abide by these rules by Tenant,
Tenant's employees, Tenant's visitors, and Tenants guests may result in
Tenant's forfeiture of Tenant's use of those facilities and will be a default
under the terms of the Lease Agreement.
6. No Tenant shall do or permit anything to be done in said premises
or bring or keep anything therein, which will in any way increase the rate of
fire insurance on said Building, or on property kept therein, or obstruct or
interfere with the rights of other tenants, or in any way injure or annoy them
or conflict with the laws relating to fire, or with any regulations of the fire
department, or with any insurance policy upon said Building or any part
thereof, or conflict with any rules and ordinances of the local Board of Health
or any governing bodies.
7. The janitor of the Building may at all times keep a pass key to
non-restricted arena and he and other agents of the Landlord shall at scheduled
times be allowed admittance to acid Demised Premises.
8. No additional looks shall be placed upon any doors without the
written consent of the Landlord. All keys to the Demised Premises and Building
security card keys shall be furnished by Landlord at the rate of 1.75 keys per
1000 rentable square feet. Additional keys or Building Security Card Keys will
be furnished at Tenant's cost. Upon termination of this Lease, all keys and
Building Security Card Keys shall be
<PAGE> 30
surrendered, and the Tenant shall then give the Landlord or his agents
explanation of the combination of all locks upon the doors of vaults.
9. No windows or other openings that reflect or admit light into the
corridors or passageways, or to any other place in said Building, shall be
covered or obstructed by any of the Tenants with the exception of Building
Approved drapery or Venetian blind installations.
10. No person shall disturb the occupants of the Building by the use
of any musical instruments, the making of unseemly noises or odors, or any
unreasonable use. No dogs or other animals or pets of any kind will be allowed
in the Building.
11. The water closets and other water fixtures shall not be used for
any purpose other than those for which they were constructed, and any damage
resulting to them from misuse, or the defacing or injury of any part of the
Building, shall be borne by the person who shall occasion it.
12. No bicycles or similar vehicles will be allowed in the Building.
13. Nothing shall be thrown out the windows of the Building or down
the stairways or other passages.
14. Tenant shall not be permitted to use or to keep in the Building
any kerosene, camphene, burning fluid or other illuminating materials.
15. If any tenant desires, at it's cost, telegraphic, telephonic or
other electric connections, Landlord or its agents will direct the electricians
as to where and how the wires may be introduced, and without such directions,
no boring or cutting for wires will be permitted.
16. If Tenant desires, at it's cost, shades, draperies, or awnings
they moat be of such shape, color, materials and make as shall be prescribed by
Landlord. Any outside awning proposed may be prohibited by Landlord. Landlord
or its agents shall have the right to enter the premises to examine the same or
to make such repairs, alterations or additions as Landlord shall deem necessary
for the safety, preservation or improvement of the Building, and the Landlord
or its agents may show acid premises at scheduled times and may place on the
windows or doors thereof, or upon the bulletin board, a notice "For Rent" for
one month prior to the expiration of the Lease.
17. No portion of the Building shall be used for the purpose of
lodging rooms or for any immoral or unlawful purposes.
18. All glass, locks and trimmings in or about the doors and windows
and all electric fixtures belonging to the Building shall be kept whole, and
whenever broken by Tenant shall be immediately replaced or repaired and put in
order at Tenant's expense under the direction and to the satisfaction of
Landlord, and on removal shall be left whole and in good order.
19. Landlord reserves the right at any time to temporarily take one
elevator out of service to Tenants for exclusive use by the Building Management
in servicing the Building.
<PAGE> 31
EXHIBIT D
THE CONCOURSE
BUILDING STANDARD MATERIALS
---------------------------
NOTE:
References made herein to ratios of certain improvements "per square
foot" shall be interpreted as meaning "per square foot of rentable
area."
LANDLORD SHALL PROVIDE TO THE PREMISES THE FOLLOWING:
A. FLOORING: Carpet to Building Standard" or Building Standard tile.
B. BLINDS: To Building Standards (horizontal mini-blinds).
C. OFFICE PARTITIONS: Landlord will provide the Premises with eight foot (8')
high Building Standard partitions to a maximum of one (1) linear foot of
partition per each twelve (12) square feet of space. Partitioning will be
constructed of 2-1/2 inch steel studs, 24 inches on center; 1/2 inch sheet
rock on each side, taped, speckled and painted with two costs of paint.
All Building Standard partitions shall be insulated.
D. INTERIOR DOORS: To a maximum of one door per each two hundred fifty (250)
square feet of space, to be equipped with Building Standard hardware and
finish. Building Standard interior oak doors shall be 7'0" x 3'0" with a
solid core.
E. SUITE ENTRY DOORS: One suite entry door is provided for each five thousand
(5,000) square feet of space, to be equipped with Building Standard
hardware and finish. Building Standard suite entry doors are oak, full
height, 7'10" x 3'0" with a solid core. Hardware for suite door shall
include mortise lock with lever handle, door close and ball bearing
hinges.
F. CEILINGS: Building Standard 2'x 2' regular acoustical tile in suspended
grid.
G. LIGHTING: Fluorescent parabolic light fixtures to a maximum of one fixture
per eighty (80) square feet of space.
H. LIGHT SWITCHES: Building Standard single-pole, single-throw to a maximum
of one (l) switch for each 200 square feet.
I. ELECTRICAL POWER FACILITIES: Power outlets (standard duplex convenience
receptacles) to a maximum ratio of one outlet per one hundred fifty (150)
square feet will be mounted on partitions as may be appropriate. Dedicated
circuits will be provided at Tenant's expense.
J. TELEPHONE FACILITIES: Standard unwired telephone outlets, SUITABLE for
standard telephone instruments, to a maximum of one (1) outlet per two
hundred (200) square feet will be mounted on partitions as may be
appropriate. Conduit can be provided by Landlord at Tenant's expense.
K. SPRINKLER HEADS: Landlord will provide a sprinkler fire protection system
in the Building including a maximum of one (1) sprinkler head per one
hundred fifty (150) square feet. Additional sprinkler heads and
relocations or additions to sprinkler heads due to Tenant change orders
made subsequent
L. WALL FINISH: Painted to Building Standard.
M. SIGNAGE: Building Standard door sign.
<PAGE> 32
N. ARCHITECTURAL SERVICES: Consultation with Landlord's architect and
preparation of Tenant's plans for all Building Standard items at
Landlord's expense.
O. GENERAL: All of the items and finishes above listed in this "Building
Standard Materials" sheet to be Supplied by Landlord will be to the
Building Standard "specifications, color and quality; no credits will be
allowed for any unused portion thereof. Designs of the basic building
risers for the mechanical and electrical systems is such that Tenant's
requirements for additional power, additional lighting, and various
mechanical facilities can be made available at Tenant's expense prior to
construction by arrangement with Landlord. The costs of modifications and
changes from Building Standard for any item shall include the cost of
architectural and engineering design. Any contractors and/or
subcontractors engaged by Tenant shall comply with all REASONABLE
regulations established by Landlord and General Contractor to promote
safety and quality of construction and much contractors "hall coordinate
their efforts to ensure timely completion of all work. All design,
construction and installation shall conform to the requirements of
applicable Building, Plumbing and Electrical Codes and the requirements of
any authority having jurisdiction over or with respect to such work.
For purposes of measuring Tenant's linear footage of partitioning,
exterior building walls will not be included. Demising partitioning
separating adjacent tenants will be calculated at fifty percent of the
total amount. Tenant's portion of corridor partitioning excluding interior
core walls (i.e., elevator shafts, electric and telephone closets and
restroom facilities), will be included in total linear measurement.
P. If Landlord shall be unable to give possession of the Premises on the date
of commencement of the term hereof as a result of the delivery and/or
construction of any nonrelated tenant special items, any delay in
completing the Premises shall not in any manner affect the commencement
date of this Lease or the Tenant's liability for the payment of rent from
such commencement date, and under such circumstances Landlord agrees to
make the Premises ready for Tenant's occupancy as soon as delivery and
construction conditions within the Landlord's control will allow.
<PAGE> 33
INSERT GRAPHIC OF Architect's FLOOR PLAN DRAWING FOR 3rd FLOOR
<PAGE> 34
INSERT GRAPHIC OF Architect's FLOOR PLAN DRAWING FOR SUITE 360
<PAGE> 1
EXHIBIT 10.51
[CB COMMERCIAL REAL ESTATE GROUP, INC. LETTERHEAD]
SUBLEASE
1. PARTIES.
This Sublease, dated February 26, 1996. is made between Barrios
Technology, Inc. a Texas Corporation ("Sublandlord"), and SPACEHAB,
Inc. ("Subtenant").
2. MASTER LEASE.
Sublandlord is the tenant under a written lease date August 21, 1991
and amended October 9, 1992, October 7; 1993, February 7, 1994, and
January 6, 1995 wherein Puget of Texas (successor to Aetna Life
Insurance Company) ("Lessor") leased to Sublandlord the real property
located in the City of Houston, County of Harris, State of Texas,
described as 1331 Gemini. Said lease and amendments are herein
collectively referred to as the "Master Lease" and are attached hereto
as Exhibit "A".
3. PREMISES.
Sublandlord hereby subleases to Subtenant on the terms and conditions
et forth in this Sublease the following portion of the Master Premises
("Premises"): 4,525 rentable square feet indicated on the attached
floor plan as Exhibit "B".
4. WARRANTY BY SUBLANDLORD.
Sublandlord warrants and represents to Subtenant that the Master Lease
has not been amended or modified except as expressly set forth herein,
that Sublandlord is not now, and as of the commencement of the Term
hereof will not be, in default or breach of any of the provisions of
the Master Lease, and that Sublandlord has no knowledge of any claim by
Landlord that Sublandlord is in default or breach of any of the
provisions of the Master Lease.
5. TERM.
The Term of this Sublease shall commence on March 22, 1996
("Commencement Date"), or when Landlord consents to this Sublease (if
such consent is required under the Master Lease), whichever shall last
occur, and end on February 28, 1998 ("Termination Date"), unless
otherwise sooner terminated in accordance with the provisions of this
Sublease. In the event the Term commences on a date other than the
Commencement Date, Sublandlord and Subtenant shall execute a memorandum
setting forth the actual date of commencement of the Term. Possession
of the Premises ("Possession") shall be delivered to Subtenant on the
commencement of the Term. If for any reason Sublandlord does not
deliver Possession to Subtenant on the commencement of the Term,
Sublandlord shall not be subject to any liability for such failure, the
Termination Date shall not be extended by the delay, and the validity
of this Sublease shall not be impaired, but rent shall abate until
delivery of Possession. Notwithstanding the foregoing, if Sublandlord
has not delivered Possession to Subtenant within eighteen (18) days
after the Commencement Date, then at any time thereafter and before
delivery of Possession, Subtenant may give written notice to
Sublandlord of Subtenant's intention to cancel this Sublease. Said
notice shall set forth an effective date for such cancellation which
shall be at least ten (10) days after delivery of said notice to
Sublandlord. If Sublandlord fails to deliver Possession to Subtenant on
or before such effective date, this Sublease shall be canceled, in
which case all consideration previously paid by Subtenant to
Sublandlord on account of this Sublease shall be returned to Subtenant,
this Sublease shall thereafter be of no further force or effect, and
Sublandlord shall have no further liability to Subtenant on account of
such delay or cancellation. If Sublandlord permits Subtenant to take
Possession prior to the commencement of the Term, such early Possession
shall not advance the Termination Date and shall be subject to the
provisions of this Sublease, including without limitation the payment
of rent.
6. RENT.
Minimum Rent. Subtenant shall pay to Sublandlord as minimum rent,
without deduction, setoff, notice, or demand, at 1331 Gemini, Suite
300, Houston, Texas 77058 Thirty three hundred and forty nine and
80/100 Dollars ($3,349.80) for months one (1) and two (2) and Four
thousand seventy-two and 50/100 Dollars ($4,072.50) per month for the
remainder of the sublease term, in advance on the first (1st) day of
each month of the Term. Subtenant shall pay to Sublandlord upon
execution of this Sublease the sum of Thirty three hundred forty nine
and 80/100 Dollars ($3,349.80) as rent for month one (1). If the Term
begins or ends on a day other than the first or last day of a month,
the rent for the partial months shall be prorated on a per diem basis,
except for payment of Base Rental as defined herein, Subtenant shall
not be liable for any economic requirements of Sublandlord, including
but not limited to, operating expenses, parking fees, maintenance, etc.
1
<PAGE> 2
7. USE OF PREMISES.
The Premises shall be used and occupied only for general office use,
and for no other use or purpose.
8. ASSIGNMENT AND SUBLETTING.
Subtenant shall not assign this Sublease or further sublet all or any
part of the Premises without the prior written consent of Sublandlord
(and the consent of Landlord, if such is required under the terms of
the Master Lease).
9. OTHER PROVISIONS OF SUBLEASE.
All applicable terms and conditions of the Master Lease are
incorporated into and made a part of this Sublease as if Sublandlord
were the landlord thereunder, Subtenant the lessee thereunder, and the
Premises the Master Premises, except for the following:
(1) Sublandlord shall provide Subtenant with nine (9) keys and nine (9)
card-keys.
(2) At no cost to Subtenant, Subtenant shall be provided one (1) strip
on the outside monument sign, one (1) strip on the lobby directory,
and building standard graphics on Subtenant's front entry, with
directional graphics.
(3) Sublandlord shall install a second exit and demising wall in the
areas indicated on Exhibit "C".
(4) Subtenant shall have an ongoing right of first refusal on
approximately 3,196 rentable square feet of space indicated on
Exhibit "C". If a third party tenant wishes to lease said space,
Subtenant shall have five (5) business days to accept or reject the
refusal space upon the said terms and conditions of the third party
offer.
(5) Sublandlord shall donate all furniture listed in Exhibit "D" to
Subtenant.
(6) The cost for use of HVAC beyond the normal business hours stated in
the Lease is $25.00 per hour. Subtenant assumes and agrees to
perform the landlord's obligations under the Master Lease during
the Term to the extent that such obligations are applicable to the
Premises, except that the obligation to pay rent to Landlord under
the Master Lease shall be considered performed by Subtenant to the
extent and in the amount rent is paid to Sublandlord in accordance
with Section 6 of this Sublease. Subtenant shall not commit or
suffer any act or omission that will violate any of the provisions
of the Master Lease. Sublandlord shall exercise due diligence in
attempting to cause Lessor to perform its obligations under the
Master Lease for the benefit of Subtenant. If the Master Lease
terminates, this Sublease shall terminate and the parties shall be
relieved of any further liability or obligation under this
Sublease, provided however, that if the Master Lease terminates as
a result of a default or breach by Sublandlord or Subtenant under
this Sublease and/or the Master Lease, then the defaulting party
shall be liable to the nondefaulting party for the damage suffered
as a result of such termination. Notwithstanding the foregoing, if
the Master Lease gives Sublandlord any right to terminate the
Master Lease in the event of the partial or total damage,
destruction, or condemnation of the Master Premises or the building
or project of which the master Premises are a part, the exercise of
such right by Sublandlord shall not constitute a default or breach
hereunder, and the subtenant shall be relieved of any further
obligation under this sublease.
10. ATTORNEYS' FEES.
If Sublandlord, Subtenant, or Broker shall commence an action against
the other arising out of or in connection with this Sublease, the
prevailing party shall be entitled to recover its costs of suit and
reasonable attorney's fees.
11. AGENCY DISCLOSURE:
Sublandlord and Subtenant each warrant that they have dealt with no
other real estate broker in connection with this transaction except: CB
COMMERCIAL REAL ESTATE GROUP, INC., who represents Barrios Technology,
Inc. and The Cole Gross Company, who represents SPACEHAB, Inc.
12. COMMISSION.
Upon execution of this Sublease, and consent thereto by Landlord (if
such consent is required under the terms of the Master Lease),
Sublandlord shall pay Broker a real estate brokerage commission in
accordance with Sublandlord's contract with Broker for the subleasing
of the Premises, for services rendered in effecting this Sublease.
Broker is hereby made a third party beneficiary of this Sublease for
the purpose of enforcing its right to said commission.
13. NOTICES.
All notices and demands which may or are to be required or permitted to
be given by either party on the other hereunder shall be in writing.
All notices and demands by the Sublandlord to Subtenant shall be sent
by United States Mail, postage prepaid, addressed to the Subtenant at
the Premises, and to the address hereinbelow, or to such other place as
Subtenant may from time to time designate in a notice to the
Sublandlord. All notices and demands by the Subtenant to Sublandlord
shall be sent by United States Mail, postage prepaid, addressed to the
Sublandlord at the address set forth herein, and to such other person
or place as the Sublandlord may from time to time designate in a notice
to the Subtenant.
To Sublandlord: Barrios Technology, 1331 Gemini, Suite 300,
Houston, Texas 77058
To Subtenant: SPACEHAB, Inc., 1331 Gemini, Suite , Houston,
Texas 77058
9. (7) Requirements upon Tenant of Section 13 of Master Lease shall not
flow down to Subtenant.
2
<PAGE> 3
14. CONSENT BY LANDLORD.
THIS SUBLEASE SHALL BE OF NO FORCE OR EFFECT UNLESS CONSENTED TO BY
LESSOR WITHIN 10 DAYS AFTER EXECUTION HEREOF, IF SUCH CONSENT IS
REQUIRED UNDER THE TERMS OF THE MASTER LEASE.
15. COMPLIANCE.
The parties hereto agree to comply with all applicable federal, state
and local laws, regulations, codes, ordinances and administrative
orders having jurisdiction over the parties, property or the subject
matter of this Agreement, including, but not limited to, the 1964 Civil
Rights Act and all amendments thereto, the Foreign Investment in Real
Property Tax Act, the Comprehensive Environmental Response Compensation
and Liability Act, and The Americans With Disabilities Act.
Sublandlord: Barrios Technology, Inc. Subtenant: SPACEHAB, Inc.
--------------------------- --------------------------
By: By: /s/ Nelda Wilbanks
------------------------------------ ---------------------------------
Title: Contracts Administrator Title: Corporate Secretary
--------------------------------- ------------------------------
By: By:
------------------------------------ ---------------------------------
Title: Title:
--------------------------------- ------------------------------
Date: Date:
---------------------------------- -------------------------------
Accepted:
LANDLORD'S CONSENT TO SUBLEASE
The undersigned ("Landlord"), landlord under the Master Lease, hereby consents
to the foregoing Sublease without waiver of any restriction in the Master Lease
concerning further assignment or subletting. Landlord certifies that, as of the
date of Landlord's execution hereof, Sublandlord is not in default or breach of
any of the provisions of the Master Lease, and that the Master Lease has not
been amended or modified except as expressly set forth in the foregoing
Sublease.
Landlord: Puget of Texas
------------------------------
By: Bob Blume
------------------------------------
Title:
---------------------------------
By:
------------------------------------
Title:
---------------------------------
Date:
----------------------------------
3
<PAGE> 4
BARRIOS TECHNOLOGY BUILDING
1331 Gemini Avenue
Third Floor Sublease Area
GRAPHIC OF FLOOR PLAN
Exhibit "B"
<PAGE> 5
BARRIOS TECHNOLOGY BUILDING
1331 Gemini Avenue
Third Floor Sublease Area
ARCHITECT'S DRAWINGS OF SUITE
Exhibit "C"
<PAGE> 6
Exhibit A to "Sublease"
LEASE CONTRACT
This Lease contract thereinafter called the "Lease"), entered into by
and between AETNA LIFE INSURANCE COMPANY, (hereinafter called "Landlord"), and
BARRIOS TECHNOLOGY, INC., a Texas corporation (hereinafter called "Tenant").
WITNESSETH:
PREMISES
1. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
Thirty-two Thousand Five Hundred Sixty (32,560) square feet of "Rentable Area"
(as hereinafter defined) in the Gemini Development Office Building (such
building whether called by such name of by any other name being hereinafter
called "the Building") located on Gemini Street in Clear Lake City, Harris
County, Texas, and being more particularly described in Exhibit "A-1", subject
to adjustment as provided in Paragraph 3.B. The areas hereby leased by Tenant in
the Building shall be called "Leased Premises" and are shown outlined and
crosshatched on the floor plan drawings designated Exhibits "A-2" through "A-4"
which are attached hereto and made a part hereof and signed or initialed by the
parties for identification. Landlord shall have the right at any time and from
time to time to change the Building name.
The term "Rentable Area", as used herein with respect to each floor of
the Building on which the entire rentable space is or will be leased to one
tenant (hereinafter called "Single Tenant Floor"), shall be the entire floor
area measured from the inside surface of the outer glass line excluding the area
contained within Building stairs, vertical ducts, elevator shafts, flues, vents,
stacks and pipe shafts, plus a pro rata portion of certain public areas of the
Building. All the area on any Single Tenant Floor that is used for elevator
lobbies, corridors, special tenant stairways, restrooms, mechanical rooms,
electrical rooms, and telephone closets situated on such floor, and all vertical
penetrations that are included for special use by Tenant, and columns and other
structural portions of the Building shall be included within the Rentable Area
of such floor.
On each floor of the Building on which space is or will be leased by more
than one Tenant, the term "Rentable Area" shall be the total of (i) the entire
floor area included within the leased premises covered by such lease, being the
floor area bounded by the inside surface of the exterior glass lines enclosing
the leased premises, the exterior of all walls separating such leased premises
from any public corridors or other public areas on such floor and the centerline
of all demising walls separating such leased premises from other areas leased or
to be leased to other tenants on such floors, (ii) a pro rata portion of the
floor area covered by the elevator lobbies, corridors, restrooms, mechanical
rooms, electrical rooms, and telephone closets situated on such floor, and (iii)
a pro rata portion of certain public areas of the Building (which public areas
may or may not be located on such floors). The Rentable Area for the entire
Building shall be deemed to be fifty-nine thousand eight hundred thirty-three
(59,833) square feet for the purposes of this Lease. Tenant shall have no
option, right of refusal or other right to lease other space in the Building now
or hereafter from Landlord, except as otherwise provided in this Lease.
TERM
2. The term of this Lease shall be for a period beginning on the date of
execution hereof (such commencement date, being hereinafter called the
"Commencement Date"), and ending on the 30th day of November, 1994.
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<PAGE> 7
3. A. Except as noted in Paragraph 27, as rental for the lease and use of the
Leased Premises during the term hereof (hereinafter called "Base
Rental"), Tenant will pay Landlord of Landlord's assigns, at the
Building office or at such other location designated by Landlord,
without demand and without deduction, abatement or setoff (except as
otherwise expressly provided for herein) the sum Of Thirty Six Thousand
Six Hundred Thirty and No/100 Dollars ($36,630.00) per month on the
first day of each calendar month, monthly in advance, for each and
every month in the term of this Lease, in lawful money of the United
States, such amount subject to adjustment as provided in Subparagraph
8, below. If the lease term does not commence on the first day of a
calendar month or end on the last day of a calendar month, Tenant will
pay in advance a pro rata part of such monthly amount as rental for
such first or last partial month. Furthermore, for each occasion on
which Tenant fails to pay within five (5) days when due the Base
Rental, or any other amount required to be paid under this Lease,
Tenant shall pay Landlord a late fee equal to five percent (5%) of such
Base Rental or other amount due.
B. The monthly rent is subject to adjustment based on the actual number of
square feet in the Rentable Area of the Leased Premises, multiplied by
the rate of $13.50 per square foot per year. Landlord's architect shall
compute the floor area and certify such information in writing to both
Landlord and Tenant prior to the Commencement Date. Measurements shall
be calculated as set forth in Paragraph 1.
USE
4. Tenant will use the Leased Premises solely for the purpose of office
space in which Tenant will conduct its regular and customary business affairs,
and for no other purpose without the prior written consent of Landlord.
SERVICES TO BE PROVIDED BY LANDLORD
5. A. Subject to the rules and regulations hereinafter referred to, Landlord
shall furnish Tenant, at Landlord's expense, the following services
during the lease term:
(1) Air conditioning and heating in season, at such times as Landlord
normally furnishes these services to other tenants in the
Building, and at such temperatures and in such amounts as are
considered by Landlord to be standard, but such service on
Saturday afternoons, Sundays and holidays to be furnished only
upon the request of Tenant, who shall bear the cost thereof.
(2) Hot and cold water at those points of general supply provided on
the floor on which the Leased Premises are located.
(3) Janitor service in and about the Building and the Leased Premises
five (5) days per week and periodic window washing; provided,
however, Tenant shall pay the additional costs attributable to the
cleaning of improvements within the Leased Premises other than
building standard improvements.
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<PAGE> 8
(4) Building elevators for access to and access from the Leased
Premises twenty-four (24) hours a day, seven (7) days a week.
(5) Proper facilities so as to enable the appropriate utility company
to furnish sufficient electrical power for building standard
lighting, typewriters, dictating equipment, calculating machines
and other machines of similar low electrical consumption, but not
including any item of electrical equipment which singly consumes
more than 0.25 kilowatts per hour at rated capacity or requires a
voltage other than 120 volts single phase, including without
limitation, electronic date processing equipment and special
lighting in excess of building standard. Tenant shall pay to
Landlord, monthly as billed, such charges as may be separately
metered (the cost of any such meter and its installation to be
borne by Tenant) or as Landlord's engineer may compute for any
electrical service in excess of that stated above. See Addendum to
Lease, Paragraph 3, Tenant Electricity.
(6) Replacement of fluorescent lamps and ballasts in building standard
ceiling mounted fixtures installed by Landlord and incandescent
bulb replacement in all public areas.
B. No interruption or malfunction of any of such services (including,
without limitation, reduction in Landlord's capability, or Landlord's
inability, to provide such services as a result of the enactment or
promulgation, regardless of the ultimate validity or enforceability
thereof, of any federal, state or local law, ordinance, decree, order,
guideline, or regulation now or hereafter enacted or promulgated by any
governmental, quasigovernmental, regulatory or executive authority
shall constitute an eviction or disturbance of Tenant's use and
possession of the Leased Premises or Building or a breach by Landlord
of any of its obligations hereunder or render Landlord liable for
damages or entitle Tenant to be relieved from any of its obligations
hereunder(including the obligation to pay rent) or grant Tenant any
right of setoff or recoupment or abatement. In the event of any such
interruption, however, Landlord shall use reasonable diligence during
normal business hours to restore such service in any circumstances in
which such restoration is within the reasonable control of Landlord.
C. Should Tenant desire any additional services beyond those described in
Subparagraph A of this Paragraph 5 or rendition of any of such services
outside the normal times of Landlord for providing such service,
Landlord may (at Landlord's option), upon reasonable advance notice
from Tenant to Landlord, furnish such services and Tenant agrees to pay
Landlord such charges as may be agreed an between Landlord and Tenant,
but in no event at a charge less than Landlord's actual cost plus
overhead for the additional services provided, it being agreed that the
cast to Landlord of such additional services shall be excluded from the
"Basic Cast", as defined in Paragraph 13.B of this Lease.
REPAIR AND MAINTENANCE
6. A. Landlord will, at its own cost and expense, except as may be provided
elsewhere herein, make necessary repairs of damage to the Building
corridors, lobby, structural members of the Building, and equipment
used to provide
LEASE CONTRACTS - page 3
<PAGE> 9
the services referred to in Paragraph 5, unless any such damage is
caused by acts or omissions of tenant, its agents, customers, employees
or invitees, in which event Tenant will bear the cost of such repairs.
Tenant will promptly give Landlord written notice of any damage
requiring repair by Landlord, as aforesaid.
B. Tenant will not injure the Leased Premises or the Building but will
maintain the Leased Premises in a clean, attractive condition and in
good repair, except as to damage to be repaired by Landlord, as
provided above. Upon termination of this Lease, Tenant will surrender
and deliver up the Leased Premises to Landlord in good condition,
excepting only ordinary wear and tear and damage arising from any cause
not required to be repaired by Tenant.
C. This Paragraph 6 shall not apply in the case of damage of destruction
by fire of other casualty which is covered by insurance maintained by
Landlord on the Building (as to which Paragraph 7 hereof shall apply)'
or damage resulting from an imminent domain (as to which Paragraph 14
shall apply).
FIRE OR OTHER CASUALTY
7. A. If at any time during the term of this Lease, the Leased Premises or
any portion of the Building shall be damaged or destroyed by fire or
other casualty, so as to render the Building premises untenantable for
over 60 days, then Landlord shall have the option to terminate this
Lease or to repair and reconstruct the Leased Premises and Building to
the condition in which they existed immediately prior to such damage or
destruction and Landlord shall give Tenant notice of its election
within sixty (60) days from the date of such damage or destruction.
B. If any of the aforesaid circumstances, rental shall abate
proportionately during the period and to the extent that the Leased
Premises are unfit for use by Tenant in the ordinary conduct of its
business. If Landlord has elected to repair and restore the Leased
Premises, this Lease shall continue in full force and effect and such
repairs will be made within a reasonable time thereafter, subject to
delays arising from shortages of labor or material, acts of God, war or
other conditions beyond Landlord's reasonable control. In the event
that this Lease is terminated as herein permitted, Landlord shall
refund to Tenant any prepaid rent (unaccrued as of the date of damage
of destruction) less any sum then owing Landlord by Tenant.
COMPLIANCE WITH LAWS AND USAGE
8. Tenant, at its own expense, will comply with all federal, state,
municipal and other laws, ordinances, rules and regulations applicable to the
Leased Premises and the business conducted therein by Tenant (including, without
limitation, any temperature control restrictions); will not engage in any
activity which would cause Landlord's fire and extended coverage insurance to be
cancelled or the rate therefor to be increased (or, at Landlord's option, will
pay any such increase); will not commit any act which is a nuisance or annoyance
to Landlord or to other tenants, or which might, in the exclusive judgment of
Landlord, appreciably damage Landlord's goodwill or reputation, or tend to
injure or depreciate the Building; will not commit or permit waste in the Leased
Premises or Building; will comply with rules and regulations from time to time
promulgated by Landlord, applicable to the Building; will not paint, erect or
display any sign, advertisement, placard or lettering which is visible in the
corridors or lobby of the Building or from the exterior of the Building without
Landlord's prior written approval.
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<PAGE> 10
LIABILITY AND INDEMNITY
9. A. Tenant agrees to indemnify and hold and save harmless Landlord and
Landlord's partners, agents, employees, invitees and contractors from
any and all claims, losses, costs, damages, or expenses (including but
not limited to attorney's fees) resulting or arising or alleged to
result or arise from any and all injuries to or death of any person or
damage to or loss of any property caused by any act, omission, or
neglect of Tenant or Tenant's partners, venturers, directors, officers,
employees, agents, invitees or guests, or any parties contracting with
Tenant relating to the Leased Premises, the Building, the Land on which
the building is constructed, or by any breach, violation or
non-performance of any covenant of Tenant under this Lease or by
occurring in or about the Leased Premises. If any action or proceeding
should be brought by or against Landlord in connection with any such
liability or claim, Tenant, on notice from Landlord, shall defend such
action or proceeding, at Tenant's expense, by or through attorneys
reasonably satisfactory to Landlord. The provisions of this paragraph
shall apply to all activities of Tenant, its partners, venturers,
directors, officers, employees, agents, invitees, guests, personnel and
contractors with respect to the Leased Premises, the Building, parking
area, or the land on which the Building is constructed, whether
accruing before or after the expiration or termination of this Lease.
Tenant's obligations under this paragraph shall not be limited to the
limits or coverage of insurance maintained or required to be maintained
by Tenant under this Lease. Except in cases of gross negligence by
Landlord, neither Landlord nor its agents and employees, shall be
liable for any damage of any kind or for any damage to property, death
or injury to persons by reason of the use and occupancy of the Leased
Premises by Tenant. Except for structural defects in the Building and
breaches of this Lease by Landlord (to the extent of actual damages, if
any, only), Landlord shall not be liable to Tenant and Tenant hereby
waives all claims against Landlord or Landlord's partners, contractors
or agents for any damages, consequential damages, loss of profits or
business opportunity, business interruption, and for any damage to
property, death or injury to persons from any cause whatsoever
including, without limitation, acts or omissions of other tenants or
such other tenants' employees, agents, contractors, invitees or guests,
vandalism, loss of trade secrets or other confidential information, and
damage, loss or injury caused by a defect (other than structural) in
the Leased Premises, the Building, parking area, pipes,
air-conditioning, heating, plumbing or by water leakage of any kind
from the roof, walls, windows, basement or other portion of the Leased
Premises or the Building, or caused by electricity, gas, oil, fire,
interruption of Landlord's services or any cause whatsoever in, on, or
about the Leased Premises, the Building, the parking area, the land on
which the Building is constructed, or any part thereof. Except as
otherwise provided in the immediately preceding sentence, Tenant agrees
to use and occupy the Leased Premises and other facilities of the
Building, parking area, and land on which the Building is constructed
at its own risk and hereby releases Landlord, its agent or employees,
from all claims for any damage or injury to the full extent permitted
by law.
B. In the event that either Landlord or Tenant sustains a loss by reason
of fire or other casualty which is a type of risk covered by such
party's fire and extended
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<PAGE> 11
coverage insurance policy and such fire or casualty is caused in whole
or in part by acts or omissions of the other party, its agents,
servants or employees, then the party sustaining such loss agrees that
to the extent that the party sustaining such loss is compensated for
such loss by its aforesaid insurance proceeds, the party sustaining
such loss shall have no right of recovery against the other party, or
the agents, servants or employees of the other party and expressly
waives such right herein; and no third party shall have any right of
recovery by way of subrogation or assignment or otherwise.
ADDITIONS AND FIXTURES
10. A. Tenant will make no alteration, change, improvement, repair,
replacement or addition to the Leased Premises without the prior
written consent of Landlord, which consent shall not be unreasonably
withheld. If such prior written consent of Landlord is granted, the
work in such connection shall be at Tenant's expense but by workmen of
Landlord or by workmen and contractors approved in advance in writing
by Landlord and in a manner and upon terms and conditions and at tines
satisfactory to and approved in advance in writing by Landlord. In any
instance where Landlord grants such consent, Landlord may grant such
consent contingent and conditioned upon Tenant's contractors, laborers,
materialmen and others furnishing labor or materials for Tenant's job
working in harmony and not interfering with any labor utilized by
Landlord, Landlord's contractors or mechanics or by any other tenant or
such other tenant's contractors or mechanics; and if at any time such
entry by one or more persons furnishing labor or materials for Tenant's
work shall cause disharmony or interference, the consent granted by
Landlord to Tenant may be withdrawn immediately upon notice to Tenant.
B. Tenant may remove its trade fixtures, supplies and movable office
furniture and equipment not attached to the Building provided: (1) such
removal is made prior to the termination of the term of the Lease; (2)
Tenant is not in default of any obligation or covenant under this Lease
at the time of such removal; and (3) Tenant promptly repairs all damage
caused by such removal. All other property at the Leased Premises and
any alteration or addition to the Leased Premises (including wall-to-
wall carpeting, paneling or other wall covering) and any other article
attached or affixed to the floor, wall or ceiling of the Leased
Premises shall immediately upon such attaching or affixing become the
property of Landlord and shall remain upon and be surrendered with the
Leased Premises as part thereof at the termination of this Lease,
Tenant hereby waiving all rights to any payment or compensation
therefor. If, however, Landlord so requests in writing, Tenant will,
prior to termination of this Lease, remove any and all alterations,
additions, fixtures, equipment and property placed or installed by it
in the Leased Premises and will repair any damage caused by such
removal.
C. Any property not belonging to Landlord remains at the Leased Premises
for ten (10) days following the expiration of the term of this Lease,
Tenant hereby authorizes Landlord to make such disposition of such
property as Landlord may desire without liability for compensation of
damages to Tenant in the event that such property is the property of
Tenant; and in the event that such property is the property of someone
other than Tenant, Tenant agrees to indemnity and hold Landlord
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<PAGE> 12
harmless from all suits, actions, liability, loss, damages and expenses
in connection with or incident to any removal, exercise or dominion
over and/or disposition of such property by Landlord.
ASSIGNMENT AND SUBLETTING
11. A. Neither Tenant nor Tenant's legal representatives or successors in
interest by operation of law or otherwise shall assign this Lease or
sublease the Leased Premises or any part thereof or mortgage, pledge or
hypothecate its leasehold interest or grant any concession or license
within the Leased Premises without the prior written permission of
Landlord, and any attempt to do any of the foregoing without the prior
express written permission of Landlord, shall be void and of no effect.
In the event Tenant requests Landlord's permission as to any such
assignment, sublease or other transaction, Landlord shall have the
right and option, as of the requested effective date of such
assignment, sublease or other transaction (but no obligation), to
cancel and terminate this Lease as to the portion of the Leased
Premises with respect to which Landlord has been requested to permit
such assignment, sublease or other transaction; and if Landlord elects
to cancel and terminate this Lease as to the aforesaid portion of the
Leased Premises, than the rent and other charges payable hereunder
shall thereafter be proportionately reduced. In the event of any such
attempted assignment or attempted sublease or should Tenant, in any
other nature of transaction, permit or attempt to permit anyone to
occupy the Leased Premises (or any portion thereof) without the prior
express written permission of Landlord, the same shall constitute a
breach, and, among Landlord's other remedies for an Event of Default,
Landlord shall thereupon have the right and option to cancel and
terminate this Lease effective upon fifteen (15) days' notice to Tenant
given by Landlord at any time thereafter either as to the entire Leased
Premises or as to only the portion thereof which Tenant shall have
attempted to assign or sublease or otherwise permitted some other
party's occupancy without Landlord's prior express written permission;
and if Landlord elects to cancel and terminate this Lease as to the
aforesaid portion of the Leased Premises, then the rent and other
charges payable hereunder shall thereafter be proportionately reduced.
This prohibition against assigning or subletting shall be construed to
include a prohibition against any assignment or subletting by operation
of law.
B. Notwithstanding that the prior express written permission of Landlord
to any of the aforesaid transactions may have been obtained, the
following shall apply:
(1) In the event of an assignment, contemporaneously with the granting
of Landlord's aforesaid consent, Tenant shall cause the assignee
to expressly assume in writing and agree to perform all or the
covenants, duties and obligations of Tenant hereunder and such
assignee shall be jointly and severally liable therefor along
with Tenant; Tenant shall further cause such assignee to grant
Landlord an express first and prior contract lien and security
interest in the manner hereinafter stated as applicable to Tenant;
(2) A signed counterpart of all instruments relative thereto (executed
by all parties to such transaction with the exception of Landlord)
shall
LEASE CONTRACT - Page 7
<PAGE> 13
be submitted by Tenant to Landlord prior to or contemporaneously
with the request for Landlord's written consent thereto (it being
understood that no such instrument shall be effective without the
written consent of Landlord);
(3) Tenant shall subordinate to Landlord's statutory lien and
Landlord's aforesaid contract lien and security interest any liens
or other rights which Tenant may claim with respect to any
fixtures, equipment, goods, wares, merchandise or other property
owned by or leased to the proposed assignee or sublessee or other
party intending to occupy the Leased Premises;
(4) No usage of the Leased Premises different from the usage herein
provided to be made by Tenant shall be permitted, and all other
terms and provisions of this Lease shall continue to apply after
any such assignment or subleasing;
(5) In any case where Landlord consents to an assignment, sublease,
grant of a concession or license or mortgage, pledge or
hypothecation of the leasehold, the undersigned Tenant will
nevertheless remain directly and primarily liable for the
performance of all of the covenants, duties, and obligations of
Tenant hereunder (including, without limitation, the obligation to
pay all rent and other sums herein provided to be paid), and
Landlord shall be permitted to enforce the provisions of this
instrument against the undersigned Tenant and/or any assignee
without demand upon or proceeding in any way against any other
person; and
(6) In the event that the rent due and payable by a sublessee under
any such permitted sublease (or a combination of the rent payable
under such sublease plus any bonus or other consideration therefor
or incident thereto) exceeds the hereinabove provided rent payable
under this Lease or if with respect to a permitted assignment,
permitted license or other transfer by Tenant permitted by
Landlord, the consideration payable to Tenant by the assignee,
licensee or other transferee exceeds the rental payable under this
Lease, then Tenant shall be bound and obligated to pay Landlord
all such excess rental and other excess consideration within ten
(10) days following receipt thereof by Tenant from such sublessee,
assignee, licensee or other transferee, as the case might be.
C If Tenant is a corporation, then any transfer of this Lease from Tenant
by merger, consolidation or dissolution or any change of ownership or
power to vote a majority of the voting stock in Tenant outstanding at
the time of execution of this instrument shall constitute an assignment
for the purpose of this Lease; provided, however, that acquisition of
all stock of the corporate tenant by any corporation, the stock of
which is registered pursuant to the Securities Act of 1933 or the
merger of the corporate tenant into such a corporation, the stock of
which is so registered shall not itself be deemed to be a violation of
Paragraph 11.A hereof. In addition, should Tenant desire to assign this
Lease to another to whom it is selling substantially all the assets of
Tenant, or desires to sell a majority of the voting stock and such
purchaser is not registered pursuant to the Securities Act of
LEASE CONTRACT - Page 8
<PAGE> 14
1933, Tenant shall first notify Landlord in writing sixty (60) days
prior to the closing of the proposed sale to secure the prior written
consent of Landlord to such assignment, which consent shall not be
unreasonably withheld. In such event, Tenant shall also furnish to
Landlord, with such notice, financial information and such other
information as Landlord may request to review. Should Landlord consent,
then such assignment shall be in compliance with the provisions of
paragraph 11.B. For purposes of this Paragraph 11.C, the term
"voting stock" shall refer to shares of stock regularly entitled to
vote for the election of directors of the corporation involved.
If Tenant is a general partnership having one or more corporations as
partners or if Tenant is a limited partnership having one or more
corporations as general partners, the provisions of the preceding
paragraph shall apply to each of such corporations as if such
corporation alone had been the Tenant hereunder.
If Tenant is a general partnership (whether or not having any
corporations as partners) or if Tenant is a limited partnership
(whether or not having any corporations as general partners), the
transfer of the partnership interest or interests constituting a
majority shall constitute an assignment for the purpose of this Lease.
D. Consent by Landlord to a particular assignment or sublease or other
transaction shall not be deemed a consent to any other or subsequent
transaction. If this Lease be assigned or if the Leased Premises be
subleased (whether in whole or in part) or in the event of the
mortgage, pledge or hypothecation of the Leased Premises without the
prior express written permission of Landlord, or if the Leased Premises
are occupied in whole or in part by anyone other than Tenant without
the prior express written permission of Landlord, Landlord may
nevertheless collect rent from the assignee, sublessee, mortgagee,
pledgee, party to whom the leasehold interest was hypothecated,
concessionee or licensee or other occupant and apply the net amount
collected to the rent payable hereunder, but no such transaction or
collection of rent or application thereof by Landlord shall be deemed a
waiver of these provisions or a release of Tenant from the further
performance by Tenant of its covenants, duties and obligations
hereunder.
SUBORDINATION
12. Tenant accepts this Lease subject and subordinate to any mortgage, deed
of trust, or other lien, or other matters of record presently existing or
hereafter placed upon the Leased Premises, and to any renewals and extension
thereof; but Tenant agrees that any such mortgage and/or beneficiary of any deed
of trust or other lien ("Landlord's Mortgagee") and/or Landlord shall have the
right at any time to subordinate such mortgage, deed of trust, or other lien to
this Lease on such terms and subject to such conditions as such Landlord's
Mortgagee may deem appropriate in its discretion. Upon demand Tenant agrees to
execute such further instruments subordinating this Lease, as Landlord may
request, and such nondisturbance and attornment agreements, as any such
Landlord's Mortgagee shall request, in a form satisfactory to Landlord's
Mortgagee.
ADJUSTMENT OF BASE RENTAL
13. A. The Base Rental provided for herein is based, in part, upon Landlord's
estimate Basic Cost (as hereinafter defined) of repairing, maintaining
and operating the
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<PAGE> 15
building during each calendar year of the Lease term will be the total
of such costs for the calendar year 1991 divided by the total Rentable
Area of office space in the Building, such amount being hereinafter
referred to as "Estimated Basic Cost".
B. "Basic Cost" as said term is used herein shall consist of the operating
expenses Of the Building, which shall be computed on the accrual basis.
All operating expenses shall be determined in accordance with generally
accepted accounting principles which shall be consistently applied. The
term "operating expenses" as used herein shall mean all expenses, costs
and disbursements (but not replacement of capital investment items,
except as noted below, nor general office expense nor specific costs
especially billed to and paid by specific tenants nor rental
commissions) of every kind and nature which Landlord shall pay or
become obligated to pay because of, or directly in connection with, the
ownership and the sole and exclusive operation of the Building,
including but not limited to, the following (directly applicable to the
Building in which the Leased Premises is located and to the related
common areas):
(1) Wages and salaries of all employees engaged in operation and
maintenance of the Building, including taxes, insurance and
benefits relating thereto;
(2) Management fees relating to the management of the Building;
(3) Cost of all supplies and materials used in operation and
maintenance of the Building;
(4) Cost of water and power, heating, lighting, air conditioning and
ventilating the Building;
(5) Cost of all maintenance and service agreements on equipment,
including window cleaning and elevator maintenance;
(6) Cost of casualty and liability insurance applicable to the
Building and Landlord's personal property used in connection with
the operation and maintenance of the Building;
(7) All taxes and assessments and other governmental charges whether
federal, state, county or municipal and whether they be by taxing
districts or authorities presently taxing the Leased Premises or
by other subsequently created or otherwise, and any other taxes
and improvement assessments attributable to the Building or its
operation excluding, however, federal and state taxes on net
income. It is agreed that Tenant will be responsible for ad
valorem taxes on its personal property and on the value of
leasehold improvements to the extent that the same exceed standard
Building allowances;
(8) Cost of repairs and general maintenance (excluding cost of major
repairs to the roof, foundation and exterior walls of the Building
constituting a replacement of a capital investment item, repairs
paid by proceeds of insurance or by Tenant or other third parties,
and alterations attributable solely to tenants of the Building
other than Tenant).
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<PAGE> 16
(9) Amortization of the cost of capital investment items and of the
installation thereof (but only with respect to capital investment
items which are installed after the substantial completion of the
construction of the Building) which are primarily for the purpose
of safety, saving energy or reducing operating costs or which may
be required by governmental authority. All such costs shall be
amortized over the reasonable life of the capital investment
items, with the reasonable life and amortization schedule being
determine in accordance with generally accepted accounting
principles and in no event to extend beyond the reasonable life of
the Building.
C. In the event that the Basic Cost of Landlord's operation of the
Building (calculated on a per square foot basis using the Rentable Area
of the Building set forth in Paragraph 1 of this Lease) during any
calendar year during the term of this Lease after calendar year 1991
shall exceed the Estimated Basic Cost set out in Paragraph 13.A, Tenant
shall pay to Landlord, as additional rent, the increase in such Basic
Cost for such year over the Estimated Basic Cost, determined by
multiplying such increase (expressed in terms of dollars per square
foot calculated as aforesaid) by the Rentable Area of the Leased
Premises as set forth in Paragraph 1 of this Lease.
The first amount which may be due under this Paragraph shall be due
within ten (10) days after Landlord submits to Tenant a bill or invoice
for the first amount due under this Paragraph; Landlord may thereafter
submit to Tenant a bill or invoice each month for one-twelfth (1/12th)
of said amount or one-twelfth (1/12th) of such greater amount as may be
later estimated by Landlord in its good faith business judgment to be
due by Tenant under this Paragraph. The amount of the first such bill
or invoice shall be determined by multiplying the monthly amount due by
the number of calendar months of the then current year which have
commenced as of the date of the bill or invoice. In the event of such
billing or invoicing procedure by landlord, then Tenant shall be bound
and obligated to pay such indicated amount contemporaneously with
required payment of rental hereunder on the first day of each calendar
month, monthly in advance, for each and every month in the term of this
Lease, in lawful money of the United States.
Once each calendar year, Landlord shall perform such computations as
are necessary to determine the amount properly payable by Tenant under
this Paragraph 13.C, whereupon, if Tenant shall have overpaid, Landlord
shall refund to Tenant the amount of the excess, but if Tenant shall
have underpaid, Landlord shall invoice Tenant for the amount of the
underpayment and such underpayment shall be due within thirty (30)
days.
Tenant shall have the right to audit and verify the prior year's Basic
Cost calculations upon thirty (30) days prior written notice to
Landlord requesting an audit. Such audit shall be conducted at
Landlord's office and at the sole cost and expense of Tenant.
EMINENT DOMAIN
14. If there shall be taken by exercise of the power of eminent domain
during the term of this Lease any part of the Leased Premises or Building,
Landlord may elect to terminate this Lease or to continue same in effect. If
Landlord elects to continue the
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<PAGE> 17
Lease, the rental shall be reduced in proportion to the area of the Leased
Premises resulting from such taking. All sums awarded or agreed upon between
Landlord and the condemning authority for the taking of the interest of Landlord
or Tenant, whether as damages or as compensation, will be the property of
Landlord without prejudice, however, to claims of Tenant against the condemning
authority on account of the unamortized cost of leasehold improvements paid for
by Tenant taken by the condemning authority. If this Lease should be terminated
under any provisions of this Paragraph 14, rental shall be payable up to the
date that possession is taken by the taking authority, and Landlord will
refund to Tenant any prepaid unaccrued rent less any sum then owing by Tenant to
Landlord.
ACCESS BY LANDLORD
15. Landlord, its agents and employees shall have access to and the right
to enter upon the Leased Premises at any reasonable time to examine the
condition thereof, to make any repairs or alterations required to be made by
Landlord hereunder, to show the Leased Premises to prospective purchasers or
tenants and for any other purpose deemed reasonable by landlord.
LANDLORD'S LIEN
16. To secure the payment of all rent due and to become due hereunder, and
the faithful performance of all the other covenants of this Lease required by
Tenant to be performed, Tenant hereby gives to Landlord an express contract lien
on and security interest in all property, chattels or merchandise which may be
placed in the Leased Premises and also upon all proceeds of any insurance which
may accrue to Tenant by reason of damage to or destruction of any such property.
All exemption laws are hereby waived by Tenant. This lien and security interest
are given in addition to the Landlord's statutory lien(s) and shall be
cumulative thereto. Upon request of Landlord, Tenant agrees to execute Uniform
Commercial Code financing statements relating to the aforesaid security
interest. Provided Tenant is not in default, Landlord agrees to subordinate its
lien on Tenant's furniture, fixtures and equipment to that of a lender providing
financing to Tenant or an equipment lessor leasing equipment to Tenant. Such
subordination shall be in form and content reasonably satisfactory to Landlord
and shall provide that such lender or equipment lessor shall repair all damage
to the Leased Premises resulting from removal of such furniture, fixtures or
equipment.
REMEDIES
17. A. Each of the following acts or omissions of Tenant or occurrences shall
constitute an "Event of Default":
(1) Failure or refusal by Tenant to timely pay rent or other payments
hereunder;
(2) Failure to perform or observe any other covenant or condition of
this Lease by Tenant to be performed or observed; provided,
however, notwithstanding the occurrence of such Event of Default,
Landlord shall not be entitled to exercise any of the remedies
provided for in this Lease or by law unless such Event of Default
continues beyond the expiration of ten (10) days following notice
to Tenant thereof;
(3) Abandonment or vacating of the Leased Premises or any significant
portion thereof;
(4) The entry of a decree or order for relief by a court having
jurisdiction over Tenant or any guarantor of Tenant's obligations
hereunder in an
LEASE CONTRACT - Page 12
<PAGE> 18
involuntary case under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of Tenant or any guarantor of Tenant's
obligations hereunder or for any substantial part of said parties'
property, or ordering the winding-up or liquidation of said
parties' affairs;
(5) The commencement by Tenant or any guarantor of Tenant's
obligations hereunder of a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or any
other similar law, or the consent by either of said parties to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar
official) of Tenant or any guarantor of Tenant's obligations
hereunder or for any substantial part of said parties' property,
or the making by said parties of any assignment for the benefit of
creditors, or the failure of Tenant or any guarantor of Tenant's
obligations hereunder generally to pay its debts as such debts
become due, or the taking of corporate action by any corporate
Tenant or any corporate guarantor of Tenant's obligations
hereunder in furtherance of any of the foregoing.
B. This lease and the term and estate hereby granted and the demise hereby
made are subject to the limitation that if and whenever any Event of
Default shall occur, Landlord may, at its option, in addition to all
other rights and remedies given hereunder or by law or equity, do any
one or more of the following:
(1) Terminate this Lease, in which event Tenant shall immediately
surrender possession of the Leased Premises to Landlord.
(2) Enter upon and take possession of the Leased Premises and expel or
remove Tenant and any other occupant therefrom, with or without
having terminated the Lease.
(3) Alter locks and other security devices at the Leased Premises.
C. Exercise by Landlord of any one or more remedies hereunder granted or
otherwise available shall not be deemed to be an acceptance of
surrender of the Leased Premises by Tenant, whether by agreement or by
operation of law, it being understood that such surrender can be
effected only by the written agreement of Landlord and Tenant. Receipt
by Landlord of Tenant's keys to the Leased Premises shall not
constitute an acceptance of surrender of the Leased Premises. No such
allocation of security devices and no removal of other exercise of
dominion by Landlord over the property of Tenant or others at the
Leased Premises shall be deemed unauthorized or constitute a
conversion, Tenant hereby consenting, after any Event of Default, to
the aforesaid exercise of dominion over Tenant's property within the
Building. All claims for damages by reason of such reentry and/or
repossession and/or alternation of locks or other security devices are
hereby waived, as are all claims for damages by reason of any distress
warrant, forcible detainer proceedings, sequestration proceedings or
other legal process. Tenant agrees that any reentry
LEASE CONTRACT - Page 13
<PAGE> 19
by Landlord may be pursuant to judgment obtained in forcible detainer
proceedings of other legal proceedings or without the necessity for
legal proceedings, as Landlord may elect, and Landlord shall not be
liable in trespass or otherwise.
D. In the event Landlord elects to terminate this Lease by reason of an
Event of Default, Landlord may also elect, upon notice to Tenant, to
accelerate the rent and other charges for the remainder of the term of
the Lease which shall then become due in accordance with the terms of
this Subparagraph D. In such event, Tenant shall be liable for (i) all
rent and other charges which have accrued to the date of such
termination and (ii) all rent and other charges for the remainder of
the term of the Lease less the fair market value of the Lease on the
date of determination, the difference discounted at the discount rate
charged by the Federal Reserve Bank of Dallas plus five percent (5%).
The "date of determination" shall be the date such matter is heard
before a court of competent jurisdiction or such other date as the
parties may agree upon. The "fair market value of the Lease" shall mean
the rent (including the estimate of other charges due hereunder for
the remaining term, including those under Paragraph 13) Landlord would
receive from and after the date of termination, if leased to a third
party, taking into account the market rentals for similar properties in
the geographic area, less the cost of concessions (free rent, tenant
improvements allowance, etc.), brokers fees and discounting for the
reasonable period to relet the Leased Premises at such rental.
E. In the event Landlord elects to terminate the Lease by reason of an
Event of Default, or in the event Landlord elects to terminate Tenant's
right to possession of the Leased Premises, Landlord may hold Tenant
liable for all rent and other indebtedness accrued to the date of such
termination, plus such rent and other indebtedness as would otherwise
have been required to be paid by Tenant to Landlord during the period
following termination of the lease term (or of Tenant's right to
possession of the Leased Premises, as the case may be) measured from
the date of such termination by Landlord until the date of expiration
stated in Paragraph 2 (had Landlord not elected to terminate the Lease
or Tenant's right of possession of the Leased Premises, on account of
such Event of Default) diminished by any net sums thereafter received
by Landlord through reletting the Leased Premises during said period
(after deducting expenses incurred by Landlord as provided in
Subparagraph E hereof). Actions to collect amounts due by Tenant
provided for in this Subparagraph E may be brought from time to time by
Landlord during the aforesaid period, on one or more occasions, without
the necessity of Landlord's waiting until expiration of such period;
and in no event shall Tenant be entitled to any excess of rent (or rent
plus other sums) obtained by reletting over and above the rent provided
for in this Lease
F. In case of an Event of Default, Tenant shall also be liable for and
shall pay to Landlord, in addition to any sum provided to be paid
above; broker's fees incurred by Landlord in connection with reletting
the whole or any part of the Leased Premises; the cost of removing and
storing Tenant's or other occupant's property; the cost of repairing,
altering, remodeling of otherwise putting the Leased Premises into
condition acceptable to a new Tenant or tenants; and all other
reasonable expenses incurred by Landlord in enforcing Landlord's
remedies.
LEASE CONTRACT - Page 14
<PAGE> 20
G. Rent past due for five (5) days and other past due payments shall bear
interest from date due until paid at the greatest applicable
non-usurious interest rate permitted by law. If no usury statute shall
apply as a limitation, then, past due rent and payments shall bear
interest at eighteen percent (18%) per annum.
H. In the event of termination or repossession of the Leased Premises for
an Event of Default, Landlord shall not have any obligation to relet or
attempt to relet the Leased Premises, or any portion thereof, or to
collect rental after reletting; but Landlord shall have the option to
relet or attempt to relet; and in the event of reletting, Landlord may
relet the whole of any portion of the Leased Premises for any period,
to any tenant, and for any use and purpose.
I. If Tenant should fail to make any payment; or if Tenant should fail to
cure any default hereunder within the time herein permitted; then
Landlord, without being under any obligation to do so and without
thereby waiving such default, may make such payment; and/or Landlord
may remedy such other default for the account of Tenant (and enter the
Leased Premises for such purpose); and thereupon Tenant shall be
obligated to, and hereby agrees to, pay Landlord, upon demand, all
costs, expenses and disbursements incurred by Landlord in taking such
remedial action.
J. In the event of any default by Landlord, Tenant's exclusive remedy
shall be an action for damages (Tenant hereby waiving the benefit of
any laws granting it a lien upon the property of Landlord and/or upon
rent due Landlord), but prior to any such action Tenant will give
Landlord written notice specifying such default with particularity, and
Landlord shall thereupon have thirty (30) days (plus such additional
reasonable period as may be required in the exercise by Landlord of due
diligence) in which to cure any default. Unless and until Landlord
fails to so cure any default after such notice. Tenant shall not have
any remedy or cause of action by reason thereof. All obligations of
Landlord hereunder will be construed as covenants, not conditions; and
all such obligations will be binding upon Landlord only during the
period of its possession of the Building and not thereafter.
K. Except as expressly set forth in the succeeding sentence, neither
Landlord nor Tenant shall be entitled to any attorneys' fees incurred
in connection with the institution of any action of proceeding in court
to enforce any provision hereof or for damages by reason of any alleged
breach or default of any provision of this Lease or for a declaration
of either party's rights or obligations hereunder or for any other
judicial remedy, at law or in equity. In the event, however, that
Landlord institutes any action or proceeding to enforce payment of a
monetary sum due hereunder, then, in such event, Tenant will pay to
Landlord all reasonable costs incurred by Landlord in collecting such
sum, including reasonable attorneys' fees.
NONWAIVER
18. Neither acceptance of rent by Landlord nor failure by Landlord to
complain of any action, nonaction or default of Tenant shall constitute a waiver
of any of Landlord's rights hereunder. Waiver by Landlord of any right for any
default of Tenant shall not constitute a waiver of any right for either a
subsequent default of the same obligation or any other default.
LEASE CONTRACT - Page 15
<PAGE> 21
HOLDING OVER
19. If Tenant should remain in possession Of the Leased Premises after the
expiration Of the term of this lease, without the execution by Landlord and
Tenant of a new lease, then Tenant shall be deemed to be occupying the Leased
Premises as a tenant-at-sufferance, subject to all the covenants and obligations
of this Lease and at a daily rental of two (2) times the per day rental provided
hereunder, computed on the basis of a thirty (30) day month.
NOTICE
20. Any notice which may or shall be given under the terms of this Lease
shall be in writing and shall be either delivered by hand or sent by United
States Registered or Certified Mail, postage prepaid, return receipt requested,
if for Landlord, to c/o Aetna Realty Investors, Inc. , 1478S Preston Road, Suite
275, Dallas, Texas 75240; or if for Tenant, to the Leased Premises, Suite 100.
Such addresses may be changed from time to time by either party by giving notice
as provided above. Notice shall be deemed given when delivered (if delivered by
hand) or when postmarked (if sent by mail).
LANDLORD'S MORTGAGEE
21. If the Building and/or Leased Premises are at any time subject to a
mortgage and/or mortgage and deed of trust, then in any instance in which Tenant
gives notice to Landlord alleging default by Landlord hereunder, Tenant will
also simultaneously give a copy of such notice to each Landlord's Mortgagee
(provided Landlord or Landlord's Mortgagee shall have advised Tenant of the name
and address of landlord's Mortgagee) and each Landlord's Mortgagee shall have
the right (but no obligation) to cure of remedy such default during the period
that is permitted to Landlord hereunder, plus an additional period of thirty
(30) days, and Tenant will accept such curative of remedial action (if any)
taken by Landlord's Mortgagee with the same effect as if such action had bean
taken by Landlord
Tenant will, at such time or times as Landlord any request, sign a
certificate stating whether this Lease is in full force and effect; whether any
amendments or modifications exist; whether there are any defaults hereunder; and
such other information and agreements as may be reasonably requested
PARKING
22. A. Landlord shall make available to Tenant up to a total of one hundred
fifty (150) free unreserved and uncovered parking spaces and a minimum
of five (5) visitor spaces, located in the front of the Building and
marked for visitors, during the primary term of this Lease. If at the
time Tenant exercises any option to renew this Lease or during any such
renewal term, Landlord assesses a charge for parking, Tenant agrees to
pay to Landlord on a monthly basis for the lease of each such parking
space an amount equal to the reasonable charge which may be assessed by
Landlord for parking. Landlord reserves the right to change the parking
if required by governmental law or regulation.
B. Landlord shall not be responsible for any loss or damage to any car or
property therein or for injuries (fatal of nonfatal) to persons
occurring within the parking areas.
MISCELLANEOUS
23. A. Provided Tenant complies with its covenants, duties and obligations
hereunder, Tenant shall quietly have, hold and enjoy the Leased
Premises subject to the terms and provisions of this instrument.
LEASE CONTRACT - Page 16
<PAGE> 22
B. In any circumstances where Landlord is permitted to enter upon the
Leased Premises during the lease term, whether for the purpose of
curing any default of Tenant, repairing damage resulting from fire or
other casualty of an eminent domain taking or is otherwise permitted
hereunder or by law to go upon the Leased Premises, no such entry shall
constitute an eviction or disturbance of tenant's use and possession of
the Leased Premises or a breach by Landlord of any of its obligations
hereunder or render Landlord liable for damages for loss or business or
otherwise or entitle Tenant to be relieved from any of its obligations
hereunder or grant Tenant any right of setoff of recoupment or other
remedy; and in connection with any such entry incident to performance
or repairs, replacements, maintenance or construction, all of the
aforesaid provisions shall be applicable notwithstanding that Landlord
may elect to take building materials in, to or upon the Leased Premises
that may be required or utilized in connection with such entry by
Landlord.
C. Except with respect to those counterclaims or claims by Tenant which,
under the laws of the State in which the Leased premises are situated,
may only be asserted in the hereafter referred to proceedings brought
by Landlord or be forever barred if not asserted in said proceedings,
in the event Landlord commences any proceedings against Tenant for
nonpayment of rent or any other sum due and payable by Tenant
hereunder, Tenant will not interpose any counterclaim or other claim
against Landlord of whatever nature or description in any such
proceedings; and in the event Tenant interposes any such counterclaim
or other claim against Landlord in such proceedings, Landlord and
Tenant stipulate and agree that, in addition to any other lawful remedy
of Landlord, upon notion by Landlord, such counterclaim or other claim
asserted by Tenant shall be severed out of the proceedings instituted
by Landlord and the proceedings instituted by Landlord may proceed to
final judgment separately and apart from and without consolidate with
or reference to the status of such counterclaim of any other claim
asserted by Tenant.
D. Landlord may restrain of enjoin any breach or threatened breach of any
covenant, duty or obligation of Tenant herein contained without the
necessity of proving the inadequacy of any legal remedy of irreparable
harm. The remedies of Landlord hereunder shall be deemed cumulative and
no remedy of Landlord, whether exercised by Landlord or not, shall be
deemed to be in exclusion of any other. Except as may be otherwise
herein expressly provided, in all circumstances under this Lease where
prior consent of permission of one party ("first party") is required
before the other party ("second party") is authorized to take any
particular type of action, the matter of whether to grant such consent
or permission shall be within the sole and exclusive judgment and
discretion of the first party; and it shall not constitute any nature
or breach by the first party hereunder or any defense to the
performance of any covenant, duty of obligation of the second party
hereunder that the first party delayed or withheld the granting of such
consent or permission, whether or not the delay or withholding of such
consent or permission was prudent or reasonable or based on good cause.
E. In all instances where Tenant or Landlord is required hereunder to pay
any sum or do any act at a particular indicated time or within an
indicated period, it is understood that tine is of the essence.
LEASE CONTRACT - Page 17
<PAGE> 23
F. The obligation of Tenant to pay all rent and other sums hereunder
provided to be paid by Tenant and the obligation of Tenant to perform
Tenant's other covenants and duties hereunder constitute independent,
unconditional obligations to be performed at all times provided for
hereunder, save and except only when an abatement thereof or reduction
therein is hereinabove expressly provided for and not otherwise. Tenant
waives and relinquishes all rights which Tenant might have to claim any
nature of lien against or withhold, or deduct from or offset against
any rent and other sums provided hereunder to be paid Landlord by
Tenant. Tenant waives and relinquishes any right to assert, either as a
claim or as a defense, that Landlord is bound to perform or is liable
for the nonperformance of any implied covenant or implied duty of
Landlord not expressly herein set forth.
G. Under no circumstance whatsoever shall Landlord ever be liable for
consequential damages or special damages.
H. All monetary obligations of Landlord and Tenant (including, without
limitation, any monetary obligation of Landlord of Tenant for damages
for any breach of the respective covenants, duties or obligations of
Landlord of Tenant hereunder) are performable exclusively in Clear Lake
City, Harris County, Texas.
I. It any provision of this Lease shall ever be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect
any other provision of the Lease, but such other provisions shall
continue in full force and effect.
J. The term "Landlord" shall mean only the owner, for the time being of
the Building, and in the event of the transfer by such owner of its
interest in the Building, such owner shall thereupon be released and
discharged from all covenants and obligations of the Landlord
thereafter accruing, but such covenants and obligations shall be
binding during the lease term upon each new owner for the duration of
such owner's ownership.
ENTIRE AGREEMENT AND BINDING EFFECT
24. This Lease and any contemporaneous workletter, addenda or exhibits
signed by the parties and attached hereto constitute the entire agreements
between Landlord and Tenant; no prior written or prior or contemporaneous oral
promises or representations shall be binding. This Lease shall not be amended,
changed of extended except by written instrument signed by both parties hereto.
Paragraph captions herein are for convenience only, and neither limit nor
amplify the provisions of this Lease. The provisions of this Lease shall be
binding upon and inure to the benefit of the heirs, executors, administrators,
successors and assigns of the parties, but this provision shall in no way altar
the restriction herein in connection with assignment and subletting by Tenant.
The submission of this Lease Contract by Landlord For examination does not
constitute a reservation of or option for the Leased Premises and this Lease
shall become effective only upon execution by all parties hereto and delivery
thereof by Landlord to Tenant.
RULES AND REGULATIONS
25. Tenant shall perform and comply with the Rules and Regulations of the
Building set out in Exhibit "B" hereto, as reasonably amended from time to time
upon written notice to Tenant, and upon written notice thereof, all other
reasonable rules and regulations with respect to safety, care, cleanliness, and
preservation of good order, operation, and conduct in the
LEASE CONTRACT - page 18
<PAGE> 24
Building that may be established from time to time by Landlord for tenants of
the Building. Landlord shall not have any liability to Tenant for any failure of
any other tenants of the Building to comply with such Rules and Regulations.
INSURANCE
26. Landlord shall maintain during the term of this Lease fire and extended
insurance coverage insuring the Building and Leased Premises (excluding Tenant's
goods, furniture, property placed in the Leased Premises and tenant
improvements) against damage or loss from fire or other casualty normally
insured against under the terms of standard policies of fire and extended
coverage insurance. If the annual premiums to be paid by Landlord shall exceed
the standard rates because of Tenant's use of the Leased Premises, Tenant shall
(in addition to any payment under Paragraph 13) promptly pay the excess amount
of the premium upon request by Landlord. Tenant shall provide, at Tenant's own
expense, all insurance coverage necessary or desirable for the full protection
against loss or damage from fire or other casualty of any tenant improvements
and Tenant's goods, furniture or other property placed in the Leased Premises,
and Tenant shall further maintain commercial general liability insurance to
include coverage under this Lease for its business operations, independent
contractors, contractual and products coverage, with limits for bodily injury
liability of not less than $1,000,000.00 per occurrence and limits for property
damage of not less than the greater of $500,000.00 or the full insurable
value of Tenant's property, or such other limits as may reasonably be
established from time to time by Landlord. Tenant shall cause Landlord to be
named as an additional insured or loss payee under such liability and other
policies, shall furnish Landlord with current certificates of all required
insurance, which certificates shall provide for thirty (30) days advance written
notice to Landlord of any cancellation thereof, and such policies shall be
written on companies with an A.M. Best Rating of A/XII or better. Landlord shall
not be obligated to insure any portion of the Leased Premises consisting of
tenant improvements or any of Tenant's goods, fixtures, furniture or other
property placed or incorporated in the Leased Premises.
PRIOR LEASE CONTRACTS
27. Upon (and only upon) the execution of at least two (2) copies of this
Lease by both Landlord and Tenant and the delivery of at least one (l) such
executed copy to Landlord, this Lease shall supersede and take the place of that
certain lease dated January 11, 1985 by and between Landlord (as successor in
interest) and Tenant for the lease of its current space in the Building (except
as otherwise noted herein) and all amendments to such prior lease. However, the
rent and other charges under the prior lease shall be incorporated herein by
reference and remain the rent and charges for this Lease for the period from
execution through November 30, 1991, except with respect to the additional areas
described in Paragraph 1 of the Addendum, attached hereto as Exhibit "C", the
rent and charges for such space to be governed by Paragraph 1 of the Addendum.
EXHIBITS
28. The following exhibits, attached hereto, and incorporated into this
Lease by reference, as if set forth verbatim.
Exhibit "A-1"-"A-4" Legal Description, Floor Plans
Exhibit "B" Rules and Regulations
Exhibit "C" Addendum to Lease
Exhibit "D" Signage
Exhibit "E" Cancellation Rights
LEASE CONTRACT - Page 19
<PAGE> 25
EXECUTED by Landlord and Tenant on the respective dates indicated
below, the latter of which shall constitute the effective date hereof.
LANDLORD:
AETNA LIFE INSURANCE COMPANY, INC.
By: /s/ Janice Y. Elwell
-------------------------------------
Printed Name: Janice Y. Elwell
---------------------------
Title: Director
----------------------------------
TENANT:
BARRIOS TECHNOLOGY, INC.,
Attest: a Texas corporation
/s/ H. R. Barrett 8/21/91
- ----------------------------- -----------------------------------------
1070/125/d/1.8.14
LEASE CONTRACT - Page 20
<PAGE> 26
EXHIBIT "C"
ADDENDUM TO LEASE
1. ADDITIONS TO LEASED PREMISES. As part of the Leased Premises described
in this Lease, Tenant agrees to lease two (2) additional areas, not
previously leased by Tenant, in "As Is" condition on the first (1st)
floor encompassing approximately Two Thousand Four Hundred Sixty-five
(2,465) square feet of Rentable Area as per Exhibit "A-4" attached
hereto. Tenant shall pay monthly rent on these two (2) additional areas
at the rate of $5.50 per square foot of Rentable Area per year through
November 30, 1991. Commencing December 1, 1991, base rent on these two
(2) additional areas shall increase to $13.50 per square foot of
Rentable Area per year with an expense stop equal to Estimated Basic
Cost as set forth in Paragraph 13.A of the Lease. Landlord agrees to
provide an allowance of up to $3.00 per usable square foot times the
number of usable square feet within these two (2) additional areas for
tenant improvements made by Tenant in accordance with plans and
specifications agreed upon by Landlord and Tenant and attached to this
Lease. The allowance is payable on December 1, 1991, based on copies of
paid invoices furnished by Tenant to Landlord evidencing costs of
improvements in these two (2) additional areas.
2. TENANT IMPROVEMENTS; ACCEPTANCE OF PREMISES. Tenant agrees to accept
the Leased Premises in "As Is" condition. All improvements to the
Leased Premises will be done by Tenant, at Tenant's sole cost and
expense, and in accordance with the plans and specifications agreed
upon by Landlord and Tenant and attached to this lease, with the
exception that Landlord will provide Tenant with the following, at
Landlord's cost:
(a) Recarpet the third (3rd) floor lobby and all executive offices
with building standard carpeting.
(b) Repaint and/or touch up of paint in areas agreed to by Landlord
and Tenant after an inspection tour made prior to execution of
this Lease.
(c) Clean carpet in high traffic areas agreed to by Landlord and
Tenant.
(d) Installation of four (4) additional light fixtures in third (3rd)
floor lobby.
Tenant agrees, with respect to tenant improvements made under
Paragraphs 1 and 2 of the Addendum, that all such improvements shall be
made in a good and workmanlike manner, with comparable materials to
those presently used on the Leased Premises, Tenant shall pay all costs
in a timely manner to prevent the imposition of any liens for labor or
materials furnished or, if a lien is filed, Tenant shall immediately
bond same.
3. TENANT ELECTRICITY. Landlord shall install at Landlord's sole cost and
expense a separate meter in the designated HVAC area(s) of the Leased
Premises, shown on plans and specifications, dated _________________,
where separate HVAC units have been installed. The cost of electricity
for operation of these units during the term of the Lease shall be at
Tenant's sole cost and paid as additional rental pursuant to the terms
and provisions of this Lease upon receipt of invoices from Landlord. In
addition, Tenant shall
Landlord's Initial J.Y.E.
_____
Tenant's Initial H.R.B.
_____
ADDENDUM TO LEASE - Page 1
<PAGE> 27
be given an annual credit of $9,000.00 toward the electrical, operating
costs of these units, such credit to be applied as charges for
electrical operating costs of these units are billed to Tenant.
4. CANCELLATION. After the completion of one (l) full calendar year of
occupancy from the Commencement Date and if the Tenant is not then in
default, Tenant shall have the right to cancel this Lease as to any
portion of the Leased Premises on the first (1st) and second (2nd)
floors with six (6) months prior written notice to Landlord.
Notwithstanding anything to the contrary, throughout the term of this
Lease, Tenant shall remain liable for rent and charges for the entire
third (3rd) floor.
5. SIGNAGE. Landlord reserves the right to change the exterior monument
sign subject to the final approval of the Tenant, such approval not to
be unreasonably withheld, and master plan developer. So long as Tenant
occupies the largest Rentable Area of any tenant in the Building,
Tenant shall be permitted to largest signage area on the monument sign.
6. BROKERS. Tenant represents and warrants to Landlord that neither it nor
its officers or agents nor anyone acting on its behalf has dealt with
any real estate broker other than Zann Commercial Brokerage, Inc., as
Landlord's agent, and Alliance Commercial, Inc., as Tenant's agent, for
the primary term of this Lease in the negotiating or making of this
Lease, and Tenant agrees to indemnify and hold Landlord harmless from
any claim or claims, as well as costs and expenses including attorneys'
fees incurred by Landlord in conjunction with any such claim or claims,
of Zann Commercial Brokerage, Inc. and Alliance Commercial, Inc. or any
broker or brokers claiming to have interested Tenant in the Building or
Premises or claiming to have caused Tenant to enter into this Lease.
7. LANDLORD'S LIABILITY. Notwithstanding anything in this Lease to the
contrary, covenants, undertakings and agreements herein made on the
part of Landlord are made and intended not for the purpose of binding
Landlord personally or the assets of Landlord but are made and
intended to bind only the Landlord's interest in the Leased Premises
and Building, as the same may, from time to time, be encumbered and no
personal liability shall at any time be asserted of enforceable against
Landlord or its stockholders, officers or partners or their respective
heirs, legal representatives, successors and assigns on account of the
Lease or on account of any covenant, undertaking or agreement of
Landlord in this Lease contained.
8. AUTHORITY OF TENANT. If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and
warrants that he is duly authorized to execute and deliver this Lease
on behalf of said corporation, and that this Lease is binding upon said
corporation.
9. NO ACCORD OR SATISFACTION. No payment by Tenant or receipt by Landlord
of a lesser amount than the monthly rent and other sums due hereunder
shall be deemed to be other than on account of the earliest rent or
other sums due, nor shall any endorsement or statement on any check or
accompanying any check or payment be deemed an accord and satisfaction;
and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or other sums or
pursue any other remedy provided in this Lease.
Landlord's Initial ____
Tenant's Initial ____
ADDENDUM TO LEASE - Page 2
<PAGE> 28
10. HAZARDOUS WASTE. Tenant covenants not to introduce any hazardous or
toxic materials onto the Leased Premises, Building or real property
described in Exhibit "A-1" (collectively the "Property") without (a)
first obtaining Landlord's written consent and (b) complying with all
applicable federal, state, and local laws or ordinances pertaining to
the transportation, storage, use or disposal of such materials,
including but not limited to obtaining proper permits.
If Tenant's transportation, storage, use or disposal of hazardous or
toxic materials on the Property results in (1) contamination of the
soil or surface or ground water or (2) loss or damage to person(s) or
property, then Tenant agrees to respond in accordance with the
following paragraph.
Tenant agrees (i) to notify Landlord immediately of any contamination,
claim of contamination, loss or damage, (ii) after contamination and
approval by Landlord, to clean up the contamination in full compliance
with all applicable statutes, regulations, and standards, and (iii) to
indemnify, defend, and hold Landlord harmless from and against any
claims, suits, causes of action, costs, and fees, including attorney's
fees, arising from or connected with any such contamination, claim of
contamination, loss or damage. This provision shall survive termination
of this Lease.
11. NO ACCESS TO ROOF. Tenant shall have no right of access to the roof of
the Premises or the Building and shall not install, repair, or replace
any aerial, fan, air conditioner, or other device on the roof of the
Premises or the Building without the prior written consent of Landlord.
Any aerial, fan, air conditioner, or device installed without such
consent shall be subject to removal, at Tenant's expense, without
notice, at any time.
12. RENEWAL OPTION. If, at the end of the primary term of this Lease,
Tenant is not in default of any of the terms, conditions, or covenants
of the Lease, Tenant, but not any assignee or subtenant of Tenant, is
hereby granted two (2) options to renew this Lease, each for an
additional term of thirty-six (36) months, upon the same terms and
conditions contained in this Lease with the following exceptions:
(a) The last of the two (2) renewal terms will contain no further
renewal options unless specifically granted by Landlord in
writing; and
(b) The rental rate for each renewal term will be based on the then
prevailing rental rates for properties of equivalent quality,
size, utility, and location in the Clear Lake area of Houston,
Texas, with the length of the Lease term and credit standing of
Tenant to be taken in account. If Tenant desires to renew this
Lease, Tenant will notify Landlord in writing of its intention to
renew no later than six (6) months prior to the expiration date of
the primary term or renewal term of the Lease, as applicable;
Landlord shall, within the next fifteen (15) days notify Tenant in
writing of the proposed rental rate. Tenant shall, thereafter,
have fifteen (15) days to accept or reject the proposed rental
rate. If accepted, Tenant shall execute within the next fifteen
(15) days after such acceptance a new Lease containing the same
terms and conditions as the present Lease but specifying the new
rental rate. If Tenant fails to execute the new lease timely, then
this Lease shall terminate on the day and date of expiration of
the primary term or renewal term, as applicable.
Landlord's Initial ____
Tenant's Initial ____
ADDENDUM TO LEASE - Page 3
<PAGE> 29
13. FIRST RIGHT OF REFUSAL. As available and provided Tenant is not in
default of this Lease Agreement, Tenant, but not any assignee or
sublessee of Tenant, is hereby granted a First Right of Refusal on all
space within a given floor which is contiguous to space then leased by
Tenant on the floor. Such option shall be at the rate and terms then
offered by Landlord to a prospective tenant but, further, shall be
subordinate to any pre-existing tenant having a First Right of Refusal
for such space in the building. Upon written notice from landlord to
Tenant that any such space is available and the terms to lease such
space, Tenant agrees to respond within the next ten (10) days by
written notice of Tenant's intention to accept or reject such space on
the terms offered. Any failure of Tenant to respond in writing within
the ten (10) day period shall be deemed as a waiver of Tenant's
election to lease such space then being offered.
Landlord's Initial ____
Tenant's Initial ____
1070/125/d/add.8.14
ADDENDUM TO LEASE - Page 4
<PAGE> 30
Abstract I: described as follows:
Being 4.5170 acres (196,762 square feet) of land situated in the Sarah Deel
League. Abstract 13, Harris County, Texas, and being out of Unrestricted Reserve
"D" (Block 3) of Clear Lake City Industrial Park, Section "D-3", recorded in
Volume 281, Page 29 of the Harris County Map Records: said 4.5170 acres (196,762
square feet) of land being more particularly described by metes and bounds as
follows (all bearings referenced to the Texas Coordinate System, South Central
Zone);
BEGINNING: at a 5/8 inch iron rod found for the northwest corner of that certain
1.9735 acre tract of land conveyed to St. Johns Professional Joint Venture by
instrument recorded under File Number J771777 and Film Code 099-84-0657 of the
Harris County Official Public Records of Real Property and being the southwest
corner of the herein described tract of land and also being in the east
right-of-way line of Regents Park Drive, based on 60 feet in width;
THENCE N 23-14-00 E 274.00 feet, with the east right-of-way line of said Regents
Park Drive, to a 5/8 inch iron rod found for the beginning of a curve;
THENCE 119.76 feet (called 119.74 feet), with the arc of a curve to the right in
the east right-of-way line of said Regents Park Drive whose chord bears N
31-24-06 E 119.35 feet (called N 31-24-03 E 119.35 feet) and having a central
angle of 16-20-13 (called 16-20-05) and a radius of 420.00 feet, to a 5/8 inch
iron rod found for the end of the curve;
THENCE N 39-34-13 E 28.82 feet, with the east right-of-way line if said Regents
Park Drive, to a 5/8 inch iron rod set for the northwest corner of this tract;
THENCE S 66-46-00 E 200.00 feet to a 5/8 inch iron rod set for a corner of this
tract;
THENCE N 23-14-00 E 140.00 feet to a 5/8 inch iron rod set for a corner of this
tract;
THENCE S 66-46-00 E 184.60 feet to a 5/8 inch iron rod set for the northwest
corner of this tract and being in the west right-of-way line of Gemini Avenue,
based on 80 feet in width;
THENCE 32.52 feet, with the arc of a curve to the right in the west right-of-
way line of said Gemini Avenue whose chord bears S 22-39-00 W 32.52 feet and
having a central angle of 1-10-00 and a radius of 1597.02 feet, to a 5/8 inch
iron rod found for the end of the curve;
THENCE S 23-14-00 W 527.28 feet, with the west right-of-way line of said Gemini
Avenue, to a 5/8 inch iron rod found for the southwest corner of this tract,
same being the northeast corner of said 1.9735 acre tract;
THENCE N 66-46-00 W 410.00 feet to the PLACE OF BEGINNING and containing 4.5170
acres (196,762 square feet) of land.
<PAGE> 31
EXHIBIT "A-1"
"Tract 2" described as follows:
Being 0.3259 acres (35,978 square feet) of land situated in the Sarah Deed
League, Abstract 13, Harris County, Texas and being out of Unrestricted Reserve
"D" (Block 3) of Clear Lake City Industrial Park, Section "D-3", recorded in
Volume 281, Page 29 of the Harris County Map Records and also being out of that
certain 8.2552-acre tract of land conveyed to Gemini Development, LTD. By
instrument recorded under File No. J-965546 and File Code No. ###-##-#### of
the Harris County Official Public Records of Real Property; said 0.8259 acres
(35,978 square feet) of land being more particularly described by metes and
bounds as follows (all bearings referenced to the Texas Coordinate System, South
Central Zone);
BEGINNING at a 5/8 inch iron rod found for the Northwest corner of that certain
1.9735-acre tract of land conveyed to St. Johns Professional Joint Venture by
instrument recorded under File No. J-771777 and File Code No.###-##-#### of the
Harris County Official Public Records of Real Property and being the Southwest
corner of the herein described tract of land and also being in the East
right-of-way line of Regents Park Drive based on 60 feet in width;
THENCE North 23" 14" 00" East 34.50 feet with the East right-of-way line said
Regents Park Drive, to an "X" in concrete;
THENCE South 66" 46" 00" East 68.00 feet to an "X" in concrete;
THENCE South 23" 14" 00" East 30.50 feet to a 1/2 inch iron rod;
THENCE South 64" 46" 00" East 56.00 feet to an "X" in concrete;
THENCE North 23" 14" 00" East 57.00 feet to an "X" in concrete;
THENCE South 66" 46" 00" East 230.00 feet to an "X" in concrete;
THENCE South 23" 14" 00 West 87.50 feet to an "X" in concrete;
THENCE South 66" 46" 00" East 56.00 feet to an "X" in concrete in the West
right-of-way line said Gemini Avenue, to a 5/8 inch iron rod for the Southwest
corner of the tract, same being the Northeast corner of said 1.9735 area tract;
THENCE North 66" 46" 00" West 410.00 feet to the PLACE OF BEGINNING and
containing 0.8259 acres (35,978 square feet) of land.
<PAGE> 32
EXHIBIT "A-1"
SQUARE FOOTAGE AREAS BY FLOOR
<TABLE>
<CAPTION>
FLOOR SF/NRA
<S> <C> <C> <C>
3rd 25,647 346,234.50 (28,852.88)
2nd 1,618
2,102 54,818.50 (4,984)87)
711
1st 2,482 33,507 (2,792.)25)
-------------
32,560 Total
-------------
$439,560 Year
</TABLE>
<PAGE> 33
EXHIBIT "A-2"
THIRD FLOOR PLAN
1331 Gemini 3rd FLOOR 25,647 SF NRA
<PAGE> 34
EXHIBIT "A-3"
FLOOR PLAN
<PAGE> 35
EXHIBIT "A-3"
FLOOR PLAN
<PAGE> 36
EXHIBIT "A-3"
FLOOR PLAN
<PAGE> 37
EXHIBIT "A-4"
FIRST FLOOR PLAN
1331 GEMINI 1st FLOOR 2,158 SF USABLE )
) = 15%
2,482 SF NRA )
<PAGE> 38
Rules And Regulations
HALLS AND PASSAGEWAYS
1. The sidewalks, halls, corridors, stairways and elevators in and
around the Building shall not be obstructed by any Tenant or Tenant's invitees,
employees or visitors or be used by them for any purpose other than for ingress
and egress to and from the Leased Premises.
HEAVY EQUIPMENT
2. All safes or similar heavy equipment or articles shall be brought
into the Building at such time and in such a manner as Landlord shall designate;
and Landlord shall have the right to determine or limit the weight, size and
position of all safes and other heavy equipment brought into the Leased
Premises. Landlord will not be responsible for loss of or damage to any such
safe or property from any cause, and all damage done to the Building by moving
or maintaining any such safe or property shall be repaired at the expense of
Tenant.
SIGNS/DIRECTORY
3. No sign, placard, picture, advertisement, name or notice shall be
painted or affixed by Tenant to the interior or exterior of Building without the
prior written consent of Landlord. Name plates on the entry door to the Leased
Premises will be provided by Landlord. A building directory located in a
prominent place and containing the names of the tenants will be provided by
Landlord. Initial directory listings or name plates will be at the cost of the
Landlord; however, any changes or revisions in the graphics provided for herein,
will be at the expense of Tenant. Tenant will advise Landlord in writing as to
the wording of the initial listing and/or the revised listing, should such
become necessary Tenant will be permitted the use of his name and title on
directory and name plate listings.
FIRE PROTECTION
4. Tenant shall not do or permit to be done in the Leased Premises,
or keep anything therein, which shall in any way increase the rate of fire
insurance on the Building or on property kept therein, or obstruct or interfere
with the rights of other tenants, or conflict with the laws relating to fire or
any regulations of the Fire Department or with an insurance policy upon said
Building. Landlord acknowledges Tenant's requirement for the use of torches
and/or alcohol burners in the course of normal dental procedures and offers no
objection to same provided due diligence is exercised by Tenant. It is
understood that Landlord does not absolve Tenant of responsibility wherein
negligence is committed.
JANITOR
5. Landlord will maintain janitorial services on a five (5) day per
week schedule, and the janitor or his agent shall be allowed admittance into the
Leased Premises after 5:30 p.m., or at any other time, should it become
necessary. Janitorial service shall include ordinary dusting and cleaning and
vacuuming of carpet or rugs. Shampooing of carpets or rugs, moving of furniture,
or other special services shall not be included. Tenant shall not cause any
unnecessary labor expense by reason of carelessness or indifference in the
preservation of good order and cleanliness. Landlord will exercise reasonable
care and discretion in selecting janitorial services; however, Landlord shall
not be responsible for any damage done to the effects of any Tenant by the
janitor or any other person. Tenant shall ensure that the doors of the Leased
Premises are closed and securely locked before leaving the Building.
LOCKS
6. The Tenant shall not alter any lock nor install any new lock nor
any additional locks or bolts on any door of the Leased Premises without the
prior written consent of Landlord. If the Landlord gives its consent, the Tenant
shall furnish the Landlord with two (2) keys for any such lock. Upon termination
of tenancy, Tenant must return to the Landlord all keys to offices, Leased
Premises and Building and in the event of loss of such keys, Tenant shall pay to
Landlord the cost of replacing same or changing the lock or locks opened by such
lost key. If Landlord deems it necessary to make such changes when Tenant takes
occupancy of the Leased Premises two (2) suite keys per lock will be furnished
by Landlord; all additional keys will be requested from Landlord in writing and
will be provided at Tenant's expense.
(Page 1 of 3)
<PAGE> 39
BUILDING HOURS
7. On Sundays, holidays and between the hours of 6:00 p.m. and 7:00
a.m., access to the Building or halls, corridors or stairways may be refused
unless the person seeking access is known to the person or employee in charge of
the Building, or is otherwise properly identified. Landlord reserves the right
to maintain a register requiring persons to sign same when requesting admittance
after normal working hours. Landlord shall in no event be liable for damages for
any error with regard to the admission to or exclusion from the building of any
person seeking admittance.
LIGHT AND PASSAGEWAYS
8. Doors, skylights and windows which reflect or admit light and air
into the corridors and passageways or to any place in the Building shall not be
obstructed or covered by Tenant.
UTILITIES
9. The water closets, lavatories and other fixtures shall not be used
for any purpose other than that for which they were designed and no foreign
substance of any kind whatsoever shall be thrown therein. All damage resulting
from any misuse of the utilities or fixtures shall be at the expense of the
Tenant, his employees or visitors who cause same. Tenant shall not waste water
or other utility services and shall observe strict care and caution that all
water faucets, light and/or other apparatus are entirely shut off before Tenant
or Tenant's employees leave the Building.
PARKING
10. (a) All vehicles will be parked within designated areas; blocking
of walkways, loading areas, entrances or driveways shall not be permitted.
Tenant hereby agrees to comply with such parking rules and regulations as
Landlord may establish.
(b) Landlord reserves the right to remove motor vehicles which are
in violation of the parking rules and regulations of Landlord. In the event the
vehicle belongs to Tenant or Tenant's directors, officers, employees, agents
invitees, or guests. Tenant shall defend and hold harmless Landlord, and/or
Landlord's agents from any and all actions which might arise as a result of the
motor vehicle's removal.
EXCESS TRASH DISPOSAL
11. It will be Tenant's responsibility to dispose of excess trash such
as crates, boxes, etc. which will not fit into office wastebaskets and all trash
resulting from Tenant's moving in and out of the Leased Premises. Tenant will
not set such items in the hallways or other areas of the Building, unless
permission is obtained from Landlord or special arrangements are made for such
disposal. If arrangements have been made with Landlord, or if Tenant does not
abide by the terms and conditions of this paragraph, Landlord will, at Tenant's
cost, dispose of any and all trash, waste, and debris and will invoice Tenant
for payment on demand.
HAND TRUCKS
12. Hand trucks or carts used in the delivery of furniture, merchandise
or equipment for any Tenant must be equipped with rubber tires and side guards.
CARPET AND/OR FLOOR DAMAGE
13. Tenant will be responsible for any damage or the correcting of any
damage to carpeting and/or flooring as a result of rust, or mildew or water from
plants, or casters or other objects. No floor coverings shall be affixed to the
floor of the Leased Premises in any manner except by a material which may easily
be removed with water, the use of cement or other similar adhesive material
being expressly prohibited. The affixing, and/or method of affixing any such
covering shall be subject to written approval of Landlord. The expense of
repairing any damage from a violation of this rule shall be borne by Tenant.
CARTAGE
14. Landlord shall have the right to approve Tenant's moving, furniture
delivery, equipment delivery, or freight forwarding company (hereinafter
referred to as cartage agent) and/or require a reasonable deposit to cover any
damage to the real property or to Landlord's personal property. Landlord
(Page 2 of 3)
<PAGE> 40
shall require any cartage agent of Tenant to maintain liability insurance in the
minimum amount of $500,000.00, workman's compensation insurance, and property
damage insurance in the minimum amount of $100,000.00. Prior to the move, Tenant
shall require the cartage agent to make available to Landlord a representative
to coordinate activities and familiarize himself with the building rules, and,
following the move, to inspect the Leased Premises and/or the Building for
damages. Landlord shall have the right to limit the hours in which Tenant may
either move in or out of the Building or Leased Premises. Additionally, Landlord
shall have the right from time to time to make rules and regulations governing
the protection of the real property and Landlord's personal property from damage
as a result of the cartage agent's activities. Notwithstanding anything to the
contrary contained herein, Tenant shall remain responsible for cartage agent's
actions or failure to act while in or about the Leased Premises and Building.
MISCELLANEOUS
15. (a) Where elevator service is available, Landlord shall not be
liable for any damage resulting from stoppage or delays in connection with such
service.
(b) Tenant shall not bring into the Building any bicycles or
similar vehicle.
(c) No dogs or other animals are permitted in the Building.
(d) Canvassing soliciting and peddling in the Building are
prohibited, and each Tenant shall cooperate to prevent same.
(e) Tenant shall not sweep or throw or permit to be swept or
thrown from the Leased Premises into the corridors or stairways or elevators of
the Building any dirt or debris or other substance; nor shall any Tenant use,
keep or permit to be used any foul or noxious gas or substance in the Leased
Premises which is or could be offensive or objectionable to the Landlord or
other occupants of the Building by reason of odors, noise and/or vibrations.
(f) All contractors and/or technicians performing work for Tenant
within the Leased Premises or Building must be approved prior to commencing any
work therein.
(g) The Landlord reserves the right to make modifications hereto
and add or delete such other rules and regulations as in its judgment may be
required for the safety, care and cleanliness of the Leased Premises and
Building. Tenant agrees to abide by all such rules and regulations.
(h) Tenant shall notify Landlord in advance of proposed dates of
occupancy, vacation, or moving of furniture or equipment into or out of the
Building or Leased Premises.
(i) Tenant will be solely responsible for abuse or harm to any
plants provided by Landlord within the Leased Premises, Building lobby, or
corridors; and will not permit his employees, agents, or invitees to water,
prune, trim or disturb the plants in any manner whatsoever.
(j) Tenant will be required to furnish plastic desk mats for chairs
and other furniture to protect the carpet and other floor coverings.
(Page 3 of 3)
<PAGE> 41
EXHIBIT "D"
SIGNAGE
<PAGE> 42
EXHIBIT "F"
LIST OF HOLIDAYS
NEW YEAR'S DAY
MEMORIAL DAY
INDEPENDENCE DAY
LABOR DAY
THANKSGIVING DAY
CHRISTMAS DAY
<PAGE> 43
EXHIBIT "E"
LIST OF GOVERNMENT CONTRACTS
FOR CANCELLATION
<PAGE> 44
FLOOR PLAN
GEMINI AVENUE
<PAGE> 45
FLOOR PLAN
GEMINI AVENUE
<PAGE> 46
LEASE CONTRACT, AMENDMENT ONE
[BARRIOS TECHNOLOGY LETTERHEAD]
October 9, 1992
Peter Mehlert
President
Sumar Enterprises
15720 JFK Boulevard, Suite 320
Houston, Texas 77032
Subject: Lease Contract Between Aetna Life Insurance Company
and Barrios Technology, Inc.
In accordance with the subject Lease Contract, Exhibit C, Section 4,
Barrios Technology, Inc. (BTI) hereby provides written notification for
the cancellation of the lease of space on the Second Floor at 1331
Gemini. This notice shall be effective November 1, 1992 and leased space
shall be terminated April 30, 1993. All BTI personnel shall be moved off
the second floor by April 30, 1993.
Any questions regarding the termination of this leased space should be
directed to Wes Brown at 280-1851 on or before October 23, 1992.
Sincerely,
/s/ Wesly O. Brown
------------------------
Wes Brown
Facilities Manager
concurrence: /s/ SANDRA G. JOHNSON
---------------------
Sandra G. Johnson
Vice President of Operations
<PAGE> 47
EXHIBIT "C"
ADDENDUM TO LEASE
1. ADDITIONS TO LEASED PREMISES. As part of the Leased Premises described in
this Lease, Tenant agrees to lease two (2) additional areas, not previously
Leased by Tenant, in "As Is" condition on the first (1st) floor
encompassing approximately Two Thousand Four Hundred Sixty-five (2,465)
square feet of Rentable Area as per Exhibit "A-4" attached hereto. Tenant
shall pay monthly rent on these two (2) additional areas at the rate of
$5.50 per square foot of Rentable Area per year through November 30, 1991.
Commencing December 1, 1991, base rent on these two (2) additional areas
shall increase to $13.50 per square foot of Rentable Area per year with a
an expense stop equal to Estimated Basic Cost as set forth in Paragraph
13.A of the Lease. Landlord agrees to provide an allowance of up to $3.00
per usable square foot times the number of usable square feet within these
two (2) additional areas for tenant improvements made by Tenant in
accordance with plans and specifications agreed upon by Landlord and Tenant
and attached to this Lease. The allowance is payable on December 1, 1991,
based on copies of paid invoices furnished by Tenant to Landlord evidencing
costs of improvements in these two (2) additional areas.
2. TENANT IMPROVEMENTS; ACCEPTANCE OF PREMISES. Tenant agrees to accept the
Leased Premises in "As Is" condition. All improvements to the Leased
Premises will be done by Tenant, at Tenant's sole cost and expense, and in
accordance with the plans and specifications agreed upon by Landlord and
Tenant and attached to this lease, with the exception that Landlord will
provide Tenant with the following, at Landlord's cost:
(a) Recarpet the third (3rd) floor lobby and all executive offices with
building standard carpeting.
(b) Repaint and/or touch up of paint in areas agreed to by Landlord and
Tenant after an inspection tour made prior to execution of this Lease.
(c) Clean carpet in high traffic areas agreed to by landlord and Tenant.
(d) Installation of four (4) additional light fixtures in third (3rd)
floor lobby.
Tenant agrees, with respect to tenant improvements made under Paragraphs 1
and 2 of the Addendum, that all such improvements shall be made in a good
and workmanlike manner, with comparable materials to those presently used
on the Leased Premises, Tenant shall pay all costs in a timely manner to
prevent the imposition of any liens for labor or materials furnished or, if
a lien is filed, Tenant shall immediately bond same.
3. TENANT ELECTRICITY. Landlord shall install at Landlord's sole cost and
expense a separate meter in the designated HVAC area(s) of the Leased
Premises, shown on plans and specifications, dated , where
separate HVAC units have been installed. The cost of electricity for
operation of these units during the term of the Lease shall be at Tenant's
sole cost and paid as additional rental pursuant to the terms and
provisions of this Lease upon receipt of invoices from Landlord. In
addition, Tenant shall
Landlord's Initial ___
Tenant's Initial ___
ADDENDUM TO LEASE - Page 1
<PAGE> 48
be given an annual credit of $9,000.00 toward the electrical, operating
costs of these units, such credit to be applied as charges for electrical
operating costs of these units are billed to Tenant.
4. CANCELLATION. After the completion of one (1) full calendar year of
occupancy from the Commencement Date and if the Tenant is not then in
default, Tenant shall have the right to cancel this Lease as to any portion
of the Leased Premises on the first (1st) and second (2nd) floors with six
(6) months prior written notice to Landlord. Notwithstanding anything to
the contrary, throughout the term of this Lease, Tenant shall remain liable
for rent and charges for the entire third (3rd) Floor.
5. SIGNAGE. Landlord reserves the right to change the exterior monument sign
subject to the final approval of the Tenant, such approval not to be
unreasonably withheld, and master plan developer. So long as Tenant
occupies the largest Rentable Area of any tenant in the Building, Tenant
shall be permitted to largest signage area on the monument sign.
6. BROKERS. Tenant represents and warrants to Landlord that neither it nor its
officers or agents nor anyone acting on its behalf has dealt with any real
estate broker other than Zann Commercial Brokerage, Inc., as Landlord's
agent, and Alliance Commercial, Inc., as Tenant's agent, for the primary
term of this Lease in the negotiating or making of this Lease, and Tenant
agrees to indemnify and hold Landlord harmless from any claim or claims, as
well as costs and expenses including attorneys' fees incurred by Landlord
in conjunction with any such claim or claims, of Zann Commercial Brokerage,
Inc. and Alliance Commercial, Inc. or any broker or brokers claiming to
have interested Tenant in the Building or Premises or claiming to have
caused Tenant to enter into this Lease.
7. LANDLORD'S LIABILITY. Notwithstanding anything in this Lease to the
contrary, covenants, undertakings and agreements herein made on the part of
Landlord are made and intended not for the purpose of binding Landlord
personally or the assets of Landlord but are made and intended to bind only
the Landlord's interest in the Leased Premises and Building, as the same
may, from time to time, be encumbered and no personal liability shall at
any time be asserted or enforceable against Landlord or its stockholders,
officers or partners or their respective heirs, legal representatives,
successors and assigns on account of the Lease or on account of any
covenant, undertaking or agreement of Landlord in this Lease contained.
8. AUTHORITY OF TENANT. If Tenant is a corporation, each individual executing
this Lease on behalf of said corporation represents and warrants that he
is duly authorized to execute and deliver this Lease on behalf of said
corporation, and that this Lease is binding upon said corporation.
9. NO ACCORD OR SATISFACTION. No payment by Tenant or receipt by Landlord of a
lesser amount than the monthly rent and other sums due hereunder shall be
deemed to be other than on account of the earliest rent or other sums due,
nor shall any endorsement or statement on any check or accompanying any
check or payment be deemed an accord and satisfaction; and Landlord may
accept such check or payment without prejudice to Landlord's right to
recover the balance of such rent or other sums or pursue any other remedy
provided in this Lease.
Landlord's Initial ___
Tenant's Initial ___
ADDENDUM TO LEASE - Page 2
<PAGE> 49
SECOND AMENDMENT TO LEASE AGREEMENT
THIS SECOND AMENDMENT TO LEASE AGREEMENT (this "First Amendment") is
made and entered into this 7 day of February, 1994, by and between AETNA LIFE
INSURANCE COMPANY, a Connecticut corporation (hereinafter "Landlord") and
BARRIOS TECHNOLOGY, INC., a Texas corporation (hereinafter "Tenant").
WITNESSETH
WHEREAS, by that certain Lease Contract dated August 21, 1991 (as
amended, the "Lease") Landlord leased to Tenant approximately 32,560 square feet
of Rentable Area of office space located on floors 1-3 (the "Leased Premises")
of the building known as Gemini Development Office Building located at 1331
Gemini Street in Clear Lake City, Harris County, Texas (the "Building"), all as
is more fully described in the Lease; and
WHEREAS, pursuant to the Lease Landlord and Tenant subsequently
reduced the Leased Premises by an aggregate amount of approximately 7,144 square
feet of Rentable Area; and
WHEREAS, Landlord and Tenant entered into that certain letter
agreement dated October 7, 1993 and agreed and accepted on December 1, 1993 (the
"First Amendment") amending the Lease to provide, among other provisions, for
the reduction of the Leased Premises by approximately 3,330 square feet of
Rentable Area; and
WHEREAS, Landlord and Tenant desire to further amend the Lease by
reducing the Leased Premises and to extend the term of the Lease under the terms
and conditions as set forth below:
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, Ten Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant
agree to amend, and do hereby amend, the Lease as follows:
1. Relinquishment of First Floor Premises. So long as Tenant is not
in default under this Lease, effective March 1, 1994, (the "First Floor
Relinquishment Date") Landlord hereby takes back from Tenant and Tenant does
hereby relinquish to Landlord 2,674 square feet of Rentable Area on the first
floor of the Building, as shown cross-hatched on the floor plan attached as
Exhibit A hereto and made a part hereof for all purposes (the "First Floor
Relinquishment Premises"). From and after the First Floor Relinquishment Date
all of Tenant's rights, privileges, duties and obligations accruing with respect
to the First Floor Relinquishment Premises, including, without limitation,
Tenant's right to possession and use thereof, shall terminate, except that
Tenant shall be liable for all Base Rental and other sums due and owing from
Tenant to Landlord (including, without limitation, all amounts accruing pursuant
to Paragraph 13 of the Lease) with respect to such space accruing to the First
Floor Relinquishment Date. Landlord and Tenant hereby agree that from and after
the First Floor Relinquishment Date, the definition of "Leased
<PAGE> 50
Premises" set forth in Paragraph 1 of the Lease shall be stipulated to mean
19,412 square feet of Rentable Area located on the third (3rd) floor of the
Building. Accordingly, Tenant's "Basic Cost" and "Estimated Basic Cost"
components of Base Rental calculated pursuant to Paragraph 13.B. of the Lease
shall be proportionately reduced from and after the First Floor Relinquishment
Date.
2. Partial Relinquishment of Third Floor Premises. So long as Tenant
is not in default under this Lease either at the time of exercise or at the time
of termination, effective November 30, 1994 (the "Sublease Premises
Relinquishment Date") Landlord hereby agrees to take back from Tenant and Tenant
does hereby agree to relinquish to Landlord 1,711 square feet of Rentable Area
on the third floor of the Leased Premises as shown cross-hatched on the floor
plan attached as Exhibit B hereto and made a part hereof for all purposes (the
"Sublease Relinquishment Premises"). From and after the Sublease Premises
Relinquishment Date all of Tenant's rights, privileges, duties and obligations
accruing with respect to the Sublease Relinquishment Premises, including,
without limitation, Tenant's right to possession and use thereof, shall
terminate, except that Tenant shall be liable for all Base Rental and other sums
due and owing from Tenant to Landlord (including, without limitation, all
amounts accruing pursuant to Paragraph 13 of the Lease) with respect to such
space accruing to the Sublease Premises Relinquishment Date. Landlord and
Tenant hereby agree that from and after the Sublease Premises Relinquishment
Date, the definition of "Leased Premises" set forth in Paragraph 1 of 5 the
Lease shall be stipulated to mean 17,701 square feet of Rentable Area located on
the third (3rd) floor of the Building. Accordingly, Tenant's "Basic Cost" and
"Estimated Basic Cost" components of Base Rental calculated pursuant to
Paragraph 13.B. of the Lease shall be proportionately reduced from and after the
Sublease Premises Relinquishment Date.
3. Condition of Premises. Tenant shall vacate the First Floor
Relinquishment Premises and the Sublease Relinquishment Premises no later than
the dates specified in Sections 1 and 2 above. Tenant shall leave those portions
of the Leased Premises in a clean and orderly condition in accordance with
Paragraph 6.B. of the Lease.
4. Renewal Term. Subject to and upon the terms, provisions and
conditions set forth herein and in the Lease, or in any exhibit hereto or to the
Lease, the term of the Lease as to the remaining portion of the Leased Premises
shall be extended for a period of four (4) years commencing on March 1, 1994 and
expiring on February 28, 1998 (the "Termination Date").
5. Rent. Base Rental payable by Tenant during the renewal term shall
be determined according to the following schedule:
<TABLE>
<CAPTION>
Lease Year Base Rental Rate
- ---------- ----------------
<S> <C>
1-2 $11.50 per square foot of Rentable Area within the Leased Premises
3 $12.00 per square foot of Rentable Area within the Leased Premises
4 $12.50 per square foot of Rentable Area within the Leased Premises
</TABLE>
In addition, Tenant agrees to pay all additional rental with respect to the
Leased Premises in accordance with Paragraph 13.B. of the Lease. Tenant's "Basic
Cost" and "Estimated Basic Cost" components of Base Rental as calculated
pursuant to Section
-2-
<PAGE> 51
13.B. of the Lease during the renewal term shall be determined based on the
Basic Cost for the calendar year 1994. Tenant agrees to pay all other sums
payable to Landlord by Tenant with respect to the Leased Premises on the terms
and conditions provided for in the Lease.
6. Leased Premises Improvements; Moving Expenses. Tenant
acknowledges that (i) no representations as to the repair of the Leased Premises
or the Building, nor promises to alter, remodel or improve the Leased Premises
or the Building have been made by Landlord in connection with the renewal term
and (ii) the Leased Premises shall be delivered to Tenant on March 1, 1994 in
its current condition, i.e., "AS IS" and "WITH ALL FAULTS". Tenant shall be
responsible for all expenses or costs incurred by Tenant in connection with (i)
Tenant's relinquishment of the First Floor Relinquishment Premises and
relocation to the third (3rd) floor portion of the Leased Premises and (ii)
Tenant's remodeling of the third (3rd) floor portion of the Leased Premises in
accordance with the specifications attached hereto as EXHIBIT C.
7. Exhibits. The third page of Exhibit A-1 and Exhibit A-2, Exhibit
A-3 and Exhibit A-4 to Lease are hereby deleted in their entirety. In addition,
paragraphs 1, 2, 4, 6, 12 and 13 of Exhibit C to the Lease are hereby deleted.
8. Parking. Landlord will provide parking to Tenant during the
renewal term in accordance with Paragraph 22.A. of the Lease at no cost to
Tenant.
9. Landlord Services. Landlord will provide to Tenant those services
described in Paragraph 5 of the Lease during the renewal term. Air conditioning
and heating will be provided during normal business hours of the Building which
are currently 7:00 a.m. to 6:00 p.m., Monday through Friday and 8:00 a.m. to
1:00 p.m. on Saturday. After hours air conditioning will be made available to
Tenant in accordance with the terms of the Lease at the rate then charged by
Landlord from time to time which is currently $25.00 per hour.
10. Brokerage Commissions. Tenant hereby represents and warrants to
Landlord that Tenant has not employed any agents, brokers or other such parties
in connection with this Second Amendment, and agrees that Tenant shall hold
Landlord harmless from and against any and all claims of agents, brokers, or
other such parties claiming by or through Tenant.
11. Miscellaneous.
(a) Amendment to Lease. Tenant and Landlord acknowledge and agree
that the Lease has not been amended or modified in any respect, other
than by the First Amendment and this Second Amendment, and there are
no agreements of any kind currently in force and effect between
Landlord and Tenant with respect to the Leased Premises or the
Building.
(b) Counterparts. This Second Amendment may be executed in
multiple counterparts, and each counterpart when fully executed and
delivered shall constitute an original instrument, and all such
multiple counterparts shall constitute but one and the same
instrument.
-3-
<PAGE> 52
(c) Entire Agreement. This Second Amendment sets forth all
covenants, agreements and understandings between Landlord and Tenant
with respect to the subject matter hereof and there are no other
covenants, conditions or understandings, either written or oral,
between the parties hereto except as set forth in this Second
Amendment.
(d) Lease Governs. Except as expressly provided herein, the
Leased Premises shall be governed by the same terms and conditions as
the Lease.
(e) Full Force and Effect. Except as expressly amended hereby,
all other items and provisions of the Lease remain unchanged and
continue to be in full force and effect.
(f) Conflicts. The terms of this Second Amendment shall control
over any conflicts between the terms of the Lease and the terms of
this Second Amendment.
(g) Authority of Tenant. Tenant warrants and represents to
Landlord that (i) Tenant is a duly organized and existing legal
entity, in good standing in the State of Texas, (ii) Tenant has full
right and authority to execute, deliver and perform this Second
Amendment; (iii) the persons executing this Second Amendment were
authorized to do so and (iv) upon request of Landlord, such persons
will deliver to Landlord satisfactory evidence of their authority to
execute this Second Amendment on behalf of Tenant.
(h) Capitalized Terms. Capitalized terms not defined herein shall
have the same meanings attached to such terms under the Lease.
(i) Successors and Assigns. This Second Amendment shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
Executed as of the first day written above.
LANDLORD
AETNA LIFE INSURANCE COMPANY
By: /s/ Janice Y. Ewell
---------------------------------
Name: Janice Y. Ewell
Title: Director
TENANT
BARRIOS TECHNOLOGY, INC.
By: /s/ Dale Pittman
---------------------------------
Name: Dale Pittman
Title: Contracts Manager
-4-
<PAGE> 53
Exhibit A
01 FIRST FLOOR PLAN
[MAP]
FIRST FLOOR PLAN
AS BUILTS
1331 GEMINI
CLEAR LAKE CITY, TEXAS
[AINSLIE ARCHITECTS LOGO]
<PAGE> 54
Exhibit B
01 THIRD FLOOR PLAN
[MAP]
THIRD FLOOR PLAN
AS BUILTS
1331 GEMINI
CLEAR LAKE CITY, TEXAS
[AINSLIE ARCHITECTS LOGO]
<PAGE> 55
Exhibit C
[J&P CONSTRUCTION LOGO] Inquiry No.______________________
General Contractors Date 1-10-94
P.O. Box 122 Terms Net 30
Manvel, Texas 77578 Prices quoted are
(713) 431-9263 F.O.B.___________________________
Delivery_________________________
To Barrios Technology
Attn.: Mark and or Martha
Rubloff Assett Management Company
Attn.: Jim Painter or Lynda Salisbury
3rd floor Remodel for Barrios
1331 Gemini
We are pleased to quote as follows. Your Inquiry
================================================================================
Quantity Description Price Amount
- --------------------------------------------------------------------------------
Electrical:
(31) 2X4 Lights relocate (2) switches
( 5) 2X4 Lights rewire (4) 3 way switches
( 3) ded plugs kitchen area
( 9) Power poles relocate FBO
( 3) New power poles
(12) 120 Volt circuits
( 1) Sub Panel
Misc. Demo and rewire 5,229.00
No Certification of existing 2X4 Lights is in
the electrical bid
HVAC:
Relocate existing diffusers as required
New lay out and use existing grills, slots and
balance 748.00
Plumbing:
Add new bar sink 19"X22" sink stainless steel
(1) 6 gallon water heater
Coffee maker: lines for rough in and floor coring
for waste after Hours 3,245.00
Demo walls 192 lF. 1,216.00
New walls 192 lF. 3,645.00
12 lF. furr wall for plumbing 176.00
Patch sheet rock 346.00
(1) case opening 144.00
Ceiling tile patch 680.00
Grid repair 192.00
Relocate (6) doors 540.00
(6) Lever sets for ADA Compliance 966.00
Uppers and lower cabinets 1,725.00
Raco window Mullion (2) 108.00
Patch carpet building or tenant to supply carpet 460.00
================================================================================
Bid continued on page -2-
By _________Gary Hudson
<PAGE> 56
[J&P CONSTRUCTION LOGO] Inquiry No.______________________
General Contractors Date 1-10-94
P.O. Box 122 Terms Net 30
Manvel, Texas 77578 Prices quoted are
(713) 431-9263 F.O.B.___________________________
Delivery_________________________
To Barrios Technology
attn.: Mr. Wess or Martha
Rubloff
attn.: Jim Painter or Lynda Salisbury Page -2-
We are pleased to quote as follows. Your Inquiry
================================================================================
Quantity Description Price Amount
- --------------------------------------------------------------------------------
Bid continued:
New base at new walls only and construction
related areas 397 LF. 389.00
Paint new walls and construction related areas
5,820 Sq. Ft. 1,397.00
Permits - drawings to obtain permits by others 250.00
Clean up construction area 3,054 Sq. Ft. 760.00
--------
Cost $22,216.00
Tax 1,832.82
----------
Total $24,048.82
Work is based on regular business hours no overtime
no weekend work is included
All furniture to be moved by others not included
Price god for 30 days
Thanks J&P
================================================================================
By Gary Hudson
------------------------------
<PAGE> 57
[CAPITAL DEVELOPMENT LETTERHEAD]
January 6, 1995
Mr. Dale Pittman
Barrios Technology, Inc.
1331 Gemini, Suite 300
Houston, TX 77058-2799
Dear Dale:
As per our conversation, I have agreed to adjust the net rentable square
footage of your premises to include a 15% common area factor as opposed to a
20% factor used in your present lease. Therefore, effective January 1, 1995,
the net rentable square footage is 17,354 (14,751/.85). In this respect, the
new monthly rent is $16,630.92.
I hope everything is to your satisfaction.
Very truly yours,
/s/ Gordon Margolese
- ----------------------
Gordon Margolese
Vice President
GM:sb
<PAGE> 1
EXHIBIT 10.52
DEPARTMENT OF THE AIR FORCE
Headquarters Air Force Space Command
Vandenberg Air Force Base
LEASE NO. SPCVAN-2-94-0001
THIS LEASE, made between the Secretary of the Air Force, of the first part, and
Astrotech Space Operations, L.P. of the second part, WITNESSETH:
The secretary of the Air Force under the authority of Title 10, United States
Code, Section 2667 (10 U.S.C. 2667) has determined that the land and facilities
hereby leased is not excess property, as defined by 40 U.S.C. 472; is not for
the time needed for public use; and leasing it will be advantageous to the
United States and in the public interest. This lease is also entered into in
furtherance of the purposes of the Commercial Space Launch Act of 1984 (PL
98-575) and the Commercial Space Launch Act Amendments of 1988 (PL 100-657).
Therefore, for the consideration set out below and by means of this Lease
Agreement, the Air Force leases the land and facilities or property, described
in Attachment A, attached hereto and made a part hereof, to the party of the
second part, called the "lessee".
THIS LEASE is granted subject to the following conditions:
1. Term. This lease shall be for a term of 20 years, beginning on 1 October
1993 and ending on 30 September 2013.
2. Use of Leased_Premises. The lease shall be for the use of land and
facilities located at Vandenberg Air Force Base (VAFB), CA, upon which lessee
shall build facilities or refurbish existing government facilities, in support
of government and commercial launches.
3. Commercialization Agreement. The Department of the Air Force/Astrotech Space
Operations Commercialization Agreement, including Annex B for Astrotech Space
Operations, L.P. Programs between the 30th Space Wing and Astrotcch Space
Operations, L.P. (hereafter "Commercialization Agreement") is hereby
incorporated into this Lease Agreement as Attachment B. Each time the
Commercializatlon Agreement is revised, it shall supersede its predecessor and
be incorporated into this Lease Agreement. In the event of any inconsistency
between the provisions of the Lease Agreement and the Commercialization
Agreement, the terms of the Lease Agreement shall take precedence. Other
supporting documents such as Joint Operating Procedures (JOPs), if entered
into, will be subordinate to both of the above documents.
4. Consideration.
(a) In consideration for the lease of these premises, the lessee shall
perform all maintenance, protection, repair, or restoration of the premises,
and any improvements now or to be constructed on them; and pay an annual
rental of $35, 000, payable in the amount of $8,750 quarterly in advance on 1
October, 1 January, 1 April and 1 July of each year. Payments shall be made
payable to the Treasurer of the United States and forwarded by the lessee
direct to Accounting and Finance, Commercial Services, DAO-DE Vandenberg/FS,
1031 California Suite A 216, Vandenberg Air Force Base, California
93437-6011, DSH 276-4964.
<PAGE> 2
(b) Lessee shall pay to the United States on demand any sum which may have
to be expended after the expiration, revocation, or termination of this lease in
restoring the premises to the condition required by Condition 19.
5. Government Representatives and Their Successors. Except otherwise
specifically provided, any reference herein to "Commander, 30SPW" or "said
officer" shall mean the Commander, 30th Space Wing, or his duly appointed
successors and his authorized representatives.
6. Extension of Lease. Subject lease may be extended with agreement of both
parties. So long as Lessee satisfactorily complies with the terms and
conditions of this Lease Agreement, Lessee shall be given the opportunity for
such extension(s). Agreements to renew subject lease will not exceed a term
of five years per renewal agreement. In order to support Lessee's commercial
requirement to contractually commit up to three (3) years in advance to
provide services to its customers utilizing the property that is the subject
of this lease, extension of subject lease shall permitted up to three (3)
years prior to expiration date of subject lease or subsequent extension.
7. Revocation or Termination by the Government
(a) This lease may be revoked by the Deputy Assistant Secretary of the
Air Force (Installations) or higher authority at any time upon the failure of
the lessee to comply with the terms of this lease. Prior to the revocation,
the lessee must be informed, in writing, by the said officer of the terms
with which the lessee is not complying and afforded a sixty (60) day period
to return to compliance with the provisions of the lease. If the lessee does
not return to compliance within the time allotted, the lessee shall vacate
the premises within 90 days thereafter. Lessee shall be liable for additional
rental costs for this 90-day period and for any costs incurred by the United
States in removing lessee from said premises and restoring the premises to
the condition that existed on the date this lease was executed.
(b) The lease may be terminated by the Deputy Assistant Secretary of the
Air Force (Installations) or higher authority in the event of a national
emergency declared by Congress or the President, declared or undeclared war
involving the United States, or if the Deputy Assistant Secretary determines
that the paramount interest of rational defense requires it. If the lease Is
terminated by the Government without fault of the lessee, the lessee may
request the Government pay the unamortized depreciation of any improvements
which have been made to the premises by the lessee. The Government will act
in good faith to seek appropriated funds for such purpose, and if authorized
by appropriate Government officials, negotiate fair and reasonable
compensation for any such unamortized depreciation.
<PAGE> 3
8. Termination by Lesee. This lease may be terminated by the lessee at
any time by giving the said officer at least sixty (60) days notice in
writing. No money or other consideration paid or due to the Government
up to the date of termination shall be refunded.
9. Assignment. The lessee shall not:
(a) transfer or assign this leave or any property on the leased
premises, except to a corporate affiliate or to a successor entity which is
involved in space exploration and development activities substantially similar
to those of Astrotech at Vandenberg AFB, without permission in writing from
said of f icer;
( b ) sublet any part of the premises or property on it without
permission in writing from said officer; or
(c) grant any other form of interest, privilege, or license in
connection with this lease without permission in writing from the said officer.
<PAGE> 4
10. Condition of Premises. The lessee has inspected and knows the condition
of the leased property. It is understood that it is leased without any
representation or warranty by the Government concerning its condition, and
without obligation on the part of the Government to make any alterations,
repairs, or additions.
11. Maintenance of Property. Subject to the limitations of Condition 19
hereof with respect to the restoration of the property, all portions of the
leased property, including any existing improvements contained in the area
described in Attachment A or improvements built by lessee, shall be
maintained, protected, repaired, or restored to good order and condition by
and at the expense of the lessee.
12. Repair of Damage. Any property of the United States on the leased
premises or elsewhere which is damaged or destroyed by occurrences arising
out of the use of the leased premises shall be promptly repaired or replaced
by the lessee to the satisfaction of the said officer. In lieu or such repair
or replacement the lessee shall, if so required by the said officer, pay to
the United States money in an amount sufficient to compensate for the loss.
<PAGE> 5
13. Entry By Government. The United States, its officers, agents,
employees, and contractors may enter upon the leased premises at any
time, upon reasonable notice, for the purpose of inspection and
inventory of property of the United States and when otherwise deemed
necessary for the protection of the interests of the Government. The
lessee shall have no claim on account of such entries against the
Government or any officer, agent, employee, or contractor thereof
provided, however, that nothing in this lease shall affect the
Government's liability arising under the Federal Tort Claims Act, 28
U.S.C. 2671 et seq.
14. Liability and Indemnification.
(a) Lessee agrees to assume all risks of loss or damage to property and
injury or death to persons by reason of the activities conducted under
this lease, except for such loss or damage and injury or death which
results from the reckless disregard or willful misconduct of the
Government or its agents or as provided in Condition 13 hereof. Lessee
expressly waives all claims against the Government for any such loss,
damage, personal injury or death occurring as a consequence of the
conduct of activities or the performance of lessee's responsibilities
under this lease. Lessee further agrees to indemnify, save, hold
harmless, and defend the Government against all suits, claims or actions
of any sort resulting from, related to, or arising out of lessee's
activities conducted or services furnished in connection with this
lease.
(b) Lessee shall carry adequate liability and indemnity insurance acceptable
to Commander, 30th Space Wing, to protect the Government against claims
for bodily injury or death and for damage to property resulting from the
operations of the lessee under the terms of this lease. The Government
shall be a named insured under the policy, and the insurer shall have no
right of subrogation against the Government.
(c) The lessee shall procure and maintain, at its cost, a standard fire and
extended coverage insurance policy or policies on the leased property to
the full insurable value thereof. Such policy shall provide, as a
minimum, for prompt restoration of the property to its condition at the
date this lease is signed without cost to the Government. Coverage
providing for repairing or rebuilding lessee's improvements is optional
with the lessee.
(d) All terms and conditions regarding liability and indemnification set out
in the current Commercialization Agreement, as set forth in Attachment
B, or as modified by the parties, which are not in conflict with above
provisions, shall apply.
15. Compliance with Applicable Laws.
(a) Lessee will comply with the provisions of all applicable federal, state,
and local laws, regulations, and standards, and including those
provisions concerning the protection and enhancement of environmental
quality and pollution control and abatement.
(b) Lessee shall comply with all applicable laws, ordinances, and
regulations of the State of California and Santa Barbara County with
regard to construction, sanitation, licenses or permits to do business,
and all other matters.
<PAGE> 6
(c) This clause does not constitute a waiver of Federal Supremacy or
sovereign immunity. Only laws and regulations applicable to the
premises under the Constitution and statutes of the United States are
covered by this clause,
(d) The said officer and the Air Force do not, by reason of this lease,
assume the responsibility for enforcement of the foregoing statutes,
ordinances or regulations. Enforcement remains the sole responsibility
of the authorities duly constituted for the purpose of such enforcement.
16. Review and Approval of Construction Plans.
(a) All plans for construction, modification, or additions by lessee must be
approved in writing by the said officer or his delegate before the
commencement of any construction project. In addition, the designs for
all lessee connections to VAFB utilities will comply with DOD/USAF
construction standards and be subject to 30SPW review and approval.
DOD/USAF construction standards are available through the office of the
VAFB Base Civil Engineer.
(b) The Air Force review process for either a construction project or a
utility connection will be completed within 30 days of receipt of plans
and specifications. Approval will not be unreasonably withheld.
(c) All construction shall be in accordance with the approved designs and
plans and without cost to the Government. The lessee shall not proceed
with excavation or construction until it receives written authorization
from the said officer.
(d) All matters of ingress, egress, contractor haul routes, construction
activity and disposition of excavated material, in connection with the
lease herein granted, shall be coordinated with the said officer. A11
excavation and construction activity shall be accomplished during
periods (including hours of the day) acceptable to the said officer.
17. Utilities.
(a) If the Government agrees to provide them, specific arrangements for
utilities will be included in a separate Operating Agreement.
<PAGE> 7
(b) The lessee shall pay direct costs incurred by the United States in
producing and/or supplying any utilities.
18. Taxes.
(a) The lessee shall pay to the proper authority on a timely basis all
applicable taxes, assessments, and similar charges relating to the leased
premises or facilities or operations thereon which, at any time during the
term of this lease or any extensions, may be imposed on the lessee's interest
in the leased premises pursuant to 10 U.S.C. 2667(e).
(b) Should Congress enact a law making the Government's interest in the
leased premises taxable by state or local governments (i.e., waive sovereign
immunity to taxation), the lease shall be re negotiated to allocate the cost
of the tax.
19. Vacation of Premises.
(a) On or before the date of expiration of this lease, or its final
extension, or of its termination by the lessee, the lessee shall vacate the
premises, remove its property (including improvements and personal property)
and restore the premises to the condition that existed on the date this lease
was executed, except as the Government may exercise its rights under
Paragraph (c) below.
(b) If the lease is revoked under Paragraph 7(a) hereof, the lessee
shall vacate the premises, remove its property (including any improvements
and personal property}, and restore the premises to the condition described
in Paragraph 19(a) above within 90 days or such longer time as the said
officer may direct, except as the Government may exercise its rights under
Paragraph (c) below.
(c) The Government may, at its option, accept title to some or all of
the lessee's property or improvements in lieu of restoration. The Government
shall have a reasonable time, extending at least until the end of the next
annual session of Congress, to obtain any authorization by law that may be
needed to exercise the right to acquire such property or improvements.
(d) If the lessee fails to remove its property and restore the premises
by the required date, and the said officer declines to take title to the
property, the said officer may cause the property to be removed and the
premises restored at the expense of the lessee. No claim for damages against
the United States or its officers, agents, or contractors shall be created by
or made on account of such removal and restoration work.
20. Disputes.
(a) Except as otherwise provided in this lease, any dispute concerning a
question of fact arising under this lease which is not disposed of by
agreement shall be decided by the said officer. Said officer shall reduce the
decision to writing and mail or otherwise furnish a copy to the lessee. The
decision of the said officer shall be final and conclusive unless, within 30
days from the date of receipt of such copy, the lessee mails or otherwise
furnishes to the said officer a written appeal addressed to the Secretary of
the Air Force. The decision of the Secretary or his duly authorized
representative for the determination of such appeals shall be final and
conclusive unless determined by a court of competent jurisdiction to have
been fraudulent, or capricious, or arbitrary, or so grossly erroneous as
necessarily to imply bad faith, or not supported by substantial evidence.
In connection with any appeal proceeding under this condition, the lessee
shal1 be afforded an opportunity to be heard and to offer evidence in support
of its appeal. Pending final decision of a dispute hereunder, the lessee
shall proceed diligently with the performance of the lease in accordance with
the said officer's decision.
<PAGE> 8
(b) This clause does not preclude consideration of legal questions in
connection with decisions provided for in Paragraph (a) above, provided that
nothing in this clause shall be construed as making final the decision of any
administrative official, representative, or board on a question of law.
21. Rules and_Regulations. The use and occupation of the leased premises
shall be subject to the general supervision and approval or the said officer
and to such reasonable rules and regulations as may be prescribed by him or
her from time to time.
22. Notices. All notices to be given pursuant to this lease shall be
addressed, if to the lessee, to:
President
Astrotech Space Operations, L.P.
12510 Prosperity Drive, Suite 100
Silver Spring, MD 20904-1663
if to the
Government,
to:
Commander
30th Space Wing
747 Nebraska Ave., Suite 1
Vandenberg AFB, CA 93437-6261
or as may from time to time be directed by the parties. Notice shall be
deemed to have been duly given if and when enclosed in a properly sealed
envelope or wrapper, addressed as aforesaid, and personally delivered or sent
certified mail, return receipt requested.
23. General Provisions.
(a) The lessee warrants that no person or selling agency has been employed
or retained to solicit or secure this lease upon an agreement or
understanding for a commission, percentage, brokerage, or contingent
fee, excepting bona fide employees or bona fide established commercial
or selling agencies maintained by the lessee for the purpose of
securing business. For breach or violation of this warranty, the
Government shall have the right to annul this lease without liability
or in its discretion to require the lessee to pay, in addition to the
lease rental or consideration, the full amount of such commission,
percentage, brokerage, or contingent fee.
(b) No Member of or Delegate to Congress or Resident Commissioner shall be
admitted to any share or part of this lease or to any benefit to arise
therefrom. Nothing, however, herein contained shall be construed to
extend to any incorporated company, if the lease be for the general
benefit of such corporation or company.
(c) Facilities Nondiscrimination.
(1) As used in this paragraph, The term "facility" means lodgings, stores,
shops, restaurants, cafeterias, restrooms, and any other facility of a
public nature in any building covered by, or built on land covered by,
this lease.
(2) The lessee agrees not to discriminate by segregation or otherwise
against any person because of race, color, religion, sex, or nationa1
origin in furnishing, or refusing to furnish, to such person the use of
any facility, including ALL services, privileges, accommodations, and
activities provided on the premises. This does not require the
furnishing to the general public the use of any facility customarily
furnished by the lessee solely to tenants or to Air Force military and
civilian personnel, and the guests and invitees of any of them.
<PAGE> 9
24. Environmental Compliance and Cleanup.
(a) The lessee agrees that from the effective date of this lease and during
the lessee's use and/or possession of leased premises, including during
any extension period, the lessee shall be the operator of the leased
premises and shall operate in compliance with all applicable federal,
state, and local environmenta1 laws, statutes, ordinances, and
regulations in effect at any time during the period of this lease. The
lessee further agrees that during the lessee's use and/or possession of
the leased premises, including any extension period, the lessee shall
not treat, store, dispose of, discharge, or release emissions, waste,
effluent, hazardous substances, or contaminates in such a manner that
such actions will unlawfully pollute or contaminate air, ground
(including subsurface strata), water (including ground water), or
become a public nuisance. The total responsibility for ensuring
compliance with the aforementioned laws, statutes, ordinances, and
regulations shall be the lessee's alone. The lessee shall obtain and
maintain, pursuant to the aforementioned laws, statutes, ordinances,
and regulations, such permits, licenses, or other authorizing documents
as may be required for the lessee's use and/or possession, The lessee
shall sign such permits, licenses, or other authorizing documents as
operator of the leased promises.
(b) During the initial lease period, and any extension period, the total
responsibility shall be the lessee's alone for the treatment, storage,
disposal of emissions, waste, effluent, hazardous substances, or
contaminants and for cleaning up or correcting any environmental
pollution, contamination, and/or damage to the leased premises
occurring on or after the effective date of this lease and resulting
from the lessee's use and/or possession on or after the effective date
of this lease. This responsibility shall exist even if said emissions,
waste, effluent, hazardous substances, pollution, damage, or
contamination are not discovered until after the date this lease
expires or is terminated. Furthermore, the leasee's responsibility
shall continue even if said treatment, storage, disposal, cleanup, or
correction operations continue or are required to begin after the date
this lease expires or is terminated.
(c) The lessee agrees that it shall reimburse, indemnify, hold harmless,
and defend the Government against any and all claims (including
equitable claims and tort claims), lawsuits or enforcement actions
concerning, or resulting from, any actual or alleged noncompliance or
violation of any laws, statutes, ordinances, or regulations, or any
actual or alleged environmental pollution resulting from, but not
limited to, the treatment, storage, disposal, discharge or release by
the lessee of emissions, waste, effluent, hazardous substances or
contaminants on the leased premises. The lessee's indemnification of
the Government herein shall include all claims, lawsuits, or
enforcement actions brought by either private citizens (including, but
net limited to, individuals, corporations, businesses, etc.) or any
governmenta1 agency. The lessee's responsibility under this provision
shall continue even if such pollution is not discovered, or said
claims, lawsuits, or enforcement actions are not brought, until after
this lease expires or is terminated.
(d) This lease does not change the parties' respective rights, liabilities,
and responsibilities regarding environmental cleanup or compliance with
environmenta1 laws, statutes, ordinances, and regulations with respect
to actions that occurred prior to the effective date of this lease.
25. Reporting to Congress. This lease is not subject to 10 U.S.C
2662(a).
IN WITNESS WHEREOF, I have hereunto set my hand by authority of the
Secretary of the Air Force this _____day of _______________1993.
By:
Title:
THIS LEASE is also executed by the lessee this ____day of _______________ 1993.
By: RICHARD G. WOLF
Title: President, Astrotech Space Operations, L.P.
Signed and sealed in the presence of:
(1)
(2)
<PAGE> 10
ATTACHMENT A TO LEASE NO. SPCVAN-2-94-0001
DESCRIPTION OF LAND AND FACILITIES
LEASED
BY
DEPARTMENT OF THE AIR FORCE
TO
ASTROTECH SPACE OPERATIONS, L. P.
The land and facilities leased by the Department of the Air Force to
Astrotech Space Operations, L.P. under this Lease Agreement, as shown in
Figure 1-1, are comprised of:
(1) The approximately 59 acre deactivated magazine storage bunker site,
which is located along the southwest side of Tangair Road and accessed via
Red Road. VAFB is currently demolishing and removing, at Government expense,
all existing bunkers and buildings within the fenced area of this site.
Approximately one-half of this demolition and removal project has been
completed. The remainder of the project will be accomplished subsequent to
execution of this Lease Agreement without any expense to lessee. Subject to
the review and approval process set forth in Condition 16 of this Lease
Agreement, a first phase of construction by lessee is planned for a portion
of the area which has already been cleared.
(2) Building 1028, which is located on the southeast side of Red Road
immediately outside the fenced area described in Paragraph (1) above. Since
Building 1028 was scheduled to be demolished and removed as part of the VAFB
funded project described in Paragraph (1) above, upon the expiration or
termination of this Lease Agreement, lessee hereby agrees to demolish and
remove Building 1028 as part of restoration of the leased premises pursuant
to Condition 19 of this Lease Agreement.
<PAGE> 1
[THE MEDOWS CORPORATE PARK LOGO]
12510 PROSPERITY DRIVE
AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE (hereinafter referred to as "this Lease"),
made this 30th day of May, 1984 by and between RANDOLPH PARK ASSOCIATES II
LIMITED PARTNERSHIP and RANDOLH PARK ASSOCIATES, a Maryland limited partnership
having their principal offices in Montgomery County, State of Maryland
(hereinafter referred collectively to as "the Landlord"), and Astrotech Space
Operations, Inc. a wholly owned subsidiary of Astrotech International
Corporation organized and existing under the law of Delaware, having an address
at 4920 Niagara Road, College Park, MD (hereinafer referred to as "the
Tenant").
WITNESSETH, THAT FOR AND IN CONSIDERATION of the mutual entry into
this Lease by the parties hereto, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged by
each party hereto, the Landlord hereby leases to the Tenant, and Tenant hereby
leases from the Landlord, all of that real property, situated and lying in
Montgomery County, Maryland, which consists of the space (containing
approximately 3,057 square feet of Gross Rentable Floor Area, as hereinafter
defined shown outlined in red on a plat attached hereto as Exhibit A
(hereinafter referred to as "the Premises") and located in a building located
at 12510 Prosperity Drive (hereinafter referred to as "the Building") at The
Meadows Corporate Park in Silver Spring, Maryland on tract of land designated
as Lot numbered twenty-two (22) in the subdivision known as Montgomery
Industrial Park as per plat thereof recorded among the Land Records of
Montgomery County, Maryland, in Plat Book 122 at Plat 14335, and recorded among
the Land Records of the said County in Plat Book N.L.P. 99 at folio 33 (the
Premises, the remainder of the Building, such tract of land and any other
buildings or improvements thereon being hereinafter referred to collectively as
"the Property"). Gross Rentable Floor Area (GRFA) shall be defined to mean the
space to be occupied by Tenant as shown on Exhibit "A", plus a prorated share
of all areas of interior space in the building measured from the glass line of
the permanent outer walls.
SUBJECT TO THE OPERATION AND EFFECT, of any and all instruments and
matters of record or in fact.
UPON THE TERMS AND SUBJECT TO THE CONDITIONS which are hereinafter set
forth:
Section 1. Term. This Lease shall be for a term (hereinafter referred to as
"the Term") commencing on June 1, 1984 (hereinafter referred to as "the
commencement Date"), and terminating at 12:01 A.M. local time, on the Fifth
(5th) anniversary of the first (1st) day of the first (1st) full calendar month
during the Term (hereinafter referred to as "the Termination Date").
Section 2. Use.
2.1 The Tenant shall, continuously throughout the Term, occupy and use the
Premises for and only for general office purposes.
2.2 In its use of the Premises and the remainder of the Property, the
Tenant shall not violate any applicable law, ordinance or regulation
2.3 Except for the parking of automobiles in the ordinary course of
business, the Tenant shall not place or permit its agents or employees to place
any trash or other objects anywhere or within the Building or the rest of the
Property (other than within the Premises) without first becomes necessary to
designate parking spaces for Tenant. Landlord may do so upon giving written
notice thereof to Tenant with the designation of parking spaces to be assigned
to Tenant.
Section 3. Rent
3.1 Amount. As rent for the Premises (all of which is hereinafter referred
to collectively as "Rent"), the Tenant shall pay to the Landlord all of the
following.
3.1.1. Base Rent. An annual base rent of See Rider No. 1 Dollars
($ --- )(hereinafter referred to as "the Base Rent") for each Lease Year
during the term, in equal monthly installments of Rider #1 Dollars ($ --- )
each, plus (if the Term commences one day other than the first (1st) day of a
calendar month), for the initial Lease Year, a fraction of such sum, the
numerator of which shall be the number of days of such calendar month falling
within the Term, and the denominator of which shall be three hundred sixty-five
(365); and
3.1.2 Additional Rent. Additional rent (hereinafter referred to as
"Additional Rent") in the amount of any payment to be made by tenant to
landlord refereed to as such in any provision of this Lease which accrues while
this Lease is in effect.
3.1.3 Increase in Base Rent. Commencing on the first day of the
calendar year next succeeding the Commencement Date, Base Rent shall be
increased by
(1) A sum of money obtained by multiplying the Base Rent by a
fraction, the denominator of which shall be the CPI-U (as hereinunder defined)
for the second month preceding the Commencement Date, and the numerator of
which shall be the CPI-U for the second month preceding each calendar year,
then multiplying the product obtained by thirty percent (30%). The CPI-U shall
be defined as the Consumer Price Index for all urban consumers, all items
Washington, D.C., SMSA Base, 1967 =100, or (in the event the CPI_U ceases to
exist, then the parties shall agree upon a similar substitute. If the parties
cannot agree, then the matter shall be submitted to arbitration to determine
adjustment in rent.)
3.2 Annual Operating Costs
3.2.1 Definition. As used herein, the term "Annual Operating Costs"
shall mean the actual costs to the Landlord of operating and maintaining the
Property during each calendar year of the Term. Such costs shall include, by
ways of example rather than of limitation (a) real property, front-foot
benefit, Washington Suburban Sanitary Commission, other metropolitan district
and other similar taxes or assessments (whether regular or special) with
respect to any or all of the Property; (b) charges or fees for, and taxes on,
the furnishing of water, sewer service, gas, fuel, electricity, or other
utility services to the Property; (c) costs of elevator service and charges or
fees for the maintenance, repair and replacement of common areas and mechanical
and electrical systems of buildings and structural members of buildings such as
exterior walls, roof, and load-bearing walls and for grounds maintenance,
janitorial service and trash removal; (d) charges or fees for any necessary
governmental permits; (e) management fees, overhead and expenses; (f) premiums
for hazard, liability, workmen's' compensation or similar insurance upon the
Property or portions thereof: (g) costs arising under service contracts with
independent contractors; and (h) the cost of any other items which, under
generally accepted accounting principles consistently applied from year to year
with respect to the Property, constitute operating or maintenance costs
attributable to any or all of the Property.
3.2.2 Portion covered by Base Rent. Included in the Base Rent is an
amount equaling the product obtained by multiplying $4.15 times the number of
square feet of Gross Rentable Floor Area, which product represents the
Landlord's estimate on the date hereof of the cost to the Landlord for the
current calendar year for providing to or for the benefit of the Premises all
of the services or other items, the costs of which are included in the Annual
Operating Costs, excluding such services or other items as are to be provided
at the Tenant's expense under the provision of Section 7.
3.2.3 Computation. After the end of each calendar year during the
term, the Landlord shall compute the total of the annual Operating costs
incurred during such calendar year, and shall allocate such costs to the GRFA
within the Property by dividing such Annual Operating costs by the aggregate
square footage of all the GRFA with the Property, thereby deriving the cost of
such categories of services and items per square foot of such GRFA; provided,
that anything contained in the foregoing provision of this of the subsection
3.2 to the contrary notwithstanding, wherever the Tenant and/or any other
tenant of space within the Property has agreed in its lease or otherwise to
provide any item of such services partially or entirely at its own expense, or
wherever any such item of expense is not incurred, with
1
<PAGE> 2
respect to all of the GRFA within the Property, in allocating the Annual
Operating Costs pursuant to the foregoing provisions of this subsection
the Landlord shall make an appropriate adjustment, using generally accepted
accounting principles, as aforesaid, so as to avoid allocating to the Tenant or
to such other tenant (as the case may be) those Annual Operating Costs covering
such services already being provided by the Tenant or by such other tenant, at
its own expense, or to avoid allocating to all of the net rentable space within
the Property those Annual Operating costs incurred only with respect to a
portion thereof, as aforesaid. *See Rider No.2, paragraph 1.
3.2.4 Payment as Additional Rent. The Tenant shall, within 15 days
after demand therefore by the Landlord (with respect to each calendar year
during the Term), pay to the Landlord as Additional Rent the amount obtained by
multiplying (a) the GRFA (as set forth hereinabove) by (b) the amount by which
(i) the Annual Operating costs per square foot of GRFA for such calendar year
(as derived under the provisions of paragraph 3.2.3) exceeds (ii) the said sum
of $ 4.15 per square foot.
3.2.5 Proration. If only part of any calendar year falls within the
Term, the amount computed as Additional Rent with respect to such calendar year
under the foregoing provisions of this subsection shall be prorated in
proportion to the portion of such calendar year falling within the Term (but
the expiration of the Term before the end of such calendar year shall not
impair the Tenant's obligation hereunder to pay such pro-rated portion of such
Additional Rent with respect to that portion of such year falling within the
Term, which shall be paid on demand, as aforesaid).
3.2.6 Landlord's right to estimate. Anything contained in the
foregoing provisions of this subsection to the contrary notwithstanding the
Landlord may, at its discretion, make form time to time during the Term a
reasonable estimate of Additional Rent which may become due under such
provision with respect to any calendar year, and may require the Tenant to pay
to the Landlord with respect to each calendar month during such year
one-twelfth (1/12th) of such Additional Rent, at the time and in the manner
that the Tenant is required hereunder to pay the monthly installment of the
Base Rent for such month. In such event, the Landlord shall cause the actual
amount of such Additional Rent, at the time and in the manner that the Tenant
is required hereunder to pay the monthly installment of the Base Rent for such
month. In such event, the Landlord shall cause the actual amount of such
Additional Rent to be computed and certified to the Tenant within 120 days
after the end of such calendar year, and the Tenant or the Landlord, as the
case may be, shall promptly thereafter pay to the other the amount of any
deficiency or overpayment therein, as the case may be.
3.3 Tax on Lease. If feral, state or local law now or thereafter imposes
any tax, assessment, levy or other charge (other than any income tax) directly
or indirectly upon (a) the Landlord with respect to this Lease or the value
thereof, (b) the Tenant's use or occupancy of the Premises, (c) the Base Rent.
Additional Rent or any other sum payable under this Lease, or (d) this
transaction, except if and to the extent that such tax, assessment, levy or
other charge is included in the Annual Operating costs the Tenant shall pay the
amount thereof at its election, as Additional Rent to the Landlord upon demand,
unless the Tenant is prohibited by law from doing so, in which event the
Landlord may at its election terminate this Lease by giving written notice
thereof to the Tenant.
3.4 Time of payment. Each installment of Rent shall be paid in advance with
deduction, demand, or set off, on the first (1st) day of each month during the
Term; provided, that the installment of Rent payable with respect to the first
full calendar month of the Term shall be paid the Landlord upon the full
execution and delivery of this Lease.
3.5 Place of payment. All Rent and other charges due from the Tenant to the
Landlord hereunder shall be paid to the Landlord's agent, Polinger Company,
when due, at Suite 1000, 5530 Wisconsin Avenue, Chevy Chase, MD 20815, or at
any other address which the Landlord may specify to the Tenant by written
notice.
3.6 Security deposit.
3.6.1 Simultaneously with the full execution and delivery of this
Lease by the parties hereto, the Tenant shall deposit with the Landlord the sum
of Three Thousand Nine Hundred Dollars ($3,948.63) , which shall be retained by
the Landlord as security for the Tenant's payment of Forty Eight and 63/100,
and its performance of all of its other obligations under the provisions of
this Lease. * See Rider
3.6.2 Upon the occurrence of an Event of Default, the Landlord shall
be entitled, at its sole discretion,
(a) to apply nay or all of such sum in payment of (i) any Rent, for
the payment of which the Tenant is in default, (ii) any expense incurred by the
Landlord in curing any such default, and/or (iii) any damages incurred by
Landlord by reason of such default (including, by way of example rather than of
limitation, the expense of reasonable attorney's fees); or
(b) to retain any or all of such sum in liquidation of any or all
damages suffered by the Landlord by reason of such default.
3.6.3 Upon the termination of this Lease, any of such sum which is not
so paid or retained shall be returned to the Tenant.
Section 4. Assignment and subletting.
4.1 The Tenant shall not mortgage, pledge or encumber this Lease.
4.2 The Tenant shall not assign this Lease, or sublet or underlet any or
all of the Premises, or permit any other person or entity to occupy any or all
of the Premises, without on each occasion first obtaining the Landlord's
written consent thereto (which consent shall not be unreasonable withheld, but
may be conditioned, inter alia, upon the entry by the parities involved into
appropriate instruments by which they rectify and confirm this Lease). For
purposes of the foregoing provision of this subsection, a transfer, by any
person or persons controlling the Tenant on the date hereof, of such control to
a person or persons to controlling the Tenant on the date hereof shall be
deemed to be an assignment of this Lease. No such action taken with or without
the Landlord's consent shall in any way relive or release the Tenant from
liability for timely performance of all of the Tenant's obligations hereunder.
The Landlord shall be entitled to receive and retain and the Tenant shall
promptly remit to the Landlord, any profit which may inure to the Tenant's
benefit as a result of any such assignment, subletting or underletting, whether
or not consented to by the Landlord.
4.3 Anything containing in the foregoing provision of this Section to the
contrary notwithstanding, either the Tenant nor any other person having an
interest in the possession, use, occupancy or utilization of the Premises or
any other portion of the Property shall enter into any lease, sublease,
license, concession or of the agreement of the use, occupancy or utilization of
space in the Premises or any other portion of the property which provides for
any rental or other payment for such use, occupancy or utilization based in
whole or in part upon the net income or profits derived by any person form the
space in the Premises or other portion of the Property so lease, used, occupied
or utilized (other than any amount based on a fixed percentage or percentages
of receipts or sales.)
Section 5 Tenant's plan for improvements.
5.1 Leasehold improvements. The Landlord shall make the improvements to the
Premises which are set forth in the plans and specifications attached hereto as
Exhibit B. the Landlord shall use its best efforts complete such improvements
by the date upon which doing so by reason of any (a) strike, lock-out or other
labor troubles, (b) governmental restrictions or limitations, (c) failure or
shortage of flood, fir or other casualty, (f) adverse weather condition, (g)
other act of God, (h) inability to obtain a building permit or a certificate of
occupancy, or (i) other cause similar or dissimilar to any of the foregoing and
beyond the Landlord's reasonable control (in which event the dates of
commencement and expiration of the Term shall be postponed for a length of time
equaling the length of such delay, and the Tenant shall accept possession of
the Premises within ten (10) days after such completion).
5.2 Acceptance of possession. Except for (a) latent defects or incomplete
work which would not reasonably have been revealed by an inspection of the
Premises made for the purpose of discovering the same at the time of the
Tenant's assumption of possession of the Premises and (b) any other items of
incomplete work which are set forth on a punch list submitted to an approved in
writing by the Landlord prior to have accepted them and to have acknowledged to
be in the condition called for hereunder. Landlord and Tenant shall, within
five (5) days from the date Tenant accepts possession of the Premises, execute
the Declaration by Landlord and Tenant as to Date of Delivery.
Section 6 Fire and other casualty.
6.1 General. If the Premises are damaged by fire or any other casualty
during the Term.
6.1.1 the Landlord shall restore the Premises with reasonable prompt-
ness (taking, into account the time required by the Landlord of effect a settle-
ment with, and to procure any insurance proceeds fro, any insurer against such
casualty, but in any event within one hundred fifty (150) days after the date
of such casulaty) to substanially their condition immediately before such
casualty, and may temporarily enter and possess any or all of the Premises for
such purpose (provided, that the Landlord shall not be obligted to repair,
restore or replace any fixture, improvements, alteration, furniture or other
property owned, installed or made by the Tenant), but
6.1.2 the times for commencement and completion of any such
restoration shall be extended for the period (not longer than sixty (60) days)
of any delay occasioned by the Landlord in doing so arising out of any of the
causes enumerated in the provisions of subsection 5.1. If the Landlord
undertakes to restore the Premises and such restoration is not accomplished
with the said period of one hundred fifty (150) days plus the period of any
extension thereof, as aforesaid, the Tenant may terminate this Lease by giving
written notice thereof to the Landlord within thirty (30) days after the
expiration of such period, as so extended; and
6.1.3 for so long as the Tenant is deprived of the use of any or all
of the Premises on account of such casualty, the Base Rent and any Additional
Rent payable under the provisions of subsection 3.2 shall be abated in
proportion to the number of square feet of the
2
<PAGE> 3
Premises rendered substantially unfit for occupany by such casualty, unless,
because of any such damage, the undamaged portion of the Premises is made
materially unsuitable for use by the Tenant for the purposes set forth in the
provisions of Section 2, in which event the Base Rent and any such Additional
Rent shall be abated entirely during such period of deprivation.
6.2 Subtantial destruction. Anything contained in the foregoing provisions
of this Section to the contrary notwithstanding.
6.2.1 if during the Term, the Building is so damaged by fire or any
other casualty that (a) either the Premises or (whter or not the Premises are
damaged) the Building are rendered substantially unfit for occupany, as
reasonably determined by the Landlord, or (b) the Building is damaged to the
extent that the Landlord reasonably elects to demolish the Building, then in
either case the Landlord may elect to terminate this Lease as of the date of
the occurrence of such damage, by giving written notice thereof to the Tenant
within thirty (30) days after such date; and
6.2.2 in such event, (a) the Tenant shall pay to the Landlord the Base
Rent and any Additional Rent (apportioned, where applicable) to the time of
such termination, (b) the Landlord shall repay to the Tenant any and all
prepaid Rent for periods beyond such termination, and (c) the Landlord may
enter upon and repossess the Premises without further notice.
6.3 Tenant's negligence. Anything contained in any provision of this Lease
to the contrary notwithstanding, if any such damage to the Premises, the
Building or both are caused by or result from the negligent or intentionally
tortious act or omission of the Tenant, those claiming under the Tenant or any
of their respective officers, employees, agents or invitees
6.3.1. the Rent shall not be suspended, abated or apportioned as
aforesaid, and
6.3.2. except if and to the extend that the Tenant is released from
liability therefore pursuant to the provision of subsection 11.4, the Tenant
shall pay to the Landlord upon demand, as Additional Rent, the cost of (a) any
repairs and restoration made or to be made as a result of such damage, or (b)
(if the Landlord elects not to restore the Building) any damage or loss which
the Landlord may incur as a result of such damage.
Section 7. Maintenance and services.
7.1 Ordinary services. The Landlord shall furnish the Premises with (a)
electricity suitable for their intended use of the purposes set forth in the
provisions of Section 2, (b) heating and air conditioning for the comfortable
use and occupany of the Premises between 8:00 o'clock A.M. and 6:00 o'clock
P.M., Monday through Friday, and 8:00 o'clock A.M. and 1:00 o'clock P.M. on
Saturday (except or legal holidays) of each week during the Term, (c)
janitorial service, and (d) trash removal from the Premises, all at the
Landlord's expense.
7.2 Extraordinary services. If the Tenant:
7.2.1. Requires electrical current or installs electrical equipment
(including by way of example rather than of limitation, any electrical heating
or refrigeration equipment, electronic data processing machine, punch-card
machine, or machinery or equipment using current in excess of 110 volts which
in any way increases that amount of the electricity which would normally be
consumed upon the Premises when used general office space), or
7.2.2. intends to use the Premises in such a manner that the services
to be furnished by the Landlord hereunder would be required during periods
other than or in addition to the business hours customarily observed in the
locality of the Property, then in either case the Tenant shall not do so
without first obtaining the Landlord's written approval thereof, and shall pay
periodically as Additional Rent the additional direct expense resulting
therefrom, including that resulting from any installation of such equipment.
7.3. Maintenance and alterations by Tenant.
7.3.1 The Tenant shall maintain the nonstructural parts of the
interior of the Premises in good repair and condition, damages by causes
reasonably beyond the Tenant's control and ordinary wear and tear excepted.
7.3.2 The Tenant shall not make or permit to be made any alteration,
addition or improvement to the Premises without first obtaining the Landlord's
written consent thereof (which, in the case of non-structural alteration,
addition and improvements, it shall be made at the Tenant's sole expense (and
the Tenant shall hold the Landlord harmless from any cost incurred on account
thereof), and at such time and in such manner as not unreasonably to interfere
with the use and enjoyment of the reminder of the Property by any tenant
thereof or any other person.
7.4. Maintenance by Landlord
7.4.1 The Landlord shall maintain the roof, structure and the
remainder of the exterior of the Building, as well as each sidewalk and parking
lot from time to time existing within the Property, all in good order and repair
(which maintenance shall include the removal of snow from each such sidewalk
and parking lot).
7.4.2 Common areas, The Landlord shall furnish, supply and maintain
any and all hallways, stairways, lobbies, elevators, heating and or
conditioning facilities, electrical, sanitary sever and water lines and
facilities, grounds and parking areas, the common areas of the Building not
contained with the Premises and the rest of the Property (other than the
Premises) , all at the Landlord's expense except as is set forth in the
provisions of Section 3 or any other provision of this Lease.
Section 8. Defaults by the Tenant.
8.1. Definition: As sued in the provisions of this Lease, each of the
following events shall constitute, and is hereinafter refereed to as, and
"Event of Default"
8.1.1. If the Tenant (a) fails to pay the Rent or any other sum which
the Tenant is obligated to pay by any provision of this Lease. When and as it
is due and payable hereunder and without demand therefor, or (b) in any respect
violates any of the terms, conditions or covenants set forth in the provisions
of this Lease; or
8.1.2. if the Tenant (a) applies for or consents to the appointment of
a receiver, trustee or liquidator of the Tenant or of all or a substantial part
of its assets, (b) files a voluntary petition in bankruptcy or admits in
writing it inability to pay its debts as they come due, (c) makes an assignment
for the benefit of its creditors, (d) files a petition or an answer seeking a
reorganization or an arrangement with creditors, or seeks to take advantage of
any insolvency law, (e) performs any other act of bankruptcy, or (f) files an
answer admitting the material allegations of a petition filed against the
Tenant in any bankruptcy, reorganization or insolvency proceedings: or
8.1.3. if (a) an order, judgment or decree is entered by any court of
competent jurisdiction adjudicating the Tenant a bankrupt or an insolvent,
approving a petition seeking such a reorganization, or appointing a receiver,
trustee or liquidator of the Tenant or of all or a substantial part of its
assets, or (b0 there otherwise commences with respect to the Tenant or any of
its assets any proceeding under any proceeding continues unstayed for more than
sixty (60) consecutive days after the expiration of any stay thereof.
8.2. Notice to Tenant; grace period, Anything contained in the provisions
of this Section to the contrary notwithstanding, upon the occurrence of an
Event of Default the Landlord shall not exercise any right or remedy which it
holds under any provision of this Lease or under applicable law unless and
until.
8.2.1. the Landlord has given written notice thereof to the Tenant,
and
8.2.2. the Tenant has failed, (a) if such Event of default consists of
the failure to pay money , within thirty (30) days thereafter to cure such
Event of Default provided, that
8.2.3. no such notice shall be required, and the Tenant shall be
entitled to no such grace period, (a) more than twice during any twelve (12)
month period, or (b) if such Event of Default consists of something other than
the failure to pay money, within thirty (30) days thereafter to cure such Event
of Default provided that
8.3. Landlord's right upon Event of Default. Upon the occurrence of any
event of Default, the Landlord may
8.3.1. re-enter and repossess the premises and any and all
improvements thereon and additions thereto:
8.3.2. declare the entire balance of the Rent for the remainder of the
Term to be due and payable, and collect such balance in any manner not
inconsistent with applicable law;
8.3.3. relet any or all of the Premises for the Tenant's account for
any or all of the remainder of the Terms as hereinabove defined, or for a
period exceeding such reminder, in which event the tenant shall pay to the
Landlord any deficiency in the Base Rent and any Additional Rent resulting,
with respect to such remainder, from such reletting, as well as the cost to the
Landlord of any attorney's fees or of any repairs or other action (including
those taken in exercising the Landlord's rights under any provision of this
Lease) taken by the Landlord on account of such Event of Default: and or
8.3.4. pursue any combination of such remedies and/or any other remedy
available to the Landlord on account of such Event of Default under applicable
law.
8.3.5. Landlord's right to cure. Upon the occurrence of an Event of
default, the Landlord shall be entitled (but shall not be obligated). In
addition to any other rights which it may have hereunder or under applicable
law as a result thereof, and after giving the tenant written
3
<PAGE> 4
notice of the Landlord's intention to do so except in the case of emergency,
to cure such Event of Default, and the Tenant shall (reimburse) the Landlord for
all expenses incurred by the Landlord in doing so, plus interest thereon at a
lesser of the rate of sixteen percent (16%) annum or the highest rate the
permitted on account thereof by applicable law, which expenses and
interest shall be additional Rent shall be payable by the Tenant immediately
upon demand therefor by the Landlord.
Section 9. Holding over. The Tenant shall not continue to occupy the
Premises after the expiration or earlier termination of the Lease or any
renewal thereof , unless the Landlord consents in writing to such continuation
of occupancy, in which event
9.1. such occupancy shall (unless the parties hereto otherwise agree in
writing) be deemed to be under a month-to-month tenant which shall continue
until either party hereto notifies the other in writing, by at least thirty
(30) days before the end of any calendar month that the party giving such
notice elects to terminate such tenancy at the end of the such calendar month,
in which event such tenancy shall terminate:
9.2. anything contained in the foregoing provisions of this Section to the
contrary notwithstanding, the rental payable with respect each such monthly
period shall equal one-twelfth (1/12) of the Base Rent and the Additional Rent
payable under the provisions of Section 3 (calculated in accordance with such
provisions of Section 3 as if this Lease had been renewed for a period of
twelve (12) full calendar months after such expiration or earlier termination
of the Terms or such renewal); and
9.3. and such month-to-month tenancy shall be upon the same terms and
subject to the same conditions as those set forth in the provision of this
Lease; provided, that if the Landlord gives to the Tenant, by at least thirty
(30) days before the end of any calendar month during such month-to-month
tenancy, written notice that such terms and conditions (including any thereof
relating to the amount and payment Rent) shall, after such month, be modified
in any manner specified in such notice, then such tenancy shall, after such
month, be upon said terms and subject to the said conditions, as so modified.
9.4. In the event Tenant holds over without Landlord's written consent
obtained prior to the expiration or earlier termination of Term, Tenant, during
the period of its possession, shall pay to Landlord twice the amount of Base
Rent and Additional Rent paid Landlord immediately proceeding the expiration or
earlier termination of the Term.
Section 10. Landlord's right of entry. The Landlord and its agents shall be
entitled to enter the Premises at any reasonable time
10.1. to inspect the Premises.
10.2. to exhibit the Premises to any existing or prospective tenant,
purchaser or Mortgagee thereof or any prospective tenant there
10.3. to make any alteration, improvement or repair to the Building or the
Premises, or
10.4. for any other purpose relating to the operation or maintenance of the
Property: provided, that the Landlord shall (a) (unless doing so is impractical
or unreasonable because of emergency) give the Tenant a least twenty-four (24)
hours' prior notice of its intention to enter the Premises. and (b) use
reasonable efforts to avoid thereby interfering any more than is reasonably
necessary with the Tenant's use and enjoyment thereof.
Section 11. Insurance and indemnification
11.1. Increase in risk. The Tenant
11.1.1. shall not do or permit to be done any act or thing as a result
of which wither (a) any policy of insurance or any kind covering any or all of
the Property or any liability of the Landlord in connection therewith may
become void or suspended, or (b) the insurance covered under any such policy
would (in the opinion of the insures thereunder) be made greater; and
11.1.2. shall pay as Additional Rent the amount of any increase in any
premium for such insurance resulting from any breach such covenant.
11.2. Insurance to be maintained by Tenant. The Tenant shall maintain at
its expense, throughout the Term, insurance against claim or liability in
connection with bodily injury, death, property damage and destruction,
occurring within the Premises or arising, out of the threat thereof by the
Tenant or its agents, employees. Officers or invites, visitors and guests under
one or more policies of general public liability insurance having such limits
as to each as are reasonably required by the Landlord from time to time (but in
any event of not less than One Million dollars ($1,000.000.00) for injury to or
death of any one person during any one occurrence, (b) Two Million Dollars
($2,000.000.00) for injury to or death of more than one person during any one
occurrence and (c) Five Hundred Thousand Dollars ($500,000.00) for property
damage or destruction during any one occurrence. Such policies shall name the
Landlord and the Tenant (and, at the Landlord's request and Mortgagee) as the
insured parties, shall provide that they shall not be cancellable without at
least thirty (30) day's prior written notice to the Landlord (and , at the
Landlord's request any such Mortgagee), and shall be issued by insures of
recognized responsibility license to do business in Maryland.
11.3 Insurance to be maintained by Landlord. The Landlord shall maintain
throughout the term all-risk or fire and extended coverage insurance upon the
Building, The cost of premiums for such insurance and each endorsement thereto
shall be deemed, for purposes to be part of cost of operating and maintaining
the Property.
11.4. Waiver of subrogation, If either party hereto is paid any proceeds
under any policy of insurance naming such party as an insured on account of any
loss, damage or liability, then such party hereby release the other party
hereto, to and only to the extent of the amount of the negligent or
intentionally tortious act or omission of the other party, its agents or
employees; provided. That such release shall be that such release shall not
impair the effectiveness of such policy or the insured's ability to recover
thereunder. Each party hereto shall use reasonable efforts to have a clause to
such effect included in its said policies. And shall promptly notify the other
in writing is such clause cannot be included in any such policy.
11.5. Liability of parties. Except if and to the extent that such party is
released from liability to the other party hereto pursuant to the provisions of
subsection 11.4.
11.5.1. the Landlord (a) shall be responsible for, and shall indemnify
and hold harmless the Tenant against and from any and a liability arising out
of any injury to or death of any person or damage to any property, occurring
anywhere upon the Property, if, only if and to the extent that such injury,
death or damage is proximately caused by the grossly negligent or intentionally
tortious act or omission of the Landlord or its agents, offices or employees,
but (b)shall not be responsible for or be obligated to indemnify or hold
harmless the Tenant against or from any liability for any such injury , death
or damage occurring anywhere upon the Property (including the Premises) by
reason of the Tenant's occupancy or use of the Premises or any other portion of
the Property, or because of fire, windstorm, act of God or other cause unless
proximately caused by such negligent or intentionally tortions or omission, as
aforesaid: and
11.5.2. subject to the operation and effect of the foregoing provision
of this subsection, the Tenant shall be responsible form and shall indemnify
and hold harmless the Landlord against and form, any and all liability arising
out of any injury to or death of any person or damage to any property,
occurring within the Premises.
Section 12. Eminent domain.
12.1. Right to award.
12.1.1. If any or all of the Premises are taken by the exercise of any
power of eminent domain or are conveyed to or at the direction of any
governmental entity under a threat of any such taking (each of which is
hereinafter referred to as a "Condemnation"). The Landlord shall be entitled to
collect from the condemning authority thereunder the entire amount of any award
made in any such proceeding or as consideration for such deed, with out
deduction therefrom for any leasehold or other estate held by the Tenant by
virtue of this Lease.
12.1.2. The Tenant hereby (a) assigns to the Landlord all of the
Tenant's right, title and interest, if any , in and to any such award:(b)
waives any right which it may otherwise have in connection with such
Condemnation, against the Landlord or such condemning authority, to any payment
for (i) the value of the then-unexpired portion of the Term, (ii) leasehold
damages, and (iii) any damage to or diminution of the value of the Tenant's
leasehold interest hereunder or any portion of the Premises not covered by such
Condemnation and (c) agrees to execute any and all further documents which may
be required in order to facilitate the Landlord's collection of any and all
such awards.
12.1.3. Subject to the operation and effect of the foregoing
provisions of this Section, the Tenant may seek, in a separate proceeding, a
separate award on account of any damages or costs incurred by the Tenant as a
result of such Condemnation, so long as such separate award in no way
diminishes any award or payment which the Landlord would otherwise receive as a
result of such Condemnation.
12.2. Effect of Condemnation.
12.2.1. If (a) all of the Premises are covered by a Condemnation, or
(b) if any part of the Premises is covered by a Condemnation and the remainder
thereof is insufficient for the reasonable operation therein of the Tenant's
business, or (c) any of the Building is covered by a Condemnation and, the Term
shall terminate on the date upon which possession of so much of the Premises or
the Building, as the case my it, covered by such event, the Term shall
terminate on the date upon which possession of so much of the Premises or the
Building, as the case may be, covered by such Condemnation is taken by the
condemning authority thereunder, and all Rent (including, by way of example
rather than of limitation, any Additional Rent payable pursuant to the
Provisions of subsection 3.2), takes and other charges payable hereunder shall
be prorated and paid to such date.
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<PAGE> 5
12.2.2. If there is a Condemnation and the Term does not terminate
pursuant to the foregoing provisions of this subsection, the operation and
effect of this Lease shall be unaffected by such Condemnation except that the
Base Rent and the Additional Rent payable under the provisions of Section 3
shall be reduced in proportion to the square footage of floor area if any of
the Premises covered by such Condemnation.
12.3. If there is a Condemnation the Landlord shall have no liability to
the Tenant on account of any (a) interruption of the Tenant's business upon the
Premises (b) diminution in the Tenant's ability to use the Premises or (c)
other injury or damage sustained by the Tenant as a result of such
Condemnation.
12.4. Except for any separate proceeding brought by the Tenant under the
provisions of paragraph 12.1.3 the Landlord shall be entitled to conduct any
such condemnation proceeding and any settlement thereof free of interference
from the Tenant and the Tenant hereby unfixes any right which it might
otherwise have to participate therein.
Section 13. Mechanics and materialmens' liens.
The Tenant shall
13.1. bond, remove or have removed and mechanist. materialman's or other
lien fiend or claimed against and or all of the Premises the Property or any
other property owned or leased by the Landlord by reason of labor or materials
provided for or at the request of the Tenant or any of its contractors or
subcontractors (other than labor or materials provided by the Landlord pursuant
to the provisions of Section 5). Or otherwise arising out of the Tenant s use
or occupancy of the Premises or and other portion of the Property and
13.2. indemnify and hold harmless the Landlord against and from any and all
liability or expense (including, by way of example rather than of limitation,
that of reasonable attorneys fees) incurred by the Landlord on account of any
such lien or claim.
Section 14. Quiet enjoyment; surrender.
14.1 Quiet enjoyment. The Landlord hereby covenants that the Tenant on
paying the Rent and performing the covenants set forth herein shall peaceably
and quietly hold and enjoy throughout the Term. (a) the Premises, and (b) such
rights as the Tenant man hold hereunder with respect to the remainder of the
Property (including. by way of example rather than of limitation. any such
right to use parking lot within the Property).
14.2. Surrender.
14.2.1. Upon the expiration or earlier termination of the Term. The
Tenant shall surrender the Premises to the Landlord in good order and repair
(arising from fire or other casuals beyond the Tenant's reasonable control and
ordinary wear and tear excepted), and broom clean.
14.2.2. Any and all improvements, repairs, alterations and all other
property attached to, used in connection with or otherwise installed upon the
Premises (a) shall immediately upon the completion of the installation thereof
be and become the Landlord's property without payment therefor by the Landlord,
and (b) shall be surrendered to the Landlord upon the expiration or earlier
termination of the Term except that any machinery, equipment or fixtures
installed by the Tenant and used in the conduct of the Tenant s trade or
business (rather than to service the Premises or any of the remainder of the
Building or the Property generally) shall remain the Tenant's property and
shall he removed be the Tenant within five (5) days after the expiation or
earlier termination of the Term. and the Tenant shall promptly thereafter fully
restore any of the Premises or the Building damaged by such installation or
removal thereof.
Section 15: Rules and Regulations.
The Landlord hereby resends the right to prescribe at its sole discretion,
reasonable rules and regulations (hereinafter referred to as the Rules and
Regulations), having uniform applicability to all tenants of the Building and
governing the use and enjoyment of the Building and the remainder of the
Property provided the: the Rules and Regulations shall not materially interfere
with the Tenant's use and enjoyment of the Premises in accordance with the
provisions of this Lease. For the purposes enumerated in the provisions of
Section 2. The Tenant shall adhere to the Rules and Regulations and shall cause
its agents, employees, invitees, visitors and guests to do so. A copy of the
Rules and Regulations in effect on the date hereof is attached hereto as
Exhibit C.
Section 16. Subordination: attornment.
16.1. Subordination. This Lease shall be subject and subordinate at all
times to the lien of any first mortgage, first deed of trust, ground lease
and/or other instrument of encumbrance heretofore or hereafter placed be the
Landlord upon and or all of the Premises or the remainder of the Property and
of all renewals, modifications, consolidations, replacements and extensions
thereof (each of which is herein referred to as a "Mortgage"), all
automatically and without the necessity of and further action on the part of
the Tenant to effectuate such subordination.
16.2. Adornment. The Tenant shall promptly at the request of the Landlord
or the holder of any Mortgage (herein reduced to as a "Mortgagee".
16.2.1. execute, enseal, acknowledge and deliver such further
instrument or instruments evidencing such subordination as the Landlord or such
Mortgage may deem necessary or desirable, and
16.2.2. attorn to such Mortgagee.
16.3. Anything contained in the provisions of this Section to contrary
notwithstanding any Mortgagee may at and time subordinate the lien of it's
mortgage to the operation and effect of this Lease without the necessity of
obtaining the Tenant s consent thereto: be giving the Tenant written notice
thereof in which event this Lease shall be deemed to be senior to such Mortgage
without regard to their respective dates of execution, delivery, and or
recordation among the land Records of the said (such Mortgagee shall have the
same rights faith respect to this lease as though this lease had been executed
and recorded among the said Land Records before the execution and delivery of
such Mortgage.
Section 17. Estoppel certificate. The Tenant shall from time to time,
within five (5) days after being requested to do so by the Landlord or any
first Mortgagee, execute, enseal, acknowledge, and deliver to the Landlord an
instrument in recordable form.
17.1. certifying
17.1.1. that this Lease is unmodified and in full force and effect (or
it there has been and modification thereof. that it is in full force and effect
as so modified, stating therein the nature of such modification):
17.1.2. as to the dates to which the Base Rate and any additional Rent
and other charges arising hereunder have been paid in advance of the dates on
which payment thereof is due hereunder, if any:
17.1.3. as to the amount of and unpaid Rent or and credit due to the
Tenant hereunder;
17.1.4 that the Tenant has accepted possession of the Premises, and
the date on which the Term commenced:
17.1.5. as to whether, to the best knowledge, information and belief,
the signer of such certificate, the Landlord is then in default in the
performance of and of its obligations hereunder (and it so. specifying the
nature of each such default): and
17.1.6. as to any other tact or condition reasonably requested by the
Landlord, and first Mortgagee or prospective first Mortgagee or purchaser of
any or all of the Premises, the Property or any interest therein, or assignee,
or prospective assignee of any interest of the Landlord under this Lease: and
17.2. acknowledging and agreeing that any statement contained in any such
certificate may be relied upon by the Landlord and any such other person.
Section 18. Notices
Any notice, demand, consent, approval, request or other communication or
document to be provided hereunder to a party hereto shall be;
18.1. in writing, and
18.2. deemed to have been provided (a) forty-eight (48) hours after being
sent as certified or registered mail in the United States mails, postage
prepaid, return receipt requested, to the address of such party set forth below
or to such other address in the United States of America as such party may
designate from time to time by notice to the other, or (b) (if such party's
receipt thereof is acknowledged in writing) given by hand or other delivery to
such party.
LANDLORD TENANT
Managing General Partner Gerald Schraeder, Vice President
---------------------------------
Randolph Park. Associates Astrotech Space Operations, Inc.
---------------------------------
5530 Wisconsin Avenue 12150 Prosperity Drive
---------------------------------
Suite 1135 Silver Spring, Maryland 20904
---------------------------------
Chevy Chase, Maryland 20815
5
<PAGE> 6
Section 19. General.
19.1. Effectiveness. This Lease shall become effective upon and only upon
the execution and delivery hereof by each party hereto.
19.2 Complete understanding. This Lease represents the complete
understanding between the parties hereto as to the subject matter hereof; and
supersedes all prior negotiations representations, warranties, statements or
agreements either written or oral between the parties hereto as to the same.
19.3. Amendment. This Lease may be amended by and only by an instrument
executed and delivered by each party hereto.
19.4. Applicable law. This Lease shall be given effect and construed by
application of the law of Maryland and any action or proceeding, arising
hereunder shall be brought in the courts of Maryland; provided, that if any
such action or proceeding arises under the Constitution, laws or treaties of
the United States of America or if there is a diversity of citizenship between
the parties thereto, so that it is to be brought in a United States District
Court, it shall be brought in the United States District Court for the District
of Maryland.
19.5. Waiver. The Landlord shall not he deemed to have waived the exercise
of and right which it holds hereunder unless such waiver is made expressly and
in writing (and no delay or omission by the Landlord in exercising any such
right shall be deemed to be a waiver of the future exercise thereof). No such
waiver made with respect to any instance involving the exercise of any such
right shall be deemed to be a waiver with respect to and other such instance,
or any other such right.
19.6. Time of essence. Time shall be of the essence of this Lease.
19.7. Headings. The headings of the Sections, subsections, paragraphs and
subparagraphs thereof., be provided herein for and only for convenience of
reference, and shall not be considered in construing the contents thereof.
19.8. Construction, As used herein.
19.8.1. The term "person" shall mean a natural person, a trustee a
corporation a partnership and any other form of legal entity; and
19.8.2. all references made (a) in the neuter, masculine or feminine
gender shall be deemed to have been made in all such genders. {b) in the
singular or plural number shall be deemed to have been made. respectively in
the plural or singular number as well, and (c) to any Section, subsection,
paragraph or subparagraph shall, unless therein expressly indicated to the
contrary, be deemed to have been made to such Section, subsection, paragraph or
subparagraph of this Lease.
19.9. Exhibits. Each writing or plat referred to herein as being attached
hereto as en exhibit or otherwise designated herein as an exhibit hereto is
hereby made a part hereof.
19.10. Severability. No determination by any court, governmental body or
otherwise that any provision of this Lease or any amendment hereof is invalid
or unenforceable in any instance shall affect the validity or enforceability of
(a) any other provision thereof, or (b) such provision in any circumstance not
controlled by such determination. Each such provision shall be valid and
enforceable to the fullest tent allotted by and shall be construed wherever
possible as being consistent with applicable law.
19.11. Definition of the Landlord .
19.11.1. As used herein; the term "the Landlord" shall mean the entire
herein above named as such and its heirs personal representatives, successors
and assignees (each of whom shall have the same rights, remedies powers,
authorities and privileges as it would have had, had it originally signed this
Lease as the Landlord.
19.11.2. No person holding the Landlord s interest hereunder [whether
or not such person is named as the Landlord) herein shall have any liability
hereunder after such person ceases to hold such interest. except for any such
liability accruing while such person holds such interest.
19.11.3. Neither the landlord nor any principal of the landlord,
whether disclosed or undisclosed shall have any personal liability under
provisions of this Lease. If the landlord defaults in the performance of any of
its obligations hereunder or otherwise, the Tenant shall look solely to the
Landlord equity, interest and rights in the Property for satisfaction of the
Tenants remedies on account thereof.
19.12. Definition of "the Tenant". As used herein, the term the Tenant
shall mean each person hereinabove named as such and such person's heirs,
personal representatives, successors and assigns, each of whom shall have the
same obligations, liabilities, rights and provisions as it would have had it
originally executed this as the Tenant: provided, that no such right or
privilege shall inure to the benefit of any assignee of the Tenant, immediate
or remote, unless the assignment to such assignee is made in accordance with
the provisions of Section 4. Whenever or more persons constitute the Tenant,
all such persons shall be jointly and severally liable for the performance of
the Tenant's obligations hereunder.
Section 20. Warranties and Representations.
20.1. Tenant hereby acknowledges and agrees that there have been no
warranties or representations, verbal or written, made be Landlord or any agent
or representative of landlord, including, but not by any of limitation, any
broker employed be Landlord, other then is expressly set forth in this Lease,
and Tenant hereby waives any claim which it may have against Landlord by virtue
of and representation or warranty not expressly set forth herein made by any
person whomsoever on behalf of Landlord.
IN WITNESS WHEREOF: each party hereto has executed and sealed this Lease,
or has caused it to be executed and sealed on its behalf by its duly authorized
representatives, the day and year first above written. <
<TABLE>
<S> <C>
WITNESS: Randolph Park Associates II Limited Partnership and Randolph Park
Associates, a Maryland Limited Partnership
[SIG] by: [SIG]
----------------------------------- ---------------------------------------------- (SEAL)
Managing General Partner
The Landlord
WITNESS or ATTEST: Astrotech Space Operations, Inc.
--------------------------------------------------------
[SIG] by: /s/ Gerald R. Schraeder, VP Administration
----------------------------------- ----------------------------------------------(SEAL)
The Tenant
</TABLE>
6
<PAGE> 7
Agreement of Lease by and between
Randolph Park Associates II Limited Partnership and
Randolph Park Associates, A Maryland Limited Partnership
and
Astrotech Space Operations, Inc.
Rider No. 1
-----------
The following provisions are hereby inserted on the attached Lease:
3.1.1. Base Rent. A base rent of forty seven thousand, three hundred eighty
three and 50/100 dollars ($47,383.50) per annum for years one (1) through
five (5), payable in monthly installments of three thousand, nine hundred,
forty eight and 63/100 dollars ($3,948.63). The above stated base rental
computations are subject to the adjustments set forth in paragraph 3 of the
attached Lease.
21.1. Free Rent. The Landlord agrees to waive the rental payments due for
the second (2nd), third (3rd), and fourth (4th) months of the Lease term;
provided Tenant is not otherwise in default.
<TABLE>
<S> <C>
Randolph Park Associates II Limited
Partnership and Randolph Park Associates,
A Maryland Partnership
[SIG] [SIG]
- ---------------------------------- --------------------------------------------
Witness Managing General Partner
[SIG] /s/ GERALD R. SCHRAEDER - V.P. Administration
- ---------------------------------- --------------------------------------------
Witness Astrotech Space Operations, Inc.
</TABLE>
<PAGE> 8
Agreement of Lease by and between
Randolph Park Associates II Limited Partnership
and
Randolph Park Associates, A Maryland Limited Partnership
and
Astrotech Space Operations, Inc.
Rider No. 2
-----------
The following provisions are hereby inserted on the attached Lease:
1. At the end of section 3.2.3., "The Landlord hereby agrees to limit increases
in operating expenses to no more than ten percent (10%) above the
previous years operating expenses for building standard hours of operation."
2. Change section 3.6.4. to "Such sum shall bear interest at an annual rate
of 6.5%."
3. Add to Exhibit C, "17. Landlord agrees to provide an additional allowance
of $320.00 for carpeting in areas designated by the Tenant."
4. Add to Exhibit C, "18. Landlord agrees to provide an allowance of 64
lineal feet of sound insulation in ceiling height partitions in areas
designated by the Tenant."
5. Add to Exhibit C, "19. Landlord agrees to provide an additional allowance
of $330.00 for wallpaper in the area designated by tenant."
6. Landlord hereby agrees that throughout the initial term and option period
of this lease , no charge shall be assessed tenant for parking for its
employees or guests.
<TABLE>
<S> <C>
Randolph Park Associates II Limited
Partnership and Randolph Park Associates.
A Maryland Limited Partnership
[SIG] [SIG]
- ----------------------------------- -------------------------------------------
Witness Managing General Partner
[SIG] /s/ GERALD R SCHRAEDER - VP Administration
- ----------------------------------- -------------------------------------------
Witness Astrotech Space Operations, Inc.
</TABLE>
<PAGE> 9
Agreement of Lease by and between
Randolph Park Associates II Limited Partnership
and
Randolph Park Associates, A Maryland Limited Partnership
and
Astrotech Space Operations, Inc.
Rider No. 3
-----------
The following provision is hereby inserted on the attached Lease:
Renewal Option. Provided Tenant has fully performed each and every covenant,
condition and obligation set forth in this Lease, Tenant shall have the
option to extend the term of this Lease for an additional period of five (5)
years from the expiration of the original Lease, and provided Tenant shall
have notified Landlord in writing of his intention to exercise this option no
later than 120 days prior to the expiration of the original term. All terms
and conditions of the Lease will remain in full force and effect, except that
the rental rate per square foot will be the then prevailing rate for similar
space in the building.
<TABLE>
<S> <C>
Randolph Park Associates II Limited
Partnership and Randolph Park Associates,
A Maryland Limited Partnership
[SIG] [SIG]
- ----------------------------------- -------------------------------------------
Witness Managing General Partner
[SIG] /s/ GERALD R. SCHRAEDER - VP Administration
- ----------------------------------- -------------------------------------------
Witness Astrotech Space Operations, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 10.54
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT, dated as of the 16th day of June,
1997, is made by and among SPACEHAB, INCORPORATED, a Washington corporation
("SPACEHAB") and ASTROTECH SPACE OPERATIONS. INC., a Delaware corporation
("Astrotech"; Astrotech and SPACEHAB is also referred to individually as a
"Borrower' and collectively as the "Borrowers") and SIGNET BANK, a Virginia
banking corporation (the "Lender"). The Lender has agreed to extend credit to
the Borrowers, and the Borrowers have agreed to obtain credit from the Lender,
on the terms and conditions set form in this Agreement. Accordingly, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Lender and the Borrowers agree as follows:
SECTION I . Definitions. Certain terms used in this Agreement are defined in
this Section 1. These terms, and the additional terms defined above, shall have
the meanings assigned wherever the terms appear in this Agreement. These
meanings are also applicable to the singular and plural forms of the terms
defined.
"Account Receivable" means collectively and includes any of the
following, whether now owned or hereafter acquired by a Borrower: all present
and future rights to payments for goods sold or leased or for services
rendered, whether or not represented by instruments or chattel paper, and
whether or not earned by performance; all present and fixture rights to
payments arising out of the licensing of computer software and systems; all
accounts, contract: rights, chattel paper, and instruments; proceeds of any
letter of credit of which a Borrower is a beneficiary: all forms of obligations
whatsoever owed to a Borrower, together with all instruments representing any
of the foregoing; all rights in any returned or repossessed goods; all rights,
security and guaranties with respect to any of the foregoing, including,
without limitation, any right of stoppage in transit; together with all
property included within the definitions of "accounts", "chattel paper",
"documents" and "instruments" set forth in the UCC.
"Act" means the Securities Act of 1933, as amended.
"Advance Request" means a written request from the Borrowers (through
SPACEHAB as their agent) for a Loan. Each Advance Request shall state the
amount of the Loan requested and the purpose of such Loan. shall confirm that
no Default or Event of Default has occurred and is continuing, and shall be
substantially in the form attached hereto as Exhibit A (or such subsequent form
as the Lender shall require).
"Affiliate" means, with respect to any specified Person, any other
Person which, directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with. such specified
Person. The term. "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of management and policies of a
Person, whether through ownership of common stock, by contract, or otherwise.
<PAGE> 2
"Agreement" means Loan and Security Agreement, as the same may be
amended, modified or supplemented from time to time.
"Bank" means any commercial banking corporation, saving bank,
commercial finance company, or other financial institution.
"Blue Sky Laws" means the securities laws of one or more states.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks are authorized or required to close under the
laws of the State.
"Capital Expenditure" means an expenditure by a Borrower for the
purpose of acquiring land, buildings, machinery, equipment, furniture,
leasehold improvements and fixtures, or any other asset that is, or under GAAP
would be, properly characterized as a capital asset on the balance sheet of
such Borrower.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Cash Collateral Account" means emit of the non-interest bearing bank
accounts which the Lender shall; cause to be opened pursuant to Section 3.2
hereof.
"CERCLA" shall mean the Comprehensive Environmental Response.
Compensation and Liability Act of 1980, as amended.
"Closing" means the date on which the initial disbursement of the Loan
is made.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time.
"Collateral" means collectively and includes all General Intangibles,
Accounts Receivable and all other property of a Borrower in which a Lien is
granted to the Lender pursuant to this Agreement or any other Loan Document.
"Compliance Certificate" means a certificate of the Borrowers
substantially in the form attached hereto as Exhibit B (or such subsequent form
as the Lender shall require), executed by the chief financial officer of each
Borrower, the Treasurer of each Borrower or such other financial officer of
each Borrower as is acceptable to the Lender containing a calculation of the
financial covenants set forth in Section 5.12 hereof applicable to the
financial statements accompanying such Compliance Certificate and a
certification that no Default or Event of Default has occurred and is
continuing.
<PAGE> 3
"Current Ratio" means the ratio of SPACEHAB's consolidated Current
Assets to SPACEHAB's consolidated Current Liabilities
"Current Asset " means any asset of a Borrower that is characterized
as a current asset in accordance with GAAP.
"Current Liability" means any liability of a Borrower that is
characterized as current liability in accordance with GAAP.
"Customer" means any Person obligated on an Account Receivable.
"Debt" means collectively and includes (a) indebtedness or liability
for boomed money, or for the deferred purchase price of property or series; (b)
obligations as a lessee under a Capital Lease; (c) obligations to reimburse the
issuer of letters of credit or acceptances: (a) all guaranties, endorsements
(other than for collection or deposit in the ordinal course of business), and
other contingent obligations to purchase, to provide funds for payment. to
supply funds to invest in any Person, or otherwise to assure a creditor against
loss; and (e) obligations secured by any Lien on property owned by the Person,
whether or not the obligations have been assumed.
"Default" means any event which with the giving of notice, the lapse
of time, or both, would constitute an Event of Default.
"Default Rate" means a rate of interest equal to 3% above the rate or
interest otherwise applicable to Loans.
"EBITDA" means, for any period, SPACEHAB's consolidated earnings
before payment of interest or provision for taxes, depreciation and
amortization calculated by adding to SPACEHAB's consolidated net income (or net
loss) during such period the following: (a) SPACEHAB's consolidated interest
expense recognized during such period, (b) SPACEHAB's consolidated income tax
expense recognized during such period, (c) SPACEHAB's consolidated depreciation
expense recognized during such period, and (d) and SPACEHAB's consolidated
amortization expense recognized during such period and adjusting such resulting
such by subtracting any extraordinary or unusual gains or other gains not
incurred in the ordinary course of a Borrower's business which have been
included in the consolidated net income for such period, in each case
determined in accordance with GAAP.
"Employee Benefit Plan" means any employee welfare benefit plan or
employee pension benefit plan, as those terms are defined in Sections 3(1) and
3(2) of ERISA for the benefit of employees of a Borrower or any ERISA
Affiliate.
"Environmental Laws" means all federal, state or local laws, rules,
regulations or orders relating to air, water or noise pollution, employee
health and safety, or the production, storage, labeling, transportation or
disposition of waste or hazardous or toxic substances, including, but not
<PAGE> 4
limited to CERCLA, the Toxic Substances Control Act of 1976, as amended, the
Resource Conservation Recovery Act of 1976, as amends the Clean Air Act, as
amended, the Federal Water Pollution Control Act, as amended, or the
Occupational Safety and Health Act of 1970, as amended.
"Equipment" means collectively and includes all of the following,
whether now owned or hereafter acquired by a Borrower: equipment and fixtures,
including, without limitation, computer hardware, computer software and
systems, furniture, machinery, vehicles and trade fixtures, together with any
and all accessories, accessions, parts and appurtenances thereto, substitutions
therefor and replacements thereof, together with all other such items which are
included within the definitions of "equipment" and "fixtures" as set forth in
the UCC.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with a Borrower would be treated as a "single
employer" within the meaning of Code Sections 414(b), (c), (m), (n) or (o).
"Euro-Dollar Amount" means each portion of the Principal Amount then
bearing, or to bear, interest at a LIBO-Based Rate pursuant to a Euro-Dollar
Rate Request.
"Euro-Dollar Business Day" means any day on which commercial banks,
are open for domestic and international business (including dealings in U.S.
Dollar deposits) in London, England and Richmond, Virginia.
"Euro-Dollar Interest Period" means the one (1), two (2), or three (3)
month period, as selected by the Borrowers (through SPACEHAB as their agent),
during which interest at a LIBO-Based Rate shall be applicable to the
Euro-Dollar Amount in question beginning, on the date specified by the
Borrowers (through SPACEHAB as their agent) in each Euro-Dollar Rare Request
for the commencement of the computation of interest at a LIBO-Based Rate and
ending on the numerically corresponding day in the calendar month in which such
period terminates (or, if there is no numerical correspondent in such month, or
if the date selected by the Borrowers (through SPACEHAB as their agent) for
commencement is the last Euro-Dollar Business Day of a calendar month, then the
last Euro-Dollar Business Day of the calendar month in which such period
terminates, or if the numerically corresponding day is not a Euro-Dollar
Business Day, then the next succeeding Euro-Dollar Business Day, unless such
next succeeding Euro-Dollar Business Day enters a new calendar month. in which
case such period shall end on the next preceding Euro-Dollar Business Day);
provided that in no event shall any such period extend beyond the Termination
Date.
"Euro-Dollar Rate Request" means the Borrowers' telephonic notice
issued by SPACEHAB as their agent (to be confirmed promptly in writing) to be
received by he Lender by 19 Noon (Washington. D.C. time) one (1) Euro-Dollar
Business Day, prior to the date specified in the Euro-Dollar Rate Request for
the commencement of the Euro-Dollar Interest Period, of (a) the
<PAGE> 5
Borrowers' intention to have (1) all or any portion of the principal which is
not then the subject of a Euro-Dollar interest Period (other than a Euro-Dollar
Interest Period which is terminating on such Euro-Dollar Business Day), and /or
(2) all or arty portion of any Loan which is to be made on such Euro-Dollar
Business Day bear interest at a specified LIBO-Based Rate and (b) the
Euro-Dollar Interest Period desired by the Borrowers in respect of the amount
specified.
"Event of Default" means any of the events specified as an "Event of
Default" under this Agreement, provided that any requirement for the giving of
notice, the lapse of time, or both, or any other condition, has been satisfied.
"Flight Hardware" means all hardware and subsystems owned or leased by
SPACEHAB which are designed or acquired for space flight (including but not
limited to flight modules, adapter rings, tunnel segments, Multi-layer
insulation Blankets, cargo pallets and associated piece parts) and non-flight
equipment directly supporting such hardware and subsystems (including but not
limited to mechanical and electrical ground support, and flight training
modules and equipment).
"GAAP" means generally accepted accounting principles consistently
applied.
"General Intangibles" means collectively and includes all of the
following, whether now owned or hereafter acquired by a Borrower: closes in
action and causes of action (except if related to fixed assets of a Borrower),
refunds, volume discounts, incentives, any "general intangible" (as defined in
the UCC) related to an Account Receivable, corporate or other business records,
goodwill, customer list, tax refunds, tax refund claims, and rights to
indemnification.
"Government" means the United States of America or any agency or
instrumentality thereof.
"Indemnitee" shall mean the Lender, its Affiliates, and its and their
respective directors, officers, employees, agents, successors and assigns.
"Intellectual Property" shall mean all letters patent, licenses, trade
names, trademarks, copyrights, inventions, service marks, trademark
registrations, service mark registrations and copyright registrations, whether
domestic or foreign and applications for any of the foregoing, and all
proprietor technology, know-how, trade secrets or other intellectual property
rights owned or used by a Borrower or any Subsidiary in the operation of their
respective businesses.
"Interest Payment Date" means the last day of each calendar month.
"Inventory" means collectively and includes all of the following,
whether now owned or hereafter acquired by a Borrower: all goods held or
intended for sale or lease by a Borrower, or furnished or to be furnished under
contracts of service, all raw materials, work in process, finished goods,
materials and supplies of every nature used or usable in connection with the
manufacture, packing, shipping, advertising or sale of any such goods, together
with all property included within
<PAGE> 6
the definition of "inventory" set forth in the UCC, but Inventory shall not
include the Flight Hardware.
"Launch Revenue" means the revenue recognized by SPACEHAB in
connection with the completion of each Shuttle mission carrying Flight
Hardware. A Shuttle mission carrying Flight Hardware is considered complete
when the Shuttle has returned to Earth and the Flight Hardware has been
returned by NASA to SPACEHAB's custody.
"Letter of Credit" means any letter of credit issued for the benefit
of a Borrower by the Lender, but the inclusion of this definition shall not
imply, or be construed as, a commitment by the Lender to issue any Letters of
Credit.
"Letter of Credit Exposure" means, at any given date, the available
face amount of outstanding Letters of Credit on such plus the aggregate amount
of drafts drawn under or purporting to be drawn under Letters of Credit that
have been paid by the Lender and for which the Lender has not been reimbursed
as of such date.
"LIBO-Based Rate" means the late per annum (expressed as a
percentage) determined by the Lender to be equal to the sum of (a) the LIBO
Rate for the Euro-Dollar Amount and the Euro-Dollar Interest Period in question
plus (b) .0250.
"LIBO Rate" means that rate per annum quoted by the Lender, in its
sole discretion (and as adjusted to reflect the cost of reserve requirements as
they exist from time to time), as the London Interbank Offered Rate as
published by Bloomberg or Dow Jones-Tolerate, as BBA LIBOR on page 3750 (or by
Reuters Monitor Money Rates Services (LIBO page), if Bloomberg or Dow
Jones-Tolerate is not available), or such other page as may replace that page
on that service for the purpose of displaying rates or prices comparable to
that rate (rounded upwards, if necessary, to the next higher l/100%)
representing the offered rates for deposits In United States Dollars in an
amount equal to the applicable Euro-Dollar Amount and for a designated period
(e.g. one (1), two (2) or three (3) months) corresponding to the applicable
Euro-Dollar Interest Period selected by the Borrowers. If more than one such
rate appears on such page or its replacement, LIBO Rate shall be the arithmetic
mean of such rates.
"License" shall mean any certificate, license, franchise, permit or
other authorization.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement. Encumbrance, lien (statutory or
other), or preference, priority, or other security agreement, or preferential
arrangement, charge or encumbrance of any kind or nature whatsoever (including.
without limitation, any conditional sale or our title retention, agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the UCC or
comparable law of any jurisdiction to evidence any of the foregoing); provided,
however, that Lien shall not include any of the following:
<PAGE> 7
(a) any liens for current taxes, assessments and other governmental charms not
yet due and payable;
(b) any mechanic's, materialman's, carrier's, warehousemen's or similar liens
for sums not yet due;
(c) easements, rights-of-way, restrictions and other similar encumbrances on
the real property fixtures a Borrower or a Subsidiary incurred in the ordinary
course of business which, individually or in the aggregate are not substantial
in amount and which do not in any case materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the business
such Borrower or such Subsidiary; and
(d) liens (other than liens on imposed on any property of a Borrower, a
Subsidiary or an ERISA Affiliate pursuant to ERISA or section 412 of the Code)
incurred or deposits made in the ordinary course of business, including liens
in connection with workers' compensation, unemployment insurance and other
types of social security.
"Loans" means the loans to be made to the Borrowers by the Lender
pursuant to this Agreement.
"Loan Documents" means this Agreement, the Note, and any other
document now or hereafter executed or delivered in connection with the
Obligations in evidence thereof or as security, therefor, including, without
limitation, any guaranty, life insurance assignment, pledge agreement. security
agreement, deed of trust, mortgage, promissory note or subordination agreement.
"Maximum Amount" means, at any time, the difference between (i)
$10,000,000.00 and (ii) the Letter of Credit Exposure as of such time.
"Multi-employer Plan" means a multi-employer plan defined as such in
Section 4001(a)(3) of ERISA.
"Non-Utilization Fee" means the quarterly fee to be paid by the
Borrowers to the Lender pursuant to Section 2.4 hereof in consideration of the
commitment by the Lender to make Loans hereunder. The Non-Utilization Fee due
for each calendar quarter (or portion thereof) shall equal the product of the
Non-Utilization Fee Rate in effect for such quarter (or portion thereof)
multiplied by the difference between $10,000,000.00 and else average daily
principal balance of the Loans during such quarter (or applicable portion
thereof).
"Non-Utilization Fee Rate" means the rate, expressed as a percentage,
calculated by multiplying 1/4% by a fraction the numerator of which is the
number of days in the calendar quarter, or shorter period, for which the
Non-Utilization Fee Rate is being calculated and the denominator of which is
360.
"Note" means the promissory note in forth substance acceptable to the
Lender in the original principal amount of $10,000.000.00 (as it may be
amended, modified supplemented or replaced from
<PAGE> 8
time to time) evidencing the obligation of the Borrowers to pay the Principal
Amount together with interest on the Loans.
"Obligations" means the Loans, the Note, all indebtedness and
obligations of the Borrowers under this Agreement and the other Loan Documents,
as well as all other obligations and indebtedness of a Borrower to the Lender,
now existing or hereafter arising, of every kind and description whether or not
evidenced by notes or other instruments, and whether such obligations are
direct or indirect, fixed or contingent, liquidated or unliquidated, including,
without limitation, any overdrafts in any deposit account maintained by a
Borrower with the Lender and all obligations of a Borrower with respect to
Letters of Credit.
"Operating Account" means the demand deposit account maintained with
the Lender by SPACEHAB as agent for the Borrowers, into which all Loans will be
disbursed. The initial Operating Account is account number 6520450542.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, limited liability
partnership, limited liability company, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.
"Prime Rate" means the rate of interest established from time to time
by the Lender and announced by the Lender as its prime rate. The Prime Rate is
not necessarily the lowest or most favorable rate of interest charged by the
Lender on extensions of credit to debtors.
"Principal Amount" means, on any specified date. the aggregate
outstanding principal balance of the Loans on such date.
"Proceeding" shall mean any action, suit or proceeding before any
Tribunal.
"Reportable Event" means any of the events described in Section
4043(b) of ERISA.
"State" means the Commonwealth of Virginia.
"Subsidiary" means a Person now existing or hereafter formed of which
ownership interests having ordinary voting power to create a majority of the
managers (e.g., board of directors) of such Person are at the time owned, or
the management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both by a Borrower. Unless required by the
context (e.g., Sections 8(a) and (b)) Astrotech shall nor be deemed to be a
Subsidiary of SPACEHAB, but rather shall be a Borrower.
"Tangible Net Worth" means at any date, all amounts which, in
accordance with GAAP, would be included under stockholders equity on the
consolidated balance sheet of SPACEHAB and its Subsidiaries on such date;
provided that, in any event, such amounts are to be net of amount carried on
the books of a Borrower and its Subsidiaries for (a) any write-up in the book
value of any assets resulting from a
<PAGE> 9
revaluation thereof subsequent to the date of this Agreement; (b) treasury
stock; (c) unamortized debt discount expense; (d) Rev cost of investments in
excess of net assets acquired at any time of acquisition; (c) loans or advances
to any Affiliate of a Borrower or Subsidiary, or directors, officers, employees
or shareholders of a Borrower., any Affiliate of a Borrower, or any Subsidiary;
(f) patents, patent applications, copyrights, trademarks, trade names, good
mill, research and development costs, organizational expenses, capitalized
software development costs and other like intangibles; and (g) any investments
in securities which are not actively traded on a national securities exchange.
"Tax Return" shall mean any federal, state and local income, excise,
property and other Tax return or report.
"Termination Date" means October 15, 1998 any any extension or
extensions thereof granted by the Lender in its sole discretion.
"Tribunal" means any federal state, municipal, foreign, territorial,
or other court, arbitration panel or governmental body, subdivision, agency,
department, commission, board, bureau or instrumentality having jurisdiction
over the matter concerned.
"UCC" means the Uniform Commercial Code as adopted in the State and
all amendments
"Unearned Contract Value" means the difference between (1) the then
fully handed dollar value of a specific contract or subcontract, whether or not
earned, and (2) the total amounts previously billed and properly billable for
accepted end items or services supplied, or to be supplied, or rendered, or to
be rendered, under such contract or subcontract.
SECTION 2. Loans.
2.1 Amount and Borrowing Procedure.
(a) Subject to the terms and conditions of this Agreement, including
the receipt of an Advance Request theater, the Lender agrees to make Loans to
the Borrowers (through SPACEHAB as their agent) from time to time until the
Termination Date unless, after giving effect to any such Loan (i) the Principal
Amount of Loans to the Borrowers would exceed the Maximum Amount or (ii) the
Borrowers then have, or it a result of such Loan would have an obligation to
prepay any Loan; provided, however that, for the purposes of all such
calculations, Loans to be repaid by Loans to be advanced on such date shall be
excluded from the Principal Amount. Subject to the foregoing limitations, the
Borrowers (acting through SPACEHAB as their agent) may borrow, repay without
penalty and re-borrow hereunder from the date hereof until the Termination
Date.
(b) If the Principal Amount exceeds the Maximum Amount, the Borrowers
shall immediately prepay Loans to the extent necessary to reduce such excess.
(c) The proceeds of the Loans shall be used for business or commercial
purposes and for no other purposes
(d) Each Advance Request must be received by the Lender not later than
1:00 p.m. (Washington, D.C. tone) on the date on which the Loan requested
thereby is to be made. Advance Requests may be
<PAGE> 10
transmitted by telecopy to the Lender at (703) 506-9553 or such other number as
the lender may designate in written notice to the Borrowers. If an Advance
Request is transmitted by telecopy, the Borrowers shall maintain the original
of such Advance Request as a permanent record for so long as any of the
Obligations remain outstanding and shall allow the Lender to inspect such
Advance Request and shall provide copies of such original to the Lender upon
its request therefor Nile proceeds of a Loan will be credited to the Operating
Account. Loans may be requested by those individuals designated by SPACEHAB
from time to time in written instruments delivered to the Lender, provided,
however, that the Borrowers shall remain liable with respect to any Loan
disbursed by the Lender in good faith hereunder, even if such a Loan is
requested by an individual who has not been so designated. The Borrowers agree
to confirm in writing from time to time, when and as requested by the Lender,
for purposes of which the proceeds of each Loan were used.
2.2. Interest
(a) General Provisions. Principal Amount shall bear interest for each
day such Principal Amount is outstanding until it becomes due, at a per annum
rate or rates of interest determined as set forth in this Section 2.2. The
Borrowers, acting through their SPACEHAB as their agent, shall have the option,
subject to the terms and conditions hereinafter set forth, of paying interest
on the Principal Amount, or portions thereof, at the Prime Rate or a LIBO-Based
Rate; provided, however, that each Euro-Dollar Rate Request must apply to at
least $1,000,000.00 of the Principal Amount, unless the Principal Amount is
less than $1,000,000.00 in which event all but not less than all of such
Principal Amount may bear interest at a LIBO-Based Rate. Following the Lender's
receipt of an oral request Mom SPACEHAB, the Lender will provide the Borrowers
with the current one, two, or three month LIBO Rates. If the Borrowers desire
the application of a LIBO-Based Rare, SPACEHAB shall submit a Euro-Dollar Rate
Request to the Lender which Euro-Dollar Rate Request, if accepted by the Lender
shall be irrevocable until the expiration of the Euro-Dollar Interest Period
applicable thereto. In the event SPACEHAB fails to submit a Euro-Dollar Rate
Request levity respect to a Euro-Dollar amount no later than 12:00 Noon
Washington, D C. time on the Euro-Dollar Business Day preceding the last day of
the relevant Euro-Dollar Interest Period, the Euro-Dollar Amount in question
shall thereafter bear interest at the Prime Rate for or any period when
SPACEHAB has failed to designate an interest rate applicable to any portion of
the Principal Amount, Prime Rate shall be the applicable interest rate. The
rate of interest with respect to any portion of the Principal Amount which,
under the terms hereof, is bearing interest at the Prime Rate shall change as
well when the Prime Rate Change. Payments of interest on each Loan shall be
made on each Interest Payment Date beginning on the Interest Payment Date next
succeeding the date of disbursement of such Loan, and with respect to Loans
bearing interest at a LIBO-Based Rate on the last day of the Euro-Dollar
Interest Period applicable thereto. At the option of the Lender, the Loans
shall bear interest at the Default Rate, payable on demand, during any period
of Default hereunder.
(b) Inability to Determine Rate. In the event that the Lender shall
have determined (which determination shall be conclusive and binding upon the
Borrowers that by reason of circumstances affecting the interbank Eurodollar
market adequate and reasonable means do not exist for ascertaining the LIBO
Rate. For any given Euro-Dollar Interest Period the Lender shall forthwith
give notice (which ma, be telephonic and promptly confirmed in writing or by
facsimile transmission) of such determination to the Borrowers at least one (1)
Euro-Dollar Business Day prior to, as the case may be, the conversion date of
any portion of the Principal Amount bearing interest at the Prime Rate to a
<PAGE> 11
LIBO-Based Rate or the proposed continuation date of any portion of the
Principal Amount bearing interest at a LIBO-Based Rate. If such notice is
given: ( 1 ) any portion of the Principal Amount bearing interest at the Prime
Rate that was to have been converted to a LIBO-Based Rate subject to the
provisions hereof, shall be continued at the Prime Rate and (2) any portion of
the Principal Amount bearing interest at a LIBO-Based Rate shall be converted,
on the last day of the these current Euro-Dollar Interest Period with respect
thereto, to the Prime Rate until such notice has been withdrawn by the Lender,
the Borrowers shall not have the right to have a LIBO-Based Rate apply to any
portion of the Principal Amount.
(c) Funding Indemnification. In addition to all other payment
obligations hereunder, in the event: (I ) any portion of the Principal Amount
which is bearing interest at LIBO-Based Rate is prepaid prior to the last day
of the applicable Euro-Dollar Interest Period, whether following a mandatory
prepayment. application of proceeds from the sale of Collateral or otherwise,
or (2) the Borrowers shall fail to convert any portion of the Principal Amount
bearing interest at the Prime Rate to a LIBO-Based Rate after SPACEHAB has
issued a Euro-Dollar Rate Request with respect to such portion of the Principal
Amount, or (3) the Borrowers shall fail to continue any portion of the
Principal Amount bearing interest at a LIBO-Based Rate which they have elected
to have continued at a LIBO-Based Rate or (4) the Borrowers shall fail to make
any payment of principal or interest on any Loan bearing interest at a
LIBO-Based Rate when due, then the Borrowers shall immediately pay to the
Lender an additional amount compensating the Lender for all losses, costs and
expenses incurred by the Lender in connection therewith, including, without
limitation, such as may arise out of reemployment of funds obtained by the
Lender or more fees payable to terminate the deposits from which such fund were
obtained, such losses, costs and expenses and the method of calculation thereof
being set forth in reasonable detail in a statement delivered to the Borrowers
by the Lender, such statement to be conclusive in the absence of manifest
error. Under no circumstances shall the Lender have any obligation to remit
monies to the Borrowers upon prepayment of any portion of the Principal Amount
bearing interest at a LIBO-Based Rate, even under circumstances which do not
result in the necessity for the payment by the Borrowers of any amount
hereunder. The hereof shall survive termination of this Agreement and the
discharge of all other Obligations.
(d) Illegality Impracticality . Notwithstanding any other provisions
herein, if any law, regulation, treaty or directive or any change therein or in
the interpretation or application thereof (whether having the force of law or
not) shall or may in the opinion of the Lender makes it unlawful or impractical
for the Lender to make or maintain claims bearing interest at a LIBO-Based
Rate: ( 1 ) the commitment of the Lender hereunder to make Loans bearing
interest at a LIBO-Based Rate shall forthwith be suspended and (2) the
outstanding Loans bearing interest at a LIBO-Based Rate, if any, shall be
converted automatically to Loans bearing interest at the Prime Rate at the end
of their respective Euro-Dollar Interest Periods or within such earlier period
as required by the event giving rise to such conversion In the event of a
conversion of any Loan bearing interest at a LIBO-Based Rate prior to the end
of its applicable Euro-Dollar Interest. Period pursuant to this Section 2.2(d),
the Borrowers hereby agree promptly, to pay the Lender, upon its written
demand, the amounts required pursuant to Section 22(c) above, it being agreed
and understood that such conversion shall constitute
<PAGE> 12
a prepayment for all purposes hereof: The provisions hereof shall survive the
termination of this Agreement by the discharge of all other Obligations.
2.3. Note. The obligation of the Borrowers to repay the Loans,
together with interest thereon, shall be evidenced by the note. The unpaid
principal balance of the Note shall be payable on the Termination Date subject
to acceleration, termination or prepayment under the terms of this Agreement.
2.4. Non-Utilization Fee. The obligation of the Borrowers to pay the
Non-Utilization Fee shall commence on the date hereof and shall continue until
the Obligations have been fully and completely paid and discharged. Commencing
on June 30, 1997, and continuing on the last day of each subsequent calendar
quarter thereafter (i.e. March 3l, June 30, September 30 and December, 31)
until the Obligations have been fully and completely paid and discharged, the
Borrowers shall pay the Non-Utilization Fee due for the quarter (or portion
thereof) then ending any accrued and unpaid portion of this fee shall be paid on
the Termination Date.
2.5. Payment and Computations. All payments hereunder (including any
payment or prepayment of principal, interest, fees and other changes) or with
respect to the blots or the Loans shall be made in lawful money of the United
States of America. in immediately available funds, to the Lender at its office
at North Tower, 5th Floor, 7799 Leesburg Pike, Falls Church, Virginia 22043, or
at such other place as the Lender may in writing designate and shall be
applied, at the option of the Lender, first to accrued Obligations other than
principal and interest, next to accrued interest, then to principal due on
Loans bearing, interest at the Prime Rate and last to interest due on monies
bearing interest at a LIBO-Based Rate in chronological order according to the
last day of the Euro-Dollar Interest Periods applicable thereto. If any payment
of principal interest or fees is not due on a Business Day, then the due date
will be extended to the next succeeding full Business Day and interest and fees
will be payable with respect the extension. If any payment of principal,
interest or fees is not made within seven (7) days of its due date, the
Borrowers agree to pay to the Lender late charge equal to 4% of the amount of
the payment. Except as otherwise specifically provided, interest and fees shall
be computed on the basis of a year of 365 days and actual days elapsed. The
Lender may, but shall not be obligated to, debit the amount of any payment due
under this Agreement to and, deposit account or loan account of a Borrower
maintained with the Lender. If the Lender elects to exercise the foregoing rift
at any time when no Default or Event of Default exists, the Lender will so
notify the Borrowers telephonically in advance.
2.6. Termination of Credit Facility by Borrowers. The Borrowers may
terminate the credit facility provided for in this Agreement and discontinue
borrowing hereunder by giving not less than 30 Business Days' prior written
notice of such termination to the Lender. The termination of the credit
facility provided for in this Agreement shall not affect the rights of the
Lender with respect to any Obligations having prior or subsequent to such
termination and the provisions of this Agreement shall remain in full force and
effect until the Obligations have been fully and completely paid and
discharged. Once the Obligations have been fully and completely paid and
discharged and all obligations of the Lender to make Loans has terminated, the
Lender will renege its Liens in the Collateral.
2.7. Extensions of Termination Date. The Lender may from time to time,
in its sole discretion, extend the Termination Date giving written notice of
such extension to the Borrowers. During any such periods of extension, the
remaining terms and conditions of this Agreement shall remain in full force and
effect.
2.8. Increase Costs.
<PAGE> 13
(a) If, on or after the date hereof, the Lender shall have determined
that the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation thereof, or compliance by the
Lender with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
Lender's capital as a consequence of its obligations hereunder to a level below
that which the Lender could have achieved but for such adoption, change or
compliance (taking into consideration the Lender's policies with respect to
capital adequacy), then from time to time after demand by the Lender, the
Borrowers shall pay to the Lender such additional amount or amounts as will
compensate the Lender for such reduction.
(b) In the event that a change subsequent to the date hereof, or any
applicable law, regulation, treaty or directive or in the governmental or
judicial interpretation or thereof, or compliance by he Lender with any request
or directive (whether or not having the force of law) issued subsequent to the
date hereof by any central bank or other governmental authority, agency or
instrumentality;
(1) Does or shall subject the Lender to any tax of any kind
whatsoever with respect to this Agreement or any others made or Letters of
Credit issued hereunder, or changes the basis of taxation of payments to
the Lender of principal, fees, interest or any other amount payable
hereunder (except for changes in the rate of tax on the overall net income
of the Lender);
(2) Does or shall impose, modify or hold applicable any
reserve special deposits compulsory loan or similar requirement against
assets held by or deposits or other liabilities in or for the account of
advances or loans by, or other credit extended by or any other acquisition
of funds by any office of the Lender which are not otherwise included in
the determination of the Prime Rate or an applicable LIBO Based Rate; or
(3) Does or shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the
Lender of making, issuing, agreeing to make or issue, renewing, or
maintaining any Loan or Letter of Credit or to reduce any amount receivable
in respect thereof then in any such case, the Borrowers shall pay
(including with respect to Taxes, any taxes or deductions imposed on such
taxes) to the Lender, within ten (10) days of its written demand therefor,
any additional amounts necessary to compensate the Lender for such
additional cost or reduced amounts receivable as determined by the Lender
levity with respect to this Agreement or such credit extensions.
(c) If the Lender becomes entitled to claim any additional amounts
pursuant to this Section 2.8 it shall promptly notify the Borrowers of the
event by reason of which it has become so entitled. A certificate (including
basis of calculation) as to any additional amounts payable pursuant to the
foregoing sentence submitted by the Lender to the Borrowers shall be conclusive
in the absence of manifest error. The obligations of the Borrowers under this
Section 2.7 shall survive the terms of this Agreement and the discharge of the
Obligations.
2.9. SPACEHAB as Agent for Borrowers. The Borrowers hereby appoint
SPACEHAB to act as agent for the Borrowers hereunder and under the other Loan
Documents. Each of the Borrowers hereby authorizes SPACEHAB to make such action
on its behalf hereunder and under the provisions of the other Loan Documents
and any other instruments and agreements referred to herein or therein, and to
exercise such powers and to perform such duties hereunder or thereunder, as are
specifically delegated to or required of SPACEHAB, either expressly or
implicitly, by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto. SPACEHAB agrees to act as the agent
<PAGE> 14
on behalf of the Borrower to the extent provided herein and in the other Loan
Documents. Any action taken by SPACEHAB or any failure of SPACEHAB to act,
either pursuant to instructions from the Borrowers or in the exercise of its
discretion, shall be binding on the Borrowers, and the Lender shall have no
obligation to inquire into the authority of SPACEHAB to act for the Borrowers
hereunder and under any other Loan Document.
2.10 Commitment Fee. At Closing, the Borrowers shall pay to the Lender
the balance of the commitment fee due to the Lender pursuant to the Lender's
commitment letter dated May 9, 1997 and accepted by the Borrowers May 19, 1997.
SECTION 3. Covenants, Representations and Other Terms Regarding Collateral.
3.1. Security Interest. Each Borrower hereby grants to the Lender, its
successors and assigns a security interest in the Collateral and all proceeds
and products thereof, all books of account and records, including all computer
software relating thereto, all of which shall secure the Obligations.
3.2. Accounts Receivable.
(a) The Borrowers represent and warrant as to each and every Account
Receivable, which is an account, now existing or hereafter arising, that: (i)
it is a bona fide existing obligation, valid and enforceable against the
Customer, for goods sold or leased or services rendered in the ordinary course
of business; (ii) it is subject to no dispute, defense or offset except as
disclosed in writing to the Lender; (iii) the supporting documents,
instruments, chattel paper and other evidences of indebtedness, if any,
delivered to the Lender are genuine, complete valid and enforceable in
accordance with their terms; (iv) it is not subject to any discount, or to
terms of special payment except as disclosed in writing to the Lender; and (v)
except to the extent the assignment or Claims Act of 1940 or similar state law
may apply to an Account Receivable from the Government, it is not and shall not
be subject to any prohibition or limitation upon assignment.
(b) The Borrowers shall immediately notify the Lender of: (i) any
dispute with a Customer relating to an Account Receivable due from such
Customer in excess of $100,000.00 and (ii) any bankruptcy, insolvency,
receivership, assignment for the benefit of creditor or suspension of business
of any Customer of which the Borrower has knowledge.
(c) Unless the Lender has exercised its rights to receive direct
parents in respect of Accounts Receivable from Customers, each Borrower is
authorized to collect amounts owing to it with respect to Accounts Receivable.
At any time, the Lender shall have the right to require that payments in
respect of Accounts Receivable be made directly to the Lender. Upon such an
election by the Lender, the Borrowers will so notify their respective Customers
and shall direct all Customers to make payments on Accounts Receivable to the
Cash Collateral Account designated by the Lender by printing such direction on
all invoices giver to Customers. At any time when a Default exists, the Lender
shall have the right to notify Customers of its security interest in the
Accounts Receivable, and. at the Lender's request the Borrowers will notify
each Customer of the Lender's security interest in the Accounts Receivable;
provided; however, that the foregoing shall not impair or restrict the Lender's
right, and the Borrowers, obligation to take all actions deemed reasonably
necessary by the Lender under the
<PAGE> 15
Assignment of Claims Act of 1040 as amended, and all applicable regulations
issued pursuant thereto to perfect the assignment to the Lender of Accounts
Receivable due from the Government.
(d) If Lender elects to receive direct payments in respect of Accounts
receivable from Customers, the Lender shall cause one or more Cash Collateral
Accounts to be opened and maintained at the principal office of the Lender. The
Cash Collateral Accounts will contain only cash proceeds of the Accounts
Receivable. Any cash proceeds (as such term is defined in Section 9-306(1) of
the UCC) received by the Lender directs from Customers obligated to make
payments under Accounts Receivable pursuant to clause (c) of this Section 3 or
from Borrower pursuant to clause (c) of this Section 2.2. whether consisting of
checks, notes, drains, bills of exchange, money orders, commercial paper or
other proceeds received on account of any Collateral, shall be promptly
deposited the Cash Collateral Accounts and until so deposited shall be held in
trust by the Lender in recognition of the Lender's security interest therein
ant shall not be commingled with any funds of the Borrowers not constituting
proceeds of Collateral. The name in which each Cash Collateral Account is
carried shall clearly indicate that the funds deposited therein are the
property of the appropriate Borrower, subject to the security interest of the
Lender hereunder. Such proceeds, when deposited, shall continue to be secured
for the Obligations and shall not constitute payment thereof until applied as
hereinafter provided. The Lender shall have sole dominion and control over the
funds deposited in the Cash Collateral Accounts, and such funds may be
withdrawn therefrom only by the Lender. Provided that no Default or Event of
Default exists, each Business Day the Lender (after final collection) will
apply the funds in the Cash Collateral Accounts to reduce that portion of the
Principal Amount bearing interest at the Prime Rate and will transfer any funds
remaining in the Cash Collateral Accounts after such principal curtailments to
the Operating Account.
(e) If the Lender has elected to receive payments directly from
Customers in respect of Accounts Receivable, each Borrower shall cause all
payments from Customers in respect of Accounts Receivable collected by it to be
delivered to the Lender forthwith upon receipt for deposit in the appropriate
Cash Collateral Account, in the original form in which received (with such
endorsements or assignments as may be necessary to permit collection thereof by
the Lender) and until so delivered such payments shall be held in trust by the
Borrowers in recognition of the Lender's security interest therein and shall
not be commingled with any funds of the Borrowers not constituting proceeds of
Collateral. Each Borrower hereby appoints the Lender and any officer, employee
or agent of the Lender as the Lender may from time to time designate as
attorneys-in-fact for such Borrower to endorse and sign the name of such
Borrower on all checks, drafts, money orders or other media of payment so
delivered and to perform all actions necessary or desirable in the discretion
of the Lender to effect the provisions of this Section 3.2(e) and to carry out
the intent hereof, to do any act which such Borrower is required to do pursuant
to the terms of this Section 3.2(e), and to exercise such rights and powers as
such Borrower might exercise with respect to the Collateral, all at the cost
and expense of the Borrowers. Any endorsements or assignments made pursuant to
the foregoing power of attorney shall, for all purposes, be deemed to have been
made by the Borrower granting such, power of attorney prior to any endorsement
or assignment thereof by the Lender. The Lender may use any convenient or
customary means for the purpose of collecting such checks, draft, money orders
or other media of payment.
(f) To facilitate the direct collection of payments made in respect of
Accounts Receivable, the Lender shall have the right to take over each
Borrower's post office boxes or make
<PAGE> 16
other arrangements, with which the Borrowers shall cooperate, to receive
payment made in respect of Accounts Receivable contained in each Borrower's
mail.
(g) Each Borrower shall execute all other agreements, instruments and
documents and shall perform all further acts which the Lender may require with
respect to Accounts Receivable owing by the Government to ensure compliance
with the Assignment of Claims Act of 1940, as amended, and all applicable
regulations issued pursuant thereto.
3.3 Defense of Collateral. Each. Borrower, at its expense, will defend
the Collateral against any claims or demands adverse to the Lender's security
interest therein and will promptly pay, when due, all taxes or assessments
levied against the Borrowers on the Collateral, except as contested in good
faith and through appropriate proceedings deemed reasonably acceptable to the
Lender.
3.4. Information Regarding Collateral. The Borrowers shall provide the
Lender such information as the Lender may from time to time reasonably request
with respect to the Collateral, including, without limitation, statements
describing, designating, identifying and evaluating all Collateral.
3.5. Perfection of Security. The Borrowers shall perform any and all
steps in all relevant or appropriate jurisdictions as may be necessary or
reasonably requested by the Lender to perfect, maintain and protect the
Lender's security interest in the Collateral. The Borrowers shall pay taxes and
costs of, or incidental to, any recording or filing of any financing statements
concerning the Collateral. The Borrowers agree that a carbon, photographic,
photostatic or other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement; provided that this shall not limit the
obligations of the Borrowers to execute separate to, subsequent financing
statements with respect to the Collateral upon the Lender's request.
3.6. Power of Attorney. Each Borrower hereby appoints the Lender and
any officer, employee or agent of the Lender as the Lender may from time to
time designate as attorneys-in-fact for such Borrower to perform all actions
necessary or desirable in the discretion of the Lender to effect full
provisions of this Agreement and to carry out the intent hereof, to do any act
which such Borrower is required to do pursuant to the terms of this Agreement,
and to exercise such rights and powers as such Borrower might exercise with
respect to the Collateral, all at the cost and expense of such Borrower. Each
Borrower agrees that neither the Lender nor any other such attorney-in-fact
will be liable for any acts of omission or commission unless such acts were
willful and malicious or grossly negligent, nor for any error of judgment or
mistake or law or fact. This power is coupled with an interest and is
irrevocable so long as any Obligations are outstanding. The Lender agrees that
it shall not exercise any right under this Section prior to the occurrence of a
Default.
3.7. Limitations on Obligations. It is expressly agreed by the
Borrowers that, anything herein to the contrary notwithstanding, the Borrowers
shall remain liable under each Account Receivable and contract giving rise to
each Account Receivable to observe and perform all the conditions and
obligations to be observed and performed by the Borrowers thereunder, all in
accordance with and pursuant to the terms and provisions of each such Account
Receivable and contract. The Lender shall not have any obligation or liability
under any Account Receivable or contract by reason of or arising out of this
Agreement or the assignment of such Account Receivable or
<PAGE> 17
contract to the Lender or the receipt by the Lender of any payment relating to
the Account Receivable pursuant hereto nor shall the Lender be required or
obligated in any manner to perform or fulfill any of the obligations of the
Borrowers under or pursuant to any Account Receivable or contract, or to make
any payment or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any Account Receivable, or to present or file any claim, or to take any action
to collect or enforce any performance of the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.
3.8. Indemnification In any suit, proceeding counterclaim or action
brought by or against he Lender relating to the Collateral, the Borrowers will
save, indemnify and keep the Lender harmless from and against all expense, loss
or carnage suffered by reason of any defense, set-off, counterclaim. recoupment
or reduction of liability whatsoever of any obligor thereunder, arising out of
a breach by the Borrowers of any obligation thereunder or arising out of any
other agreement, indebtedness or liability at any time owing to or in favor of
such obligor or its successors from the Borrowers. and all such obligations of
the Borrowers shall be and remain enforceable against and only against the
Borrowers and shall not be enforceable against the Lender. The foregoing
obligation of the Borrowers to indemnify the Lender shall survive the payment
of the Obligations and the termination of this Agreement but shall not extend
to any suit, proceeding or action arising out of the Lender's gross negligence
or willful misconduct.
SECTION 4. Representations and Warranties. As of the date hereof and
as of each date a Loan is requested hereunder the Borrowers represent and
warrant to the Lender:
4.1. Incorporation, Good Standing and Due Qualification. Each Borrower
and each Subsidiary is a corporation duly organized, validly existing, and in
good standing under the laws or the jurisdiction of its incorporation; has the
corporate power, and authority to own its assets and to transact the business
in which it is now engaged or in which it is proposed to be engaged; and is
duly qualified as a foreign corporation and in good standing under the laws of
each other jurisdiction in which such qualification is required.
4.2. Corporate Power and Authority. The execution, delivery and
performance by each Borrower of the Loan Documents to which each is a party
have been duly authorized by all necessary corporate action and do not and will
not (a) require any consent or approval of the stockholders of such
corporation: (b) contravene such corporation's charter or bylaw (c) result in a
material breach of or constitute a default under any material agreement or
instrument to which such corporation is a party or by which it or its
properties may be bound or affected: (d) result in, or require, the creation or
imposition of any Lien. upon or with respect to any of the properties now
owned or hereafter by such corporation except be specifically created by or
permitted under the Loan, Documents; and (e) to each Borrower's best knowledge
cause such corporation to be in default under any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award applicable to such
corporation.
4.3 Legally Enforceable Agreement. This Agreement is, and each of the
other Loan Documents when delivered under this Agreement will be, legal, valid
and binding obligations of the Borrowers, enforceable against the Borrowers, as
the case may be, in accordance with their respective terms, except
<PAGE> 18
as such enforceability may be limited by bankruptcy, insolvency, receivership
or by general principles of equity.
4.4. Financial Statements. The financial statements of the Borrowers
which have been furnished to the Lender in connection with this Agreement are
complete and correct in all material respects in accordance with GAAP and
fairly present the financial condition of such Borrower, and, since the date of
each such statement, there has been no material adverse change in the condition
(financial or otherwise), business or operations of the Borrowers.
4.5. Litigation. There's no pending or, to each Borrower's best
knowledge, threatened action or proceeding against or affecting a Borrower or
any Subsidiary before any Tribunal which may, in any case or in the aggregate,
materially adversely affect the financial condition, operations, properties or
business of a Borrower or any Subsidiary.
4.6. Ownership and Liens. Each Borrower and each Subsidiary has title
to all of its assets, including the Collateral and none of the Collateral or
such assets, to the best of each Borrower's knowledge, is subject to any Lien,
except Liens permitted by this Agreement.
4.7. ERISA.
(a) Prohibited Transactions. No transaction has occurred in
connection with which a Borrower or any Subsidiary would be subject to a
liability to either civil penalty assessed pursuant to Code 502(i) of ERISA or
a tax imposed by Code 4975.
(b) Plan Termination. There has been no termination of an
Employee Benefit Plan or trust created under any Employee Benefit Plan that has
or will give rise to liability to the PBGC on the part of a borrower an ERISA
affiliate. No withdrawal or other liability has been incurred under Title IV of
ERISA with respect to any Employee Benefit Plan by a Borrower or an ERISA
Affiliate. The PBGC As not instituted proceedings to terminate any Employee
Benefit Plan.
(c) Accumulated Funding Deficiency. Full payment has been
made of all amounts which are required under the terms of each Employee Benefit
Plan to have been, paid as contributions to such Employee Benefit Plan as of
the last day of the most recent fiscal year of such Employee Benefit Plan ended
on or before the dare of this Agreement, and no accumulated funding deficiency
(as defined in Section 302 of ERISA and Code Section 419), whether or not
waived, exists with respect to any Employee Benefit Plow Each Borrower and each
E~SA Affiliate are current with all required installments under Code Section
412.
(d) Relationship of Benefits to Pension Plan Assets. The
current value of the benefit liabilities (as defined in Section 4001 (a)(6)
of ERISA) of each Employee Benefit Plan does not exceed the fair market value
of the assets of such Employee Benefit Plan. Neither a Borrower nor any ERISA
affiliate is required to provide security to an Employee Benefit Plan under
Code Section 401(a)(29). No lien under Code Section 412(n) or Sections 312(f)
or 4068 of ERISA has been or is reasonably expected by the Borrowers to be
imposed on the assets of a Borrower or any ERISA Affiliate.
<PAGE> 19
(e) Multiemployer Plan. Either the Borrowers nor any ERISA
Affiliate participates in or contributes to or, since September 26, 1980 has
participated in or contributed to, any Multiemployer Plan.
(f) Compliance with ERISA. The Borrowers and the ERISA
Affiliates are in compliance in all material respects with those provisions of
ERISA which are applicable to them. Any Employee Benefit Plan which is intended
to be "qualified" under Code Section 401 (a) is so qualified. No Reportable
Event has occurred with respect to any Employee Benefit Plan. Each Employee
Benefit Plan has been administered in compliance with ERISA and the applicable
provisions of the Code, and in accordance with its terms and any related
agreements or documents. Each Borrower may terminate its contributions to any
ether Employee Benefit Plan maintained by it without incurring any liability to
any person interested therein. There is no pending or, to the best knowledge of
each Borrower, threatened assessment. complaint, proceeding or investigation of
any kind before any Tribunal, including, but not limited to, the Internal
Revenue Service, the Department of Labor, the PBGC or any court of competent
jurisdiction, related to an Employee Benefit Plan, nor is there any basis
therefor. The Borrowers and each ERISA Affiliate have complied with the
continuation coverage requirements of Code Section 4980B and Part 6 of Title of
ERIS.A and any predecessor provisions thereto and, to the extent elective. the
group health plan for ability, access and renewability requirements in Code
Sections 9801 through 9806.
4.8. Taxes. The Borrowers and each Subsidiary have (a) timely flied or
caused to be filed all Tax Reviews required to be filed for all periods up to
and including the date hereof in each jurisdiction in which they are or have
been subject to taxation and such return and reports are true and corrects have
timely filled all claims for refunds to which they are entitled and have timely
paid or caused to be paid in full all taxes which are due and payable to any
taxing authorities for such periods, (b) fully paid or accrued on their
respective books an amount sufficient to pay all taxes to the extent of known
liabilities therefor which are not yet due and payable, (c) made or caused to
be made all withholdings of taxes required to be made, and such withholdings
have either been paid to the appropriate governmental authority or set aside in
separate accounts for such purposes, and (d) otherwise satisfied, in all
material respects, all federal requirements applicable to them with respect to
all aforementioned obligations of all taxing jurisdictions, and neither the
Internal Revenue Service nor any other taxing authority is now asserting or, to
the best knowledge of each Borrower, threatening assert against a Borrower or
and, Subsidiary any deficiency or claim for additional truces or any interest
thereon or penalties in connection therewith.
4 9. Debt. No Borrower is in any manner directly or contingently
obligated with respect to any Debt which is not permitted by this Agreement. No
Borrower is in default with respect to any such Debt.
4.10 Corporate Name: Chief Executive Office. During the five years
immediately preceding the date of this Agreement, neither a Borrower nor any
predecessor of a Borrower has used arty corporate or fictitious name other than
its current corporate name. The chief executive office of SPACEHAB, within the
meaning of Section 9.103(3!(d) of the UCC is Suite 360, 1595 Spring Hill Road,
Vienna, Virginia 22182 and the chief executive office of Astrotech, within the
meaning of Section 9.1 03(3)(d) of the UCC is 125110 Prosperity Drive, Suite
100, Silver Spring, Maryland 20904.
4.11. Environmental and Safety Matters. The operation of the business
of the Borrowers and all Subsidiaries does not violate any applicable
Environmental Laws. The Borrowers and all
<PAGE> 20
Subsidiaries have timely obtained all licenses and permits and timely filed all
reports required to be filed under any applicable Environmental Laws. Neither a
Borrower nor any Subsidiary has, and, to the best knowledge of each Borrower,
no other Person has, stored any chemical or hazardous substances, including any
"Hazardous Substances," "Pollutants" or "Contaminants" (as such terms are
defined in CERCLA), asbestos, petroleum products, or polychlorinated biphenyls
on, beneath or about any of the owned or leased properties of a Borrower or any
Subsidiary in violation of any applicable legal requirements, including any
environmental Laws. Except as otherwise disclosed to the Lender in writing
prior to the date hereof: to the best knowledge of each Borrower, there is no
condition relating to or resulting from. the release or discharge into the
soil, surface waters, groundwaters, drinking water supplies. navigable waters,
lands surface or subsurface: strata, ambient air or any other environmental
medium which has resulted or could result in any damage, loss, cost, expense,
claim, demand, order or liability to or against a Borrower or any Subsidiary by
any Tribunal or other third party relating to or resulting from the operation
of its business or otherwise related to any real properly owned or leased of a
Borrower or any Subsidiary, irrespective of the cause of such condition.
Neither a Borrower nor any Subsidiary has received notice from any Tribunal or
private or public entities advising a Borrower or any Subsidiary that it is
potentially responsible for response costs with respect to a release or
threatened release of any Hazardous Substances. Neither a Borrower nor any
Subsidiary has and, to the best knowledge of each Borrower, no other Person
has, buried, dumped or otherwise disposed of any Hazardous Substances on,
beneath or about any property of a Borrower or any Subsidiary or on, beneath or
about any other property in violation of any applicable legal requirements,
including any Environmental Laws. Neither a Borrower nor any Subsidiary has
received notice of violation of any Environmental Law or zoning or land use
ordinance, law or regulation relating to the operation of the business of the
Borrowers or any Subsidiary, nor is either Borrower severe of any such
violation.
4.12. Licenses. The Borrowers and all Subsidiaries possess all
Licenses from federal, state and local governmental or regulatory authorities
that are necessary for the ownership, maintenance and operation of their
respective businesses as now conducted or as proposed to be conducted and the
ownership or leasing of their respective properties where the failure to
possess such Licenses would have a material adverse effect on the condition
(financial or otherwise), operations, business or property of such Borrower or
such Subsidiary. The Licenses are in full force and effect, and the Borrowers
and each Subsidiary, as the case may be, are in compliance in all material
respects with all of such Licenses.
4.13. Intellectual Property. The Borrowers and all Subsidiaries own
all right, title and interest in and to all Intellectual Property used in and
material to the operation of their respective businesses or, for such
Intellectual Property that is not owned, possesses adequate licenses or other
legally enforceable rights to use the same. Each Borrower has no reason to
believe that any valid basis exists upon which a claim adversely affecting any
such Intellectual Property may be asserted against a Borrower or any
Subsidiary. To the best knowledge of each Borrower, no person is infringing
upon the Intellectual Property used by a Borrower or any Subsidiary material to
the operation of their respective businesses. Each Borrower has taken
appropriate steps to protect the secrecy, confidentiality and value of its and
all Subsidiaries rights in any to such Intellectual Property and to prevent
others from using such Intellectual Proper without consent.
4.14. Absence of Payments. None of the Borrowers, any Subsidiary, any
of their respective directors, officers, agents or employees, or, to the best
knowledge of each Borrower, any other Person acting on behalf of any such
Person has made any unlawful contributions, payments, gifts
<PAGE> 21
or entertainment, or make any unlawful expenditures relating to political
activity, to government officials or others.
4.15. Related Party Transactions. No present or former officer,
director, stockholder or Affiliate of a Borrower is a party to any transaction
or series of transactions with a Borrower which requires payments by a Borrower
to such officer, director, stockholder or affiliate other than normal and
customary employment compensation and benefits.
4.16. Disclosure. All facts material to the financial condition
results of operations, business, prospects and property of the Borrowers and
each Subsidiary have heretofore been disclosed o the Lender. No representation
or warranty made by a Borrower in this Agreement or in any of the other Loan
Documents or in any statement certificate, exhibit or schedule furnished or to
be furnished to the Lender pursuant to this Agreement or any of the other Loan
Documents or in connection with the transactions contemplated herein and
therein contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein and therein not misleading.
SECTION 5. Affirmative Covenants. The Borrowers covenant and agree
with the Lender that each will:
5.1. Maintenance of Existence. Preserve and maintain, and cause each
Subsidiary to preserve and maintain, its corporate existence and good standing
in the jurisdiction of its incorporation, and qualify and remain qualified, and
cause each Subsidiary to qualify and remain qualified, as a foreign corporation
in each jurisdiction in which to he best of each Borrower's knowledge such
qualification is required.
5.2. Maintenance of Records. Keep and cause each Subsidiary to keep,
adequate records and books of account, in which complete entries will be made
in accordance with GAAP, reflecting all financial transactions of each Borrower
and each Subsidiary, and maintain the principal records and books of account of
each Borrower and each Subsidiary, including those concerning the Collateral,
at the chief executive office of SPACEHAB.
5.3. Maintenance of Properties. Maintain, keep and preserve, and
cause each Subsidiary to maintain, keep and preserve, all or its properties
(tangible and intangible) necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.
5.4. Conduct of Business. Continue, and cause each Subsidiary to
continue, to engage in an efficient and economical manner in a business of the
same general type as conducted by it on the date of this Agreement.
5.5. Maintenance of Insurance. Maintain, and cause each Subsidiary to
maintain, insurance with financially sound and reputable insurance companies or
associations in such amounts and covering such risk as are usually carried by
companies engaged in the same or a similar business and similarly situated.
5.6. Compliance with Laws. Comply, and cause each Subsidiary to
comply, in all material respects with all applicable laws, rules, regulations
and orders (including, without limitation, ERISA), such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon, its property,
except is contested in good faith, and through appropriate proceedings deemed
reasonably acceptable to the Lender.
<PAGE> 22
5 7. Right of Inspection. At any reasonable time and from time to time
permit the Lender or any agent or representative thereof to audit and verify
the collateral, examine and notice copies of and abstracts from the records and
books of account of; and visit the properties of, the Borrowers and any
Subsidiary, and to discuss the affairs, finances and accounts of the Borrowers
and any Subsidiary with any of heir respective of officers, directors or
shareholders and each Borrower's independent accountants, and in connection
with any such inspection, pay to the Lender upon demand its then current fee
for such inspections compensate the Lender for the cost incurred and the
commitment of resources required for conducting such inspection.
5.8 Reporting Requirements Furnish to the Lender:
(a) Form 10-Q. As soon as available, and in any event within the
earlier or five (5) days after filing with the Securities and Exchange
Commission and fifty (50) days after the end of each of the first three
quarters of each fiscal year of SPACEHAB. Securities and Exchange Commission
Form 10-Q prepared by SPACEHAB in accordance with GAAP. The financial
statements contained in each Form 10-Q statements shall be certified by an
officer of each Borrower acceptable to the Lender to present fairly the
financial condition of the Borrowers (subject to year-end adjustment) and shall
be accompanied by a Compliance Certificate;
(b) Form 10-K. As soon as available, and in any event within the
earlier of five (5) days after filing with the Securities and Exchange
Commission and ninety-five (95) days after the end of each fiscal year of
SPACEHAB. Securities and Exchange Commission Form 10-K prepared by SPACEHAB.
The consolidated financial statements contained in such Form 10-K shall be
prepared in accordance with GAAP and be accompanied by an opinion thereon
acceptable to the Lender of an independent certified public accountant firm
selected by the Borrowers and acceptable to the Lender and shall also be
accompanied by a Compliance Certificate.
(c) Management Letters. Promptly upon receipt thereof copies of any
reports submitted to a Borrower or any Subsidiary by independent certified
public accountants in connection with examination of the financial statements
of a Borrower or any Subsidiary made by such accountants;
(d) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits and proceedings before any Tribunal affecting a
Borrower or Any Subsidiary, which, in the reasonable opinion of the Borrowers,
if determined adversely, is reasonably likely to have a material adverse effect
on the financial condition, properties or operations of such Borrower or such
Subsidiary;
(e) Notice of Defaults and Events of Default. As soon as possible and
in any event within five (a) Business Days after the occurrence of each Default
and Event of Default, a written notice setting forth the details of such
Default or Event of Default and the action which is proposed to be taken by the
Borrowers with respect thereto;
(f) Proxy Statements, Etc. Promptly after the sending or filing
thereof copies of all proxy statements, financial statements and reports which
a Borrower or any Subsidiary sends to its stockholders, and copies of all
regular, periodic and specific reports, and all registration statements which a
Borrower or any Subsidiary files with the Securities and Exchange Commission or
any governmental authority which may be substituted therefor, or with any
national securities exchange;
<PAGE> 23
(g) Government Contract Audits. Promptly after a Borrower's receipt
thereof; notice of any final decision of a contracting officer disallowing
costs aggregating more than $500,000.00, which disallowed costs arise out of
any audit of such Borrowers contracts with the Government;
(h) Notice Claimed Defaults. Immediately upon becoming aware that the
holder of any Debt or Lien has given notice or taken any action with respect to
a claimed breach, default or coven of default, a written notice specifying the
notice given or action taken by such holder and the nature of the claimed
breach. default or event of default by a Borrower thereunder and the action
being taken or proposed to be taken with respect thereto; and
(i) General Information. Such other information respecting the
condition or operations, financial or otherwise, of the Borrowers or any
Subsidiary as the Lender may from time to time reasonably request.
5.9. Licenses. Keep, and cause each Subsidiary, to keep, all increases
and all other agreements necessary to operate the business of such Borrower or
such Subsidiary in full force and effect and free from burdensome restrictions
and comply in all material respects with all terms and conditions thereof.
5.10. ERISA. (a) Make, and cause each Subsidiary to make, prompt
payments of contributions required by the terms of each Employee Benefit Plan
and meet the minimum Ending standards set forth under ER1SA and the Code with
respect to each Employee Benefit Plan to which such standards apply; (b) notify
the Lender immediately of any fact including, without limitation, any
Reportable Event, arising in connection with any Employee Benefit Plan which,
more likely than not, would constitute grounds for the termination thereof by
the PBGC or for the appointment by the appropriate United States district court
of a trustee to administer the Employee Benefit Plan; (c) notify the Lender
immediately of the intent by a Borrower to terminate any Employee Benefit Plan;
(d) notify the Lender immediately of the adoption of an amendment to any
Employee Benefit Plan (or of any other event) which causes any Employee Benefit
Plan to fail to leave sufficient assets to qualify for a standard termination
under Section 4041 of ERISA or to require providing security under Code Section
401 (a)(29); (e) promptly after receipt thereof, furnish to the Lender a copy
of any notice received by a Borrower or any Subsidiary from the PBGC relating
to the intention of the PBGC to terminate any Employee Benefit Plan or to
appoint a trustee to administer an Employee Benefit Plan.; (f) promptly after
receipt thereof furnish to the Lender a copy of any notice received by a
Borrower or any Subsidiary from the Internal Revenue Service relating to the
intention of the Internal Revenue Service to disqualify any Employee Benefit
Plan or to refuse to grant a favorable determination letter with regard to any
Employee Benefit Plan; (g) notify the Lender immediately of arty lawsuit, claim
for damages or administrative proceeding in which an Employee Benefit Plan or a
fiduciary with respect thereto is a defendant: and (h) furnish to the Leader.
promptly upon its request therefor, such additional information concerning each
and every Employee Benefit Plan as may be reasonably requested including, but
not limited to, the annual report required to be film under ERISA and any
notices filed or proposed to be filed in connection with any of the foregoing.
<PAGE> 24
5.11. Environmental Matters. Notify the Lender immediately of the
receipt by a Borrower or any Subsidiary of any notice from any Tribunal that
there has been a violation by a Borrower or any Subsidiary of any Environmental
Law and that remediation of such violation is necessary and assume
responsibility for, and control the process of, any response action, penalties
or correction associated with such violation.
5.12. Financial Covenants.
(a) EBITDA. Cause EBITDA, determined on a quarterly basis, to be not
less than the amount set forth below for the corresponding period:
<TABLE>
<CAPTION>
Amount Period
<S> <C>
$3,000,000.00 From April 1, 1997 through
June 30, 1997
$4,600,000.00 From July 1, 1997 through
September 30, 1997
$4,100,000.00 From October 1, 1997 through
December 31, 1997
$6,700,000.00 From January 1, 1998 through
March 31, 1998
$5,000,000.00 From April 1, 1998 through
June 30, 1998
</TABLE>
The Lender shall calculate EBITDA for the purpose of measuring the
Borrowers' compliance with foregoing covenant using information contained in
the consolidated financial statements of SPACEBAB included in each Form 10-Q or
Form 10-K that the Borrowers are required to deliver to the Lender under this
Agreement.
(b) Minimum Tangible Net Worth. Cause Tangible Net Worth to be at
least $72,500,000.00.
- -------------
* If the Launch Revenue is recognized during the period from July 1, 1997
through September 30, 1997 then this amount shall be changed to $1,748,000.00
** If the Launch Revenue is recognized during the period from October 1,1997
through December 31,1997, then this amount shall be changed to ($2,248,000.00).
The Lender shall calculate Tangible Net worth for the purpose of
measuring the Borrowers' compliance with foregoing covenant using information
contained in the consolidated balance sheet of SPACEHAB included in each Form
10-Q or Form 10-K that the Borrowers are required to deliver to the Lender
under this Agreement.
<PAGE> 25
(c) Current Ratio. Cause the Current Ratio to be at least 1.2 to 1.
The Lender shall calculate the Current Ratio for the purpose of
measuring the Borrowers' compliance with foregoing covenant using information
contained in the consolidated financial statements of SPACEHAB included in each
Form 10-Q or Form 10-K that the Borrowers are required to deliver to the Lender
under this Agreement.
SECTION 6. Negative Covenants. Each Borrower agrees that it will not:
6.1 Liens. Create, incur, assume or permit to exist, or permit any
Subsidiary to create, incur, assume or permit to exist, any Lien upon or with
respect to any of its properties, now owned or hereafter acquired, except: (a)
Liens in favor of tile Lender; (b) Liens which are incidental to the conduct
off the business of the Borrowers or any Subsidiary arising in connection with
operating lease obligations evidencing the rights of the lessors under such
leases. (c) Liens on any assets of a Borrower (other than assets included in
the Collateral and inventory) securing Debt of such Borrower to a Bank that is
permitted pursuant to Section 6.2(b) hereof, including the Liens in existence
on the date of this Agreement and disclosed in Schedule 6.1 (c) attached
hereto; and (d) Liens securing obligations of a Subsidiary to a Borrower or
another Subsidiary.
6.2. Debt. Create, incur, assume or permit to exist, or permit any
Subsidiary to create, incur, assume or permit to exist, any Debt, except (a)
the Obligations; (b) Debt of a Borrower or a Subsidiary to any Bank that is
either unsecured or secured by assets of such Borrower or Subsidiary not
included in the Collateral or constituting inventory, including the Debt in
existence on the date of this Agreement and depicted in Schedule 6.2 attached
hereto: provided that after giving effect to the payments required by such
Debt, no Default or Event of Default will occur; (c) Debt of a Borrower
subordinated to the Obligations on terms satisfactory to the Lender; (d)
subject to the limitations specified in Sections 6.7 and 6.10 hereof, Debt of
any Subsidiary to a Borrower or another Subsidiary; and (e) ordinary trade
accounts payable.
6.3 Mergers, Etc. Without obtaining the prior written consent of the
Lender, which will not be unreasonably withheld, merge or consolidate with a
Person, or permit any Subsidiary to do so, except that without the Lender's
prior written consent (a) any Subsidiary may merge into or transfer assets to a
Borrower, and (b) Any Subsidiary may merge into or consolidate with or transfer
assets to any other Subsidiary.
6.4. Leases .Create, incur, assume or permit to exist, or permit any
Subsidiary to create, incur, assume or permit to exist any obligation as lessee
for the rental or hire of any real or personal property, except as is necessary
in connection with such party's normal and customary business activities.
6.5. Dividends. Declare or pay any dividends; purchase, redeem,
retire, or otherwise acquire for value any of its capital stock note of
hereafter outstanding; make any distribution of assets to its stockholders
whether in cash, assets or obligations of a Borrower; allocate or otherwise set
apart any sum for the payment of any dividend or distribution on, or for the
purchase, redemption, or retirement
<PAGE> 26
of, any shares of its capital stock: retake any other distribution by reduction
of capital or otherwise in respect of any shares of its capital stock; or
Permit any Subsidiary to purchase or otherwise acquire for value any stock of a
Borrower or another Subsidiary, except that if there is no Default at such time
and, after giving effect to the proposed dividend, no Default will occur, (a) a
Borrower may declare and deliver dividends and make distributions payable
solely in common stock of such Borrower, (b) a Borrower may purchase or
otherwise acquire shares of its capital stock by exchange for or out of the
proceeds received from a substantially concurrent issue of new shares of its
capital stock, and (c) a Borrower may declare and pay cash dividends; provided
that no Borrower shall declare or pay any dividends permitted under this
Section 6.5 until the Lender has received written notice from such Borrower at
least five (5) Business Days in advance of declaring or paying any such
dividend and has also received such other information as the Lender may have
requested in order to verify the amount of the proposed dividends and to
determine that the conditions precedent to the making of the requested
dividends has been satisfied.
6.6. Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of any of its now owned or hereafter acquired assets including in the
Collateral or constituting inventory, except: (a) the sale of Inventory in the
ordinary course of business and (b) the sale or other disposition of tangible
property included in Collateral or constituting Inventory which, in each case,
a Borrower determines in good faith to be obsolete.
6.7. Loans. Make, or permit any Subsidiary to make, any loan or
advance to any Person except for reasonable advances by a Borrower to its
employees for anticipated business expenses that would be reimbursable to such
employees under such Borrower's expense reimbursement policy.
6.8. Guaranties, Etc. Assume, guarantee, endorse or otherwise be or
become directly or contingently responsible or liable (including. but not
limited to, an agreement to purchase any obligation, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or services, or to
maintain or cause such Person to maintain a minimum working capital or net
worth, or otherwise to assure the creditors of any Person against loss) for
obligations of any Person, except, guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business
6.9. Acquisitions. Purchase or acquire, or permit any Subsidiary to
purchase or acquire, (a) all or substantially all of the assets of any Person,
or (b) any capital stock of or ownership interest in any other Person unless
the Lender has consented in writing to such acquisition, which consent will not
be unreasonably withheld.
<PAGE> 27
6.10. Transaction with Affiliate. Except as specifically permitted by
the terms of this Agreement, enter into any transaction, including without
limitation, the purchase, sale or exchange of property or the rendering of any
service, with any Affiliate, or permit any subsidiary to enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of. any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of such
Borrower's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to such Borrower or such Subsidiary than would be applicable in
a comparable arm's-length transaction with a Person not an Affiliate.
6.11. Change of Chief Executive Office and Corporate Name. Move the
principal records and books of account of any Borrower or any Subsidiary,
including those concerning the Collateral from its chief executive office or
change its chief executive office or the name under which it does business
without (a) giving the Lender at least thirty (30) days prior written notice,
and (b) executing and delivering financing statements reasonably satisfactory
to the Lender prior to such move or change.
6.12. Capital Expenditures. Permit the aggregate Capital Expenditures
of the Borrowers (other than Capital Expenditures paid for by proceeds of Debt
of a Borrower permitted under the terms of this Agreement and obtained by such
Borrower specifically to fund such Capital Expenditures) to exceed the amounts
set forth below for the corresponding period:
<TABLE>
<CAPTION>
Amount Period
------ ------
<S> <C>
$30,000,000.00 For the fiscal year ending June 30, 1997
$12,000,000.00 For the fiscal year ending June 30, 1998
$ 2,000,000.00 For the period beginning July 1, 1998 through
the period ends October 15, 1998
</TABLE>
SECTION 7. Conditions of Lending.
The making of the Loans shall be subject to the following conditions:
7.1. Conditions Precedent to Closing. The initial disbursement of the
Loans shall be subject to the following conditions precedent:
(a) The Loan Documents shall have been appropriately completed. duly
executed by the panties thereto, recorded and or filed where necessary and
delivered to the Lender, and all taxes and fees with respect to such recording
and filing shall have been paid by the Borrowers.
(b) No Default or Event of Default shall have occurred and be
continuing.
(c) All representations and warranties contained herein shall be true
and correct at the date of the Closing.
<PAGE> 28
(d) All legal Matters incident to the Loans shall be satisfactory to
counsel for the Lender, and each Borrower agrees to execute and deliver to the
Lender such additional documents and certificates relating to the Loans as the
Lender may reasonably request.
(e) If required by the Lender, the Lender shall have received an
opinion of counsel to the Borrowers as to such matters as the Lender may
request, in form and substance satisfactory to the Lender and its counsel.
(f) The Lender shall have received a certification by an acceptable
pros ides of financing statement searches of all financing statements of public
record which relate or pertain to the Borrowers and/or the Collateral,
financing statements in form and substance satisfactory to the Lender shall
have been properly filed in each office where necessary to perfect the Lender's
security interest in the Collateral, termination statements shall have been
filed with respect to any other financing statements covering all or any
portion of the Collateral (except with respect to Liens permitted by this
Agreement), and all taxes and fees with respect to such recording and filing
shall have been paid by the Borrowers: provided that the Lender may choose to
waive this condition with respect to the filing of certain financing statements
or termination statements prior to Closing. The Lender shall also have received
a certification by an acceptable provider of judgments and tax lien searches of
the absence of any judgments or tax liens of public record against the
Borrowers and/or the Collateral.
(g) If requested by the Lender, each Borrower shall have delivered to
the Lender (i) certified copies of evidence of all corporate actions taken by
such Borrower and each Corporate Guarantor to authorize the execution and
delivery of this Agreement, the Note and the other Loan Documents, (ii) a
certificate of incumbency or the officers of each Borrower and each Corporate
Guarantor executing the Loan Documents required herein, (iii) a good standing
certificate dated not more than 30 days prior to the date of the Closing from
the appropriate state official of any state in which each Borrower is
incorporated or qualified to do business, and (iv) such additional supporting
documents as the Lender or counsel for the Lender may reasonably request.
(h) The Lender shall have received an Advance Request in form and
substance satisfactory to the Lender with respect to such initial Loan.
(i) The Borrowers shall have executed all other agreements,
instruments and documents and shall have performed all acts which the Lender
may require with respect to Accounts Receivable owing by the Government to
ensure compliance with the Assignment of Claims Act of 1940, as amended, and
all applicable regulations issued pursuant thereto.
(j) The Lender shall have received the fee due pursuant to Section
2.10 hereof.
(k) No cure notice or show-cause notice shall be in effect relating to
a possible termination for default under and contract of a Borrower which is
either a contract with the Government or is a subcontract (at any tier) which
is related to a contract between a third party and the Government the Unearned
Contact Value of which is greater than or equal to $250,000.00.
7.2. Conditions Precedent to Subsequent Disbursement. The Disbursement
of subsequent Loans shall be subject to the following conditions precedent:
(a) No Default or Event of Default shall have occurred and be
continuing.
<PAGE> 29
(b) No material adverse change shall have occurred in the financial
condition of a Borrower or a Subsidiary and no material adverse change shall
have occurred in the business condition of a Borrower or a Subsidiary which the
Lender reasonably concludes is likely to result in a material adverse change in
the financial condition of the Borrowers.
(c) All representation and warranties contained herein shall be true
and correct at the date of such disbursement.
(d) No change shall have occurred in any law or regulations thereunder
or interpretations thereof which in the opinion of counsel for the Lender would
make it illegal for the Lender to make Loans hereunder.
(e) The Lender shall have received an Advance Request in form and
substance satisfactory to the Lender with respect to such Loan.
(f) If previously waived by the Lender as a condition to Closing,
financing statements and/or termination statements shall have been filed in
each location where the Lender deems such filing necessary to perfect its
security interest in the Collateral or terminate a previously perfected
security interest in the Collateral.
(g) The Borrowers shall have executed all other agreements,
instruments and documents and shall have performed all acts which the Lender
may require with respect to Accounts Receivable owing by the Government to
ensure compliance with the Assignment of Claims Act of 1940, as amended, and
all applicable regulations issued pursuant thereto.
(h) No cure notice or show-cause notice shall relating to a possible
termination for default under any contract of a Borrower which is either a
contract with the Government or is a subcontract (at any tier) which, is
related to a contract between a third party and the Government the Unearned
Contract Value of which is greater than or equal to $250,000.00.
SECTION 8. Default.
8.1. Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
(a) The failure of a Borrower to pay any Obligation to the Lender
including, without limitation the principal of or interest on the Note or any
of the Loans, when the same shall become due and payable whether at maturity,
as a result of the Lender's demand for payment or otherwise; provided, however,
that any such failure (other than a failure to make a payment due pursuant to
Section 2.1 (b), as to which no notice and cure period applies) shall
constitute an Event of Default only if such failure is not cured and such
failure shall continue for a period of ten (10) days after the date when the
Lender's notice of such failure (which notice may be a computer generated late
payment notice) is deemed effective pursuant to Section 9.3 hereof; or
(b) The refusal by a Borrower to permit the Lender to inspect,
examine, verify or audit the Collateral in accordance with the provisions of
this Agreement; or
(c) The failure of a Borrower to perform or observe any covenant set
forth herein (except any such failure resulting in the occurrence of another
Event of Default described in this Section) or
<PAGE> 30
to perform or observe any other term, condition, covenant, warranty, agreement
or other provision contained in this Agreement or any of the other Loan
Documents; provided that if such failure is capable of cure then such failure
shall constitute an Event of Default only if such failure is not cures within
ten (10) days after the date when a notice from the Lender specifying such
failure is deemed effective pursuant to Section 9.3 hereof; provided; however,
that if such Borrower has commenced and is diligently prosecuting a cure of
such Default within the foregoing ten (10) day period, such Borrower shall have
an additional twenty (20) days to complete such cure for a total of thirty (30)
days: or
(d) The existence of any material inaccuracy in any representation or
warranty made by a Borrower or any statement or representation made in any
certificate, report or opinion delivered pursuant hereto or in connection with
any borrowing hereunder or the occurrence of any material breach thereof; or
(e) The occurrence of a default under and the acceleration of any
other obligation of a Borrower, any Subsidiary, or any Guarantor for the
payment of any Debt in excess or $250,000.00, unless and to the extent that the
declaration of default and acceleration is being contested in good faith in a
court of appropriate jurisdiction; or
(f) The making by a Borrower of an assignment for the benefit of
creditors, the filing by a Borrower of a petition in bankruptcy or a petition
or application to any Tribunal for the appointment of any receiver or trustee
for a Borrower or any substantial part of its property, or the commencement by
a Borrower of any proceeding relating to such Borrower under any
reorganization, arrangement, readjustments of debt, dissolution or liquidation
law or statue of any jurisdiction, whether now or hereafter in effect; or
(g) The failure within 30 days after the filing of a bankruptcy
petition or the commencement of any proceeding against a Borrower seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, lay, or
regulation, to have such proceeding dismissed, or the failure within 30 days
after the appointment, without the consent or acquiescence of a Borrower, of
any trustee, receiver or liquidator of such Borrower or of all or any
substantial part of the properties of such Borrower to have such appointment
vacated; or
(h) The occurrence of any of the events described in the two
immediately preceding clauses with respect to a Subsidiary, or any property of
a Subsidiary; or
(i) The entry of any judgment against a Borrower or any Subsidiary in
excess of $1,000,000.00 or the attachment of any property of a Borrower or any
Subsidiary having a value in excess of $100,000.00 and the failure by the
affected Person to pay, discharge, bond-off or cause to be dismissed such
judgment or attachment within 30 days, unless and to the extent that the
judgment or attachment is appealed in good faith to a court of higher
jurisdiction and the appeal remains pending; or
(j) The occurrence of a material adverse change in the financial
condition of a Borrower or a Subsidiary or the occurrence of a material adverse
change in the business condition of a Borrower or a Subsidiary which the Lender
reasonably concludes is likely to result in a material adverse change in the
financial condition of the Borrowers, or
<PAGE> 31
(k) The failure of the stock of SPACEHAB to be listed or NASDAQ or a
national stock exchange; or
(1) The failure of SPACEHAB to own at least eighty percent (80%) of
the voting capital stock of be other Borrowers; or
(m) The issuance to a Borrower or any Subsidiary of a notice of actual
termination for default (complete or partial), under any contract which is
either a contract with the Government or is a subcontract (at any tier) which
is related to a contract between a third party and the Government; provided,
however, that no Event of Default under this Section 8.1 (m) if the notice in
question is issued at a time when the Unearned Contract Value of the contract
or subcontract in question is less than $250,000.00.; or
(n) With respect to a Borrower or any Subsidiary, by occurrence of any
debarment or suspension from contracting or subcontracting with the Government;
or
(o) The occurrence of any of the following events: (i) the termination
of any Employee Benefit Plan in a distress termination under Section 4041 (c)
of ERISA or an involuntary termination under Section 4042 of ERISA; (ii) the
failure to maintain, or the filing of a request for a waiver of, the minimum
funding standard with respect to any Employee Benefit Plan; (iii) the
occurrence of any event which causes any Employee Benefit Plan to cease to have
sufficient assets at all times so as to qualify for a standard termination
under Section 4041 of ERISA; (iv) the occurrence of any event which causes the
unfunded liability with regard to all such Employee Benefit Plans in the
aggregate to become an amount in excess of $10,000.00; (v) the appointment of a
trustee by an appropriate United States district court to administrator any
Employee Benefit Plan; or (vi) the institution of any proceedings by the PBGC
to terminate any such Employee Benefit Plan or to appoint a trust to administer
any such Employee Benefit Plan; or
(p) The occurrence of an event of default under any other Loan
Document.
8.2. Remedies upon Default. Upon the occurrence of an Event of
Default, the following provisions shall be applicable:
(a) The Lender may, at its option, declare all Obligations, whether
incurred prior to, contemporaneous with, or subsequent to the date of this
Agreement, and whether represented in writing or otherwise, immediately due and
payable without presentment, demand, protest, notice of non-payment or any
other notice required by law relative thereto, all of which are hereby
expressly waived by the Borrowers and terminate the Lender's obligation to make
Loans hereunder; provided, however, that upon the occurrence of an Event of
Default specified in Sections 8.1(f) or (g), all Obligations automatically will
be due and payable and the Lender's obligation to make Loans hereunder will
automatically terminate without further action by the Lender. If any of the
Obligations, including, without limitation, the Loans, shall be evidenced by a
demand instrument, the right of the Lender to declare any and all Obligations
to be immediately due and payable, as well as the recitation of the above
events permitting the Lender to declare all Obligations due and payable, shall
not constitute an election by the Lender to waive it's right to demand payment
under a demand instrument at any time and in any event, as the Lender, in its
discretion, may deem appropriate. In addition, the Lender may exercise all of
its rights and remedies against the Borrowers and any Collateral.
<PAGE> 32
(b) The Lender may foreclose its lien and security interest in the
Collateral in any way permitted by low and shall have without limitation, the
remedies of a secured party tinder the UCC. The Lender may notify the account
debtors obligated on any of the Collateral to make payments thereon directly to
the Lender, take control of the cash and non-cash proceeds of any such
Collateral and may enter each Borrower's premises without legal process and
without incurring liability to the Borrowed end remove the Collateral to such
place or places as the Lender may deem advisable, or the Lender may require the
Borrowers to, assemble the Collateral and make the Collateral available to the
Lender at a convenient place and, with or without having the Collateral at the
time or place of sale, the Lender may sell or otherwise dispose of all or any
part of the Collateral whether in its then condition or after further
preparation or processing, either at public or private sale or at any broker's
board, in lots or in bulk for cash or for credit, at any time or place, in one
or more sales, and upon such terms and conditions as the Lender may elect. The
Lender shall give not less than five (5) Business Days prior written notice to
the Borrowers of the time and place of any sale of the Collateral, which each
Borrower hereby agrees constitutes commercially reasonable notice. At any such
sale the Lender may be the purchaser.
(c) The Borrowers recognize that the Lender may be unable to effect a
public sale of all or a part of the Collateral by reason of certain
prohibitions contained in the Act and/or the Blue Sky Laws, bus may be
compelled to resort to one or more private sales to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire the
Collateral for their own account, for investment and without a view to the
distribution or resale thereof The Borrowers understand that private sales so
made may be at prices and on other terms less favorable than if the Collateral
were sold at public sales, and agrees that the Lender has no obligation to
delay the sale of any of the Collateral for the period of time necessary to
permit the issuer of the Collateral (even if the issuer agrees) to register the
Collateral for sale under the Act or the Blue Sky Laws. Each Borrower agrees
that private sales made under the foregoing circumstances shall be deemed to
have been made in a commercially reasonable manner.
(d) The proceeds from any sale of the Collateral by the Lender shall
first be applied to any costs and expenses in securing possession of the
Collateral, and to any expenses in connection with the sale. The next proceeds
will be applied toward the payment of the Obligations. Application of the net
proceeds as to particular Obligations or as to principal or interest shall be
in the Lender's absolute discretion. Any deficiency will be paid to the Lender
forthwith upon demand and any surplus will be paid to the Borrowers or in
accordance with law if the Borrowers are not otherwise indebted to the Lender.
(e) To the extent that the Obligations are now or hereafter secured by
property other than the Collateral described herein or by the guarantee,
endorsement or property of any other Person, then the Lender shall have the
right to proceed against such other property, guarantee or endorsement upon the
occurrence of Event of Default, and the Lender shall have the right in its sole
discretion to determine which rights, security, liens, security interests or
remedies the Lender shall at any time pursue, relinquish, subordinate modify or
take any other action with respect thereto, without in any way modifying or
affecting any of them or any of the Lender's rights hereunder.
(f) The Lender is hereby authorized at any time or from time to time,
without notice to the Borrowers (any such notice being expressly waived by the
Borrowers) to set-off and apply against any and all or the Obligations, whether
or not due, any and all deposits (general or special, time or demand,
provisional or final) at any time held by the Lender, including any certificate
of deposit,
<PAGE> 33
and all other obligations and indebtedness at any time owed by the Lender, in
any capacity, to or for the credit or account of a Borrower.
(g) EACH BORROWER, HAVING KNOWLEDGE THAT IT MAY BE ENTITLED TO NOTICE
AND A HEARING PRIOR TO REPOSSESSION Of THE COLLATERAL, HEREBY WAIVES ANY RIGHT
THAT IT MAY HAVE UNDER EXISTING OR FUTURE LAW TO NOTICE OF FORECLOSE AND ANY
OTHER ACT DESCRIBED HEREIN, TO ANY HEARING THAT MAY BE HELD RELATING TO
FORECLOSE OR ANY OTHER SUCH ACTS, AND TO ANY NOTICE THAT MAY BE REQUIRED TO BE
GIVEN BY THE LENDER PRIOR TO SUCH HEARING. EACH BORROWER HEREBY EXPRESSLY
RELEASES THE LENDER AND ITS AGENTS FROM ANY AND ALL LIABILITY RELATING TO SUCH
FORECLOSURE AND ANY OTHER ACTS DESCRIBED HEREIN.
(h) The Lender may itself perform or comply, or otherwise cause
performance or compliance with the obligations of the Borrowers contained in
this Agreement, including, without limitation, the obligations of the Borrowers
to defend and insure the Collateral. The expenses of the Lender incurred in
connection with such performance or compliance, together with interest thereon
at the Default Rate, shall be payable by the Borrowers to the Lender on demand
and shall constitute Obligations.
SECTION 9. Miscellaneous.
9.1. Collection Costs. The Borrowers shall pay all of the reasonable
costs and expenses incurred by the Lender in connection with the enforcement of
this Agreement and the other loan Documents, including, without limitation,
reasonable attorneys' fees and expenses.
9.2. Modification and Waiver Except for the other documents expressly
referred to herein, this Agreement contains the entire agreement between the
parties, and no modification or waiver of any provision of this Agreement or
the Note and no consent by the Lender to any departure therefrom by a Borrower
shall be effective unless such modification or waiver shall be in writing ant
signed by an officer of the Lender with a title of assistant vice president or
any higher office, and the same shall then be effective only for the period and
on the conditions and Or the specific instances and purposes specified in such
writing. No notice to or demand on the Borrowers in any case shall entitle the
Borrowers to any other or further notice or demand in similar or other
circumstances. No failure or delay by the Lender in exercising any right, power
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided are cumulative and not exclusive of any rights or remedies
otherwise provided by law.
9.3. Notices. All notices, requests, demands or other communications
required or permitted bit or in connection with this Agreement or any other
Loan Document, without implying the obligation to provide any such notice,
request, demand or other communication, shall be in writing addressed to the
appropriate address set forth below or to such other address as may be
hereafter specified by written notice by the Lender or the Borrowers, as
applicable, forwarded in like manner. Any such notice, requests, demand or
other communication shall be deemed to be effective one (1) day after dispatch
if sent by telegram, mailgram, Purolator Delivery, express mail, Federal
Express or any other commercially recognized overnight delivery service or two
(2) days after dispatch if sent by registered or certified mail, return receipt
requested. Notwithstanding the
<PAGE> 34
foregoing, all notices, requests, demands or other communications shall be
considered to be effective upon receipt if accomplished by hand delivery.
To the Lender:
North Tower, 5th Floor
7799 Leesburg Pike
Falls Church, Virginia 22043
Attention: Brian M. Haggerty
To the Borrowers:
1595 Spring Hill Road, Suite 360
Vienna, Virginia 22181
Attention: Margaret E. Grayson
9.4. Counterparts. This Agreement may be executed by the parties
hereto individually or in any combination, in one or more counterparts, each of
which shall be an original and all of which together consulate one and the same
agreement.
9.5. Captions. The captions of the various sections and paragraphs of
this Agreement have been inserted only for the purpose of convenience; such
captions are not a part of this Agreement and shall not be deemed in any manner
to modify, explain, enlarge or restrict any of the provisions of this
Agreement.
9.6. Survival of Agreements All agreements, representations and
warranties made herein shall survive the delivery of this Agreement and the
making and renewal of the Loans hereunder.
9.7. Fees and Expenses. Whether or not any Loans are made hereunder,
the Borrowers shall pay on demand all costs and expenses incurred by the Lender
in connection with the preparation, negotiation, execution, delivery, filing,
recording and administration of this Agreement and any of the documents
executed or delivered in connection herewith, including, without limitation,
the reasonable fees and expenses of counsel to the Lender, including in-house
counsel for the Lender and local counsel who may be retained by the Lender,
with respect to this Agreement and such documents and any amendments thereof
and with respect to advising the Lender as to its rights and responsibilities
thereunder.
9.8. Use of Defined Terms. All terms defined in this Agreement shall
have the defined meanings when used in certificates, reports or other documents
made or delivered pursuant to this Agreement, unless the context shall
otherwise require.
9.9. Successors and Assign.
(a) This agreement shall inure to the benefit of and bind the
respective parties hereto and their successors and assigns; provided, however,
that no Borrower may assign its rights hereunder without the prior written
consent of the Lender.
(b) At any time and from time to time, the Lender may grant to one or
more Banks participating interests in the Lender's commitment to makes Loans
hereunder or in any or all of the
<PAGE> 35
Loans or Note. In the event of any such grant by the Lender of a participating
interest to a Bank, whether or not upon notice to the Borrowers, the Lender
shall remain responsible for the performance of its obligations hereunder, and
the Lender shall continue to deal solely and directly with the Borrowers in
connection with the Lender's rights and obligations under this Agreement. Any
agreement pursuant to which the Lender may grant such a participation interest
shall provide that the Lender shall retain the sole right and responsibility to
enforce the obligations of the Borrowers hereunder including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement; provided that such participation agreement may
provide that the Lender will not agree to any modification, amendment or waiver
of this Agreement which would have the effect increasing or decreasing the
Maximum Amount, extending the Termination Date, subjecting the Lender to any
additional obligation, reducing the principal of or rate of interest on any
Loan, or postponing the date fixed for any payment of principal of or interest
on any Loan or fees hereunder or under the Note without the consent of such
Bank . An assignment or other transfer which is not permitted by subsection (c)
or (d) below shall be given effect for purposes of this Agreement only to the
extent of a participating interest grant in accordance with this subsection
(b).
(c) At any time, the Lender may assign to one or more Banks all, or a
proportionate part of all, of the Lender's rights and obligations under this
Agreement and the Note, and such Bank shall assume such rights and obligations,
pursuant to an instrument executed by such Bank and the Lender, with (and
subject to) the consent of the Borrowers: provided that if such Bank is an
affiliate of the Lender, the Borrowers' consent shall not be required. Upon
execution and delivery of such an instrument and payment by such Bank to the
Lender of an amount equal to the purchase price agreed between the Lender and
such Bank, such Bank shall become a party to this Agreement and shall have all
the rights and obligations of the Lender to the extent of such Bank's
commitment to make Loans as set forth in such Bank's instrument of assumption,
and the Lender shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any parry shall be
required. Upon the consummation of any assignment pursuant to this subsection
(c), the Lender and the Borrowers shall make appropriate arrangements so that,
if required, a new Note is issued to the Bank. If the Bank is not incorporated
under the laws of the United States of America or a state thereof, it shall,
prior to the first date on which interest or fees are payable hereunder for its
account deliver to the Borrowers certification as to exemption from deduction
or withholding of any United States federal income taxes.
(d) The Lender may at any time assign all or any portion of its rights
under this Agreement and the Note to a Federal Reserve Bank. No such assignment
shall release the Lender from its obligations hereunder.
(e) The Lender may furnish any information concerning the Borrowers in
its possession from time to time to any Bank which is or may become a
participant or assignee under this Section 9.9 and may furnish such information
in response to credit inquires consistent with general banking practice.
9.10. Accounting Term. All accounting terms used herein which are not
otherwise expressly defined in this Agreement shall have the meanings
respectively, given to them in accordance with GAAP in effect on the date of
this Agreement except when such terms are used in reference to financial
statements of a Borrower, in which event such terms shall leave the meanings
respectively given to them in accordance with GAAP in effect on the date of
such financial statements. Except as otherwise provided herein, all financial
computations made pursuant to this
<PAGE> 36
Agreement shall be made in accordance with GAAP and all balance sheets and
other financial statements shall be prepared in accordance with GAAP. Except as
otherwise provided herein, whenever reference is made in any provision of this
Agreement to a balance sheet or other financial statement or the information
depicted therein for performing a financial computation, such terms shall mean
the most recent consolidated balance sheet or other financial statement
received by the Lender pursuant to the terms hereof.
9.11. Consent to Jurisdiction Each Borrower irrevocably submits to the
jurisdiction of any Virginia State court sitting in the County of Fairfax or
the United States District Court for the Eastern District of Virginia, sitting
in Alexandria, Virginia over any suit, action or proceeding arising out of or
relating to this Agreement. To the fullest extent it may effectively do so
under applicable law, each Borrower irrevocably waives and agrees not to
assert, by way of motion, as a defense or otherwise, any claim that it is nor
subject to the Jurisdiction of any such court, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding brought in any such court and any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.
9.12. Enforcement of Judgments. Each Borrower agrees, to the fullest
extent it may effectively do so under applicable law, that a judgment in any
suit, action or proceeding of the nature referred to in Section 9.11 brought in
any such court shall be conclusive and binding upon such Borrower and may be
enforced in the courts of the United States of America or the Commonwealth of
Virginia (or any other courts to the jurisdiction of which such Borrower is or
may be subject) by a suit upon such judgment.
9.13. Waiver of Jury Trial. AS A SPECIFICALLY INDUCED BARGAIN FOR THE
LENDER TO ENTER INTO THIS AGREEMENT AND TO EXTEND CREDIT TO THE BORROWERS. THE
BORROWERS AND THE LENDER EACH HEREBY WAIVES TRIAL BY JURY WITH RESPECT T0 ANY
ACTION, CLAIM, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS
AGREEMENT AND/OR THE CONDUCT OF THE RELATIONSHIP BETWEEN THE LENDER AND THE
BORROWERS.
<PAGE> 37
9.14. Service of Process. Each Borrower consents to process being
served in any suit, action or proceeding of the nature referred to in Section
9.11 by mailing a copy thereof by registered or certified mail postage prepaid,
return receipt requested, to the Borrowers' address specified in or designated
pursuant to Section 9.3. Each Borrower agrees that such service (i) shall be
deemed in every respect effective service of process upon such Borrower in any
such suit, action or proceeding and (ii) shall, to the fullest extent permitted
by law, be taken and held to be valid personal service upon and personal
delivery to such Borrower.
9.15. No Limitation on Service or Suit. Nothing in this Section 9
shall affect the right of the Lender to serve process in any manner permitted
by law, or limit any right that the Lender may have to bring proceedings
against the Borrowers in the courts of any jurisdiction or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other
jurisdiction.
9.16. Indemnification. At all times prior to and after the
consummation or the transactions contemplated by this Agreement, the Borrowers
will indemnify and hold each Indemnitee harmless from and against all losses,
damages, claims, fines, costs and expenses (including, without limitation,
reasonable attorneys' fees, costs and expenses) incurred by any such
Indemnitee, whether direct or indirect, as a result of arising from or relating
to any Proceedings by any Person, whether threatened or initiated, asserting a
claim for any legal or equitable remedy against any lndemnitee arising from or
in connection with this Agreement, the Note or any of the other Loan Documents,
and any of the transactions contemplated herein or therein, except to the
extent such losses, damages, claims, fines, costs or expenses are due to the
willful misconduct or gross negligence of the Lender; provided that in
connection with such indemnification obligations, the Borrowers shall not be
liable for any settlement effected by any Indemnitee without the Borrowers'
prior consent (which the Borrowers shall not unreasonably withhold, delay or
condition) and the Borrowers shall have the right to participate at their sole
cost and expense in the defense of any proceeding for which such
indemnification may be sought. In the event of any Proceeding, the Lender shall
promptly and as soon as is practicable notify the Borrowers of the existence of
such Proceeding, provided that the Lenders failure to do so shall not preclude
any Indemnitee from seeking indemnification hereunder. At the request of the
Lender, the Borrowers will indemnify any Person to whom the Lender transfers or
sells all or any part of its interest in the Loans or participations therein on
the terms set forth above. The obligations of the Borrowers under this Section
9.16 shall survive the termination of this Agreement and payment of the
Obligations.
9.17. No Partnership, Joint Venture or Agency. Neither this Agreement
nor any of the Loan Documents shall in any respect be interpreted, deemed or
construed as making the Lender a partner join venturer with the Borrowers, nor
shall they be interpreted, deemed or construed as making the Lender the agent
of representative of the Borrowers, and each Borrower agrees not to make any
contrary assertion, claim or counterclaim in any action, suit or other legal
proceeding involving the Lender.
<PAGE> 38
9.18. Interpretation.
(a) This Agreement and the rights and obligations of the parties
hereunder shall be construed and interpreted in accordance with the laws of the
Commonwealth of Virginia, excluding principles of conflict of laws.
(b) The Lender hereby acknowledges and agrees that this Agreement
shall be subject to and interpreted in accordance with all applicable legal,
regulatory and contractual obligations of the Borrowers with respect to the
security, privacy or nondisclosure of certain information regarding the
business of the Borrowers. By way of example and not limitation, the Lender
acknowledges and agrees that the Borrowers may be prohibited from (i)
disclosing the location of certain information with respect to certain Accounts
Receivable, (ii) providing access to certain books and records and (iii)
permitting the Lender to inspect certain Collateral. The Lender hereby agrees
that the compliance of the Borrowers with such legal, regulatory and
contractual obligations shall not give rise to an Event of Default hereunder,
even if such compliance conflicts with the representations, warranties,
covenants, agreements and conditions set forth herein.
9.19. Joint and Several Obligations. The Borrowers are jointly and
severally liable for all Obligations.
IN WITNESS WHEREOF, the Borrowers and the Lender have caused this
Agreement to be signed by their duly authorized representatives all as of the
day and year first above written, with the specific intention that this
Agreement constitute a document under seal.
ATTEST: SPACEHAB, INCORPORATED, a Washington
Corporation
By: /s/ Margaret E. Grayson
------------------------
/s/ William S. Dawson Name: Margaret Grayson
- --------------------- Title: Vice President of Finance/Treasurer
Name: William Dawson III
(Asst.) Secretary
[corporate seal]
ATTEST: ASTROTECH SPACE OPERATIONS, INC.,
a Delaware corporation
By: /s/ Margaret E. Grayson
/s/ William S. Dawson Name: Margaret E Grayson
Secretary Title: Vice President of Finance/Treasurer
[corporate seal]
SIGNET BANK, a Virginia Banking Corporation
By: /s/ Brian Haggerty
Brian Haggerty, Vice President
<PAGE> 39
EXHIBIT A
ADVANCE REQUEST
Re: Loan and Security Agreement (the "Agreement") dated June 12, 1997
between SPACEHAB, INCORPORATED and ASTROTECH SPACE OPERATIONS, INC
(referred to individually as a "Borrower" and collectively as the
"Borrowers") and Signet Bank (the "Lender"). Capitalized terms used in
this Advance Request and not defined herein are defined in the
Agreement.
Loan amount request: $__________to be credited to the
Operating account
Purpose:
I do hereby certify to the Lender, that I am familiar with the terms of the
Agreement. Either I or individuals under my immediate supervision who are
familiar with the terms of the Agreement have made a current review of the
activities of the Borrowers to determine compliance by the Borrowers with their
obligations under the Agreement and the continuing validity of the
representations and warranties of the Borrowers contained in the Agreement.
This review has included, if necessary, interviews with officers and employees
of the Borrowers whose duties require them to have personal knowledge of the
certifications made herein. To the best of my knowledge, information and
belief, no Defaults or Events of Default have occurred and are continuing. My
analysis of the books and records of the Borrowers reveals the information set
forth in the statement above, upon which you are authorized to rely.
SPACEHAB, INC., as agent for the Borrowers
By:
------------------------
Title:
----------------------
<PAGE> 40
EXHIBIT B
SPACEHAB, INC. And ASTROTECH SPACE OPERATIONS, INC.
Compliance Certificate
FOR THE FISCAL___________________ ENDING ___________, ______, 199_
The undersigned hereby certifies that he/she is
the_______________________________________ _ of SPACEHAB, INC., a Washington
corporation and ASTROTECH SPACE OPERATIONS, INC., a__________________
corporation (each referred to individually as a "Borrower", and collectively
the "Borrowers"), and, as such, is authorized to execute this Certificate on
behalf of each Borrower, and pursuant to Section 5.8 of the Loan and Security
Agreement dated June 12, 1997, as amended from time to time (the "Agreement";
terms defined in the Agreement being used herein as therein defined), among the
Borrowers and Signet Bank (the "Lender"), hereby further certifies, based upon
a review made under his/her supervision, that:
I. The attached financial statements have been prepared in accordance with
GAAP; they are accurate and present fairly the consolidated financial condition
and results of operations of SPACEHAB, incorporated and Subsidiaries for the
period ending_______________ , 199_; subject to normal year-end audit
adjustments.
II. The Borrowers have performed and observed all of, and are not in default in
the performance or observance of any of, the covenants and conditions of the
Agreement except the following:
III. Set forth below are the calculations necessary to demonstrate the
Borrowers' compliance with all of the financial covenants and representations
contained in Sections 5 and 6 of the Agreement, in each case as of the end of
the period ending__________ , 199_.
SPACEHAB, INCORPORATED ASTROTECH SPACE OPERATIONS, INC.
By: . By:
----------------------- -----------------------------
Name: Name:
--------------------- ---------------------------
Date: Date:
--------------------- ---------------------------
Attachment
<PAGE> 41
SECTION 5.12 (A), EBITDA. Cause EBITDA, determined on a quarterly basis, to be
not less than the amount set forth below for the corresponding period.
<TABLE>
<CAPTION>
Amount Period
- ------- ------
<S> <C>
$3,000,000.00 From April 1, 1997 through June 30, 1997
($4,600,000.00) * From July 1, 1997 through September 30, 1997
$4,100,000.00 ** From October 1, 1997 through
December 31, 1997
$6,700,000.00 From January 1, 1998 through
March 31, 1998
$5,000,000.00 From April 1, 1998 through June 30, 1998
</TABLE>
* If the Launch Revenue is recognized during the period from July 1,
1997 through September 30, 1997, then this amount shall be changed to
$l,748,000.00.
** If the Launch Revenue is recognized during the period from July 1, 1997
through September 30, 1997, then this amount shall be changed to
($2,248,000.00).
Financial Period Applicable Covenant Level
- ------------------------------ ------------------------------
<TABLE>
<CAPTION>
EBITDA Calculation:
- -------------------
<S> <C>
Consolidated Net Income $____________
PLUS:
Consolidated Interest Expense $____________
Consolidated Tax Expense $____________
Consolidated Amortization Expense $____________
Consolidated Depreciation Expense $____________
EBITDA $____________
</TABLE>
<PAGE> 42
Section 5.12 (b). Minimum Tangible Net Worth. Cause Tangible Net Worth to be
at least $72,500,000.
Tangible Net Worth Calculation:
<TABLE>
<S> <C>
Stockholder's; Equity (per balance sheet on above referenced date) $_______________
LESS: Intangible Assets
*Goodwill: $_______________
*Loans/Advances due from employees,
officers $_______________
*Other Intangibles: $_______________
Tangible Net Worth (not to he less than $72,500,000): $_______________
</TABLE>
Section 5.12 (c). Current Ratio. Cause the Current Ratio to be at least 1.2 to
1.
<TABLE>
<CAPTION>
Current Assets Divided By Current Liabilities Equal to Current Ratio
- -------------- ---------- ------------------- -------- -------------
<C> <C> <C> <C> <C>
$ / $ = $
----------- ------------------- -------------
</TABLE>
Section 6.12 Capital Expenditures. Permit the aggregate Capital Expenditures of
the Borrowers (other than Capital Expenditures paid for by proceeds of Debt of
a Borrower permitted under the terms of this Agreement and obtained by such
Borrower specifically to fund such Capital Expenditures) exceed the amounts set
forth below for the corresponding period:
<TABLE>
<CAPTION>
Amount Period
------- ------
<S> <C>
$30,000,000.00 For the fiscal year ending June 30, 1997.
$12,000.000.00 For the fiscal year ending June 30, 1998.
$ 2,000,000 For the period beginning July 1, 1998 through
the period ending October 15, l998.
<CAPTION>
Capital Expenditures to Date Period
---------------------------- ------
<S> <C>
$________________ $________________
</TABLE>
<PAGE> 1
EXHIBIT 10.55
ASTROTECH SPACE OPERATIONS, INC.
LOAN AND SECURITY AGREEMENT
Dated: July 14, 1997
$15,000,000.00
THE CIT GROUP/EQUIPMENT FINANCING INC.
<PAGE> 2
LOAN AND SECURITY
THIS LOAN AND SECURITY AGREEMENT is made this 14th day of
July, 1997, by and between THE CIT GROUP/EQUIPMENT FINANCING, INC.
("Lender"), a New York corporation with an office at 1211 Avenue of the
Americas, 13th Floor, New York, New York 10036; and ASTROTECH SPACE
OPERATIONS, INC. ("Borrower"), a Delaware corporation with its chief
executive office and principal place of business at 12510 Prosperity
Drive, Suite 100, Silver Spring, Maryland 20904.
SECTION 1. GENERAL DEFINITIONS
1.1. Defined Terms. When used herein, the following terms
shall have the following meanings (terms defined in the singular to have
the same meaning when used in the plural and vice versa):
Account - shall have the meaning ascribed to "account" under
the Code.
Adjusted LIBOR Rate - the interest rate per annum (rounded
upwards, to the next 1/lOOth of 1 %) equal to the LIBOR Rate in effect
under this Agreement from time to time.
Adjustment Day - the first day of each month, commencing
August 1, 1997.
Adjusted Tangible Net Worth - as to any Person, its
Consolidated Adjusted Tangible Net Worth before consolidation.
Affiliate - a Person (other than a Subsidiary): (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, Borrower; (ii) which
beneficially owns or holds 5% or more of any class of the voting
Securities of Borrower; or (iii) 5% or more of the voting Securities (or
in the case of a Person which is not a corporation, 5% or more of the
equity interest) of which is beneficially owned or held by Borrower or a
Subsidiary of Borrower. For purposes hereof, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the
<PAGE> 3
management and policies of a Person, whether through the ownership of voting
Securities, by contract or otherwise.
Agreement - this Loan and Security Agreement.
Alenia - Alenia Spazio, S.p.A., an Italian corporation and
its successors and assigns.
Applicable Law - all laws, rules and regulations applicable
to the Person, conduct, transaction, covenant or Loan Document in question,
including, but not limited to, (i) all applicable common law and equitable
principles; (ii) all provisions of all applicable state and federal
constitutions, statutes, rules, regulations and orders of governmental bodies;
and (iii) all orders, judgments and decrees of all courts and arbitrators
applicable to such Person.
Board of Governors - the Board of Governors of the Federal
Reserve Board.
Business Day- a day on which the Federal Reserve Bank of New
York is open for business in New York, New York.
Cape Canaveral Leasehold Conditions - the following
conditions: (i) Borrower shall have caused Guarantor to execute in favor
of and delivered to Lender a first priority Mortgage in Guarantor's
leasehold interest in its Cape Canaveral Location substantially in the
form of the Mortgage (with appropriate modifications to reflect the
nature of the leasehold interest to be mortgaged thereunder) executed by
Borrower as of the Closing Date in connection with its Titusville,
Florida location and such WCC-1 financing statements or statements
satisfactory to Lender and sufficient to perfect Lender's security
interest in the Equipment and fixtures at the Cape Canaveral Location as
a first priority Lien thereon; (ii) Guarantor has caused the sublessor of
Guarantor's Cape Canaveral Location to execute and deliver to Lender a
Lessor's Agreement in substantially the form attached hereto as Exhibit F
and such other consents as Lender may reasonably request; (iii) Lender
shall have received a fully paid mortgagee title insurance policy (or
binding commitment to issue title insurance policy, marked to Lender's
satisfaction to evidence the form of such policy to be delivered after
the funding of Loan No. 2), in standard ALTA form, issued by a title
insurance company satisfactory to Lender, in an amount not less than the
fair market value of Guarantor's interest in the real Property subject to
such leasehold Mortgage, insuring that such Mortgage creates a valid Lien
on all of Guarantor's interest in the Cape Canaveral Location with no
exceptions which Lender shall not have approved in writing and no survey
exception; (iv) evidence satisfactory to Lender that Guarantor's
ownership, use and operation of the Cape Canaveral Location and the
conduct of its business thereon does not violate any applicable zoning
ordinance, rule or regulation; (v) Lender shall
<PAGE> 4
have received three (3) copies of a current survey of each parcel of the real
Property comprising the Cape Canaveral Location, certified to Lender by the
registered land surveyor preparing such survey; and (vi) Borrower shall have
remitted to Lender (or authorized deductions from the initial loan proceeds)
amounts sufficient to pay all intangible or documentary taxes, filing fees and
other taxes or charges in connection with the recordation IN THE PUBLIC records
of such leasehold Mortgage.
Cape Canaveral Location - the premises located in PORT
CANAVERAL, Florida, leased by Guarantor from Eastern American Teak Corporation
("EAT") pursuant to a certain Agreement of Sublease Agreement, dated as of
April 9, 1991, as amended, which constitutes a sublease of EAT's interest in
such premises under a LEASE Agreement, dated February 1, 1991, as amended,
between EAT and the Canaveral Port Authority.
Capital Lease - any lease of Property which in accordance with
GAAP would be capitalized on the lessee's balance sheet or for which the
amount of the asset or liability thereunder, if so capitalized, should be
disclosed in a note to such balance sheet.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a Capital Lease, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in
accordance with GAAP.
Charges - all federal, state, county, municipal, foreign or
other taxes, assessments, levies, claims or charges upon Borrower, its
income or sales, or any of its Properties.
Chattel Paper - shall have the meaning ascribed to "chattel
paper" under the Code.
Closing Date - the date on which all of the conditions
precedent in Section 8 are satisfied and Loan No. 1 is made hereunder.
Code - the Uniform Commercial Code (or any successor statute)
as adopted and in force in the State of New York, or when the laws of any
other state govern the method or manner of the creation or perfection of
any security interest in any of the Collateral, the Uniform Commercial Code
(or any successor statute) of such state.
Collateral - all of the Personal Property Collateral, the Real
Property Collateral, and all other Property and interests in Property that
now or hereafter secure the payment and performance of any of the
Obligations.
<PAGE> 5
Compliance Certificate - a Compliance Certificate in the form
of EXHIBIT E annexed hereto.
Consolidated - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
Consolidated Adjusted Net Earnings - with respect to any
fiscal period, the net income of Borrower and Guarantor and their
Subsidiaries less income tax expense for such fiscal period, on a
Consolidated basis, all as reflected on the financial statement of
Borrower, Guarantor and their Subsidiaries supplied to Lender pursuant to
Section 7.1(~) hereof, but excluding: (i) any gain or loss arising from
extraordinary or non-recurring items; (ii) any gain arising from any
write-up of assets; (iii) earnings of any Subsidiary accrued prior to the
date it became a Subsidiary; (iv) earnings of any Person substantially all
the assets of which have been acquired in any manner by Borrower or Guarantor
or any of their Subsidiaries, realized by such Person prior to the date of such
acquisition; (v) net earnings of any Person (other than a Subsidiary) in which
Borrower or Guarantor has an ownership interest unless such net earnings shall
have actually been received by Borrower or Guarantor in the form of cash
distributions; (vi) any portion of the net earnings of any Subsidiary which for
any reason is unavailable for payment of dividends to Borrower or Guarantor;
(vii) the earnings of any Person to which any assets of Borrower or Guarantor
shall have been sold, transferred or disposed of, or into which Borrower or
Guarantor shall have merged, or been a party to any consolidation or other form
of reorganization, prior to the date of such transaction; (viii) any gain
arising from the acquisition of any Securities of Borrower or Guarantor.
Consolidated Adjusted Tangible Assets - as of any date of
determination, all assets of Borrower and Guarantor and their
Subsidiaries, on a Consolidated basis, except: (i) any surplus resulting
from any write-up of assets subsequent to March 31, 1997; (ii) deferred
assets, other than prepaid expenses and deferred loan costs and deferred
mission costs; (iii) patents, copyrights, trademarks, trade names,
non-compete agreements, franchises and other similar intangibles; (iv)
good will; (v) unamortized debt discount and expense; (vi) assets located
and notes due from obligers outside of the United States of America;
(vii) receivables due from an obligor outside of the United States of
America (unless such receivables arise out of a written agreement between
Borrower and such obligor in connection with a space flight mission
carrying Flight Hardware, and either (A) Borrower has collected from such
obligor, prior to the launch of any vessel on such mission, not less than
fifty percent (50%) of the total amounts payable to Borrower under such
agreement, or (B) such obligor has delivered to Borrower an irrevocable
letter of credit issued or confirmed by a bank and payable only in the
United States of America and in Dollars, sufficient to cover the total
amounts payable to Borrower under such agreement); and (viii) Accounts,
notes and other receivables due from Affiliates or employees.
<PAGE> 6
Consolidated Adjusted Tangible Net Worth - at any date, on a
Consolidated basis, a sum equal to: (i) the Consolidated Adjusted
Tangible Assets of Borrower, Guarantor and their Subsidiaries would be
shown on a balance sheet at such date in accordance with GAAP, less (ii)
the total liabilities (excluding deferred flight revenue) of Borrower and
Guarantor and their Subsidiaries, on a Consolidated basis, as would be
shown on such balance sheet in accordance with GAAP, and including as
LIABILITIES ALL reserves for contingencies and other potential
liabilities.
Consolidated Cash Flow - for any period, (i) Consolidated
Adjusted Net Earnings for such period, plus (ii) depreciation and
amortization expenses of Borrower and Guarantor and their Subsidiaries,
on a Consolidated basis, for such period, ~ (iii) income tax expense of
Borrower and Guarantor and their Subsidiaries, on a Consolidated basis,
for such period, all as determined in accordance with GAAP, less (iv) any
Distributions by Guarantor declared or made during such period.
Consolidated Funded Debt - on a Consolidated basis, all
Indebtedness which would, in accordance with GAAP, constitute long term
debt, including (a) any Indebtedness for borrowed money with a maturity
more than one year after the creation thereof and (b) any Indebtedness for
borrowed money which is renewable or extendible at the option of Borrower
or Guarantor for a period of more than one year from the date of creation
of such Indebtedness.
Default - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an Event of
Default.
Default Rate - as defined in Section 3.1 of this Agreement.
Distribution - in respect of any corporation means and
includes: (i) the payment of any dividends or other distributions on
capital stock of the corporation (except distributions in such stock) and
(ii) the redemption or acquisition of Securities unless made
contemporaneously from the net proceeds of the sale of Securities.
Document - shall have the meaning ascribed to "documents"
under the Code.
Dollars - and the sign "$" shall refer to currency of the
United States of America.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety or environmental matters, including,
without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
Equipment - all machinery, apparatus, equipment, fittings,
furniture, fixtures and other tangible personal Property (other than Flight
Hardware and
<PAGE> 7
Inventory) of every kind and description owned by Borrower or in which Borrower
has an interest, whether now owned or hereafter acquired by Borrower and
wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements therefor.
ERISA - the Employee Retirement Income Security Act of 1974
and all rules and regulations from time to time promulgated thereunder.
Event of Default - as defined in Section 9.1 of this
Agreement.
Fixed Rate Effective Date - the Business Day next following
Lender's receipt of payment by Borrower of the quarterly installment of
principal and INTEREST DUE under the Notes if Lender, not less than five
(5) Business Days prior to such payment date, shall have received a written
election by Borrower for the Loans to bear interest at the fixed rate as
provided in Section 3.1 of this Agreement.
<PAGE> 8
Flight Hardware - all hardware and subsystems owned or leased
by Borrower which are designed or acquired for space flight (including, but
not limited, to flight modules, adapter rings, tunnel segments, multi-layer
insulation blankets, cargo pallets and associated piece parts) and
non-flight equipment directly supporting such hardware and subsystems
(including, but not limited to, mechanical and electrical ground support,
and flight training modules and equipment).
GAAP - generally accepted accounting principles in the United
States of America in effect from time to time.
General Intangibles - shall have the meaning ascribed to
"general intangibles" under the Code and shall include, without limitation,
all chases in action, causes of action, corporate or other business
records, deposit accounts, inventions, designs, patents, patent
applications, trademarks, trade names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, tax refund claims,
computer programs, all claims under guaranties, security interests or other
security held by or granted to Borrower to secure payment of any Account by
an account debtor, all rights to indemnification and all other intangible
property of every kind and nature (other than Accounts).
Guarantor - SPACEHAB, Incorporated, a Washington corporation.
Guarantor Mortgage - the leasehold mortgage or other
instruments that may be executed by Guarantor after the date hereof in
favor of Lender and by which Guarantor may grant and convey to Lender, as
security for its guaranty of the Obligations, a first priority Lien upon
Guarantor's leasehold interest in the real Property located in Brevard
County, Florida described in such Guarantor Mortgage.
Guarantor Security Agreement - the Security Agreement to be
executed by Guarantor on or about the Closing Date in favor of Lender and
by which Guarantor shall grant and convey to Lender, as security for its
guaranty of the Obligations, a first priority Lien upon all of Guarantor's
personal Property described in such Guarantor Security Agreement.
Guarantor Security Documents - the Guarantor Mortgage, the
Guarantor Security Agreement and all other instruments and agreements
now or at any time hereafter securing the whole or any part of
Guarantor's obligations under the Guaranty.
Guaranty - that certain Continuing Guaranty AGREEMENT DATED
THE DATE hereof from Guarantor in favor of Lender and by which Guarantor
unconditionally guarantees payment of the Obligations.
Indebtedness - as applied to a Person means, without
duplication (i) all items which in accordance with GAAP would be included
in determining total
<PAGE> 9
liabilities as shown on the liability side of a balance sheet of such Person as
at the date AS OF WHICH Indebtedness is to be determined, including, without
limitation, Capitalized Lease Obligations, (ii) all obligations of other
Persons which such Person has guaranteed and (iii) in the case of Borrower
(without duplication), the Obligations.
Instrument - shall have the meaning ascribed to "instrument"
under the Code.
Intercreditor Agreement - the Intercreditor Agreement to be
entered into between Lender and Revolver Lender and by which Lender and
Revolver Lender shall establish the relative priorities of their respective
Liens in the Personal Property Collateral.
Inventory - shall have the meaning ascribed to "inventory"
under the Code and shall include, without limitation, all goods (other than
Flight Hardware) intended for sale or lease by Borrower, or for display or
demonstration; all work in process; all raw materials and other materials
and supplies of every nature and description used or which might be used in
connection with the manufacture, printing, packing, shipping, advertising,
selling, leasing or furnishing of such goods or otherwise used or consumed
in Borrower's business; and all documents evidencing and General
Intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by Borrower.
LIBOR Rate - the rate of interest per annum at which deposits
in Dollars for a period of 1 month are offered to major banks in the London
interbank market as of 11:00 a.m., London time, as reported on Telerate
Page 3750 on the day that is two (2) London Banking Days preceding the
applicable Adjustment Day. If such rate does not appear on the Telerate
Page 3750, the rate for that Adjustment Day will be the last such rate that
appeared on Telerate Page 3750; provided that if such rate did not appear
on Telerate Page 3750 for a period of more than five (5) London Banking
Days prior to that Adjustment Day, then the LIBOR Rate shall be determined
from such source as Lender shall determine.
Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person OTHER THAN THE owner of the Property, whether
such interest is based on the common law, statute or contract, and
including, but not limited to, the security interest, security title or
lien arising from a security agreement, mortgage, deed of trust, deed to
secure debt, encumbrance, pledge, conditional sale or trust receipt or a
lease, consignment or bailment for security purposes.
Lloyd's - Lloyd's London Syndicates subscribing to Lloyd's
policy No.846/C24642 and other insurers who own portions of the Lloyd's
Debt.
<PAGE> 10
Lloyd's Debt - the Indebtedness in the principal amount of
$2,000,000 as of the date hereof owing by Borrower to Lloyd's.
Loan Documents - this Agreement, the Other Agreements and
the Security Documents.
Loan No. 1 - the term loan described in Section 2.1(A) of
this Agreement.
Loan No. 2 - the term loan described in Section 2.1 (B) of
this Agreement.
Loan No. 3 - the term loan described in Section 2.1(C) of
this Agreement.
Loan No. 2 Conditions - with respect to a request by Borrower
pursuant to Section 2.1(B) hereof for the funding of Loan No. 2, the
following conditions: (i) Borrower has given to Lender written notice of a
request for Loan No. 2 at least fifteen (15) Business Days prior to the
date on which Borrower desires for Loan No. 2 to be funded, which request
shall include a detailed description of the identity, type, value and
location of additional Property offered by Borrower or Guarantor as
collateral security of such requested loan; (ii) the amount of the
requested loan does not exceed the loan-to-collateral ratios customarily
utilized by Lender for loans of like type and size based on Lender's good
faith valuations of additional collateral as may be offered by Borrower to
support such requested loan; (iii) Borrower has executed and delivered to
Lender Note No. 2 (with all blank provisions completed appropriately) to
evidence Loan No. 2, together with evidence of corporate authority to
deliver such note and any collateral in connection therewith; (iv) Borrower
shall have delivered to Lender such other amendments to this Agreement, the
Mortgages and other documents or agreement as Lender may reasonably request
in connection with the perfection of Lender's Liens securing such requested
loan and the cross-collateralization of such loan with the other
Obligations of Borrower or Guarantor hereunder or under the Guaranty; and
(v) if Borrower elects to have Guarantor offer a leasehold mortgage in the
Cape Canaveral Location in connection with the request for Loan No. 2, the
Cape Canaveral Leasehold Conditions shall have been satisfied.
Loan No. 3 Conditions - with respect to a request by Borrower
pursuant to Section 2.1(C) hereof for the funding of Loan No. 3, the
following conditions: (i) Borrower has given to Lender written notice of a
request for Loan No. 3 at least fifteen (15) Business Days prior to the
date on which Borrower desires for Loan No. 2 to be funded, which request
shall include a fair market and orderly liquidation valuation of Equipment
owned by Borrower or Guarantor currently constituting as Collateral which
valuation shall be conducted by an appraisal firm of national standing
employing methodologies reasonably acceptable to Lender; (ii) the amount of
the requested loan
<PAGE> 11
does not exceed the loan-to-collateral ratios customarily utilized by Lender
for loans of like type and size based on Lender's good faith valuations; (iii)
Borrower has executed and delivered to Lender Note No. 3 (with all blank
provisions completed appropriately) to evidence Loan No. 3, together with
evidence of corporate authority to deliver such note; and (iv) Borrower shall
have delivered to Lender such other amendments TO THIS AGREEMENT, the Mortgages
and other documents or agreement as Lender may reasonably request in connection
with the perfection of Lender's Liens securing such requested loan
<PAGE> 12
and the cross-collateralization of such loan with the other Obligations of
Borrower or Guarantor hereunder or under the Guaranty.
Loan Year - a period commencing each calendar year on the same
month and day as the date of this Agreement and ending on the same month
and day in the immediately succeeding calendar year, with the first such
period (4, the first Loan Year) to commence on the date of this Agreement.
Loans - Loan No. 1, and, if funded pursuant to Section 2.1(B)
of this Agreement, Loan No. 2, and, if funded pursuant to Section 2.1(C) of
this Agreement, Loan No. 3.
London Banking Day - any day on which commercial banks are
open for business (including dealings in foreign exchange and foreign
currency deposits) in London, England.
Make-Whole Cost - the cost equal to the excess, if any, (i) of
the present value of all remaining scheduled principal and interest
payments due on the applicable Loan discounted to the date of prepayment at
the Prepayment Discount Rate, over (ii) the aggregate unpaid principal
amount of such Loan. The Make-Whole Cost shall in no event be less than
zero.
Material Adverse Effect - the effect of any event or condition
which, alone or when taken together with other events or conditions
occurring or existing concurrently therewith, (a) has or may be reasonably
expected to have a material adverse effect upon the business, operations,
Properties, condition (financial or otherwise) or business prospects of
Borrower, Guarantor and any Subsidiary, taken together as a whole; (b) has
or may be reasonably expected to have any material adverse effect
whatsoever upon the validity or enforceability of this Agreement or any of
the other Loan Documents; (c) has or may be reasonably expected to have any
material adverse effect upon any material portion of the Collateral, the
Liens of Lender with respect to any of the Collateral or the priority of
such Liens; or (d) materially impairs the ability of Borrower or Guarantor
to perform its obligations under this Agreement, the Guaranty or any of the
other Loan Documents or of Lender to enforce or collect the Obligations or
realize upon any material portion of the Collateral in accordance with the
Loan Documents and Applicable Law.
Money Borrowed - as applied to Indebtedness, means (i)
Indebtedness for borrowed money; (ii) Indebtedness, whether or not in any
such case the same was for borrowed money, (A) which is represented by
notes payable or drafts accepted that evidence extensions of credit, (B)
which constitutes obligations evidenced by bonds, debentures, notes or
similar instruments, or (C) upon which interest charges are customarily
paid (other than accounts payable) or that was issued or assumed as full or
partial payment for Property; (iii) Indebtedness that constitutes a
Capitalized Lease
<PAGE> 13
Obligation; and (iv) Indebtedness under any guaranty of obligations that
would constitute Indebtedness for Money Borrowed under clauses (i) through
(iii) hereof.
Mortgages - the mortgages, leasehold mortgages, security
deeds, trust deeds or other instruments to be executed by Borrower or
Guarantor on or after the Closing Date in favor of Lender and by which
Borrower or Guarantor shall grant and convey to Lender, as security for
the Obligations, a first priority Lien upon the Real Property Collateral
owned by Borrower or a first priority Lien in Borrower's or Guarantor's
leasehold interest in the Real Property Collateral leased by Borrower or
Guarantor, as the case may be.
Net Proceeds - proceeds received by Borrower in cash from
the sale, lease, transfer or other disposition of any Property,
including, without limitation, insurance proceeds and awards of
compensation received with respect to the destruction or condemnation of
all or part of such Property, net of: (i) the direct cost of such sale,
lease, transfer or other disposition; (ii) reasonable costs and expenses
incurred by Borrower in contesting any condemnation or similar proceed;
(iii) any tax liability arising from such transaction; and (iv) amounts
applied to repayment of Indebtedness (other than the Obligations)
secured by a Permitted Lien on the Property of which disposition is made
to the extent that such Lien has priority over the Liens of Lender with
respect to such Property.
Note No. 1 - the Secured Promissory Note to be executed by
Borrower on or about the Closing Date in favor of Lender to evidence
Loan No. 1, which shall be in the form of Exhibit A-1 attached hereto.
Note No. 2 - the Secured Promissory Note to be executed by
Borrower in favor of Lender to evidence Loan No. 2, which shall be in
substantially the form of Exhibit A-2 attached hereto.
Note No. 3 - the Secured Promissory Note to be executed by
Borrower in favor of Lender to evidence Loan No. 3, which shall be in
substantially the form of Exhibit A-3 attached hereto.
Notes - Note No. 1 and, upon the funding of Loan No. 2,
Note No. 2 and, upon the funding of Loan No. 3, Note No. 3.
Obligations - the Loans and all other advances, debts,
liabilities, obligations, covenants and duties owing, arising, due or
payable from Borrower to Lender of any kind or nature, whether or not
evidenced by any note, guaranty or OTHER instrument, whether arising
under this Agreement or any of the other Loan Documents or otherwise and
whether direct or indirect (including those acquired by assignment),
absolute or contingent, primary or secondary, joint or several, due or
to become due, now existing or hereafter arising and however acquired.
The term includes, without
<PAGE> 14
limitation, all interest, charges, expenses, fees, attorneys' fees and
any other sums chargeable to Borrower under this Agreement or any of
the other Loan Documents.
Other Agreements - any and all agreements, instruments and
documents (other than this Agreement and the Security Documents)
heretofore, now or hereafter executed by Borrower in favor of or
delivered to Lender in respect of the transactions contemplated by this
Agreement, including, without limitation, the Notes and WCC-1 financing
statements.
Payment Items - all checks, drafts, or other items of
payment payable to Borrower, including proceeds of any of the Collateral.
Permitted Liens - any Lien of a kind specified in Section
7.2(E) of this Agreement.
Person - an individual, partnership, corporation, joint
stock company, trust, limited liability company, unincorporated
organization, or other form of business entity or a government or agency
or political subdivision thereof.
Personal Property Collateral - all of the types and items
of Property of Borrower described in Section 4.1 hereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of Borrower that is covered by Title IV of ERISA.
Prepayment Discount Rate - shall mean the sum of (i) the
yield appearing on Telerate, Page 5 three (3) Business Days prior to the
date of prepayment of a Loan as of the close of business, New York, New
York time, equal to the monthly bid yield to maturity on direct, full
faith credit obligations of the United States of America (as quoted on
Telerate Page 5) with a remaining term equal to the applicable Weighted
Average Life to Maturity, plus (ii) fifty (50) basis points.
Prepayment Premium - an amount equal to 3 % of the
principal amount of a Loan prepaid by Borrower pursuant to Section 2.4
of this Agreement.
Properly Contested - in the case of any Indebtedness of
Borrower (including, but not limited to, any Charges) that is not paid
as and when due or payable by reason of Borrower's bona fide dispute
concerning its liability to pay SAME OR CONCERNING THE amount thereof,
provided that (i) such Indebtedness is being PROPERLY CONTESTED IN GOOD
FAITH BY APPROPRIATE PROCEEDINGS PROMPTLY INSTITUTED AND DILIGENTLY
CONDUCTED, (ii) BORROWER HAS ESTABLISHED APPROPRIATE RESERVES AS SHALL
BE REQUIRED IN CONFORMITY WITH GAAP, (iii) THE NON-PAYMENT OF SUCH
INDEBTEDNESS DURING THE PERIOD OF such contest will not have a Material
Adverse Effect and will not result in a forfeiture of any assets of
Borrower; (iv) no Lien is imposed upon any of
<PAGE> 15
Borrower's assets with respect to such Indebtedness other than a Permitted Lien
the priority of which is (except only with respect to statutory, non-consensual
liens that have priority as a matter of Applicable Law of a state) at all times
junior and subordinate to the Liens in favor of Lender; and (v) if such contest
is abandoned, settled or determined adversely to Borrower, Borrower forthwith
pays such Indebtedness and all penalties and interest in connection therewith.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
Purchase Money Lien - a Lien upon fixed assets which secures
the payment of Indebtedness (other than the Obligations) for the payment
of all or any part of the purchase price of such fixed assets incurred
by Borrower in connection with its acquisition of such fixed assets,
which Lien constitutes a purchase money security interest under the Code.
Real Property Collateral - all of the real estate of
Borrower and improvements thereon as referenced in Section 4.3 hereof
and as more fully described in the Mortgages.
Regulation D - Regulation D of the Board of Governors.
Remaining Dollar-years - in respect of any Loan, the amount
obtained by (i) multiplying the amount of each remaining quarterly
principal installment of such Loan by the number of years (calculated at
the nearest one-twelfth) which will lapse between the date of
determination of the Weighted Average Life to Maturity and the date of
the required payment, and (ii) totaling all the products obtained in (i).
Revolver Documents - the Loan and Security Agreement, dated as
of June 16, 1997, among Borrower, Guarantor and the Revolver Lender, and
all instruments, documents and agreements executed or delivered in
connection therewith.
Revolver Lender - Signet Bank, a Virginia banking corporation.
Security -shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
Security Documents - the Mortgages, the GUARANTY, THE
GUARANTOR SECURITY Documents, any Subordination Agreement and all other
instruments and agreements now or AT ANY TIME HEREAFTER SECURING THE
WHOLE OR ANY PART OF THE OBLIGATIONS.
Solvent - as to any Person, such Person (i) owns Property
whose fair saleable value is greater than the amount required to pay all of
such Person's
<PAGE> 16
Indebtedness (including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
Subordinated Debt - Indebtedness of Borrower that is expressly
subordinated to the Obligations.
Subordination Agreement - any debt subordination agreement
executed in favor of Lender by a holder of Subordinated Debt.
Subsidiary - any corporation of which a Person owns, directly
or indirectly through one or more intermediaries, more than 50% of the
voting Securities at the time of determination.
Telerate Page - the display page so designated on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying rates comparable to the Treasury Rate
or the LIBOR Rate, as the case may be, or such other publicly recognized
service as may be nominated by Lender as the information vendor for the
purpose of displaying rates or prices for U.S. deposits for 1 month or
rates applicable to direct, full faith and credit obligations of the United
Sates of America, as the case may be.)
Treasury Rate - the rate per annum determined by Lender
(rounded upwards to the nearest whole multiple of 1/lOOth of 1%) applicable
to direct, full faith credit obligations of the United States of America in
amounts equal to or comparable to the amount of the outstanding principal
balance of the Loans and for a term comparable to that of the Loans at any
date of determination as such rate appears on Telerate Page 5 as of 11:00
a.m. (New York time) on any date of determination.
Value - for purposes of the provisions of this Agreement
concerning mandatory prepayments of the Obligations and dispositions of
Collateral, the fair market value or book value, whichever is greater, as
of the date of such disposition, of the Collateral as to which value is
determined.
Vandenberg Clawback Conditions - the following conditions:
(i) Borrower has executed in favor of and delivered to Lender a leasehold
Mortgage in and to Borrower's leasehold interest in its Vandenberg
Location in substantially the form and substance heretofore delivered to
Borrower and such WCC-1 financing statements or statements satisfactory
to Lender and sufficient to perfect Lender's security interest in the
Equipment and fixtures at such location as a first priority Lien thereon;
(ii) Borrower has caused the lessor of its Vandenberg Location to execute
and deliver to Lender a Lessor's Agreement in substantially the form
attached hereto as Exhibit G; (iii) Lender shall have received a fully
paid mortgagee title insurance policy (or binding commitment to issue
title insurance policy, marked to Lender's satisfaction to evidence the
form of such policy to be delivered after the funding of Loan No. 2), in
standard
<PAGE> 17
ALTA form, issued by a title insurance company satisfactory to Lender, in an
amount not less than the fair market value of the real Property Collateral
subject to such leasehold Mortgage, insuring that such Mortgage creates a valid
Lien on all of Borrower's leasehold interest in the Vandenberg Location with no
exceptions which Lender shall not have approved in writing and no survey
exception; (iv) evidence satisfactory to Lender Hat ownership, use and
operation of the Vandenberg Location and the conduct of its business thereon
does not violate any applicable zoning ordinance, rule or regulation; (v)
Lender shall have received three (3) copies of a current survey of each parcel
of the real Property comprising the Vandenberg Location, certified to Lender by
the registered land surveyor preparing such survey; and (vi) Borrower shall
have remitted to Lender sums sufficient to pay all intangible taxes,
documentary taxes, filing fees, and other taxes or charges in connection with
the recordation in the public records of the foregoing leasehold Mortgage.
Vandenberg Location - the business premises located in
Lompoc, California leased by Borrower from the Department of the Air
Force pursuant to a certain Lease No. SPCVAN-2-94-0001, dated October
6, 1993, as amended.
Weighted Average Life to Maturity - at the date of
determination thereof, the number of years obtained by dividing the
then Remaining Dollar-years of the applicable Loan by the then
outstanding principal amount of such Loan.
Work - the repair, replacement or restoration described in
Section 2.3 of this Agreement.
1.2. ACCOUNTING AND OTHER TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data pursuant to the Agreement shall be prepared in accordance with such
principles. All other terms contained in this Agreement shall have, when the
context so indicates, the meanings provided for by the Code to the extent the
same are used or defined therein.
1.3. CERTAIN MATTERS OF CONSTRUCTION. The terms "herein," "hereof"
and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be deemed to cover all genders. The
section titles, table of contents and list of exhibits appear as a
matter of convenience only and shall not affect the interpretation of
this Agreement. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and
regulations. All references to any instruments or agreements, including,
without limitation, references to this Agreement or the other Loan
Documents, shall include any and all modifications or amendments thereto
and any and all extensions or renewals thereof.
SECTION 2. THE LOANS
<PAGE> 18
2.1. TERM LOAN FACILITIES.
(A) LOAN NO. 1. SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, Lender shall make a term loan to Borrower in the principal
amount of $10,400,000.00
<PAGE> 19
("Loan No. In), which shall be evidenced by and repayable in accordance
with the terms of Note No. 1 and shall be secured by the Collateral.
(B) LOAN NO. 2. For so long as no Default or Event of
Default exists, Lender shall, upon Borrower's written request during the
period from the Closing Date through December 31, 1997, make a term loan
to Borrower in a principal amount, which, together with the original
principal balance of Loan No. 3, if made, not to exceed $4,600,000.00
("Loan No. 2"), which shall be evidenced by and repayable in equal
quarterly installments of principal over a term of five (5) years and
otherwise in accordance with the terms of Note No. 2 and shall be
secured by the Collateral. In no event shall Lender have any obligation
to honor a request of Borrower for Loan No. 2 unless each of the Loan
No. 2 Conditions is satisfied.
(C) Loan No. 3.For so long as no Default or Event of Default
exists, Lender shall, upon Borrower's written request during the period
from the Closing Date through December 31, 1997, make a term loan to
Borrower in a principal amount, together with the original principal
balance of Loan No. 2, if made, not to exceed $4,600,000.00 ("Loan No.
3"), which shall be evidenced by and repayable in equal quarterly
installments of principal in accordance with the terms of Note No. 3 and
shall be secured by the Collateral. In no event shall Lender have any
obligation to honor a request of Borrower for Loan No. 3 unless each of
the Loan No. 3 Conditions is satisfied.
2.2. Use OF LOAN PROCEEDS. The proceeds of the Loans shall be
used by Borrower solely to pay costs incurred by Lender that are to be
reimbursed to Lender pursuant to Section 10.3 hereof and to make
expenditures for other, lawful corporate purposes of Borrower to the
extent such expenditures are not prohibited by this Agreement or
Applicable Law.
2.3. MANDATORY PREPAYMENTS.
(A) Proceeds of Sale of Certain Collateral. If Borrower
sells any of the Collateral consisting of Equipment having, in the
aggregate with all other Equipment sold during the consecutive
twelve-month period ending on the date of disposition of such Equipment,
a Value of $100,000 or more, or any Real Property Collateral, Borrower
shall pay to Lender, as and when received by Borrower and as a mandatory
prepayment of the Loans, a sum equal to the Net Proceeds received by
Borrower from such sale. Nothing in this Section 2.3 SHALL AUTHORIZE
BORROWER TO SELL ANY OF THE COLLATERAL WITHOUT Lender's prior written
consent except as otherwise expressly provided IN THIS AGREEMENT OR IN
THE MORTGAGES.
(B) Insurance and Condemnation Proceeds. If Borrower shall
receive any proceeds of insurance or any proceeds as a result of
condemnation of any Collateral, Borrower shall promptly remit such
proceeds to Lender for disposition as
<PAGE> 20
hereinafter provided. All insurance or condemnation proceeds received by
Borrower or Lender on account of any casualty to the Equipment or the Real
Property Collateral shall be applied as follows:
(i) If an Event of Default exists at the time of the
receipt of such insurance or condemnation proceeds by Lender, all such
proceeds shall be paid to, and applied by Lender as a mandatory
prepayment of the Obligations in such order as Lender determines in its
sole discretion; or
(ii) If no Event of Default exists at the time of the
receipt of such insurance or condemnation proceeds by Lender, Borrower
may elect (by written notice delivered to Lender within ninety (90)
days after the earlier of Borrower's or Lender's receipt of such
insurance or condemnation proceeds to repair, replace or restore such
Equipment or Real Property Collateral to substantially the same or
better condition that existed prior to such damage, destruction, loss
or condemnation. If Borrower gives notice of its election to so use
such insurance or condemnation proceeds, such insurance proceeds shall
be remitted by Lender to Borrower and applied by Borrower as described
in Section 2.3(B)(iii). If Borrower does not elect to so use such
insurance or condemnation proceeds, or if the cost to repair, replace
or restore damaged Real Property Collateral exceeds the total of (1)
available insurance proceeds, plus (2) other funds available to
Borrower to pay for such Work, then Lender may apply such insurance or
condemnation proceeds as a mandatory prepayment of the Obligations in
such order as Lender determines in its sole discretion.
(iii) If Borrower gives timely notice of its election to
so use such insurance or condemnation proceeds:
(A) All such insurance or condemnation proceeds of
less than $100,000 in the aggregate with respect to any damage,
destruction, loss or condemnation of Equipment and $500,000 in the
aggregate with respect to any damage to or condemnation of the Real
Property Collateral shall be released by Lender to Borrower for, and
shall be promptly applied by Borrower to, Borrower's repair,
replacement or restoration of the damaged, destroyed, lost or condemned
Equipment or the damaged or condemned Real Property Collateral, as the
case may be (hereinafter referred to as the "Work").
(B) If the cost for the Work, as estimated by
Lender, is more than $100,000 in the aggregate with respect to any
damage, destruction or loss of Equipment or $500,000 in the aggregate
with respect to any damage to or condemnation of the Real Property
Collateral, or if the Work involves structural work (my, involving
supporting members of a building), then Borrower shall
<PAGE> 21
promptly deliver to Lender a detailed and complete plan for the Work,
including a cash flow and capital expenditures budget and projected time
schedule for the implementation and completion of such plan and such other
information as Lender may reasonably request. The Work shall be performed
under the supervision and control of a licensed architect or engineer. After
Lender's receipt of such plan, all such insurance proceeds of more than
$100,000 in the aggregate with respect to any damage, destruction, loss or
condemnation of Equipment and $500,000 in the aggregate with respect to any
damage to Real Property Collateral received by Lender and necessary for the
Work shall be released to or for the account of Borrower in accordance with
the progress of the Work, upon Lender's receipt of a certificate of
Borrower's principal financial officer stating that the Work for which
payment is requested has been completed and that no Liens or claims of Liens
in respect of the Work remain unsatisfied or of record. After the completion
of the Work, Borrower will diligently pursue all certificates, permits,
licenses and other documents necessary to the use or occupancy of the
repaired, replaced or restored Equipment or Real Property Collateral have
been obtained. Pending the release of such proceed to Borrower in accordance
with the foregoing provisions, such proceeds shall be held by Lender (in such
account as Lender may select, with interest thereon payable to Borrower,
provided Borrower pays the costs of maintenance of such account).
(C) If any portion of the insurance proceeds in
excess of $100,000 in the aggregate with respect to any damage,
destruction or loss of Equipment and $500,000 in the aggregate
with respect to damage to Real Property Collateral received by
Lender is not necessary for the Work, then Lender may apply such
proceeds to the payment of the Obligations in such order as Lender
may elect.
(iv) If the insurance or condemnation proceeds made
available to Borrower are for any reason insufficient to cover the
costs of completion of the Work, then Borrower shall be solely
responsible for funding such insufficiency. At Lender's request,
whether prior to or after the commencement of the repair, replacement
or restoration, Borrower shall provide to Lender evidence
satisfactory to Lender of Borrower's unqualified access to such funds
as a condition to the release of insurance proceeds hereunder.
Nothing herein shall be deemed to supersede the provisions of Section
7.2(E) of this Agreement.
(v) Completion of the Work shall be evidenced, in the
case of the Real Property Collateral, by a final, unqualified
certification of the architect or engineer employed, if any, and
an unconditional certificate of occupancy, if applicable; and, in
the case of Equipment and Real Property Collateral, such other
certification as may be required by Applicable Law; or if none of
the above is applicable, a written good faith determination of
completion by Borrower reasonably satisfactory to Lender.
(vi) All replacement Collateral shall be subject to
Lender's duly perfected Lien therein and no other Liens except
Permitted Liens that are not Purchase
<PAGE> 22
Money Liens. Replacements of buildings shall be constructed on the sites of,
and be of comparable size, quality and utility to the destroyed buildings.
(C) Vandenberg Clawback. If Borrower shall fail to satisfy
the Vandenberg Clawback Conditions on or before January 31, 1998,
Borrower shall pay to Lender, as a mandatory prepayment of Loan No. 1,
the amount of $2,827,500.
2.4. VOLUNTARY PREPAYMENTS. Borrower may, at its option, prepay the
Loans, in whole or in part from time to time, without premium or penalty
if (i) the aggregate amount of such prepayments made during any Loan Year
is less than or equal to $1,000,000 or (ii) such prepayment occurs at any
time after July 15, but prior to the Fixed Rate Effective Date. At any
time prior to the Fixed Rate Effective Date, Borrower may, at its option,
prepay the Loans, in whole or in part, in an aggregate amount exceeding
$1,000,000 in any Loan Year ending on or before July 15, 1999, by paying
the principal amount to be prepaid together with interest accrued and
unpaid thereon to the date of prepayment together with a prepayment
premium equal to 3 % of the principal amount prepaid in excess of
$1,000,000 during any such Loan Year. At any time on or after the Fixed
Rate Effective Date, Borrower may, at its option, prepay the Loans, in
whole or in part, in an aggregate amount exceeding $1,000,000 in any Loan
Year, by paying the principal amount to be prepaid together with interest
accrued and unpaid thereon to the date of prepayment together with a
prepayment premium equal to the Make-Whole Cost, if any, based on the
principal amount prepaid in excess of $1,000,000 during any such Loan
Year. Any voluntary prepayment permitted hereunder, in any single
instance, shall be in amounts aggregating at least $750,000. Nothing
contained in his Section 2.4 shall relieve Borrower of its duty to make
full and complete payment of the Obligations. Borrower shall give written
notice (or telephonic notice confirmed in writing) to Lender of any
prepayment authorized hereinabove not less than three (3) Business Days
prior to the prepayment of the Loans.
2.5. PAYMENT DATES; APPLICATION OF PAYMENT. If any payment by
Borrower is due on a day that is not a Business Day, such payment shall
be due on the next succeeding Business Day. All Payment Items received by
Lender by 4:00 p.m., New York, New York time, on any Business Day shall
be deemed received on that Business Day. All Payment Items received after
4:00 p.m., New York, New York time, on any Business Day shall be deemed
received on the following Business Day. Each mandatory prepayment of the
Loans shall be applied first to accrued but unpaid interest on the
portion of the principal balance prepaid and then to installments of
principal in the inverse order of their maturities. Borrower irrevocably
waives the right to direct the application of any and all payments and
collections at any time or times hereafter received by Lender from or on
behalf of Borrower, and Borrower does hereby irrevocably agree that
Lender shall have the continuing exclusive right to apply and reapply any
and all such payments and collections received at any time or times
hereafter by Lender or its agent against the Obligations, in such manner
as Lender may deem advisable, notwithstanding any entry by Lender upon
any of its books and records.
SECTION 3. INTEREST, FEES AND CHARGES
<PAGE> 23
3.1. Interest. Borrower agrees to pay interest in respect of the
unpaid principal amount of the Loans from the date such principal amounts
are advanced until paid (whether at stated maturity, on acceleration or
otherwise) at a rate per annum equal to 3.0~o ~(Pound Sterling) the
Adjusted LIBOR Rate. Notwithstanding the foregoing, at any time prior to
July 14, 1999, if no Default or Event of Default then exists, Borrower
shall be entitled to elect a fixed rate per annum in respect of the
unpaid principal amount of the Loans. Such fixed rate per annum SHALL be
equal to 3.0% plus the Treasury Rate in effect on the third Business Day
prior the Fixed Rate Effective Date. The applicable Adjusted LIBOR Rate
shall be increased or decreased, as the case may be, by an amount equal to any
increase or decrease in the LIBOR Rate as of any Adjustment Day until the next
following Adjustment Day, with such adjustments in the LIBOR Rate to be
effective as of the opening of business as of any applicable Adjustment Day.
Such determination of the applicable Adjusted LIBOR Rate shall, absent manifest
error, be final, conclusive and binding on all parties and for all purposes.
Upon and after the occurrence of an Event of Default, the principal amount of
the Obligations shall automatically (without notice to or demand upon Borrower)
bear interest, calculated daily (computed on the actual days elapsed over a
year of 360 days), at a rate per annum equal to 3%, above the interest rate
otherwise applicable thereto, but not to exceed in any event the maximum rate
permitted under Applicable Law ("Default Rate").
3.2. COMMITMENT FEE: ORIGINATION FEE. Lender acknowledges receipt
of a commitment fee of $37,500, which was fully earned on issuance of
Lender's proposal letter to Borrower, and of an origination fee of
$37,500, which shall be deemed Filly earned at the closing of the
transactions contemplated hereby. Neither the commitment fee nor the
origination fee shall be subject to rebate except as may be required by
Applicable Law.
3.3. MAXIMUM INTEREST. Regardless of any provision contained in
this Agreement or in any of the other Loan Documents, in no contingency
or event whatsoever shall the aggregate of all amounts deemed interest
under this Agreement, the Notes or any of the other Loan Documents and
charged or collected pursuant to the terms hereof, of the Notes or of any
of the other Loan Documents exceed the highest rate permissible under
Applicable Law. It is the intent of the parties hereof to comply with all
Applicable Laws relating to interest and usury, and if Lender shall
inadvertently charge or receive interest hereunder in excess of the
highest applicable rate, Lender shall promptly refund such excess
interest to Borrower and such rate shall automatically be reduced to the
maximum rate permitted by Applicable Law. All interest paid or agreed to
be paid to Lender shall, to the extent permitted by Applicable Law, be
amortized, prorated, allocated and spread throughout the full term of the
Notes until payment in full of the principal amount thereof so that
interest on such principal amount for such full period will not exceed
the maximum amount permitted by Applicable Law.
3.4. STATEMENTS OF ACCOUNT. Lender shall account to Borrower, no
less frequently than quarterly, with a statement of charges and payments
made pursuant to this Agreement and the Notes, and any such account
rendered by Lender shall, absent manifest error, be deemed rebuttably
conclusive upon Borrower unless Lender is notified by Borrower in writing
to the contrary within forty five (45) days after the date each account
is mailed to Borrower. Such notice shall only be deemed an objection to
those items specifically objected to therein.
<PAGE> 24
SECTION 4. COLLATERAL: GENERAL TERMS
4.1. SECURITY INTEREST IN PERSONAL PROPERTY COLLATERAL. To secure
the prompt payment and performance to Lender of the Obligations, Borrower
hereby grants to Lender a continuing security interest in and Lien upon
all of the following Property and interests in Property of Borrower,
whether now owned or existing or hereafter created, acquired or arising
and wheresoever located:
<PAGE> 25
(A) All Equipment;
(B) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of the items described in
paragraphs (A) above, including, without limitation, all Accounts, Chattel
Paper, Instruments and General Intangibles constituting proceeds of the
Equipment and proceeds of and unearned premiums with respect to insurance
policies insuring any of the Collateral; and
(C) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other
computer materials and records) of Borrower pertaining to any of the items
described in paragraphs (A) or (B) above.
4.2 REPRESENTATIONS. WARRANTIES AND COVENANTS -- COLLATERAL. To
induce Lender to enter into this Agreement, Borrower represents and
warrants to, and covenants with, Lender as follows:
(A) The Collateral is now and will continue to be owned solely
by Borrower. No other Person has or will have any right, title, interest,
claim, or Lien therein, thereon or thereto other than a Permitted Lien.
(B) Except for statutory, non-consensual Liens, the Liens
granted to Lender shall be first and prior on the Collateral. No further
action need be taken to perfect the Liens granted to Lender, other than the
filing of continuation statements under the Code or other Applicable Law,
continued possession by Lender of that portion of the Collateral
constituting Instruments or Documents and the recording of the Mortgages.
4.3. LIEN ON REAL PROPERTY COLLATERAL. (A) The due and punctual
payment and performance of the Obligations shall also be secured by first
priority Liens created by the Mortgages upon all real Property of
Borrower located in Brevard County and Florida, as more fully described
in the respective Mortgages. Borrower agrees to execute for Lender's
benefit the Mortgage and such leasehold mortgages, deeds of trust or
other documents evidencing a collateral assignment of Borrower's interest
in the Real Property Collateral as Lender may request. Such documents
shall be recorded, at the expense of Borrower, with such filing offices
as may be required to evidence Lender's Lien upon the real Property owned
by BORROWER.
(B) As additional security for the payment of the Obligations,
Lender shall have the Liens granted and conveyed pursuant to the other
Security Documents upon the Property described therein.
4.4. FINANCING STATEMENTS. Borrower agrees to execute WCC-1
financing statements PROVIDED FOR by the Code or other Applicable Law,
together with any and all other instruments, assignments or documents,
and shall take such other action as may be required to perfect or to
continue the perfection and priority of Lender's security interest in and
Liens upon the Collateral, including, without limitation, the execution
at Lender's request of all
<PAGE> 26
documents deemed necessary by Lender to cause Lender's Lien to be
noted on any motor vehicle title
<PAGE> 27
certificates for motor vehicles forming a part of the Collateral. Unless
prohibited by Applicable Law, Borrower hereby authorizes Lender to
execute and file any such financing statement on Borrower's behalf.
4.5. LOCATION OF EQUIPMENT. All Equipment will at all times be kept
by Borrower at one or more of the business locations set forth in Exhibit
C and shall not, without the prior written approval of Lender, be moved
therefrom except dispositions of Equipment that are authorized by Section
5.2 hereof, and except that Borrower may move Equipment to a location in
the United States other than those shown on Exhibit C hereto so long as
Borrower has given Lender at least 30 Business Days' prior written notice
of such new location and prior to moving any Equipment to such location
Borrower has executed and delivered to Lender UCC- 1 financing statements
and any other appropriate documentation to perfect or continue the
perfection of Lender's Liens with respect to such Equipment and all
products and proceeds thereof.
4.6. INSURANCE OF COLLATERAL. Borrower agrees to maintain and pay
for insurance upon all Collateral, wherever located, covering casualty,
hazard, public liability and such other risks and in such amounts and
with such insurance companies as shall be customary in Borrower's
business to insure Lender's interest in the Collateral. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to
give not less than thirty (30) days prior written notice to Lender in the
event of cancellation of the policy for any reason whatsoever and a
clause that the interest of Lender shall not be impaired or invalidated
by any act or neglect of Borrower or owner of the Property nor by the
occupation of the premises for purposes more hazardous than are permitted
by said policy. If Borrower fails to provide and pay for such insurance,
Lender may, at Borrower's expense, procure the same, but shall not be
required to do so. Borrower agrees to deliver to Lender, promptly as
rendered, true copies of all reports made in any reporting forms to
insurance companies. Borrower shall give to Lender promptly, and in any
event within five (5) Business Days after Borrower obtains knowledge
thereof, written notice of any damage, destruction or loss covered by any
insurance. In addition to the insurance required hereinabove, Borrower
will maintain, with financially sound and reputable insurers, insurance
with respect to its other Properties and business against such casualties
and contingencies of such type (including public liability, product
liability, business interruption, larceny, embezzlement or other criminal
misappropriation insurance) and in such amounts as is customary in the
business in which Borrower is engaged.
4.7. ADVANCES TO PROTECT COLLATERAL. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, all taxes imposed by Applicable Law on any of the Collateral
or in respect of the sale or use thereof, and all other PAYMENTS REQUIRED
TO BE MADE BY LENDER TO ANY PERSON TO REALIZE UPON ANY COLLATERAL SHALL
BE borne by Borrower. If Borrower fails to pay any portion thereof when
due, except to the extent being Properly Contested, Lender may, at its
option, but shall not be required to, pay the same and charge Borrower
therefor. Lender may, at any time or times hereafter, in its SOLE
DISCRETION, WITHOUT WAIVING OR RELEASING ANY OBLIGATIONS, OR ANY duty of
Borrower under ANY of the Loan Documents, or any Event of Default, pay
when due, acquire or accept an assignment of any Lien (other than, prior
to an Event of Default, any Permitted Lien) or claim
<PAGE> 28
asserted by any Person against any of the Collateral. All sums paid
by Lender in respect thereof and all costs, fees and expenses, including,
without limitation, attorneys' fees and court costs, which are incurred by
Lender on account thereof, shall be payable, ON DEMAND, by Borrower to Lender
together with interest accruing at the Default Rate from the date of demand
until paid and shall be secured by the Collateral. Lender shall not be liable
or responsible in any way for the safekeeping of any of the Collateral or for
any loss or damage thereto or for any diminution in the value thereof except to
the extent provided by Applicable Law.
SECTION 5. PROVISIONS RELATING TO EQUIPMENT
5.1. REPRESENTATIONS. WARRANTIES AND COVENANTS. With respect to the
Equipment, Borrower represents, warrants and covenants to and with Lender
that the Equipment is in good operating condition and repair, and all
necessary replacements of and repairs thereto shall be made so that the
value and operating efficiency of the Equipment shall be maintained and
preserved, reasonable wear and tear excepted. Borrower will not permit
any of the Equipment to become affixed to any real Property leased to
Borrower so that an interest arises therein under any Applicable Law
unless the landlord of such real Property has executed a landlord waiver
or leasehold mortgage in favor of Lender, and Borrower will not permit
any of the Equipment to become an accession to any personal Property
other than Equipment that is subject only to Permitted Liens. Immediately
on request therefor by Lender, Borrower shall deliver to Lender any
evidence of Borrower's ownership of any of the Equipment (including,
without limitation, certificates of title and applications for title).
Borrower shall maintain accurate records itemizing and describing the
kind, type, quality, quantity and value of its Equipment and all
dispositions made in accordance with Section 5.2 hereof, and shall
furnish Lender with a current schedule containing the foregoing
information on at least an annual basis and more often if requested by
Lender after the occurrence of a Default or an Event of Default.
5.2. DISPOSITIONS OF EQUIPMENT. Borrower shall not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event
of Default exists, to (i) dispositions of Equipment in the ordinary
course of Borrower's business which, in the aggregate during any
consecutive twelve-month period, has a fair market value or book value,
whichever is greater, of $100,000 or less, provided that all Net Proceeds
thereof are turned over to Lender for application to the Obligations,
(ii) dispositions of functionally obsolete Equipment, provided that all
Net Proceeds thereof are turned over to Lender, or (iii) replacements of
Equipment that is functionally obsolete or substantially worn or damaged
with Equipment of like kind, function and value, provided that the
replacement Equipment is acquired prior to, concurrently with or within
thirty (30) Business Days after any disposition of the Equipment that is
to be replaced, the replacement Equipment is free and clear of Liens
(except for Permitted Liens that are not Purchase Money Liens), Lender is
given at least five (5) Business Days' prior written-notice of such
disposition.
SECTION 6. REPRESENTATIONS AND WARRANTIES
<PAGE> 29
6.1. GENERAL REPRESENTATIONS AND WARRANTIES. To induce Lender to
enter into this Agreement and to make the Loans hereunder, Borrower
warrants, represents and covenants to Lender that:
(A) Borrower is a corporation duly organized and validly
existing under the laws of the State of Delaware. Borrower has duly
qualified and is authorized to do business and is in good standing as a
foreign corporation in all states and jurisdictions failure to so qualify
has had or would have a Material Adverse Effect.
(B) Borrower has the power and is duly authorized to enter
into, deliver and perform this Agreement and each of the other Loan
Documents to which it is a party. The execution, delivery and performance
of this Agreement and each of the other Loan Documents to which Borrower is
a party have been duly authorized by all necessary corporate action and do
not and will not (i) require any consent or approval of the shareholders of
Borrower; (ii) contravene Borrower's certificate of incorporation or
by-laws; (iii) violate, or cause Borrower to be in default under, any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award in effect having applicability to Borrower;
(iv) result in a breach of or constitute a breach under any indenture or
loan or credit agreement or any other agreement, lease or instrument to
which Borrower is a party or by which it or any of its Properties may be
bound or affected; or (v) result in, or require, the creation or imposition
of any Lien (other than Permitted Liens) upon or with respect to any of the
Properties now owned or hereafter acquired by Borrower. This Agreement is,
and each of the other Loan Documents when delivered under this Agreement
will be, a legal, valid and binding obligation of Borrower enforceable
against it in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally.
(C) Borrower is not engaged principally, or as one of its
important activities, in the business of purchasing or carrying "margin
stock" (within the meaning of Regulation G or U of the Board of Governors
of the Federal Reserve System), and no part of the proceeds of the Loans
will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock, or be
used for any purpose which violates or is inconsistent with the provisions
of Regulation X of said Board of Governors.
(D) Borrower has all governmental consents, approvals,
authorizations, permits, certificates, inspections, and franchises
necessary to conduct its business as heretofore or proposed to be conducted
by it and to own or lease and operate its Properties as now owned or leased
by it (except to the extent that the failure to obtain such items has not
had or would not reasonably be expected to have a Material Adverse Effect).
(E) Except as set forth on Exhibit D attached hereto AND MADE
A PART HEREOF, there are no actions, suits, proceedings or investigations
pending, or to the knowledge of Borrower, threatened, against or affecting
Borrower or any of its Properties in any court or
<PAGE> 30
before any governmental authority or arbitration board or tribunal, and no
action, suit, proceeding or investigation shown on Exhibit D will have a
Material Adverse Effect.
(F) Borrower has filed all federal, state and local tax
returns and other reports it is required by Applicable Law to file and
has paid, or made provision for the payment of, all Charges that are due
and payable, except to the extent being Properly Contested.
(G) Borrower has duly complied with, and its Properties and
business operations are in compliance in all material respects with, the
provisions of all Applicable Law (except to the extent that any
non-compliance has not had or would not reasonably be expected to have a
Material Adverse Effect), including, without limitation, all Environmental
Laws.
(H) No Default or Event of Default exists or will exist or
result from the execution and delivery of this Agreement or Borrower's
performance hereunder.
(I) The Consolidated and consolidating balance sheets of
Borrower, Guarantor and such other Persons described therein as of March
31, 1997, and the related statements of income, changes in stockholders'
equity, and statements of cash flows for the period entered on such date,
have been prepared in accordance with GAAP (except for changes in
application in which Borrower's independent certified public accountants
concur), and present fairly the financial position of Borrower and
Guarantor at such date and the results of Borrower's and Guarantor's
operations for such period. Since March 31, 1997, there has been no
material change in the condition, financial or otherwise, of Borrower and
Guarantor, taken together as a whole, except changes in the ordinary course
of business, none of which individually or in the aggregate has been
materially adverse to Borrower and Guarantor, taken as a whole.
(I) Except for the fees of Harbor Securities, Inc., which
shall be paid in full by Borrower and for which Lender has no
responsibility or liability, there are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the
transactions contemplated by this Agreement.
6.2. SURVIVAL OF REPRESENTATIONS. Borrower warrants to Lender that
all representations and warranties of Borrower contained in this
Agreement or any of the other Loan Documents shall be true at the time of
Borrower's execution of this Agreement and any of the other Loan
Documents.
SECTION 7. COVENANTS AND CONTINUING AGREEMENTS
7.1. AFFIRMATIVE COVENANTS. For so long as there are any
Obligations outstanding, Borrower covenants that, unless otherwise
consented to by Lender in writing, it shall:
(A) Pay and discharge all Charges as and when such Charges are
due and payable, except and to the extent only that such Charges are being
Properly Contested.
<PAGE> 31
Borrower shall also pay and discharge any lawful claims which,
if unpaid, might become a Lien against any of the Collateral except for
Permitted Liens.
(B) File all federal, state and local tax returns and other
reports Borrower is required by Applicable Law to file and maintain
adequate reserves for the payment of all Charges.
(C) Preserve and maintain its separate corporate existence and
all rights, privileges, and franchises in connection therewith, and
maintain its qualification and good standing in all states in which the
failure to be qualified would have a Material Adverse Effect.
(D) Maintain its Properties in good condition, ordinary wear
and tear excepted, and make all necessary renewals, repairs, replacements,
additions and improvements thereto.
(E) Comply with all Applicable Law, including, without
limitation, all Environmental Laws, and obtain and keep in force any and
all licenses, permits, franchises, or other governmental authorizations, to
the extent that any such failure to comply, obtain or keep in force would
be reasonably likely to have a Material Adverse Effect.
(F) At all times make prompt payment of contributions required
to meet the minimum funding standards set forth in ERISA with respect to
each Plan and furnish to Lender, promptly upon Lender's request therefor,
such additional information concerning any Plan or any other such employee
benefit plan as may be reasonably requested.
(G) Keep adequate records and books of account with respect to
its business activities in which proper entries are made in accordance with
GAAP reflecting all its financial transactions.
(H) Permit representatives of Lender, from time to time, as
often as may be reasonably requested, but only during normal business
hours, to visit and inspect any of the Collateral and inspect and make
extracts from Borrower's books and records.
(I) Cause to be prepared and furnished to Lender the following
(all to be kept and prepared in accordance with GAAP applied on a
consistent basis, unless Borrower's certified public accountants concur in
any change therein and such change is disclosed to Lender and is consistent
with GAAP): (i) as soon as possible, but not later than 120 days after the
close of each fiscal year of Borrower, unqualified financial statements of
Guarantor, Borrower and their Subsidiaries as of the end of such year,
audited on a Consolidated basis and with consolidating entries and
calculations detailed, all certified by a firm of independent certified
public accountants of recognized national standing or otherwise acceptable
to Lender; and (ii) AS SOON AS POSSIBLE, BUT NOT LATER than 90 days after
the end of each fiscal quarter hereafter, unaudited INTERIM consolidated
financial statements of Guarantor, Borrower and its Subsidiaries as of the
end of such quarter and of the portion of Borrower's fiscal year then
elapsed, on a Consolidated and consolidating basis, certified by the
principal financial officer of Guarantor as prepared in accordance with
GAAP and fairly presenting the consolidated
<PAGE> 32
financial position and results of operations of Guarantor,
Borrower and its Subsidiaries for such quarter and period. Concurrently
with the delivery of the financial statements described in clause (i) of
this Section 7.1(I), Borrower shall furnish to Lender a copy of the
accountants' letter to Borrower's management that is prepared in connection
with such financial statements. Concurrently with the delivery of the financial
statements described in clauses (i) and (ii) of this Section 7.1(I), Borrower
shall cause to be prepared and furnished to Lender a Compliance Certificate
from the principal financial officer of Borrower.
(J) At Lender's request, promptly execute or cause to be
executed and deliver to Lender any and all documents, instruments and
agreements deemed necessary by Lender to perfect or to continue the
perfection of Lender's Liens or to facilitate collection of the Collateral.
(K) Notify Lender in writing: (i) promptly after Borrower's
learning thereof, of the commencement of any litigation affecting Borrower,
the Collateral or any of Borrower's other Properties, whether or not the
claim is considered by Borrower to be covered by insurance, and of the
institution of any administrative proceeding which might reasonably be
expected to have a Material Adverse Effect if determined adversely to
Borrower; (ii) promptly after Borrower's learning thereof, of any material
default by Borrower under any note, indenture, loan agreement, mortgage,
lease, deed, guaranty or other similar agreement relating to any
Indebtedness of Borrower exceeding $500,000; (iii) promptly after the
occurrence thereof, of any Default or Event of Default; and (iv) promptly
after the rendition thereof, of any judgment rendered against Borrower.
(L) Permit Lender to communicate directly with any of the
following Persons concerning Borrower, its business, the Collateral and the
Loans (and Lender is irrevocably authorized to communicate with each such
Persons) upon at least 24 hours' oral or written notice to Borrower (unless
an Event of Default exists, in which event no notice shall be required):
(a) any service bureau, warehousing service, landlords or trade creditors;
(b) any Person employed by Borrower (but no prior notice shall be required
for Lender to discuss any matters pertaining to Borrower, its business or
the Collateral with any officer of Borrower or attorney for Borrower or any
other Person designated by an officer of Borrower to deal on a day-to-day
basis with Lender); and (c) Borrower's present and future independent
public accountants, each of whom is authorized by Borrower to communicate
with Lender and to disclose to Lender any and all matters relating to
Borrower, its financial condition and business prospects, and the
Collateral. for so long as no Event of Default shall exist, Borrower shall
be entitled to have a representative present at any meeting requested by
Lender under this subsection.
(M) Furnish to Lender, promptly after the sending or filing
thereof, as the case may be, copies of all regular, periodic and special
reports and all registration statements which Borrower or Guarantor files
with the Securities and Exchange Commission or any governmental authority
which may be substituted therefor, or with any national securities
exchange.
<PAGE> 33
7.2. NEGATIVE COVENANTS. For so long as there are any Obligations
outstanding, Borrower covenants that, unless Lender has first consented
thereto in writing, it will not:
(A) Acquire all or any substantial part of the Properties of
any Person nor merge or consolidate with any Person, except (1) a
consolidation or merger involving only Borrower and one or more wholly owned
Subsidiaries, or (2) a merger in which Borrower is the surviving corporation or
such an acquisition of Properties, provided, in either case, that, immediately
after the merger or acquisition and after giving affect thereto, no Default or
Event of Default exists, and the Adjusted Tangible Net Worth of Borrower is not
less than its Adjusted Tangible Net Worth immediately prior to such merger or
acquisition, and provided further that the Consolidated Cash Flow for the most
recently completed fiscal year of Borrower, when combined on a pro forma basis
with the cash flow of the Person merged into Borrower or the cash flow
attributable to the assets acquired by Borrower for such fiscal year period,
would not have been less than the Consolidated Cash Flow for such prior fiscal
year.
(B) Make any loans or other advances of money (other than
for salary, travel advances, advances against commissions and other
similar advances in the ordinary course of business) to any Person other
than unsecured loans to Guarantor for so long as Borrower shall not have
received notice from Lender of the occurrence of an Event of Default.
(C) Enter into any material transaction with any Affiliate
or stockholder, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's business and upon fair and
reasonable terms which are no less favorable to Borrower than would
obtain in a comparable arm's length transaction with a Person not an
Affiliate or stockholder of Borrower.
(D) Guarantee, assume, endorse or otherwise, in any way,
become directly or contingently liable with respect to the Indebtedness
of any Person except by endorsement of instruments or items of payment
for deposit or collection.
(E) Create or suffer to exist any Lien upon any Inventory,
any Flight Hardware or any Collateral, except: (i) Liens at any time
granted in favor of Lender; (ii) Liens for Charges (excluding any Lien
imposed pursuant to any of the provisions of ERISA) not yet due or being
Properly Contested; (iii) Liens securing the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like
Persons for labor, materials, supplies or rentals incurred in the
ordinary course of Borrower's business, but only if the payment of such
claims or demands is not at the time required or are being Properly
Contested; (iv) Liens resulting from deposits made in the ordinary course
of business in connection with workmen's compensation, unemployment
insurance, social security and other like laws; (v) attachment, judgment
and other similar non-tax Liens arising in connection with court
proceedings, but only if and for so long as the execution or other
enforcement of such Liens is and continues to be effectively stayed and
bonded on appeal in a manner satisfactory to Lender for the full amount
thereof, the validity and amount of the claims secured thereby
<PAGE> 34
are being PROPERLY CONTESTED and such Liens do not, in the AGGREGATE,
MATERIALLY DETRACT FROM THE VALUE of the Property of Borrower or materially
impair the use thereof in the operation of Borrower's business; (vi) Liens
incurred or deposits made in the ordinary course of business to secure the
performance of tenders, bids, leases, contracts (other than for the repayment
of Indebtedness for money borrowed), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts, provided that, to the extent any such Liens attach to any of the
Collateral, such Liens are at all times subordinate and junior to the Liens
upon the Collateral in favor of Lender; (vii) Liens listed as permitted
encumbrances in the Mortgages; (viii) Purchase Money Liens; and (ix) Liens
described in Exhibit B attached hereto.
(F) Transfer its principal place of business or chief
executive office, or open new manufacturing plants, or transfer existing
manufacturing plants, to or at any locations other than those at which
the same are presently kept or maintained, except upon at least sixty
(60) days prior written notice to Lender and after the delivery to Lender
of duly executed WCC-1 financing statements, if required by Lender, in
form satisfactory to Lender to perfect or continue the perfection of
Lender's Liens and security interest hereunder.
(G) Sell, lease or otherwise dispose of any of the
Collateral, including any disposition of any Collateral as part of a sale
and leaseback transaction, to or in favor of any Person, except
dispositions of Equipment authorized by Section 5.2 of this Agreement or
sell, lease or otherwise dispose of any Inventory or Flight Hardware,
including any disposition of any such items as part of a sale and
leaseback transaction, except for the sale of Inventory in the ordinary
course of business or the lease of Flight Hardware in the ordinary course
of business.
(H) Declare or make any Distributions; provided, however,
that if Alenia shall convert all or any portion of the Subordinated Debt
held by it into equity securities of Borrower, then for so long as no
Default or Event of Default shall then exist, Borrower may make
Distributions to Alenia to the extent permitted under Applicable Law. In
no event, however, shall the amount of Distributions paid to Alenia
during any fiscal year exceed the amount that would have been payable to
Alenia during such year if Alenia had not so converted the Subordinated
Debt held by it.
(I) Hereafter create any Subsidiary or divest itself of any
assets by transferring them to any Subsidiary.
(K) Amend or modify in any respect the payment terms or
maturities of the Lloyd's Debt as in effect as of the date hereof, amend
or modify the terms of the Lloyd's Debt to provide for mandatory
prepayment thereof or grant or give a Lien in any Property of Borrower as
security for the payment of the Lloyd's Debt.
<PAGE> 35
7.3. SPECIFIC FINANCIAL COVENANTS. For so long as there are any
Obligations outstanding, Borrower covenants that, unless otherwise
consented to by Lender in writing, it shall:
(A) Minimum Consolidated Adjusted Tangible Net Worm. Maintain
a Consolidated Adjusted Tangible Net Worth of not less than the amount
shown below as of the date corresponding thereto:
<TABLE>
<CAPTION>
Date Amount
------------------------------------------------------------
<S> <C>
June 30, 1997 $75,000,000.00
June 30, 1998 The sum of $75,000,000.00, plus by
an amount equal to 50% of Borrower's
Consolidated Adjusted Net Earnings
for the fiscal year ended June 30,
1998.
As of the last day of
each fiscal quarter The amount required as of June 30,
quarter thereafter 1998, increased
quarterly as of the last day of each
fiscal quarter after June 30, 1998,
by an amount equal to 50% of
Borrower's Consolidated Adjusted Net
Earnings, if any, for the fiscal
quarter ending on such date.
</TABLE>
(B) Consolidated Cash Flow to Current Portion of
Consolidated Funded Debt. Maintain as of the last day of each fiscal
year a ratio of Consolidated Cash Flow for the prior fiscal year to the
current portion of Consolidated Funded Debt as of the last day of such
fiscal year that is the date of determination of not less than 1.50 to
1.00.
(C) Consolidated Indebtedness to Consolidated Adjusted
Tangible Net Worth Ratio. Maintain a ratio of Consolidated Indebtedness
to Consolidated Adjusted Tangible Net Worth of not more than 1.50 to
1.00 as of June 30, 1997, as of June 30, 1998, and as of the last day of
each fiscal quarter thereafter.
(D) Adjusted Tangible Net Worth. Maintain an Adjusted
Tangible Net Worth, before consolidation of at least $1.00 at all times
during the term hereof.
SECTION 8. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of
the other Loan Documents, and without affecting in any manner the rights
of Lender under the other Sections of this Agreement, it is understood
and agreed that Lender will not be obligated to fund Loan
<PAGE> 36
No. 1 unless and until each of the following conditions has been
satisfied in a manner satisfactory to Lender and its counsel:
8.1. DOCUMENTATION. Lender shall have received the following
documents on or before July 30, 1997, each to be in form and substance
satisfactory to Lender and its counsel:
(A) Certified copies of Borrower's casualty insurance
policies, together with loss payable endorsements on Lender's standard
form of loss payee endorsement naming Lender as loss payee, and
certified copies of BORROWER'S LIABILITY INSURANCE POLICIES, TOGETHER
WITH endorsements naming Lender as a co-insured;
(B) Copies of all filing receipts or acknowledgments issued
by any governmental authority to evidence any filing or recordation
necessary to perfect the Liens of
<PAGE> 37
Lender in the Collateral and evidence in a form acceptable to Lender that
such Liens constitute valid and perfected security interests and Liens;
(C) Landlord or warehouseman agreements with respect to all
premises leased or occupied by Borrower;
(D) A copy of the Articles or Certificate of Incorporation of
Borrower, and all amendments thereto, certified by the Secretary of State
or other appropriate official of its jurisdiction of incorporation;
(E) Good standing certificates for Borrower, issued by the
Secretary of State or other appropriate official of Borrower's jurisdiction
of incorporation and each jurisdiction where the conduct of Borrower's
business activities or the ownership of its Properties necessitates
qualification;
(F) A closing certificate signed by the President and
principal financial officer of Borrower dated as of the date hereof,
stating that (i) the representations and warranties set forth in Section 6
hereof are true and correct in all material respects on and as of such
date, (ii) Borrower is on such date in compliance with all the terms and
provisions set forth in this Agreement and (iii) on such date no Default or
Event of Default has occurred or is continuing;
(G) The Other Agreements duly executed and delivered by
Borrower and each other signatory thereto;
(H) The Security Documents duly executed by Borrower,
Guarantor and each other signatory thereto;
(I) The favorable written opinion of Dewey Ballantine, counsel
to Borrower and Guarantor, regarding Borrower and Guarantor, this
Agreement, the other Loan Documents, the Guaranty and the Guarantor
Security Documents and the transactions contemplated by this Agreement and
any of the other Loan Documents, in form and content satisfactory to Lender
and its counsel;
(I) A fully paid mortgagee title insurance policy (or binding
commitment to issue title insurance policy, marked to Lender's satisfaction
to evidence the form of such policy to be delivered after the Closing
Date), in standard ALTA form, issued by a title insurance company
satisfactory to Lender, in an amount not less than the fair market value of
the Real Property Collateral subject to the Mortgages, insuring that the
Mortgages create valid Liens on all such Real Property Collateral with no
exceptions which Lender shall not have approved in writing and no survey
exception;
(K) Evidence satisfactory to Lender that the ownership, use and
operation of Borrower's real Property and the conduct of Borrower's business
THEREON DOES NOT VIOLATE ANY applicable zoning ordinance, rule or regulation;
<PAGE> 38
(L) Three (3) copies of a current survey of each parcel of the
Real Property Collateral, certified to Lender by the registered land
surveyor preparing such survey;
(M) The Intercreditor Agreement duly executed by the Revolver
Lender;
(N) Such other documents, instruments and agreements as Lender
shall reasonably request in connection with the foregoing matters;
(O) No Default or Event of Default shall exist at the time of,
or shall result from, the funding of Loan No. 1;
(P) Since June 30, 1996, except for changes which are
reflected on the March 31, 1997, financial statements prepared by
management and submitted to Lender, there shall not have occurred any
material adverse change in the business, financial condition or results of
operations of Borrower and Guarantor taken together as a whole, or the
existence or value of any Collateral, or any event, condition or state of
facts which could reasonably be expected to have a Material Adverse Effect;
(Q.) No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages from any Person in respect of, the
consummation of the transactions contemplated hereby or which, in Lender's
sole discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement, the Guaranty or any of the other Loan
Documents;
(R) Lender shall have received assurances satisfactory to it
that the Liens granted to Lender in the Collateral are free and clear of
all Liens except Permitted Liens;
(S) Lender shall have received assurances including, without
limitation, a Phase I environmental report, satisfactory to it, that the
Real Estate Collateral, and Borrower's ownership and use thereof, are in
compliance with all Environmental Laws;
(T) Lender shall have received appraisals that reflect fair
market, orderly liquidation and auction valuations of the Collateral which
are acceptable to Lender;
(U) Lender shall have received evidence, satisfactory to it
and its counsel, that Borrower and Guarantor have received all third party
consents necessary to permit Borrower and Guarantor to consummate the
transactions contemplated by this Agreement or any of the other Loan
Documents, without violation of any other agreements to which Borrower or
Guarantor is a party or by which either of their respective Properties are
bound; and
(V) Revolver Lender and Borrower shall HAVE ENTERED INTO A
REVOLVING CREDIT facility having a maximum loan amount of not less than
$7,500,000, and all conditions
<PAGE> 39
precedent to Borrower's entitlement to obtain revolving credit loans
thereunder shall have been satisfied.
SECTION 9. EVENTS OF DEFAULT: RIGHTS AND REMEDIES ON DEFAULT
9.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events or conditions shall constitute an "Event of Default":
(A) Borrower shall fail to pay any installment of principal, interest or
premium, if any, owing on the Notes on the due date thereof (whether due
at stated maturity, upon acceleration or otherwise); (B) Borrower shall
fail to pay any of the Obligations that are not evidenced by the Notes on
the due date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise); (C) any warranty, representation, or other
statement made or furnished to Lender by or on behalf of Borrower or
Guarantor or in any instrument, certificate or financial statement
furnished in compliance with or in reference to this Agreement or any of
the other Loan Documents proves to have been false or misleading in any
material respect when made or furnished; (D) Borrower shall fail or
neglect to perform, keep or observe (i) any covenant contained in
Sections 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 5.2, 7.1(A), 7.1(H), 7.1(I),
7.1(J), 7.1(K), 7.1(L), 7.2 or 7.3 of this Agreement or (ii) any other
covenant contained in this Agreement (other than a covenant a default in
the performance or observance of which is dealt with specifically
elsewhere in this Section 9.1) and the breach of such other covenant is
not cured to Lender's satisfaction within thirty (30) days after the
sooner to occur of Borrower's receipt of notice of such breach from
Lender or the date on which such failure or neglect becomes known to any
officer of Borrower; (E) any event of default shall occur under, or
Borrower or Guarantor shall default in the performance or observance of
any term, covenant, condition or agreement contained in, any of the
Security Documents, the Other Agreements, the Other Loan Documents or the
Revolver Documents and such default shall continue beyond any applicable
period of grace; (F) there shall occur any default or event of default on
the part of Borrower under any agreement, document or instrument to which
Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Indebtedness having an unpaid balance of
$500,000 or more if the payment or maturity of such Indebtedness is
accelerated in consequence of such event of default or if demand for
payment of such Indebtedness is made; (G) any material loss, theft,
damage or destruction of Collateral not fully covered by insurance (as
required by this Agreement and subject to such deductibles as Lender
shall have agreed to in writing), or the making of any levy, seizure, or
attachment thereof or thereon; (H) there shall occur any material adverse
change in the financial condition or business prospects of Borrower and
Guarantor taken together as a whole; (I) Borrower or Guarantor shall
cease to be Solvent or shall suffer the appointment of a receiver,
trustee, custodian or similar fiduciary, or shall make an assignment for
the benefit of creditors, or any petition for an order for relief shall
be filed by or against Borrower or Guarantor under the Bankruptcy Code
(if against Borrower or Guarantors, the continuation of such proceeding
for more than thirty (30) days), or Borrower or Guarantor shall make any
offer of settlement, extension or composition to their respective
unsecured creditors generally, or any motion, complaint or other pleading
is filed in any bankruptcy case of any Person other than Borrower and
such motion, complaint or pleading seeks the consolidation of Borrower's
or Guarantor's assets and liabilities with the assets and liabilities of
such Person; (J) Guarantor shall cease to own and control, beneficially
and of
<PAGE> 40
record, at least one hundred percent (100%) of the issued and
outstanding capital stock of Borrower; (K) Guarantor shall revoke or
attempt to revoke the Guaranty, or shall dispute Guarantor's liability
under the Guaranty, or shall refuse to confirm in writing, at Lender's
request, the ongoing validity and enforceability of the Guaranty as to all
Obligations; or (L) the prepayment of any of the Lloyd's Debt (whether
mandatory or voluntary or payment upon acceleration).
9.2. ACCELERATION OF THE OBLIGATIONS. Without in any way limiting
the obligation of Borrower to pay any portion of the Obligations made
payable on demand pursuant to the terms of this Agreement or any of the
other Loan Documents, upon or at any time after the occurrence of an
Event of Default and for so long as such Event of Default shall exist,
Lender may in its discretion declare all of the Obligations then
outstanding (whether under this Agreement, any of the other Loan
Documents or otherwise), to be, whereupon the same shall become, without
further notice or demand by Lender of any kind (all of which further
notice and demand Borrower expressly waives), forthwith due and payable
and Borrower shall forthwith pay to Lender, the entire principal of and
interest accrued on the Loans and the other Obligations plus reasonable
attorneys' fees not to exceed fifteen percent (15%) of the Obligations if
the same are collected by or through an attorney at law. Notwithstanding
the foregoing, upon the occurrence of an Event of Default specified in
Section 9.1(I) hereof all of the Obligations shall become automatically
due and payable without declaration, notice or demand by Lender. Nothing
herein or in any of the other Loan Documents shall be construed to permit
Lender to charge or collect any unaccrued or unearned interest.
9.3. Remedies. Upon or at any time after the occurrence of an Event
of Default, Lender shall have and may exercise from time to time the
following rights and remedies (which shall be in addition to any other
rights or remedies contained in this Agreement or any of the other Loan
Documents or under an Applicable Law):
(A) All of the rights and remedies of a secured party under
the Code or under other Applicable Law, and all other legal and equitable
rights to which Lender may be entitled, all of which rights and remedies
shall be cumulative, and none of which shall be exclusive.
(B) The right to take immediate possession of the Equipment,
and (i) to require Borrower to assemble the Equipment, at Borrower's
expense, and make it available to Lender at a place in the continental
United States designated by Lender, at Borrower's expense, and (id) to
enter any of the premises of Borrower or wherever any of the Equipment
shall be located, and to keep and store the same on said premises until
sold (and if said premises be the Property of Borrower, Borrower agrees
not to charge Lender for storage thereof).
(C) The right to sell or otherwise dispose of all or any of
the Personal Property Collateral in its then condition, or after any
further manufacturing or processing thereof, at public or private sale or
sales, with such notice as may be required by law, in lots or in bulk,
for cash or on credit, all as Lender, in its sole discretion, may deem
advisable. Borrower AGREES that ten (10) days written notice to Borrower
of any public or private sale or other
<PAGE> 41
disposition of such Personal Property Collateral shall be reasonable notice
thereof; Provided, however, that no notice of Lender's intended disposition of
Personal Proper Collateral shall be required with respect to any portion of the
Personal Property Collateral that is perishable, threatens to decline speedily
in value or is of a type customarily sold on a recognized market, nor shall any
such notice be required hereunder if not otherwise required under Applicable
Law, and such sale shall be at such locations as Lender may designate in said
notice. Lender shall have the right to conduct such sales on Borrower's
premises, without charge therefor, and such sales may be adjourned from time to
time in accordance with Applicable Law. Lender shall have the right to sell,
lease or otherwise dispose of such Personal Property Collateral, or any part
thereof, for cash, credit or any combination thereof, and Lender may purchase
all or any part of such Personal Property Collateral at public or, if permitted
by Applicable Law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations.
(D) The right at any time or times, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, or provisional or final) at any time held and
other indebtedness at any time owing by Lender to or for the credit or
the account of Borrower against any and all of the Obligations,
irrespective of whether or not Lender shall have made any demand under
any Loan Document and whether or not any of the Obligations may be
unmatured.
(E) The right to foreclose upon the Real Property Collateral
encumbered by the Mortgages in accordance with the terms thereof and
Applicable Law. Lender is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses
and all franchise agreements shall inure to Lender's benefit. The proceeds
realized from the sale of any Collateral may be applied, after allowing two (2)
Business Days for collection, first to the reasonable costs, expenses and
attorneys' fees and expenses incurred by Lender for collection and for
acquisition, completion, protection, removal, storage, sale and delivery of the
Collateral; secondly, to interest due upon any of the Obligations; and thirdly,
to the principal of the Obligations. If any deficiency shall arise, Borrower
and Guarantor shall remain liable to Lender therefor.
9.4. REMEDIES CUMULATIVE: NO WAIVER. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings
of Borrower contained in this Agreement and the other Loan Documents, or
in any document referred to herein or contained in any agreement
supplementary hereto or in any schedule given to Lender or contained in
any other agreement between Lender and Borrower, heretofore,
concurrently, or hereafter entered into, shall be deemed cumulative to
and not in derogation or substitution of any of the terms, covenants,
conditions, or agreements of Borrower herein contained. The failure or
DELAY OF Lender to exercise or enforce any rights, Liens, powers, or
remedies hereunder or under any of
<PAGE> 42
the aforesaid agreements or other documents or security or
Collateral shall not operate as a waiver of such Liens, rights, powers
and remedies, but all such Liens, rights, powers, and remedies shall
continue in full force and effect until the Loans and all other
Obligations owing or to become owing from Borrower to Lender shall have
been fully satisfied, and all Liens, rights, powers, and remedies
provided for herein and in the other Loan Documents are cumulative and
none are exclusive.
SECTION 10. MISCELLANEOUS
10.1. INDEMNITY. Borrower hereby agrees to indemnify Lender and
hold Lender harmless from and against any liability, loss, damage, suit,
action or proceeding ever suffered or incurred by Lender as the result of
Borrower's failure to observe, perform or discharge Borrower's duties
hereunder. Without limiting the generality of the foregoing, this
indemnity shall extend to any claims at any time asserted against Lender
by any Person under any Environmental Laws. Additionally, if any taxes
(excluding taxes imposed upon or measured by the net income of Lender and
Lender's corporate franchise taxes or similar state taxes imposed on
Lender, but including, without limitation, any intangibles taxes, stamp
taxes, recording taxes, documentary taxes or other franchise taxes) shall
be payable by Lender, Borrower or Guarantor on account of the execution,
delivery, issuance or recording of any of the Loan Documents, or the
granting of any Liens or the creation of any of the Obligations
thereunder, by reason of any existing or hereafter enacted federal or
state statute, Borrower will pay all such taxes, including, but not
limited to, any interest and penalties thereon, and will indemnify and
hold Lender harmless from and against liability in connection therewith.
The obligations of Borrower under this Section 10.1 shall survive the
payment in full of the Obligations and the termination of this Agreement.
10.2. MODIFICATION OF AGREEMENT: Sale of Interest. This Agreement
may not be modified, altered or amended, except by an agreement in
writing signed by Borrower and Lender. Lender may at any time grant to
one or more banks or other institutions participating interests in the
Loans. Lender may at any time assign to one or more banks or other
institutions all, or a proportionate part, of its rights and obligations
under this Agreement, with and subject to the consent of the Borrower
(which consent shall not be unreasonably withheld or delayed).
10.3. REIMBURSEMENT OF EXPENSES. If, at any time or times prior or
subsequent to THE date hereof, regardless of whether or not an Event of
Default then exists or any of the transactions contemplated hereunder are
concluded, Lender employs counsel for advice or other representation, or
incurs legal expenses or other costs or out-of-pocket expenses in
connection with: (A) the negotiation and preparation of this Agreement or
any of the other Loan Documents; (B) any amendment of or modification of
this Agreement or any of the other Loan Documents; (C) the filing or
recording of this Agreement or any of the other Loan Documents
(including, without limitation, filing fees, recording fees, documentary
stamps and recording taxes); (D) the administration of this Agreement or
any of the other Documents and the transactions contemplated hereby and
thereby; (E) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Lender, Borrower, Guarantor or any other Person)
in any way relating to the Collateral, this Agreement, the Guaranty or
any of the other Loan Documents or Borrower's affairs; (I;) any attempt
to enforce any rights or remedies of Lender
<PAGE> 43
against Borrower, Guarantor or any other Person which may be obligated to
Lender by virtue of this Agreement, the Guaranty or any of the other Loan
Documents, including, without limitation, any account debtors; or (G) any
attempt to inspect, verify, protect, preserve, restore, collect, sell,
liquidate or otherwise dispose of or realize upon any of the Collateral; then,
in any such event, the attorneys' fees arising from such services and all
expenses, costs, charges and other fees of such counsel or of Lender or
relating to any of the events or actions described in this Section shall be
payable, ON DEMAND, by Borrower to Lender, and shall be additional Obligations
hereunder secured by the Collateral.
10.4. INDULGENCES NOT WAIVERS. Lender's failure, at any time or
times hereafter, to require strict performance by Borrower of any
provision of this Agreement shall not waive, affect or diminish any right
of Lender thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by Lender of an Event of Default by
Borrow or this Agreement or any of the other Loan Documents shall not
suspend, waive or affect any other Event of Default by Borrower under
this Agreement or any of the other Loan Documents, whether the same is
prior or subsequent thereto and whether of the same or of a different
type. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the
other Loan Documents and no Event of Default by Borrower under this
Agreement or any of the other Loan Documents shall be deemed to have been
suspended or waived by Lender, unless such suspension or waiver is by an
instrument in writing specifying such suspension or waiver and is signed
by a duly authorized representative of Lender and directed to Borrower.
10.5. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and
valid under Applicable Law, but if any provision of this Agreement shall
be prohibited by or invalid under Applicable Law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Agreement.
10.6. SUCCESSORS AND ASSIGNS. This Agreement, the Other Agreements
and the Security Documents shall be binding upon and inure to the benefit
of the successors and assigns of Borrower and Lender; provided, however,
that Borrower may not sell, assign or transfer any interest in this
Agreement or any of the other Loan Documents, or any portion thereof,
including, without limitation, Borrower's rights, title, interests,
remedies, powers and duties hereunder and thereunder.
10.7. CUMULATIVE EFFECT. The provisions of the Other Agreements
and the Security Documents are hereby made cumulative with the provisions
of this Agreement.
10.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed IN
ANY NUMBER OF counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which counterparts taken together
shall constitute but one and the same instrument.
<PAGE> 44
10.9. Notice. All notices, requests and demands to or upon a party
hereto shall be in writing and shall be sent by certified or registered
mail, return receipt requested, personal delivery against receipt or by
telecopier or other facsimile transmission and, unless otherwise
expressly provided herein, shall be deemed to have been validly served,
given or delivered when delivered against receipt or three (3) Business
Days after deposit in the U.S. mail, postage prepaid, or, in the case of
facsimile transmission, when received at the office of the noticed party,
addressed as follows:
(A) If to Lender: The CIT Group/Equipment Financing, Inc.
Suite 600
900 Ashwood Parkway
Atlanta, Georgia 30338
Attention: Vice President of Credit
Telecopier No.: 770-551-7866
(B) If to Borrower: Astrotech Space Operations, Inc.
12510 Prosperity Drive, Suite 100
Silver Spring, Maryland 20904
Attention: Margaret E. Grayson
Telecopier No.: 703-448-0719
or to such other address as each party may designate for itself by like
notice given in accordance with this Section. Any written notice that is
not sent in conformity with the provisions hereof shall nevertheless be
effective on the date that such notice is actually received by the
noticed party.
10.10. ENTIRE AGREEMENT. This Agreement and the other Loan
Documents, together with all other instruments, agreements and certificates
executed by the parties in connection therewith or with reference thereto,
embody the entire understanding and agreement between the parties hereto
and thereto with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and inducements, whether
express or implied, oral or written.
10.11. LENDER'S CONSENT. Unless otherwise expressly provided in
this Agreement, whenever Lender's consent is required to be obtained under
this Agreement or any of the other Loan Documents, as a condition to any
action, inaction, condition or event, Lender shall be authorized to give or
withhold such consent in its sole and absolute discretion and to condition
its consent upon the giving of additional collateral security for the
Obligations, the payment of money or any other matter.
10.12. GOVERNING LAW. This Agreement has been delivered at, and
shall be effective when accepted by Lender in, New York, New York,
whereupon this Agreement shall be deemed a contract made in New York and
shall be governed by and construed in accordance with the laws of the State
of New York; provided, however, that if any of THE COLLATERAL SHALL BE
LOCATED in any jurisdiction other than New York, the laws of such
jurisdiction shall govern the method, manner and procedure for foreclosure
of Lender's Lien upon such Collateral and
<PAGE> 45
the enforcement of Lender's other remedies in respect of such Collateral to THE
EXTENT THAT THE LAWS of such jurisdiction are different from or inconsistent
with the laws of New York.
10.13. Consent to Forum. As part of the consideration for new value
received, and regardless of any present or future domicile or principal place
of business of Borrower or Lender, Borrower hereby consents and agrees that the
United States District Court for the Southern District of New York, New York
Division, shall have jurisdiction to hear and determine any claims or disputes
between Borrower and Lender pertaining to this Agreement or to any matter
arising out of or related to this Agreement; provided, however, Lender may, at
its option, commence any action, suit or proceeding in any other appropriate
forum or jurisdiction to obtain possession of or foreclosure upon any
Collateral, to obtain equitable relief, to enforce any judgment or order
obtained by Lender against Borrower or with respect to any Collateral, to
enforce any other right or remedy under this Agreement or Applicable Law or to
obtain any other relief deemed necessary or appropriate by Lender. Borrower
expressly submits and consents in advance to such jurisdiction in any action or
suit commenced in any such court, and Borrower hereby waives any objection
which Borrower may have based upon lack of personal jurisdiction, improper
venue or forum non conveniens and hereby consents to the granting of such legal
or equitable relief as is deemed appropriate by such court. Borrower hereby
waives personal service of the summons, complaint and other process issued in
any such action or suit and agrees that service of such summons, complaint and
other process may be made by registered or certified mail addressed to Borrower
at the address set forth in this Agreement and that service so made shall be
deemed completed upon the earlier of Borrower's actual receipt thereof or three
(3) days after deposit in the U.S. mails, proper postage prepaid. Nothing in
this Agreement shall be deemed or operate to affect the right of Lender to
serve legal process in any other manner permitted by Applicable Law.
10.14. GENERAL WAIVERS BY BORROWER. Borrower waives (i)
presentment, demand and protest and notice of presentment, protest,
default, non payment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper and guaranties at any
time held by Lender on which Borrower may in any way be liable and hereby
ratifies and confirms whatever Lender may do in this regard; (ii) notice
prior to Lender's taking possession or control of any of the Collateral
or any bond or security which might be required by any court prior to
allowing Lender to exercise any of Lender's remedies, including the
issuance of an immediate writ of possession; (iii) the benefit of all
valuation, appraisement and exemption laws; and (iv) notice of Lender's
acceptance hereof.
10.15. JURY TRIAL WAIVER. BORROWER AND LENDER EACH WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF
ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL. BORROWER ACKNOWLEDGES
THAT THE FOREGOING WAIVER IS A MATERIAL INDUCEMENT TO LENDER'S ENTERING
INTO THIS AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVER
IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS
THAT IT HAS REVIEWED THE FOREGOING WAIVER WITH ITS LEGAL COUNSEL AND HAS
KNOWINGLY AND VOLUNTARILY WAIVED ITS
<PAGE> 46
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
<PAGE> 47
IN WITNESS WHEREOF, this Agreement has been duly executed under
seal on the day and year specified at the beginning hereof.
ATTEST: ASTROTECH SPACE OPERATIONS, INC.
("borrower")
/s/ William S. Dawson By: /s/ Margaret E. Grayson
Secretary Margaret E. Grayson, Vice President
[CORPORATE SEAL]
THE CIT GROUP EQUIPMENT FINANCING, INC.
("Lender")
BY:
Title: Vice President
<PAGE> 48
EXHIBIT A-1
SECURED PROMISSORY NOTE
(NOTE NO. 1)
$10,400,000.00 July 14, 1997
FOR VALUE RECEIVED, the undersigned ASTROTECH SPACE OPERATIONS,
INC. (hereinafter "Borrower"), a Delaware corporation, hereby promises
to pay to the order of THE CIT GROUP/EQUIPMENT FINANCING, INC., a New
York corporation (hereinafter "Lender"), in such coin or currency of the
United States which shall be legal tender in payment of all debts and
dues, public and private, at the time of payment, the principal sum of
TEN MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($10,400,000.00),
together with interest from and after the date hereof on so much of the
principal balance hereof as may be outstanding and unpaid from time to
time at the rate of interest in effect from time to time pursuant to
Section 3.1 of the Loan Agreement (as hereafter defined).
This Secured Promissory Note (this "Note") is "Note No. 1"
referred to in, and is issued pursuant to, that certain Loan and
Security Agreement ("Loan Agreement"), dated the date hereof, between
Borrower and Lender, the provisions of which are by this reference
incorporated herein, and is entitled to all of the benefits and security
of the Loan Agreement and the other Loan Documents. All capitalized
terms used herein, unless otherwise specifically defined in this Note,
shall have the meanings ascribed to them in the Loan Agreement.
.
Interest hereunder shall be computed on the basis of actual days
elapsed over a period of a 360-day year unless reference to a 365 or a
366-day year is necessary in order not to exceed the highest rate of
interest that may be charged or collected under Applicable Law. Upon and
after the occurrence of an Event of Default, the outstanding principal
balance of this Note shall bear interest at a rate per annum equal to
the Default Rate. In no contingency or event whatsoever, whether by
reason of advancement of the proceeds hereof or otherwise, shall the
amount paid or agreed to be paid to Lender for the use, forbearance or
detention of money advanced hereunder exceed the highest lawful rate
permissible under Applicable Law. It is the intent hereof that Borrower
not pay or contract to pay, and that Lender not receive or contract to
receive, directly or indirectly in any manner whatsoever, interest in
excess of that which may be paid by Borrower under Applicable Law. Any
acceleration of indebtedness, if elected by Lender, shall be subject to
all Applicable Law, including laws relating to rebate and refund of
unearned charges.
The principal amount and accrued interest of this Note shall be
due and payable on the dates and in the manner hereinafter set forth:
(a) Interest shall be due and payable quarterly, in arrears,
on the first day of each quarter, commencing on October 1, 1997,
and continuing until such time as the full
<PAGE> 49
principal BALANCE HEREOF, TOGETHER WITH ALL OTHER AMOUNTS
OWING HEREUNDER, SHALL HAVE SEEN PAID IN FULL;
(b) Principal shall be due and payable commencing on
October 1, 1997, and continuing on the first day of each quarter
thereafter to and including the first day of April, 2002, in
installments of $519,710.00) each; and
(c) The entire remaining principal amount then outstanding,
together with any and all other amounts due hereunder shall be
due and payable on July 1, 2002.
If any payment is due on a day that is not a Business Day, such
payment shall be due on the next succeeding Business Day, and interest
shall continue to accrue on the principal amount of such payment until
paid. The acceptance of payment of any installment hereof by Lender
after the date on which such installment becomes due as set forth herein
shall not be held to establish a custom or to constitute a waiver of any
rights of Lender to enforce prompt payment of any further installment.
Borrower shall prepay this Note as provided in Section 2.3 of the
Loan Agreement. Borrower may not voluntarily prepay this Note except to
the extent permitted by Section 2.4 of the Loan Agreement.
The occurrence of an Event of Default, including, without
limitation, Borrower's failure to pay any installment of principal or
interest on this Note in full on the due date thereof, shall constitute
an event of default under this Note and shall entitle Lender, at its
option, upon or at any time after the occurrence and during the
continuance of any such event of default, to declare the then
outstanding principal balance and accrued interest hereof to be, and the
same shall thereupon become, immediately due and payable without notice
to or demand upon Borrower, all of which Borrower hereby expressly
waives. If this Note is collected by or through an attorney at law, then
Borrower shall be obligated to pay, in addition to the principal balance
and accrued interest hereof, reasonable attorney's fees, not to exceed
fifteen percent (15 %) of such principal and interest, and court costs.
To the fullest extent permitted by Applicable Law, Borrower, for
itself and its legal representatives, successors and assigns, expressly
waives presentment, demand, protest, notice of dishonor, notice of
non-payment, notice of maturity, notice of protest, presentment for the
purpose of accelerating maturity, diligence in collection, and the
benefit of any exemption or insolvency laws.
Wherever possible each provision of this Note shall be
interpreted in such a manner as to be effective and valid under
Applicable Law, but if any provision of this Note shall be prohibited or
invalid under Applicable Law, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the
remainder of such provision or remaining PROVISIONS OF THIS NOTE. NO
DELAY OR FAILURE ON THE PART OF LENDER IN THE EXERCISE OF ANY RIGHT or
remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by
Lender of any right or
<PAGE> 50
remedy preclude any other right or remedy. Lender, at its option, may enforce
its rights against any collateral securing this Note without enforcing its
rights against Borrower, any guarantor of the indebtedness evidenced hereby or
any other property or indebtedness due or to become due to Borrower. Borrower
agrees that, without releasing or impairing Borrower's liability hereunder,
Lender may at any time release, surrender, substitute or exchange any
collateral securing this Note and may at any time release any party secondarily
liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, and is intended to
take effect as an instrument under seal.
BORROWER WAIVES TRIAL BY JURY AND THE RIGHT TO INTERPOSE ANY
COUNTERCLAIM OR SET-OFF OF ANY KIND IN ANY ACTION, SUIT OR PROCEEDING
RELATING TO THIS NOTE.
IN WITNESS WHEREOF, Borrower has caused dais Note to be duly
executed, sealed and delivered on the date first above written.
ATTEST: ASTROTECH SPACE OPERATIONS, INC.,
("Borrower")
Secretary By:
Name:
Title:
[CORPORATE SEAL]
<PAGE> 51
EXHIBIT A-2
SECURED PROMISSORY NOTE
(NOTE NO. 2)
$_____________________ ________ __, 1997
FOR VALUE RECEIVED, the undersigned ASTROTECH SPACE OPERATIONS,
INC. (hereinafter "Borrower"), a Delaware corporation, hereby promises to
pay to the order of THE CIT GROUP/EQUIPMENT FINANCING, INC., a New York
corporation (hereinafter "Lender"), in such coin or currency of the United
States which shall be legal tender in payment of all debts and dues, public
and private, at the time of payment, the principal sum of
__________________ AND____/100THS DOLLARS ($___________ ), together with
interest from and after the date hereof on so much of the principal balance
hereof as may be outstanding and unpaid from time to time at the rate of
interest in effect from time to time pursuant to Section 3.1 of the Loan
Agreement (as hereafter defined).
This Secured Promissory Note (this "Note") is "Note No. 2" referred
to in, and is issued pursuant to, that certain Loan and Security Agreement
("Loan Agreement"), dated July 14, 1997, between Borrower and Lender, the
provisions of which are by this reference incorporated herein, and is
entitled to all of the benefits and security of the Loan Agreement and the
other Loan Documents. All capitalized terms used herein, unless otherwise
specifically defined in this Note, shall have the meanings ascribed to them
in the Loan Agreement.
Interest hereunder shall be computed on the basis of actual days
elapsed over a period of a 360-day year unless reference to a 365 or a
366-day year is necessary in order not to exceed the highest rate of
interest that may be charged or collected under Applicable Law. Upon and
after the occurrence of an Event of Default, the outstanding principal
balance of this Note shall bear interest at a rate per annum equal to the
Default Rate. In no contingency or event whatsoever, whether by reason of
advancement of the proceeds hereof or otherwise, shall the amount paid or
agreed to be paid to Lender for the use, forbearance or detention of money
advanced hereunder exceed the highest lawful rate permissible under
Applicable Law. It is the intent hereof that Borrower not pay or contract
to pay, and that Lender not receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may
be paid by Borrower under Applicable Law. Any acceleration of indebtedness,
if elected by Lender, shall be subject to all Applicable Law, including
laws relating to rebate and refund of unearned charges.
The principal amount and accrued interest of this Note shall be due
and payable on the dates and in the manner hereinafter set forth:
(d) Interest shall be due and payable quarterly, in arrears,
on the FIRST DAY OF each , commencing on , 1997, and continuing
until such TIME AS the full principal
<PAGE> 52
balance hereof, together with all other amounts owing
hereunder, shall have been paid in full;
<PAGE> 53
(e) Principal shall be due and payable commencing on,
1997, and continuing on the first day of each quarter thereafter
to and including the first day of , 2002, in installments of $ )
each; and
(f) The entire remaining principal amount then outstanding,
together with any and all other amounts due hereunder shall be due
and payable on the maturity date of Loan No. 1.
If any payment is due on a day that is not a Business Day, such
payment shall be due on the next succeeding Business Day, and interest
shall continue to accrue on the principal amount of such payment until
paid. The acceptance of payment of any installment hereof by Lender after
the date on which such installment becomes due as set forth herein shall
not be held to establish a custom or to constitute a waiver of any rights
of Lender to enforce prompt payment of any further installment.
Borrower shall prepay this Note as provided in Section 2.3 of the
Loan Agreement. Borrower may not voluntarily prepay this Note except to the
extent permitted by Section 2.4 of the Loan Agreement.
The occurrence of an Event of Default, including, without
limitation, Borrower's failure to pay any installment of principal or
interest on this Note in full on the due date thereof, shall constitute
an event of default under this Note and shall entitle Lender, at its
option, upon or at any time after the occurrence and during the
continuance of any such event of default, to declare the then
outstanding principal balance and accrued interest hereof to be, and the
same shall thereupon become, immediately due and payable without notice
to or demand upon Borrower, all of which Borrower hereby expressly
waives. If this Note is collected by or through an attorney at law, then
Borrower shall be obligated to pay, in addition to the principal balance
and accrued interest hereof, reasonable attorney's fees, not to exceed
fifteen percent (15 %) of such principal and interest, and court costs.
Time is of the essence of this Note. To the fullest extent
permitted by Applicable Law, Borrower, for itself and its legal
representatives, successors and assigns, expressly waives presentment,
demand, protest, notice of dishonor, notice of non-payment, notice of
maturity, notice of protest, presentment for the purpose of accelerating
maturity, diligence in collection, and the benefit of any exemption or
insolvency laws.
Wherever possible each provision of this Note shall be interpreted
in such a manner as to be effective and valid under Applicable Law, but if
any provision of this Note shall be prohibited or invalid under Applicable
Law, such provision shall be ineffective to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or
remaining provisions of this Note. No delay or failure on the part of
Lender in the exercise of any right or remedy hereunder shall operate as a
waiver thereof, nor as an acquiescence in any default, nor shall any single
or partial exercise by Lender of any right or remedy preclude any other
right or remedy. Lender, at its option, may enforce its rights against any
collateral
<PAGE> 54
securing this Note without enforcing its rights against Borrower, any guarantor
of the indebtedness evidenced hereby or any other property or indebtedness due
or to become due to Borrower. Borrower agrees that, without releasing or
impairing Borrower's liability hereunder, Lender may at any time release,
surrender, substitute or exchange any collateral securing this Note and may at
any time release any party secondarily liable for the indebtedness evidenced by
this Note.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, and is intended to
take effect as an instrument under seal.
BORROWER WAIVES TRIAL BY JURY AND THE RIGHT TO INTERPOSE ANY
COUNTERCLAIM OR SET-OFF OF ANY KIND IN ANY ACTION, SUIT OR PROCEEDING
RELATING TO THIS NOTE.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly
executed, sealed and delivered on the date first above written.
ATTEST: ASTROTECH SPACE OPERATIONS, INC.,
("Borrower")
By:
Secretary Name:
Title:
[CORPORATE SEAL]
<PAGE> 55
EXHIBIT A-3
SECURED PROMISSORY NOTE
(NOTE NO. 3)
$________________ __________ __, 1997
FOR VALUE RECEIVED, the undersigned ASTROTECH SPACE OPERATIONS, INC.
(hereinafter "Borrower"), a Delaware corporation, hereby promises to pay to
the order of THE CIT GROUP/EQUIPMENT FINANCING, INC., a New York
corporation (hereinafter "Lender"), in such coin or currency of the United
States which shall be legal tender in payment of all debts and dues, public
and private, at the time of payment the principal sum of __________________
AND____/100THS DOLLARS ($___________ ), together with interest from and
after the date hereof on so much of the principal balance hereof as may be
outstanding and unpaid from time to time at the rate of interest in effect
from time to time pursuant to Section 3.1 of the Loan Agreement (as
hereafter defined).
This Secured Promissory Note (this "Note") is "Note No. 3" referred
to in, and is issued pursuant to, that certain Loan and Security Agreement
("Loan Agreement"), dated July 14, 1997, between Borrower and Lender, the
provisions of which are by this reference incorporated herein, and is
entitled to all of the benefits and security of the Loan Agreement and the
other Loan Documents. All capitalized terms used herein, unless otherwise
specifically defied in this Note, shall have the meanings ascribed to them
in the Loan Agreement.
Interest hereunder shall be computed on the basis of actual days
elapsed over a period of a 360-day year unless reference to a 365 or a
366-day year is necessary in order not to exceed the highest rate of
interest that may be charged or collected under Applicable Law. Upon and
after the occurrence of an Event of Default, the outstanding principal
balance of this Note shall bear interest at a rate per annum equal to the
Default Rate. In no contingency or event whatsoever, whether by reason of
advancement of the proceeds hereof or otherwise, shall the amount paid or
agreed to be paid to Lender for the use, forbearance or detention of money
advanced hereunder exceed the highest lawful rate permissible under
Applicable Law. It is the intent hereof that Borrower not pay or contract
to pay, and that Lender not receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may
be paid by Borrower under Applicable Law. Any acceleration of indebtedness,
if elected by Lender, shall be subject to all Applicable Law, including
laws relating to rebate and refund of unearned charges.
The principal amount and accrued interest of this Note shall be due
and payable on the DATES and in the manner hereinafter set forth:
(d) Interest shall be due and payable quarterly, in
arrears, on the first day of each , commencing on , 1997, and
continuing until such time as the full principal balance hereof,
together with all other amounts owing hereunder, shall have been
paid in full;
<PAGE> 56
(e) Principal shall be due and payable commencing on ,
1997, and continuing on the first day of each quarter thereafter
to and including the first day of , 2002, in installments of
$ ) each; and
(f) The entire remaining principal amount then outstanding,
together with any and all other amounts due hereunder shall be due
and payable on the maturity date of Loan No. 1.
If any payment is due on a day that is not a Business Day, such
payment shall be due on the next succeeding Business Day, and interest
shall continue to accrue on the principal amount of such payment until
paid. The acceptance of payment of any installment hereof by Lender after
the date on which such installment becomes due as set forth herein shall
not be held to establish a custom or to constitute a waiver of any rights
of Lender to enforce prompt payment of any further installment.
Borrower shall prepay this Note as provided in Section 2.3 of the
Loan Agreement. Borrower may not voluntarily prepay this Note except to
the extent permitted by Section 2.4 of the Loan Agreement.
The occurrence of an Event of Default, including, without
limitation, Borrower's failure to pay any installment of principal or
interest on this Note in full on the due date thereof, shall constitute
an event of default under this Note and shall entitle Lender, at its
option, upon or at any time after the occurrence and during the
continuance of any such event of default, to declare the then
outstanding principal balance and accrued interest hereof to be, and the
same shall thereupon become, immediately due and payable without notice
to or demand upon Borrower, all of which Borrower hereby expressly
waives. If this Note is collected by or through an attorney at law, then
Borrower shall be obligated to pay, in addition to the principal balance
and accrued interest hereof, reasonable attorney's fees, not to exceed
fifteen percent (15%) of such principal and interest, and court costs.
Time is of the essence of this Note. To the fullest extent
permitted by Applicable Law, Borrower, for itself and its legal
representatives, successors and assigns, expressly waives presentment,
demand, protest, notice of dishonor, notice of non-payment, notice of
maturity, notice of protest, presentment for the purpose of accelerating
maturity, diligence in COLLECTION, and the benefit of any exemption or
insolvency laws.
Wherever possible each provision of this Note shall be interpreted
in such a manner as to be effective and valid under Applicable Law, but
if any provision of this Note shall be prohibited or invalid under
Applicable Law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of
such provision or remaining provisions of this Note. No delay or failure
on the part of Lender in the exercise of any right or remedy hereunder
shall operate as a waiver thereof, nor as an acquiescence in any
default, nor shall any single or partial exercise by Lender of any right
or remedy preclude any other right or remedy. Lender, at its option, may
enforce its rights against any collateral securing this Note without
enforcing its rights against Borrower, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become
due to
<PAGE> 57
Borrower. Borrower agrees that, without releasing or impairing Borrower's
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any collateral securing this Note and may at any time release any
party secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, and is intended to
take effect as an instrument under seal.
BORROWER WAIVES TRIAL BY JURY AND THE RIGHT TO INTERPOSE ANY
COUNTERCLAIM OR SET-OFF OF ANY KIND IN ANY ACTION, SUIT OR PROCEEDING
RELATING TO THIS NOTE.
<PAGE> 58
IN WITNESS WHEREOF, Borrower has caused this Note to be duly
executed, sealed and delivered on the date first above written.
ATTEST: ASTROTECH SPACE OPERATIONS, INC.,
("Borrower")
By:
Secretary Name:
Title:
[CORPORATE SEAL]
<PAGE> 59
EXHIBIT B
PERMITTED LIENS
<TABLE>
<CAPTION>
ITEM(S)
INCEPTION TERM ORIGINAL LIEN
LESSOR DATE (IN MONTHS) AMOUNT COVERS
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Copelco Credit Corp. Jan-97 36 19,450 Copier/Fax
Copelco Credit Corp. Jan-97 35 23,151 Copier/Fax
Caterpillar Financial Sep-94 60 24,232 Forklift
Nations Bank Dealer
Leasing Jun-94 8 19,067 Pick up Truck
Finova Capital Corp. Jul-94 84 249,490 Computer & Software
MARCO Leasing Aug-95 80 56,722 Flatbed Truck
Raymond Leasing Jun-94 80 57,465 Reach Trucks
Grentree Vendor
Services Apr-96 24 15,339 Fire Bend Test Machine
Great American Leasing Sep-96 24 7,776 Computer
Great American Leasing Oct-96 12 4,197 Computer
Great American Leasing Nov-96 12 4,897 Computer
Raymond Leasing Jun-94 60 28,732 Reach Trucks
Ikon Capital Jan-96 48 13,964 Copier/Fax
Mita Financial Services Apr-96 48 11,568 Copier/Fax
Commercial Equipment
Leasing Aug-97 60 45,538 4 Copiers
Toyota Motor Credit Jul-97 36 12,077 Pick up Truck
</TABLE>
<PAGE> 60
EXHIBIT C
BUSINESS LOCATIONS
Borrower has the following business locations:
1. Astrotech Space Operations, Inc.
12510 Prosperity Drive
Suite 100
Silver Spring, Maryland 20904
2. Astrotech Space Operations, Inc.
1515 Chaffee Drive
Titusville, Florida
3. Astrotech Space Operations, Inc.
P.O. Box 5097
Tangair Road at Red Road
Vandenburg Air Force Base, California 93437
<PAGE> 61
EXHIBIT D
LITIGATION
The following is a description of all pending and overtly
threatened litigation against Borrower or any of its Properties:
None.
<PAGE> 62
EXHIBIT E
COMPLIANCE CERTIFICATE
SPACEHAB, Incorporated
1595 Spring Hill Road
Suite 360
Vienna, Virginia 22182
_______ _, 199_
TO: The CIT Group/Equipment Financing, Inc. 1211 Avenue of the Americas
13th Floor New York, New York 10036 Attention:
The undersigned, the chief financial officer of ASTROTECH SPACE
OPERATIONS, INC. ("Borrower"), gives this certificate to THE CIT
GROUP/EQUIPMENT FINANCING, INC. ("Lender") in accordance with the
requirements of Section 7.1 (I) of that certain Loan and Security
Agreement, dated July _, 1997, between Borrower and Lender ("Loan
Agreement"). Capitalized terms used in this Certificate, unless otherwise
defined herein, shall have the meanings ascribed to them in the Loan
Agreement:
(1) Based upon my review of the balance sheets and statements of income of
Borrower for the month ending , 199_, copies of which are attached hereto,
I hereby certify that:
(a) The Adjusted Tangible Net Worth is ________$
(b) The Coverage Ratio is __________ to 1; and
(c) The ratio of total Indebtedness to Adjusted
Tangible Net Worth is __________ to 1.
(2) No Default exists on the date hereof, other than: _______________________
(if none, so state); and
(3) No Event of Default exists on the date hereof, other than: ______________
(If none, so state).
Very truly yours,
Name:
Title:
<PAGE> 63
EXHIBIT G
Prepared by and after
recording return to:
Robert A. Crosby, Esq. Parker,
Hudson, Rainer & Dobbs LLP
1500 Marquis Two Tower
285 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303
LESSOR'S AGREEMENT
Re: Lease no. SPCVAN-2-94-0001 dated October 6, 1993, recorded in the
Office of the of Santa Barbara County, California, at Deed Book
______, Page _____
In consideration of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which the undersigned
hereby acknowledges, the undersigned hereby certifies and agrees with
Lender as follows:
1. Definitions. For purposes of this Agreement, the following
terms shall be defined as set forth below:
Lender. The CIT Group/Equipment Financing, Inc., a New York
corporation, and its successors and assigns.
Lender's Address: The CIT Group/Equipment Financing, Inc.
600 Ashwood Parkway
6th Floor
Atlanta, Georgia 30338
Attention: Vice President of Credit
Collateral. All equipment, furniture and fixtures of Lessee, now
owned OF hereafter acquired, and all substitutions and replacements
thereof, in which Lessee has granted a security interest to Lender
to secure the financial accommodations under the Loan Agreement,
some of which Collateral is or may be located from time to time on
the Property.
Lessor. Department of the Air Force.
Lease. The above-referenced Lease Agreement between Lessor and
Lessee, together with the amendments thereto as of the date hereof
Leasehold Deed of Trust. That certain deed of trust and security
agreement to be executed by Lessee and to be delivered to Lender
conveying the Property.
Property. All that tract or parcel of land located at Vandenberg
Air Force Base, Lompoc, Santa Barbara County, California, and being
more particularly described in Exhibit ~A" hereto attached and
incorporated herein by this reference.
<PAGE> 64
Lessee. Astrotech Space Operations, Inc., a Delaware corporation,
as successor to AstroTech Space Operations, L.P.
2. Lender's Security Interest in Collateral. Lessor consents to
Lender's security interest in the Collateral. Lender's security
interests in the Collateral shall be superior to any interest which the
Lessor may at any time have therein. For so long as Lender has a
security interest in any of the Collateral, Lessor will not assert
against any of the Collateral any statutory, common law, contractual or
possessory lien, including, without limitation, any right of levy or
distraint for rent, all of which Lessor hereby subordinates in favor of
Lender. Lessor agrees that none of the Collateral shall be deemed a
fixture or a part of the Property, but shall at all times be considered
personal property, and Lessor disclaims any interest in the Collateral
as fixtures. Lessor agrees that Lender may enter upon the Property at
any time or times, during normal business hours, to inspect or remove
any of the Collateral therefrom, without charge. Lender shall repair
any physical damage directly caused to the Property by such removal.
Lessor will not hinder Lender's actions in enforcing its liens and
remedies with respect to the Collateral. Lessor agrees that Lender may
conduct public or private sales of Collateral at the Property and that
interested parties will be permitted access to the Property during
normal business hours for the purpose of inspecting the Collateral
prior to any such sale.
3. Consent to Leasehold Deed of Trust. Lessor hereby consents to
the execution and delivery by Lessee of the Leasehold Deed of Trust and
other collateral documents executed in accordance therewith. Lessor
agrees that such conveyance or assignment and any sale of the Lease and
of Lessee's rights in any proceedings for the foreclosure of the
Leasehold Deed of Trust, or the transfer of the Lease and Lessee's
rights in lieu of foreclosure shall not constitute or result in the
occurrence of a default or event of default under the Lease. Lender or
any other acquirer of Lessee's rights pursuant to foreclosure, transfer
in lieu of foreclosure or other proceeding or pursuant to a New Lease
(as hereinafter defined) may, without consent of Lessor, sell and
assign the Lease and the Lessee's rights on such terms and to such
persons or entities as are acceptable to Lender or such acquirer and
thereafter shall be relieved of all obligations under the Lease.
4. Limited Obligations of Lender. Lessor acknowledges and agrees
that in the event Lender shall succeed to Lessee's interest under the
Lease, Lender shall not be responsible or liable for curing any
defaults arising under or with respect to the Lease prior to the date
on which Lender so succeeds to Lessee's interest. Further, Lender shall
be liable only for those obligations of Lessee under the Lease arising
and accruing during the period Lender is the owner of Lessee's interest
(other than security interest) in the Lease.
5. Notice and Opportunity to Cure. If Lessee defaults under the
Lease, Lessor shall, prior to taking any action to remove Lessee from
the Property or otherwise exercising its remedies under the Lease,
first give written notice to Lender at Lender's Address of such
default, and Lessor will allow Lender, at Lender's option, without
obligation, sixty (60) days after Lender's receipt of such notice
within which to cure or cause Lessee to cure such default. If Lender
elects not to cure such default, Lessor will not terminate the Lease or
take any action to remove Lessee from the Property so long as the
regular installments of rent under the Lease are paid and Lender is
diligently prosecuting foreclosure proceedings under the Leasehold Deed
of Trust. Lender shall be deemed to be diligently prosecuting such
foreclosure proceedings during the pendency of any bankruptcy stay
relating to Lessee if Lender diligently seeks a lifting of such stay in
order to enable it to undertake and prosecute such foreclosure
proceedings to completion.
6. Options to Occupy Property and Enter into New Lease. In the
event of termination of the Lease, Lessor shall, in addition to
providing the notice of default as required above, provide Lender
<PAGE> 65
with written notice that the Lease has been terminated, together
with a statement of all sums which would at that time be due under the
Lease but for such termination, and of all other defaults, if any, then
known to Lessor. At Lender's option, Lessor will:
a. permit the Collateral to remain on the Property for a
period of up to ninety (90) days following receipt by Lender of
such notice of termination from Lessor, subject, however, to the
payment to Lessor by Lender of the regular installments of rent
due under the Lease for the period of time during which Lender
shall elect to use or occupy the Property or elect to keep the
Collateral thereon without abandoning same, which rent shall be
pro-rated on a per diem basis determined on a 30-day month. Lender
shall not be deemed to have assumed nor shall it be liable for any
unperformed or unpaid obligations of Lessee under the Lease, other
than for the payment of rent described in the preceding sentence;
and
b. enter into a new lease ("New Lease") of the Property
with Lender or its designee for the remainder of the term of the
Lease, effective as of the date of termination, at the rent and
additional rent, and upon the terms, covenants, and conditions
(including all options to renew but excluding requirements which
are not applicable or which have already been fulfilled) of the
Lease, provided:
i. Lender shall make written request upon Lessor for
such New Lease within sixty (60) days after the date Lender
receives Lessor's notice of termination of the Lease.
ii. Lender or its designee shall pay or cause to be
paid to Lessor at the time of the execution and delivery of
such New Lease any and all sums which would at the time of
the termination of the Lease have been due pursuant to the
Lease but for such termination; provided, however, that
Lender shall have no obligation to pay or cause to be paid
any rent, additional rent, or other payment for which
Lessor did not give written notice of nonpayment to Lender
within thirty (30) days of the date first due.
iii. The lessee under any New Lease shall have the
same right, title, and interest in and to the Property and
the buildings and improvements thereon as Lessee had under
the Lease. The lessee under any such New Lease shall be
liable to perform the obligations imposed on the lessee by
such New Lease only during the period such person or entity
has ownership of such leasehold estate.
iv. Either (a) any New Lease made pursuant to this
paragraph shall be prior to any deed to secure debt,
mortgage or other lien, charge, or encumbrance on the
Property, or (b) Lessor shall provide to the lessee under
the New Lease an instrument reasonably acceptable to such
lessee by which the holder of any such deed to secure debt,
mortgage, lien or encumbrance shall agree not to terminate
or disturb such lessee's possession of the Property except
pursuant to the terms of the New Lease.
7. No Merger. So long as the Leasehold Deed of Trust is in existence, the
fee title to the Property and the leasehold estate of Lessee created by any
Lease shall not merge, but shall remain separate and distinct, notwithstanding
the acquisition of said fee title and said leasehold estate by Lessor or by
Lessee or by a third party, by purchase or otherwise.
<PAGE> 66
8. Miscellaneous. This agreement shall remain in full force and
effect until all obligations of Lessee to Lender have been paid and satisfied in
full and Lender has terminated its financing agreements with Lessee. The
provisions of this agreement may not be modified or terminated orally and shall
be binding upon the successors, assigns and representatives of the Lessor, and
upon any successor owner or transferee of the Property, and shall inure to the
benefit of the Lender and its successors and assigns. This agreement constitutes
the entire understanding and agreement of the parties hereto on the subject
matter hereof Lessor hereby waives notice of acceptance of this agreement by
Lender.
IN WITNESS WHEREOF, the undersigned Lessor has caused this instrument
to be executed by its duly authorized of officers to be affixed hereto
as of , 1997.
DEPARTMENT OF THE AIR FORCE
("Lessor")
By:
Name:
Title:
STATE OF:
COUNTY OF:
Before me, , a Notary Public of said County and State, personally
appeared , with whom I am personally acquainted (or proved to me on the
basis of satisfactory evidence), and who, upon oath, acknowledged himself to be
the (or other officer authorized to execute the instrument) of the within-named
bargainor, a corporation, and that he as such executed the foregoing instrument
for the purposes therein contained, by signing the name of the corporation by
himself as
WITNESS my hand and Notarial Seal at office, on this _ day of , 1997.
Notary Public
My Commission Expires:
[NOTARIAL SEAL]
<PAGE> 67
EXHIBIT F
Prepared by and after recording return to: Robert A. Crosby, Esq. Parker,
Hudson, Rainer & Dobbs LLP 1500 Marquis Two Tower 285 Peachtree Center
Avenue, N.E. Atlanta, Georgia 30303
LESSOR'S AGREEMENT
Re: Sublease Agreement dated April 9, 1991, recorded in the Office of
the Clerk of the Circuit Court of Brevard County, Florida, at Deed
Book 3123, Page 1776
In consideration of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which the undersigned
hereby acknowledges, the undersigned hereby certifies and agrees with
Lender as follows:
1. Definitions. For purposes of this Agreement, the following
terms shall be defined as set forth below:
Lender. The CIT Group/Equipment Financing, Inc., a New York
corporation, and its successors and assigns.
Lender's Address: The CIT Group/Equipment Financing, Inc.
600 Ashwood Parkway
6th Floor
Atlanta, Georgia 30338
Attention: Vice President of Credit
Collateral. All equipment, furniture and fixtures of Lessee, now
owned or hereafter acquired, and all substitutions and replacements
thereof, in which Lessee has granted a security interest to Lender
to secure the financial accommodations under the Loan Agreement,
some of which Collateral is or may be located from time to time on
the Property.
Lessor. Eastern American Teak Corporation.
Lease. The above-referenced Sublease Agreement between Lessor and
Lessee, together with the amendments thereto as of the date hereof.
Leasehold Deed of Trust. That certain deed of trust and security
agreement to be executed by Lessee and to be delivered to Lender
conveying the Property.
Property. All that tract or parcel of land located at Brevard
County, Florida, and being more particularly described in Exhibit
"A" hereto attached and incorporated herein by this reference.
Lessee. Spacehab, Incorporated, a Washington corporation.
2. Lender's Security Interest in Collateral. Lessor consents to
Lender's security interest in the Collateral. Lender's security
interests in the Collateral shall be superior to any interest which the
Lessor may at any time have therein. For so long as Lender has a
security interest in any of the
<PAGE> 68
Collateral, Lessor will not assert against any of the Collateral
any statutory, common law, contractual or possessory lien, including,
without limitation, any right of levy or distraint for rent, all of
which Lessor hereby subordinates in favor of Lender. Lessor agrees that
none of the Collateral shall be deemed a fixture or a part of the
Property, but shall at all times be considered personal property, and
Lessor disclaims any interest in the Collateral as fixtures. Lessor
agrees that Lender may enter upon the Property at any time or times,
during normal business hours, to inspect or remove any of the
Collateral therefrom, without charge. Lender shall repair any physical
damage directly caused to the Property by such removal. Lessor will not
hinder Lender's actions in enforcing its liens and remedies with
respect to the Collateral. Lessor agrees that Lender may conduct public
or private sales of Collateral at the Property and that interested
parties will be permitted access to the Property during normal business
hours for the purpose of inspecting the Collateral prior to any such
sale.
3. Consent to Leasehold Deed of Trust. Lessor hereby consents to
the execution and delivery by Lessee of the Leasehold Deed of Trust and
other collateral documents executed in accordance therewith. Lessor
agrees that such conveyance or assignment and any sale of the Lease and
of Lessee's rights in any proceedings for the foreclosure of the
Leasehold Deed of Trust, or the transfer of the Lease and Lessee's
rights in lieu of foreclosure shall not constitute or result in the
occurrence of a default or event of default under the Lease. Lessor has
obtained all consents, approvals and agreements necessary to the full
exercise of Lender's rights hereunder, including, without limitation,
any necessary consent, approval or agreement (including a
non-disturbance agreement) of the Canaveral Port Authority of Cape
Canaveral. Lender or any other acquirer of Lessee's rights pursuant to
foreclosure, transfer in lieu of foreclosure or other proceeding or
pursuant to a New Lease (as hereinafter defined) may, without consent
of Lessor, sell and assign the Lease and the Lessee's rights on such
terms and to such persons or entities as are acceptable to Lender or
such acquirer and thereafter shall be relieved of all obligations under
the Lease.
4. Limited Obligations of Lender. Lessor acknowledges and agrees
that in the event Lender shall succeed to Lessee's interest under the
Lease, Lender shall not be responsible or liable for curing any
defaults arising under or with respect to the Lease prior to the date
on which Lender so succeeds to Lessee's interest. Further, Lender shall
be liable only for those obligations of Lessee under the Lease arising
and accruing during the period Lender is the owner of Lessee's interest
(other than security interest) in the Lease.
5. Notice and Opportunity to Cure. If Lessee defaults under the
Lease, Lessor shall, prior to taking any action to remove Lessee from
the Property or otherwise exercising its remedies under the Lease,
first give written notice to Lender at Lender's Address of such
default, and Lessor will allow Lender, at Lender's option, without
obligation, sixty (60) days after Lender's receipt of such notice
within which to cure or cause Lessee to cure such default. If Lender
elects not to cure such default, Lessor will not terminate the Lease or
take any action to remove Lessee from the Property so long as the
regular installments of rent under the Lease are paid and Lender is
diligently prosecuting foreclosure proceedings under the Leasehold Deed
of Trust. Lender shall be deemed to be diligently prosecuting such
foreclosure proceedings during the pendency of any bankruptcy stay
relating to Lessee if Lender diligently seeks a lifting of such stay in
order to enable it to undertake and prosecute such foreclosure
proceedings to completion.
6. Options to Occupy Property and Enter into New Lease. ~ the
event of termination of the Lease, Lessor shall, in addition to
providing the notice of default as required above, provide Lender with
written notice that the Lease has been terminated, together with a
statement of all sums which
<PAGE> 69
would at that time be due under the Lease but for such termination, and
of all other defaults, if any, then known to Lessor. At Lender's option, Lessor
will:
a. permit the Collateral to remain on the Property for a
period of up to ninety (90) days following receipt by Lender of
such notice of termination from Lessor, subject, however, to the
payment to Lessor by Lender of the regular installments of rent
due under the Lease for the period of time during which Lender
shall elect to use or occupy the Property or elect to keep the
Collateral thereon without abandoning same, which rent shall be
pro-rated on a per diem basis determined on a 30-day month. Lender
shall not be deemed to have assumed nor shall it be liable for any
unperformed or unpaid obligations of Lessee under the Lease, other
than for the payment of rent described in the preceding sentence;
and
b. enter into a new lease ("New Lease") of the Property with
Lender or its designee for the remainder of the term of the Lease,
effective as of the date of termination, at the rent and
additional rent, and upon the terms, covenants, and conditions
(including all options to renew but excluding requirements which
are not applicable or which have already been fulfilled) of the
Lease, provided:
i. Lender shall make written request upon Lessor for
such New Lease within sixty (60) days after the date Lender
receives Lessor's notice of termination of the Lease.
ii. Lender or its designee shall pay or cause to be
paid to Lessor at the time of the execution and delivery of
such New Lease any and all sums which would at the time of
the termination of the Lease have been due pursuant to the
Lease but for such termination: provided, however, that
Lender shall have no obligation to pay or cause to be paid
any rent additional rent, or other payment for which Lessor
did not give written notice of nonpayment to Lender within
thirty (30) days of the date first due.
iii. The lessee under any New Lease shall have the
same right, title, and interest in and to the Property and
the buildings and improvements thereon as Lessee had under
the Lease. The lessee under any such New Lease shall be
liable to perform the obligations imposed on the lessee by
such New Lease only during the period such person or entity
has ownership of such leasehold estate.
iv. Either (a) any New Lease made pursuant to this
paragraph shall be prior to any deed to secure debt,
mortgage or other lien, charge, or encumbrance on the
Property, or (b) Lessor shall provide to the lessee under
the New Lease an instrument reasonably acceptable to such
lessee by which the holder of any such deed to secure debt,
mortgage, lien or encumbrance shall agree not to terminate
or disturb such lessee's possession of the Property except
pursuant to the terms of the New Lease.
7. No Merger. So long as the Leasehold Deed of Trust is in
existence, the fee title to She Property and the leasehold estate of Lessee
created by any Lease shall not merge, but shall remain separate and distinct,
notwithstanding the acquisition of said fee tide and said leasehold estate by
Lessor or by Lessee or by a third party, by purchase or otherwise.
<PAGE> 70
8. Miscellaneous. This agreement shall remain in full force and
effect until all obligations of Lessee to Lender have been paid and satisfied in
full and Lender has terminated its financing agreements with Lessee. The
provisions of tills agreement may not be modified or terminated orally and shall
be binding upon the successors, assigns and representatives of She Lessor, and
upon any successor owner or transferee of She Property, and shall inure to the
benefit of the Lender and its successors and assigns. This agreement constitutes
the entire understanding and agreement of the parties hereto on The subject
matter hereof. Lessor hereby waives notice of acceptance of this agreement by
Lender.
IN WITNESS WHEREOF, The undersigned Lessor has caused this
instrument to be executed by its duly authorized officers and its
corporate seal to be affixed hereto as of ~ 1997.
EASTERN AMERICAN TEAK CORPORATION
("Lessor")
By:
Print Name:
Title:
<PAGE> 71
STATE OF FLORIDA )
)
COUNTY OF
BREVARD )
Before me, , a Notary Public of said County and
State, personally appeared , with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence), and who,
upon oath, acknowledged himself to be the ____________________ (or other
officer authorized to execute the instrument) of Eastern American Teak
Corporation the within named bargainor, a corporation, and that he as such
___________ executed the foregoing instrument for the purposes therein
contained, by signing the name of the corporation by himself as
____________________________________.
WITNESS my hand and Notarial Seal at office, on this day of , 1997.
Notary Public Print Name:
My Commission Expires:
[NOTARIAL SEAL]
<PAGE> 1
EXHIBIT 10.56
EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
This Employment and Non-Interference Agreement (this
"Agreement"), is dated as of April 1, 1997 (the "Effective Date"), by and
between Dr. Shelley A. Harrison (the "Executive") and SPACEHAB, Incorporated, a
Washington corporation (the "Company").
WITNESSETH:
WHEREAS, the Company wishes to retain the future services of Executive
for the Company;
WHEREAS, Executive is willing, upon the terms and conditions set forth
in this Agreement, to provide services hereunder; and
WHEREAS, the Company wishes to secure Executive's non-interference,
upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
Subject to Section 3, the Company hereby employs Executive, and
Executive agrees to accept such employment, during the Term of Employment (as
defined in Section 3(a)), as Chief Executive Officer of the Company and to
undertake such duties and responsibilities as may be reasonably assigned to
Executive from time to time by the Chairman, Board of Directors of the Company,
or such other appropriately authorized or designated executive officer of the
Company, provided however, that nothing herein shall require Executive to
relocate his principal residence from the Long Island, New York area.
2. Extent of Employment
(a) During the Term of Employment, Executive shall perform his
obligations hereunder faithfully and to the best of his ability under the
direction of the Board of Directors of the Company, or such other appropriately
authorized or designated executive officer of the Company, and shall abide by
the rules, customs and usages from time to time established by the Company.
(b) During the Term of Employment, Executive shall devote such
business time, energy and skill as may be reasonably necessary for the
performance of his duties, responsibilities and obligations under this Agreement
(except for vacation periods
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<PAGE> 2
and reasonable periods of illness or other incapacity), consistent with past
practices and norms with respect to similar positions, provided however, that
the Company acknowledges that Employee is a General Partner in several venture
capital funds and is a director, consultant and/or advisor to certain companies
and associations. The Company specifically agrees that such current and future
activities of the same general type and scope are permitted under the terms of
this Agreement and are not in derogation of Employee's duties and obligations
under this Agreement.
(c) Nothing contained herein shall require Executive to follow any
directive or to perform any act which would violate any laws, ordinances,
regulations or rules of any governmental, regulatory or administrative body,
agent or authority, any court or judicial authority, or any public, private or
industry regulatory authority. Executive shall act in accordance with the laws,
ordinances, regulations or rules of any governmental, regulatory or
administrative body, agent or authority, any court or judicial authority, or any
public, private or industry regulatory authority.
3. Term of Employment; Termination
(a) The "Term of Employment" shall commence on the Effective Date and
shall continue for a term ending on March 31, 2000 (the "Initial Term"), subject
to automatic annual renewal for one-year terms thereafter (the "Additional
Term"), unless either the Company or Executive notifies the other party of its
intent not to renew within ninety (90) days prior to the end of the Initial
Term. Should Executive's employment by the Company be earlier terminated
pursuant to Section 3(b), the Term of Employment shall end on the date of such
earlier termination.
(b) Subject to the payments contemplated by Section 3(d), the Term of
Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability,
Executive is unable to perform and does not perform his duties
hereunder, for a continuous period of 90 days, and an experienced,
recognized physician specializing in such disabilities certifies as to
the foregoing in writing;
(iii) for Cause or Material Breach (each as defined in Section
3(d));
(iv) upon the continuous poor or unacceptable performance of
Executive's duties to the Company, in the sole judgment of the Board of
Directors of the Company, which has remained uncured for a period of 90
days after the delivery of notice by the Company to the Executive of
such dissatisfaction with Executive's performance; or
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<PAGE> 3
(v) for any other reason not referred to in clauses (i) through
(iv), or for no reason, such that this Agreement shall be construed as
terminable at will by the Company.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Material Breach or Cause. Termination
shall become effective upon the delivery by the Company to Executive of notice
specifying such termination and the reasons therefor, subject to the
requirements for advance notice and an opportunity to cure provided in this
Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by Section 3(d), the Term of
Employment may be terminated at any time by Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability,
Executive is unable to perform and does not perform his duties
hereunder, for a continuous period of 90 days, and an experienced,
recognized physician specializing in such disabilities certifies as to
the foregoing in writing;
(iii) as a result of the Company's material reduction in
Executive's authority, perquisites, position, title or responsibilities
(other than such a reduction by the Company because of a temporary
illness or disability or such a reduction which affects all of the
Company's senior executives on a substantially equal or proportionate
basis as a result of financial results, conditions, prospects,
reorganization, workout or distressed condition of the Company), or the
Company's willful, material violation of its obligations under this
Agreement, in each case, after 30 days' prior written notice by
Executive to the Company and its Board of Directors and the Company's
failure thereafter to cure such reduction or violation within such 30
days; or
(iv) voluntarily or for any reason not referred to in clauses (i)
through (iii), or for no reason, in each case, after 90 days' prior
written notice to the Company and its Board of Directors.
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<PAGE> 4
(d) For the purposes of this Section 3:
"Cause" shall mean any of the following: (i) Executive's conviction of
any crime or criminal offense involving the unlawful theft or conversion of
substantial monies or other property or any other felony (other than a criminal
offense arising solely under a statutory provision imposing criminal liability
on the Executive on a per se basis due to the offices held by the Executive); or
(ii) Executive's conviction of fraud or embezzlement.
"Material Breach" shall mean any of the following: (i) Executive's
breach of any of his fiduciary duties to the Company or its stockholders or
making of a willful misrepresentation or omission which breach,
misrepresentation or omission would reasonably be expected to materially
adversely affect the business, properties, assets, condition (financial or
other) or prospects of the Company; (ii) Executive's willful, continual and
material neglect or failure to discharge his duties, responsibilities or
obligations prescribed by Sections 1 and 2 (other than arising solely due to
physical or mental disability); (iii) Executive's habitual drunkenness or
substance abuse which materially interferes with Executive's ability to
discharge his duties, responsibilities or obligations prescribed by Sections 1
and 2; (iv) Executive's willful, continual and material breach of any
noncompetition or confidentiality agreement with the Company, including without
limitation, those set forth in Sections 8 and 9 of this Agreement; and (v)
Executive's gross neglect of his duties and responsibilities, as determined by
the Company's Board of Directors; in each case, for purposes of clauses (i)
through (v), after the Company or the Board of Directors has provided Executive
with 30 days' written notice of such circumstances and the possibility of a
Material Breach, and Executive fails to cure such circumstances and Material
Breach within those 30 days.
(i) In the event Executive's employment is terminated pursuant to
Section 3(b)(i) [death], 3(b)(ii) [disability] or 3(b)(v) [any other
reason or no reason] or 3(c)(i) [death], 3(c)(ii) [disability] or
3(c)(iii) [material reduction], the Company will: (A) pay to Executive
(or his estate or representative) the full amounts to which the
Executive would be entitled to under Section 4(a) for the period from
effectiveness of termination through the eighteenth month anniversary
of termination; and (B) pay to Executive (or his estate or
representative) the benefits described in Section 6 through the
eighteenth month anniversary of termination.
Payment of the amounts and provision of the benefits described
above will be made in accordance with the timetable and schedule for
such payments contemplated therefor as if such termination did not
occur, and will be subject to the other provisions of this Agreement,
including Section 3(g) and Sections 8 and 9. If the Company makes the
payments required by this Section 3(d)(i), such payments will
constitute severance and liquidated damages, and the Company will not
be obligated to pay any further amounts to Executive under this
Agreement or otherwise be liable to Executive in connection with any
termination.
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<PAGE> 5
(ii) In the event Executive's employment is terminated pursuant to
Section 3(b)(iii) [Cause or Material Breach], 3(b)(iv) [poor
performance], or 3(c)(iv) [voluntary], the Company will not be
obligated to pay any further amounts to Executive under this Agreement.
(e) In the event the Term of Employment is terminated and the Company
is obligated to make payments to Executive pursuant to Section 3(d)(i),
Executive shall not be under a duty to seek to obtain alternative employment;
and if Executive thereafter obtains alternative employment, the Company's
payment obligations under Section 3(d)(i), including its obligation to provide
insurance coverage, if any, will not be mitigated or reduced by Executive's
compensation under such alternative employment.
(f) In the event the Term of Employment is terminated and the Company
is obligated to make payments pursuant to Section 3(d)(i), Executive hereby
waives any and all claims against the Company and its respective officers,
directors, employees, agents, or representatives, stockholders and affiliates
relating to his employment during the term hereof and this Agreement.
(g) Termination of the Term of Employment will not terminate Sections
3(d), 3(f), and 8 through 22.
4. Compensation
During the Term of Employment, the Company shall pay to Executive:
(a) As base compensation for his services hereunder, in bi-monthly
installments, a base salary at a rate in the first year of this Agreement of
$275,000 per annum, in the second year of the Agreement of $300,000 per annum
and in the third year of the Agreement of $325,000. Such amounts may be
increased (but not decreased) annually at the discretion of the Compensation
Committee of the Board of Directors based upon an annual review by the
Compensation Committee of the Board of Directors of Executive's performance.
(b) An annual bonus, if any, based on Executive's performance as
determined and approved by the Compensation Committee of the Board of Directors.
5. Reimbursement of Expenses
During the Term of Employment, the Company shall pay all expenses,
including without limitation, transportation, lodging and food for Executive to
travel between his home and the Company's headquarters and to any of its other
offices, to attend conventions, conferences and meetings that the Company
determines are necessary or in the best interest of the Company, and for any
ordinary and reasonable expenses incurred by Executive in the conduct of the
Business of the Company.
5
<PAGE> 6
6. Benefits
During the Term of Employment, Executive shall be entitled to benefits
(including health, disability, pension and life insurance benefits consistent
with Company policy, or as increased from time to time), in each case, in
accordance with guidelines or established from time to time, by the Board of
Directors for senior executives of the Company.
7. Stock Options
As a condition of entering into this Agreement, outstanding stock
options held by Executive will be treated as follows:
1. On January 20, 1997, the 120,000 options granted to
Executive in October 1995 were cancelled and an additional
60,000 options were issued at an exercise price of $5.75.
These options were vested immediately. The Company also
committed that an additional 60,000 options will be granted
to Executive at the Compensation Committee meeting to be
held in August 1997 when annual grants of options to
employees are to be considered. The exercise price for
these options will be at fair market value at the time of
grant and they will be immediately vested.
2. With reference to the 331,000 options granted in April and
August 1996, said options shall remain outstanding and an
additional 231,700 options shall be granted to Executive on
April 25, 1997 with an exercise price equal to the closing
market price on that date. On that date said options shall
be fully vested.
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<PAGE> 7
8. Confidential Information
(a) Executive acknowledges that his employment hereunder gives him
access to Confidential Information relating to the Company's Business and its
customers which must remain confidential. Executive acknowledges that this
information is valuable, special, and a unique asset of the Company's Business,
and that it has been and will be developed by the Company at considerable effort
and expense, and if it were to be known and used by others engaged in a
Competitive Business, it would be harmful and detrimental to the interests of
the Company. In consideration of the foregoing, Executive hereby agrees and
covenants that, during and after the Term of Employment, Executive will not,
directly or indirectly in one or a series of transactions, disclose to any
person, or use or otherwise exploit for Executive's own benefit or for the
benefit of anyone other than the Companies, Confidential Information (as defined
in Section 11), whether prepared by Executive or not; provided, however, that
any Confidential Information may be disclosed to officers, representatives,
employees and agents of the Companies who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them in the Business (as defined in Section 11). Executive shall
use his best efforts to prevent the removal of any Confidential Information from
the premises of the Companies, except as required in his normal course of
employment by the Company. Executive shall use his best efforts to cause all
persons or entities to whom any Confidential Information shall be disclosed by
him hereunder to observe the terms and conditions set forth herein as though
each such person or entity was bound hereby. Executive shall have no obligation
hereunder to keep confidential any Confidential Information if and to the extent
disclosure of any thereof is specifically required by law; provided, however,
that in the event disclosure is required by applicable law, Executive shall
provide the Company with prompt notice of such requirement, prior to making any
disclosure, so that the Company may seek an appropriate protective order. At the
request of the Company, Executive agrees to deliver to the Company, at any time
during the Term of Employment, or thereafter, all Confidential Information which
he may possess or control. Executive agrees that all Confidential Information of
the Companies (whether now or hereafter existing) conceived, discovered or made
by him during the Term of Employment exclusively belongs to the Companies (and
not to Executive). Executive will promptly disclose such Confidential
Information to the Company and perform all actions reasonably requested by the
Company to establish and confirm such exclusive ownership.
(b) In the event that Executive breaches his obligations in any
material respect under this Section 8, the Company, in addition to pursuing all
available remedies under this Agreement, at law or otherwise, and without
limiting its right to pursue the same shall cease all payments to Executive
under this Agreement.
(c) The terms of this Section 8 shall survive the termination of this
Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. Non-Interference
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<PAGE> 8
(a) Executive acknowledges that the services to be provided give him
the opportunity to have special knowledge of the Company and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company, and that interference in these relationships would cause
irreparable injury to the Company. In consideration of this Agreement, Executive
covenants and agrees that:
(i) During the Restricted Period (which shall not include any
period of violation of this Agreement by the Executive), Executive will
not, without the express written approval of the Board of Directors of
the Company, anywhere in the Market, directly or indirectly, in one or
a series of transactions, own, manage, operate, control, invest or
acquire an interest in, or otherwise engage or participate in, whether
as a proprietor, partner, stockholder, lender, director, officer,
employee, joint venturer, investor, lessor, supplier, customer, agent,
representative or other participant, in any Competitive Business
without regard to (A) whether the Competitive Business has its office,
manufacturing or other business facilities within or without the
Market, (B) whether any of the activities of Executive referred to
above occur or are performed within or without the Market or (C)
whether Executive resides, or reports to an office, within or without
the Market; provided, however, that (x) Executive may, anywhere in the
Market, directly or indirectly, in one or a series of transactions,
own, invest or acquire an interest in up to five percent (5%) of the
capital stock of a corporation whose capital stock is traded publicly,
or that (y) Executive may accept employment with a successor company to
the Company.
(ii) During the Restricted Period (which shall not include any
period of violation of this Agreement by Executive), Executive will not
without the express prior written approval of the Board of Directors of
the Company (A) directly or indirectly, in one or a series of
transactions, recruit, solicit or otherwise induce or influence any
proprietor, partner, stockholder, lender, director, officer, employee,
sales agent, joint venturer, investor, lessor, supplier, customer,
agent, representative or any other person which has a business
relationship with the Company or had a business relationship with the
Company within the twenty-four (24) month period preceding the date of
the incident in question, to discontinue, reduce or modify such
employment, agency or business relationship with the Company, or (B)
employ or seek to employ or cause any Competitive Business to employ or
seek to employ any person or agent who is then (or was at any time
within six months prior to the date Executive or the Competitive
Business employs or seeks to employ such person) employed or retained
by the Company. Notwithstanding the foregoing, nothing herein shall
prevent Executive from providing a letter of recommendation to an
employee with respect to a future employment opportunity.
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<PAGE> 9
(iii) The scope and term of this Section 9 would not preclude him
from earning a living with an entity that is not a Competitive
Business.
(b) The terms of this Section 9 shall survive termination of this
Agreement regardless of who terminates this Agreement, or the reasons therefor.
10. Inventions
(a) Each invention, improvement or discovery made or conceived by
Executive, either individually or with others, during the term of his employment
with the Company, which invention, improvement or discovery is related to any of
the lines of business or work of the Companies, any projected or potential
activities which the Companies have investigated or hereinafter investigates, or
which result from or are suggested by any service performed by Executive for the
Company, whether patentable or not, shall be promptly and fully disclosed by
Executive to the Company. Executive assigns each such invention, improvement or
discovery, and the patents thereof, or related thereto, to the Company.
Executive shall, during the term of his employment with the Company and
thereafter without charge to the Company, but at the request and expense of the
Company, assist the Company in obtaining or vesting in itself patents upon such
improvements and inventions. All such inventions, improvements or discoveries
shall at all times become and remain the exclusive property of the Company.
Executive represents that he does not claim ownership of any inventions,
improvements, formulae or discoveries which are excluded from this Agreement.
(b) In the event that Executive breaches his obligations in any
material respect under Sections 8, 9 or this Section 10, the Company, in
addition to pursuing all available remedies under this Agreement, at law or
otherwise, and without limiting its right to pursue the same shall cease all
payments to Executive under this Agreement.
11. Definitions
"Business" means (a) the design, manufacture, lease and operation of
pressurized habitable space capsules and those other businesses and activities
that are described in the Company's Form 10-K for the fiscal year ended June 30,
1996, or (b) any similar, incidental or related business conducted or pursued
by, or engaged in, or proposed to be conducted or pursued by or engaged in, by
the Companies prior to the date hereof or at any time during the Term of
Employment.
"Cause" is defined in Section 3(d).
"Companies" means the Company and any of its direct or indirect
subsidiaries, now existing or hereafter existing.
"Company" is defined in the introduction.
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<PAGE> 10
"Competitive Business" means any business which competes, directly or
indirectly, with the Business in the Market.
"Confidential Information" means any trade secret, confidential study,
data, calculations, software storage media or other compilation of information,
patent, patent application, copyright, trademark, trade name, service mark,
service name, "know-how", trade secrets, customer lists, details of client or
consultant contracts, pricing policies, sales techniques, confidential
information relating to suppliers, information relating to the special and
particular needs of the Companies' customers operational methods, marketing
plans or strategies, products and formulae, product development techniques or
plans, business acquisition plans or any portion or phase of any scientific or
technical information, ideas, discoveries, designs, computer programs (including
source of object codes), processes, procedures, research or technical data,
improvements or other proprietary or intellectual property of the Companies,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
obligation hereunder with respect to, information that is or becomes generally
available to the public other than as a result of a disclosure by Executive not
permissible hereunder.
"Executive" means the individual identified in the first paragraph of
this Agreement, or his or her estate, if deceased.
"Market" means any county in the United States of America and each
similar jurisdiction in any other country in which the Business was conducted or
pursued by, engaged in by the Companies prior to the date hereof or is conducted
or engaged in or pursued, or is proposed to be conducted or engaged in or
pursued, by the Companies at any time during the Term of Employment.
"Material Breach" is defined in Section 3(d).
"Non-Interference Period" means the period commencing on the date of
this Agreement and continuing through the twelfth month anniversary of the
termination of the Term of Employment.
"Prior Employment Agreement" is defined in Section 13(a).
"Restricted Period" means the period commencing on the date of this
Agreement and continuing through the twelfth month anniversary of the
termination of the Term of Employment.
"Subsidiary" means any corporation, limited liability company, joint
venture, limited and general partnership, joint stock company, association or
any other type of business entity of which the Company owns, directly or
indirectly through one or more intermediaries, more than fifty percent (50%) of
the voting securities at the time of determination.
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"Term of Employment" is defined in Section 3(a).
12. Notice
Any notice, request, demand or other communication required or
permitted to be given under this Agreement shall be given in writing and if
delivered personally, or sent by certified or registered mail, return receipt
requested, as follows (or to such other addressee or address as shall be set
forth in a notice given in the same manner):
If to Executive: Dr. Shelley A. Harrison
5 Norma Lane
Dix Hills, NY 11746
If to Company: SPACEHAB, Incorporated
1595 Spring Hill Road, Suite 3600
Vienna, Virginia 22182
Attention: President
with a copy to:
Frank E. Morgan II
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
13. Previous Agreements; Executive's Representation
(a) Attached hereto as Annex A are all previous employment or
severance agreements, if any, by and between Executive and the Company
(collectively, the "Prior Employment Agreements"). Executive and the Company
hereby cancel, void and render without force and effect all Prior Employment
Agreements, and the Executive releases and discharges the Company from any
further obligations or liabilities thereunder. Notwithstanding the foregoing,
the terms and provisions in any Prior Employment Agreement relating to any
grants of stock options or other derivative securities for the purchase of the
Company's common stock, no par value per share, shall remain in full force and
effect and shall not be amended in any manner as a result of the execution of
this Agreement.
(b) Executive hereby warrants and represents to the Company that
Executive has carefully reviewed this Agreement and has consulted with such
advisors as Executive considers appropriate in connection with this Agreement,
is not subject to any covenants, agreements or restrictions, including without
limitation any covenants, agreements or restrictions arising out of Executive's
prior employment, which would be
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<PAGE> 12
breached or violated by Executive's execution of this Agreement or by
Executive's performance of his duties hereunder.
14. Other Matters
Executive agrees and acknowledges that the obligations owed to
Executive under this Agreement are solely the obligations of the Company, and
that none of the Companies' stockholders, directors, officers, affiliates,
representatives, agents or lenders will have any obligations or liabilities in
respect of this Agreement and the subject matter hereof.
15. Validity
If, for any reason, any provision hereof shall be determined to be
invalid or unenforceable, the validity and effect of the other provisions hereof
shall not be affected thereby.
16. Severability
Whenever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein. If any court determines that any
provision of Section 9 or any other provision hereof is unenforceable because of
the power to reduce the scope or duration of such provision, as the case may be
and, in its reduced form, such provision shall then be enforceable.
17. Waiver of Breach; Specific Performance
The waiver by the Company or Executive of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any other breach of such other party. Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its rights under
this breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of
Sections 8, 9 and 10 of this Agreement and that any party (and third party
beneficiaries) may in its sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief,
including temporary restraining orders, preliminary injunctions and permanent
injunctions in order to enforce or prevent any violations of the provisions of
this Agreement. In the event either party takes legal action to enforce any of
the terms or provisions of this Agreement against the other party, the party
against whom judgement is rendered in such action shall pay the prevailing
party's costs and expenses, including but not limited to, attorneys' fees,
incurred in such action.
12
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18. Assignment; Third Parties
Neither Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other. The parties agree and acknowledge that each of the
Companies and the stockholders and investors therein are intended to be third
party beneficiaries of, and have rights and interests in respect of, Executive's
agreements set forth in Sections 8, 9 and 10.
19. Amendment; Entire Agreement
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments with respect to such subject matter.
20. Litigation
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA, EXCEPT THAT NO
DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF
VIRGINIA, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY
THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT,
MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY
FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. SUBJECT TO SECTION 21,
EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR
ARISING OUT OF THIS AGREEMENT MAY BE COMMENCED IN THE COURTS OF THE COMMONWEALTH
OF VIRGINIA OR THE UNITED STATES DISTRICT COURTS IN THE NORTHERN DISTRICT OF
VIRGINIA. EXECUTIVE AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT
VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM
NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 20 SHALL NOT BE
DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
JURISDICTION.
21. Arbitration
EXECUTIVE AND THE COMPANY AGREE THAT ANY DISPUTE BETWEEN OR AMONG THE
PARTIES TO THIS AGREEMENT RELATING TO OR
13
<PAGE> 14
IN RESPECT OF THIS AGREEMENT, ITS NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT
MATTER, OR ANY COURSE OF CONDUCT OR DEALING OR ACTIONS UNDER OR IN RESPECT OF
THIS AGREEMENT, SHALL BE SUBMITTED TO, AND RESOLVED EXCLUSIVELY PURSUANT TO
ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION. SUCH ARBITRATION SHALL TAKE PLACE IN ARLINGTON,
VIRGINIA, AND SHALL BE SUBJECT TO THE SUBSTANTIVE LAW OF THE STATE OF VIRGINIA.
DECISIONS PURSUANT TO SUCH ARBITRATION SHALL BE FINAL, CONCLUSIVE AND BINDING ON
THE PARTIES. UPON THE CONCLUSION OF ARBITRATION, EXECUTIVE OR THE COMPANY MAY
APPLY TO ANY COURT OF THE TYPE DESCRIBED IN SECTION 20 TO ENFORCE THE DECISION
PURSUANT TO SUCH ARBITRATION. IN CONNECTION WITH THE FOREGOING, THE PARTIES
HEREBY WAIVE ANY RIGHTS TO A JURY TRIAL TO RESOLVE ANY DISPUTES OR CLAIMS
RELATING TO THIS AGREEMENT OR ITS SUBJECT MATTER.
22. Further Action
Executive and the Company agree to perform any further acts and to
execute and deliver any documents which may be reasonable to carry out the
provisions hereof.
23. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
day and year first written above.
EXECUTIVE:
/s/ Dr. Shelley A. Harrison
------------------------------------
Dr. Shelley A. Harrison
SPACEHAB, INCORPORATED
By: /s/ Chester M. Lee
---------------------------------
Chester M. Lee
President
15
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ANNEX A
None.
16
<PAGE> 1
EXHIBIT 10.57
ACCOUNTANTS' CONSENT
The Board of Directors
SPACEHAB, Incorporated:
We consent to incorporation by reference in the registration statements (Nos.
333-3634, 333-3636, and 333-3638) on Forms S-8 of SPACEHAB, Incorporated of our
report dated August 15, 1997, relating to the consolidated balance sheets of
SPACEHAB, Incorporated and subsidiary as of June 30, 1996 and 1997, and the
related consolidated statements of income, stockholder's equity (deficit), and
cash flows for the year ended September 30, 1995, the nine month period ended
June 30, 1996 and the year ended June 30, 1997, which report appears in the June
30, 1997, annual report on Form 10-K of SPACEHAB, Incorporated.
KPMG PEAT MARWICK LLP
McLean, VA
September 11, 1997
<PAGE> 1
EXHIBIT 10.58
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT, dated as of October 22, 1996 (this
"Agreement"), and between SPACEHAB, Incorporated, a Washington corporation (the
"Company"), and John M. Lounge ("Indemnitee").
WITNESSETH
WHEREAS, highly competent persons are becoming more reluctant to
sense publicly-held corporations as directors, executive officers, or in other
capacities unless they are provided with adequate protection through insurance
and indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the corporation; and
WHEREAS, the current difficulties or virtual impossibility of
obtaining adequate insurance and uncertainties relating to indemnification have
increased the difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company has determined that
the inability to attract and retain such persons is detrimental to the best
interests of the Company's stockholders and that the Company should act to
assure such persons that there will be increased certainty of such protection in
the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, the Shareholders of the Company have adopted the Amended
and Restated Articles of Incorporation of the Company (the "Articles") and the
Amended and Restated Bylaws of the Company (the "Bylaws") providing for the
indemnification of the directors, officers, agents and employees of the Company
to the full extent permitted by the Washington Business Corporation Act (the
"Act"). The Articles, the Bylaws and Act specifically provide that they are not
exclusive, and thereby contemplate that contracts may be entered into between
the Company and the members of its Board of Directors and its executive officers
with respect to indemnification of such directors and executive officers: and
WHEREAS, this Agreement is being entered into as part of
Indemnitee's total compensation for serving as a director and/or an executive
officer, as the case may be;
NOW THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
<PAGE> 2
SECTION I. Service by Indemnitee.
Indemnitee agrees to serve as director of the Company and/or
executive officer of the Company if so designated by the Company and appointed
by the Board of Directors, and agrees to the indemnification provisions provided
for herein. Indemnitee may at any time and for any reason resign from such
position (subject to any other contractual obligation or other obligation
imposed by operation of law), in which event the Company shall have no
obligation under this Agreement to continue Indemnitee in any such position.
SECTION II. Indemnification.
The Company shall indemnify Indemnitee to the fullest extent
permitted by applicable law in effect on the date hereof, notwithstanding that
such indemnification is not specifically authorized by this Agreement, the
Articles, the Bylaws, the Act or otherwise. In the event of any change, after
the date of this Agreement, in any applicable law, statute or rule regarding the
right of a Washington corporation to indemnify a member of its board of
directors or an officer, such changes, to the extent that they would expand
Indemnitee's rights hereunder, shall be within the scope of Indemnitee's rights
and the Company's obligations hereunder, and, to the extent that they would
narrow Indemnitee's rights hereunder, shall be excluded from this Agreement;
provided, however, that any change that is required by applicable laws, statutes
or rules to be applied to this Agreement shall be so applied regardless of
whether the effect of such change is to narrow Indemnitee's rights hereunder.
Without diminishing the scope of the indemnification provided by this Section 2,
the rights of indemnification of Indemnitee provided hereunder shall include
indemnification in respect of the Company's initial public offering of Common
Stock pursuant to its Registration Statement on Form S-1 (File No. 33-97812) and
shall further include any other public offerings of securities by the Company,
and shall not be limited to those rights set forth hereinafter, except to the
extent expressly prohibited by applicable law.
SECTION III. Action or Proceeding Other Than an Action
by or in the Right of the Company.
Indemnitee shall be entitled to the indemnification rights provided
in this Section 3 if he is or was a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, other than an action by or
in the right of the Company, by reason of the fact that he is or was a director,
officer, employee, agent or fiduciary of the Company or is or was serving at the
request of the Company as a director, officer, employee, agent, partner, trustee
or fiduciary of any other entity (a "Related Company") or by reason of anything
done or not done by him in any such capacity. Pursuant to this Section 3,
Indemnitee shall be indemnified against reasonable costs and expenses
(including, but not limited to, counsel fees, costs, judgments, penalties,
fines, ERISA excise taxes, and amounts paid in settlement) (collectively,
"Damages") actually and reasonably incurred by him connection with such action,
suit or proceeding (including, but not limited to, the investigation, defense or
appeal thereof), if, in the case of conduct in his official capacity with the
corporation, he acted in good faith and in the Company's best interests, and in
all other cases, he acted in good faith and was at least not opposed to the
Company's best interests, and with respect to any criminal action or proceeding
had no reasonable cause to believe his conduct was unlawful, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been finally adjudged to be liable for (i)
negligence or misconduct in the performance of his duty to the Company unless
and only to the extent that the court in which such action or suit was brought,
or any other court of competent jurisdiction, shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, Indemnitee is fairly
2
<PAGE> 3
and reasonably entitled to indemnity for such expenses as such court shall deem
proper or (ii) the indemnification does not relate to any liability arising
under Section 16(b) of the Securities Exchange Act of 1934, as amended, or any
of the rules or regulations promulgated thereunder. Notwithstanding the
foregoing, the Company shall be required to indemnify an officer or director in
connection with an action, suit or proceeding initiated by such person only if
such action, suit or proceeding was authorized by the Board or a committee
thereof. No indemnity pursuant to this Agreement shall be provided by the
Company for Damages that have been paid directly to Inductee by an insurance
carrier under a policy of directors' and officers' liability insurance
maintained by the Company.
SECTION IV. Actions by or in the Right of the Company.
Indemnitee shall be entitled to the indemnification rights
provided in this Section 4 if he is or was made a party or is threatened to be
made a party to any threatened, pending or completed action, suit, or
proceeding, whether civil, criminal, administrative or investigative brought by
or in the right of the Company to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee, agent or fiduciary of
the Company or is or was serving at the request of the Company as a director,
officer, employee, agent, partner, trustee or fiduciary of any other entity by
reason of anything done or not done by him in any such capacity. Pursuant to
this Section 4, Indemnnitee shall be indemnified against Damages (as deemed in
Section 3 of this Agreement) actually and reasonably incurred by him in
connection with such action or suit (including, but not limited to the
investigation, defense, settlement or appeal thereof) if, in the case of conduct
in his official capacity with the corporation, he acted in good faith and in the
Company's best interests, and in all other cases, he acted in good faith and was
at least not opposed to the Company's best interests, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been finally adjudged to be liable for (i)
negligence or misconduct in the performance of his duty to the Company unless
and only to the extent that the court in which such action or suit was brought,
or any other court of competent jurisdiction, shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses as such court shall deem proper or (ii) the indemnification does not
relate to any liability arising under Section 16(b) of the Securities Exchange
Act of 1934, as amended, or any of the rules or regulations promulgated
thereunder. Notwithstanding the foregoing, the Company shall be required to
indemnify an officer or director in connection with an action, suit or
proceeding initiated by such person only if such action, suit or proceeding was
authorized by the Board or a committee thereof. No indemnity pursuant to this
Agreement shall be provided by the Company for Damages that have been paid
directly to Indemnitee by an insurance carrier under a policy of directors' and
officers' liability insurance maintained by the Company.
SECTION V. Indemnification for Costs, Charges and Expenses
of Successful Party.
Notwithstanding the other provisions of this Agreement, to the
extent that Indemnitee has served as a witness on behalf of the Company or has
been successful, on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit or
proceeding referred to in Section 3 and Section 4 hereof, or in defense of any
claim, issue or matter therein, Indemnitee shall be indemnified against all
reasonable costs, charges, and expenses (including counsel fees) actually and
reasonably incurred by him or on his behalf in connection therewith.
3
<PAGE> 4
SECTION VI. Partial Indemnification.
If Indemnitee is only partially successful in the defense,
investigation, settlement or appeal of any action, suit, investigation or
proceeding described in Section 3 or Section 4 hereof, and as a result is not
entitled under Section 5 hereof to indemnification by the Company for the total
amount of reasonable Damages actually and reasonably incurred by him, the
Company shall nevertheless indemnify Indemnitee, as a matter of right pursuant
to Section 5 hereof, to the extent Indemnitee has been partially successful.
SECTION VII. Determination of Entitlement to
Indemnification.
Upon written request by Indemnitee for indemnification pursuant to
Section 3 or Section 4 hereof, the entitlement of Indemnitee to indemnification
pursuant to the terms of this Agreement shall be determined by the following
person or persons who shall be empowered to make such determination: (a) the
Board of Directors of the Company by a majority vote of a quorum consisting of
Disinterested Directors (as hereinafter defined); or (b) if such a quorum is not
obtainable or, even if obtainable, if the Board of Directors by the majority
vote of Disinterested Directors so directs, by Independent Counsel (as
hereinafter defined) in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee; or (c) by the stockholders, but shares
owned by or voted under the control of directors, including the Indemnitee, who
are at the time parties to the proceeding may not be voted on the determination.
Such Independent Counsel shall be selected by the Board of Directors and
approved by Indemnitee. Upon failure of the Board of Directors to so select such
Independent Counsel or upon failure of Indemnitee to so approve, such
Independent Counsel shall be selected by any state or federal court situated in
the State of Virginia. Such determination of entitlement to indemnification
shall be made no later than sixty (60) days after receipt by the Company of a
written request for indemnification. Such request shall include documentation or
information which is necessary for such determination and which is reasonably
available to Indemnitee. Any Damages incurred by Indemnitee in connection with
his request for indemnification hereunder shall be borne by the Company. The
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom
irrespective of the outcome of the determination of Indemnitee's entitlement to
indemnification. If the person making such determination shall determine that
Indemnitee is entitled to indemnification as to part (but not all) of the
application for indemnification, such person shall reasonably prorate such
partial indemnification among such claims, issues or matters.
SECTION VIII. Presumptions and Effect of Certain
Proceedings.
The Secretary of the Company shall, promptly upon receipt of
Indemnitee's request for indemnification, advise in writing the Board of
Directors or such other person or persons empowered to make the determination as
provided in Section 7 that Indemnitee has made such request for indemnification.
Indemnitee shall be presumed to be entitled to indemnification hereunder and the
Company shall have the burden of proof in the making of any determination
contrary to such presumption. If the person or persons so empowered to make such
determination shall have failed to make the requested indemnification within 60
days after receipt by the Company of such request, the requisite determination
of entitlement to indemnification shall be deemed to have been made and
Indemnitee shall be absolutely entitled to such indemnification, absent actual
and material fraud in the request for indemnification. The termination of any
action, suit, investigation or proceeding described in Section 3 or Section 4
hereof by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself (a) create a presumption that
Indemnitee did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of
4
<PAGE> 5
the Company, and, with respect to any criminal action or proceeding, that
Indemnitee had reasonable cause to believe that his conduct was unlawful or (b)
otherwise adversely affect the rights of Indemnitee to indemnification except as
may be provided herein.
SECTION IX. Advancement of Expenses and Costs.
All reasonable expenses and costs incurred by Indemnitee who is
party to a proceeding (including counsel fees, retainers and advances of
disbursements required of Indemnitee) (collectively, the "Expense Advance")
shall be paid by the Company in advance of the final disposition of such action,
suit or proceeding at the request of Indemnitee within twenty (20) days after
the receipt by the Company of a statement or statements from Indemnitee
requesting such advance or advances from time to time. Such statement or
statements shall reasonably evidence the expenses and costs incurred by him in
connection therewith. The Company's obligation to provide an Expense Advance is
subject to the following conditions: (i) If the proceeding arose in connection
with Indemnitee's service as a director and/or executive officer of the Company
(and not in any other capacity in which Indemnitee rendered service, including
service to any related company), then the Indemnitee or his representative shall
have executed and delivered to the Company an undertaking, which need not be
secured and shall be accepted without reference to Indemnitee's financial
ability to make repayment, by or on behalf of Indemnitee to repay all Expense
Advance if and to the extent that it shall ultimately be determined by a final,
unappealable decision rendered by a court having jurisdiction over the parties
and the question that Indemnitee is not entitled to be indemnified for such
Expense Advance under this Agreement or otherwise; (ii) Indemnitee shall give
the Company such information and cooperation as it may reasonably request and as
shall be within Indemnitee's power; and (iii) Indemnitee shall furnish, upon
request by the Company and if required under applicable law, a written
affirmation of Indemnitee's good faith belief that any applicable standards of
conduct have been met by Indemnitee. Indemnitee's enticement to such Expense
Advance shall include those incurred in connection with any proceeding by
Indemnitee seeking an adjudication pursuant to this Agreement. In the event that
a claim for an Expense Advance is made hereunder and is not paid in full within
twenty (20) days after written notice of such claim is delivered to the Company,
Indemnitee may, but need not, at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim.
SECTION X. Remedies of Indemnitee in Cases of Determination
not to Indemnify or to Advance Expenses.
In the event that a determination is made that Indemnitee is not
entitled to indemnification hereunder or if payment has not been timely made
following a determination of entitlement to indemnification pursuant to Sections
7 and 8, or if expenses are not advanced pursuant to Section 9, Indemnitee shall
be entitled to a final adjudication in an appropriate court of the State of
Washington or any other court of competent jurisdiction of his entitlement to
such indemnification or advance. The Company shall not oppose Indemnitee's right
to seek any such adjudication or any other claim. Such judicial proceeding shall
be made de novo and Indemnitee shall not be prejudiced by reason of a
determination (if so made) that he is not entitled to indemnification. If a
determination is made or deemed to have been made pursuant to the terms of
Section 7 or Section 8 hereof that Indemnitee is entitled to indemnification,
the Company shall be bound by such determination and is precluded from asserting
that such determination has not been made or that the procedure by which such
determination was made is not valid, binding and enforceable. The Company
further agrees to stipulate in any such court that the Company is bound by all
the provisions of this Agreement and is precluded from making any assertion to
the contrary. If the court shall determine that Indemnitee is entitled to any
indemnification hereunder, the Company shall pay all reasonable Damages actually
incurred by
5
<PAGE> 6
Indemnitee in connection with such adjudication (including, but not limited to,
any appellate proceedings).
SECTION XI. Other Rights to Indemnification.
The indemnification and advancement of expenses (including counsel
fees) and costs provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may now or in the future be entitled under any
provision of the By-laws, provisions of the Articles, vote of stockholders or
Disinterested Directors, provision of law or otherwise.
SECTION XII. Counsel Fees and Other Expenses to
Enforce Agreement.
In the event that Indemnitee is subject to or intervenes in any
proceeding in which the validity or enforceability of this Agreement is at issue
or seeks an adjudication or award in arbitration to enforce his rights under, or
to recover damages for breach of, this Agreement, Indemnitee, if he prevails in
whole or in part in such action, shall be entitled to recover from the Company,
and shall be indemnified by the Company against, any reasonable expenses for
counsel fees and disbursements actually and reasonably incurred by him.
SECTION XIII. Duration of Agreement.
This Agreement shall continue until and terminate upon the later of
(a) 10 years after Indemnitee has ceased to occupy any of the positions or have
any of the relationships described in Section 3 or Section 4 of this Agreement
or (b) the final termination of all pending or threatened actions, suits,
proceedings or investigations with respect to Indemnitee. This Agreement shall
be binding upon the Company and its successors and assigns and shall inure to
the benefit of Indemnitee and his spouse, assigns, heirs, devisees, executors,
administrators or other legal representatives.
SECTION XIV. Severability.
If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever (a) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including without limitation, all portions of any paragraphs of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, all portions of any
paragraph of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
SECTION XV. Identical Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall for all purposes be deemed to be an original, but all of which
together shall constitute one and the same Agreement. Only one such counterpart
signed by the party against whom enforceability is sought needs to be produced
to evidence the existence of this Agreement.
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<PAGE> 7
SECTION XVI. Headings.
The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction thereof.
SECTION XVII. Definitions.
For purposes of this Agreement:
A. "Disinterested Director" shall mean a director of the
Company who is not or was not a party to the action, suit, investigation or
proceeding in respect of which indemnification is being sought by Indemnitee.
B. "Independent Counsel" shall mean a law firm or a member of a
law firm that neither is presently nor in the past five years has been retained
to represent (i) the Company or Indemnitee in any matter material to either such
party or (ii) any other party to the action, suit, investigation or proceeding
giving rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any person who,
under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or Indemnitee in
an action to determine Indemnitee's right to indemnification under this
Agreement.
SECTION XVIII. Modification and Waiver.
No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
SECTION XIX. Mutual Acknowledgment.
The Company and Indemnitee acknowledge that, in certain instances,
federal law or public policy may override applicable state law and prohibit the
Company from indemnifying Indemnitee under this Agreement or otherwise. For
example, the Company and Indemnitee acknowledge that the U.S. Securities and
Exchange Commission (the "SEC") has taken the position that indemnification is
not permissible for liabilities arising under certain federal securities laws,
and federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the SEC to submit
the question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.
SECTION XX. Notice by Indemnitee.
Indemnitee agrees promptly to notify the Company in writing upon
being served with any summons, citation, subpoena, complaint, indictment,
information or other document relating to any matter which may be subject to
indemnification covered hereunder, whether civil, criminal or investigative.
7
<PAGE> 8
SECTION XXI. Notices.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if (i) delivered
by hand and receipted for by the party to whom said notice or other
communication shall have been directed or if (ii) mailed by certified or
registered mail with postage prepaid on the third business day after the date on
which it is so mailed, to the following addresses:
A. to Indemnitee:
John M. Lounge
4323 Parkmead Drive
Seabrook, TX 77586
B. to the Company:
SPACEHAB, Incorporated
1595 Spring Hill Road
Vienna,Virginia 22182
Attention: President
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
SECTION XXII. Other Agreements.
This Agreement restates and supersedes, but does not limit or
negate, any indemnification, rights or interests of Indemnitee under any prior
agreements between the Company and Indemnitee.
SECTION XXIII. Governing Law.
The parties agree that this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Washington.
IN WITNESS WHEREOF, the parties hereto have executed this,
Agreement on the day and year first above written.
SPACEHAB, INCORPORATED
By: /s/ Chester M. Lee
-----------------------
Chester M. Lee
President
INDEMNITEE:
By: /s/ John M. Lounge
-----------------------
John M. Lounge
8
<PAGE> 1
EXHIBIT 10.59
Consulting Agreement
AGREEMENT, made this 15th day of August, 1997, between SPACEHAB, INC., a
corporation organized under the laws of Washington with its principal place of
business at 1595 Spring Hill Road, Vienna, Virginia 22182 (hereinafter referred
to as "SPACEHAB") and Gordon S. Macklin with offices at 8212 Burning Tree Road,
Bethesda, Maryland 20817 ("Consultant").
WHEREAS, Consultant desires to provide certain consulting services to
SPACEHAB and SPACEHAB desires to obtain such services from Consultant in a
capacity in which Consultant may receive or contribute confidential or
proprietary information;
NOW, THEREFORE, in consideration of such Consulting Services, and other
good and valuable consideration given or to be given, SPACEHAB and Consultant
hereby AGREE:
1. Consultant shall render workmanlike consulting services for SPACEHAB
in connection with potential strategic acquisition opportunities and investor
relations support, as more fully described in Exhibit A attached hereto and
incorporated by this reference ("Consulting Services") for a term of one year
from the above referenced date. Consultant recognizes that all information
regarding such strategic acquisitions and/or investor relations (as well as all
other SPACEHAB related business information) which (i) may be or shall have been
imparted to Consultant by SPACEHAB or its agents, or (ii) is created or obtained
by Consultant while performing, or as a result of performing (directly or
indirectly) Consulting Services, is confidential and proprietary to SPACEHAB.
Furthermore, the identity and character of services and products required by
SPACEHAB'S customers, as well as all actual or potential business acquisitions,
joint ventures, alliances and other business arrangements of any kind constitute
confidential and/or proprietary business information of SPACEHAB.
2. The attached Confidentiality and Nondisclosure Agreement between
Consultant and SPACEHAB shall be executed simultaneously with this Agreement and
shall govern Consultant's rights and responsibilities with respect to all
SPACEHAB confidential and/or proprietary information disclosed to or otherwise
obtained by Consultant as noted in Paragraph I above. It is understood that the
success of SPACEHAB requires that SPACEHAB exert extraordinary measures to
safeguard the confidentiality of all such information, and Consultant agrees to
abide by all such measures established by SPACEHAB.
3. Consultant shall be directed by Shelley A. Harrison and Margaret
Grayson (respectively, SPACEHAB's Chief Executive Officer and Chief Financial
Officer) in performance of the Consulting Services. Mr. Harrison and Ms. Grayson
shall request and direct the specific Consulting Services tasks hereunder.
4. For the Consulting Services, SPACEHAB agrees to pay Consultant a
retainer fee of $2,000/month for the term hereof, and an Option to purchase
10,000 shares of SPACEHAB Common Stock at an exercise price per share
corresponding to the price of SPACEHAB Common Stock on the NASDAQ market as of
close of business August 15, 1997. The Options shall vest immediately upon their
granting. Actual expenses for travel, hotel accommodations and automobile rental
incurred by Consultant during performance of Consulting Services tasks hereunder
shall be reimbursed by SPACEHAB within 30 days of submittal of expense documents
to the company.
<PAGE> 2
5. Either Consultant or SPACEHAB may terminate this Agreement, without
cause, with three days notice to the other party.
6. Upon termination of the Consulting Services, Consultant shall promptly
deliver to SPACEHAB all ( of whatever media, including but not limited to
written, digital or other computerized media, tape, disk, CD, etc.) all
documents and media, including all copies thereof, and any other materials of a
proprietary or confidential nature relating to SPACEHAB's business and which are
in the possession or under the control of Consultant. Consultant shall promptly
return to SPACEHAB any information, of whatever nature, that relates to, or is
generated by any, actual or potential, customer of SPACEHAB's services, or any
actual or potential business acquisition or other relationship (including but
not limited to joint ventures, alliances and partnerships). SPACEHAB shall pay
Consultant for the days actually worked by Consultant up to the date of
termination (including any partial day on a pro-rata basis).
7. The parties hereto desire and agree that any controversy or claim
arising out of, or relating to this Agreement, or breach thereof, shall be
settled by arbitration in Tysons Corner, Virginia, in accordance with the rules
of the American Arbitration Association, and final judgment upon award rendered
may be entered in any court having jurisdiction thereof.
8. This Agreement constitutes the complete agreement and understanding
with respect to the subject matter hereof between the parties and supersedes all
previous or contemporaneous written or oral representations, agreements,
contracts, etc. of whatever kind or nature.
CONSULTANT SPACEHAB, INC.
By: /s/ GORDON S. MACKLIN By: /s/ MARGARET E. GRAYSON
--------------------------- ------------------------------
Name: Gordon S. Macklin Name: Margaret E. Grayson
------------------------- ----------------------------
Title: Title: Vice President-Finance
------------------------ ---------------------------
<PAGE> 3
EXHIBIT A
MACKLIN CONSULTING AGREEMENT
CONSULTING SERVICES
A. Investor Relations Support
- Work for continued improvement and expansion of the investor
relations program
- Work to improve skills and contracts of investor
relations officer, while continuing to expand and enhance the
CFO's exposure in the financial community
- General advice regarding investment community
requirements
B. Investment Community Introductions
- Expand SPACEHAB market visibility
- Expand coverage of company by analysts
- Help identify and recruit additional market makers
and possible financing sources
- Continue to add to the company's creditability and
acceptance in the financial community
C. Potential Strategic Acquisitions Opportunities/Information In SPACEHAB's
Strategic Targeted Markets, Including Aerospace, Biotechnology,
General Hi-Technology And Software Integration
- Introduction to potential partners/acquisitions
- Leads regarding potential opportunities
- Facilitate potential partnerships/acquisitions
- Help review future acquisition candidates
D. Corporate Governance
- Help implement appropriate corporate governance practices
- Work to expand board procedures and effectiveness
E. Be Available For Additional Assignments As Appropriate
<PAGE> 4
CONFIDENTIALITY & NONDISCLOSURE AGREEMENT
This Confidentiality and Nondisclosure Agreement ("Agreement") is entered
into by and between SPACEHAB, Inc., a Washington State corporation, having its
corporate headquarters at 1595 Spring Hill Road, Vienna, Virginia 22182
(hereinafter "SPACEHAB"), and Gordon S. Macklin, having offices at 8212 Burning
Tree Road, Bethesda, Maryland 20817 (hereinafter "Consultant").
WHEREAS, SPACEHAB desires to provide and CONSULTANT desires to receive
sensitive and proprietary information, including technical, marketing and/or
financial data, relating to certain SPACEHAB business pursuits and activities in
order for CONSULTANT to perform consulting services for SPACEHAB; and
WHEREAS, SPACEHAB, seeks to fully protect such confidential proprietary
information from any and all unauthorized use, reproduction, or disclosure;
NOW, THEREFORE, the parties hereto agree as follows:
1. "Proprietary Information" shall mean any and all information regarding
SPACEHAB's business activities, competitors, customers, trade secrets,
industrial and technical knowledge, etc. (including but not limited to
marketing, technical, financial and other business data or information) however
disclosed by SPACEHAB or its agents (including but not limited to written, oral,
visual, magnetic recording or any other machine readable form) which is directly
or indirectly related to any consulting or other services requested by SPACEHAB
to be provided by CONSULTANT, unless SPACEHAB explicitly exempts such
information or data in writing from coverage by this Agreement.
2. CONSULTANT agrees that it, as well as all its directors, officers,
employees and agents, will protect from unauthorized use, reproduction, and
disclosure and will not disclose to any person or entity outside CONSULTANT or
to any person within CONSULTANT not having a need to know for the purposes of
the Agreement and will not use or reproduce, except for the purposes of this
Agreement, any and all Proprietary Information disclosed by SPACEHAB or its
agents.
3. CONSULTANT shall not be liable for disclosure of certain Proprietary
Information if CONSULTANT obtains the prior written approval of SPACEHAB to
disclose such Proprietary Information.
4. Any and all Proprietary Information received by CONSULTANT hereunder
shall be fully protected as required by this Agreement for a period of five (5)
years from the date of CONSULTANT's receipt thereof.
<PAGE> 5
5. CONSULTANT shall not be liable for the inadvertent or accidental
disclosure of Proprietary Information received hereunder provided that it has
exercised the same degree of care in protecting such Proprietary Information as
it normally exercises to protect its own proprietary and confidential
information (provided such degree of care is no less than a reasonable degree
under the circumstances) and provided, further, that immediately upon
discovering the loss or unauthorized disclosure of such Proprietary Information
received under this Agreement, it notifies SPACEHAB thereof and takes all
reasonable steps to retrieve, and prevent further unauthorized disclosure of
such Proprietary Information.
6. This Agreement shall not restrict disclosure or use of Proprietary
Information which: (1) was in the public domain at the time of disclosure or
thereafter enters the public domain through no breach of this Agreement by
CONSULTANT; (2) was, at the time of receipt, otherwise known to CONSULTANT
without restrictions as to use or disclosure; (3) becomes known to CONSULTANT
from a source other than SPACEHAB or its agents without breach of this Agreement
by CONSULTANT; (4) is developed independently by CONSULTANT without the use of
Proprietary Information disclosed to it hereunder; or (5) is disclosed more than
five years after it is first received hereunder.
8. Nothing contained in this Agreement shall be construed as granting or
conferring rights by license or otherwise in any Proprietary Information
disclosed under this Agreement.
9. The respective address and point of contact for each party to which
all correspondence and notices hereunder are to be sent is as follows:
If to SPACEHAB: If to CONSULTANT:
Attn.: William Dawson Attn.: Gordon S. Macklin
General Counsel 8212 Burning Tree Road
SPACEHAB, Inc. Bethesda, Maryland 20817
1595 Spring Hill Road.
Suite 360
Vienna,VA 22182
Each party may change its respective address or point of contact by delivering a
written notice thereof to the other party.
10. This Agreement is not intended to, and shall not, constitute, create,
give effect to, or otherwise recognize a joint venture, partnership, pooling
arrangement or formal business entity between the parties of any kind. The
rights and obligations of the parties shall be limited to those expressly set
forth herein. Nothing herein shall be construed as providing for the sharing of
profits or losses arising out of the efforts of either or both parties. Each
party shall act as an independent contractor and not as an agent of the other
for any purpose
<PAGE> 6
whatsoever and neither party shall have any authority to bind the other party
except as specifically set forth herein. Neither party shall be liable to the
other for any of the costs associated with the other party's efforts or
compliance in connection with this Agreement.
11. This Agreement shall become effective on the date on which it is
signed by the last of the parties hereto to sign, and it shall expire one (l)
year thereafter, at which time all proprietary information received hereunder
(and any copies thereof) shall be returned to the providing party unless a
different arrangement has been entered into between the parties in writing.
Expiration of the term of this Agreement, however, shall have no effect on the
obligations imposed on the party with respect to the protection of proprietary
information received hereunder for the full period of time required by Paragraph
4 of this Agreement.
12. This is the entire agreement between the parties concerning the
exchange and protection of Proprietary Information, and it supersedes any prior
written or oral agreements relating thereto and may not be amended or modified
except by subsequent agreement in writing signed by a duly authorized officer or
representative of each party.
l3. Each signatory, by signing below, certifies that he or she has
authority to bind to this Agreement the respective party for which he or she
signs.
<PAGE> 7
14. This Agreement does not contemplate export from the United States of
any "technical data" (as defined by the regulation of the Office of Defense
Trade Controls, United States Department of State) related to items on the U.S.
Munitions List. If the parties determine that the export of any "technical data"
is necessary, the Parties will seek the necessary license or approval prior to
the export of any such "technical date".
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed in duplicate originals by its respective duly authorized
representative as follows:
CONSULTANT SPACEHAB, Inc.
By: /s/ GORDON S. MACKLIN By: /s/ MARGARET E. GRAYSON
--------------------------- ------------------------------
Name: Gordon S. Macklin Name: Margaret E. Grayson
------------------------- ----------------------------
Title: Title: Vice President-Finance
------------------------ ---------------------------
Date: 8/14/96 Date: 8/14/96
------------------------- ----------------------------
<PAGE> 1
EXHIBIT 10.60
[CSP ASSOCIATES, INC. LETTERHEAD]
MEMORANDUM
TO: DAVID ROSSI, SPACEHAB
FROM: Brad Meslin, CSP
SUBJECT: CONSULTANT AGREEMENT CONTRACT EXTENTION
DATE: AUGUST 18, 1997
CC: Peg Grayson, Spacehab
Dear David:
The purpose of this memo is to extend our current Consultant Agreement, as the
prior extension expired on June 30, 1997.
I would propose that we extend the existing Agreement through the end of
Spacehab's fiscal year, to June 30, 1998, with a not-to-exceed value of $150,000
plus actual and reasonable expenses - the same terms as the prior extension.
(Under the prior extension, we expended approximately $95,000, not including
separately funded tasks such as Astrotech or the value pricing evaluation.) As
in the prior Agreement, funding may only be expended by CSP in response to tasks
specifically requested by Spacehab. This proposed contract extension and
associated funding is unrelated to CSP's provision of certain acquisition
advisory services, for which separate compensation arrangements may be made
between Spacehab and CSP.
Please indicate your concurrence with the above contract extension by executing
and returning a copy of this memorandum for our files.
Sincerely,
Brad M. Meslin, Ph.D. Agreed and Accepted
/s/ Brad M. Meslin, Ph.D. /s/ David Rossi
- ---------------------------- -------------------------------
Brad M. Meslin, Ph.D. David Rossi
Managing, Director Senior Vice President
Spacehab, Inc.
<PAGE> 1
EXHIBIT 10.61
[HARBOR SECURITIES LETTERHEAD]
October 24, 1996
Ms. Margaret E. Grayson
Vice President Finance
and Chief Financial Officer
SPACEHAB, Incorporated
Suite 360
1595 Spring Hill Road
Vienna, Va. 22182
Dear Ms. Grayson:
This letter sets forth the terms pursuant to which Harbor Securities, Inc. (the
"Agent") and its affiliates will be the exclusive financial advisor to SPACEHAB,
Incorporated and its subsidiaries (hereinafter known as "SPACEHAB" or the
"Company" for the purposes of this agreement) for the structuring and placement
of financing for (i) certain acquisitions and (ii) the development of a double
science module (the "Financing").
1. Scope of the Engagement. In connection with this engagement, the Agent's
services will include, but not be limited to: assisting in due diligence;
structuring the Financing(s); drafting the placement memorandum(a) (the
"Memorandum(a)"); privately placing the Financing(s); negotiating the terms of
the Financing(s); and closing the Transaction(s). All of the above are subject
to the approval of SPACEHAB.
2. Compensation. In consideration of the Agent's services rendered hereunder,
SPACEHAB agrees to pay the Agents placement fees as outlined below, payable at
closing in cash.
<TABLE>
<CAPTION>
TYPE OF FINANCING FEE AS % OF PRINCIPAL AMOUNT
<S> <C>
Senior Debt 1%
Subordinated Debt 2%
Equity* 3%
</TABLE>
*Equity may or may not constitute a part of the Financing(s)
During the engagement, SPACEHAB will pay, at the first of each month, a non
refundable monthly retainer of $20,000 (such monthly retainer to be offset
against the placement fee), plus reasonable out of pocket expenses. The first
monthly retainer is due and payable on signing of this letter.
3. Confidentiality. Any information furnished to the Agent by the Company,
unless such information is available to the public or otherwise available to the
Agent, without
<PAGE> 2
restriction or breach of any confidentiality agreement, will be held by the
Agent in confidence and will not be disclosed by the Agent without the Company's
prior approval.
4. Indemnification. SPACEHAB will indemnify and hold harmless the Agent and its
affiliates, directors, officers, agents and employees against any claims,
actions, proceedings, demands, liabilities, damages, judgments, assessments,
losses and costs, including fees and expenses, arising out of or in connection
with services rendered by the Agent under this agreement, and will reimburse the
Agent for all such fees and expenses, including fees of counsel, as they are
incurred by the Agent in connection with pending litigation whether or not the
Agent is a party. The Company will not, however, be responsible for any claims,
liabilities, losses, damages or expenses that are determined by final judgment
of a court of competent jurisdiction to have resulted primarily from the Agent's
gross negligence or bad faith. SPACEHAB also agrees that the Agent shall have no
liability for claims, liabilities, damages, losses or expenses, including legal
fees incurred by SPACEHAB unless they are determined by final judgment of a
court of competent jurisdiction to have primarily resulted from the Agent's
gross negligence or bad faith.
5. Termination. Either SPACEHAB or the Agent may terminate this agreement at any
time by notifying the other party in writing. If SPACEHAB terminates the Agent
and then subsequently consummates a financing which is similar in nature to that
which is contemplated under this agreement within, a 12 month period following
termination, with any financial institution or other potential investor
contacted by the Agent on behalf of SPACEHAB and identified by the Agent prior
to or at the time of termination, the Agent will be entitled to the fees defined
in Paragraph 2. The Agent will keep SPACEHAB informed on its progress.
This engagement will begin on the date of signing this letter agreement and the
receipt by the Agent of the first month's retainer fee. Please confirm that this
letter agreement is in accordance with our understanding by signing and
returning to the Agent an executed copy of this letter agreement which shall
constitute a binding agreement.
Very truly yours, Accepted and Agreed:
Harbor Securities, Inc. SPACEHAB, Incorporated
By: /s/ Robert W. Wright By: /s/ Margaret E. Grayson
----------------------------- --------------------------------
Robert W. Wright Ms. Margaret E. Grayson
President Vice President Finance
and Chief Financial Officer
Date: Date:
--------------------- -------------------------
<PAGE> 1
EXHIBIT 10.62
AGREEMENT
Between
UNITED SPACE ALLIANCE, LLC
and
SPACEHAB, INCORPORATED
MAY 29, 1997
<PAGE> 2
AGREEMENT
THIS AGREEMENT, entered into this __ day of_________________ by and between
UNITED SPACE ALLIANCE, LLC,(hereinafter "USA"), a Delaware limited liability
company, having its principal office at 1150 Gemini Avenue, Houston, Texas
77058, and SPACEHAB, INCORPORATED, a Washington Corporation, having its
principal office at 1595 Spring Hill Road, Suite 360, Vienna, Virginia 22182,
(hereinafter "SHI").
WITNESSETH:
WHEREAS, USA has unique Space Shuttle operations expertise and is the industry
manager of privatized Space Shuttle operations;
WHEREAS, SHI has unique commercial payload expertise and privately owned
hardware capable of supporting microgravity research on the Space Shuttle;
WHEREAS, the respective capabilities of the parties are complimentary; and
WHEREAS, the parties are committed to establishment of a non NASA market for the
use of space (the "Program");
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants set forth herein, it is agreed as follows:
1. OBJECTIVE OF THE TEAM
(a) The parties agree to pursue a joint initiative to establish a non
NASA market for microgravity science and/or production that will support at
least one commercial Space Shuttle mission per year.
The program effort shall be prepared by the parties in connection with this
Agreement and include the following:
(1) Specific roles and responsibilities for USA and SHI, Initial
business plan, Detailed plan of action and assignments.
The above plans will be completed in time to support a June 1997 meeting.
2. EXPENSES
Each party hereto agrees to bear all of its own expenses incurred in connection
with the Program incurred under this Agreement. Expenses incurred between the
announcement of contract award and the contract start are the responsibility of
each party.
<PAGE> 3
3. INDEPENDENT CONTRACTORS
This Agreement shall not constitute, create, or in any way be interpreted as a
joint venture, partnership, or formal business organization of any kind. Except
for the preparation and submission of proposals and obligations set forth
herein, and the mutual support to be provided between the parties hereto toward
attainment of the contract for the Program, no actions, obligations or
commitments of any nature of either of the parties hereto shall be binding upon
the other party.
4. ASSIGNMENT
Neither party may assign nor transfer its interest herein without the prior
written consent of the other; provided however, that the parties may assign
their respective interest in this agreement to any new wholly owned entities
that may be created for the purpose of performing efforts on the program.
5. DISCLOSURE AND PROTECTION OF INFORMATION
(a) "Proprietary Information" for purpose of the Agreement, shall be defined as
text, tables, and drawings and other written data which have been identified as
such by (1) appropriate markings on the documents or drawings involved, or (2)
written notice, with attached copies of all documents and complete summaries of
all oral disclosures to which the notice relates, delivered within two (2) weeks
of disclosure to the person designated by either party as a recipient of
proprietary data.
(b) The receiving party agrees that it will protect the proprietary nature of
such information and use such information only during the currency of this
Agreement and only in connection with the preparation of the proposal for the
Program. Such party will use its best efforts to distribute proprietary
information only to those persons within its organization who have a need to
know, and notwithstanding that this Agreement shall have terminated or expired,
to prevent the disclosure thereof for three (3) years subsequent to such
termination or expiration to any person or persons outside its organization(as
may be required for the proposal effort, provided the appropriate, protective
legend is utilized).
Information shall be excluded from the protection of this paragraph when it:
(1) was in the public domain at the time it was disclosed; or
(2) was known to the receiving party at the time of receipt; or
(3) is disclosed with the written approval of the other party; or
(4) is disclosed inadvertently despite the exercise of the same degree of care
as the receiving party takes to preserve and safeguard its own proprietary
information; or
<PAGE> 4
(5) is disclosed pursuant to judicial action or Government regulations or
requirements and the receiving party has notified the disclosing party prior to
such disclosure and has used its reasonable efforts in a legal manner to contest
and avoid such disclosures; or
(6) becomes known to the receiving party from any source other than the other
party hereto, provided such information was not disclosed to the public or any
other party by way of a breach of the Agreement.
(d) As and between USA and SHI, the foregoing restrictions as to disclosure and
use of proprietary information all expire three (3) years from the date of
Agreement, except, that that in the event a subsequent contract or Agreement is
executed by SHI and USA prior to the expiration of such period, the terms of
such subcontract relating to such type of information shall supersede the
provisions of this Article.
(e) Neither the execution of this Agreement nor the furnishing of any
information hereunder shall be construed as granting, either expressly or by
implication, estoppel or otherwise, any license under any patent which is owned
by or controlled by the party furnishing the information.
6. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Texas.
7. DURATION OF AGREEMENT
This Agreement and all rights and duties hereunder, except for those
specifically set forth in Article 5 hereof, shall cease and terminate upon the
first to occur of the following events:
(a) Upon the mutual written agreement of the parties hereto.
(b) The expiration of one (1) year from the effective date of this Agreement.
(c) The execution of a subsequent contract or Agreement between USA and SHI for
the efforts specifically described in the product of the Agreement.
IN WITNESS WHEREOF the parties hereto have, through duly authorized
representatives, caused this Agreement to be executed as of the day and year
first above written.
UNITED SPACE SPACEHAB, INC.
ALLIANCE
BY: /s/ Ann Halligan BY: /s/ Chester M. Lee
------------------------- -----------------------------
Ann Halligan Chester M. Lee
Title: Director Contract Title: President
Management and Pricing
<PAGE> 1
EXHIBIT 10.63
[SPACEHAB, INC. LETTERHEAD]
Letter Agreement
Page 1 of 3
DRAFT
LETTER AGREEMENT
To: RSC-Energia
Address: 4A Lenin Street
Korolev, Moscow Region
Russia
141070, RSC-Energia
Attn: A. Derechine
Contracts Administrator
RSC-Energia
Dear Mr. Y. P. Semenov:
1. Pursuant to this letter agreement ("Letter Agreement") SPACEHAB, Inc.
("SPACEHAB"), agrees to contract with RSC-Energia (hereinafter referred
to as "Energia" or "Seller"), to develop flight qualified Unpressurized
Cargo Pallets ("UCP") and associated test and support equipment in
accordance with the Statement of Work ("SOW") attached hereto as
Exhibit A and incorporated herein by this reference.
2. This Letter Agreement is for all activities required to complete a
Preliminary Design Review ("PDR") for the UCP (which will be a discreet
element of the Initial Integrated Cargo Carrier System ("IICC") being
developed by SPACEHAB), as well as for long lead material orders or
schedule protection activities that must be accomplished prior to PDR
in order to complete the full UCP build program on a schedule to
support delivery of the IICC flight hardware inclusive of the UCP to
SPACEHAB in June of 1999. It is expected that a full-scale development
and production contract ("Production Contract") for the build and
delivery of flight qualified UCP hardware will be negotiated and
executed no later than 31 December 1997. It is agreed that the
following items will be excluded from the Production Contract:
1) Transportation of the UCP hardware items
2) Travel costs
It is also agreed that the following items are included in the
Production Contract:
1) Translation costs
2) Customs costs
<PAGE> 2
Letter Agreement
Page 2 of 3
The parties agree to promptly begin good faith negotiation of the terms
of the Production Contract. Energia agrees that the fixed price for the
Production Contract, based on the current definition of the UCP (and
assuming no special provisions for equity or revenue sharing) shall not
exceed $2.4 Million (U.S. Dollars).
3. RSC-Energia shall provide the UCP and the design of the cargo
integration on the UCP per SPACEHAB requirements. SPACEHAB has
contracted with Daimler-Benz Aerospace ("DASA") of Bremen, Germany, for
production of the Keel Yoke Assembly and Engagement Mechanism Assembly,
and for integration of the IICC into the Space Shuttle. RSC-Energia is
expected to work directly and informally with DASA engineers as
required for integration of the UCP into the IICC system. However, all
interface specifications, technical direction and contract deliverables
under this Letter Agreement shall be dictated solely by SPACEHAB.
4. The fixed price to be paid to Energia for the products and services
under this Letter Agreement is $150,000 (U.S. Dollars). This amount is
to be paid in three payments. First payment (20% of fixed price) to be
paid upon execution of this Letter Agreement. Second payment (30% of
fixed price) to be paid upon acceptance by SPACEHAB of the comparative
analysis report (deliverable item # 4 of Section 4.1 of the attached
SOW) due sixty (60) days after execution of this Letter Agreement. The
final 50% payment shall be made at successful completion of the PDR
(defined as closing out of all PDR review items and actions) fifteen
(15) days after the PDR milestone. All payments shall be made by wire
transfer to the account listed in Exhibit B attached hereto and shall
be completed within 30 days of written ratification of completion of
the associated payment milestone by the SPACEHAB ICC Program Manager.
5. Reimbursement for Travel Expenses: The fixed price in Section 4 above
is for provision of the products and services associated with the
attached SOW, with the sole exception of travel costs in support of
program reviews, technical interchange meetings and other activities
approved in advance by SPACEHAB. SPACEHAB shall reimburse RSC-Energia
for actual pre-approved transportation and hotel expenses, and on a per
diem basis for meals and other expenses. The per diem allowance shall
be at the rate of $58 per day.
6. Period of performance: From date of execution of this Letter Agreement
through 31 December 1997.
7. Technical Direction: Seller shall accept technical direction from one
of the following SPACEHAB individuals only:
Prime Contact - Pete Gadsby, ICC Program Manager
Alternate Contact - Clark Thompson, Director, Product Development
8. Provisions for Execution: Seller and SPACEHAB shall execute two (2)
copies of this Letter Agreement in English and two (2) copies in
Russian, one original in each language for each party.
9. Intellectual Property Rights: All worldwide Intellectual Property
rights (including but not limited to patents, copyrights, trademarks,
service marks and trade secrets) created under
<PAGE> 3
Letter Agreement
Page 3 of 3
this Letter Agreement and the Production Contract shall be the sole
property of SPACEHAB. Energia agrees to reasonably assist SPACEHAB in
securing such rights through patent, copyright and tradename
applications in various worldwide jurisdictions. All Intellectual
Property utilized in the performance of this Letter Agreement or the
subsequent Production Contract shall remain the exclusive property of
the party(s) who had the rights in the IP prior to this Letter
Agreement.
10. Confidentiality: Per the Nondisclosure Agreement between the parties
dated December 23, 1996, which terms and conditions are incorporated
herein by this reference.
11. Document Translation: All textual documents provided by the Seller
shall be in English. Graphical documents (drawings) may be provided in
Russian. Any textual document, fax, or letter, five (5) pages or less
in size, may be exchanged in native language.
12. Local transportation, meeting facilities, and interpreter services
shall be provided by the host party. SPACEHAB will provide ground
transportation (to and from DASA) for Energia personnel while jointly
at DASA's facilities for business meetings.
13. All provisions herein and performance hereunder shall be governed by
the laws of the Commonwealth of Virginia.
14. Any and all disputes hereunder shall be resolved by arbitration in the
Washington, D.C. metropolitan area pursuant to the arbitration rules of
the International Chamber of Commerce. The parties hereby agree that
any arbitration findings hereunder may be enforced in any U.S. Federal
Court in Washington D.C. or Virginia and the parties hereby consent to
the jurisdiction of such courts for such purpose.
SPACEHAB, INC. RSC-ENERGIA
By: By:
----------------------------------- ------------------------------
Typed Name: Nelda Wilbanks Typed Name:
-------------------------- --------------------
Title Contracts Administrator Title:
-------------------------- --------------------
Date: Date:
-------------------------- --------------------
<PAGE> 1
EXHIBIT 10.64
June 10, 1997
Mr. R. Gale Schluter
Vice President & General Manager
Space & Defense Systems
McDonnell Douglas Aerospace Group
McDonnell Douglas Corporation
5301 Bolsa Avenue
Huntington Beach, CA 92647-2048
Subject: Memorandum of Agreement
Dear Gale:
This is to confirm in writing our mutual understanding, reached by Dr. Harrison,
the undersigned and you in previous meetings regarding the subject, that the
Memorandum of Agreement between McDonnell Douglas Corporation and SPACEHAB,
Incorporated dated 28, July, 1995 is null and void and of no effect. Please
confirm this understanding by returning an executed copy of this letter at your
convenience.
Sincerely,
/s/ Chester M. Lee Acknowledged &
- ---------------------------- Approved By: /s/ R. Gale Schluter
Chester M. Lee ------------------------
President R. Gale Schluter
Date: 20 January 1997
CML/jam
Enclosure(s)
<PAGE> 2
MEMORANDUM of
AGREEMENT
between
McDONNELL DOUGLAS
CORPORATION
and
SPACEHAB
INCORPORATED
28 July
1995
<PAGE> 3
MEMORANDUM OF AGREEMENT
This Agreement concurred upon on July 14,1995, is between McDonnell
Douglas Corporation ("MDC"), acting through its McDonnell Douglas Aerospace
- -Huntsville component, with an address at 689 Discovery Drive, Huntsville, AL
35806-2804, and SPACEHAB, Inc. ("SHI") with an address at 1215 Jefferson Davis
Highway, Suite 1501, Arlington, VA 22202-4302, collectively "the Parties".
WHEREAS:
A. SHI has entered into contracts with NASA, hereinafter referred to as
"Use Contracts," for the lease and operational services of pressurized habitable
Shuttle Middeck Augmentation modules. MDC is SPACEHAB's sole subcontractor on
such activity.
B. The Use Contracts have established the following four major
marketing assets for SHI and MDC:
1. Low cost, reconfigurable modules for a variety of space
business applications;
2. Valuable integration and operational services experience and
knowledge base;
3. A successful commercialization example and;
4. A powerful alliance between SHI and MDC for extensive
penetration of the domestic and international Space Industry
Market and potentially other technology markets.
C. By leveraging on the Use Contract success and experience, the
parties can create many new space business opportunities in the future.
D. SHI is an entrepreneurial commercial firm with international
strategic partners pursuing a strategy of excellent service and of providing
private investment to incrementally displace public investment funding and,
therefore, engaged in the marketing, commercial development, financing,
conceptual design, operation, and leasing of crew-tended space systems.
E. MDC is an aerospace corporation engaged in providing the systems
management, design, development, integration, production and operation of
crewtended space systems, including those for SHI.
THEREFORE:
The Parties intending to be legally bound agree:
1. During the term of this agreement SHI will grant to MDC a right of
first refusal to perform as prime contractor to SHI for the commercial provision
and support of all crew-tended and support space systems including, but not
limited to, the following, should they become SHI contracts:
<PAGE> 4
i. CMAM-type science missions;
ii. International Space Station Alpha (hereinafter referred to as
ISSA) Phase 1 docking mission with the Mir Space Station;
iii. ISSA Centrifuge/Life Sciences Module; and,
iv. All production, integration, and operation work to provide
crew tended space systems and all logistics and operation of
the ISSA or Shuttle or derivatives thereof.
(a) MDC intends to support SHI in such business pursuits as described
in items 1 (i) to 1 (iv) above in its traditional role and relationship with
SHI, and will continue the nature of past relationships in the pursuit and
conduct of the scope of business as identified. Where MDC elects to pursue these
business opportunities as a prime, MDC will make reasonable best efforts to
structure and present opportunities to customers utilizing SHI and its
commercial service approach to satisfying customer's requirements.
(b) MDC may exercise its right of first refusal hereunder for the
specific project(s) covered by the right of first refusal by delivery of a
notice of acceptance to SHI within 30 days of SHl's notice of the right of first
refusal to MDC.
(c) SHI will not contract with any party other than MDC for the
performance of all or any of the work described in items 1 (i) to 1 (iv) above
unless MDC has failed to exercise its right of first refusal within 30 days of
the notice of said right, including an outline of reasonable principal terms,
given by SHI to MDC. In the event that MDC does not exercise its right of first
refusal within said time period, SHI shall be entitled to contract with one or
more parties on terms no more favorable than those offered MDC, but only for the
project(s) or product(s) covered by the right of first refusal written notice
delivered to MDC.
(d) Notwithstanding an exercise of the right of first refusal by MDC,
for any individual proposal effort should the customer direct in writing,
despite the reasonable efforts of the parties to convince the customer of the
benefit of the teaming arrangement, a different contractor and subcontractor
relationship, then SHI will not be obligated to honor MDC's right of first
refusal for said proposal effort.
2. The Parties recognize that third parties may be brought into
association from time to time in order to maximize international and/or domestic
funding, support, acceptability, and competitiveness. The parties will perform
this necessary accretion of associates cooperatively. In those cases where MDC
exercises its right of first refusal the contractual relationship of the third
party will be as sub contractor to MDC. The parties recognize that from time to
time a direct contract between SHI and a third party may be necessary in order
to maximize international and/or domestic funding, support, acceptability, and
competitiveness. In those cases where the parties wish to proceed with a direct
contract with a third party each party agrees to negotiate a mutually acceptable
third party arrangement.
3. This Agreement shall terminate automatically upon the earliest of
the following events to occur: (i) the expiration of 10 years following the date
hereof, (ii) the debarment or suspension of either party by the Government,
(iii) mutual agreement in writing by the parties. This agreement may be extended
for 10 additional years in 5 year increments by mutual agreement of the parties
in writing.
<PAGE> 5
4. Subject to Lloyd's concurrence, MDC agrees to amend the Amended and
Restated Credit Agreement dated December 29, 1993, signed by the Parties to
extend the Revolving Credit Commitment Termination and Final Maturity dates
until December 31, 1998. The Revolving Credit Commitment (RCC) amount will be
reduced to $6 million as of January 1, 1996.
5. This Agreement shall not be assignable by either party without the
prior written consent of the other and shall not be modified by any trade usage
or prior course of dealing between the parties or in any way other than by a
writing signed by the party to be charged therewith. This Agreement shall be
governed by the laws of Missouri.
6. This Agreement shall not constitute, create, give effect to or
otherwise imply a joint venture, pooling arrangement, partnership, or formal
business organization of any kind. The rights and obligations of the parties
shall be limited to these expressly set forth herein. Nothing herein shall be
construed as providing for the sharing of profit or loss arising out of the
efforts of either or both parties. Neither party shall be liable to the other
for any of the costs, expenses, risks or liabilities arising out of the other's
efforts in connection with the performance of this Agreement, except to the
extent provided for under any subcontract contemplated herein.
7. Either Party by affixing an appropriate legend may identify any
documented information furnished by it to the other party during the period of
this agreement as the proprietary information of the furnishing party. The
receiving party shall not use the identified information for any purpose other
than the performance of the agreed tasks and shall not, without the written
approval of the other party, disclose the identified information to others,
except that this limitation on use or disclosure shall not apply to (i)
information that the receiving party can prove was already known to it or
subsequently becomes known to it from a source other than the furnishing party,
(ii) information that has fallen into the public domain other than through
disclosure by the receiving party, (iii) an inadvertent disclosure by the
receiving party that occurs despite its exercise of reasonable diligence to
prevent such disclosure, (iv) use of disclosure that occurs later than five (5)
years after the date of this agreement, or (v) any disclosure by either party to
NASA for NASA'a use under contract. Upon any termination of this Agreement, each
party at the request of the other shall return to the other all documents
reflecting information identified by the other as its proprietary information.
8. Any invention made by the parties jointly during performance of
precontract proposal activities where the parties are each responsible for their
own proposal costs shall be their joint property and they shall share equally in
the cost of obtaining patent protection in the U. S. and such foreign countries
as may be agreed. Neither party shall license any such joint invention without
the written approval of the other party.
9. Neither party shall make any news releases about or disclose the
contents of the Agreement without prior written consent of the other party
except as may be required by law.
<PAGE> 6
10. Any notice, consent, demand, or request required or permitted by
this Agreement shall be in writing, and shall be deemed to have been
sufficiently given when personally delivered or received by confirmed telephonic
facsimile (FAX) or deposited in the United States registered mail, return
receipt requested, and addressed as follows:
For SHI: For MDC:
M. E. Grayson P. J. Nohalty
C. F. O. Director, Business Management
Spacehab, Inc. McDonnell Douglas Aerospace - Huntsville
1215 Jefferson Davis Highway 689 Discovery Drive
Suite 1501
Arlington, Virginia 22202 Huntsville, Alabama 35608
11. This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations and understandings of the parties.
SPACEHAB.INC, McDonnell Douglas Corporation
By By
Richard P. Hora R. D. Goodman
President and CEO Director of Contracts and Pricing
SPACEHAB, Inc. McDonnell Douglas Aerospace
<PAGE> 1
EXHIBIT 10.65
ROYALTY AGREEMENT
This agreement (hereinafter "Agreement") is entered into this 1st day of
May, 1997 (hereinafter "Effective Date") by and between SPACEHAB,
Incorporated, a Washington State corporation, located at 1595 Springhill
Road, Suite 360, Vienna, VA 22182, and University of Maryland Biotechnology
Institute (hereinafter "UMBI")located at 4321 Hartwick Road, Suite 500,
College Park, MD 20740.
RECITALS
WHEREAS, SPACEHAB will fly the Commercial Refrigerator/Incubator Module
(CRIM) containing the Crystals by Vapor Diffusion Apparatus (CVDA) aboard its
SPACEHAB Module during National Aeronautics and Space Administration (NASA)
space shuttle mission, STS-84, currently scheduled to be flown May 15, 1997,
and
WHEREAS, UMBI desires to reserve and use eight (8) chambers in the CVDA
during STS-84 to fly eight (8) Protein Crystal Growth Solutions, and
WHEREAS, it is foreseeable that UMBI may, subsequent to the STS-84 mission,
develop any Products as defined in Section 1.1 below, for which UMBI will
license and receive royalty payments, and
WHEREAS, SPACEHAB desires to receive royalties on all future sales of
Products as defined in Section 1.1, rather than require UMBI pay SPACEHAB the
customary $220,000 fair market value for flying the Protein Crystal Growth
Solutions aboard the CVDA, and
WHEREAS, both parties desire that UMBI pay SPACEHAB royalties on all future
payments it receives for the sale of the Protein Crystal Growth Solutions, or
derivative products thereof, in exchange, and as consideration for SPACEHAB's
foregoing the $220,000 otherwise payable by UMBI to SPACEHAB for flying the
Protein Crystal Growth Solutions aboard the CVDA.
NOW THEREFORE, in consideration of the promises, mutual covenants, and
warranties herein contained, the parties agree as follows:
1.0 DEFINITIONS
1.1 Products. The term "Products", referred to herein, shall mean all
derivative products and derived applications of the eight (8) Protein
Crystal Growth Solutions licensed or sublicensed by UMBI, including but
not limited to, crystals developed from flying the Protein Crystal
Growth Solutions aboard the CVDA during STS-84; other solutions using
one or more elements of the original Protein Crystal Growth Solutions;
other formulations, used independently or in conjunction with other
compounds or substances; and pharmaceuticals, developed from the Protein
Crystal Growth Solutions. The term Products shall also include further
insight as to the true nature and character of the Protein Crystal
Growth Solutions or the crystals produced thereby; discoveries of new
methods; inventions of new formulations; discoveries of new approaches;
and all
<PAGE> 2
intellectual property developed or created as a result of flying the
Protein Crystal Growth solutions aboard the CVDA during STS-84. Products
shall also include discoveries arising as a direct or indirect result of
examining, testing, and otherwise working with the Protein Crystal Growth
solutions.
1.2 Net Sales. The term "Net Sales", referred to herein, shall mean the
payment received by UMBI from licensees (or sublicensee) in all
transactions, minus expenses, directly or indirectly involving the sale
of Products defined in Section 1.1 above.
2.0 DESCRIPTION OF SPECIMENS
2.1 UMBI shall provide SPACEHAB with a description of the specimens, the
solvents, and precipitants to be flown, and derived from the
experimental flight aboard the CVDA during STS-84. UMBI shall also
provide SPACEHAB with a description of the reasonably foreseeable areas
of application for which these Products could feasibly be developed to
commercial usefulness. The descriptions provided by UMBI, hereunder,
shall become exhibits and shall be incorporated into this agreement.
SPACEHAB shall keep confidential all descriptions provided by UMBI,
hereunder, and shall not disclose said descriptions without UMBI's prior
consent.
3.0 CONSIDERATION
3.1 As consideration, and in exchange for SPACEHAB foregoing the $220,000
fair market value otherwise payable to fly the eight (8) Protein Crystal
Growth Solutions aboard the CVDA during shuttle mission STS-84, UMBI
shall pay SPACEHAB a royalty on the sale of Products, as herein set
forth.
4.0 ROVALTIES
4.1 UMBI shall pay to SPACEHAB for the sale of Products sold by licensees or
sub-licensees an earned royalty of two percent (2%) of Net Sales until
SPACEHAB receives $440,000in royalties, and one (1%) of Net Sales
thereafter.
4.2 Royalties accruing to SPACEHAB shall be paid to SPACEHAB on an annual
basis. Each such payment will be for royalties which accrued within the
most recently completed calendar yearend payment shall be made by UMBI
within two months of the end of such calendar year.
4.3 All moneys due SPACEHAB from UMBI, its licensee or sublicensee shall be
payable in United States dollars collectible in Vienna, Virginia. When
Products are sold for moneys other than United States dollars, the
earned royalties will first be determined in foreign currency of the
country in which such Products are sold and then converted into
equivalent United States funds. The exchange rate will be that
established by the Bank of America in San Francisco, California.
5.0 DUE DILIGENCE
<PAGE> 3
5.1 Upon execution of this Agreement, UMBI shall diligently proceed with the
research plan utilizing the Protein Crystal Growth solutions. Upon
completion of the research, UMBI shall diligently proceed to market and
seek commercial licenses for Products in order to further develop,
manufacture or sell Products. UMBI shall notify SPACEHAB of its progress
in licensing on an annual basis.
5.2 UMBI agrees that any license agreement entered into by UMBI for the
development, manufacture, or sale of Product(s) shall include the
requirement:
a) That any licensee (or sublicensee) develop a commercialization plan under
which licensee (or sublicensee) intends to bring the Products into
commercial use;
b) That licensee (or sublicensee) provide written annual reports on its
product development progress or efforts to commercialize on an annual
basis;
c) That licensee (or sublicensee) shall use its reasonable best efforts to
introduce into the commercial market or apply the license processes to
commercial use as soon as practicable. "Reasonable best efforts", for the
purpose of this provision shall include, but not be limited to, adherence
to the commercialization plan and established benchmarks in the license
(or sublicense) agreement;
d) That licensee (or sublicensee) shall obtain all necessary governmental
approvals for the manufacture, use and sale of Products; and
e) That licensee (or sublicensee) use its reasonable best efforts to keep
licensed products or licensed processes reasonably accessible to the
public.
5.3 UMBI shall have the sole discretion for making all decisions as to how
to commercialize, market and sell Products.
5.4 All such licenses (or sublicenses) shall include all of the rights of
and obligations due to SPACEHAB that are contained in this Agreement.
UMBI shall provide SPACEHAB with a copy of each license (or sublicense)
issued hereunder and summarize and deliver all reports due under any
license (or sublicense).
5.5 Upon termination of this Agreement for any reason, SPACEHAB shall have
the option to require that all licenses (or sublicenses), hereunder, be
assigned to SPACEHAB, and remain in force and effect under the terms and
conditions thereof with SPACEHAB as the licenser, but the duties of
SPACEHAB shall only extend to SPACEHAB's duties under this Agreement.
6.0 PROGRESS AND ROYALTY REPORTS
6.1 Beginning January 1, 1998 and annually thereafter, UMBI shall submit to
SPACEHAB a progress report covering UMBI's activities related to the
research.
6.2 After the First Commercial Sale of a Product anywhere in the world by
licensee (or sublicensee), UMBI will make annual royalty reports to
SPACEHAB on or before each February 28 of each year (i.e. within two (2)
months from the end of each calendar year). Each such royalty report
will cover UMBI's most recently completed calendar year and will show
(a) the gross sales and net sales of Products sold by licensees, or
sub-licensees during the most recently completed calendar year; (b) the
number of each
<PAGE> 4
type of Product sold; (c) the royalties, in U. S. dollars, payable
hereunder with respect to such sales; (d) the exchange rates used.
6.3 If no sales of Products have been made during any reporting period, a
statement to this effect shall be required.
7.0 BOOKS AND RECORDS
7.1 UMBI shall require its licensee (or sublicensee) to make available books
and records accurately showing all Products developed, manufactured,
used and/or sold under the terms of this Agreement. Such books and
records shall be preserved for at least five (5) years from the date of
the royalty payment to which they pertain and shall be open to
inspection by representatives or agents of SPACEHAB at reasonable times
upon reasonable advance notice to UMBI.
7.2 The fees and expenses of SPACEHAB representatives performing such
examination shall be borne by SPACEHAB. However, if an error in
royalties of more than ten percent (5) of the total royalties due for
any year is discovered, then the fees and expenses of these
representatives shall be borne by UMBI.
8.0 LIFE OF THE AGREEMENT
8.1 Unless otherwise terminated by operation of law or by acts of the
parties in accordance with the terms of this Agreement, this Agreement
shall be in force from the Effective Date and shall remain in effect for
fifteen (15) years, until both mutually agree to terminate due to a lack
of commercial success of the research or until UMBI elects to buyout
this Agreement, as set forth in Article 11.0, the Termination and Buyout
provisions set forth herein.
9.0 TERMINATION BY SPACEHAB
9.1 Subject to Article 5.0, the Due Diligence provisions located herein, if
UMBI should violate or fail to perform any material term or covenant of
this Agreement, then SPACEHAB may give written notice of such default
(Notice of Default) to UMBI. If UMBI should fail to repair such default
within ninety (90) days of the effective date of such notice, SPACEHAB
shall have the right to terminate this Agreement and invoke the Buyout
provisions located in Article 11.0, by second notice (Notice of
Termination) to UMBI. If a Notice of Termination is sent to UMBI, this
Agreement shall automatically terminate on the effective date of such
notice, and all moneys payable to SPACEHAB, hereunder, shall immediately
become due. Such termination shall not relieve UMBI of its obligation to
pay any royalty or fees owed at the time of such termination.
9.2 If, at any time, either party is dissolved or reorganized the other
party shall have the right to terminate this Agreement.
10.0 TERMINATION BY UMBI
<PAGE> 5
10.1 UMBI shall have the right at any time to terminate this Agreement by
giving notice in writing to SPACEHAB. Such notice shall be subject to
the Notice provisions located in Article 13.0 (Notices) and termination
of this Agreement shall be effective sixty (60) days from the effective
date of such notices. Termination by UMBI shall activate the Buyout
provisions located in Article 11.0 below.
10.2 Any termination pursuant to the above paragraph shall not relieve UMBI
of any obligation accrued prior to such termination or any payments made
to SPACEHAB due prior to the effective date of termination.
11.0 BUYOUT
11.1 If UMBI chooses to terminate this Agreement, or if this Agreement is
terminated by SPACEHAB in accordance with the default provisions set
forth herein, then UMBI shall pay SPACEHAB a buyout fee. The buyout fee
shall be an amount mutually established by SPACEHAB and UMBI, and shall
be a function of and based upon projected future Net Sales of Products
beginning at the time the Buyout provision is invoked.
11.2 UMBI's payment of the buyout fee, hereunder, shall be known as the
"Buyout" provision, and shall not relieve UMBI of its obligation to pay
any royalties or fees accrued and owed to SPACEHAB up through the time
of the mutually established Buyout fee.
12.0 COSTS
12.1 Each party agrees to pay its own costs and expenses incurred in
connection with performing and complying with this Agreement, and neither
party shall be liable for the costs incurred by the other party in
complying with this agreement, except as herein set forth. It is
expressly understood by the parties that SPACEHAB shall not liable for
the costs incurred by UMBI if the STS-84, the CVDA, or the Protein
Crystal Growth Solutions are not otherwise flown; and UMBI shall not be
liable for the costs incurred by SPACEHAB if the Protein Crystal Growth
Solutions are not flown aboard the CVDA during STS-84.
13.0 NOTICES
13.1 Any notice or payment required to be given to either party shall be
deemed to have been properly given and to be effective (a) on the date of
delivery if delivered in person or (b) five (5) days after mailing if
mailed by first-class certified mail, postage, pre-paid to the respective
addresses given below, or to such other addresses as it shall designate
by written notice given to the other party.
In the case of UMBI: University of Maryland
Biotechnology Institute
4321 Hartwick Road, Suite 500
<PAGE> 6
College Park, MD 20740
Attention: ORATD
In the case of SPACEHAB: SPACEHAB, Inc.
1595 Springhill Road, Suite 360
Vienna, VA 22182
Attention:Nelda Wilbanks, Contracts Administrator
14.0 ASSIGNABILITY
14.1 This Agreement is binding upon and shall inure to the benefit of
SPACEHAB, its successors and assigns, but shall be personal to UMBI and
assignable by UMBI only with the written consent of SPACEHAB, which
consent shall not be unreasonably withheld.
15.0 LATE PAYMENTS
15.1 In the event royalty payments or fees are not received by SPACEHAB when
due, UMBI shall pay to SPACEHAB annual interest charges equal to the
projected inflation rate published by the United States government. Late
fees shall be waived in the event there is a legitimate dispute
concerning payments due to UMBI from its licensee(s).
16.0 WAIVER
16.1 It is agreed that no waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth shall be
deemed a waiver as to any subsequent and/or similar breach or default.
17.0 GOVERNMENT LAWS
17.1 This Agreement shall be interpreted and construed in accordance with the
laws of the State of Virginia.
18.0 EXPORT CONTROL LAWS
18.1 UMBI shall observe all applicable United States and foreign laws with
respect to the transfer of Products and related technical data, to
foreign countries, including, without limitation, the International
Traffic in Arms Regulations (ITAR) and the Export Administration
Regulations.
18.2 UMBI shall impose upon any licensees or sublicensees the requirement to
observe all applicable United States and foreign laws with respect to
the transfer of Products and related technical data, to foreign
countries, including without limitation, the International Traffic in
Arms Regulations (ITAR) and Export Administration Regulations.
19.0 FORCE MAJEURE
<PAGE> 7
19.1 The parties to this Agreement shall be excused from any performance
required hereunder if such performance is rendered impossible or
unfeasible due to any catastrophes or other major event beyond their
reasonable control, including, without limitation, war, riot, and
insurrection; laws, proclamations, edicts, ordinances or regulations;
strikes, lockouts or other serious labor disputes; and floods, fires,
explosions, or other natural disasters. When such events have been
abated, the parties' respective obligations hereunder shall resume.
20.0 MISCELLANEOUS
20.1 The headings of the sections of this agreement are for convenience of
reference only and are not intended to be part of or to affect the
meaning or interpretation of this Agreement.
20.2 This Agreement will not be binding upon the parties until it has been
signed below on behalf of each party, in which event, it shall be
effective as of the date recited on page one.
20.3 No amendment or modification hereof shall be valid or binding upon the
parties unless made in writing and signed on behalf of each party.
20.4 This Agreement embodies the entire understanding of the parties and
shall supersede all previous representations or understandings, either
oral or written, between the parties relating to the subject matter
hereof.
20.5 If any provision(s) contained in this Agreement are or become invalid,
are ruled illegal by any court of competent jurisdiction or are deemed
unenforceable under then current applicable law from time to time in
effect during the term hereof, it is the intention of the parties that
the remainder of this Agreement shall not be affected thereby, provided
that a party's rights under this Agreement are not materially affected.
It is further the intention of the parties that in lieu of each such
provision which is invalid, illegal, or unenforceable, there be
substituted or added as part of this Agreement a provision which shall
be as similar as possible in economic and business objectives as
intended by the parties to such invalid, illegal, or unenforceable
provision, but shall be valid, legal and enforceable.
IN WITNESS WHEREOF, both SPACEHAB and UMBI have executed this Agreement in
duplicate originals, by their respective officers hereunto duly authorized, on
the day and year hereafter written.
UMBI SPACEHAB, INC.
BY: /s/ S. Gaylen Bradley BY: /s/ Chester M. Lee
---------------------
Title: Vice President Acad. Affairs Title: President
Date: 1 May 1997 Date:
<PAGE> 8
SpaceHab/University of Maryland Agreement
Exhibit A (Robb)
Description of Specimens
Amersham Life Science, Inc. specializes in reagents, enzymes, and kits for
Nucleic Acid Sequencing and Detection. The Amersham line of DNA polymerases
for sequencing is the best currently available, and continues to expand with
its most recent addition, Thermo Sequenase. In order to continue to provide
new DNA polymerases with improved features, one focus of current research is
mutagenesis of archaeal thermostable DNA polymerases (confidential
information relating to our current grant from the ATP). Protein engineering
is currently underway on such a polyrnerase, based on the primary and
proposed secondary structure of the enzyme. Having tertiary structure
information from crystal analysis would provide key information on the
structure to be modified. However, despite efforts by several labs in the
past few years, these proteins have proven refractory to ordinary
crystallization techniques, and there is no crystal structure data available
for any thermostable archaeal Type II DNA polymerase.
Amersham proposes to produce sufficient quantities of modified DNA polymerase
from the hyperthermophile Pyrococcus furiosus for experiments to attempt
crystallization with the Commercial Vapour Diffusion Apparatus. Our
colleagues at the University of Maryland Biotechnology Institute have
received funding from us under the NIST ATP program. Under this agreement,
Amersham retains exclusive patent rights to the University's intellectual
property developed under the agreement. UMBI researchers will collaborate
with us to prepare the samples in a format most amenable to crystallization.
Data obtained will enhance understanding of the protein structures that
contribute to thermos/ability (by comparison with homologous mesophilic
structures), and lead to further modifications of polymerase active sites.
The potential commercial benefits include improved stability and performance
of enzymes for DNA sequencing and PCR research.
The University of Maryland is conducting basic studies into the determination
of exceptional thermos/ability in enzymes. The approach they have taken is
the mutagenesis of moderately thermostable enzymes, based on comparative
structural predictions dictated by the crystal structures of homologous,
exceptionally thermostable enzymes. Currently, they have constructed five
fully active glutamate dehydrogenase variants of the hyperthermophile
Thermococcus litoralis, which have a five-fold range of thermos/abilities.
The midpoint of denaturation (Tm) of the most thermostable variant is 111C,
which is within 2c of the most thermostable dehydrogenase recorded by us,
that of Pyrococcus furiosus, and is 1 8C higher than the least thermostable
mutant enzyme in the study. This range represents the effects of only five
altered residues in a polypeptide of 321 residues.
Detailed structural studies based on the crystallization of the enzyme under
microgravity conditions, will allow us to confirm the data from modeling
studies that led to the choice of these mutations sites. The overall goal of
the study is to devise robust predictive strategies for altering enzyme
thermos/ability.
<PAGE> 9
SPACEHAB/UNIVERSITY OF MARYLAND AGREEMENT
EXHIBIT B (DiGATE)
DESCRIPTION OF SPECIMENS
DNA topoisomerases have been the subject of intense study in recent years.
These enzymes play a crucial role in cellular DNA metabolism. The importance
of this role has been reinforced by the finding that certain antibiotics and
antineoplastic agents specifically target and inhibit these enzymes. For
example, the coumarin and quinolone antibiotics specifically inhibit
bacterial DNA gyrase and acridines, anthracyclines, ellipticines,
epipodophyllotoxins, and alkaloids specifically target and inhibit eucaryotic
topoisomerases.
DNA topoisomerases act by altering the topoligical state of DNA. This is
accomplished by the transient breakage of one (type I topoisomerase) or both
(type II topoisomerase) strands(s) of the helix, a strand passing event, and
the subsequent resealing of the strand(s). It is the ability of
topoisomerases to link and unlink DNA, that defines their role in cellular
DNA metabolism. Topoisomerases have not only been implicated in the
maintenance of the superhelical density of DNA, but also in the separation
(or decatenation) of chromosomes during DNA replication.
My laboratory is particularly interested in Escherichia cold DNA
topoisomerase I (Topo I) and III (Topo III), the two type I enzymes of this
well characterized bacteria. These two topoisomerases show extensive protein
sequence homology within the first 600 amino acids of the two proteins;
however, they diverge rapidly in the carboxyl-terminal domains of the
proteins. Our laboratory has been able to show that although these proteins
show extensive protein sequence homology, they catalyze distinct reaction in
vitro. Topo I is an efficient relaxation activity, catalyzing the removal of
negative supercoils from circular DNA molecules, but Topo III is a poor
relaxation activity. Topo III, on the other hand, is a potent decatenase
capable of efficiently resolving interlinked chromosomes. Topo I is a poor
decatenase. In an attempt to understand the differences between these two
enzymes we have used a combined molecular biology and biophysical analysis
of these two enzymes. Molecular biology studies have implicated the
heterologous carboxyl-terminus of Topo III as essential for its unique
biochemical properties. In addition, these studies have indicated that there
must be amino acid residues within the homologous regions of both proteins
that are responsible for the unique biochemical properties of these enzymes.
<PAGE> 10
EXHIBIT B
The X-ray crystal structure has been determined in the laboratory of Alfonso
Mondragon for a genetically engineered truncation of Topo I (containing
residues through amino acid 590). This truncation, however, is not an active
enzyme. We have collaborated with Dr. Mondragon to elucidate the X-ray
crystal structure of E. cold Topo III. We have been able to generate a 3
structure of Topo III that contains amino acids 1-609. Our laboratory has
shown that Topo III truncated to 609 amino acids, is a fully active
topoisomerase. In addition, we are attempting to explain the catalytic
differences of the two enzymes within the context of their physical
structure. The structural determination of Topo III to higher resolution has
been hampered by the small size of the crystals. Dr. Mondragon and myself are
extremely interested in the possibility of growing bigger crystals in the low
gravity environment of SPACEHAB.
Dr. Mondragon and myself have recently entered a collaborative research
agreement with SmithKline Beecham Pharmaceuticals to perform studies to
elucidate the catalytic mechanism of type 1 topoisomerases. The agreement
grants to Smith-Kline Beecham an option to negotiate an exclusive worldwide
royalty bearing license to UMBI developed intellectual property and to UMBI's
share of any jointly developed intellectual. The ultimate goal of the
research would be to rationally design inhibitors of these enzymes. Recently,
there has been a increasing occurrence of antibiotic resistant strains of
bacteria. It is clear that new antibiotics must be produced. Unfortunately,
the current list of antibiotics target a very limited set of enzymes. It is
therefore essential to develop antibiotics to new targets. Type 1
topoisomerases are potential targets since inhibition of these enzymes during
catalysis would result in chromosomal breaks in much the same way that the
quinolone antibiotics result in chromosomal breaks by inhibiting type II
topoisomerases. The availability of the crystal structures of the two type 1
enzymes in combination with the arsenal of molecular biology techniques
currently available makes this an unparalleled opportunity to rationally
design a new antibiotic to a new target. The ability to generate high quality
crystals is essential to the refinement of the current X-ray crystal
structure of Topo III and would greatly enhance the possibility of success of
this project.
<PAGE> 1
EXHIBIT 10.66
SPACEHAB, INC. LETTERHEAD
Date: 28 April 1997
CHANGE ORDER
to
AGREEMENT between SPACEHAB, Inc.
and the UAB Research Foundation
Dated July 15, 1996
To: From:
David Day SPACEHAB, INC.
UABRF 1595 Spring Hill Road
701 South 20th Street Suite 360
Suite 1120G Vienna, VA 22182
Birmingham, AL 35294
WHEREAS SPACEHAB, Inc. desires to purchase the "Optional Services" set forth in
the Statement of Work ("SOW") to subject Agreement, UABRF is directed to perform
the tasks described in the SOW, (Section II. Optional Services) and the parties
hereby agree to the following changes to the Agreement.
1. Paragraph 2 is deleted in its entirety and replaced with the following:
"2. SHI shall pay UABRF a fixed price of $629,294 for all of the "Standard
Services" hardware, supplies and services pursuant to the SOW, and a
fixed price of $134,635 for the "Optional Services" set forth in the
SOW if requested by SHI. Payment shall be made as follows for the
Standard Services:
$40,000 upon submission of this Agreement to UABRF (hereby
acknowledged and accepted by UABRF)
$211,717 within 20 days of execution of this Agreement by
SHI
$125,859 upon UABRF/CMC's delivery to SHI of Phase III
Safety Data Package on or before November 1, 1996
(currently L-6mos.)
$125,859 upon delivery of all flight hardware due hereunder
to SHI's Payload Processing Facility at L-2 mos.
(currently March 1, 1997)
$125,859 on L+1 mo. (currently June 1, 1997)
<PAGE> 2
UAB/SPACEHAB, Inc. Agreement
Change Order
April 28, 1997
Payment for the $61,080 of Optional Services shall be made within 30 days of
request for such services by SHI or by December 15, 1996, whichever is later."
2. Exhibit A, SHI/UABRF STATEMENT OF WORK is amended as follows:
II. OPTIONAL SERVICES (IF REQUIRED) B. is deleted in its entirety and replaced
with the following.
"B. Provision of passive thermal containers and internal refrigerant
and packing materials required to transport the required quantity of sample
blocks from the UAB CMC to Tokyo's Narita Airport via commercial airliner.
Purchase of a dedicated passenger compartment seat onboard the aircraft to
safely accommodate and protect these containers. Provision of a trained
technical to accompany these crystal-laden containers to a designated place in
head office of Mitsubishi Corporation."
Except as hereby modified, all conditions of said agreement as heretofore
modified, remain unchanged and in full force and effect.
/s/ Nelda Wilbanks
- ---------------------------- ----------------------------------
Nelda Wilbanks UAB Research Foundation
SPACEHAB, Inc.
<PAGE> 3
AGREEMENT
This agreement ("Agreement") is made this 15th day of July, 1996, between
SPACEHAB, Incorporated in Washington state, with its principal offices located
in Vienna, Virginia ("SHI") and the UAB Research Foundation ("UABRF") on behalf
of The University of Alabama at Birmingham Center for Macromolecular
Crystallography, located in Birmingham, Alabama ("CMC").
WHEREAS SHI has contracted with Mitsubishi International Corporation
to provide NASDA with certain experiment flight hardware and related services
for conducting microgravity protein crystal growth experiments on the Space
Shuttle STS-84 SPACEHAB Double Module mission no sooner than May 1997; and
WHEREAS SHI desires to lease UABRF/CMS's Commercial Vapor Diffusion
Apparatus ("CVDA") and certain UABRF/CMS's, to provide said hardware and
services to NASDA as part of the requirements under the NASDA Contract and
WHEREAS desire to provide said CVDA and related services to SHI
through a subcontract win CMC for the aforesaid purpose;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties agree as follows:
1. UABRF/CMC shall provide to SHI and SHI's customers NASDA, at the times
and locations set forth therein, all the hardware, supplies and
services set forth in the Statement of Work ("SOW') attached hereto as
Exhibit A and incorporated herein by the reference.
2. SHI shall pay UABRF a fixed price of $629,294 for all of the "Standard
Services" hardware, supplies and services pursuant to the SOW, and a
fixed price of $123,555 for the "Optional Services" set forth in the
SOW if requested by SHI. Payment should be made as follows for the
Standard Services:
$40,000 upon submission of this Agreement to UABRF (hereby
acknowledged and accepted by UABRF)
$211,717 within 20 days of execution of this Agreement by
SHI
$125,859 upon UABRF/CMC's delivery to SHI of Phase III
Safety Data Package on or before November 1, 1996
(currently L-6 mos.)
$125,859 upon delivery of all flight hardware due hereunder
to SHI's Payload Processing Facility at L-2 most
(currently March 1, 1997)
$125,859 or L+1 mo. (currently June 1, 1997)
Payment for the $123,555 of Optimal Services shall be made within 30
days of request for such services by SHI or by December 15, 1996,
whichever is later.
3. UABRF/CMC warrants that the CVDA hardware being provided hereunder is
designed for the particular use intended herein.
4. UABRF/CMC shall indemnify arid its customer, Mitsubishi and NASDA,
against any and all
<PAGE> 4
citrons or actions brought by any third parties based upon the
negligent acts or omissions in UABRF/CMC'S performance of this
agreement.
5. SHI and UABRF/CMC acknowledge that performance of the services
described in this Agreement and the SOW depends upon the agreements
governing NASA's lease of the SHI module for STS-84 or any ether
missions covered herein ("USA Contracts"). Any changes to these
NASA/SHI agreements that are imposed by NASA and which prevent the
performance contemplated herein shall not constitute a breach of this
agreement by either SHI or UABRF/CMC. In the event of such charges by
NASA, SHI and UABRF agree to negotiate an equitable adjustment to this
Agreement that satisfies both parties as well as NASA's new
requirements. If there are any conflicts between this Agreement and the
requirements of the NASA contracts applicable to this Agreement, the
NASA Contracts terms and conditions shall take precedence. UABRF/CMC
shall execute a Cross -Waiver of Liability if required by such NASA
Contracts.
6. SHI and UABRF/CMC shall exchange all documents and information required
for each party to fulfill its responsibilities under this Agreement. In
the event technical data required to he furnished to UABRF/CMC under
this Agreement is considered by SHI or its customer Misubishi/NASDA to
be proprietary or a trade secret such shall inform SHI that the date is
considered proprietary or trade secret and any data so provided shall
be conspicuously marked "Proprietary" or "Trade Secret" prior to
submittal to UABRF/CMC. UABRF/CMC agrees that the data will not,
without permission, be duplicated, used or disclosed by UABRF/CMC or
its Contractors and subcontractor for any propose other than as
necessary to carry out UABRF/CMC's obligation hereunder. All data
(including data reduction and analysis) obtained or derived as a result
of the activities contemplated herein shall be the property of SHI's
customer MUSUBISHI/NASDA, and, in order to protect trade secrets and
other property rights in such data, UABRF/CMC shall maintain such data
in confidence. UABRF/CMC will not acquire, as a result of launch and
associated services under this Agreement, any rights to such properly
rights, except the right to use duplicate, and disclose such data as
set forth herein.
7. UABRF/CMC shall obtain any permit or license that may be required to
provide the services to be furnished under this Agreement.
8. Notwithstanding any other provisions herein, SHI shall not be obligated
to pay the amounts set for in paragraph number 2 above in the event
STS-84 is canceled or indefinitely delayed and SHI does not arrange for
another Space Shuttle mission launch to carry the NASDA experiments
which are the subject of this Agreement, or SHI's customer declines,
for whatever reason, to contact with SHI or otherwise to participate in
the contemplated experiments. In the event of any of the above
occurrences, SHI shall not be required to make any payments not due
before such occurrence and UABRF/CMC shall be entitled to retain any
payments made prior to such occurrence only to the extent such payments
represent actual performance by UABRF/CMC up to the date of such
occurrences.
9. Neither party shall assign the rights under this Agreement to any
person or entity without The Often approval of the over party.
10. All notices, requests, demands, and other communication hereunder shall
be in writing and shall be either (1) personally delivered, (2) sent by
U.S. mail or reputable overnight delivery service, or (3) transmitted
by facsimile machine as follows:
To SHI: Nelda Wilbanks
Contracts Administrator
SPACEHAB, Inc.
1595 Spring Hill Rd.
Vienna, Virginia 22182
<PAGE> 5
To UABRF/CMC: David Day
UABRI:
1120 G Administration Building
701 20th Street South
Birmingham, Alabama 35294
The effective date of each notice, demand, request or other
communication shall be deemed to be: (1) the date of receipt if
delivered personally or by mail or overnight delivery service, or (2)
the date of transmission if by facsimile. Either party may change its
address or designee for purpose hereof by informing the other party in
writing of such action and the effective date of such change.
11. The parties hereto desire and agree that any controversy or claim
arming out of, or relating to his Agreement, or breach thereof, shall
be settled by arbitration in Tysons Corner, Virginia, in accordance
with the rules of the American Arbitration Association, and final
judgment upon the award rendered may be entered in my court having
jurisdiction thereof.
12 This Agreement constitutes the complete agreement and understanding
with respect to the subject matter hereof between the parties.
Reviewed By:
CMC SPACEHAB, Inc.
By: /s/ Dr. Lawrence J. DeLucas By: /s/ William S. Dawson
---------------------------- ---------------------
Name: Dr. Lawrence J. DeLucas Name: William S. Dawson
---------------------------- ---------------------
Title: Director Title: General Counsel and
---------------------------- ---------------------
Director of Contracts
---------------------
UABRF
By: /s/ Kenneth J. Roozen, Ph.D.
----------------------------
Name: Kenneth J. Roozen, Ph.D.
----------------------------
Title: Executive Director
----------------------------
<PAGE> 6
EXHIBIT A
SHI/UABRF STATEMENT OF WORK
OBJECTIVE:
Provide engineering and science support to SPACEHAB's
customer, the NASDA organization, in order to perform protein crystal growth
experiments in microgravity currently scheduled on STS-84 utilizing hardware
developed and services provided by UABRF/CMC.
I. STANDARD SERVICES
A. UABRF/CMC will provide a means for the NASDA organization to perform
protein crystal growth experiments in hardware designed and built by
the University of Alabama at Birmingham. The hardware will be managed
and integrated by the UABRF/CMC engineering staff. All safety and
integration data will be generated and submitted by UABRF/CMC, with the
exception of the sample list which will have to be provided by the
NASDA organization.
B. The Commercial Vapor Diffusion Apparatus (CVDA) will be used as the
vehicle for growing protein crystals by vapor diffusion. The CVDA
hardware will be flown in a CRIM in order to maintain the thermal
environment of the crystal growth hardware.
C. UABRF/CMC will act as the primary point of contact for hardware and
operational requirements, development and implementation.
D. UABRF/CMC will provide ground based hardware and procedures for
determining the proper protein crystal growth conditions in
microgravity. The ground hardware will be sent to NASDA approximately
eleven months before launch.
E. UABRF/CMC will obtain all certifications necessary for flight
(including but not limited to flight and ground safety certifications).
F. Provide mission specific experiment familiarization and "hands on"
training sessions to the flight crew and to NASDA technical and
scientific personnel as required to support ground operator, PI and
flight crew training at U.S. and Japanese locations. This includes
provision of the required training and/or flight hardware at the
location of the training session.
G. UABRF/CMC will perform/support timeline specific training at the
SPACEHAB Payload Processing Facility (SPPF)
H. UABRF/CMC will support all JSC mission simulations required to complete
flight and ground control team preparation mission milestones.
I. UABRF/CMC will be responsible for developing an "Acceptance Data
Package" that will enable the Commercial Protein Crystal Growth
Hardware to be processed at Kennedy Space Center pre-flight and
post-landing.
J. UABRF/CMC will also provide all the necessary equipment and personnel
at KSC and JSC to support pre-mission integration and real-time mission
operations.
K. UABRF/CMC will provide badging for all NASDA personnel required at KSC
to support loading of the required space hardware and at JSC to support
real-time mission operations.
L. UABRF/CMC will provide transportation, personnel, and equipment at the
landing site in order to
<PAGE> 7
bring the samples back to UABRF/CMC for deintegration and analysis.
M. All experiment mission parameters (e.g., temperature setting, length of
experiment) will be determined by the NASDA organization and submitted
to UABRF/CMC for incorporation into the integration documentation. All
requirements must fall within the STS middeck & CRIM capabilities.
N. All Mission specific interface verification data will be submitted by
UABRF/CMC with inputs on sample toxicity from the NASDA PI.
O. Photo documentation of flight-grown crystals, if desired, will be
performed by UABRF/CMC personnel.
II. OPTIONAL SERVICES (IF REQUIRED)
A. UABRF/CMC will provide three X-ray data collection facilities (one image
plate detector and two multiwire detectors) for a two week period
immediately following the flight. A UABRF/CMC crystallographer will provide
technical assistance during this data collection period.
B. Provision of passive thermal containers and internal refrigerant and packing
materials required to transport the required quantity of sample blocks from
the UABRF/CMC to Tokyo's Narita Airport via commercial airliner. Purchase of
a dedicated passenger compartment seat onboard the aircraft to safely
accommodate and protect these containers. Provision of a trained engineer to
accompany these crystal-laden containers.
<PAGE> 1
EXHIBIT 10.67
[SPACEHAB, INC. LETTERHEAD]
SPACEHAB
DEVELOPERS OF SPACE HABITAT MODULES
RECEIVED APR 29 1996
April 26, 1996
SHI-HOU-DAB-960037
Dr. Wesley C. Hymer
Director
Center for Cell Research
The Pennsylvania State University
204 South Frear Building
University Park, PA 16802-6005
Dear Dr. Hymer:
Thank you for your hospitality this week during SPACEHAB's visit to the
Pennsylvania State University (PSU) Center for Cell Research (CCR) facility to
discuss the status of the United States Commercial Electrophoresis Program in
Space (USCEPS). I was impressed by your ground test program as well as with
progress on development of an integrated flight hardware system. I am more
confident than ever that USCEPS will become the premier facility for
electrophoresis research in space by U.S. and international principal
investigators.
It is our understanding that the funding required to "keep the doors open" at
the CCR is $25,000 per month. It is also our understanding that the NASA Office
of Space Access and Technology (Code X) has provided $40,000 in supplemental
funding to the CCR, the use of which is subject to agreement by the CCR to
certain USCEPS market-base definition criteria. Additionally, Code X has
initiated development of a Cooperative Agreement (CA) with the CCR which, when
completed, will enable additional NASA contributions as the USCEPS Program
matures.
SPACEHAB is prepared to consider a formal, long-term, business relationship with
the PSU, the Space Technology Corporation (STC), and the CCR regarding
development and/or utilization of the USCEPS and Biomodule technologies on the
ground and in space. To facilitate development of the requisite documentation
and understandings pertaining to such a relationship, SPACEHAB is prepared to
provide initial, good-faith funds to the CCR in the amount of $12,500 per month
beginning May 1, 1996, continuing for an initial period of ninety days. During
this 90-day period, PSU and the CCR would be expected to accomplish the
following in close coordination and cooperation with SPACEHAB.
1. Development and execution of a joint Industry-University Cooperative Research
Agreement between PSU and SPACEHAB which will be consistent with University
policies and which will contain certain intellectual property provisions
providing STC with exclusive commercialization rights to technology developed
under the agreement.
2. Development and execution of an intellectual property licensing agreement
between STC and the Penn State Research Foundation (PSRF, the University's
technology transfer agent) for the licensing of the background rights relative
to the USCEPS Program and the Biomodule and upon which the above-referenced
research program will be based. The license will be consistent with PSRF's
standard license terms and conditions. (Note: In the event PSU cannot ultimately
commercialize the USCEPS or Biomodule technologies using the entity STC, the
parties will effectuate the intent of this agreement through licensing
agreements directly from PSU's subsidiary technology transfer corporation, the
PSRF, to SPACEHAB or other third parties, who will enter licensing and/or
manufacturing agreements consistent with this letter agreement.)
3. Development and execution of a Commercialization Agreement between STC and
SPACEHAB. This agreement will provide SPACEHAB with the right to serve as its
exclusive commercialization agent, and providing SPACEHAB with the right to
initially receive 50% of net profits generated from the commercialization of the
USCEPS and Biomodule technologies until SPACEHAB has recovered 150% of the
research monies provided to the University under paragraph 1. above, as well as
SPACEHAB's right to thereafter receive 25% of net profits as a continuing
royalty share.
<PAGE> 2
4. Development of a Cooperative Agreement between the CCR and NASA to facilitate
additional NASA funding, USCEPS hardware flight certification and advocacy for
USCEPS flight opportunities aboard the Space Shuttle and International Space
Station.
5. Development of a Statement of Work (SOW) which encompasses the strategic and
tactical aspects of the CCR/SPACEHAB business relationship as it relates to
marketing and managing the USCEPS and Biomodule Programs over the next five
years. This SOW should include, but not be limited to, the following elements:
a. Program overview (USCEPS, Biomodule)
b. Program implementation strategy (USCEPS, Biomodule)
c. Current market assessment (USCEPS, Biomodule) and outreach plan (as specific
as proprietary considerations allow)
d. USCEPS development-to-flight-readiness schedule with key technical and
programmatic milestones and assumptions identified
6. Development of a phased budget plan which projects CCR costs throughout the
five year period.
7. Monthly progress reports updating the status of work on the above products.
Following the initial 90-day period, all parties will evaluate the above
products for completeness and substance, realizing that certain technical
aspects of the USCEPS development and flight opportunity schedule may continue
to be somewhat uncertain during this time. If SPACEHAB determines in its sole
discretion that substantial progress has been made on the above products,
SPACEHAB will continue funding at $12,500 per month through April, 1997 (a total
of $150,000 in funds), at which time an additional assessment of Program status
will be made by SPACEHAB. A negative assessment at the 90-day milestone will
result in termination of SPACEHAB funding (a total of $37,500).
It is expected that all funds provided by SPACEHAB, Inc. will be used solely to
facilitate the continuation of USCEPS ground tests currently in process; in the
development of a detailed Statement of Work which functionally organizes the
technical and business-base-development work to be done up to and including
first USCEPS flight; in the overall management of the USCEPS and PSB research
program; and in the maintenance of the USCEPS and PSB flight hardware.
As a part of this letter agreement, the CCR will use the Oceaneering SPACEHAB
Refrigerator Freezer (OSRF) as the USCEPS sample refrigeration facility, subject
to successful completion of all OSRF flight qualification testing.
It is expected that the CCR retain the services of Mr. Joe Baker as USCEPS
Program Manager throughout the funding period. The CCR, however, will remain
solely responsible for Mr. Baker's compensation.
2
<PAGE> 3
Your concurrence on the above and signature below is requested at your earliest
convenience. SPACEHAB, Inc. looks forward to working with the CCR in its USCEPS
and Biomodule commercialization efforts.
Sincerely,
/s/ Dan A. Bland, Jr.
- ----------------------
Dan A. Bland, Jr.
Director, Commercial Applications
SSUP Program manager
/s/ Margaret E. Grayson /s/ R. D. Nargi
- ------------------------ --------------------------
Margaret E. Grayson Mr. R.D. Nargi
SPACEHAB Vice President - Finance Associate Treasurer
and Administration The Pennsylvania State University
3
<PAGE> 1
EXHIBIT 10.68
OMB APPROVAL NO. 2700-0042
- --------------------------------------------------------------------------------
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT
- --------------------------------------------------------------------------------
1. CONTRACT ID CODE PAGE 1 OF 41 PAGES
- --------------------------------------------------------------------------------
2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE
42 SEE BLOCK 16C
- --------------------------------------------------------------------------------
4. REQUISITION/PURCHASE REQ. NO. N/A 5. PROJECT NO. (if applicable)
- --------------------------------------------------------------------------------
6. ISSUED BY CODE BV2/Y55
NASA/Lyndon B. Johnson Space Center --------------------------------
Space Shuttle Business Management Office 7. ADMINISTERED BY (if other
Attn: BV2/ Christine Mack than item 6)
Houston, TX 77058
CODE
- --------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State and Zip Code)
Spacehab, Inc.
Attn: Nelda Wilbanks --------------------------------
1595 Spring Hill Rd., Suite 360 APPROVED
Vienna, VA 22182
- ------------------------------------------- /s/
CODE FACILITY CODE ------------------------
- ------------------------------------------- JSC PROCUREMENT OFFICER
[X] 9A. AMENDMENT OF SOLICITATION NO.
7/16/97
- ------------------------------------------- -------------------------
9B. DATED (SEE ITEM 11) DATE
- ------------------------------------------- -------------------------
[X] 10A. MODIFICATION OF CONTRACT/ORDER NO. 10B. DATED (SEE ITEM 13)
NAS 9-19250 11/17/94
- ----------------------------------------------------------------------------
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
- ----------------------------------------------------------------------------
[ ] The above numbered solicitation is amended as set forth in Item 14.
The hour and date specified for receipt of Offers [ ] is extended,
[ ] is not extended.
Offers must acknowledge receipt of this amendment prior to the hour and
date specified in the solicitation or as amended, by one of the following
methods:
(a) By completing Items 8 and 15, and returning copies of the
amendment; (b) By acknowledging receipt of this amendment on each copy of the
offer submitted; or (c) By separate letter or telegram which includes a
reference to the solicitation and amendment numbers. FAILURE OF YOUR
ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS
PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If
by virtue of this amendment you desire to change an offer already submitted,
such change may be made by telegram or letter, provided each telegram or letter
makes reference to the solicitation and this amendment, and is received prior to
the opening hour and date specified.
- --------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATE (If required)
N/A
- --------------------------------------------------------------------------------
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS.
IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
- --------------------------------------------------------------------------------
[X] A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority)
THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER
NO. IN ITEM 10A.
- --------------------------------------------------------------------------------
B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE
ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation
date, etc.) SET FORTH IN ITEM 14. PURSUANT TO THE AUTHORITY OF FAR 43
103(b)
- --------------------------------------------------------------------------------
[X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF:
10 U.S.C. 2304 (c)(1)
- --------------------------------------------------------------------------------
D. OTHER (Specify type of modification and authority)
- --------------------------------------------------------------------------------
E. IMPORTANT: Contractor [ ]is not [X] is required to sign this document and
return 3 copies to the issuing office.
---
- --------------------------------------------------------------------------------
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings,
including solicitation/contract subject matter where required.)
The purpose of this modification is to: (1) definitize letter contract
modification 23, Contract Change Orders (CCOs), 12, 13, 14, and 15, and all
revisions; and (2) recognize full and equitable adjustment. To implement the
above actions, the following changes are made to the contract:
1. Article B.2. SCHEDULE OF SERVICES TO BE PROVIDED, is deleted in its
entirety and replaced with the following:
Except as provided herein, all items and conditions of the document referenced
in Item 9A or 10A as heretofore changed, remained unchanged and in full force
and effect.
- --------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type or print)
Nelda Wilbanks, Contracts Administrator
- --------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR 15C. DATE SIGNED
/s/ Nelda Wilbanks 7/11/97
(Signature of person
authorized to sign)
- --------------------------------------------------------------------------------
16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
Carl C. Weber, Jr., Contracting Officer
- --------------------------------------------------------------------------------
16B. UNITED STATES OF AMERICA
By: /s/ Carl C. Weber, Jr.
(Signature of Contracting Officer)
- --------------------------------------------------------------------------------
16C. DATE SIGNED
16 July 97
- --------------------------------------------------------------------------------
<PAGE> 2
NAS 9-19250
Modification No. 42
Page 2 of 41
"B.2 SCHEDULE OF SERVICES TO BE PROVIDED
In accordance with the Statement of work set forth in Section C, the Contractor
shall provide all flight and ground hardware and integration and operations
services required to meet the following launch dates for seven missions to MIR:
<TABLE>
<CAPTION>
Missions Module Configuration Launch Date
-------- -------------------- -----------
<S> <C> <C>
Shuttle/Mir Mission-03 (S/MM-03) Single 22 Mar 1996
Shuttle/Mir Mission-04 (S/MM-04) Double 16 Sep 1996
Shuttle/Mir Mission-05 (S/MM-05) Double 12 Jan 1997
Shuttle/Mir Mission-06 (S/MM-06) Double 15 May 1997
Shuttle/Mir Mission-07 (S/MM-07) Double 18 Sep 1997
Shuttle/Mir Mission-08 (S/MM-08) Double 15 Jan 1998
Shuttle/Mir Mission-09 (S/MM-09) Single 29 May 1998
</TABLE>
(End of clause)"
2. Article B.3 FIRM-FIXED PRICE (NASA 18-52.2167-78) (DEC 1988) is deleted in
its entirety and replaced with the following to reflect the negotiated
price of $38,000,000 for definitization letter contract modification 23,
and for CCOs 12, 13, 14, and 15, and all revisions.
"B.3 FIRM-FIXED PRICE (NASA 18-52.216-78) (DEC 1988)
The total firm-fixed-price of this contract is $88,506,600."
3. Section C, Statement of work is deleted in its entirety and replaced with
the attached statement of work which includes the following revisions to
letter contract modification 23:
- As definitization for CCO 12, section 2.1, fourth paragraph, is
deleted in its entirety and replaced with the following:
"Figure 1 provides a preliminary payload manifest for the first four
NASA-Mir Program Phase 1 missions utilizing SPACEHAB. It is provided to
assist the Contractor in scoping the effort required. The payload
complement for the remaining three missions shall be a combination of
Russian logistics, research payloads and miscellaneous items associated
with one crewmember exchange on S/MM-07 and S/MM-08, and one crewmember
return on S/MM-09. Russian logistics items are expected to be similar to
those items manifested on the first four missions, however, the quantity
of items may be revised, as in the case of the Russian 800A storage
batteries. The quantity of these batteries, which require special mounting
hardware, has been increased from three to a maximum of seven on missions
S/MM-07, -08 and -09. Additions, deletions, and changes to the individual
payload mass and volume for both the launch and return payload
complements, and changes to other
<PAGE> 3
NAS 9-19250
Modification No. 42
Page 3 of 41
requirements such as active versus passive payloads and Extra Vehicular
Activity (EVA) requirements are anticipated. "
- - As definitization for CCO 13, SOW Section 3.5.2.2 is modified by the
addition of the following paragraph:
"For S/MM-06 the contractor shall provide routing and installation of a
customer-provided data cable form the EORF to a SPACEHAB module Experiment
Connector Panel, configuration of the module downlink telemetry system to accept
EORF data, preflight testing of the data system with EORF data, and real-time
throughput of the received telemetry data from the SPACEHAB POCC to the JSC
Science Monitoring Area during the mission."
SOW Section 3.4, Power, the last sentence in the first paragraph, is deleted in
its entirety and replaced with the following:
"In addition to standard electrical services for payloads, beginning with
S/MM-04 the contractor shall provide a 28 VDC, 25 ampere electrical power outlet
and cable to connect to the Enhanced Orbiter Refrigerator Freezer (EORF) to
existing module electrical power circuits. In addition, for S/MM-06 the
contractor shall provide an electrical power cable for connection of the
Inflatable Thermal control unit (ITCU) to existing module electrical power
circuits."
- - As definitization for CCO 14, SOW Section 3.5.2.2, Telemetry, is
modified by the addition of the following paragraph:
"For S/MM-06, -08 and -09 the Contractor shall provide the capability to process
simultaneously in the POCC both real time downlinked telemetry data from the
Realtime Radiation Monitoring Device (RRMD) experiment, and RRMD experiment data
recorded on board during Orbiter Loss Of Signal (LOS) periods for delayed
playback."
- - As definitization for CCO 15, SOW Section 3.1, the following paragraph
is added after the eleventh paragraph:
"The Contractor shall provide the hardware, facilities and services necessary to
integrate a Russian-provided Elektron oxygen generating unit into the SPACEHAB
double module for ascent or descent to/from the Mir Station on any SPACEHAB-Mir
double module mission after S/MM-05."
- - To support alternate landing site for S/MMs 07, 08, and 09, SOW Section
6.3.9, End-of-Mission Access, is deleted in its entirety and replaced
with the following:
"The Contractor shall negotiate with the SSP through the PIP for early module
access at the end of a mission. In concert with KSC landing and recovery
personnel, and if necessary to meet payload complement requirements, the
Contractor shall provide the
<PAGE> 4
NAS 9-19250
Modification No. 42
Page 4 of 41
support necessary, including GSE, for the accomplishment of approved payload
early removal from the module at the primary and first alternate landing sites.
At the primary landing site the Contractor shall be ready to support a landing
at any time after launch. At the first alternate landing site the Contractor
shall be ready to support a landing at any time after Docking + 48 hours, if
Shuttle-Mir docking is successful. If not successfully accomplished, support
will be on a best effort basis. If necessary to provide timely support at the
first alternate landing site, the Contractor shall preposition GSE there to
support payload removal on all SPACEHAB-Mir missions. The Contractor shall have
in place a rapid response plan to move the necessary personnel and equipment to
other alternate or abort landing sites if so directed."
- - To incorporate full capacity of the modules, negotiated as
approximately 13,860 lbs, and to incorporate up to 25 percent active
payloads the following changes are made:
- SOW Section 2.3, paragraph (a) is deleted in its entirety and
replaced with the following:
"a Total available SPACEHAB module internal volume. Except as constrained
by (1) Space Shuttle ascent performance, (2) center-of-gravity
considerations, and (3) the structural limitations of installed storage
accommodations, and to the extent that (1) approved Phase 1 manifest
requirements exist and (2) the utilization of storage capacity is
operationally practical, the Contractor shall utilize all available
module storage volume."
- SOW Section 2.3, paragraph ( c) is deleted in its entirety and
replaced with the following:
"c. Total allowable SPACEHAB payload weight. For each SPACEHAB-Mir mission
the projected maximum payload net weight at launch is as follows:
<TABLE>
<CAPTION>
Mission Payload Net Weight
------- ------------------
<S> <C>
Shuttle/Mir Mission-03 3132 lbs (1420 kg)
Shuttle/Mir Mission-04 4421 lbs (2005 kg)
Shuttle/Mir Mission-05 4224 lbs (1916 kg)
Shuttle/Mir Mission-06 4647 lbs (2107 kg)
Shuttle/Mir Mission-07 5250 lbs (2381 kg)
Shuttle/Mir Mission-08 5250 lbs (2381 kg)
Shuttle/Mir Mission-09 3360 lbs (1524kg)
</TABLE>
Manifesting of more or less payload net weight on any mission, up to the
limits of Orbiter ascent performance, or center-of-gravity limits, or module
structural capability, is not precluded. Active payloads manifested on
SPACEHAB-Mir missions-07, 08, and 09 may constitute up to 25% of the total net
ascent payload weight accommodated in the SPACEHAB during those missions. Active
payloads (those requiring extensive ICD and
<PAGE> 5
NAS 9-19250
Modification No. 42
Page 5 of 41
safety packages, module electrical power, crew training, procedures and flight
support), either bulkhead or rack mounted, are not precluded on any mission."
- - No adjustments will be made to the contract price for net ascent
payload weight above or below 13,860 lbs. for S/MMs-7, 08, and 09.
- - A new paragraph is added after the sixth paragraph of SOW Section 3.1
to incorporate a cargo net:
"The Contractor shall develop and provide a light weight cargo net or bag
arrangement that may be stowed for ascent and deployed for descent. This shall
be used to meet a requirement on S/MMs-07, 08, and 09 for an efficient method to
return excess low density packing material from the Mir Station."
- - Section 4.7, paragraph 1, is deleted in its entirety and replaced with
the following for clarification of the payload complement assessment
process:
"For each SPACEHAB-Mir mission, the contractor shall perform an assessment of
candidate payloads for their technical and operational compatibility when
integrated into a total mission complement. For the initial baselining, and for
each proposed update to the Phase 1 Requirements Document, the Contractor shall
perform an informal assessment of candidate payloads for their technical and
operational compatibility when integrated into a total mission complement. The
results of this assessment shall be informally transmitted to the Government's
Phase 1 Requirements Integrated Product Team as part of the Phase 1 manifesting
process. For each approved update to the baselined Phase 1 Requirements Document
the Contractor shall develop and submit to the Government a Mission Requirements
and Allocations Document (MRAD) (DRL Line Item No. 14) detailing how the
approved requirements will be accommodated in SPACEHAB."
- - The above and all other changes to Section C associated with
incorporating S/MMs-07, 08, and 09, as negotiated, are bar-marked in
the attached SOW.
- - CC04 and all revisions, will be revised to include additional lease
hardware on STS-89. The revised CCO will have an NTE of $580,000 and
will be negotiated at $0 profit.
4. Article F.4, COMPLETION OF WORK (JSC 52.212-95) (SEP 1988), is deleted
its entirety and replaced with the following:
"F.4 COMPLETION OF WORK (JSC 52.219-95) (SEP 1988)
All work required under this contract, including submission of all
reports, shall be completed on or before July 31, 1998.
(End of clause)"
<PAGE> 6
NAS 9-19250
Modification No. 42
Page 6 of 41
5. Clause H.5 LIMITATION OF FUNDS FIXED-PRICE CONTRACT (NASA 18-52.232-77)
(MARCH 1989), paragraphs (a) and (c)(l) are deleted in their entirety and
replaced with the following to reflect the new Schedule for Allotment of
Funds:
(a) Of the total price of this contract, the sum of $54,226,100 is
presently available for payment and allotted to this contract. It is
anticipated that from time to time additional funds will be
allocated to this contract in accordance with the following schedule
until the total price of said items is allotted:
SCHEDULE FOR ALLOTMENT OF FUNDS
<TABLE>
<CAPTION>
Date Amounts
<S> <C>
GFY95 $12,800,000
GFY96 $37,493,944
GFY97 $30,500,000
GFY98 $ 7,712,656
TOTAL $88,506,000
</TABLE>
(c)(1) It is contemplated that funds presently allotted to this contract will
cover the work to be performed until August 31, 1997."
6. Article H.7, RESERVED, is deleted in its entirety and replaced with the
following:
"H.7 AGREEMENT CONCERNING DELAYS IN LAUNCH DATES AS SET FORTH IN THE
CONTRACT AND RELATED EQUITABLE ADJUSTMENTS
Since flight schedule changes are likely to occur, it is desirable to negotiate
an agreement that equitable adjustments will not be made unless the schedule
slips impact the hardware processing time or impacts the total period of
performance under this contract. The proposed agreement is identified below:
No equitable adjustment shall be requested in the event of launch schedule
changes as long as the launch schedule changes:
1.) Allow the contractor at least 45 working days to process hardware in
the Spacehab Payload Processing Facility.
2.) Do not increase the total period of performance under this contract.
(End of clause)"
<PAGE> 7
NAS 9-19250
Modification No. 42
Page 7 of 41
7. Article H.10, RESERVED, is deleted in its entirety and replaced with
the following:
"H.10 SPECIAL PROVISION FOR CONTRACT CHANGES
Notwithstanding the provisions of the Changes clause, the parties agree
that no change made pursuant to the Changes clause shall give rise to an
equitable adjustment in the firm-fixed-price or any other contract
provision, when said change causes an increase or decrease in the
contractor's estimated cost of performing that change is $30,000 or less
in this contract. Each change shall be controlling in making this
determination, and such change shall not, for purposes of determining the
applicability of this clause, be added to any other change(s). The parties
recognize that several changes may be grouped together in a bilateral
contract modification for definitization; however, the dollar value of
each individual change will be controlling in determining whether or not
an equitable adjustment is in order.
(End of clause)"
8. Article I.8, PROGRESS PAYMENTS (FAR 52.232-16) (JUL 1991), of the basic
contract, and Article I.11, PROGRESS PAYMENTS (FAR 52.232-16) (JUL 1991),
Alternate II (AUG 1987), of letter contract modification 23, are deleted
in their entirety following final payment for work in support of the basic
missions totaling $50,506,600 and until the contractor's accounting system
is approved by the Defense Contract Audit Agency.
9. Article I.11, MILESTONE SCHEDULE, is hereby added to the contract:
"I. 11 MILESTONE PAYMENT SCHEDULE
The firm-fixed price for the lease of module and related services on a
per-flight basis is as follows:
<TABLE>
<CAPTION>
Firm-Fixed Delivery
Item Number Services Price Date
----------- -------- ----- ----
<S> <C> <C> <C>
1 Lease of double module and
related integration services
on STS-86
la Interface Control Agreements
(Interface Control Documents (ICDs),
Stowage Interface Agreements (SIAs)
Payload Transfer Agreements (PTAs))
baselined $3,400,000 06/20/97
</TABLE>
<PAGE> 8
NAS 9-19250
Modification No. 42
Page 8 of 41
<TABLE>
<CAPTION>
Firm-Fixed Delivery
Item Number Services Price Date
----------- -------- ----- ----
<S> <C> <C> <C>
1b Analytical Engineering Analyses
(Structural, Thermal, Electromagnetic
Interference/Electromagnetic
Compatibility (EMI/EMC) and
Acoustics) delivered to Space
Shuttle Program(SSP) $ 3,400,000 07/19/97
1c Delivery of flight-ready SPACEHAB
double module in accordance with the
SOW to KSC $ 3,400,000 08/13/97
1d Post-flight destow process complete $ 3,400,000 10/28/97
SUBTOTAL $13,600,000
2 Lease of double module and
related integration services
on STS-89
2a Interface Control Agreements (ICDs,
SIAs, PTAs) baselined $ 3,400,000 10/16/97
2b Analytical Engineering Analyses
(Structural, Thermal, EMI/EMC and
Acoustics) delivered to SSP $ 3,400,000 11/15/97
2c Delivery of fight-ready SPACEHAB
double module in accordance with the
SOW to KSC $ 3,400,000 12/03/97
2d Post-flight destow process complete $ 3,400,000 02/24/98
SUBTOTAL $13,600,000
3 Lease of single module and
related integration services
on STS-91
3a Interface Control Agreements (ICDs,
SIAs, PTAs) baselined $ 2,700,000 02/27/98
3b Analytical Engineering Analyses
(Structural, Thermal, EMI/EMC and
Acoustics) delivered to SSP $ 2,700,000 03/29/98
</TABLE>
<PAGE> 9
NAS 9-19250
Modification No. 42
Page 9 of 41
<TABLE>
<CAPTION>
Firm-Fixed Delivery
Item Number Services Price Date
----------- -------- ----- ----
<S> <C> <C> <C>
3c Delivery of fight-ready SPACEHAB
double module in accordance with the
SOW to KSC $ 2,700,000 04/21/98
3d Post-flight destow process complete $ 2,700,000 07/08/98
SUBTOTAL $ 10,800,000
TOTAL PAYMENTS $ 38,000,000
</TABLE>
Milestone payments shall be made until the contractor's accounting system is
approved. Following DCAA approval of the contractor's accounting system,
milestone payments shall be used concurrently with progress payments. The
milestone invoices will be credited for amounts received as progress payments
during that milestone period.
(End of clause)"
<PAGE> 10
SPACEHAB PHASE ONE CONTRACT
STATEMENT OF WORK
1.0 SCOPE
The National Aeronautics and Space Administration (NASA) and the Russian
Federation are planning a cooperative space venture in which the Space Shuttle,
carrying an external airlock and docking mechanism, will rendezvous and dock
with the Russian Mir Space Station. There will be multiple missions to Mir and
the purpose of these missions is logistical resupply of the space station,
transfer of research, technology demonstration and risk mitigation payloads
to/from the Mir, and to conduct on-orbit joint activities.
A pressurized habitable volume greater than that available in the Orbiter
middeck is required for the payload to be carried to/from the Mir Space Station.
To meet the requirement for additional habitable volume NASA intends to acquire
the use of both SPACEHAB single and double modules, with end-to-end integration
and operations services, for a series of seven flights to Mir in the early
calendar 1996 to mid 1998 time period, assuming current Shuttle launch
schedules. The period of performance of the contract issued to perform the tasks
identified in this SOW shall run from November 17, 1994 until 45 days after the
landing (R+45) of the last SPACEHAB-Mir mission, or about July 23, 1998, based
on current launch schedules.
The following terms are used frequently throughout this SOW. The term "payload"
corresponds to all NASA-Mir Program logistics items, science samples and
equipment carried in the SPACEHAB module to or from orbit. "Module" refers to
either single or double module configurations (unless explicitly stated) plus
the module integration hardware required to effect a complete interface with the
Orbiter. The integrated module and payload are referred to as the SPACEHAB
"cargo element."
2.0 SERVICES PROVIDED TO THE GOVERNMENT
2.1 LEASE OF SPACEHAB FLIGHT HARDWARE
The Contractor shall provide the services of single or double SPACEHAB modules
to NASA. These services include SPACEHAB flight hardware, Ground Support
Equipment (GSE), and module trainers and mockups to support flight crew training
and mission integration services. The SPACEHAB modules provided shall be capable
of supporting Space Shuttle-Mir mission durations of up to 11 days plus 2 Space
Shuttle contingency days (i.e. a landing delay due to a variety of reasons).
This Statement of Work covers provision of the following SPACEHAB related
services by the Contractor to the Government: (1) physical accommodations in the
SPACEHAB module for the operation, servicing and maintenance of Government-
sponsored payloads on each flight; (2) associated mission integration, flight
operations support, and mission deintegration services; and (3) provision of the
required module resources (e.g., power, thermal, command and data management,
etc.) for the payloads.
The contractor shall provide all flight and ground hardware and integration and
operations services required to meet the following launch dates for seven
missions to Mir.
<TABLE>
<CAPTION>
Mission Module Configuration Launch Date
------- -------------------- -----------
<S> <C> <C>
Shuttle/Mir Mission-03 (S/MM-03) Single 22 Mar 1996
Shuttle/Mir Mission-04 (S/MM-04) Double 16 Sep 1996
Shuttle/Mir Mission-05 (S/MM-05) Double 12 Jan 1997
Shuttle/Mir Mission-06 (S/MM-06) Double 15 May 1997
Shuttle/Mir Mission-07 (S/MM-07) Double 18 Sep 1997
Shuttle/Mir Mission-08 (S/MM-08) Double 15 Jan 1998
</TABLE>
C-4
<PAGE> 11
<TABLE>
<CAPTION>
Mission Module Configuration Launch Date
------- -------------------- -----------
<S> <C> <C>
Shuttle/Mir Mission-09 (S/MM-09) Single 29 May 1998
</TABLE>
Figure 1 provides a preliminary payload manifest for the first four NASA-Mir
Program Phase 1 missions utilizing SPACEHAB. It is provided to assist the
Contractor in scoping the effort required. The payload complement for the
remaining three missions shall be a combination of Russian logistics research
payloads and miscellaneous items associated with one crewmember exchange on
S/MM-07 and S/MM-08, and one crewmember return on S/MM-O9. Russian logistics
items are expected to be similar to those items manifested on the first four
missions, however, the quantity of items may be revised, as in the case of the
Russian 800A storage batteries. The quantity of these batteries, which require
special mounting hardware, has been increased from three to a maximum of seven
on missions S/MM-07, -08 and -09. Additions, deletions, and changes to the
individual payload mass and volume for both the launch and return payload
complements, and changes to other requirements such as active versus passive
payloads and Extra Vehicular Activity (EVA) requirements are anticipated.
Not shown in Figure 1 are 8 Middeck Locker Volume Equivalents of experiments
which must be accommodated on one of the SPACEHAB-Mir missions to satisfy
Spacehab Inc.'s obligations to NASA under Contract NAS9-18371.
C-5
<PAGE> 12
<TABLE>
<CAPTION>
S/MM-03 PAYLOAD DEFINITION
Weight Pwr
(kg) (lbs) MLE (W) Comments
--- --- ---- ------ --------
<C> <S> <C> <C> <C> <C> <C>
Stowage Location SCIENCE AND TECHNOLOGY
Middeck Commercial Generic Bioprocessing App. 54 119 2 A 40 up only
Protein Crystal Growth (STES) 54 119 2 A 141 up only
Animal Enclosure Module (AEM) 30 86 1 A 42
Microgravity GN(2) Dewar 22 49 1 n/a swap out
Blorack Late Access Locker 22 49 1 n/a
--- --- ---- ------
Subtotal 182 401 7 223
ISSA ROCK MITIGATION
Micromat/Debns Photo Survey of Mir 0 0 n/a n/a
--- --- ---- ------
Subtotal 0 0 0 0
LVA
SAFER(2) 91 200 # 8 n/a
--- --- ---- ------
Subtotal 91 200 8 0
--- --- ---- ------
Middeck Total 273 601 15 223
Pressurized Module SCIENCE AND TECHNOLOGY
(Spacehab-SM) Biorack and 1 MLE Stowage -212 467 rack 7
TSD Science and Technology Experiments 109 240 4
LSLE Refrigerator and Freezer 77 170 rack A 183 req. entry seq.
Refrigerated and Frozen Stowage 20 44 n/a down only
=======================================================================================================================
Under review Microgravity Glovebox Experiments 80 175 4 up only
due to Life Sciences Stowage 80 175 4 up only
stowage Ambient Science Logistics to Mir 60 132 3 n/a swap out
limitations BTS Hardware (STES and REM) 38 84 3 A 400 up only
(765 lbs Fundamental Biology Stowage 30 65 3 swap out
not included GASMAP Stowage 21 46 1 up only
in totals). Two SIA Drawer Rack Modification 20 44 rack swap out
Korund Liquid Phase Sintering 10 22 0.5 up only
SAMs Data Disks 8 18 0.5 n/a swap out
--- --- ---- ------
Subtotal 418 922 4 193
--- --- ---- ------
ISSA ROCK MITIGATION
Mir Electric Field Characterization 37 82 *1.5 O 140 Shuttle/Mir
MEEP Mir Attach Hardware 18 40 1.5 n/a
--- --- ---- ------
Subtotal 55 121 3 140
--- --- ---- ------
</TABLE>
STS-79 Notes:
A = Ascent
O = On-orbit
* = Req. window shade bag (mdk) Steve Gayler
# = Assumes 2 airlock/ODS stowage bags Manifest/Schedules Office/MC
Shuttle/Mir = Ops on both veh. 1/31/95
1 of 2
C-6
<PAGE> 13
S/MM-03 PAYLOAD DEFINITION
<TABLE>
<CAPTION>
Stowage Location Weight Pwr
-------------- ---
(kg) (lbs) MLE (w) Comments
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
Russian Logistics
Gyrodyne 124 273 26.6 n/a up only
Storage Battery (3) and Transformer (3) 256 585 9 n/a up only
Other Logistics 479 1,055 43 n/a up only
--- ----- ---- ---
Subtotal 868 1,914 78.6 0
--- ----- ---- ---
EVA
Tools for 90 bolts & Stowage Bag 48 106 4 n/a
DTO 871,872 21 47 2 n/a
Medical DSOs (482,489,494) 7 15 0.5 n/a
DTO 640 7 15 0.5 n/a
----- ----- ---- ---
Subtotal 83 184 7 0
----- ----- ---- ---
PAO
Electronic Still Camera (ESC) 16 35 0.5 n/a
----- ----- ---- ---
Subtotal 16 35 0.5 0
----- ----- ---- ---
Pressurized Module Total 1,440 3,176 93.1 533
----- ----- ---- ---
Payload Bay
ISSA Risk Mitigation
MEEP (includes 2 POSAs, PPMD, ODC, 305 672 n/a n/a up only (Mir ext)
and 4 APCs)
----- ----- ---- ---
Subtotal 305 672 0 0
----- ----- ---- ---
EVA
DTO 671 (includes 1 APC) 54 120 n/a n/a
----- ----- ---- ---
Subtotal 54 120 0 0
----- ----- ---- ---
Payload Bay Total 359 792 0 0
----- ----- ----- ---
Mission Total 2,072 4,689 108.1 556
----- ----- ----- ---
</TABLE>
STS-76 Notes
A = Ascent
O = On-orbit
* = Reg. window shade bag (mdk) Steve Gaylor
# = Assumes 2 airlock/ODS stowage bags Manifest/Schedules Office/MC
Shuttle/Mir = Ops on both veh. 1/31/95
2 of 2
C-7 Figure 1
<PAGE> 14
S/MM-04 Payload Definition
<TABLE>
<CAPTION>
_________ _____
STS-70 Weight PWR
Stowage Location _______________________________
Middeck (kg) (lbs) MLE (W) Comments
__________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
SCIENCE AND TECHNOLOGY
Counter Measures Treadmill 84 185 n/a
Thermo-Electric Holding Module 69 132 2 E 150
Protein Crystal Growth (STES) 54 119 2 260 swap out
BTS Hardware (STES and BEM) 38 64 2 260 up only
Commercial Protein Crystal Growth 31 68 1 115 up only
Animal Enclosure Module (AEM) 30 66 1 E 42
Microgravity GN(2) Dewar 16 35 1 n/a swap out
_________________________________________________________________________
Subtotal 322 710 9 827
_________________________________________________________________________
ISSA RISK MITIGATION
Microbiology Monitor Kit #1 7 15 1 n/a swap out
Micromet/Debris Photo Survey of Mir 0 0 n/a n/a
_________________________________________________________________________
Subtotal 7 15 1 0
_________________________________________________________________________
CMAM PAYLOAD (OTHER CARGO)
CMAM Payload 218 480 8
_________________________________________________________________________
Subtotal 213 480 8 0
_________________________________________________________________________
_________________________________________________________________________
Middeck Total 547 1,205 18 827
_________________________________________________________________________
Pressurized Module SCIENCE AND TECHNOLOGY
(Spacehab-DM) LSLE Refrigerator and Freezer 85 187 rack
Life Sciences Stowage 80 176 4 swap out
Microgravity Glovebox Experiments 80 176 4 swap out
Thermo-Electric Holding Module 69 152 2 E 150
Commerical Generic Bioprocessing App. 54 119 2 down only
Counter Measures LBNP 37 82 2
Fundamental Biology Stowage 30 66 3 swap out
Materials in Devices as Superconductors 20 44 1 up only
Refrigerated and Frozen Stowage 20 44 down only
Two SIA Drawer Rack Modifications 20 44 rack
BTS Hardware (Stowage and BCM) 16 35 1 up only
High-Temperature Liquid Phase Sintering 10 22 0.5 down only
SAMS Data Disks 8 18 0.5 n/a down only
Film and Camera Supplies 5 11 n/a swap out
_________________________________________________________________________
Subtotal 534 1,177 20 150
_________________________________________________________________________
</TABLE>
STS-79 Notes
A = Ascent
O = On-orbit
E = Entry Suzan Voss, Steve Gaylor
* = Requires window shade bag (middeck) Manifest/Schedules Office/MC
Shuttle/Mir = Ops on both vehicles 3/7/95
1 of 2
C-8 FIGURE 1
<PAGE> 15
S/MM-04 Payload Definition
<TABLE>
<CAPTION>
------------ -----
Weight Pwr
STS-79 -----------------------------------------------
Stowage Location (kg) (lbs) MLE (W) Comments
- ---------------- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------
USSA Risk Mitigation
Active Rack Isolation System (ARIS) 494 1,090 n/a 600
Mir Electric Field Characterization 37 92 1.50 170 Shuttle/Mir
Mir Structural Dynamics Experiment 88 216 4 115 up only
Real-time Radiation Monitor Device 24 53 1 20 plus track
---------------------------------------------------------------------------------------------------
Subtotal 653 1,440 6.5 905
Russian Logistics
Gyrodyne & Fastening Ring 124 273 26.5 n/a up only
Storage Battery & Transformer 265 585 9 n/a up only
Water Container 64 140 5 n/a up only
Food Containers 245 540 18 n/a up only
Clothing 27 60 5 n/a up only
Seat Liner Kit 42 92 8 n/a up only
Personal Hygiene Equipment 87 193 5 n/a up only
Medical Kit 2 4 0.5 n/a up only
--------------------------------------------------------------------------------------------------
Subtotal 856 1,888 79.1 0
EVA
Tools for 96 Bolts & Stowage Bag 48 106 4 n/a
(Shuttle-required) 0
--------------------------------------------------------------------------------------------------
Subtotal 48 106 4 0
Code U Risk Mitigation (other cargo)
Volatile Organics Analyzer 6 13 0.5 up/down
--------------------------------------------------------------------------------------------------
Subtotal 6 13 0.5
--------------------------------------------------------------------------------------------------
Pressurized Module Total 2,098 4,624 110 1055
Payload Bay Science and Technology
(none) 0 0
--------------------------------------------------------------------------------------------------
Subtotal 0 0 0 0
--------------------------------------------------------------------------------------------------
Payload Bay Total 0 0 0 0
--------------------------------------------------------------------------------------------------
Mission Total 2,644 5,829 128.1 1882
</TABLE>
STS-79 Notes
A = Ascent
O = On-orbit
E = Entry Suzan Voss, Steve Gaylor
* = Requires window shade bag (middeck) Manifest/Schedules Office/MC
Shuttle/Mir = Ops on both vehicles 2 of 2 3/7/95
C-9 FIGURE 1
<PAGE> 16
S/MM-05 PAYLOAD DEFINITION
<TABLE>
<CAPTION>
Weight Pwr
STS-81 ------------- ---
Stowage Location (kg) (lbs) MLE (W) Comments
- ---------------- ---- ----- ---- --- --------
<S> <C> <C> <C> <C> <C> <C>
Middeck SCIENCE AND TECHNOLOGY
Counter Measures Treadmill 84 185 n/a
Commercial Protein Crystal Growth 64 141 2 down only
Protein Crystal Growth (STES) 54 119 2 swap out
STS Hardware (STES and EEM) 38 84 2 swap out
Animal Enclosure Module (AEM) 30 66 1
Microgravity GN(2) Dewar 22 49 1 n/a swap out
Biorack Late Access Locker 22 49 1 n/a
Fundamental Biology GN(2) Dewar 22 49 1
-------------------------------------------------------------------
Subtotal 336 741 10 0
-------------------------------------------------------------------
ISSA RISK MITIGATION
Optical Properties Monitor (OPM) 122 268 ODS? n/a up only
OPM/Shuttle Attach Kit 13 29 ODS? n/a up only
OPM/Mir Interface Plate 30 65 ? n/a up only
-------------------------------------------------------------------
Subtotal 164 362 0 0
-------------------------------------------------------------------
Middeck Total 500 1,103 10 0
===================================================================
Pressurized Module SCIENCE AND TECHNOLOGY
(Spacehab-DM) Biorack and 1 MLE Stowage 257 567 rack
Mechanics of Granular Materials (MGM) 168 370 5
LSLE Refrigerator and Freezer (x 2) 154 340 rack
Life Sciences Stowage 80 176 4 swap out
Microgravity Glovebox Experiments 80 176 4 swap out
Counter Measures LBNP 37 82 2
Baroreflex Hardware 32 71 2 up only
Fundamental Biology Stowage 30 66 3 swap out
Two SIA Drawer Rack Modification 20 44 rack
Refrigerated and Frozen Stowage 20 44 n/a n/a down only
SVET Root Module 20 44 1 swap out
SAMS Hardware for MGM 20 44 1
SAMS Data Disks 8 18 0.5 swap out
-------------------------------------------------------------------
Subtotal 926 2,041 22.5 0
-------------------------------------------------------------------
ISSA RISK MITIGATION
MIR Electric Field Characterization 37 82 1.5O 140 Shuttle/Mir
Microbiology Monitor Kit #2 7 15 0.5 n/a swap out
-------------------------------------------------------------------
Subtotal 44 97 2 140
-------------------------------------------------------------------
</TABLE>
STS-81 Notes:
A = Ascent
O = On-orbit
* = Requires window shade bag (middeck) Suzan Voss, Steve Gaylor
# = Assumes 40 lbs/locker Manifest/Schedules Office/MC
Shuttle/Mir = Operations on both vehicles 3/7/95
1 of 2
C-10 FIGURE 1
<PAGE> 17
<TABLE>
<CAPTION>
S/MM-05 Payload Definition
------------------------ -----------
STS-81 Weight Pwr
------ -----------------------------------------------
Stowage Location (kg) (lbs) MLE (W) Comments
- ---------------- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Russian Logistics
Target for Contents & MPE 850 1,874# 47 n/a ?? only
-------------------------------------------------------------------------------------------------------
Subtotal 850 1,874 47 0
-------------------------------------------------------------------------------------------------------
EVA
Tools for 96 Bolts & Stowage Bag 48 106 4 n/a
-------------------------------------------------------------------------------------------------------
Subtotal 48 106 4 0
-------------------------------------------------------------------------------------------------------
Code U Risk Mitigation (other cargo)
Water Quality Monitor 68 150 4 ?? only
-------------------------------------------------------------------------------------------------------
Subtotal 68 150 4 0*
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Pressurized Module Total 1,936 4,268 79.5 140
-------------------------------------------------------------------------------------------------------
Payload Bay Science and Technology
[none] 0 0
-------------------------------------------------------------------------------------------------------
Subtotal 0 0 0 0
-------------------------------------------------------------------------------------------------------
ISSA Risk Mitigation
[none] 0
-------------------------------------------------------------------------------------------------------
Subtotal 0 0 0 0
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Payload Bay Total 0 0 0 0
-------------------------------------------------------------------------------------------------------
Mission Total 2,436 5,371 89.5 140
-------------------------------------------------------------------------------------------------------
</TABLE>
STS-81 Notes:
A = Ascent
O = On-orbit
* = Requires window shade bag (middeck)
# = Assumes 40 lbs/locker Suzan Voss, Steve Gaylor
Shuttle/Mir = Operations on both vehicles 2 of 2 Manifest/Schedules Office/MC
3/7/95
C-11 FIGURE 1
<PAGE> 18
S/MM-06 Payload Definition
<TABLE>
<CAPTION>
-------------- -----
STS-84 Weight Pwr
- ------ ------------------------------
Stowage Location (kg) (lbs) MLE (W) Comments
- ---------------- ----------------------------------------------------------------------- --------
<S> <C> <C> <C> <C> <C> <C>
Middeck SCIENCE AND TECHNOLOGY
Counter Measures Treadmill 84 185 n/a
Protein Crystal Growth (STES) 54 119 2 down only
BTS Hardware (STES and BEM) 33 84 2 down only
Advance Protein Crystalization Facility 32 71 2
Animal Enclosure Module (AEM) 30 66 1
Fundamental Biology GN(2) Dewar 22 49 1 swap out
Microgravity GN(2) Dewar 22 49 1 n/a down only
Biorack Late Access Locker 22 49 1 n/a
----------------------------------------------------------------------
Subtotal 304 670 10 0
----------------------------------------------------------------------
ISSA RISK MITIGATION
ESA Prox Ops Sensor Test 0 1
----------------------------------------------------------------------
Subtotal 0 0 1 0
----------------------------------------------------------------------
Middeck Total 304 670 11 0
----------------------------------------------------------------------
Pressurized Module SCIENCE AND TECHNOLOGY
(Spacehab-DM)
Biorack and 1 MLE Stowage 257 567 rack
Mechanics of Granular Materials (MGM) 168 370 5
LSLE Refrigerator and Freezer (x 2) 154 340 rack
Life Sciences Stowage 80 176 4 swap out
Microgravity Glovebox Experiments 80 176 4 down only
Counter Measures LBNP 37 82 2
Fundamental Biology Stowage 30 66 3 down only
Refrigerated and Frozen Stowage 20 44 n/a down only
SVET Root Module 20 44 1 down only
Two SIA Drawer Rack Modification 20 44 rack
SAMS Hardware for MGM 20 44 1
Materials in Devices as Superconductors 20 44 1 down only
PIE (up on Priroda) 20 44 1 down only
MSRE (up on Priroda) 20 44 1 down only
SAMS Data Disks 8 18 0.5 swap out
----------------------------------------------------------------------
Subtotal 954 2,103 23.5 0
----------------------------------------------------------------------
ISSA RISK MITIGATION
Treadmill Vibration Isolation System Exp. 145 320 4.5 120
Real-Time Radiation Monitor Device 24 53 rack 20
Microbiology Monitor Kit #3 7 15 0.5 n/a swap out
----------------------------------------------------------------------
Subtotal 176 388 5 140
----------------------------------------------------------------------
RUSSIAN LOGISTICS
Target for Contents & MPE 750 1,653* 41 n/a up only
</TABLE>
STS-84 Notes:
A = Ascent Suzan Voss, Steve Gaylor
O = On-orbit Manifest/Schedules Office/MC
* = Assumes 40 lbs/locker 1 of 2 3/7/95
C-12 FIGURE 1
<PAGE> 19
S/MM-06 Payload Definition
<TABLE>
<CAPTION>
Weight Pwr
STS-84 -----------------------------------------
Stowage Location (kg) (lbs) MLE (W) Comments
- ---------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------
Subtotal 750 1,653 41 0
----- ----- ---- ----
EVA
Tools for 96 Bolts & Stowage Bag 48 106 4 n/a
----- ----- ---- ----
Subtotal 48 106 4 0
----- ----- ---- ----
Code U Risk Mitigation (other cargo)
Vapor Compression Distillation System 225 496 rack up only
Volatile Removal System 50 110 rack up only
Crew Medical Restraint System 45 99 4 up only
----- ----- ---- ----
Subtotal 320 705 4 0*
----- ----- ---- ----
Space Shuttle Program Office
Orbiter Space Vision System 70 154 4
----- ----- ---- ----
Subtotal 70 154 4 0
----- ----- ---- ----
Pressurized Module Total 2,318 5,110 81.5 140
----- ----- ---- ----
Payload Bay Science and Technology
(none) 0 0
----- ----- ---- ----
Subtotal 0 0 0 0
----- ----- ---- ----
ISSA Risk Mitigation
ESA Prox Ops Sensor Test 25 55 n/a
----- ----- ---- ----
Subtotal 25 55 0 0
----- ----- ---- ----
Payload Bay Total 25 55 0 0
----- ----- ---- ----
Mission Total 2,647 5,836 92.5 140
----- ----- ---- ----
</TABLE>
STS-84 Notes:
A = Ascent Suzan Voss, Steve Gaylor
O = On-orbit Manifest/Schedules Office/MC
# = Assumes 40 lbs/locker 3/7/95
2 of 2
C-13 FIGURE 1
<PAGE> 20
2.2 ACQUISITION OF CONTRACTOR INTEGRATION & OPERATION SERVICES
As a minimum, the following services are to be provided by the Contractor:
a. Manifest assessment support to the NASA-Mir Phase 1Program Office for
each SPACEHAB-Mir mission. Perform trade-off studies of proposed launch
and return payloads, assessing volume, weight, electrical power and
other requirements against module resources to achieve the optimum
module configuration for each mission. Participate in manifest working
groups as directed by the Contracting Officer's Technical Representative
(COTR).
b. Acquisition, analysis, integration, and documentation of SPACEHAB
payload technical systems and operational constraints data. Management
of resultant data bases and documents in accordance with the established
Space Shuttle payload integration process in order to facilitate overall
Shuttle mission integration and to ensure SPACEHAB cargo element
compatibility and operator safety with the Space Shuttle for each
SPACEHAB-Mir mission.
c. Development, utilization and maintenance of a Product Assurance Plan
(DRL Line Item No. 17) to assure the safety of personnel and to provide
to the Government highly reliable SPACEHAB modules which conform to
applicable quality and safety requirements.
d. For each SPACEHAB-Mir mission, representation to the Government of all
matters regarding flight safety, Space Shuttle mission integration
processes, and technical management of module and payload systems
development. The Contractor representative(s) shall be the Government's
point of contact for mutual exchange of correspondence, documentation,
and data as well as for participation in telecons, meetings, working
groups, and various other mission support forums.
e. Contractor-provided training (including Contractor-provided equipment,
documentation, and instruction) of flight crew and ground controllers in
the operation of SPACEHAB module systems. Also, Contractor-coordinated
training (including user-provided equipment, documentation, and
instruction) in the operation of each SPACEHAB-Mir mission's complement
of SPACEHAB payloads shall be conducted according to established NASA
mission development schedules and milestones. Integrated Space Shuttle
and SPACEHAB module systems training will be conducted at the
NASA-Lyndon B. Johnson Space Center (JSC).
f. Coordination of direct Contractor and user participation in the Joint
Integrated Simulations (JIS's) for each SPACEHAB-Mir mission. This
support shall be provided from the NASA-JSC Mission Control Center (MCC)
complex, specifically from the Payload Operations Control Center (POCC).
Customer Support Room (CSR) areas for SPACEHAB program management
support shall be utilized.
g. Analytical and physical ground integration, test and checkout services
necessary to permit the fully integrated SPACEHAB with its payload
complement to go directly to the NASA-Kennedy Space Center (KSC)
Operations & Checkout (O&C) Facility for launch processing (except for
late pad access items).
h. Personnel and equipment needed to install and remove payloads during
SPACEHAB module late access, early retrieval and launch scrub turnaround
activities. This support will be provided to KSC in response to Space
Shuttle launch/landing requirements.
i. Coordination of direct Contractor and user participation in flight
operations (a.k.a. real-time prelaunch, ascent, on-orbit, descent, and
landing operations) associated with each SPACEHAB-Mir mission. This
support will be provided from the MCC, specifically from the POCC and
CSR areas.
j. Deintegration and disposition of payloads at completion of each
SPACEHAB-Mir mission.
k. Physical security at the appropriate level to protect proprietary data,
hardware, or processes during all SPACEHAB-Mir Mission support phases.
C-14
<PAGE> 21
l. Coordination with the NASAMir program regarding interaction or exchange
of payloads to/from the SPACEHAB module to/from the Mir Space Station
SPACEHAB-Mir missions.
m. A communication system for Personal Computers (PC's) located at
NASA-JSC, the Contractor's offices in Virginia, Florida and Texas, and
McDonnell Douglas Aerospace in Huntsville, Alabama. The communication
system shall provide electronic mail (e-mail) connectivity and file
transfer capability. Word processing and spreadsheet software shall be
compatible with NASA-JSC standards.
2.3 SPACEHAB MODULE RESOURCES
SPACEHAB module resources availability shall be a principal consideration in
Contractor determination of feasible flight manifests and in the development of
associated payload integration and crew training milestones. The following
shall be considered as a minimum SPACEHAB module resource available to the
Government on any SPACEHAB-Mir mission.
a. Total available SPACEHAB module internal volume. Except as constrained
by (1) Space Shuttle ascent performance. (2) center-of-gravity
considerations and (3) the structural limitations of installed storage
accommodations, and to the extent that (1) approved Phase 1 manifest
requirements exist and (2) the utilization of storage capacity is
operationally practical the Contractor shall utilize all available
module storage volume.
b. Total available external payload mounting area on module roof
c. Total allowable SPACEHAB payload weight. For each SPACEHAB-Mir mission
the projected maximum payload net weight at launch is as follows:
Mission Payload Net Weight
Shuttle/Mir Mission-03 3132 lbs (1420 kg)
Shuttle/Mir Mission-04 4421 lbs (2005 kg)
Shuttle/Mir Mission-05 4224 lbs (1916 kg)
Shuttle/Mir Mission-06 4647 lbs (2107 kg)
Shuttle/Mir Mission-07 5250 lbs (2381 kg)
Shuttle/Mir Mission-08 5250 lbs (2381 kg)
Shuttle/Mir Mission-09 3360 lbs (1524 kg)
Manifesting of more or less payload net weight on any mission, up to the
limits of Orbiter ascent performance, or center-of-gravity limits or
module structural capability is not precluded. Active payloads
manifested on SPACEHAB-Mir missions-07, -08 and -09 may constitute up to
25% of the total net ascent payload weight accommodated in the SPACEHAB
during those missions. Active payloads (those requiring extensive ICD
and safety packages, module electrical power, crew training, procedures
and flight support), either bulkhead or rack mounted, are not precluded
on any mission.
d. Available AC/DC power
e. Vacuum venting capability
f. Video, command and data management capability
g. Payload late access/early removal capability
h. Interface hardware including but not limited to: lockers, racks, soft
pack stowage including foam, adapter plates and other hardware to
accommodate payloads to be flown in the SPACEHAB module and possibly
transferred to or from Mir
i. Active payload cooling capability
<PAGE> 22
j. Payload-required ancillary equipment provided in the SPACEHAB inventory
k. Crew training services
l. Crew time
m. Crew work area
n. Single or double modules
Only a single module is available for S/MM-03. A single module shall be
manifested on S/MM-09 for compatibility with the Alpha Magnetic
Spectrometer (AMS) payload also manifested on that mission. All other
SPACEHAB-Mir missions shall utilize double modules.
Note: The Phase 1 Requirements Document is the driver for the aggregate of the
above resources.
3.0 SPACEHAB MODULE PERFORMANCE REQUIREMENTS
3.1 MODULE SIZE/VOLUME/WEIGHT/INTERNAL CONFIGURATION
Size, weight, and volume accommodations of the SPACEHAB module in all text that
follows shall be such that they are contained within the Orbiter cargo bay and
connect to the Orbiter Docking System (ODS) or the Spacelab Tunnel Adapter hatch
opening through an extended tunnel. The structural/mechanical interface
between the SPACEHAB module and the Orbiter shall consist of four longeron
trunnions and one keel trunnion that shall attach to SSP-provided longeron and
keel attach fittings. Trunnion locations for the single and double modules
shall be as follows:
Single Module Double Module
------------- -------------
Forward trunnions (2) X(o) = 1013.9 in. x(o) = 1013.9 in.
Aft trunnions (2) X(o) = 1108.3 in. x(o) = 1218.5 in.
Keel trunnion (1) X(o) = 1108.3 in. x(o) = 1108.3 in.
In addition, the Contractor shall provide for the SPACEHAB-Mir missions a 65.3
in. long tunnel segment which shall interface with the Orbiter with two
longeron trunnions and a keel trunnion, all located at Orbiter X(o) = 954.9 in.
The SPACEHAB-provided tunnel segment shall be integrated by KSC with the
cylindrical section of the Spacelab Transfer Tunnel and the Spacelab Mir Tunnel
Extension to form a complete tunnel assembly connecting the ODS or the Tunnel
Adapter (in the OV-103 configuration) to the SPACEHAB module.
The complete structural/mechanical interface between the module, the tunnel and
Orbiters OV-103, OV-104 and OV-105 shall be specified in the A-level
Orbiter-to-SPACEHAB Interface Control Document (ICD) for the SPACEHAB-Mir
missions ICD-A-21095. It is planned to use OV-104 for S/MM-03 through S/MM-07,
OV-105 for S/MM-08 and OV-103 for S/MM-09.
NASA plans to utilize the full volumetric and mass capacities of the SPACEHAB
modules though consideration must be given to launch and landing mass
constraints required to enable the Space Shuttle to manage Orbiter
center-of-gravity conditions that will be effected by the planned location of
the module in the Payload Bay.
The overall design of the single and double modules must minimize reduction in
launch performance and complexity of physical integration into the Orbiter
while maximizing manifesting flexibility and must be easily accessible from the
Orbiter middeck when on orbit. Interior volume and external mounting area shall
accommodate projected Government-sponsored payload manifests contained in
mission-specific Phase 1 Requirements Documents.
C-16
<PAGE> 23
The SPACEHAB modules shall provide accommodations for standard Orbiter middeck
lockers, and equipment designed to utilize standard middeck locker interfaces.
The use of soft stowage bags, some of which should be sized to fit within
standard lockers, is encouraged as a weight-saving measure.
The Contractor shall develop and provide a light weight cargo net or bag
arrangement that may be stowed for ascent and deployed for descent. This shall
be used to meet a requirement on S/MM-07, -08 and -09 for an efficient method
to return excess low density packing material from the Mir Station.
Accommodations for SPACEHAB racks shall be provided. Rack mounting capabilities
shall accommodate 19-inch wide payload mounting panels with standard interfaces.
These racks and their supporting module subsystems shall accommodate those
payloads in Figure 1 identified as requiring rack installation, whether new
SPACEHAB installations or payloads originally designed for Spacelab racks.
SPACEHAB racks, both single and double, shall be capable of being outfitted as
Soft Stowage(TM) racks, capable of accommodating either Contractor-provided Soft
Stowage(TM) bags or NASA-provided Collapsible Transfer Bags.
The Contractor shall provide the hardware, facilities and services necessary
to support integration of the European Space Agency-provided Biorack facility
in a SPACEHAB rack for three missions to Mir. The Contractor shall also build
and provide ground translation and display computer software to allow ground
computers at NASA-JSC to provide the same Biorack screen displays as seen in
the SPACEHAB module on-orbit.
The Contractor shall provide an adaptive structure (J-Frame) and Ground Support
Equipment (GSE) to allow installation of an International Standard Payload Rack
(ISPR) in the SPACEHAB module. Additionally, the Contractor shall provide the
hardware and services necessary to support integration of an ISPR and Active
Rack Isolation System (ARIS) experiment in the Contractor-provided J-Frame for
one SPACEHAB-Mir mission.
The Contractor shall provide the hardware, software and services required to
effect a data interface for the Real-time Radiation Monitor Device (RRMD) Risk
Mitigation Experiment with the SPACEHAB Ground Teleoperations System (GTS) and
provide ground cabling necessary for RRMD/GTS operations at the SPACEHAB Payload
Processing Facility (SPPF) and at the NASA-JSC POCC.
The Contractor shall provide the hardware and services necessary to integrate a
Russian-provided ORLAN-DMA Space Suit into a SPACEHAB double module for return
from the Mir Station on one SPACEHAB-Mir mission. In addition, the Contractor
shall provide to NASA-JSC flight-like training items (straps and hardware) to
support crew training in a JSC-supplied mockup.
The Contractor shall provide the hardware, facilities and services necessary to
integrate a Russian-provided Elektron oxygen generating unit into the SPACEHAB
double module for ascent or descent to/from the Mir Station on any SPACEHAB-Mir
double module mission after S/MM-05.
The Contractor shall provide the hardware, including the lease of
Contractor-owned support hardware, facilities and services necessary to
integrate the Volatile Removal Assembly (VRA) into a SPACEHAB rack for
S/MM-06. To replace VRA on its originally scheduled mission, S/MM-06, the
Contractor shall provide additional Soft Stowage(TM) hardware to allow
reconfiguration of the SPACEHAB rack volume reserved for VRA to a stowage
configuration.
Standard Interface Adapter (SIA) panel units and drawers shall be accommodated.
Other payload accommodations required include Z-axis viewing through one or
more MSFC-provided view ports, vacuum vent capability, power, cooling, video
and data management, late access/early retrieval of payloads from the modules,
and ascent and descent power.
For payloads requiring transfer, SPACEHAB translation aids and stowage systems
shall be designed such that they do not preclude transfer of these payloads
through the existing Space Shuttle airlock and ??DS hatch openings. Provisions
must be included to perform scheduled and unscheduled inflight maintenance of
the SPACEHAB modules.
C-17
<PAGE> 24
3.2 HUMAN FACTORS
The crew work area of each SPACEHAB module shall be designed to accommodate a
minimum of 2 crewmembers working simultaneously and continuously, and three to
four crewmembers working for shorter periods. A "shirtsleeve environment" must
be maintained and foot restraints, handholds, air diffusers, and lighting
provided in appropriate locations. A work station may be required to support
specific payload requirements.
3.3 ENVIRONMENTAL CONTROL
The SPACEHAB modules shall preserve a crew habitable "shirtsleeve environment"
when integrated with the Orbiter. Air temperature, surface temperatures, carbon
dioxide concentration, air circulation, moisture condensation, contamination and
humidity control shall be maintained to assure a safe environment for a minimum
of two crew members working simultaneously and continuously, or for three to
four crewmembers working for shorter periods. An environment comparable to that
in the Orbiter middeck must be maintained.
Because of limitations placed on the capability of the SPACEHAB Atmospheric
Revitalization System (ARS) by the flow rate and dew point of the
conditioned/unconditioned air mixture ducted from the Orbiter, use of crew
exercise devices such as the treadmill or cycle ergometer in the SPACEHAB module
is not contemplated on SPACEHAB-Mir missions.
3.3.1 Heat Rejection
The SPACEHAB modules, when integrated into the Orbiter, shall be designed to
reject heat from payloads using module air flow or utilizing a forced air and/or
liquid cooling system. Methods for ease of connection/disconnection, flow
variation and isolation of the cooling flow shall be provided. The total
SPACEHAB module and payload complement may require up to 6.0 kilowatts of active
cooling on orbit and 1,500 watts during prelaunch, launch, landing, and
post-landing. Heat rejection shall be compatible with environmental control
requirements. See (Shuttle Orbiter/Cargo Standard Interfaces) CD-2-19001 for
details. The Contractor shall perform mission unique thermal analyses as a part
of the Spacehab-Mir Mission Performance Analyses (DRL Line Item No. 4) which
verify that the SPACEHAB module and its manifested payloads can operate during
routine mission situations at a cabin temperature that is comfortable to the
crew.
3.3.2 External Thermal Requirements
The SPACEHAB module shall be designed to have the same attitude-hold capability
as the Orbiter which is defined in Section 61.1.2 of ICD-2-19001 and shall not
require any on-orbit thermal attitude constraints in a fully operative mode. In
the event of degraded performance of SPACEHAB subsystems, the Contractor shall
not rely on Orbiter attitude control to prevent module external water line
freezing.
The SPACEHAB module water loop design shall permit satisfactory thermal system
performance at the "maintenance level" with the Orbiter radiators in bypass mode
and the module water pump in operation (as they would be during radiator cold
soak prior to nominal deorbit).
3.3.3 Vacuum Venting
3.3.3.1 Module Venting
For safety, a capability for venting of the module internal atmosphere shall be
provided and shall be capable of activation by the crew from the safe haven of
the Orbiter.
3.3.3.2 Payload Venting
C-18
<PAGE> 25
The SPACEHAB module shall provide a capability to allow multiple payloads to be
exposed to a controlled vacuum environment. This will be an on-orbit operation
performed by the crew and shall not jeopardize the safety of the flight crew or
harm other payloads in the SPACEHAB module.
3.4 POWER
The SPACEHAB module, when integrated into the Orbiter, shall be designed to
accommodate two (2) Orbiter power feeds to supply up to 3.5 kilowatts of
continuous and 6 kilowatts peak DC power during on-orbit (payload bay doors
open) operations. Accommodations on both power feeds for switching of power to
the module shall be provided by the contractor. In addition, the SPACEHAB
module shall accommodate 690 volt-amps (VA) continuous and 1,000 VA peak AC
power during on-orbit (payload bay doors open) operations from auxiliary feeds.
For ascent and descent, the module shall accommodate 1.3 kilowatts of DC power
only. See ICD-2-19001 for details. The module shall provide these standard
services to numerous interface locations as needed to meet the payload
requirements. All payload locations shall be accessible to these accommodations
and easily integrated. In addition to standard electrical services for
payloads, beginning with S/MM-04 the Contractor shall provide a 28 VDC, 25
ampere electrical power outlet and cable to connect the Enhanced Orbiter
Refrigerator/Freezer (EORF) to existing module electrical power circuits. In
addition, for S/MM-06 the Contractor shall provide an electrical power cable
for connection of the Inflatable Thermal Control Unit (ITCU) to existing module
electrical power circuits.
The power system design for safety critical systems and subsystems shall comply
with the applicable redundant electrical power and failure requirements of the
Safety Policy and Requirements for Payloads using the Space Transportation
System NSTS 1700.7B. Specifically, a Main Power Kill command shall require the
ability to switch safety-critical module AC powered equipment (fans and water
circulation pumps) from SPACEHAB to Orbiter AC power from a location outside
the module.
3.5 COMMAND AND DATA MANAGEMENT SYSTEMS
The module shall be compatible with the assisting Orbiter command and telemetry
systems and utilize those services currently provided as standard payload
accommodations. The SPACEHAB module shall provide a Command and Data Management
system that is capable of performing, as a minimum, the following functions:
3.5.1 Orbiter-To-Module Services
3.5.1.1 Monitoring and Control
Provide the capability within the Orbiter crew and compartment for sufficient
monitoring and control of the module subsystems to perform time critical and
safety critical operations without requiring access to the module itself.
Provide capability to monitor module status during all phases of operation
where the module is active.
This requires that module systems be adequately instrumented to allow
monitoring not only of obvious safety critical functions such as fire
suppression and cabin pressure, but also of functions which control routine
module/payload resource interfaces and services (such as power to payload
lockers and racks).
SPACEHAB module systems health parameters monitorable from the Orbiter aft
flight deck must also be monitorable from within the module. Use of the Payload
and General Support Computer (PGSC) should be considered.
3.5.1.2 Telemetry
Provide the capability for the module systems and payload data to be included
in the Orbiter downlink telemetry and if required, to the Orbiter Multifunction
Cathode ray tube Display System (MCDS). Uplink command capability to SPACEHAB
module systems and payloads shall be provided.
C-19
<PAGE> 26
3.5.1.3 Flight Crew Communications
Provide capability to interface with the Orbiter Air-to-Ground and crew
compartment intercom systems.
3.5.1.4 Closed Circuit Television (CCTV)
Provide capability to interface with the Orbiter CCTV system for remote
television capability in the module. Services shall also be provided by the
module to utilize Orbiter cameras systems (camcorders).
When dictated by payload requirements, video switching capability shall be
provided in the SPACEHAB module to allow selection of one output to the Orbiter
CCTV system from multiple payload or module cameras.
Provide capability to mount Orbiter CCTV's external to the module and located
on the aft bulkhead to view the payload bay area behind the module.
3.5.1.5 Caution and Warning (C&W)
The module shall be compatible with the Orbiter C&W system for safety critical
status.
3.5.2 MODULE-TO-PAYLOAD SERVICES
3.5.2.1 Monitoring and Control
Provide control and monitoring capability for payloads through the use of
standard orbiter laptop computers, e.g., the PGSC, in order to standardize the
crew-to-payloads interface.
3.5.2.2 Telemetry
To the extent that payload data is required in the JSC POCC, provide services
for inclusion of payload data to the Orbiter downlink telemetry systems. Uplink
commanding between the JSC POCC and the SPACEHAB payloads shall be provided
when required.
For S/MM-06 the Contractor shall provide routing and installation of a
customer-provided data cable from the EORF to a SPACEHAB module Experiment
Connector Panel, configuration of the module downlink telemetry system to
accept EORF data, pre-flight testing of the system with EORF data, and
real-time throughput of the received telemetry data from the SPACEHAB POCC to
the JSC Science Monitoring Area during the mission.
For S/MM-06, -08 and -09 the Contractor shall provide the capability to process
simultaneously in the POCC both real time downlinked telemetry data from the
Realtime Radiation Monitoring Device (RRMD) experiment, and RRMD experiment
data recorded on board during Orbiter Loss Of Signal (LOS) periods for delayed
playback.
3.5.2.3 Onboard Recording
Provides services for onboard recording of payload data using the Orbiter
Payload Recorder.
3.5.2.4 Timing Signals
Provide the appropriate timing signal services for payload use. This shall
include, but not be limited to Orbiter Mission Elapsed Time (MET) and Greenwich
Mean Time (GMT) signals.
3.6 ELECTROMAGNETIC INTERFERENCE/COMPATIBILITY (EMI/EMC)
<PAGE> 27
The SPACEHAB cargo element shall be compatible with the EMI/EMC requirements
as specified in IGD-19001. Additional requirements are as follows:
a. The SPACEHAB module shall be capable of tolerating Ku-Band external
radiation with no operational constraints on the Space Shuttle and without
sustaining performance loss or degradation.
b. The Contractor shall be responsible for insuring that the payload complement
meets all specifications for EMI/EMC between the payload and the Orbiter,
the payload and the module and between payloads within the module and shall
so certify. This certification is required by NASA as part of the overall
SPACEHAB certification for flight.
4.7 EXTRAVEHICULAR ACTIVITY (EVA) COMPATIBILITY
The SPACEHAB shall be compatible with Space Shuttle EVA design requirements.
The module, with any external payloads installed, shall not preclude EVA access
to the Orbiter payload bay door contingency work areas with the payload bay
doors closed.
3.8 DIRECT VIEWING
Direct viewing from the Orbiter aft flight deck toward the aft bulkhead is
required for payload bay door operations. The SPACEHAB module, with any
external payloads installed, shall not block this viewing.
4.0 CONTRACTOR INTEGRATION AND OPERATIONS RESPONSIBILITIES
4.1 SPACE SHUTTLE INTEGRATION SUPPORT
The Contractor shall provide the products and services to support NASA in the
integration of the SPACEHAB cargo element into the Space Shuttle as defined in
the standard Space Shuttle payload integration process (reference NSTS 07700
Volume XIV, Space Shuttle System Payload Accommodations). The Contractor shall
provide generic and specific mission documentation. Items which are not
considered standard Space Shuttle Program (SSP) integration services will be
identified to the COTR.
4.2 FLIGHT DESIGN SUPPORT
The Contractor shall support NASA in the production of the integrated flight
design for each SPACEHAB-Mir mission by providing cargo element data such as
physical configuration, mass and volume, electrical power and energy
requirements, orbiter attitude requirements and crew time utilization.
Additionally, it is a requirement that the SPACEHAB module not impose any
operational constraints or special requirements (e.g., launch window
constraints, orbital attitude or inclination constraints, etc.) on the SSP
flight design process.
4.3 MISSION TRAINING SUPPORT
The Contractor shall be responsible for planning and implementing an integrated
training program for flight crew and ground personnel for each mission. The
training program for each mission shall include participation by the Orbiter
flight crew, the SPACEHAB Flight Control Team, JSC-Mission Operations
Directorate personnel and payload developers and shall be documented by the
Contractor in a Mission Training Plan (MTP).
4.3.1 SPACEHAB SYSTEMS TRAINING SUPPORT
The SSP is responsible for the training of flight crews and ground support
personnel in the operation and maintenance of SPACEHAB module to Space Shuttle
systems interfaces. As such, the SSP shall develop detailed crew training
schedules and plans for use by the Contractor in each SPACEHAB-Mir mission's
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training cycle. The SSP is also responsible for Shuttle Mission Simulator (SMS)
training of the integrated Space Shuttle and SPACEHAB module system.
Module systems training shall be performed by the Contractor at JSC where
practical; otherwise, at other locations convenient to NASA/Contractor mission
preparation activities and schedules. As a minimum, the Contractor shall be
required to provide the following module systems training functions:
a. Systems familiarization briefings in the classroom covering nominal and
off-nominal systems operations and maintenance.
b. Hands-on instruction in SPACEHAB module systems operations and maintenance
using desktop computer trainers, module mockups, and one or more flight modules
as appropriate to the training task. This hands-on training shall nominally
precede SMS training, and shall include module systems up to Orbiter
interfaces, as well as moduleOrbiter systems interactions.
c. Participation in SMS joint integrated mission training sessions.
d. Instructional training documentation and material as appropriate to the
training task.
e. Coordination of integrated training plans and schedules with NASA to avoid
schedule conflicts and assure proper lesson content.
f. Updates to module data and contractor-provided training hardware as
required to maintain a mission-specific training environment for each of the
training aids/mockups defined in paragraph 4.3.3 below.
4.3.2 SPACEHAB PAYLOAD TRAINING
The contractor shall be responsible for the training of flight crews and ground
support personnel in the operation and maintenance of SPACEHAB payloads and
Contractor-provided mission support equipment.
This training may be performed directly by the Contractor or may be performed
by individual payload sponsors, but in either case, the overall responsibility
for effective SPACEHAB payload/logistics training rests with the Contractor.
Traning shall be located/consolidated so as to limit requirements for NASA
personnel travel. As a minimum, this traning shall include:
a. Development and provision of training curricula and reference material
which have been previously verified by the Contractor as adequate to accomplish
the objectives of the training lesson.
b. Provision of payload operations flight procedures and timelines which have
been previously verified by the Contractor as technically correct and
operationally achievable.
c. Provision of integrated payload operations training in a simulator or
flight unit as appropriate. The training environment shall include high
fidelity internal SPACEHAB cabin, payload, and support equipment configurations
which are representative of a flight environment. Additionally, there shall be
adequate availability of ground resources such as power, cooling, and data
management to conduct integrated payload operations timelines.
d. Assistance to the NASA training team in the development of training plans
for joint integrated simulations.
4.3.3 TRAINING AIDS AND MOCKUPS
The Contractor shall obtain and provide training aids for use in SPACEHAB
operator training and flight procedures development. The Contractor shall
provide for routine maintenance of the aids as required to
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keep them at an acceptable level of fidelity. A brief description of each
required training aid follows; more specific information is provided in the
SPACEHAB-Mir Payload Integration Plan (PIP), NSTS 21320.
a. For use with the NASA SMS located at NASA-JSC existing high fidelity,
flight-like SPACEHAB Display and Control (D&C) panels which interface
with the Orbiter subsystem (e.g., environmental control and life
support, data management, fire suppression, and electrical power).
Additionally, the Contractor shall provide the necessary data to develop
SMS visual models and functional math models of the SPACEHAB structure,
systems, and subsystems.
b. For use in the NASA Weightless Environment Test Facility (WETF) located
at NASA-JSC the existing structural mockup of the SPACEHAB single module
compatible with WETF requirements to support EVA crew training.
c. The existing high fidelity trainer for SPACEHAB module systems,
subsystems, payloads, and support equipment, located at the SPACEHAB
Payload Processing Facility (SPPF), Cape Canaveral, Florida. This
trainer can be used for procedure validation and simultaneous training
of two mission specialists for integrated payload operations. It must be
capable of being configured as either a single or double module, and of
interfacing with payload high fidelity mockups, engineering development
units, or actual flight hardware to ensure the highest quality
integrated orbital procedures training in module systems and payload
operations. The mockup shall have internal dimensions and clearances
which are consistent with those within the flight single and double
modules.
d. The existing SPACEHAB module vertical access trainer, located at the
SPPF in Cape Canaveral, Florida. This trainer is used for developing and
validating procedures and hardware for late installation and removal of
payload hardware into or from the module while in the vertical on the
launch pad.
e. The contractor shall provide configuration control and maintenance of
the existing SPACEHAB Intelligent Familiarization Trainer (SHIFT)
located at NASA-JSC. The Contractor shall provide workstations as
required for software maintenance. The Government will provide computer
workstations as required for NASA ground and flight personnel training.
The institutional safety requirements that are required for this contract are
restricted to the training and mockup provisions of subparagraphs b. (hardware)
and the (software) above. Because these mockups and trainers fall within the
province of JMI 8830.1. "Facilities Baseline Documentation," system safety
requirements are applicable. To insure compliance with pertinent NASA policies
and requirements and Federal, State, and local regulations for safety and
health, environmental protection, and emergency preparedness, the Contractor
will develop and implement a safety and health program in accordance with a
Safety and Health Plan (DRL Line Item No. 11) as approved by NASA.
4.4 SPACEHAB MODULE SYSTEMS. CONFIGURATION AND STOWAGE DATA
The Contractor shall provide the Government with a SPACEHAB Systems Data Book
(DRL Line Item No. 3) that is an accurate and comprehensive source of module
systems operational data. This data shall be used by the Government for
development of procedures, operational limits, flight rules, preflight mission
design, and as flight reference material.
On a mission specific basis, the Contractor shall provide the Government with
integrated SPACEHAB-Mir Mission Performance Analyses (DRL Line Item No. 4)
which contain the technical data necessary to provide the Contractor and the
Government with an understanding of the mission-unique performance parameters
of the SPACEHAB systems, the module payloads, and the integrated SPACEHAB.
The Contractor shall provide the Government SPACEHAB-Mir cargo element
Configuration Management Plan (DRL Line Item No. 5). This document shall provide
the Government with insight into the Contractor's hardware/software
configuration management system for the SPACEHAB and its payload interfaces.
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The Contractor shall provide to the Government a SPACEHAB/Mir cargo element
Stowage Management Plan (DRL Line Item No. 18) This plan shall document the
process by which the payloads are stowed, and may be identified and located
during all phases of flight. Payload removal/replacement and return of items
carried to orbit on Russian spacecraft shall also be documented in this DRL.
4.5 DESIGN REVIEWS AND PROGRAM STATUSING
The Contractor is responsible for conducting reviews of the SPACEHAB module
during the design and development process. During this process the Government
shall be provided an opportunity to submit Review Item Discrepancies pertaining
to the Space Shuttle/SPACEHAB module interfaces and operations. Government
participation in the review process shall not unilaterally impose new
requirements on the design. NASA and other agency participation in these
reviews does not constitute approval of the design nor certificating as to its
reliability.
The Contractor shall submit monthly Progress Reports (DRL Line Item No. 1) to
the Government for its use in maintaining visibility of contract performance,
current program status, technical accomplishment compared with planned
activities and areas of concern.
Beginning in April 1995, quarterly SPACEHAB cargo element Mission Status
Reviews will be held at McDonnell Douglas Aerospace, Huntsville, Alabama and
will be chaired by the COTR. Presentations from the Contractor will be made,
and formal, in-scope action items will be assigned.
4.6 PAYLOAD DOCUMENTATION
The Government shall identify to the Contractor beginning at approximately L-17
months the prioritized list of candidate payloads, including points of contact
for payload information, to be accommodated by SPACEHAB for each SPACEHAB-Mir
mission. This includes the payload complement to be carried to Mir and that to
be returned.
After the mission complement is baselined by the Government, the Contractor is
responsible for the definition, development and configuration control of all
integration documentation for the payloads.
4.7 PAYLOAD INTEGRATION
For each SPACEHAB-Mir mission, the contractor shall perform an assessment of
candidate payloads for their technical and operational compatibility when
integrated into a total mission complement. For the initial baselining, and
foe each proposed update to the Phase 1 Requirements Document (P1RD), the
Contractor shall perform an informal assessment of candidate payloads for their
technical and operational compatibility when integrated into a total mission
complement. The results of this assessment shall be informally transmitted to
the Government's Phase 1 Requirements Integrated Product Team as part of the
Phase 1 manifesting process. For each approved update to the baseline, P1RD the
Contractor shall develop and submit to the Government a Mission Requirements
and Allocations Document (MRAD) (DRL Line Item No. 14) detailing how the
approved requirements will be accommodated in SPACEHAB.
Once the manifest is approved by the Government, the Contractor is responsible
for negotiating with the Government (the NASA-Mir Phase 1 Program Office and
the SSP) a mission specific PIP Addendum, and associated PIP annexes defining
the mission unique responsibilities, mission support requirements, and overall
mission guidelines/constraints to meet the needs of the SPACEHAB cargo element.
To assist in Government and Contractor assessments of the mission feasibility
of SPACEHAB-Mir payloads, the Contractor shall provide to the Government a
generic Payload Interface Definition Document (IDD) (DRL Line Item No. 15) which
shall define all payload to SPACEHAB module interfaces.
In order for the Government to maintain cognizance over the individual
experiments, the Contractor shall provide NASA copies of all payload specific
ICD's (DRL Line Item No. 6). The payload specific ICD's shall be organized such
that they address, item by item, the interface requirements set for in the IDD.
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4.8 SPACE SHUTTLE PROGRAM FLIGHT DOCUMENTATION
The Contractor is responsible for supporting the SSP in the generation of the
flight procedures, malfunction data, support documentation, and the integrated
mission timeline. As a minimum, the Contractor is responsible for the following:
a. SPACEHAB module systems operations flight documentation shall be jointly
developed by NASA and the Contractor. An operations procedures plan for the
SPACEHAB cargo element which defines the roles and responsibilities for all
operations documentation products must be developed by the Contractor. This
must address all the development, configuration control, verification, and
Flight Data File production aspects including schedules for these products,
and be approved by NASA.
b. All integrated SPACEHAB module systems Shuttle flight procedures, mission
timelines and SPACEHAB module system flight procedures and associated
changes shall be the responsibility of NASA/JSC with appropriate inputs from
the Contractor through the standard integration documentation process as
defined in paragraph 4.9. All joint ground procedures will be jointly
defined and approved and shall be documented in the appropriate PIP annexes.
c. All SPACEHAB payload flight procedures and timelines shall be the
responsibility of the Contractor to develop and produce as defined in the
operations procedures plan. All procedures shall meet the Space Shuttle crew
procedures preparation and production standards. The NASA-generated flight
plan shall be the overall controlling document and the Contractor-generated
payload timelines must operate within the crew time allotted by the flight
plan.
d. Results of the Contractor's control process, procedure validation process
and documentation production process must be reviewed by the NASA/JSC Crew
Procedures Control Board periodically to ensure timely product delivery and
coordination with other mission documentation.
e. All Contractor-generated documentation is required to be a part of the
flight specific Flight Operations Review (FOR) package and is subject to all
changes approved by the FOR Board without additional approval by the
Contractor control process.
4.9 INTEGRATION DOCUMENTATION
The Contractor is responsible for performing those functions necessary to ensure
the integration of the SPACEHAB module into the Space Shuttle.
The Space Shuttle standard integration documentation shall be utilized to
integrate the module into the Space Shuttle. The primary documentation to ensure
proper integration of the SPACEHAB into the SSP shall consist of the
SPACEHAB-Mircore PIP, NSTS 21320 with the PIP Addendum, annexes, and appropriate
ICD's for each mission.
The core PIP and its mission-specific Addenda shall be jointly approved by NASA
and the Contractor. PIP changes, PIP annexes, unique ICD (or ICD addendum), and
associated change shall be jointly approved by NASA and the Contractor.
Configuration control shall be initiated upon signature approval.
The NASA-JSC shall maintain configuration control of the cited documentation in
accordance with Mission Integration Control Board Configuration Management
Procedures, NSTS 18468, with the exception of the Launch Site Support Plan
Annex, which will be maintained by the NASA-KSC in accordance with instructions
for KSC Crew Procedures Configuration Control Board Operations, KSC K-CM-04.2.
4.10 MISSION SUPPORT DATA
The Contractor is responsible for developing an electronic Mission Support Data
(MSD) repository (DRL Line Item No. 8) containing SPACEHAB module systems data
and data for payloads that are candidates for
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SPACEHAB cargo element accommodations. The MSD repository shall be maintained by
the Contractor with current module systems and payload data. The data shall
reflect such information as key project status, technical and systems data,
operational requirements and constraints, systems operating specifications and
limits, and background on payload objectives. This data is to be used by the
Contractor and NASA in supporting the identification of specific payload
complements and to aid in the integration documentation work required for
SPACEHAB-Mir mission manifesting.
This information shall reside in an electronic format accessible by personal
computers within the NASA Mir Phase 1 Program Office and the SPACEHAB Project
Group (SPG) at NASA-JSC, and at the Contractor's facilities. The MSD repository
shall be protected against unauthorized access, Access, word processing and
spreadsheet software shall be compatible with NASA-JSC standards and available
commercially.
4.11 SPACEHAB INTEGRATION FACILITY
The Contractor is responsible for payload integration into the SPACEHAB module
in a Contractor-provided facility and shall provide the personnel and GSE to
accomplish these operations.
4.12 SPACEHAB FLIGHT SUPPORT TEAM
The Contractor shall support mission operations for the SPACEHAB cargo element
by providing a ground support team that is trained and operates in conjunction
with the Space Shuttle and Mir Flight Control Teams. The SPACEHAB support team
shall participate in Joint Integrated Simulations (JIS's) from the JSC. POCC
and the CSR, conducted by NASA, to perform integrated mission training. The
Contract shall support real time operations with this same team as defined in
Paragraph 6.2 of the Statement of Work.
5.0 INTERFACE REQUIREMENTS
5.1 SPACEHAB-TO-ORBITER INTERFACE REQUIREMENTS
5.1.1 INTERFACE
The interface between the SPACEHAB module and the Orbiter shall be developed by
the SSP utilizing the standard Shuttle/payload interface documentation. The
module must be compatible with the Orbiter mechanical, structural, materials,
electrical, avionics, and environmental interfaces as defined in the
appropriate SSP documents. These documents are included in NSTS 07700, Volume
XIV, Space Shuttle System Payload Accommodations and supporting documents. The
interface documentation between the SPACEHAB module and the Orbiter shall be
developed by the SSP utilizing the Shuttle Orbiter/Cargo Standard Interfaces,
ICD-2-19001.
5.1.2 EVA REQUIREMENTS
The module shall be compatible with existing EVA capabilities and NASA Mir
Program EVA planning. An existing Spacelab tunnel adapter may be used to
provide an egress/ingress location for EVA.
5.2 SPACEHAB-TO-PAYLOAD INTERFACE REQUIREMENTS
5.2.1 INTERFACE
The Contractor shall integrate the payloads into the SPACEHAB module. The
interface documentation between the SPACEHAB system and the payloads shall be
developed by the Contractor utilizing Contractor-prepared payload interface
documentation. This documentation shall be compatible with the comparable SSP
documentation systems and formats.
5.2.2 PAYLOAD REQUIREMENTS
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The individual payloads shall be integrated into a compatible complement of
payloads strategically located in the SPACEHAB module to facilitate optimum use
of SPACEHAB resources and Orbiter services.
6.0 INTEGRATED OPERATIONS
6.1 INTEGRATED OPERATIONS PLANNING
In addition to identifying the SPACEHAB cargo element operational requirements
and constraints in the appropriate SSP integration documentation, the
Contractor shall develop, maintain and utilize a Mission Integration and
Operation Management Plan (DRL Line Item No. 8).
This plan shall define the various operations processes, schedules, and
interface requirements used by the contractor to manifest payloads for a
mission, prepare the SPACEHAB module and its payload complement for flight,
support orbital operations, manage the associated data, and return payloads to
their sponsors post flight. This plan shall be approved by the COTR and shall
describe the following principal functions as a minimum:
a. User manifesting and integration
b. NASA-Mir Program support
c. Configuration control and process
d. Payload flight operations documentation preparation
e. Stowage Management and on-orbit logistics support
f. SPACEHAB systems and payload operations training
g. Ground facility utilization
h. Data and software management
i. Simulations and flight operations support
6.2 FLIGHT OPERATIONS SUPPORT
The Contractor shall provide to the Government flight-ready Payload Flight
Operations Procedures and Timelines (DRL Line Item No. 9). These documents
shall be delivered according to established NASA preflight milestones and shall
be used to support crew training, integrated simulations and flight operations.
Contractor and user support personnel, during integrated mission simulations
and during flight, shall be located at the JSC and shall utilize the JSC POCC
and CSR facilities.
The JSC POCC shall be utilized for the SPACEHAB cargo element operations
support personnel and the CSR for program management support. For JSC POCC
capabilities, reference the POCC Capabilities Document, NSTS 21063.
6.3 GROUND OPERATIONS
Because of the potential for unforeseeable delays in the launch schedule of the
Space Shuttle Program changes to the SPACEHAB-Mir launch dates given in Section
2.1 are likely to occur and are recognized as being beyond the Contractors'
ability to control. The effort required by the Contractor to adjust his ground
operations schedules and processes to those in support of the SSP ground
processing schedules shall be considered within the scope of this contract
unless the total contract period of performance is lengthened, or unless SSP
schedules do not allow the Contractor at least 45 working days in the SPPF for
module processing between missions.
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6.3.1 LAUNCH SITE INTEGRATION
All Space Shuttle payload integration operations and testing at the launch and
landing site are scheduled and controlled by NASA-KSC Payload Operations
personnel.
6.3.2 CONTRACTOR KSC SUPPORT
The Contractor shall support the Orbiter interface verification and launch
processing with personnel and GSE. Procedure inputs shall be provided in
accordance with KSC procedure development schedules and reviews and meetings as
stated in the KSC Launch Site Support Plan.
6.3.3 DELIVERY TO KSC
The Contractor shall transport the SPACEHAB module from the SPPF to KSC and
deliver it to the O&C Facility for vertical installation into the Orbiter in
accordance with the schedule defined in Figure 2.
6.3.4 KSC FACILITY COMPATIBILITY
The SPACEHAB flight hardware and any Contractor-supplied GSE to be used at KSC
in support of SPACEHAB module vertical installation integration and launch
processing shall be compatible with existing KSC facility resources and
capabilities. Any needed change shall be defined and funded by the Contractor.
6.3.5 FIT CHECKS
The Contractor shall support fit checks as required by the PIP at KSC for any
Spacehab Inc.-provided flight item that has been approved by the SSP for middeck
installation into the Orbiter. New or modified equipment to be installed by the
crew for the first time on orbit must be fit checked pre-flight (e.g. at the
Crew Equipment Interface Test).
6.3.6 LATE ACCESS
The Contractor shall negotiate with the SSP through the PIP for resolution of
any flight hardware issues regarding late pad (after payload bay door closure)
access that could potentially impact the Orbiter closeout timeline for launch.
The Contractor is responsible for installation of late access payloads into the
SPACEHAB module. Late access to the module at KSC for payload installation at
approximately L-2 weeks using the Module Vertical Access Kit (MVAK)s is planned
for all SPACEHAB-Mir missions. A second late MVAK loading opportunity at
approximately L-40 hours shall not be precluded on any mission.
6.3.7 LAUNCH SUPPORT
The Contractor shall coordinate his operations with, and participate in, KSC
launch operation (e.g., real-time pre-launch and landing operations) associated
with each mission. Launch and landing operations support will be provided from
the Launch Control Center (LCC) at KSC or other locations as appropriate.
6.3.8 SCRUB TURNAROUND
The Contractor shall obtain prior approval from the SSP through the PIP for any
module payload that would require access/replacement prior to the next launch
attempt.
6.3.9 END-OF-MISSION ACCESS
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The Contractor shall negotiate with the SSP through the PIP for early module
access at the end of a mission. In concern with KSC landing and recovery
personnel and if necessary to meet payload complement requirements, the
Contractor shall provide the support necessary including GSE, for the
accomplishment of approved payload early removal from the module at the primary
and first alternate landing sites. At the primary landing site the Contractor
shall be ready to support a landing at any time after launch. At the first
alternate landing site the Contractor shall be ready to support a landing at
any time after Docking + 48 hours, if Shuttle-Mir docking is successful. If not
successfully accomplished, support will be on a best effort basis. If necessary
to provide timely support at the first alternate landing site, the Contractor
shall preposition GSE there to support payload removal on all SPACEHAB-Mir
missions. The Contractor shall have in place a rapid response plan to move the
necessary personnel and equipment to other alternate or abort landing sites if
so directed.
6.3.10 RETURN TO THE SPPF
The Contractor shall be responsible for providing return transportation of the
module from KSC to the SPPF after post-mission deintegration. Under normal
conditions (a Space Shuttle landing at KSC after a nominal duration mission)
the module is expected to be returned to the Contractor for transportation to
the SPPF 10 days after landing. To allow completion of contract activity within
R+45 days after S/MM-KSC will be requested to expedite module turnover to the
Contractor. Under normal conditions this can be accomplished within 8 days
after landing.
7.0 SAFETY
The Contractor is responsible for assuring that the SPACEHAB cargo element and
the GSE (including interfaces and operations) are safe. The SPACEHAB module and
GSE design and operations must comply with the safety requirements defined
herein. Payload compliance with the safety requirements is assessed by the SSP
through four phases each of flight and ground safety reviews and safety
certification. Successful completion of these safety reviews and of the safety
certifications are prerequisites for approval by the SSP for ground processing
and flight.
The Contractor shall provide flight and ground safety data for the integrated
payload element to the SSP as specified by NSTS 13830, Implementation Procedure
for NSTS Payloads System Safety Requirements. Separate flight and ground Safety
Analyses and Hazard Analyses reports (DRL Line Item No. 7) will be provided as
phased submittals to the JSC and KSC Payload Safety Review panels (PSRP).
Russian payload elements carried to/from Mir shall be independently certified
to be safe for flight and for ground processing at KSC or any alternate landing
facility. The Contractor will coordinate the inclusion of required safety data
for these pre-certified Russian payload elements into the integrated flight and
ground safety data packages, and will document any integrated hazards created
by the combination of the Russian payload elements with the SPACEHAB module and
subsystems. All analyses and supporting data required to address these
integrated hazards will be provided to the Contractor for their use.
At the time of delivery of the payload hardware, the Contractor shall obtain a
Payload Configuration Certification from each payload provider which shall
certify that the hardware provided is identical in configuration and
construction to the hardware described at the Phase III Flight and Ground Safety
reviews.
7.1 SPACEHAB MODULE DESIGN AND FLIGHT OPERATIONS REQUIREMENTS
The SPACEHAB module design (including interfaces and operations) shall comply
with the requirements of NSTS 1700.7B, Safety Policy and Requirements for
Payloads Using the Space Transportation System. Interpretations or
clarification of these requirements are contained in NSTS 18798, Interpretations
of NSTS Payload Safety Requirements. The module shall meet these requirements
at the launch/landing sites and during flight operations and ferry flights.
7.2 GSE DESIGN AND GROUND OPERATIONS REQUIREMENTS
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The SPACEHAB module and GSE design (including interfaces and operations) shall
comply with the requirements of NSTS 1700.7B and KHB 1700.7, Space
Transportation System Payload Ground Safety Handbook, for launch site
processing and post-landing operations including abort, contingency, and
emergency landings.
7.3 SAFETY AND REVIEW REQUIREMENTS
The implementation of safety requirements of NSTS 1700.7B and KHB 1700.7 shall
be accomplished by NSTS 13830, Implementation Procedure for Space Shuttle
Payloads System Safety Requirements.
The safety documentation shall be provided by the Contractor to the appropriate
NASA organization for each safety review. The safety review meeting shall be
scheduled approximately 45 days after the receipt of a data submittal
acceptable to the Payload Safety Review Panel (PSRP).
8.0 MAJOR MILESTONES
In order to assure compatibility of the SPACEHAB cargo element with the
NASA-Mir program, the milestones presented in Figure 2 must be met.
9.0 APPLICABLE DOCUMENTS FOR THE NASA-MIR PROGRAM
In performing its obligations under this contract, the Contractor shall use the
current issue of the following documents:
1. NSTS 07700, Volume XIV: Space Shuttle System Payload Accommodations,
with Appendices 1-10
2. NSTS 07700, Volume XIV, Attachment 1, ICD 2-19001: Shuttle
Orbiter/Cargo Standard Interfaces
3. NSTS 1700.7B: Safety Policy and Requirements for Payloads using the
Space Transportation System (STS)
4. NSTS 13830: Implementation Procedure for STS Payloads System Safety
Requirements
5. NSTS 21063-POC-CAP: POCC Capabilities Document
6. KHB 1700.7: Space Shuttle Payload Ground Safety Handbook
7. NSTS 18468: Mission Integration Control Board Configuration Management
Procedures
8. KSC K-CM-04.2: Instructions for KSC Crew Procedures Configuration
Control Board Operations
9. NSTS 18798: Interpretations of NSTS Payload Safety Requirements
10. NSTS 21320. Shuttle/Mir Mission (S/MM)(SPACEHAB-Mir) Payload
Integration Plan with Addenda
11. ICD-A-21095. Shuttle Orbiter/SPACEHAB Cargo Element Interface Control
Document
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SPACEHAB--MIR
GENERIC PAYLOAD INTEGRATION SCHEDULE
PAGE 1
[DESCRIPTION OF ALL DUE DATES FOR LAUNCH INTEGRATION REVIEWS AND SAFETY REVIEWS]
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SPACEHAB--MIR
GENERIC PAYLOAD INTEGRATION SCHEDULE
PAGE 2
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
I. MINUS MONTHS
- -----------------------------------------------------------------------------------------------------------------------------------
*JOINT +P/L #SSP 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
PIP STATUS
FLIGHT SPECIFIC #DRAFT (17.0)
*B/L (14.0)
- -----------------------------------------------------------------------------------------------------------------------------------
EXPERIMENT
EXPERIMENT MANIFEST +PREL (18.0)
+B/L (15.0)
- -----------------------------------------------------------------------------------------------------------------------------------
ICD STATUS
FLIGHT SPECIFIC #DRAFT (15.0)
*B/L (13.0)
- -----------------------------------------------------------------------------------------------------------------------------------
PIP ANNEXES
ANNEX-1 PAYLOAD DATA +SUB (14.0)
#DRAFT (12.0)
+SIGN (11.0)
*B/L (10.0)
+UPDATE (3.0)
ANNEX-2 FLT PLANNING/PT 1 +SUB (14.0)
#DRAFT (11.0)
+SIGN (6.0)
*B/L (5.0)
ANNEX-2 FLT PLANNING/PT 2 +SUB (13.0)
#DRAFT (8.0)
+SIGN (7.0)
*B/L (6.0)
</TABLE>
C-32
<PAGE> 39
SPACEHAB--MIR
GENERIC PAYLOAD INTEGRATION SCHEDULE
PAGE 3
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
I. MINUS MONTHS
- -----------------------------------------------------------------------------------------------------------------------------------
*JOINT +P/L #SSP 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ANNEX-3 FOSA +SUB (13.0)
#DRAFT (10.0)
+SIGN (8.0)
*B/L (6.0)
ANNEX-4 COMMAND & DATA +SUB (14.0)
#DRAFT (12.0)
+SIGN (11.0)
*FINAL B/L (11.0)
+FNL UPD (6.7)
ANNEX-5 POCC +SUB (14.0)
#DRAFT (12.0)
+SIGN (11.0)
*B/L (10.5)
ANNEX-6 CREW COMP +SUB (13.0)
#DRAFT (11.5)
+SIGN (10.0)
*B/L (9.0)
ANNEX-8 LAUNCH SITE SUP +SUB TO PRELIM (24.0)
#PRELIM PUB (19.0)
+SUB TO B/L (17.5)
#B/L COMP (14.0)
*SIGN (12.0)
</TABLE>
C-33
<PAGE> 40
SPACEHAB--MIR
GENERIC PAYLOAD INTEGRATION SCHEDULE
PAGE 4
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
I. MINUS MONTHS
- -----------------------------------------------------------------------------------------------------------------------------------
*JOINT +P/L #SSP 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ANNEX-9 VERIFICATION +SUB (13.0)
#DRAFT (12.0)
*B/L (7.0)
- -----------------------------------------------------------------------------------------------------------------------------------
FLIGHT OPERATIONS
FLIGHT PLAN #PREL (10.0) #FINAL (1.0)
#BASIC (4.0)
PYLD CREW ACTIVITY PLAN +PREL (11.4) +FINAL (1.0)
+BASIC (4.0)
PYLD FLIGHT DATA FILE +(4.0)
FINAL (1.0) +
- -----------------------------------------------------------------------------------------------------------------------------------
ENGINEERING
LOADS ANALYSIS #STS MODEL (20.0)
+DES RPT (14.5)
+MODEL (10.0)
LOADS VERIFICATION #RPT (5.5)
*VAR (4.0)
THERMAL ANALYSIS +DES RPT (15.5)
+MODEL (15.5)
THERMAL VERIFICATION #RPT (6.2)
EMC TEST DATA +SUB (15.0) +FINAL (4.0)
THERMAL BLANKET DATA +SUB (5.0)
ACOUSTIC TEST DATA +SUB (4.0)
FINAL (2.0) +
- -----------------------------------------------------------------------------------------------------------------------------------
HARDWARE DELIVERY
CUSTOMER HARDWARE ??????????
??? MILLSTONE ????????? ??? ???? (3.5) +
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
C-34
<PAGE> 41
SPACEHAB--MIR
GENERIC PAYLOAD INTEGRATION SCHEDULE
PAGE 5
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
I. MINUS MONTHS
- -----------------------------------------------------------------------------------------------------------------------------------
*JOINT +P/L #SSP 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
TRAINING
SPACEHAB SYSTEMS TRNG
FAMILIARIZATION +START (12.0)
+COMP (10.0)
SHIFT TRAINING +START (10.0)
+COMP (4.0)
EXPERIMENT TRAINING
FAMILIARIZATION +START (12.0)
+COMP (7.5)
HANDS-ON +START (10.0)
+COMP (4.0)
TIMELINE TRAINING +START (7.5)
COMP (2.0) +
READY FOR INTEGRATED
SMS TRAINING *(4.0)
INTEGRATED MISSION
TRAINING *(4.0)
- -----------------------------------------------------------------------------------------------------------------------------------
OPTIONAL SERVICES
</TABLE>
C-35
<PAGE> 1
EXHIBIT 11
SPACEHAB, INCORPORATED AND SUBSIDIARY
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
YEAR NINE MONTHS YEAR
ENDED ENDED ENDED
SEPTEMBER 30, JUNE 30, JUNE 30,
----------------- ------------------ -----------------
1995 1996 1997
----------------- ------------------ -----------------
<S> <C> <C> <C>
Net Income and Adjusted Earnings:
Net income applicable to Common
shareholders used for primary
computations $15,808,856 $29,828,743 $13,831,625
----------------- ------------------ -----------------
Fully diluted adjustments:
Savings in convertible note payable interest
expense, net of tax 80,163 59,017 -
----------------- ------------------ -----------------
Adjusted net income applicable to
common shareholders assuming full dilution $15,889,019 $29,887,760 $13,831,625
================= ================== =================
Average number of shares of common stock and
common stock equivalents used for primary
computation 6,671,346 9,303,487 11,133,243
----------------- ------------------ -----------------
Fully diluted adjustments:
Weighted average shares and share
Equivalents outstanding:
Stock options assumed exercised at ending
fair market value - - 26,314
Assumed conversion of convertible debt 75,000 47,671 27,329
----------------- ------------------ -----------------
Total number of shares assumed to be
Outstanding assuming full dilution 6,746,346 9,378,487 11,186,886
----------------- ------------------ -----------------
Earnings Common Per Share:
Income per common and common equivalent
share:
Income Before Extraordinary Item $2.37 $3.21 $0.95
Extraordinary Item - - 0.29
----------------- ------------------ -----------------
Primary $2.37 $3.21 $1.24
================= ================== =================
Income before extraordinary item $2.36 $3.19 $0.95
Extraordinary item - - 0.29
----------------- ------------------ -----------------
Fully Diluted: $2.36 $3.19 $1.24
================= ================== =================
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARY OF THE REGISTRANT
<TABLE>
<CAPTION>
JURISDICTION OF
NAME OF SUBSIDIARY INCORPORATION BUSINESS NAME
- ------------------ ------------- -------------
<S> <C> <C>
Astrotech Space Operations, Inc. Delaware Astrotech
</TABLE>
<PAGE> 1
EXHIBIT 23
ACCOUNTANTS' CONSENT
The Board of Directors
SPACEHAB, Incorporated:
We consent to incorporation by reference in the registration statements (Nos.
333-3634, 333-3636, and 333-3638) on Forms S-8 of SPACEHAB, Incorporated of our
report dated August 15, 1997, relating to the consolidated balance sheets of
SPACEHAB, Incorporated and subsidiary as of June 30, 1996 and 1997, and the
related consolidated statements of income, stockholder's equity (deficit), and
cash flows for the year ended September 30, 1995, the nine month period ended
June 30, 1996 and the year ended June 30, 1997, which report appears in the
June 30, 1997, annual report on Form 10-K of SPACEHAB, Incorporated.
KPMG PEAT MARWICK LLP
McLean, VA
September 11, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 12,886,731
<SECURITIES> 0
<RECEIVABLES> 5,176,255
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 18,262,233
<PP&E> 129,077,493
<DEPRECIATION> 38,115,620
<TOTAL-ASSETS> 114,450,376
<CURRENT-LIABILITIES> 12,807,274
<BONDS> 0
0
0
<COMMON> 81,057,164
<OTHER-SE> 16,299
<TOTAL-LIABILITY-AND-EQUITY> 114,450,376
<SALES> 56,600,766
<TOTAL-REVENUES> 56,600,766
<CGS> 34,120,024
<TOTAL-COSTS> 34,120,024
<OTHER-EXPENSES> 9,818,662
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 955,015
<INCOME-PRETAX> 13,528,537
<INCOME-TAX> 2,970,943
<INCOME-CONTINUING> 10,557,594
<DISCONTINUED> 0
<EXTRAORDINARY> 3,274,031
<CHANGES> 0
<NET-INCOME> 13,831,625
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24
</TABLE>
