<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED...............MARCH 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
Commission file number 0-27206
SPACEHAB, Incorporated
300 D Street, SW
Suite 814
Washington, D.C. 20024
(202) 488-3500
Incorporated in the State of Washington I.R.S. Employer
Identification
No. 91-1273737
The number of shares of Common Stock outstanding as of the close of business
on April 30, 2000:
Class Number of Shares Outstanding
- ----- ----------------------------
Common Stock 11,315,581
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ -----
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SPACEHAB, INCORPORATED AND SUBSIDIARIES
MARCH 31, 2000 QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART 1 FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2000 and
June 30, 1999 3
Condensed Consolidated Statements of Operations for the three and
nine months ended March 31, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows for the
nine months ended March 31, 2000 and 1999 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
PART II - OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders 17
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
</TABLE>
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PART 1: FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SPACEHAB, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(In thousands, except share data) MARCH 31,
2000 JUNE 30,
(UNAUDITED) 1999
-------------- ------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 16,777 $ 21,346
Accounts receivable, net 22,330 17,471
Prepaid expenses and other current assets 2,279 1,146
----------- ----------
Total current assets 41,386 39,963
Property, plant, and equipment, net of
accumulated depreciation and amortization
of $54,419 and $49,247, respectively 150,047 132,184
Goodwill, net of accumulated amortization of $2,161 and $1,339, respectively 24,076 25,498
Investment in joint venture, net 2,000 1,400
Other assets, net 6,616 5,301
----------- ----------
Total assets $ 224,125 $ 204,346
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued expenses $ 17,376 $ 13,181
Loans payable, current portion 7,959 3,459
Accrued subcontracting services 3,041 6,787
Deferred revenue 5,717 4,162
----------- ----------
Total current liabilities 34,093 27,589
Loans payable under credit agreement, net of current portion 333 667
Loans payable, net of current portion 5,281 7,033
Convertible notes payable to shareholder 7,860 7,860
Accrued contract costs 883 940
Deferred revenue 6,870 -
Deferred income taxes 3,012 2,842
Convertible subordinated notes payable 63,250 63,250
----------- ----------
Total liabilities 121,582 110,181
Commitments and contingencies
Stockholders' equity:
Preferred Stock, convertible (authorized 2,500,000 shares, issued and outstanding
1,333,334 and 0 shares, respectively, liquidation preference of $12,000) 11,892 -
Common stock, no par value, authorized 30,000,000 shares,
issued and outstanding 11,315,581 and 11,229,646, respectively 81,936 81,585
Additional paid-in capital 16 16
Retained earnings 8,699 12,564
----------- ----------
Total stockholders' equity 102,543 94,165
----------- ----------
Total liabilities and stockholders' equity $ 224,125 $ 204,346
=========== ==========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
3
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SPACEHAB, INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(In thousands, except share data) THREE MONTHS NINE MONTHS
ENDED MARCH 31, ENDED MARCH 31,
------------------------------ ----------------------------
2000 1999 2000 1999
------------------------------ ----------------------------
<S> <C> <C> <C> <C>
Revenue $ 25,057 $ 26,693 $ 77,046 $ 78,600
Costs of revenue 19,265 21,956 65,870 64,659
------------ ------------- ------------ ------------
Gross profit 5,792 4,737 11,176 13,941
------------ ------------- ------------ ------------
Operating expenses:
Marketing, general and administrative 5,178 3,691 12,811 10,781
Research and development 503 708 1,580 2,678
------------ ------------- ------------ ------------
Total operating expenses 5,681 4,399 14,391 13,459
------------ ------------- ------------ ------------
Income (loss) from operations 111 338 (3,215) 482
Interest expense, net of capitalized interest 907 1,252 2,803 3,910
Interest and other income, net (161) (422) (464) (1,859)
Other expense - 46 - 596
------------ ------------- ------------ ------------
Net loss before income taxes (635) (538) (5,554) (2,165)
Income tax expense (benefit) - 3 (1,689) (186)
------------ ------------- ------------ ------------
Net loss $ (635) $ (541) $ (3,865) $ (1,979)
============ ============= ============ ============
Basic earnings per share:
Net loss per share - basic $ (0.06) $ (0.05) $ (0.34) $ (0.18)
============ ============= ============ ============
Shares used in computing
Loss per share - basic 11,287,026 11,189,242 11,258,661 11,178,004
============ ============= ============ ============
Diluted loss per share:
Net loss per share - diluted $ (0.06) $ (0.05) $ (0.34) $ (0.18)
============ ============= ============ ============
Shares used in computing
Loss per share - assuming dilution 11,287,026 11,189,242 11,258,661 11,178,004
============ ============= ============ ============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
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SPACEHAB, INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In thousands) NINE MONTHS ENDED MARCH 31,
2000 1999
--------------- ----------------
<S> <C> <C>
Cash flows provided by (used for) operating activities:
Net loss $ (3,865) $ (1,979)
Adjustments to reconcile net loss to
net cash provided by (used for) operating activities:
Depreciation and amortization 6,391 5,661
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (4,859) 792
Increase in prepaid expenses and other current assets (1,133) (1,204)
Increase in other assets (1,711) (204)
Increase (decrease) in deferred flight revenue 8,425 (4,044)
Increase (decrease) in accounts payable and
accrued expenses 1,715 (2,374)
Decrease in advanced billings - (1,567)
Decrease in accrued subcontracting services (3,746) (6,032)
Increase in deferred taxes 67 -
--------------- ----------------
Net cash provided by (used for) operating activities 1,284 (10,951)
--------------- ----------------
Cash flows used for investing activities:
Payments for flight assets under construction (14,156) (12,893)
Purchase of Johnson Engineering, net of cash acquired 600 (25,344)
Payments for building under construction (3,659) (1,020)
Purchases of property, equipment and leasehold improvements (2,696) (2,104)
Investment in joint venture (600) (800)
--------------- ----------------
Net cash used for investing activities (20,511) (42,161)
--------------- ----------------
Cash flows provided by (used for) financing activities:
Payment of loan payable (1,752) (2,118)
Payment of loan payable under credit agreement (333) (500)
Proceeds from line of credit 4,500 -
Proceeds from issuance of common stock, net of expenses 351 164
Payments of note payable to shareholder - (4,035)
Proceeds from issuance of preferred stock, net of expenses 11,892 -
--------------- ----------------
Net cash provided by (used for) financing activities 14,658 (6,489)
--------------- ----------------
Net increase (decrease) in cash and cash equivalents (4,569) (59,601)
Cash and cash equivalents at beginning of period 21,346 92,327
--------------- ----------------
Cash and cash equivalents at end of period $ 16,777 $ 32,726
=============== ================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
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SPACEHAB, INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments, consisting of only normal
recurring accruals, necessary for a fair presentation of the consolidated
financial position of SPACEHAB, Incorporated and subsidiaries ("SPACEHAB" or the
"Company") as of March 31, 2000, and the results of their operations for the
three and nine month periods ended March 31, 2000 and 1999 and their cash flows
for the nine months ended March 31, 2000 and 1999. However, the condensed
consolidated financial statements are unaudited, and do not include all related
footnote disclosures.
The consolidated results of operations for the three and nine months ended March
31, 2000 are not necessarily indicative of the results that may be expected for
the full year. The Company's results of operations have fluctuated significantly
from quarter to quarter. The interim unaudited condensed consolidated financial
statements should be read in conjunction with the Company's audited consolidated
financial statements appearing in the Company's Form 10-K for the year ended
June 30, 1999.
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2. EARNINGS PER SHARE
The following are reconciliations of the numerators and denominators of the
basic and diluted earnings per share computations for the three and nine month
periods ended March 31, 2000 and 1999:
(in thousands except per share data)
<TABLE>
<CAPTION>
Three months ended Three months ended
March 31, 2000 March 31, 1999
-------------------------------------------- ---------------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
-------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Income available to
common stockholders $ (635) 11,287,026 $ (0.06) $ (541) 11,189,242 $ (0.05)
Effect of dilutive securities:
Convertible notes payable - - - - - -
Options and warrants - - - - - -
-------------------------------------------- ---------------------------------------------
Diluted EPS:
Income available to
common stockholders $ (635) 11,287,026 $ (0.06) $ (541) 11,189,242 $ (0.05)
</TABLE>
<TABLE>
<CAPTION>
Nine months ended Nine months ended
March 31, 2000 March 31, 1999
-------------------------------------------- ----------------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
-------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Income available to
common stockholders $ (3,865) 11,258,661 $ (0.34) $ (1,979) 11,178,004 $ (0.18)
Effect of dilutive securities:
Convertible notes payable - - - - - -
Options and warrants - - - - - -
-------------------------------------------- ----------------------------------------------
Diluted EPS:
Income available to
common stockholders $ (3,865) 11,258,661 $ (0.34) $ (1,979) 11,178,004 $ (0.18)
</TABLE>
Convertible notes payable outstanding as of March 31, 2000, convertible into
4,642,202 shares of common stock at $13.625 per share and due October 2007, were
not included in the computation of diluted EPS for the three and nine months
ended March 31, 2000 and 1999 as the inclusion of the converted notes would be
anti-dilutive for these periods.
Options to purchase 114,000 shares of common stock at prices ranging from $4.125
to $4.875 per share were outstanding for the three and nine months ended March
31, 2000, but were not included in the computation of diluted EPS as the
inclusion of these options would be anti-dilutive. These options expire October
14, 2006.
Options and warrants to purchase 3,227,149 shares of common stock, at prices
ranging from $5.125 to $24.00 per share, were outstanding for the three and nine
months ended March 31, 2000 but were not included in the computation of diluted
EPS because the options' exercise prices were greater than the average market
price of the common shares during the three and nine months ended March 31,
2000. The options expire between June 24, 2000 and December 20, 2008.
Options and warrants to purchase 1,468,508 shares of common stock for the three
month period ended March 31, 1999, at prices ranging from $8.875 to $24.00 per
share, were outstanding as of March 31, 1999 but were not
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<PAGE> 8
included in the computation of diluted EPS because the options' exercise prices
were greater than the average market price of the common shares during the three
months ended March 31, 1999. These options expire between June 24, 1999 and
August 3, 2007.
Options and warrants to purchase 1,352,943 shares of common stock for the nine
months ended March 31, 1999, at prices ranging from $9.875 to $24.00 per share,
were outstanding but were not included in the computation of diluted EPS because
the options' exercise prices were greater than the average market price of the
common shares during the nine months ended March 31, 1999. These options expire
between June 24, 1999 and August 3, 2007.
3. REVENUE RECOGNITION
Under the REALMS (Research and Logistics Mission Support) contract and for new
contract awards for which the capability to successfully complete the contract
can be reasonably assured and the costs at completion can be reliably estimated
at contract inception, revenue is recognized under the percentage-of-completion
method. This percentage-of-completion method allows the Company to report
revenue based on costs incurred on a per mission basis over the period of that
mission. The percentage-of-completion method results in the recognition of
revenue over the period of contract performance. Revenue provided by the
Astrotech payload processing facilities is recognized ratably over the occupancy
period of the satellites at the Astrotech facilities. Revenue provided by
Johnson Engineering ("JE") is primarily based on cost-plus award fee contracts,
whereby revenue is recognized to the extent of costs incurred plus estimates of
award fee revenues using the percentage-of-completion method. Award fees, which
provide earnings based on the Company's contract performance as determined by
the National Aeronautics and Space Administration ("NASA") evaluations, are
recorded when the amounts can be reasonably estimated, or are awarded. Changes
in estimated costs to complete and estimated amounts recognized as award fees
are recognized in the period they become known.
4. STATEMENTS OF CASH FLOWS - SUPPLEMENTAL INFORMATION
(a) Cash paid for interest costs was $4.1 million and $4.0 million for the nine
month periods ended March 31, 2000 and 1999, respectively. The Company
capitalized interest of approximately $2.6 million and $1.8 million during the
nine months ended March 31, 2000 and 1999, respectively.
(b) The Company paid no income taxes during the nine months ended March 31,
2000, and paid $0.4 million for income taxes during the nine months ended March
31, 1999.
(c) During the nine months ended March 31, 2000, the Company received a $0.6
million refund of purchase price paid for the JE acquisition in 1998. In
accordance with the acquisition agreement, the refund resulted from JE's failure
to attain certain minimum award fee scores on its Flight Crew Systems
Development ("FCSD") contract for the period from April 1, 1999 to September 30,
1999. The refund has been recorded as a reduction of goodwill from the JE
acquisition.
5. CREDIT FACILITIES
On June 16, 1997, the Company entered into a $10.0 million 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,
and are collateralized by certain assets of the Company. The term of the
agreement is through May 2000. As of March 31, 2000, the Company had drawn $4.5
million against the line of credit.
On July 14, 1997, the Company's wholly owned subsidiary, Astrotech, entered into
a five-year credit facility with a financial institution for loans of up to
$15.0 million. 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. As of March 31, 2000, the Company had drawn
$15.0 million against this loan. As of March 31, 2000, the outstanding balance
on this loan was $8.4 million.
In October 1997, the Company completed a private placement offering for $63.3
million of aggregate principal of its 8% Convertible Subordinated Notes due
2007. Interest is payable semi-annually. The notes are convertible into the
common stock of the Company at a rate of $13.625 per share. This offering
provided the Company with net proceeds
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of approximately $59.9 million to be used for capital expenditures associated
with the development and construction of space related assets, the purchase of
JE and for other general corporate purposes.
6. PREFERRED STOCK
On August 2, 1999, DaimlerChrysler Aerospace AG ("Dasa"), a shareholder,
purchased an additional $12.0 million equity stake in SPACEHAB representing
1,333,334 shares of Series B Senior Convertible Preferred Stock. Under the
agreement, Dasa purchased all of SPACEHAB's 975,000 authorized and unissued
shares of preferred stock. At the annual stockholders meeting held on October
14, 1999, the shareholders approved the proposal to increase the number of
authorized shares of preferred stock to 2,500,000, in order to complete the
transaction with Dasa, allowing them to purchase the additional 358,334
preferred shares. The preferred stock purchase increased Dasa's investment
interest in SPACEHAB to approximately 11.5 percent. The Series B Senior
Convertible Preferred Stock is: convertible at the holders' option on the basis
of one share of preferred stock for one share of common stock, entitled to vote
on an "as converted" basis the equivalent number of shares of common stock and
has preference in liquidation, dissolution or winding up of $9.00 per preferred
share. No dividends are payable on the convertible preferred shares.
7. SEGMENT INFORMATION
The Company adopted SFAS No. 131, "Disclosure about Segments of an Enterprise
and Related Information", as of June 30, 1999. SFAS No. 131 establishes annual
and interim reporting standards for an enterprise's operating segments.
Based on its organization, the Company operates in three business segments;
Astrotech, JE and SPACEHAB. Astrotech, acquired in February 1997, provides
payload processing facilities to serve the satellite manufacturing and launch
services industry. Astrotech currently provides launch site preparation of
flight ready satellites to major U.S. space launch companies and satellite
manufacturers. Johnson Engineering, acquired in July 1998, is primarily engaged
in providing engineering services and products to the Federal Government and
NASA, primarily under the FCSD contract. SPACEHAB was founded to commercially
develop space habitat modules to operate in the cargo bay of the Space Shuttles.
SPACEHAB provides access to the modules and integration and operations support
services for both NASA and commercial customers.
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The Company's chief operating decision maker utilizes both revenue and income
before taxes, including allocated interest based on the investment in the
segment, in assessing performance and making overall operating decisions and
resource allocations. As such, other income/expense items including income taxes
and corporate overhead have not been allocated to the various segments. Other
income and expense items are included in SPACEHAB. Pretax income (loss) in the
following table includes an allocation of interest expense.
<TABLE>
<CAPTION>
(in thousands)
THREE MONTHS ENDED MARCH 31, 2000
- ---------------------------------
Pre-Tax Net Depreciation
Income Fixed And
Revenue (loss) Assets Amortization
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SPACEHAB $9,006 $ (394) $123,519 $1,527
Astrotech 2,495 (197) 23,603 249
Johnson Engineering 13,556 (44) 2,925 407
-------------------------------------------------------------------------
$25,057 $ (635) $150,047 $2,183
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
- ---------------------------------
Pre-Tax Net Depreciation
Income Fixed And
Revenue (loss) Assets Amortization
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SPACEHAB $8,985 $ (449) $103,391 $1,357
Astrotech 2,180 (656) 20,336 315
Johnson Engineering 15,528 567 915 296
-------------------------------------------------------------------------
$26,693 $ (538) $124,642 $1,968
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED MARCH 31, 2000
- --------------------------------
Pre-Tax Net Depreciation
Income Fixed And
Revenue (loss) Assets Amortization
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SPACEHAB $25,414 $ (4,313) $123,519 $4,514
Astrotech 6,570 (1,168) 23,603 747
Johnson Engineering 45,062 (73) 2,925 1,130
-------------------------------------------------------------------------
$77,046 $ (5,554) $150,047 $6,391
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED MARCH 31, 1999
- --------------------------------
Pre-Tax Net Depreciation
Income Fixed And
Revenue (loss) Assets Amortization
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SPACEHAB $29,761 $ (1,193) $103,391 $3,845
Astrotech 6,982 (653) 20,336 953
Johnson Engineering 41,857 (319) 915 863
-------------------------------------------------------------------------
$78,600 $ (2,165) $124,642 $5,661
</TABLE>
8. JOINT VENTURE
During the nine months ended March 31, 2000, the Company invested an additional
$0.6 million in a joint venture with Guigne Inc. ("Guigne"), in accordance with
the Company's initial funding commitment to the joint venture. The joint venture
is constructing the Space-DRUMS(TM) facility to be used aboard the International
Space Station. In accordance with the joint venture agreement, the Company
informed Guigne in December 1999 of its intention to convert its investment in
the joint venture to up to 19% common stock of Guigne, subject to completion of
a fair
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market value appraisal of Guigne. The Company requested representation on
Guigne's board of directors but will have no operational or financial influence
on Guigne. Based on preliminary estimates of fair market value of Guigne, the
Company recognized a $0.2 million valuation allowance against its investment in
Guigne during the second quarter of fiscal year 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
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) the "General" and
"Liquidity and Capital Resources" sections of this Item 2. Such statements are
subject to certain risks and uncertainties, including those discussed herein,
which could cause actual results to differ materially from those projected in
such statements.
SPACEHAB was incorporated in 1984 to commercially develop space habitat
modules to operate in the cargo bay of the Space Shuttles. SPACEHAB currently
provides space within and on the modules for both NASA and commercial customers.
Astrotech was established in 1984 to provide payload processing facilities to
serve the satellite manufacturing and launch services industry. Astrotech
currently provides launch site preparation of flight-ready satellites to major
U.S. space launch companies and satellite manufacturers. Johnson Engineering was
incorporated in the state of Colorado in 1973 and is primarily engaged in
providing engineering services and products to the federal government.
The Company currently operates under two significant contracts with NASA:
(1) the REALMS Contract, a $122.0 million contract for two research missions
aboard the Space Shuttle, three logistics missions to resupply the International
Space Station ("ISS") and one Integrated Cargo Carrier ("ICC") mission; and (2)
the Flight Crew Systems Development Contract ("FCSD Contract") currently a
$331.5 million multitask cost-plus-award and incentive-fee contract, that
commenced in May 1993 and will conclude in April 2001. The value of the NASA
portion of the REALMS contract is $94.9 million for four firm module missions
and one ICC mission. The commercial value is currently $27.1 million with an
additional $5.1 million non-REALMS commercial value. The Company has the
potential to increase the total REALMS Contract value by an additional $11.7
million through module usage sales to commercial customers for micro gravity
space research such as the European Space Agency ("ESA"), the National Space
Development Agency of Japan ("NASDA") and the Canadian Space Agency ("CSA"). The
first mission under the REALMS Contract, STS-95 which carried Senator John Glenn
back into space, was completed in October 1998. The second mission, STS-96, a
re-supply mission to the ISS, was completed in May, 1999. The three remaining
flights are currently scheduled for launch in May 2000, September 2000, and
March 2001. NASA has executed a modification to the REALMS contract whereby
pricing is defined for six mission configurations. NASA has exercised the
pricing for a logistics double module for $21.6 million on STS-106, which is
scheduled to fly in September 2000. Under the FCSD Contract, Johnson Engineering
provides a variety of critical crew training, support and manufacturing
functions on a cost-plus-award fee and incentive-fee basis.
In November 1999, Astrotech received a six-year contract extension from
Lockheed Martin for Atlas V payload processing (with options through 2010) and a
ten-year contract from Boeing for Delta IV payload processing. The minimum
revenue commitments under these contracts combined is $82 million over 10 years.
REVENUE
SPACEHAB generates revenue by: (i) providing lockers and/or volume within
and on the SPACEHAB Modules; (ii) integration and operations support services
provided to scientists and researchers responsible for the experiments; and/or
(iii) from NASA or international agencies to carry logistics supplies for module
missions aboard the Shuttle system. For the REALMS contract and for contract
awards for which the capability to successfully complete the contract can be
demonstrated at contract inception, revenue recognition is being reported under
the percentage-of-completion method based on costs incurred on a per mission
basis over the period of the mission. The percentage-of-completion method
results in the recognition of revenue over the period of contract performance.
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Astrotech revenue is derived from various multi-year 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.
In addition, Astrotech generates additional revenue from an exclusive multi-year
agreement to process all Sea Launch program payloads at the Boeing facility in
Long Beach, California.
Johnson Engineering generates revenue primarily from its multi-year
cost-plus-award and incentive-fee contract with NASA. Johnson Engineering's
flight crew support services include operations, training, and fabrication of
mockups at NASA's Neutral Buoyancy Laboratory ("NBL"), and at NASA's Space
Vehicle Mockup Facility ("SVMF"), where astronauts train for both Space Shuttle
and International Space Station ("ISS") missions. Johnson Engineering also
designs and fabricates flight hardware including flight crew equipment and crew
quarters habitability outfitting and provides stowage integration services.
Johnson is also responsible for configuration management of the ISS. Revenue
provided by Johnson Engineering is recognized to the extent of costs incurred
plus award fee using the percentage of completion method, measured on costs
incurred. Award fees, which provide earnings based on contract performance as
determined by periodic NASA evaluations, are recorded when the amounts can be
reasonably estimated or are awarded.
COSTS OF REVENUE
Costs of revenue for SPACEHAB missions include integration and operations
expenses associated with the performance of three types of efforts: (i)
sustaining engineering in support of all missions under a contract, (ii) mission
specific support and (iii) other costs of revenue including depreciation
expense, related insurance, costs associated with both the Astrotech and
SPACEHAB payload processing facilities and Johnson Engineering direct and
indirect costs under the FCSD Contract.
RESULTS OF OPERATIONS
For the three months ended March 31, 2000 as compared to the three months ended
March 31, 1999.
Revenue. Revenue decreased by 6% to approximately $25.1 million as compared
to $26.7 million for the three months ended March 31, 2000 and 1999,
respectively. Revenue of $9.0 million was recognized from the REALMS Contract
with NASA and with related commercial customers, $2.5 million from Astrotech,
and $13.6 million from Johnson Engineering under the FCSD Contract. In contrast,
for the quarter ended March 31, 1999, revenue of $9.0 million was recognized
from the REALMS Contract with NASA, $2.2 million was generated by Astrotech, and
revenue of $15.5 million was recognized by Johnson Engineering under the FCSD
Contract. The decrease in revenue at Johnson Engineering in the current quarter
is due primarily to the deletion of certain flight hardware tasks from the FCSD
contract, and is partially offset by the increase in training services at the
NBL.
Costs of Revenue. Costs of revenue for the quarter ended March 31, 2000
decreased by 12% to $19.3 million, as compared to $22.0 million for the prior
year's quarter. For the quarter ended March 31, 2000, integration and operations
costs for the REALMS and related commercial customer contracts were $4.3
million, $1.3 million for Astrotech payload processing, $12.3 million for
Johnson Engineering under the FCSD Contract, and $1.3 million of depreciation
expense. For the three months ended March 1999, the components of costs of
revenue include integration and operations costs of $5.6 million under the
REALMS and related commercial customer contracts, $1.2 million for Astrotech
payload processing, $13.9 million for Johnson Engineering under the FCSD
Contract, and depreciation expense of $1.3 million. The decrease in costs for
SPACEHAB during the current quarter is due primarily to the mix of missions
flown as compared to the comparable quarter last year, and due to the sharing of
certain costs during the current quarter for STS-101 and STS-106 missions. The
decrease in costs at Johnson Engineering during the current quarter is due
primarily to the deletion of flight hardware tasks, and is partially offset by
costs due to increased training requirements at the NBL. Also in the current
quarter, Johnson Engineering incurred
12
<PAGE> 13
$0.3 million of non-reimbursable cost overruns related to the completion of the
robotic training arm for NASA under a fixed-price contract.
Operating Expenses. Operating expenses increased approximately 29% to $5.7
million for the three months ended March 31, 2000 as compared to $4.4 million
for the three months ended March 31, 1999. Marketing, general and administrative
("MG&A") expenses increased 40% to $5.2 million for the three months ended March
31, 2000 as compared to $3.7 million for the quarter ended March 31, 1999. The
increase in MG&A expenses in the current quarter is due primarily to the costs
incurred for SPACEHAB's newly formed subsidiary, Space Media, Inc. ("SMI"). SMI
will create proprietary content from the ISS for broadcast and internet
distribution.
Research and development costs decreased to $0.5 million for the quarter
ended March 31, 2000 as compared to $0.7 million for the quarter ended March 31,
1999.
Interest and Other Expense. Interest expense was approximately $0.9 million
for the three months ended March 31, 2000, and $1.3 million and the three months
ended March 31, 1999. There was also approximately $0.9 million and $0.6 million
of interest capitalized for the quarters ended March 31, 2000 and 1999,
respectively. Interest for the current fiscal year is capitalized primarily on
the construction of the Company's science module with adapter hardware and an
additional payload processing facility being constructed by Astrotech.
Interest and Other Income. Interest and other income was approximately $0.2
million and $0.4 million for the three months ended March 31, 2000 and 1999,
respectively. Interest is earned on the Company's short-term investments of
proceeds received from the Company's equity financings by Dasa completed during
August and October, 1999, and cash invested overnight in money market accounts.
Income Taxes. Based on the Company's current projected taxable earnings and
likely valuation allowances for certain deferred tax assets, the Company did not
record an income tax benefit for the quarter ended March 31, 2000. In addition,
the Company may be required to provide additional valuation allowances against
certain deferred tax assets in the future to the extent that the Company's
projection of future taxable earnings are insufficient to support the
realizability of such assets.
Net Income (Loss). The net loss for the quarter ended March 31, 2000 was
approximately ($0.6) million or ($0.06) per share (basic and diluted EPS) on
11,287,026 shares as compared to net loss of ($0.5) million or ($0.05) per share
(basic and diluted EPS) on 11,189,242 shares.
For the nine months ended March 31, 2000 as compared to the nine months ended
March 31, 1999.
Revenue. Revenue decreased by approximately 2% to $77.0 million as compared
to $78.6 million for the nine months ended March 31, 2000 and 1999,
respectively. During the nine months ended March 31, 2000, revenue of $25.4
million was recognized from the REALMS and commercial customer contracts,
revenue of $6.6 million was recognized from Astrotech operations, and revenue of
$45.1 million was recognized from Johnson Engineering operations, primarily
under the FCSD contract. For the nine months ended March 31, 1999 the Company's
revenue was attributable to REALMS and commercial customer contracts of $29.8
million; Astrotech operations of $6.9 million; Johnson Engineering operations of
$41.9 million. The decrease in revenue under the REALMS contract in the period
ended March 31, 2000 is due to schedule slippages of the assembly of the ISS and
the stand down of the shuttle fleet for wiring inspections. These delays
resulted in the slippage of STS-101 from November, 1999 to May, 2000, which was
partially offset by the addition of a new mission, STS-106, which is scheduled
to fly in September, 2000. The increased revenue at Johnson Engineering in the
nine month period ended March 31, 2000 was due primarily to increased astronaut
training at the NBL, and partially to a retroactive increase in the available
fee pool.
Costs of Revenue. Costs of revenue for the nine months ended March 31, 2000
increased approximately 2% to $65.9 million, as compared to $64.7 million for
nine months ended March 31, 1999. The primary components of costs of revenue for
the nine months ended March 31, 2000 include integration and operation costs
under the REALMS and commercial customer contracts of $17.0 million, Astrotech
operations of $3.4 million and Johnson Engineering of $41.5 million.
Depreciation expense for the period was $4.0 million. In contrast, the primary
components of costs of revenue for the nine months ended March 31, 1999 included
integration and operations costs under the REALMS and commercial customer
contracts of $18.7 million, Astrotech operations of $3.5 million, and
13
<PAGE> 14
Johnson Engineering of $38.7 million. Depreciation expense for the period was
$3.8 million. The increase in costs of revenue in the nine month period ended
March 31, 2000 is due primarily to increased astronaut training at Johnson
Engineering and $1.2 million of non-reimbursable cost overruns related to the
delivery of the robotic training arm for NASA under a fixed-price contract.
Operating Expenses. Operating expenses increased by approximately 7% to
approximately $14.4 million for the nine months ended March 31, 2000 as compared
to approximately $13.5 million for the nine months ended March 31, 1999.
Marketing, general and administrative expenses increased by 19% to $12.8 million
as compared to $10.8 million. The increase in the period ended March 31, 2000 is
due primarily to costs incurred for SPACEHAB's newly formed subsidiary, SMI.
Research and development costs decreased 41% to $1.6 million for the period
ended March 31, 2000 as compared to $2.7 million for the period ended March 31,
1999, due to the Company's emphasis on completing existing assets in progress.
Interest and Other Expense. Interest expense was approximately $2.8 million
for the nine months ended March 31, 2000 as compared to approximately $3.9
million for the nine months ended March 31, 1999. There was approximately $2.6
million and $1.8 million of capitalized interest for the nine months ended March
31, 2000 and 1999, respectively. Interest for the current fiscal year is
capitalized primarily on the construction of the Company's science module with
adapter hardware and an additional payload processing facility being constructed
by Astrotech. Additionally, during the nine months ended March 31, 1999, the
Company recognized $0.6 million in other expense related to costs associated
with a debt offering that the Company canceled in July 1998.
Interest and Other Income. Interest and other income was approximately $0.5
million for the nine months ended March 31, 2000 as compared to $1.9 million for
the nine month period ended March 31, 1999. Interest income is due to short-term
interest earned by the Company for the investment of the proceeds received from
the Company's credit facilities completed during July and October 1997 and
equity financings with Dasa completed in August and October 1999.
Income Taxes. Based on the Company's current projected taxable earnings and
likely valuation allowances for certain deferred tax assets, the Company
recorded a $1.7 million income tax benefit for the nine months ended March 31,
2000. In addition, the Company may be required to provide additional valuation
allowances against certain deferred tax assets in the future to the extent that
the Company's projection of future taxable earnings are insufficient to support
the realizability of such assets.
Net Income (Loss). The net loss for the period ended March 31, 2000 was
approximately ($3.9) million, or ($0.34) per share (basic and diluted EPS), on
11,258,661 shares as compared to a net loss of ($2.0) million, or ($0.18) per
share (basic and diluted EPS) for the nine months ended March 31, 1999, on
11,178,004 shares.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its capital expenditures, research and
development and working capital requirements with progress payments under its
various contracts, as well as with proceeds received from private debt and
equity offerings and borrowings under credit facilities. During December 1995,
SPACEHAB completed an initial public offering of Common Stock (the "Offering"),
which provided the Company with net proceeds of approximately $43.5 million. In
June 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 March 31, 2000, the
Company had drawn $4.5 million on this line of credit which expires in May 2000.
The Company is currently in the process of negotiating a new revolving line of
credit. In July 1997, Astrotech obtained a five-year term loan (the "Term Loan
Agreement"), which is guaranteed by SPACEHAB, and provides for draws of up to
$15.0 million for general corporate purposes. As of March 31, 2000, the Company
had drawn $15.0 million on this loan, which had an outstanding balance on that
date of $8.4 million. On October 21, 1997, the Company completed a private
placement offering of convertible subordinated notes (the "Notes Offering"),
which provided the Company with net proceeds of approximately $59.9 million
which has been used, in part, for capital expenditures associated with the
development and construction of space related assets, the purchase of Johnson
Engineering, and for general corporate purposes. In December 1998, the Company
amended its agreement with Alenia relative to subordinated
14
<PAGE> 15
notes payable with an outstanding balance of $11.9 million. In exchange for
payment of $4.0 million, Alenia agreed to reduce the annual interest rate from
12 percent to 10 percent on the outstanding balance as of January 1, 1999, and
the interest payment due for the quarter ended December 31, 1998, was waived
resulting in an effective interest rate of 8.75 percent. An amended agreement
with the senior debt holders under the Insurers' note requires that an interest
rate of 8.25 percent be applied to the senior debt with an outstanding balance
of $0.7 million as of March 31, 2000. On August 2, 1999, DaimlerChrysler
Aerospace AG ("Dasa"), a shareholder, purchased an additional $12.0 million
equity stake in SPACEHAB representing 1,333,334 shares of Series B Senior
Convertible Preferred Stock. Under the agreement, Dasa purchased all of
SPACEHAB's 975,000 authorized and unissued shares of preferred stock. At the
annual stockholders meeting held on October 14, 1999, the shareholders approved
the proposal to increase the number of authorized shares of preferred stock to
2,500,000, in order to complete the transaction with Dasa. The preferred stock
purchase increased Dasa's investment interest in SPACEHAB to approximately 11.5
percent. No dividends are payable on the preferred shares which are convertible
into common shares on a one-for-one basis.
Cash Flows from Operating Activities. Cash flows provided by (used for)
operating activities for the nine months ended March 31, 2000 and March 31, 1999
were $1.3 million and ($11.0) million, respectively. The increase in cash flows
from funds provided by operating activities for the period ended March 31, 2000
is due to an increase in accounts receivable of $4.9 million, which represents
billings for the new mission, STS-106, and an increase in deferred flight
revenue of $8.4 million, of which $6.9 million represents a payment received for
a research mission to be flown at a future undetermined date. The major items
contributing to the use of funds for the period ended March 31, 1999 were the
decrease in deferred flight revenue of ($4.0) million dollars and the decrease
in accrued consulting and subcontractor services of ($6.0) million. The decrease
in deferred flight revenue was primarily due to recognition of all deferred
revenue on STS-95, which flew in October 1998, and was partially offset by
increases in deferred revenue for STS-101 and STS-107. The decrease in accrued
consulting and subcontractor services was due to the payment of subcontractor
costs under the MIR contract and the payment of accrued subcontractor costs for
the research module with adapter hardware.
Cash Flows from Investing Activities. For the nine months ended March 31, 2000
and 1999, cash flows used for investing activities were $20.5 million and $42.2
million, respectively. The investments made during the period ended March 31,
2000 were $14.2 million for the construction of flight assets consisting
primarily of the science double module and associated hardware, $3.7 million for
buildings primarily for the expansion at the Astrotech Florida facility, and
$2.7 million for property, equipment, and leasehold improvements. The Company is
in the process of obtaining permanent financing for the facilities expansion at
Astrotech's Florida facility. An additional $0.6 million was invested in the
Space-DRUMS(TM) joint venture, completing the contracted investment. SPACEHAB
received $0.6 million from an escrow agreement related to the purchase of
Johnson Engineering during the period ended March 31, 2000. For the period ended
March 31, 1999, cash flows used for investing activities consisted primarily of
capital expenditures related to the acquisition of Johnson Engineering in July
1998 for $25.3 million. Additional investing included approximately $12.9
million attributable to the construction of the ICC system and the Company's
research module with adapter hardware. $1.0 million was invested in the
expansion of the Astrotech facilities, $2.1 million for the purchase of
additional property and equipment and $0.8 million in the Space-DRUMS(TM) joint
venture.
Cash Flows from Financing Activities. Cash flows provided by (used for)
financing activities were approximately $14.7 million and ($6.5) million for the
nine months ended March 31, 2000 and 1999, respectively. During the period ended
March 31, 2000, SPACEHAB borrowed $4.5 million against a line of credit, and
raised $11.9 million, net of expenses, from Dasa, a shareholder, in exchange for
1,333,334 shares of Series B Convertible Preferred Stock. In addition, $2.1
million was paid on outstanding debt. During the period ended March 31, 1999,
the Company made an early payment of $4.0 million of Alenia debt in exchange for
a lower interest rate and a waiver of interest expense due and payable for the
quarter ended December 31, 1998. Additional payments were made on outstanding
debt of $2.6 million.
The Company believes that cash flows from the Notes Offering, the Term Loan
Agreement, the Revolving Line of Credit and other current financing activities
will be sufficient to meet any cash flow requirements from operations and other
funding requirements for capital asset construction and development for at least
the next twelve months.
RECENT ACCOUNTING PRONOUNCEMENTS
15
<PAGE> 16
In 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133").
SFAS 133 becomes effective for all fiscal quarters of all fiscal years beginning
after June 15, 2000 and will require the Company to disclose additional
information on its hedging activities. The Company is reviewing this standard;
however, it is not expected that implementing this Standard will significantly
impact the Company. The Company has not entered into any derivative or hedging
instruments during the periods covered.
YEAR 2000 READINESS DISCLOSURE STATEMENT
The Year 2000 ("Y2K") issue is the result of computer programs that were written
using two digits rather than four to define the applicable year. Any computer
program that has date-sensitive software may recognize the date using "00" as
the year 1900 rather than the year 2000. This error could result in systems
failures and computational errors causing disruptions of operations, including,
among other things, the temporary inability to process transactions, send
invoices or engage in similar normal business activities.
SPACEHAB had established a Y2K program to address both information-technology
("IT") and non-IT problems that may exist within the SPACEHAB system, including
its vendors and customers, e.g. NASA and the Space Shuttle. As a result of
SPACEHAB's Y2K program, the company transitioned to the new millennium without
any identified system or system related problems. The Central Processing Unit
("CPU") on the ground support electrical equipment at SPACEHAB's payload
processing facility is not Y2K compliant. SPACEHAB implemented its contingency
plan, as previously disclosed, and changed the year on the CPU to 1972. The CPU
will report the correct day and month but the year will currently be reported as
1973. This change only affects the date printed on reports. The current ground
support equipment is expected to be replaced by mid-2000.
READERS ARE CAUTIONED THAT THE DISCUSSION OF SPACEHAB'S EFFORTS AND EXPECTATIONS
RELATED TO YEAR 2000 ARE FORWARD LOOKING STATEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH SPACEHAB'S DISCLOSURE UNDER "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS- FORWARD LOOKING
STATEMENTS."
16
<PAGE> 17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held on October 14, 1999. A quorum of
at least one-third of the issued and outstanding common stock and Series B
Senior Convertible Preferred Stock of the Company, voting together, was present
and voting.
(a) At the Annual Meeting of Shareholders, candidates for the Board of
Directors stood for and were duly elected, with each nominee receiving a
vote of at least 7,650,145 votes:
The directors elected by the holders of the Common Stock are:
Hironori Aihara
Melvin D. Booth
Dr. Edward E. David, Jr.
Richard Fairbanks
Dr. Shelley A. Harrison
Chester M. Lee
Gordon S. Macklin
James R. Thompson
Giuseppe Viriglio
The director elected by the holder of the Series B Senior Convertible
Preferred Stock is:
Josef Kind
The following matters were brought to a vote of the shareholders at the
meeting:
(b) An amendment to the Company's Articles of Incorporation to increase the
number of authorized shares of preferred stock from 1,000,000 to
2,500,000.
For 6,874,486 Against 2,215,760 Abstain 412,805
(c) An amendment to the Company's Stock Incentive Plan to increase the
number of shares that may be granted thereunder from 2,750,000 to
3,950,000.
For 6,821,948 Against 3,375,350 Abstain 28,233
17
<PAGE> 18
(d) The appointment of KPMG LLP as the Company's independent auditors for
fiscal year 2000.
For 9,487,237 Against 6,507 Abstain 6,307
ITEM 5. OTHER INFORMATION
On March 3, 2000, David A. Rossi, President of SPACEHAB, was elected by the
Board of Directors to fill the vacancy created by the death of Chester M.
Lee.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The separate Index to Exhibits accompanying this filing is
incorporated herein by reference.
(b) Reports on Form 8-K.
None
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
----------- -----------------------
<S> <C>
10.103* Agreement between Astrotech and McDonnell
Douglas, dated January 7, 2000
10.104* Agreement between Astrotech and Lockheed
Martin, dated January 24, 2000
27 Financial Data Schedule
* Portions have been omitted and filed separately for
confidentiality treatment
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPACEHAB, INCORPORATED
Date: May 12, 2000 /s/Julia A. Pulzone
---------------------------------------
Julia A. Pulzone
Senior Vice President, Finance
Chief Financial Officer
/s/David A. Rossi
---------------------------------------
David A. Rossi
President and Chief Operating Officer
18
<PAGE> 1
"Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked by ****, have been
separately filed with the Commission."
EXHIBIT 10.103
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
PAGE 1 OF 18
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Subcontract Type: Firm Fixed Price
Security Classification: NA
Prime Contract Number: Various Commercial
Supplier Number:
Account Number:
DPAS Priority Rating: Not Applicable
Cost Charge No. (CCN): See Section G.3(c)
Terms Of Payment: Net 30 Days
Astrotech Space Operations, Inc.
6305 Ivy Lane, Suite 520
Greenbelt, MD 20770-06318
This Firm Fixed Price (FFP) Subcontract is hereby placed with Astrotech Space
Operations, Inc. (hereinafter referred to as "Astrotech," "ASO," Subcontractor,"
"Supplier," or "Seller") by McDonnell Douglas Corporation, a wholly owned
subsidiary of The Boeing Company, Huntington Beach, California (hereinafter
referred to as "MDC" or "Buyer") for the goods and services described herein,
and is subject to the terms and conditions set forth thereto.
Authority to Proceed 99797075 and amendments/changes thereto were issued in
contemplation of the execution of this Firm Fixed Subcontract, and are hereby
superseded in their entirety by this Subcontract. Any and all acts of
performance performed under the Authority to Proceed, as amended/changed, shall
be deemed performed under the applicable provisions of this Subcontract.
This Subcontract constitutes the entire understanding and agreement between the
parties with respect to the subject matter hereof and supersedes all prior
representations and agreements.
IN WITNESS WHEREOF, the parties hereto have executed this Subcontract effective
as of the date executed by MDC below:
MCDONNELL DOUGLAS CORPORATION
By: By:
-------------------------------- --------------------------------
Typed/Printed Name: Typed Name:
---------------- -----------------------
(AUTHORIZED AGENT)
Title: Title:
----------------------------- -----------------------------
Date: Date:
----------------------------- -----------------------------
END OF COVER/SIGNATURE PAGE
================================================================================
<PAGE> 2
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
DRAFT PAGE 2 OF 18
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CONTENTS OF SUBCONTRACT
COVER/SIGNATURE PAGE
CONTENTS OF SUBCONTRACT
SECTION A SPECIAL AGREEMENTS AND OTHER IMPORTANT PROVISIONS AND
NOTIFICATIONS
A.1 ORDER OF PRECEDENCE
A.2 SUBCONTRACT MODIFICATIONS ( AND LIVING CONTRACT)
SECTION B GOODS/SERVICES AND PRICES
B.1 TYPE OF SUBCONTRACT
B.2 STATEMENT OF REQUIREMENTS
B.3 GOODS/SERVICES, PRICES AND SUBCONTRACT LINE ITEM
NUMBERS (SCLINs)
B.4 PAYMENT AND BILLING (Receipt of Goods/Services)
SECTION C SUPPLIER WORK STATEMENT /SPECIFICATIONS
C.1 SUPPLIER WORK STATEMENT
C.2. RESERVED
SECTION D RESERVED
SECTION E INSPECTION AND ACCEPTANCE/QUALITY ASSURANCE
E.1 INSPECTION AND ACCEPTANCE
E.2 QUALITY ASSURANCE
SECTION F DELIVERY/PERFORMANCE
F.1 DELIVERY
F.2 PAYLOAD PROCESSING SERVICES
SECTION G SUBCONTRACT ADMINISTRATION DATA
G.1 TECHNICAL AND ADMINISTRATIVE REPRESENTATIVES
G.2 COMMUNICATIONS
G.3 SUBMISSION OF INVOICES
G.4 PAYMENT TERMS
G.5 CALIFORNIA SALES - USE TAX
<PAGE> 3
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
DRAFT PAGE 3 OF 18
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CONTENTS OF SUBCONTRACT (cont.)
SECTION H SPECIAL PROVISIONS
H.1 PLACE OF PERFORMANCE
H.2 BUYER/GOVERNMENT FURNISHED SPECIAL TOOLING, SPECIAL
TEST EQUIPMENT, MATERIAL, AND/OR FACILITIES
H.3 DPAS PRIORITY RATING
H.4 IDENTIFICATION OF RESTRICTIONS ON GOVERNMENT RIGHTS IN
TECHNICAL DATA AND COMPUTER SOFTWARE
H.6 PRIORITY USAGE OF BUILDING 9
H.7 UPLINK AND DOWNLINK CAPABILITY BETWEEN COMPLEX 37 AND
ASTROTECH
H.8 EXCLUSIVITY
H.9 PAYLOAD FAIRING ACCESS PLATFORMS
H.10 DAMAGE TO PERSONS OR PROPERTY INVOLVED IN PAYLOAD
PROCESSING ACTIVITY
H.11 SCHEDULE AND FACILITY ASSIGMENTS
H.12 TERMINATION
SECTION I GENERAL PROVISIONS
I.1 TERMS AND CONDITIONS GUIDE
I.2 MODIFICATIONS TO GENERAL PROVISIONS (full text)
I.3 ADDITIONAL FULL-TEXT PROVISIONS
SECTION J LIST OF DOCUMENTS, EXHIBITS AND ATTACHMENTS APPLICABLE TO THIS
SUBCONTRACT
END OF TABLE OF CONTENTS
================================================================================
<PAGE> 4
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
DRAFT PAGE 4 OF 18
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SECTION A - SPECIAL AGREEMENTS AND OTHER IMPORTANT PROVISIONS AND NOTIFICATIONS
A.1 ORDER OF PRECEDENCE
In the event of an inconsistency between any of the provisions of this
Subcontract, the inconsistency shall be resolved by giving precedence
to the provisions of the Subcontract in the following order:
1. Cover/Signature Page and Sections A through H (Schedule
Provisions)
2. NonDisclosure Agreement (NDA), (if applicable)
3. Contract Security Classification Specification (DD Form 254),
(if applicable)
4. Supplier Work Statement 7075
5. Section I (General Provisions)
6. All Other Attachments, Exhibits and Documents listed in
Section J
Sections A through H comprise the "Schedule" of this Subcontract.
A.2 SUBCONTRACT MODIFICATIONS (AND LIVING CONTRACT)
Modifications to this Subcontract shall be made through the issuance of
a Supplemental Agreement or Administrative Contract Funding Order
(ACFO), which will delineate therein the stated modification, and
identify the changed Subcontract page(s). Changed portions of the
Subcontract language will be marked in bold type. For Seller's
convenience, replacement pages containing the Subcontract modifications
will be provided, so that at all times, the Seller will possess a
complete, corrected and coherent text of the Subcontract. Each
replacement page shall be marked with the Subcontract number,
modification number, and date.
END OF SECTION A
================================================================================
<PAGE> 5
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
DRAFT PAGE 5 OF 18
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SECTION B - GOODS/SERVICES AND PRICES
B.1 TYPE OF SUBCONTRACT
The Subcontract awarded hereunder is a firm fixed price (FFP), type
Subcontract. Under FFP contracting, the Seller shall provide
goods/services at a price that is not subject to any adjustment on the
basis of the Seller's cost experience in performing the subcontract. In
FFP contracting, the Seller bears the entire risk of cost and
performance.
B.2 STATEMENT OF REQUIREMENTS
In accordance with the Subcontract, Seller shall provide all materials,
labor, equipment and facilities, except as specified herein to be
furnished by the Buyer and/or Government, and shall do all that is
necessary or incident to the satisfactory and timely performance of the
SCLINs listed below.
B.3 SERVICES, PRICES AND SUBCONTRACT LINE ITEM NUMBERS (SCLINs)
(a) Price. MDC shall pay Astrotech a firm fixed price fee for the Basic
Services provided for each Payload under this Subcontract (hereinafter
called "Service Fee"). The Service Fee shall be determined by the
actual launch date of the respective Payload in accordance with the
price schedule set forth below. In addition, MDC shall pay Astrotech
any additional charges agreed to or otherwise due and payable under
this Subcontract. The Service Fee and any such additional charges are
exclusive of any federal, state or local tax, if applicable. Although
as of the effective date of this subcontract no such taxes are
applicable, should such taxes become applicable they shall be added to
the amount to be paid by MDC to Astrotech.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Calendar Year Guaranteed Quantity Price Excess Quantity Price
----------------------------------------------------------------------------------
<S> <C> <C> <C>
*** **** Missions *** ***
*** **** Missions *** ***
*** **** Missions *** ***
*** **** Missions *** ***
*** **** Missions *** ***
*** **** Missions *** ***
*** **** Missions *** ***
*** **** Missions *** ***
*** **** Missions *** ***
*** **** Missions *** ***
----------------------------------------------------------------------------------
</TABLE>
(b) Dual manifested GEO spacecraft will be charged ****. Multiple-LEO/GEO
constellation spacecraft missions will be charged as **** assuming a
single spacecraft manufacturer for all satellites on a single flight.
(c) Should the guaranteed quantity of services not be required in any given
year, a credit for a maximum of **** missions will be carried over to
the next contract year. The credits would then expire at the end of
that contract year and be applied only after the processing of the
guaranteed quantity of missions stipulated above for that year.
<PAGE> 6
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
DRAFT PAGE 6 OF 18
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B.4 PAYMENT AND BILLING (Receipt of Goods/Services)
(a) The parties agree that the basis for payment under this Subcontract is
the performance of acceptable services.
(b) Seller shall bill Buyer for each completed item of services. Buyer
shall pay Seller upon receipt of the following: a properly prepared
Seller's invoice and acceptable services. Seller shall prepare and
submit the aforementioned invoice in accordance with Subcontract
Sections G.3 and G.4.
(c) Payments. All payments defined in this subcontract shall be (i) in
United States Dollars, (ii) payable to Astrotech Space Operations,
Inc., and (iii) delivered, at MDC expense, to the offices of Astrotech
Space Operations, Inc. at 6305 Ivy Lane, Suite 520, Greenbelt, Maryland
20770-6318 (or other address specified by Astrotech in writing) within
thirty (30) days of receipt of the invoice by MDC. All payments made
under this Subcontract shall reference the number of the applicable
Mission Exhibit shown on the cover page of the Mission Exhibit.
(d) Billing Schedule. Each Mission Exhibit of this Subcontract sets forth
the billing schedule for payment of the Service Fee applicable to that
particular Payload. The amount and billing dates of the three scheduled
Service Fee partial payments are determined pursuant to Sections (1),
(2), and (3) below. In addition to invoicing MDC for the three
scheduled Service Fee partial payments, Astrotech shall provide MDC a
separate invoice for any additional charge agreed to or otherwise due
and payable under this Subcontract pursuant to Section (4) below,
unless otherwise expressly provided for in this Subcontract. Each
invoice shall be due and payable upon receipt by MDC.
(1) Deposit and First Partial Payment. On the effective date of each
Mission Exhibit, MDC will be billed five percent (5%) of the
Service Fee for that particular Payload to be processed at
Astrotech TICO under this Subcontract.
(2) Second Partial Payment. Thirty (30) days prior to the beginning
of the Occupancy Period for each particular Payload, MDC will be
billed forty-five percent (45%) of the Service Fee applicable to
that particular Payload plus any adjustments to the First
Partial Payment required due to a change in the scheduled launch
date subsequent to the effective date of the applicable Mission
Exhibit. The cumulative total of the First and Second Partial
Payments will equal fifty percent (50%) of the applicable
Service Fee.
(3) Third Partial Payment. On the last day of the Occupancy Period
or when the customer vacates the facility for each particular
Payload, MDC will be billed fifty percent (50%) of the Service
Fee applicable to that particular Payload plus any adjustments
to the First and Second Partial Payments required due to a
change in the launch date subsequent to the Second Partial
Payment billing date of the applicable Mission Exhibit. The
cumulative total of the First, Second, and Third Partial
Payments will equal one hundred percent (100%) of the applicable
Service Fee based upon the actual launch date.
(4) Final Billing. As soon as practicable, but not later than sixty
(60) days after the customer vacates the facility for each
particular Payload, MDC will be invoiced for any additional
charges agreed to or otherwise due and payable for that
particular Payload under this Subcontract.
(e) Payment for Guaranteed Minimum Quantity For any calendar year in which
MDC fails to meet the minimum quantity guarantee specified in Section
B.3 (a), Astrotech will submit an invoice to MDC for the amount equal
to the guaranteed quantity minus the actual number of payloads
processed and launched in that calendar year times the mission price
for that year. This invoice will be submitted on the first business day
of January in the following calendar year in which the shortfall
occurred in accordance with Section B.4 (c) above. Payment by MDC for
missions guaranteed but not processed will result in a mission
credit(s) governed by Section B.3 (c).
<PAGE> 7
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
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END OF SECTION B
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SECTION C - STATEMENT OF WORK/SPECIFICATIONS
C.1 SUPPLIER WORK STATEMENT
The goods/services which the Seller is to provide are stated in Section
B hereof, and shall be furnished in accordance with the Subcontract
schedule provisions and any referenced Supplier Work Statement
documents set forth in Section J, which are incorporated herein by this
reference.
C.2 RESERVED
END OF SECTION C
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SECTION D - RESERVED
END OF SECTION D
================================================================================
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
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SECTION E - INSPECTION AND ACCEPTANCE/QUALITY ASSURANCE
E.1 INSPECTION AND ACCEPTANCE
(a) All goods and services shall be subject to in-process inspection/test
by the Buyer at the Seller's facility to the extent practicable at all
times during the period of performance and, in any event, prior to
shipment. If the Buyer performs inspection or evaluation on the
premises of the Seller or its subcontractor(s), the Seller shall
furnish and require its subcontractor(s) to furnish, without additional
charge, all reasonable facilities and assistance for the safe and
convenient performance of these duties.
(b) The provisions of Section E are in addition to any other inspection and
acceptance provisions of the Subcontract. In the event of a conflict
between Section E and any other inspection and acceptance provisions of
the Subcontract, including the inspection and acceptance provisions set
forth by the Subcontract Statement of Work and the Subcontract General
Provisions, the full text provisions of Section E shall prevail.
END OF SECTION E
================================================================================
SECTION F - DELIVERY/PERFORMANCE
F.1 DELIVERY
During the period 27 October 1999 through ****, Astrotech will be
expanding their facilities to support this subcontract prior to the
start of the Period of Performance set forth in Section F.2 below.
During this period, MDC and Astrotech agree that the termination
liability amounts specified in Section H.12 (a) are in effect.
F.2 PAYLOAD PROCESSING SERVICES
Payload processing services period of performance is **** through ****.
The occupancy date is ****, at which time the new Spacecraft Processing
Facility (SPF) built in accordance with the SWS specified in Section J
will be available to support the Delta IV 5 meter fairing pathfinder
effort.
END OF SECTION F
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
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SECTION G - SUBCONTRACT ADMINISTRATION DATA
G.1 TECHNICAL AND ADMINISTRATIVE REPRESENTATIVES
(a) The following technical and administrative representatives of the Buyer
and Seller are hereby designated for this Subcontract:
Seller's Representatives are: Buyer's Representatives are:
Lloyd S. Erickson Norm Yearsley
Technical Representative Technical Representative
John Satrom Kim E. Palchikoff
Contract Representative Subcontract Representative
In the event Kim E. Palchikoff is not available, Martin Vande Ven or
his duly authorized representative shall serve as Buyer's Subcontract
Representative. In the event John Satrom is not available, his/her duly
authorized representative shall serve as Seller's Contract
Representative.
(b) The Buyer's Technical Representative is responsible for day-to-day
clarifications, guidance and technical direction as may be required
within the scope of the technical work requirements. "Technical
direction" shall be in accordance with the "Technical Direction"
provision of the General Provisions of the Subcontract.
(c) Contact with the Buyer regarding prices, terms, quantities, deliveries,
and financial adjustments shall be made only between the Buyer's
Subcontract Representative and the Seller's Contract Representative.
Actions taken by the Seller, which by their nature effect a change to
this Subcontract, shall only be binding upon the Buyer when such action
is specifically authorized in writing by the Buyer's Subcontract
Representative. Unless specified otherwise in this subcontract, all
written communications between Seller and Buyer shall be addressed and
directed to the Buyer's Subcontract Representative and Seller's
Contract Representative.
(d) The Buyer shall be responsible for all liaison and communications with
the Buyer's customer as well as the Buyer's other subcontractors for
the term of this Subcontract. The Seller shall not communicate with the
Buyer's customer nor the Buyer's other subcontractors regarding this
Subcontract except with the prior consent of the Buyer.
(e) No verbal or written request, notice, authorization, direction or order
received by the Seller shall be binding upon the Buyer, or serve as the
basis for a change in the Subcontract, unless issued (or confirmed) in
writing by the Buyer's Subcontract Representative.
(f) The Seller shall immediately notify the Buyer's Subcontract
Representative whenever a verbal or written change notification has
been received from an employee of the Buyer (other than the Subcontract
Representative), which would affect any of the terms, conditions, cost,
schedules, etc., of this Subcontract, and the Seller is to perform no
work or make any changes in response to any such notification or make
any claim on Buyer unless the Buyer's Subcontract Representative
directs the Seller, in writing, to implement such change notification.
<PAGE> 10
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
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G.2 COMMUNICATIONS
All notices and other binding communications shall be in writing and
sent by cable, telex, U.S. mail, telefax, or other customary means,
addressed as follows:
<TABLE>
<CAPTION>
Seller: Buyer:
<S> <C>
Astrotech Space Operations, Inc. McDonnell Douglas Corporation
6305 Ivy Lane, Suite 520 5301 Bolsa Avenue
Greenbelt, MD 20770-06318 Huntington Beach, CA 92647-2099
Attn: John Satrom Attn: Kim E. Palchikoff, M/C H012-C215
</TABLE>
or to such other address as the Seller's Contract Representative or
Buyer's Subcontract Representative shall designate by written notice.
All correspondence, data and reports submitted by the Seller shall
reference the Subcontract number.
G.3 SUBMISSION OF INVOICES
(a) For each shipment of goods or completed item of services, Seller shall
submit invoices no more than once a month, in triplicate (one original
and two copies) and addressed as follows:
(1) Original and one (1) copy to:
McDonnell Douglas Corporation
Accounts Payable - M/C 2761371
P. O. Box 66856
St. Louis, MO 63166-6856
(2) Fax one (1) copy to:
McDonnell Douglas Corporation
5301 Bolsa Avenue
Huntington Beach, California 92647-2099
Attention: Kim E. Palchikoff
M/C H012-C215
(b) Seller's invoices and attachments thereto shall contain the following
information, as applicable: Seller's name and business address, date of
invoice, Subcontract number, Buyer's internal accounting numbers or
Cost Charge Numbers (CCNs), name of Buyer's designated Subcontract
Representative, description of services, extended totals, Seller's
signature and payment terms.
(c) Invoices submitted without the above information may be returned to the
Seller for correction.
G.4 PAYMENT TERMS
Determination of payment due date, whether under net or discount terms,
will be based on the latest of (i) the date services are performed;
(ii) the date provided in this Subcontract for the completion of
services, or (iii) the date an accurate invoice is received. Payment
will be deemed to have been made when deposited in the mail. Payment
terms are Net 30 days.
G.5 CALIFORNIA SALES - USE TAX
All goods and services purchased under this Subcontract are for resale.
Buyer's California Tax Permit No. is SY-ADA-98-003153.
END OF SECTION G
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<PAGE> 11
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
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SECTION H - SPECIAL PROVISIONS
H.1 PLACE OF PERFORMANCE
The work under this Subcontract shall be performed at the Seller's
Facility located at Titusville, Florida.
H.2 BUYER/GOVERNMENT FURNISHED SPECIAL TOOLING (ST), SPECIAL TEST
EQUIPMENT (STE), PLANT EQUIPMENT (PE), MATERIAL, AND/OR FACILITIES
(a) Pursuant to the Property Clause of this Subcontract, the Buyer shall
furnish for use in the performance of this Subcontract, the following
Buyer and/or Government-furnished ST, STE, PE, material, and/or
facilities identified in paragraphs (b) and (c) below on or before the
date(s) specified.
(b) Buyer Furnished ST, STE, PE, material, and/or facilities: None
(c) Government Furnished ST, STE, PE, material, and/or facilities: None
H.3 RESERVED
H.4 IDENTIFICATION OF RESTRICTIONS ON GOVERNMENT RIGHTS IN TECHNICAL DATA
AND COMPUTER SOFTWARE
(a) In accordance with the Section I General Provisions pertaining to data
rights, the Subcontractor has identified the technical data and/or
computer software listed in paragraph (b) below, that may be delivered
by Seller with other than unlimited rights.
(b) None
H.5 PRIORITY USAGE OF BUILDING 9
During the period of performance specified in Section F.2, Astrotech
will offer to MDC the use of the Building 9 Spacecraft Processing
Facility on a "First Right of Refusal" basis. Should another Astrotech
customer request use of Bldg. 9, Astrotech will contact MDC in writing
to offer MDC the opportunity to occupy the specified areas of the
facility during the requested period. MDC shall have 15 calendar days
to provide written response to Astrotech regarding their intention to
occupy the facility during the stated period or to release it for
another customer's use. Should MDC request use of Bldg. 9 during the
period specified, a program Mission Exhibit between Astrotech and MDC
will be prepared and executed reserving the specified Bldg. 9 areas.
H.6 ROADWAY OVERHEAD OBSTRUCTIONS
Astrotech accepts the cost and responsibility for raising/relocating
any overhead obstructions along the roadway from the Astrotech facility
to Launch Complex 17 and/or 37. Consideration for this effort is
included in the price schedule contained in Section B3(a) of this
document.
H.7 UPLINK AND DOWNLINK CAPABILITY BETWEEN COMPLEX 37 AND ASTROTECH
Technical resolution for spacecraft uplink and downlink capability
between Complex 37 and Astrotech has not been accomplished. An
acceptable solution will be developed between Astrotech and MDC. Any
such improvement to the communications requirements would be subject to
an equitable adjustment. As a mitigation measure, Astrotech will
maintain their current RF communication capability.
<PAGE> 12
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H.8 EXCLUSIVITY
MDC will utilize Astrotech services exclusively from **** through ****
for the prelaunch processing of the payloads for all commercial Delta
launches during the duration of this subcontract, except as MDC may be
directed by the Government to utilize Government facilities for a
Government Payload, or as a commercial Customer may elect to separately
contract with another entity other than MDC for or provide their own
payload processing services or takes exception to the use of Astrotech
for payload processing services, or upon the written acknowledgement by
Astrotech that it is unable to adequately satisfy an essential
requirement for a particular Payload.
H.9 PAYLOAD FAIRING ACCESS PLATFORMS
Astrotech, at their expense, will design and construct the required
payload fairing access platforms based on MDC's design requirements.
MDC has provided a detailed design requirements document which will be
used by Astrotech to determine the target cost for the project,
currently estimated at ****. This target cost, to include the cost of
financing, will be provided by Boeing no later than 31 January 2000 and
will form the cost basis for this item on the contract. Boeing will be
billed back on a cost per mission basis spread over the firm missions
each year for the full **** years of the contract (**** missions). If
the cost is less than the agreed to target cost, Boeing and Astrotech
share the savings equally. In the event that the cost exceeds the
target, but is less than ****% of the value, Boeing and Astrotech share
the increase equally. In the event that the cost for the access
platforms exceeds ****% of the targeted cost, Boeing agrees to review
and accept a claim for an equitable price adjustment unless Astrotech
is found to be negligent in its performance. Should Boeing change the
design requirements following the establishment of the target price
that results in an increase to the cost to design and build the
platforms, Boeing will agree to review and accept a claim for an
equitable price adjustment in the amount of such increase.
<PAGE> 13
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H.10 DAMAGE TO PERSONS OR PROPERTY INVOLVED IN PAYLOAD PROCESSING ACTIVITY
(a) Inter-Party Waiver of Liability. In carrying out this Agreement,
Astrotech and MDC will respectively utilize their property and
employees in Payload Processing Activity in close proximity to one
another and to others. Furthermore, the parties recognize that all
participants in Payload Processing Activity are engaged in the common
goal of meaningful exploration, exploitation and uses of outer space.
In furtherance of this goal, the parties hereto agree to a no-fault,
no-subrogation, inter-party waiver of liability pursuant to which each
party agrees not to bring a claim in arbitration or otherwise against
or sue the other party, and agrees to absorb the financial and any
other consequences for Damage it incurs to its own property and
employees as a result of participation in Payload Processing Activity,
irrespective of whether such Damage is caused by Astrotech, MDC,
Customer, or other participants in Payload Processing Activity, and
regardless of whether such Damage arises through negligence of any
degree or kind or otherwise (except for Damage caused by willful
misconduct). Thus, the parties, by absorbing the consequences of damage
to their property and employees without recourse against each other or
other participants in Payload Processing Activity, jointly contribute
to the common goal of meaningful exploration, exploitation and uses of
outer space.
(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 Payload Processing Activity.
Accordingly, the parties agree to use best efforts to extend the waiver
as set forth in Clause H.10, Part (a) above to Customer and other
customers of Astrotech and to contractors and subcontractors at every
tier of Astrotech, MDC, Customer, other customers of Astrotech, and to
all other participants in Payload Processing Activity, as third party
beneficiaries, whether or not such participants causing damage bring
property or employees to the Astrotech Facility or retain title to or
other interest in property provided by them to be used, or otherwise
involved, in Payload Processing Activity. Further, MDC will use best
efforts to require that Customer extend the waiver as set forth in
Clause H.10, Part (a) above to (i) all other persons and entities to
whom it assigns all or part of its right to Services, and (ii) any
person or entity to whom Customer has sold or leased or otherwise
agreed to provide all or any portion of its Payload or Payload
services. The parties agree that if they are unsuccessful in flowing
down the provisions of Clause H.10, Part (a) to a customer, contractor,
subcontractor, or the other persons and entities described above, each
agrees to provide written notice thereof within 30 days of such
failure. In addition, the party that is unsuccessful in flowing down
Clause H.10, Part (a) shall, at its option, be obligated to procure or
maintain insurance to indemnify the other party, its customers,
contractors and subcontractors consistent with the requirements of
Clause H.10, Part (a) or in the alternative to pay the other party all
reasonable costs incurred in connection with that party procuring or
maintaining additional insurance to indemnify that party its customers,
contractors and subcontractors consistent with the requirements of
Clause H.10, Part (a), and/or in the alternative to self insure for any
damage not covered by insurance. In the event either party fails to
fulfill its obligations under this Clause H.10, Part (b), said party
agrees to indemnify the other party and other participants in Payload
Processing Activity for any Liability they may sustain as a result of
such failure.
(c) The parties agree in lieu of any provisions provided in Clause H.10,
Part (b), Astrotech may at its sole option, and with no contractual or
legal liabiliity to MDC, refuse to process any payload of an MDC
customer who has refused to execute the Inter-party Waiver of Liability
as set forth in Clause H.10, Parts (a) and (b). The aforementioned
right of Astrotech shall be subject to Astrotech providing preliminary
notice to MDC (not later than 45 days after MDC's Clause H.10, Part (b)
notification) of Astrotech's intent not to process a payload and also
subject to Astrotech's agreement to provide good faith support to any
MDC efforts to convince its customer(s) to accept the Inter-party
Waiver of Liability provision prior to Astrotech's final decision to
invoke its rights under Clause H.10, Part (c).
<PAGE> 14
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
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H.11 SCHEDULE AND FACILITY ASSIGNMENT
(a) Occupancy Period. The period of time agreed to by MDC and Astrotech
during which MDC and Customer will reside at the Astrotech Facility or
otherwise receive Services for each Payload to be processed under this
Subcontract (hereinafter called "Occupancy Period") and the launch date
upon which the Occupancy Period is based shall be determined and set
forth in the Mission Exhibit of this Subcontract applicable to the
particular Payload. Such Mission Exhibit shall also contain the
schedules and assignments for the use of the facilities within
Astrotech TICO, as applicable, by MDC and Customer.
(b) Key Dates. Key milestone dates relating to all critical events that
could affect the Occupancy Period or Services to be performed for each
Payload under this Subcontract shall be exchanged between the MDC
Technical Manager and the Astrotech Technical Manager. Each party shall
advise the other, in a timely manner, of any event which occurs that
would significantly alter the agreed to Occupancy Period or Services.
(c) Schedule Changes. MDC and Astrotech recognize that the nature of
spaceflight activity is such that schedules must sometimes be changed,
often for reasons beyond the control or reasonable predictive ability
of MDC, Customer, or Astrotech. In the event that a change in the
Occupancy Period or in the schedules for the use of the respective
Astrotech facilities for a particular Payload becomes necessary by MDC,
Customer, or Astrotech, the parties agree to work together to
accommodate the particular rescheduling request (including, if
necessary, changes in the assignments for the use of the respective
Astrotech facilities, and overtime and weekend work by Astrotech, MDC
and Customer, and their respective contractors and subcontractors), in
a manner that will be mutually acceptable, satisfy the established
launch schedules, and be compatible with the established or changed
schedules of the other customers of Astrotech. Once the need for such a
change has been recognized by either party, that party shall promptly
notify the other party of the particular rescheduling or reassignment
request, and the related circumstances. Any officially announced change
(by letter, press release, or other formal means) in the launch date
for a particular Payload that is more than one week from the launch
date upon which the current Occupancy Period is based shall be deemed
to be notification to Astrotech of a request to change the Occupancy
Period, unless MDC otherwise notifies Astrotech in writing.
(d) Schedule Changes Requested or Caused by MDC. In the event that MDC
requests or causes a change (including that resulting from an
officially announced change in launch date) in the Occupancy Period or
the schedule for the use of the respective Astrotech facilities for a
particular Payload, as long as the resulting change does not exceed the
duration of the previously established schedule such change shall not
affect the Service Fee or other charges to MDC, except that MDC shall
be charged any increase or credited with any decrease in the Service
Fee applicable to any change in launch date associated with the
rescheduled Occupancy Period in accordance with Section B.3(a), Price
Schedule. In the event that MDC requests or causes a change in the
Occupancy Period for a particular Payload which results in Customer
vacating the Astrotech Facility after the beginning of the Occupancy
Period, MDC shall also be charged a pro rata share of the applicable
Service Fee based on the portion of the Occupancy Period elapsed as of
the date of such vacation by Customer, computed on a daily basis.
(e) Schedule Changes Requested by Astrotech. In the event that Astrotech
requests and MDC agrees to a change in the Occupancy Period for a
particular Payload, such change shall not affect the Service Fee or
other charges to MDC, except that MDC shall be credited with any
decrease in the Service Fee applicable to any change in launch date
associated with the rescheduled Occupancy Period in accordance with
Section B.3(a), Price Schedule.
<PAGE> 15
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H.12 TERMINATION
(a) Termination by MDC.
(1) Termination for Convenience. MDC shall have the right to
terminate for convenience, in whole or in part, its obligation
to obtain Astrotech Services under this Subcontract by providing
written notification to Astrotech.
(2) Termination for Cause. MDC shall only have the right to
terminate, in whole or in part, its obligation to obtain
Astrotech Servides under this Subcontract in the event and to
the extent THAT (i) Astrotech fails to meet a material provision
of this Subcontract for a particular Payload, and such failure
continues without acceptable corrective action for thirty (30)
days following written notification to Astrotech by MDC
indicating such failure and that MDC intends to terminate, or
(ii) Astrotech is unable to adequately satisfy an essential
requirement for a particular Payload and Astrotech so
acknowledges in writing within thirty (30) days following
written notification to Astrotech by MDC citing such inability,
which acknowledgment shall not be unreasonably withheld by
Astrotech.
(3) Termination Charge. In the event of termination by MDC pursuant
to Section H.12, Parts (a)(1) & (a)(2), MDC shall pay Astrotech
a Termination Charge as determined below. In the event of an
overpayment, Astrotech shall refund the amount of such
overpayment to MDC.
a) Termination for Convenience. Should MDC exercise its rights
to terminate this Subcontract under the provisions of
Section H.12, Part (a)(1), the following charges would
apply.
1) In Whole. Should MDC terminate this Subcontract in
Whole before the beneficial occupancy date of the new
Astrotech Spacecraft Processing Facility (Bldg. 9), the
termination charge to MDC would be equal to the total
costs expended to date on the design and construction
of Bldg. 9 and the MDC payload fairing work platforms
including any related project termination charges, not
to exceed the amount shown in the Exhibit B Termination
Liability Schedule for the month in which written
notification was provided by MDC to Astrotech, plus any
payload mission charges as described in 2) below.
Should MDC terminate this Subcontract in Whole on or
after the beneficial occupancy date of the new
Astrotech Spacecraft Processing Facility (Bldg. 9), the
total termination charge to MDC would equal the amount
shown on the Exhibit B Termination Liability Schedule
for the month in which written notification was
provided by MDC to Astrotech.
2) In Part. Should MDC terminate this Subcontract for a
given Payload or Payloads that represents a mission or
missions over and above the annual guaranteed mission
quantity plus potential mission credits as defined in
Section B.3, Parts (a) and (c), MDC shall pay Astrotech
as liquidated damages a pro-rated share of the Service
Fee applicable for that particular Payload or Payloads
based on the portion of the contracted Occupancy Period
elapsed as of the date Customer vacates the Astrotech
Facility, computed on a daily basis, but not less than
five percent (5%) of the Service Fee for that Payload,
plus any additional charges agreed to or otherwise due
and payable under this Subcontract as of the date
Customer vacates the Astrotech Facility. The minimum 5%
termination fee also applies if termination by MDC
occurs prior to the start of facility Occupancy Period
for the Payload or Payloads.
b) Termination for Cause. Should MDC exercise its rights to
terminate this Subcontract under the provisions of Section
H.12, Part (a)(2) above, MDC shall not be required to
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
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pay Astrotech any termination charge associated with that
particular Payload or Payloads.
(b) Termination by Astrotech.
(1) Inability to Perform. Astrotech shall have the right to
terminate, in whole or in part, its commitment to furnish
Services under this Subcontract, only to the extent that
Astrotech is prevented from performing said Services, (i) in the
event of riot, civil strife, war, damage to or destruction of
the Astrotech facility, natural disaster or other Act of God
beyond the control of Astrotech, or (ii) in the event the United
States Government terminates or fails to provide support it has
committed to Astrotech which is necessary for Astrotech to
perform certain Services to be provided hereunder, and Astrotech
cannot reasonably provide other means whereby to perform such
Services. Prior to considering termination pursuant to this
Section H.12, Part (b)(1), Astrotech shall consult with MDC in
order to seek alternative means of providing Services acceptable
to MDC.
(2) Termination Charge. In the event of a termination of Services
for a Payload by Astrotech pursuant to Section H.12, Part
(b)(1), MDC shall not be required to pay Astrotech any
termination charge. In the event of overpayment, Astrotech shall
refund the amount of such overpayment to MDC.
END OF SECTION H
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MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
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SECTION I - GENERAL PROVISIONS
The below-noted terms and conditions, full text clauses, provisions and
modifications thereto are the General Provisions of the Subcontract.
I.1 TERMS AND CONDITIONS GUIDE
The Subcontract incorporates by reference the below-listed clauses with
the same force and effect as if they were set forth in full text. The
clauses are in the Expendable Launch Systems (ELS) Terms and Conditions
Guide found on the Internet at
http://www.boeing.com/companyoffices/doingbiz/tscs .
<TABLE>
<CAPTION>
NUMBER TITLE
------ -----
<S> <C>
GP1 Fixed Price General Provisions
312 Seller Compliance with Occupational Safety & Health Act of
1970
328 Release Void
329 Plant Rules and Government Clearance
333 Insurance and Minimum Requirements
336 Release and Use of Information
354 Safety and Accident Prevention
390 Commercial Space Operations Support Agreement (CSOSA) -
Allocation of Risk and Insurance
524 Service and Supply Provisions
862 Additional General Provisions (Fixed Price Contract)
</TABLE>
I.2 MODIFICATIONS TO GENERAL PROVISIONS (Full Text)
MDC Clauses cited above from the Expendable Launch Systems (ELS) Terms
and Conditions Guide found on the Internet at
http://www.boeing.com/companyoffices/doingbiz/tscs .
a) GP1, Articles 14 and 15 are hereby deleted and replaced by Clause
H.12.
b) GP1, Article 16 is deleted and replaced by: "Neither party shall
assign any of its rights or interest in this contract or
subcontract all or substantially all of its performance of this
contract, without the other party's prior written consent. Such
consent shall not unreasonably be withheld. Neither party shall
delegate any of its duties or obligations under this contract. No
assignment, delegation or subcontracting by either party, with or
without the other party's consent, shall relieve either party of
any of its obligations under this contract. This article does not
limit either party's ability to purchase standard commercial
supplies or raw materials. Either party may assign its right to
monies due or to become due."
I.3 ADDITIONAL FULL-TEXT PROVISIONS
The following additional full-text provisions apply to this
Subcontract:
NONE
END OF SECTION I
================================================================================
<PAGE> 18
- -------------------------------------------------------------------------------
MCDONNELL DOUGLAS CORPORATION SUBCONTRACT NO. 99797075
DRAFT PAGE 18 OF 18
- -------------------------------------------------------------------------------
SECTION J
LIST OF DOCUMENTS, EXHIBITS AND ATTACHMENTS
APPLICABLE TO THIS SUBCONTRACT
1. Exhibit A, Supplier Work Statement 7075 entitled "Payload Processing
Services" dated 1 December 1998, as modified by the following revisions
thereto, are incorporated herein by this reference:
<TABLE>
<CAPTION>
Revision No. Date
------------ ----
<S> <C>
1 5 August 1999
2 15 November 1999
</TABLE>
2. Exhibit B, Termination Liability Schedule dated 20 May 1999.
NOTE: *The only clauses of the Terms and Conditions Guide applicable
to the Subcontract are as specified in Section I of the
Subcontract.
END OF SECTION J
END OF SUBCONTRACT
================================================================================
<PAGE> 1
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked by ****, have been
separately filed with the Commission.
EXHIBIT 10.104
AGREEMENT NO. 48801
AMENDMENT 5
AGREEMENT BETWEEN
ASTROTECH SPACE OPERATIONS, INC.
AND
LOCKHEED MARTIN COMMERCIAL LAUNCH SERVICES, INC.
FOR PROVISION OF
PAYLOAD PROCESSING FACILITIES AND SUPPORT
IN CONJUNCTION WITH
COMMERCIAL ATLAS LAUNCHES
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
------
<S> <C>
Table of Contents i
Amendment 1 iii
Amendment 2 iv
Amendment 3 v
Amendment 4 vi
Amendment 5 vii
Title & Preamble 1
1. Recital 1
2. Format of Agreement 2
3. Changes 2
4. Description of Services 2
5. Documentation Requirements 3
5.1 General 3
5.2 Payload Processing Requirements Document 3
5.3 Hazardous Procedures 4
5.4 Liquid Propellant Operations Crew Certification 4
6. Environmental, Safety, and Health Responsibilities 4
6.1 Astrotech Obligations to LMCLS 4
6.2 LMCLS Obligations to Astrotech 6
7. Coordination 7
7.1 Agreement Coordinators and Technical Managers 7
7.2 Coordination with USAF 7
7.3 Additional Coordination 7
8. Schedule and Facility Assignment 7
8.1 Occupancy Period 7
8.2 Key Dates 7
8.3 Schedule Changes 8
9. Service Fees and Other Charges 9
9.1 Price 9
9.2 Payments 9
9.3 Billing and Payment Schedule 9
10 .Allocation of Certain Risks of Liability and Damage 10
10.1 General 10
10.2 Definitions 10
10.3 Damage to Persons or Property Involved in Payload Processing Activity 11
10.4 Risk of Patent Infringement 13
10.5 Assistance with Third Party Claims 13
11. Limitation of Astrotech and LMCLS Liability 14
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
12. Termination 14
12.1 Termination by LMCLS 14
12.2 Termination by Astrotech 15
13. Handling of LMCLS and Customer Provided Data 16
13.1 Technical Data Furnished to Astrotech by LMCLS and Customer 16
13.2 Financial and Commercial Data 16
14. Patent and Data Rights 17
15. Compliance With the International Traffic in Arms Regulation (ITAR) 17
15.1 Conduct of Activities 17
15.2 Technology Assistance Agreement 17
15.3 Signature Assistance 17
16. Permits and Licenses 17
17. Warranty 18
17.1 Warranty of Services 18
17.2 Exclusivity of Warranties and Remedies 18
18. Notices 18
19. Governing Law 19
20. Severability 19
21. Waiver 19
22. Disputes 19
22.1 Disputes Resolution 19
22.2 Performance During Submission of Dispute 20
23. Headings 20
24. Assignability 20
25. Disclaimer of Authority 20
26. Complete Agreement 20
27. Effective Date and Duration of Agreement 20
</TABLE>
Appendix 1: Agreement Exhibit Format
Appendix 2: Spacecraft Services
Appendix 3: Atlas Launch Vehicle Services
Appendix 4: Price Schedule
ii
<PAGE> 4
AMENDMENT 1
1. Description of Amendment. Amendment 1 (i) extends the duration of
this Agreement from 4 March 1989 through 31 December 1994 to 4 March 1989
through 31 December 1997, (ii) and similarly extends the Appendix 4 Price
Schedule.
2. Incorporation of Amendment 1 Change Pages. Amendment 1 consists
of the following change pages: Coverpage; i; iii; iv; 24; Appendix 4, Page 1 of
3, Page 2 of 3, and Page 3 of 3. Where change pages contained in Amendment 1
have the same page number as pages in the previous issue of this Contract, the
Amendment 1 changes pages are to be substituted for and replace the
corresponding previous issue pages in their entirety. All pages of this contract
affected by Amendment 1 carry the notation "AMENDMENT 1" in either the upper or
lower righthand corner. The update of this Contract to Amendment 1 is
accomplished by the addition of substitution, as appropriate, of all Amendment 1
change pages.
3. Effective Date. This Amendment 1 shall enter into force as of
the date of the last signature of the parties shown on Page 24.
iii
<PAGE> 5
AMENDMENT 2
1. Description of Amendment. Amendment 2 (i) extends the duration of
this Agreement from 4 March 1989 through 31 December 1994 to 4 March 1989
through ****, (ii) recognizes the change from NASA to USAF as the source of
Government support provided to Astrotech, and (iii) revises, and simplifies and
extends the Appendix 4 Price Schedule to cover the time period through the year
2000.
2. Incorporation of Amendment 2 Change Pages. Amendment 2 consists
of the following change pages: Coverpage; i; iv; 3; 6; 19; 21; and 24; and
Appendix 4 in its entirety. Where change pages in Amendment 2 have the same page
number as pages in the previous issue of this Contract, the Amendment 2 change
pages are to be substituted for and replace the corresponding previous issue
pages in their entirety. All pages of this Contract affected by Amendment 2
carry the notation "AMENDMENT 2" in either the upper or lower righthand corner.
The updaate of this Contract to Amendment 2 is accompliahed by the addition or
substitution, as appropriate, of all Amendment 2 change pages.
3. Effective Date. This Amendment 2 shall enter into force as of
the date of the last signature of the parties shown on Page 24.
iv
<PAGE> 6
AMENDMENT 3
1. Description of Amendment. Amendment 3 (i) recognizes that
Martin Marietta Commercial Launch Services, Inc. has been renamed Lockheed
Martin Commercial Launch Services, Inc. and that all references in this
Agreement to General Dynamics Commercial Launch Services, Inc. or GDCLS are to
be construed to be references to Lockheed Martin Commercial Launch Services,
Inc. (LMCLS), (ii) revises the expiration date of this Agreement to 31 December
1997, and (v) revises the Appendix 4 Price Schedule to extend the previous Price
Schedule for an additional one year period, with the option to elect an
Alternative Price Schedule for a multi-year period at a reduced per payload
price.
2. Incorporation of Amendment 3 Change Pages. Amendment 3 consists
of the following change pages: Coverpage; i; ii; v; and 24; and Appendix 4 in
its entirety. Where change pages in Amendment 3 have the same page number as
pages in the previous issue of this Contract, the Amendment 3 change pages are
to be substituted for and replace the corresponding previous issue pages in
their entirety. All pages of this Contract affected by Amendment 3 carry the
notation "AMENDMENT 3" in either the upper or lower righthand corner. The update
of this Contract to Amendment 3 is accomplished by the addition or substitution,
as appropriate, of all Amendment 3 change pages.
3. Effective Date. This Amendment 3 shall enter into force as of
the date of the last signature of the parties shown on Page 24.
v
<PAGE> 7
AMENDMENT 4
1. Description of Amendment. Amendment 4 (i) recognizes that all
references in this Agreement to General Dynamics Commercial Launch Services,
Inc. or GDCLS are to be construed to be references to Lockheed Martin Commercial
Launch Services, Inc. (LMCLS), (ii) incorporates LMCLS's commitment to exclusive
use of Astrotech Services, (iii) revises the termination provisions to be
consistent with the exclusive use commitment, (iv) retains the expiration date
of this Agreement as 31 December 1999, (v) revises the Appendix 3 Services for
Payload Fairing Encapsulation to indicate GDCLS responsibility for transport,
and (vi) revises the Appendix 4 Price Schedule.
2. Incorporation of Amendment 4 Change Pages. Amendment 4 consists
of the following change pages: Coverpage; i; vi; 2; 16; 16a, 24; Appendix 3 Page
1 of 3, and Appendix 4 in its entirety. Where change pages in Amendment 4 have
the same page number as pages in the previous issue of this Contract, the
Amendment 4 change pages are to be substituted for and replace the corresponding
previous issue pages in their entirety. All pages of this Contract affected by
Amendment 4 carry the notation "AMENDMENT 4" in either the upper or lower
righthand corner. The update of this Contract to Amendment 4 is accompliahed by
the addition or substitution, as appropriate, of all Amendment 4 change pages.
3. Effective Date. This Amendment 4 shall enter into force as of
the date of the last signature of the parties shown on Page 24.
vi
<PAGE> 8
AMENDMENT 5
1. Description of Amendment. Amendment 5 (i) changes all
references to General Dynamics Commercial Launch Services, Inc. or GDCLS to
Lockheed Martin Commercial Launch Services, Inc. (LMCLS), (ii) changes all
references to Astrotech Space Operations, L.P. to Astrotech Space Operations,
Inc., (iii) incorporates reference to Facility Requirements Document for Florida
TICO facility expansion, (iv) incorporates references and standard services for
Astrotech Vandenberg AFB payload processing services, (v) revises the Appendix 2
and Appendix 3 Services for Spacecraft Processing and Payload Fairing
Encapsulation to meet Atlas V requirements, (vi) revises the Agreement
expiration date to ****, (vii) provides for **** one-year option periods for
calendar years **** through **** inclusive, and (viii) revises the Appendix 4
Price Schedule.
2. Incorporation of Amendment 5 Changes. Amendment 5 is a complete
revision to the Agreement, replacing the original issue and Amendments 1 through
4 in their entirety.
3. Effective Date. This Amendment 5 shall enter into force as of
the date of the last signature of the parties shown on Page 21.
vii
<PAGE> 9
AGREEMENT BETWEEN
ASTROTECH SPACE OPERATIONS, INC.
AND
LOCKHEED MARTIN COMMERCIAL LAUNCH SERVICES, INC.
FOR PROVISION OF
PAYLOAD PROCESSING FACILITIES AND SUPPORT
IN CONJUNCTION WITH
COMMERCIAL ATLAS LAUNCHES
This Agreement is entered into by and between Astrotech Space
Operations, Inc., a Delaware corporation and a wholly-owned subsidiary of
SPACEHAB, Inc. (hereinafter called "Astrotech"), and Lockheed Martin Commercial
Launch Services, Inc., a Delaware corporation (hereinafter called "LMCLS"), and
sets forth the terms and conditions under which Astrotech shall furnish Payload
Processing Facilities and Activities to LMCLS and to each LMCLS customer
(hereinafter called "Customer") so identified in a duly executed Exhibit to this
Agreement in conjunction with commercial Atlas launches.
1. Recital. LMCLS has established a program to provide Atlas
expendable launch vehicle launch services on a commercial basis utilizing launch
facilities at Cape Canaveral Air Station, Florida and Vandenberg AFB,
California. Under its contract with Customer for Atlas launch services, LMCLS
acts as the agent of Customer to arrange for all Customer-required prelaunch
Payload Processing Facilities and Activities. Therefore, in conjunction with
these commercial Atlas launches, LMCLS will require specialized facilities and
support (hereinafter called "Services") for the preparation of each Customer
spacecraft and its respective upper stage system, if applicable, the payload
fairing, and all other associated property to be flown aboard the Atlas launch
vehicle (hereinafter called "Payload"), and for Atlas payload fairing
encapsulation activities. Astrotech has built and operates specialized Payload
Processing Facilities in Titusville, Florida adjacent to the NASA-John F.
Kennedy Space Center (hereinafter called "Astrotech TICO") and at Vandenberg
AFB, California (hereinafter called "Astrotech VAFB") wherein Astrotech offers
such Services. Under this Agreement LMCLS will utilize Astrotech Services for
the prelaunch processing of the Payloads for commercial Atlas launches for the
duration of this Agreement. Additionally, as mutually agreed, LMCLS will
provide, without cost to Astrotech, engineering support services to Astrotech
(e.g., reviewing Astrotech drawings and analyses) for facility modifications
necessary to satisfy future LMCLS and Customer payload processing requirements.
1
<PAGE> 10
2. Format of Agreement. This Agreement is in the form of a Basic
Purchase Order Agreement. The Title, Preamble, Sections 1 through 27, and the
Appendices of this Agreement constitute the general terms and conditions
(hereinafter called "General Terms and Conditions") applicable to the Services
to be provided by Astrotech for all Payload Processing Activities performed
under this Agreement. The mission specific details and requirements for each
Payload are contained in a series of Exhibits, modeled after Appendix 1, which
will be attached to and made part of this Agreement as they are mutually agreed
to and signed by authorized representatives of LMCLS and Astrotech. Any
alteration or exception to the General Terms and Conditions for a specific
mission will be clearly stated and identified in the applicable Exhibit.
3. Changes. Changes to the Services defined herein to be provided by
Astrotech to LMCLS under this Agreement may be agreed to by LMCLS and Astrotech
and shall be evidenced by a written amendment to the General terms and
Conditions or applicable Exhibit of this Agreement, as appropriate, prior to
implementation of such change.
4. Description of Services. The description and specifications of
the Astrotech TICO facilities and equipment, as they pertain to this Agreement,
are those contained in the Astrotech document titled "Facility Accommodation
Handbook/TICO" dated June 1994, and subsequent revisions that do not diminish
the previously stated capabilities, which is explicitly incorporated by
reference herein and the Lockheed Martin Astronautics Astrotech Satellite
Processing Facility, Bldg. 10, Facility Requirements Document (SPF-FRD-99) dated
19 January 2000, and subsequent revisions mutually approved by LMCLS and
Astrotech. The date for LMCLS beneficial occupancy of the Bldg. 10 facility
shall be ****. The description and specifications of the Astrotech VAFB
facilities and equipment, as they pertain to this Agreement, are those contained
in the Astrotech document titled "Facility Accommodation Handbook/VAFB" dated
March 1998, and subsequent revisions that do not diminish the previously stated
capabilities, which is explicitly incorporated by reference herein. Astrotech
shall maintain the TICO and VAFB facilities to ensure readiness to support LMCLS
and LMCLS Customer requirements consistent with the capabilities specified in
the above documentation. In addition to operating and maintaining the Astrotech
TICO and Astrotech VAFB facilities, Astrotech shall provide to LMCLS for each
Customer Payload to be processed under this Agreement the "Spacecraft Services"
set forth in Appendix 2 of this Agreement and for each associated Payload
fairing encapsulation to be accomplished under this Agreement the "Atlas Launch
Vehicle Services" set forth in Appendix 3 of this Agreement. It is recognized by
LMCLS and Astrotech (i) that certain of the Services to be provided to LMCLS
will be obtained by Astrotech from the U.S. Government pursuant to "Department
of the Air Force/Astrotech Space Operations Commercial Space Operations Support
Agreement", executed 15 November 1999, and subsequent revisions, and (ii) that
LMCLS and Customer or their respective contractors or
2
<PAGE> 11
subcontractors, other than Astrotech, shall perform all activity involving
assembly, servicing and checkout of the Payload and use of its associated ground
support equipment, unless otherwise expressly provided for in this Agreement.
5. Documentation Requirements.
5.1 General. LMCLS shall provide Astrotech the documentation
described in Sections 5.2, 5.3 and 5.4 below applicable to the activities
planned to occur at the Astrotech Facility. While it is essential that the
required content of this documentation be complete as defined below, Astrotech
will accept the documentation in any format convenient to LMCLS and Customer. In
particular, to the extent the required documentation has been prepared for and
approved for activity in Government facilities such documentation shall be fully
acceptable to Astrotech, except to the extent additional information may be
required to adequately define a planned activity at the Astrotech Facility.
Astrotech will evaluate such LMCLS provided documentation only from the
standpoint of facility compatibility and safety, and will not attempt to
evaluate, in any way, the probability of Payload success. All such documentation
shall be written in the English language.
5.2 Payload Processing Requirements Document. A Payload
Processing Requirements Document (or Documents) for each Payload shall be
submitted to Astrotech nominally nine months prior to the beginning of the
Occupancy Period set forth in Section 8.1 below for the particular Payload,
unless otherwise agreed to in writing by Astrotech. This document shall provide
a description of the Payload (including a description of each hazardous system),
outline all Payload and Payload fairing activities planned to occur at the
Astrotech Facility, and detail all services and support requested by LMCLS to be
provided to LMCLS and Customer by Astrotech. The hazardous systems description
shall include drawings, schematics, summary test data, and any other available
information which will aid in appraising the respective systems. Hazardous
systems description shall include ordnance devices, radioactive materials,
propellants, pressurized systems, toxic material, cryogenic material, and radio
frequency (RF) radiation, and any other system which is a source of danger
either to personnel or equipment. Astrotech will review the Payload Processing
Requirements Document, which, when mutually agreed to by Astrotech and LMCLS,
will constitute the detailed definition of the Services to be provided by
Astrotech for the particular Payload and associated Payload fairing
encapsulation. For repeat payload processing operations, to the extent that
identical Spacecraft processing operations and Payload fairing encapsulation
operations are to be performed, a one-time submittal will suffice for all such
operations.
3
<PAGE> 12
5.3 Hazardous Procedures. Detailed procedures must be prepared
for all operations at the Astrotech Facility involving hazardous systems, as
defined in Section 5.2 above. Hazardous procedures planned for use at Astrotech
VAFB must be prepared in accordance with WR 127-1. All such procedures shall be
clearly labeled as "Hazardous" and shall be submitted to Astrotech for review no
later than forty-five (45) days prior to planned use at the Astrotech Facility,
unless otherwise agreed to in writing by Astrotech. Once mutually agreed to by
Astrotech and LMCLS, hazardous procedures shall be followed without exception.
Any changes to an approved hazardous procedure must be mutually agreed to by the
Astrotech and LMCLS Technical Managers prior to use.
5.4 Liquid Propellant Operations Crew Certification. A Liquid
Propellant Operations Crew Certiciation shall be submitted by LMCLS to Astrotech
no later than one week prior to the beginning of liquid propellant operations
for each Payload. This document shall identify all personnel who will be
directly involved in handling liquid propellents at the Astrotech Facility and
shall state that each individual is properly qualified for such activity. At
Astrotech VAFB, the personnel so identified, by means of Astrotech sponsorship,
may be required to obtain medical certification and attend USAF training courses
as required by Air Force safety regulations.
6. Environmental, Safety, and Health Responsibilities.
6.1 Astrotech Obligations to LMCLS
6.1.1 Astrotech, at its own cost and expense, shall
operate the Astrotech Facilities and conduct all Astrotech Payload Processing
Activities in compliance with all applicable federal, state and local laws,
regulations, rules, ordinances, and other regulatory requirements and standards
relating to the regulation and protection of the environment, safety and health,
in effect at any time during the period of this contract ("ESH Laws").
6.1.2 With respect to all Payload Processing Activities
performed under this Agreement that are conducted on United States
government-owned property, the term "ESH Laws" also includes all applicable base
permits, operational plans and procedures and other site specific requirements
relating to the environment, safety and health at the particular
government-owned property in question.
6.1.3 Astrotech shall be considered the owner and
operator of the Astrotech Facilities for the purposes of all applicable ESH
Laws. Astrotech shall obtain, at its own cost and expense, any and all permits
or licenses, maintain records and prepare any reports, manifests, or other
documentation
4
<PAGE> 13
necessary to operate the Astrotech Facilities and conduct all Astrotech Payload
Processing Activities in compliance with all ESH Laws.
6.1.4 Upon LMCLS's or the Customer's reasonable notice
and request, Astrotech shall make available all permits, licenses, plans,
procedures, manuals, protocols and other documents pertaining to the Astrotech
Facilities (including any amendments or revisions thereto) that Astrotech has
developed or maintained pursuant to applicable ESH laws.
6.1.5 Astrotech shall notify LMCLS and the Customer(s)
of any potentially hazardous operations (as defined in Section 5.3) that are
being conducted at the Astrotech Facilities by Astrotech or any of its other
customers at the facility concurrent with LMCLS or the Customer's activities.
6.1.6 Astrotech shall be responsible for all permitted
and unpermitted releases or discharges of pollutants, contaminants, hazardous
substances, or petroleum products to the environment from or at the Astrotech
Facilities related to activities performed by Astrotech, LMCLS, their agents
(i.e., LMA) and their Customers. Notwithstanding the foregoing, and with the
express agreement that Astrotech shall be responsible for reporting and other
regulatory requirements, Astrotech shall not be responsible for any damages or
penalties resulting from releases caused solely by the negligence of LMCLS, its
agents or Customer(s).
6.1.7 For the purposes of ESH Laws pertaining to the
generation, storage, transportation, treatment and disposal of hazardous waste,
Astrotech shall be considered the generator of and, at its own cost and expense,
shall manage all hazardous waste generated in connection with the Payload
Processing Activities. In addition, Astrotech agrees to provide proper disposal
for any hazardous materials identified as excess by the Customer. For such
excess materials, Astrotech agrees to pay up to **** per mission towards the
disposal costs. Any costs in excess of **** will be billed to LMCLS as a
reimbursable expense without Astrotech mark-up.
6.1.8 Astrotech, at its own cost and expense, shall
provide Hazardous Materials Storage lockers for use by LMCLS and Customer
personnel working at the Astrotech Facility. Storage lockers shall meet
applicable OSHA and NFPA Code 30 requirements.
6.1.9 Astrotech, at its own cost and expense, shall
provide Astrotech Facility Orientation to all LMCLS and Customer personnel. This
orientation course will include a summary of Astrotech site-specific hazardous
material requirements. Upon LMCLS's reasonable notice and request,
5
<PAGE> 14
Astrotech shall make available to LMCLS all course materials that will be used
to provide Customer orientation.
6.1.10 Astrotech, as its own cost and expense, will
review all customer-submitted operating procedures for compliance with all
applicable ESH and OSHA standards.
6.2 LMCLS Obligations to Astrotech
6.2.1 LMCLS shall require the Customer to agree to
notify Astrotech, within 60 days prior to the arrival of the Payload to the
Astrotech Facility, of the types and amounts of hazardous chemical products or
articles, including but not limited to cleaners, propellants and ordnance, that
will be required for preparation of any payload. Such notification shall include
the submission of applicable Material Safety Data Sheets (MSDS) or similar
documents.
6.2.2 LMCLS shall require the Customer to agree to
comply with applicable requirements of the Toxic Substances Control Act, 15
U.S.C. Sections 2601 to 2692, including those requirements that pertain to the
import or export of chemicals, and all other applicable ESH laws while in
residence at the Astrotech Facility.
6.2.3 LMCLS shall require the Customer to agree to
minimize the generation of hazardous waste in its Payload Processing Activities.
As part of this obligation, LMCLS shall require the Customer to agree to
minimize the amount of hazardous materials used in connection with its Payload
Processing Activities to be performed at the Astrotech facility.
6.2.4 LMCLS shall require the Customer to agree to
submit all hazardous operating procedures to be performed at the Astrotech
facility to Astrotech safety for review and approval prior to use. Customers
shall be required to execute the procedures as approved, and coordinate any
required deviations with Astrotech safety prior to performance.
6.2.5 While occupying the Astrotech facilities and
except as otherwise provided herein, LMCLS, their agents (i.e., LMA) and their
Customers will be responsible for appropriately handling all hazardous materials
brought on to the Astrotech Facility and utilized by their respective personnel
in the performance of their operations to include: (i) storage of all hazardous
materials in Astrotech-provided, hazardous material storage lockers, (ii)
monthly update of locker inventories and submittal to Astrotech, and (iii) at
the completion of mission processing operations removal of hazardous material
that LMCLS or the Customer, in its sole descretion, determines it can use in its
ongoing
6
<PAGE> 15
operations and transfer to Astrotech of all other hazardous material or waste
for disposal per Section 6.1.7.
7. Coordination.
7.1 Agreement Coordinators and Technical Managers. LMCLS and
Astrotech shall each designate an Agreement Coordinator who shall be responsible
for coordinating with each other all financial, general scheduling, and other
administrative matters related to this Agreement. In addition, LMCLS and
Astrotech shall each designate a Technical Manager, who shall be responsible for
coordinating with each other all technical activities, including the day-by-day
activity schedules, to be performed under this Agreement.
7.2 Coordination with USAF. The Astrotech Technical Manager
shall provide all coordination with USAF for any U.S. Government support
provided to LMCLS and Customer under this Agreement.
7.3 Additional Coordination. The Astrotech Technical Manager
and LMCLS Technical Manager shall, through consultation and with the assistance
of the Customer Technical Manager, coordinate the activities of Astrotech,
LMCLS, and Customer related to the furnishing of Services provided under this
Agreement, and will call upon individuals from their respective organizations,
including contractors and consultants, to participate as necessary and
appropriate in such consultations.
8. Schedule and Facility Assignment.
8.1 Occupancy Period. The period of time agreed to by LMCLS
and Astrotech during which LMCLS and Customer will reside at the Astrotech
Facility or otherwise receive Services for each Payload to be processed under
this Agreement (hereinafter called "Occupancy Period") and the launch date upon
which the Occupancy Period is based shall be determined and set forth in the
Exhibit of this Agreement applicable to the particular Payload. Such Exhibit
shall also contain the schedules and assignments for the use of the facilities
within Astrotech TICO or Astrotech VAFB, as applicable, by LMCLS and Customer.
8.2 Key Dates. Key milestone dates relating to all critical
events that could affect the Occupancy Period or Services to be performed for
each Payload under this Agreement shall be exchanged between the Astrotech
Technical Manager and the LMCLS Technical Manager. Each party shall advise
7
<PAGE> 16
the other, in a timely manner, of any event which occurs that would
significantly alter the agreed to Occupancy Period or Services.
8.3 Schedule Changes. LMCLS and Astrotech recognize that the
nature of spaceflight activity is such that schedules must sometimes be changed,
often for reasons beyond the control or reasonable predictive ability of LMCLS,
Customer, or Astrotech. In the event that a change in the Occupancy Period or in
the schedules for the use of the respective Astrotech facilities for a
particular Payload becomes necessary by LMCLS, Customer, or Astrotech, LMCLS and
Astrotech agree to work together to accommodate the particular rescheduling
request (including, if necessary, changes in the assignments for the use of the
respective Astrotech facilities, and overtime and weekend work by LMCLS,
Customer, and Astrotech, and their respective contractors and subcontractors) in
a manner that will be mutually acceptable, satisfy the established launch
schedules, and be compatible with the established or changed schedules of the
other customers of Astrotech. Once the need for such a change has been
recognized by either LMCLS or Astrotech, the party recognizing such need shall
promptly notify the other party of the particular rescheduling or reassignment
request, and the related circumstances. A change in the announced launch
schedule for a particular Payload by more than one week from the launch date
upon which the current Occupancy Period is based shall be deemed to be
notification to Astrotech of a request to change the Occupancy Period, unless
LMCLS otherwise notifies Astrotech.
8.3.1 Schedule Changes Requested or Caused by LMCLS. In
the event that LMCLS requests or causes a change in the Occupancy Period or the
schedule for the use of the respective Astrotech facilities for a particular
Payload, as long as the resulting change does not exceed the duration of the
previously established schedule such change shall not affect the Service Fee or
other charges to LMCLS, except that LMCLS shall be charged any increase or
credited with any decrease in the Service Fee applicable to any change in launch
date associated with the rescheduled Occupancy Period, in accordance with the
Price Schedule set forth in Appendix 4 of this Agreement applicable to the
particular Payload
8.3.2 Schedule Changes Requested by Astrotech. In the
event that Astrotech requests and LMCLS agrees to a change in the Occupancy
Period, such change shall not affect the Service Fee or other charges to LMCLS,
except that LMCLS shall be credited with any decrease in the Service Fee
applicable to any change in launch date associated with the rescheduled
Occupancy Period, calculated in accordance with the Price Schedule set forth in
Appendix 4 of this Agreement applicable to the particular Payload.
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9. Service Fees and Other Charges.
9.1 Price. LMCLS shall pay Astrotech a firm fixed price
Service Fee (hereinafter called "Service Fee") specified in the applicable
Exhibit for each Payload to be processed at the Astrotech facilities under this
Agreement, determined pursuant to the Price Schedule set forth in Appendix 4 of
this Agreement, plus any additional charges agreed to or otherwise due and
payable under this Agreement. The stated Service Fee and additional charges are
exclusive of any taxes, if applicable. The Appendix 4 Price Schedule provides
per mission pricing on a calendar year basis through the expiration date of the
current Agreement, ****, plus pricing terms for **** one-year option periods for
**** through **** inclusive.
9.2 Payments. All payments defined in this Agreement shall be
(i) in United States Dollars, (ii) payable to Astrotech Space Operations, Inc.,
and (iii) delivered, at LMCLS expense, to the offices of Astrotech Space
Operations, Inc. at 6305 Ivy Lane, Suite 520, Greenbelt, MD 20770-6318 or other
address specified by Astrotech in writing. As an alternative to sending payments
to Astrotech as specified in clause (iii) above, LMCLS may pay by wire transfer
to Astrotech's bank in accordance with instructions available upon request from
Astrotech. All payments made under this Agreement shall reference the number of
the applicable Exhibit shown on the invoice.
9.3 Billing and Payment Schedule. Each Exhibit of this
Agreement sets forth the billing schedule for the Service Fee applicable for
that particular Payload. The amount and billing dates of the three partial
payments for each Payload are determined in accordance with Sections 9.3.1,
9.3.2, and 9.3.3 below. In addition to these three scheduled payments, Astrotech
shall provide LMCLS a separate invoice for any additional charge or charges
agreed to or otherwise due and payable under this Agreement determined in
accordance with Section 9.3.4 below, unless otherwise expressly provided for in
this Agreement. All payments shall be due and payable within thirty (30) days of
the billing date of the invoice.
9.3.1 Deposit and First Partial Payment. On the
effective date of each Exhibit, LMCLS will be billed five percent (5%) of the
Service Fee for that particular Payload to be processed at Astrotech TICO or
Astrotech VAFB under this Agreement.
9.3.2 Second Partial Payment. Thirty (30) days prior to
the beginning of the Occupancy Period for each Payload, LMCLS will be billed
forty-five percent (45%) of the Service Fee applicable to that particular
Payload plus any adjustments to the First Partial Payment required due to a
change in the scheduled launch date subsequent to the effective date of the
applicable Exhibit. The
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cumulative total of the First and Second Partial Payments will equal fifty
percent (50%) of the applicable Service Fee.
9.3.3 Third Partial Payment. On the last day of the
Occupancy Period for each Payload, LMCLS will be billed fifty percent (50%) of
the Service Fee applicable to that particular Payload plus any outstanding
unpaid balance or credit due toward the Service Fee for that particular Payload
as a result of Changes to this Agreement. The cumulative total of the First,
Second, and Third Partial Payments will equal one hundred percent (100%) of the
applicable Service Fee based upon the actual launch date.
9.3.4 Final Billing. As soon as practicable, but not
later than sixty (60) days after the end of the Occupancy Period for each
Payload, LMCLS will be billed for any additional charges agreed to or otherwise
due and payable for that particular Payload under this Agreement.
10. Allocation of Certain Risks of Liability and Damage.
10.1 General. Certain risks of Liability and Damage, as
defined below, arising out of the Services to be provided by Astrotech and its
contractors and subcontractors under this Agreement, including the use of any U.
S. Government facilities and support arranged by Astrotech under this Agreement,
shall be allocated between LMCLS and Astrotech (hereinafter called the
"Parties") as set forth in this Section 10.
10.2 Definitions. The following definitions shall be applicable
to this Agreement.
10.2.1 Liability. "Liability" shall include payments
made pursuant to any judgment by a court of competent jurisdiction or award of
an arbitration tribunal, and administrative and litigation costs, and settlement
payments made after consultation between the Parties.
10.2.2 Damage. "Damage" shall mean bodily injury to or
death of any person, damage to or loss of any property, and loss of revenue or
profits or other direct, indirect or consequential damages arising therefrom.
10.2.3 Payload Processing Activity. "Payload Processing
Activity" shall mean all activity conducted at the Astrotech Facility or at a
U.S. Government installation, where use of the U.S. Government installation is
arranged by Astrotech under this Agreement, including that associated with the
preparation of the Payload or another payload for launch aboard a Government or
commercial launch
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vehicle, post flight processing of the Payload or another payload, the storage
of all or a portion of the Payload or another payload, the handling and
transportation of all or a portion of the Payload or another payload outside the
confines of the Astrotech Facility by Astrotech or its contractors or
subcontractors, or outside a U.S. Government installation by the U.S. Government
or its contractors or subcontractors, and Manufacturing Support Activity.
10.2.4 Manufacturing Support Activity. "Manufacturing
Support Activity" shall mean all activity conducted at the Astrotech Facility
that is not directly related to the prelaunch or post flight processing,
storage, or handling and transportation of the Payload or another payload.
10.3 Damage to Persons or Property Involved in Payload Processing
Activity.
10.3.1 Inter-Party Waiver of Liability. In carrying out
this Agreement, Astrotech and LMCLS and LMCLS Customer will respectively utilize
their property and employees in the Payload Processing Activity in close
proximity to one another and to others. Furthermore, the Parties recognize that
all participants in Payload Processing Activity are engaged in the common goal
of meaningful exploration, exploitation and uses of outer space. In furtherance
of this goal, the Parties hereby agree to a no-fault, no-subrogation,
inter-party waiver of liability pursuant to which each party agrees not to bring
a claim in arbitration or otherwise against or sue the other or other
participants (including the U.S. Government) in Payload Processing Activity, and
agrees to absorb the financial and any other consequences for Damage it incurs
to its own property and employees as a result of participation in Payload
Processing Activity, irrespective of whether such Damage is caused by Astrotech,
LMCLS, or other participants in Payload Processing Activity, and regardless of
whether such Damage arises through negligence or otherwise. Thus, the Parties,
by absorbing the consequences of Damage to their property and employees without
recourse against each other or other participants in Payload Processing
Activity, jointly contribute to the common goal of meaningful exploration,
exploitation and uses of outer space.
10.3.2 Extension of Inter-Party Waiver. The Parties
agree that this common goal will also be advanced through extension of the
inter-party waiver of liability to other participants in Payload Processing
Activity. Accordingly, the Parties agree to extend the waiver as set forth in
Section 10.3.1 above to the LMCLS Customer, to other customers of Astrotech, to
contractors and subcontractors at every tier of Astrotech, LMCLS, LMCLS
Customer, and to all other participants (excluding the U.S. Government) in
Payload Processing Activity, as third party beneficiaries, whether or not such
participants causing damage bring property or employees to the Astrotech
Facility or retain title to or other interest in property provided by them to be
used, or otherwise involved, in Payload Processing Activity. Further, the
Parties recognize and agree that, although the U.S. Government will not
participate in this inter-party
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waiver, the U.S. Government will also be a third party beneficiary.
Specifically, the Parties intend to protect these contractors, subcontractors
and the U.S. Government from claims, including "products liability" claims,
which might otherwise be pursued by the Parties, or the contractors or
subcontractors of the Parties, or other participants in Payload Processing
Activity. Moreover, it is the intent of the Parties that each will take all
necessary and reasonable steps in accordance with Section 10.3.4 below to
foreclose claims for Damage by any participant in Payload Processing Activity,
under the same conditions and to the same extent as set forth in Section 10.3.1
above, except for claims between LMCLS and its contractors and subcontractors,
claims between LMCLS Customer and its contractors or subcontractors, claims
between Astrotech and its contractors or subcontractors, and claims by the U.S.
Government for Damage to U.S. Government persons or property.
10.3.3 Broad Construance of Inter-Party Waiver. The
Parties intend that the inter-party waiver of liability set forth in Sections
10.3.1 and 10.3.2 above be broadly construed to achieve the intended objectives.
10.3.4 Agreement to Extend Inter-Party Waiver. Astrotech
will require all customers entering into Agreements for services to be provided
by Astrotech utilizing the Astrotech Facility to agree to the inter-party waiver
of liability as set forth in Sections 10.3.1 and 10.3.2 above. Further,
Astrotech will require all the following to agree to the waiver of liability set
forth in Section 10.3.2 above: (i) all its contractors; and (ii) all its
subcontractors who will have persons or property involved in Payload Processing
Activity. If Astrotech fails to fulfill its obligation under this Section
10.3.4, Astrotech will indemnify LMCLS and the U.S. Government for any Liability
LMCLS or the U.S. Government may sustain as a result of Astrotech's failure.
LMCLS will require the following to agree to the waiver of liability set forth
in Section 10.3.2 above: (i) LMCLS Customer and all other persons and entities
to whom it assigns all or part of its right to Services; (ii) any person or
entity to whom LMCLS Customer has sold or leased or otherwise agreed, prior to
the completion of Services for a particular Payload, to provide all or any
portion of its Payload or Payload services; (iii) all LMCLS's and LMCLS
Customer's prime contractors; and (iv) all LMCLS's and LMCLS Customer's
subcontractors who will have persons or property involved in Payload Processing
Activity. If LMCLS fails to fulfill its obligation under this Section 10.3.4,
LMCLS will indemnify Astrotech and the U.S. Government for any Liability
Astrotech or the U.S. Government may sustain as a result of LMCLS's failure.
Failure of LMCLS, or LMCLS Customer, or Astrotech, or any other participant
(excluding the U.S. Government) in Payload Processing to obtain a waiver
agreement required above shall not affect LMCLS's, or LMCLS Customer's, or
Astrotech's, or such other participant's right to the protection otherwise
provided by this Section 10.
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10.3.5 Damage to U.S. Government Persons or Property.
The Parties acknowledge that, except as a third party beneficiary, the U.S.
government is not a participant in the inter-party waiver set forth in Sections
10.3.1, 10.3.2, 10.3.3, and 10.3.4 above.
10.4 Risk of Patent Infringement.
10.4.1 Astrotech Indemnity of LMCLS. Astrotech agrees to
indemnify LMCLS, its officers, employees and agents against any United States
Patent infringement costs (including, but not limited to, any judgment against
LMCLS by a court of competent jurisdiction, reasonable administrative and
litigation costs, and settlement payments made as a result of an administrative
claim) incurred by LMCLS which are attributable to products, processes or
articles of manufacture used in the facilities and support to be furnished to
LMCLS by Astrotech hereunder.
10.4.2 LMCLS Indemity of Astrotech. LMCLS agrees to
indemify Astrotech, its officers, employees and agents against any United States
Patent infringement costs (including, but not limited to, any judgment against
Astrotech by a court of competent jurisdiction, reasonable administrative and
litigation costs, and settlement payments made as a result of an administrative
claim) incurred by Astrotech which are attributable to products, processes or
articles of manufacture used in the Payload and any supporting equipment and
facilities brought to the Astrotech Facility by LMCLS, LMCLS Customer, or their
respective contractors or subcontractors, and to any activity which entails
infringement of a United States Patent and which is performed at the Astrotech
Facility by LMCLS, LMCLS Customer, or their respective contractors or
subcontractors.
10.5 Assistance with Third Party Claims. In the event a third
party claim is asserted against Astrotech or LMCLS as a result of patent
infringement, use of proprietary data, or Damage, including claims of their
respective contractors or subcontractors, or LMCLS Customer or LMCLS Customer's
contractors or subcontractors arising from or in connection with the Services
provided by Astrotech under this Agreement, Astrotech and LMCLS each agree to
give prompt notice to the other of any such claim and agree to provide each
other with all assistance practicable in the defense against such claim. If a
claim asserted against either LMCLS or Astrotech is a claim in which one party
has agreed to indemnify the other party under this Agreement, the party who has
agreed to indemnify shall have the right to intervene and defend, the right to
control litigation of, and the right to determine the appropriateness of any
settlement related to such claim.
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11. Limitation of Astrotech and LMCLS Liability. Notwithstanding
Section 10.2.2 above, to the extent that a risk of Damage is not dealt with
expressly in this Agreement, Astrotech's liability to LMCLS, and LMCLS's
liability to Astrotech arising out of this Agreement, whether or not arising as
a result of an alleged breach of this Agreement, (i) shall be limited to direct
damages only and shall not include any loss of revenue, profits or other
indirect or consequential damages, and (ii) shall not exceed the total price
paid to Astrotech by LMCLS for the Services to be provided for the particular
Payload under this Agreement.
12. Termination.
12.1 Termination by LMCLS.
12.1.1 Termination for Convenience. LMCLS shall have the
right to terminate for convenience, in whole or in part, its obligation to
obtain Astrotech Services under this Agreement by providing written notification
to Astrotech.
12.1.1.1 Termination Charge. In the event of
termination by LMCLS pursuant to Section 12.1.1, LMCLS shall pay Astrotech
liquidated damages as specified. In the event of an overpayment, Astrotech shall
refund the amount of such overpayment to LMCLS.
12.1.1.1.1 In Whole. The termination liability charge
to LMCLS shall be the greater of the unpaid balance of payments for all
guaranteed missions through the end of the contract period, ****, or ****. The
termination liability limit to LMCLS is ****. Per mission pricing is specified
in Appendix 4 for each year through the end of the contract period.
12.1.1.1.2 In Part. The termination liability charge
for a given Payload that represents a mission over and above the annual
guaranteed mission quantity of four per year shall be the pro-rated share of the
Service Fee applicable for that particular Payload based on the portion of the
contracted Occupancy Period elapsed as of the date Customer vacates the
Astrotech Facility, computed on a daily basis, but not less than five percent
(5%) of the Service Fee for that Payload, plus any additional charges agreed to
or otherwise due and payable under this Agreement as of the date Customer
vacates the Astrotech Facility. The minimum 5% termination fee also applies if
termination by LMCLS occurs prior to the start of the Facility Occupancy Period
for the Payload. For a Payload that is one of the guaranteed minimum missions
for a particular calendar year, the termination charge shall equal the full
amount of the applicable Servce Fee.
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12.1.2 Termination for Cause. LMCLS shall only have the
right to terminate, in whole or in part, its obligation to obtain Astrotech
Services under this Agreement in the event that (i) Astrotech fails to meet a
material provision of this Agreement for a particular Payload, and such failure
continues without acceptable corrective action for thirty (30) days following
written notification to Astrotech by LMCLS indicating such failure and that
LMCLS intends to terminate, or (ii) Astrotech is unable to adequately satisfy an
essential requirement for a particular Payload and Astrotech so acknowledges in
writing within thirty (30) days following written notification to Astrotech by
LMCLS citing such inability, which acknowledgment shall not be unreasonably
withheld by Astrotech.
12.1.2.1 Termination Charge. In the event of
termination by LMCLS pursuant to Section 12.1.2, LMCLS shall not be required to
pay Astrotech any termination charge associated with that particular Payload and
LMCLS's obligation to guarantee Astrotech a minimum of **** processings in that
caldendar year shall be reduced by **** Payload
12.2 Termination by Astrotech.
12.2.1 Inability to Perform. Astrotech shall have the
right to terminate, in whole or in part, its commitment to furnish Services
under this Agreement, only to the extent that Astrotech is prevented from
performing said Services, (i) in the event of riot, civil strife, war, damage to
or destruction of the Astrotech facility, natural disaster or other Act of God
beyond the control of Astrotech, or (ii) in the event the United States
Government terminates or fails to provide support it has committed to Astrotech
which is necessary for Astrotech to perform certain Services to be provided
hereunder, and Astrotech cannot reasonably provide other means whereby to
perform such Services. Prior to considering termination pursuant to this Section
12.2.1, Astrotech shall consult with LMCLS in order to seek alternative means of
providing Services acceptable to LMCLS.
12.2.2 Non-performance by LMCLS. Astrotech shall have
the right to terminate, in whole or in part, its commitment to furnish Services
under this Agreement in the event LMCLS fails to make any required payment when
due or LMCLS fails to meet any other material provision of this Agreement, and
such failure continues for thirty (30) days beyond receipt by LMCLS of written
notice from Astrotech which specifies such failure. Astrotech shall promptly
notify LMCLS in writing, if LMCLS fails to make such payment or if LMCLS fails
to meet any such other material provision of this Agreement.
12.2.3 Termination Charge. In the event of a termination
of Services for a Payload by Astrotech pursuant to Section 12.2.1, LMCLS shall
not be required to pay Astrotech any termination
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charge. In the event of a termination pursuant to Section 12.2.2, the
termination charge shall be computed in accordance with Section 12.1.1.1. In the
event of overpayment, Astrotech shall refund the amount of such overpayment to
LMCLS.
13. Handling of LMCLS and Customer Provided Data.
13.1 Technical Data Furnished to Astrotech by LMCLS and Customer.
Astrotech and LMCLS shall exchange all documents and information required for
each party to fulfill its responsibilities under this Agreement, including
certain documents that are prepared by and are the property of Customer.
13.1.1 Nonrestrictive Markings. All technical data
furnished to Astrotech under this Agreement shall be provided with unrestricted
rights for use by Astrotech and its contractors and subcontractors in
performance of this Agreement (the right to use, duplicate, and disclose in any
manner and for any purpose whatsoever in performance of this Agreement), and
without a restrictive legend, except as provided pursuant to Section 13.1.2
below. It is the intent of the parties that the designation of technical data as
proprietary or a trade secret shall be kept to a minimum in order to facilitate
implementation of this Agreement.
13.1.2 Proprietary Data. In the event any of the
technical data required to be furnished to Astrotech under this Agreement is
considered by LMCLS or Customer to be proprietary or a trade secret (such as
detailed design, manufacturing and processing information) and LMCLS or Customer
desires to maintain proprietary or trade secret rights for such data, the LMCLS
Technical Manager shall inform the Astrotech Technical Manager that the data is
considered proprietary or a trade secret. Any data so provided shall be marked
by LMCLS or Customer "PROPRIETARY" or "TRADE SECRET" prior to submittal to
Astrotech. Astrotech agrees that such data will not, without permission of
LMCLS, be duplicated, used or disclosed by Astrotech or its contractors and
subcontractors for any purpose other than as necessary to carry out Astrotech's
obligations under this Agreement. If such data is required by Astrotech's
contractors and subcontractors, the data will only be furnished to them after
the contractors and subcontractors have agreed with Astrotech in writing to
protect the data from unauthorized use, duplication and disclosure.
13.2 Financial and Commercial Data. It is recognized that
Astrotech may receive or otherwise have access to certain financial and
commercial (business) data of LMCLS or Customer, or their respective contractors
and subcontractors, which may be considered confidential or privileged, and
which, if subsequently disclosed to the public, could cause substantial harm to
LMCLS's or Customer's competitive position or impair Astrotech's ability to
obtain necessary information in the future. Such data
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shall be considered by Astrotech to be proprietary and handled pursuant to
Section 13.1 above, provided it is marked by LMCLS or Customer as "PROPRIETARY"
prior to submittal to Astrotech.
14. Patent and Data Rights. Astrotech will not acquire, as a result
of the Services provided under this Agreement, any rights to LMCLS's or
Customer's copyrights, trade secrets, inventions, or patents that may be used in
or result from the Payload or any rights to LMCLS's or Customer's proprietary
data, except for the right to use such proprietary data as set forth in Section
13 above.
15. Compliance With the International Traffic in Arms Regulation
(ITAR).
15.1 Conduct of Activities. LMCLS and Astrotech hereby agree to
conduct all Activities at the Astrotech Facility in full compliance with the
ITAR as it pertains to safeguarding the transfer of U.S. technology to non-U.S.
citizens. Certain LMCLS Customers and other customers of Astrotech are non-U.S.
based organizations represented by foreign national personnel that will
participate in the Activities at the Astrotech Facility. LMCLS and Astrotech
shall coordinate all LMCLS, Customer, and Astrotech Activities in such a way as
to prevent the transfer of unauthorized data pertaining to operations,
procedures and hardware to non-U.S. citizens participating in Activities at the
Astrotech Facility.
15.2 Technical Assistance Agreements. Astrotech shall submit
Technical Assistance Agreement (TAA) applications to the United States
Department of State for the performance of those activities that constitute
"defense services" as defined in the ITAR. LMCLS shall obtain an U.S. Department
of State TAA for each mission involving a non-U.S. Customer organization. The
respective TAAs define the approved limits of technical interchange between
Astrotech and the foreign Customer and LMCLS and the foreign Customer. LMCLS
agrees that for all future TAA submittals they will include the Astrotech scope
of work contained in this Agreement in the LMCLS TAA.
15.3 Signature Assistance. LMCLS shall provide assistance to
Astrotech in obtaining approval signatures from the LMCLS Customers on the
Astrotech TAA for missions involving non-U.S. Customers.
16. Permits and Licenses. Astrotech shall obtain any permit or
license that may be required to provide the Services to be furnished under this
Agreement. LMCLS will be responsible for obtaining any permit or license that
may be required to perform an activity unique to the Payload that is not
included in the foregoing, such as tests involving use of radioactive materials.
17. Warranty.
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17.1 Warranty of Services. Astrotech warrants that the Services
performed by Astrotech will reflect competent professional knowledge, judgement
and workmanship. In the event any portion of the Services furnished to LMCLS
fails to comply with this warranty obligation and Astrotech is so notified in
writing prior to the launch date after completion of such portion of the
Services, Astrotech will either promptly reperform such portion of the Services
without additional compensation from LMCLS or at LMCLS's option Astrotech will
refund a portion of the compensation paid to Astrotech for such portion of
Services.
17.2 Exclusivity of Warranties and Remedies. THE WARRANTIES
SET FORTH IN THIS SECTION 17 ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
WARRANTIES WHETHER STATUTORY, EXPRESS, OR IMPLIED (INCLUDING ALL WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES ARISING
FROM COURSE OF DEALING OR USAGE OF TRADE). The remedies set forth in this
Section 17 are the exclusive remedies of LMCLS for any failure by Astrotech to
comply with its warranty obligations. Correction of noncomformance or refund of
compensation paid in the manner provided herein, shall constitute complete
fulfillment of all the liabilities of Astrotech for defective or nonconforming
Services, whether the claims by LMCLS are based in contract, in tort (including
negligence and strict liability), or otherwise.
18. Notices. All notices, requests, demands, and other communications
hereunder shall be in writing, in English, and shall be delivered to the other
party as follows:
To Astrotech: Astrotech Space Operations, Inc.
6305 Ivy Lane, Suite 520
Greenbelt, MD 20770-6318
Attention: Mr. John B. Satrom
Voice: (301) 982-7876
Facsimile: (301) 982-7808
To LMCLS: Lockheed Martin
Commercial Launch Services, Inc.
12999 Deer Creek Canyon Road
Littleton, CO 80127
Attention: Mr. Jack Zivic
MZ DC-1400
Voice: (303) 971-5394
Facsimile: (303) 971-9456
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The effective date of each notice, demand, request, or other communication shall
be deemed to be: (i) the date of confirmed receipt for communications delivered
personally, or transmitted by facsimle machine, or sent by mail, courier or
overnight express with the exception of billing invoices as stipulated in
Section 9.3, or (ii) the date of transmission with a confirmed answerback, if
transmitted by telex. If multiple transmission means are used, the earliest
date, determined in accordance with the foregoing, shall be applicable. Either
party may change its address or designee for purposes hereof by informing the
other party in writing of such action and the effective date of such change.
19. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with the laws in force in the State of Florida, and
Astrotech and LMCLS further agree that they will not commence any action,
whether in a court of law or equity or before an arbitration panel, other than
in the State of Florida.
20. Severability. Any provision of this Agreement that is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality, or unenforceability
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal, or unenforceable in any other jurisdiction.
21. Waiver. A failure by either Astrotech or LMCLS to assert its
rights under this Agreement shall not be deemed a waiver of such rights, nor
shall any waiver be implied from any such act or omission. No waiver by either
Astrotech of LMCLS with respect to any right shall extend its effect to any
subsequent breach of the terms hereof of like or different kind, unless such
waiver explicitly provides otherwise.
22. Disputes.
22.1 Disputes Resolution. Any controversy or claim arising out
of or relating to this Agreement, whether or not involving an alleged breach of
this Agreement, which cannot be resolved in a timely manner by the mutual
agreement of the Technical Managers or Agreement Coordinators of Astrotech and
LMCLS shall in the first instance be submitted in writing, by either Astrotech
or LMCLS, to the President or equivalent senior official of LMCLS and the
President of Astrotech for resolution, whose joint decision shall be made in
writing within thirty (30) days after such submittal and shall be final and
conclusive. In the event any controversy or claim submitted for joint resolution
hereunder is not jointly resolved in writing within thirty (30) days from the
date of such submittal, either party shall have the right to seek other
appropriate relief.
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22.2 Performance During Submission of Dispute. The decision to
submit a dispute under this Section 22 shall not excuse either Astrotech or
LMCLS from the timely performance of its obligations hereunder which are not the
subject matter of such dispute. Further, if the lack of resolution of the matter
in dispute will adversely impact the timely completion of the Payload Processing
Activity, upon the request of LMCLS, Astrotech will perform, while reserving all
rights, the subject matter of such dispute within the framework of this
Agreement and without prejudice to the final resolution of the matter in
dispute.
23. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
24. Assignability. Except for LMCLS's right to assign to Customer its
rights to Services for Customer's spacecraft under its role as agent of
Customer, neither party to this Agreement shall be entitled to assign, directly
or indirectly, by operation of law or otherwise, this Agreement or its rights or
obligations hereunder or any interest herein, except to a related or successor
entity, or with the prior written consent of the other.
25. Disclaimer of Authority. This Agreement shall not constitute
either Astrotech or LMCLS as the legal representative, agent, or
attorney-in-fact of the other, nor, except as expressly set forth herein, shall
Astrotech or LMCLS have the right or authority to assume, create or incur any
liability or obligation of any kind, express or implied, against or in the name
of or on behalf of the other party.
26. Complete Agreement. This Agreement and the Appendices, Exhibits,
and Annexes hereto, together with the documents here inbefore incorporated by
reference, as amended and supplemented, and any Amendments to this Agreement
constitute the entire agreement between the parties hereto with respect to the
transactions contemplated hereby and supersede all previous oral and written and
all contemporaneous oral negotiations, commitments, agreements, and
understandings. The terms of this Agreement may not be waived, altered, modified
or amended, except by a written agreement of the parties hereto executed by duly
authorized officers thereof.
27. Effective Date and Duration of Agreement. This Agreement, which
entered into force on 4 March 1989, shall continue in force through ****, unless
amended or terminated or extended by LMCLS's right to exercise any or all of the
**** one-year Agreement option periods for calendar years **** through ****
inclusive pursuant to the provisions of this Agreement prior to said expiration
date.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Agreement.
LOCKHEED MARTIN ASTROTECH SPACE OPERATIONS, INC.
COMMERCIAL LAUNCH SERVICES, INC.
By: By:
---------------------------- --------------------------------
John A. Zivic, Jr. John B. Satrom
Manager Vice President
Commercial Contracts Payload Processing Operations
Date: Date:
---------------------------- --------------------------------
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Page 1 of 6
APPENDIX 1
EXHIBIT 48801 - (xxx)
(Payload Name)
MISSION SPECIFIC DETAILS AND REQUIREMENTS
FOR
ASTROTECH SERVICES
This Exhibit 48801-(xxx) sets forth the mission specific details and
requirements for the Services to be provided by Astrotech to Lockheed Martin
Commercial Launch Services, Inc. (hereinafter called LMCLS) under Agreement No.
48801 to support the launch of the (Name) Payload.
1. Launch Date. The (Name) Payload is scheduled for launch launch from (CCAS
or VAFB) on (Date), which is the launch date for purposes of this
Agreement.
2. Occupancy Period. The Occupancy Period and facility assignments at
Astrotech (TICO/VAFB) for the Payload established pursuant to Section 8.1
of the General Terms and Conditions are set forth in Annex A, which is
attached to and made part of this Exhibit.
3. Additional Services. Astrotech shall provide additional Services as set
forth in Annex B, which is attached to and made part of this Exhibit.
4. Financial Arrangements.
4.1 Service Fee. Based on the launch date set forth in Section 1 above
and pursuant to Section 9.1 of the General terms and Conditions,
the Service Fee applicable to the (Name) Payload is ****.
4.2 Charges for Additional Services. LMCLS shall pay Astrotech
additional charges for certain additional Services, as specified
in Annex B, which is attached to and made part of this Exhibit.
4.3 Billing Schedule. The billing schedule established pursuant to
Section 9.3 of the General Terms and Conditions is set forth in
Annex C, which is attached to and made part of this Exhibit.
<PAGE> 31
Page 2 of 6
5. Agreement Coordinators and Technical Managers: Pursuant to Section 7.1 of
the General Terms and Conditions, the representatives of LMCLS, the
Spacecraft Customer, and Astrotech designated as Agreement Coordinators
and Technical Managers are identified in Annex D, which is attached to
and made part of this Exhibit.
6. Alterations and Exceptions to the General terms and Conditions. Under
this Exhibit 48801-(xxx) (there are no alterations or exceptions to the
General Terms and Conditions of this Agreement) or (the following are the
alterations and/or exceptions to the General Terms and Conditions of this
Agreement:).
7. Effective Date. This Exhibit 48801-(xxx) shall be incorporated into
Agreement No. 48801 and Astrotech's commitment to provide Services for
the (Name) Payload shall commence as of the date of the last signature of
the parties below.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Exhibit.
LOCKHEED MARTIN ASTROTECH SPACE OPERATIONS, INC.
COMMERCIAL LAUNCH SERVICES, INC.
By: (Signature) By: (Signature)
-------------------------------- ----------------------------
(Name) (Name)
-------------------------------- ----------------------------
(Title) (Title)
-------------------------------- ----------------------------
Date: Date:
-------------------------------- ----------------------------
<PAGE> 32
Page 3 of 6
ANNEX A
OCCUPANCY PERIOD AND FACILITY ASSIGNMENTS
FOR
(Name) PAYLOAD
AT
ASTROTECH (TICO/VAFB)
PROGRAM LAUNCH DATE: _____________________
OCCUPANCY PERIOD: __________ TO __________
<TABLE>
<CAPTION>
FACILITY ASSIGNMENTS:
BUILDING/ROOM ENTRY DATE DEPARTURE DATE
FOR ASTROTECH TICO:
<S> <C>
Building 1/High Bay Complex ("A", "B", "C" or "D")
Building 1/LMCLS Office Area CONTINUOUS
Building 2/("North" or "South") High Bay Complex
Building 2/("North" or "South") Encapsulation Bay
Building 2/Spin Bay
Buildings 3, 4 and 6/ Warehouse Storage SHARED SPACE, AS REQUIRED & AVAILABLE
Building 5/Customer Office Space
(Receptionist Area & 4 Offices)
Building 7/Lockheed Martin Technical Office CONTINUOUS
Building 10/High Bay Complex
Building 10/Payload Encapsulation Bay
FOR ASTROTECH VAFB:
Building 1032/High Bay Complex ("East" or "West")
Building 1036/Technical Support Building
(Receptionist Area & 4 Desks)
Building 1034/Warehouse Storage SHARED SPACE, AS REQUIRED & AVAILABLE
</TABLE>
<PAGE> 33
Page 4 of 6
ANNEX B
ADDITIONAL SERVICES
AND
ASSOCIATED ADDITIONAL CHARGES
FOR
(Name) PAYLOAD
1. Telephone, Facsimile and Telex Service. Astrotech shall provide LMCLS
and Customer, without separate charge, commercial telephone service at the
Astrotech Facility , except that LMCLS shall reimburse Astrotech for all
long-distance calls charged to its assigned telephone extensions. In addition,
Astrotech shall provide access for LMCLS and Customer use of existing Astrotech
facsimile transmission machine and telex capability via personal computer
without separate charge, except that LMCLS shall reimburse Astrotech for all
associated long-distance and telex transmission charges. Astrotech will submit
an itemized summary of these separate charges along with the billing invoice.
<PAGE> 34
Page 5 of 6
ANNEX C
PROGRESS PAYMENT SCHEDULE
FOR THE
(NAME) PAYLOAD
<TABLE>
<CAPTION>
SERVICE FEE PROGRESS PAYMENT BILLING DATE AMOUNT
- ---------------------------- ------------ ------
<S> <C> <C>
Deposit and First Partial Payment (5%) EFFECTIVE DATE* $ ****
Second Partial Payment (45%) **** $ ****
Third Partial Payment (50%) **** $ ****
Total $ ****
-------
</TABLE>
(* Invoice will be issued on the Effective Date of this Agreement)
<PAGE> 35
Page 6 of 6
ANNEX D
AGREEMENT COORDINATORS
AND TECHNICAL MANAGERS
FOR
(Name) PAYLOAD
<TABLE>
<CAPTION>
<S> <C>
LMCLS Agreement Coordinator. (Name)
- --------------------------- -------------------------------------------
(Title or Position)
-------------------------------------------
Lockheed Martin Commercial Launch Services, Inc.
(Address)
-------------------------------------------
(Address)
-------------------------------------------
Telephone:
---------------------------------
Facsimile:
---------------------------------
LMCLS Technical Manager. (Name)
- ----------------------- -------------------------------------------
(Title or Position)
-------------------------------------------
Lockheed Martin Commercial Launch Services, Inc.
(Address)
-------------------------------------------
(Address)
-------------------------------------------
Telephone:
---------------------------------
Facsimile:
---------------------------------
Customer Technical Manager. (Name)
- -------------------------- -------------------------------------------
(Title or Position)
-------------------------------------------
(Customer Organization)
(Address)
-------------------------------------------
(Address)
-------------------------------------------
Telephone:
----------------------------------
Facsimile:
----------------------------------
Astrotech Agreement Coordinator. (Name)
- ------------------------------- -------------------------------------------
(Title or Position)
-------------------------------------------
Astrotech Space Operations, Inc.
6305 Ivy Lane, Suite 520
Greenbelt, MD 20770-6318
Telephone: (301) 982-7876
Facsimile: (301) 982-7808
Astrotech Technical Manager. (Name)
- ---------------------------- -------------------------------------------
(Title)
-------------------------------------------
Astrotech Space Operations, Inc.
(Address)
-------------------------------------------
(Address)
-------------------------------------------
Telephone:
---------------------------------
Facsimile:
---------------------------------
</TABLE>
<PAGE> 36
Page 1 of 5
APPENDIX 2
SPACECRAFT SERVICES
This Appendix 2 describes the scope of Basic Services to be provided by
Astrotech in conjunction with the processing of each Customer spacecraft,
spacecraft with integral upper stage, or spacecraft with PAM or other autonomous
upper stage under this Agreement at either Astrotech TICO or Astrotech VAFB
(the"Astrotech Facility"). The specific Basic Services to be provided by
Astrotech will be as detailed in the Payload Processing Requirements Document
pursuant to Section 5.2 of the General Terms and Conditions of this Agreement.
1. Arrival and Departure Transportation. Astrotech will provide
transportation of crated flight hardware and associated ground support equipment
by commercially available ground transportation vehicles from and to terminals
within a 50 mile radius of the Astrotech Facility. This service will accommodate
shipment by air to and from commercial or Government airports in the vicinity of
Astrotech TICO and Astrotech VAFB. Any specialized loading equipment required,
other than forklifts, must be provided by the transporting airline.
2. Local Transportation. By means of commercially available ground
transportation vehicle, Astrotech will provide transportation and delivery of
the crated Payload or Payload elements, and ground support equipment, within the
Astrotech Facility and (i ) to and from Astrotech TICO and designated facilities
at the Kennedy Space Center (KSC) or Cape Canaveral Air Station (CCAS), or (ii)
to and from Astrotech VAFB and designated facilities at Vandenberg AFB (VAFB),
as applicable.
3. Use of Astrotech Facilities. Astrotech will provide use of the
following portions of the applicable Astrotech Facility. The total mission
occupancy period shall be up to fourteen (14) weeks from the time of Customer
arrival until Customer departure from the facility.
(A) For Payloads processed at Astrotech TICO:
(1) In Building 1: up to fourteen (14) weeks use of one High Bay
Complex, consisting of the High Bay, the associated Garment Change Room, Control
Room (Ground Station), and one contiguous Office Area (minimum of 985 ft2) for
use by the spacecraft contractor;
<PAGE> 37
Page 2 of 5
(2) In Building 2:
(a) for Spacecraft only or Spacecraft with an integral
upper stage up to three (3) weeks use of either (i) the South High Bay Complex,
consisting of the High Bay and the adjacent Fuel and oxidizer Cart Storage
Rooms, the South Garment Change Room, and the South Control Room, or (ii) the
North High Bay Complex, consisting of the North High Bay, the North Garment
Change Room, and the North Control Room for handling and loading of liquid
propellants, and preparation and installation of the Spacecraft apogee kick
motor and/or integral upper stage system, if applicable, and other ordnance, and
use of the Spin High Bay, if required, for spin balancing the Spacecraft or
related ordnance preparations, and
(b) for Spacecraft with PAM or other Autonomous Upper
Stage up to three (3) weeks use for Spacecraft processing of either (i) the
South High Bay Complex, consisting of the High Bay and the adjacent Fuel and
oxidizer Cart Storage Rooms, the South Garment Change Room, and the South
Control Room, or (ii) the North High Bay Complex, consisting of the North High
Bay, the North Garment Change Room, and the North Control Room for handling and
loading of liquid propellants, and preparation and installation of the
Spacecraft apogee kick motor and/or integral upper stage system, if applicable,
and other ordnance, and use of the Spin High Bay, if required, for spin
balancing, and up to nine (9) weeks use for Upper Stage processing of either the
Spin High Bay, North High Bay Complex, or South High Bay Complex;
(3) In Buildings 3, 4 and 6: storage, on a shared space basis,
of flight hardware elements, shipping containers, ground support equipment,
etc.;
(4) In Building 5: use of up to 4 offices and shared use of
conference rooms and reception area for the Customer; and
(5) In Building 10: for Spacecraft only or Spacecraft with an
integral upper stage, priority use for up to four (4) weeks of one Satellite
Processing Cell, its associated Garment Change Room, and adjacent Control Room
for handling and loading of liquid propellants, and preparation and installation
of the Spacecraft apogee kick motor and/or integral upper stage system, if
applicable, and other ordnance.
<PAGE> 38
Page 3 of 5
(B) For Payloads processed at Astrotech VAFB:
(1) In Building 1032: up to fourteen (14) weeks use of one High Bay
Complex, consisting of the High Bay, the associated Garment Change Room,
adjacent Control Room, and associated Cart Storage Room(s);
(2) In Building 1036: use of one Office Area; and
(3) In Building 1034: storage, on a shared space basis, of shipping
containers, ground support equipment, etc.
4. Ordnance Handling and Storage. Astrotech will provide receiving,
inspection, and storage of ordnance items; bridge-wire checking; and, for
Payloads processed at Astrotech TICO, cold soak and x-ray of solid rocket
motors.
5. Communications. For Payloads processed at Astrotech TICO,
Astrotech will provide radio frequency (RF) links, data circuits, and voice
communications between Astrotech TICO and KSC/CCAS, between Building 1 and
Building 2, and between Building 1 and Building 10, in accordance with the
defined Astrotech capabilities; closed-circuit television in and between
Building 1, Building 2 and Building 10. For Payloads processed at Astrotech
VAFB, Astrotech will provide command and data circuits and voice communications
between Astrotech VAFB and designated locations on VAFB, and between Building
1032 and Building 1036, in accordance with defined Astrotech capabilities; and
closed-circuit television between the High Bays in Building 1032 and Building
1036. For Payloads processed at either site, Astrotech will provide on-site
Local Area Network (LAN) connectivity, local and long distance telephone service
and dedicated use of a facsimile machine, except that Astrotech will be
reimbursed by LMCLS for all commercial long distance charges incurred by LMCLS
and LMCLS Customer pursuant to the General Terms and Conditions of this
Agreement.
6. Electrical Power. Astrotech will provide 60Hz, and for Payloads
processed at Astrotech TICO 50Hz, electrical power as defined in the Facility
Accomodation Handbook, for electrical ground support equipment.
7. U.S. Government Coordination. Astrotech will provide
coordination with the U.S. Government (NASA and USAF) for any Services requiring
U.S. Government support.
<PAGE> 39
Page 4 of 5
8. Security. Astrotech will provide 24 hour-a-day perimeter security
at the Astrotech Facility. At Astrotech TICO periodic security patrols will be
conducted during non-work hours; digital cypher locks are on all internal and
external doors leading into the Payload Processing Areas; and all buildings are
electronically monitored 24 hours-a-day for smoke/fire detection. At Astrotech
VAFB access via the perimeter gate and all internal and external doors leading
into the Payload Processing Areas is controlled by a card readerkeypad system;
the electronic security system is directly linked to Air Police Headquarters;
and all buildings are electronically monitored 24 hours-a-day for smoke/fire
detection.
9. Solvents and Gases. Astrotech will provide moderate quantities
of gaseous nitrogen, liquid nitrogen, gaseous helium, isopropyl alcohol,
deionized water, and other general purpose cleaning agents and solvents.
10. Hazardous Waste Disposal. Astrotech will provide for disposal of
hazardous materials, such as propellants and solvents, resulting from Payload
Processing Activities pursuant to Section 6.1 of the General Terms and
Conditions of this Agreement.
11. Sampling and Analysis. Astrotech will provide sampling and
analysis of up to 25 samples of gases, propellants, and cleaning materials.
12. Photographic Services. Astrotech will provide use of a 35mm
single lense reflex camera with color film and processing fees for up to 100
8xl0 inch color prints, use of video camera/recorder (1/2 inch VHS format) and
up to three blank video tapes, and photographer, as required.
13. Emergency Medical and Fire Protection. Astrotech will provide
emergency medical assistance and fire protection at Astrotech TICO utilizing the
services of Brevard County and the City of Titusville, Florida, respectively. At
Astrotech VAFB these services are provided through the U.S. Air Force.
14. Test Equipment. Astrotech will provide test equipment and tools,
as available, on a non-interference basis.
15. Calibration. Astrotech will provide standard equipment
calibration services for up to ten (10) items of scientific equipment.
16. Personnel Protective Suits. Astrotech will provide self-contained,
air hose-type personnel protective suits, splash suits, and related training and
support for the Spacecraft team to support Payload
<PAGE> 40
Page 5 of 5
propellant handling, transfer, and fueling operations. In addition, upon request
Astrotech will arrange for attendance at available related NASA training
courses.
17. Technical Shop Support. Astrotech will provide unplanned shop
support, as available, on a non-interference basis.
18. Dynamic Balancing. For Payloads processed at Astrotech TICO,
Astrotech will support the dynamic balancing of the Payload or Payload
components, as required, within the capabilities of the Astrotech Schenck-Trebel
Model E7S aerospace balance machine.
19. Weighing. Astrotech will weigh the Payload, as requested,
utilizing the available Astrotech weighing equipment.
20. U.S. Customs Clearance. Astrotech TICO is part of the Port
Canaveral Foreign Trade Zone (FTZ No. 136) and, in this capacity, for Payloads
processed at Astrotech TICO Astrotech will arrange for duty-free entry of the
Payload and any Payload processing materials and equipment entering the U.S.
from another country for the duration of the Occupancy Period. Astrotech VAFB is
part of the Santa Maria Public Airport District Foreign Trade Zone (FTZ No. TBD)
and, in this capacity, for Payloads processed at Astrotech VAFB Astrotech will
arrange for duty free entry of the Payload and any Payload processing materials
and equipment entering the U.S. from another country for the duration of the
Occupancy Period.
<PAGE> 41
Page 1 of 3
APPENDIX 3
ATLAS LAUNCH VEHICLE SERVICES
This Appendix 3 describes the scope of Services to be provided by
Astrotech in conjunction with the processing of each Atlas payload fairing
(including base module) and Payload encapsulation activity associated with the
Customer Payload for the Service Fee under this Agreement at Astrotech TICO or
Astrotech VAFB (the Astrotech Facility). The specific Services to be provided by
Astrotech will be as specified in the Payload Processing Requirements Document
pursuant to Section 5.2 of the General Terms and Conditions of this Agreement.
1. Arrival and Departure Assistance. Astrotech will assist LMCLS
with the loading and off-loading of hardware and equipment at the Astrotech
Facility.
2. Transportation of Encapsulated Payload. For Payloads processed at
Astrotech TICO, Astrotech will arrange for and obtain the necessary permits and
licenses (Wide Load, HazMat, etc.) as required by the State of Florida
Department of Transportation for transport of the encapsulated Payload from
Astrotech TICO to the launch complex at KSC/CCAS. LMCLS will be responsible for
providing the transport vehicle and for conduct of the transportation operation.
3. Use of Astrotech Facilities. Astrotech will provide use of the
following portions of the applicable Astrotech Facility for the duration stated:
(A) For Payloads processed at Astrotech TICO:
(1) In Building 1: dedicated use of one Customer Office Area
(minimum of 600 ft2) for LMCLS use for the duration of this Agreement;
(2) In Building 2: up to four (4) weeks use of one
Encapsulation Bay or one High Bay and the associated Garment Change Room for
payload fairing preparation and encapsulation of the Customer Payload;
(3) In Buildings 3, 4, and 6: storage, on a shared basis, of
flight hardware elements, shipping containers, ground support equipment, etc.;
<PAGE> 42
Page 2 of 3
(4) In Building 7: dedicated use of one Launch Vehicle
Technical Support/Break Area for the duration of this Agreement; and
(5) In Building 10: up to four (4) weeks use, on a priority
basis, of one airlock, the Encapsulation Bay and the associated Garment Change
Room for payload fairing preparation and encapsulation of the Customer Payload,
and continuous occupancy of the Conditioned Storage Area for storage of flight
hardware elements and ground support equipment.
(B) For Payloads processed at Astrotech VAFB:
(1) In Building 1032: up to four (4) weeks use of one High Bay
and the associated Garment Change Room for payload fairing preparation and
encapsulation of the Customer Payload;
(2) In Building 1034: storage, on a shared space basis, of
shipping containers, ground support equipment, etc.
4. Communications. For Payloads processed at Astrotech TICO,
Astrotech will provide radio frequency (RF) links, data circuits, and voice
communications within Astrotech TICO between Building 1 and Building 2, and
between Building 1 and Building 10, in accordance with the defined Astrotech
capabilities; closed-circuit television in and between Building 1, Building 2
and Building 10. For Payloads processed at Astrotech VAFB, Astrotech will
provide command and data circuits and voice communications within Astrotech VAFB
between Building 1032 and Building 1036, in accordance with defined Astrotech
capabilities; and closed-circuit television between the High Bays in Building
1032 and Building 1036. For Payloads processed at either site, Astrotech will
provide on-site Local Area Network (LAN) connectivity, local and long distance
telephone service and dedicated use of a facsimile machine, except that
Astrotech will be reimbursed by LMCLS for all commercial long distance charges
incurred by LMCLS and LMCLS Customer pursuant to the General Terms and
Conditions of this Agreement.
5. Technical Shop Support. Astrotech will provide unplanned shop
support, as available,on a non-interference basis.
6. Electrical Power. Astrotech will provide 60Hz, and for Payloads
processed at Astrotech TICO 50Hz, electrical power as defined in the Facility
Accomodation Handbook, for electrical ground support equipment.
<PAGE> 43
Page 3 of 3
7. U.S. Government Coordination. Astrotech will provide
coordination with the U.S. Government (NASA and USAF) for any Services requiring
U.S. Government support.
8. Security. Astrotech will provide 24 hour-a-day perimeter security
at the Astrotech Facility. At Astrotech TICO periodic security patrols will be
conducted during non-work hours; digital cypher locks are on all internal and
external doors leading into the Payload Processing Areas; and all buildings are
electronically monitored 24 hours-a-day for smoke/fire detection. At Astrotech
VAFB access via the perimeter gate and all internal and external doors leading
into the Payload Processing Areas is controlled by a card reader,keypad system;
the electronic security system is directly linked to Air Police Headquarters;
and all buildings are electronically monitored 24 hours-a-day for smoke/fire
detection.
9. Solvents and Gases. Astrotech will provide moderate quantities
of gaseous nitrogen, liquid nitrogen, gaseous helium, isopropyl alcohol,
deionized water, and other general purpose cleaning agents and solvents.
10. Hazardous Waste Disposal. Astrotech will provide for disposal of
hazardous materials, such as propellants and solvents, resulting from Payload
Processing Activities pursuant to Section 6.1 of the General Terms and
Conditions of this Agreement.
11. Photographic Services. Astrotech will provide use of a 35mm
single lense reflex camera with color film and processing fees for up to 100
8xl0 inch color prints, use of video camera/recorder (1/2 inch VHS format) and
up to three blank video tapes, and photographer, as required.
12. Emergency Medical and Fire Protection. Astrotech will provide
emergency medical assistance and fire protection at Astrotech TICO utilizing the
services of Brevard County and the City of Titusville, Florida, respectively. At
Astrotech VAFB these services are provided through the U.S. Air Force.
13. Test Equipment. Astrotech will provide test equipment and tools,
as available, on a non-interference basis.
14. Pathfinder Operations. Astrotech will provide support as
required for LMCLS payload fairing pathfinder operations consistent with the
services specified in this Appendix 3 on a non-interference basis to Spacecraft
processing operations at no cost to LMCLS.
<PAGE> 44
Page 1 of 1
APPENDIX 4
PRICE SCHEDULE
ASTROTECH PAYLOAD PROCESSING SERVICES
FOR SPACECRAFT AND, IF APPLICABLE, UPPER STAGE SYSTEM
FOR ALL ATLAS MISSIONS (CCAS AND VAFB)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
FIRM FIXED PRICE PER PAYLOAD
----------------------------
- -------------------------------------------------------------------------------------------------------------------------------
PAYLOADS
**-**
CALENDAR YEAR PAYLOADS **-** IN SAME YEAR
------------- IN SAME YEAR (with addition PAYLOADS **+
of 2nd cell in CY2005) IN SAME YEAR
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
**** **** **** ****
- -------------------------------------------------------------------------------------------------------------------------------
**** **** **** ****
- -------------------------------------------------------------------------------------------------------------------------------
**** **** **** ****
- -------------------------------------------------------------------------------------------------------------------------------
**** **** **** ****
- -------------------------------------------------------------------------------------------------------------------------------
**** **** **** ****
- -------------------------------------------------------------------------------------------------------------------------------
**** **** **** ****
- -------------------------------------------------------------------------------------------------------------------------------
**** **** **** ****
- -------------------------------------------------------------------------------------------------------------------------------
**** **** **** ****
- -------------------------------------------------------------------------------------------------------------------------------
**** **** **** ****
- -------------------------------------------------------------------------------------------------------------------------------
**** **** **** ****
- -------------------------------------------------------------------------------------------------------------------------------
**** **** **** ****
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 1. Alternate pricing is provided for addition of 2nd Processing
Cell in ****.
NOTE 2. Prices stated are based on a guaranteed minimum of ****
missions per year. Should LMCLS fail to process a minimum of
**** Payloads during any calendar year, LMCLS agrees to pay
Astrotech for the balance of the **** processings upon
receipt of an invoice to be issued in December of the
applicable calendar year.
NOTE 3. Pricing is shown for **** one-year option periods from ****
through ****. Addition of 2nd Processing Cell in ****
requires exercise of all **** options periods.
NOTE 4. Prices stated are on a "per-payload" basis. Dual manifested
GEO spacecraft will be charged **** the rate shown in the
price table. Multiple-LEO spacecraft missions utilizing a
single processing cell will be charged ****.
NOTE 5. Services as provided support all Atlas V/5 meter Payload
Fairing Operations at CCAS and all Atlas V/4 meter Payload
Fairing Operations at VAFB.
NOTE 6. Prices stated are exclusive of any taxes, if applicable.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001001907
<NAME> SPACEHAB, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 16,777
<SECURITIES> 0
<RECEIVABLES> 22,330
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 41,386
<PP&E> 150,047
<DEPRECIATION> 54,419
<TOTAL-ASSETS> 224,125
<CURRENT-LIABILITIES> 34,093
<BONDS> 0
0
11,892
<COMMON> 81,936
<OTHER-SE> 16
<TOTAL-LIABILITY-AND-EQUITY> 224,125
<SALES> 77,046
<TOTAL-REVENUES> 77,046
<CGS> 65,870
<TOTAL-COSTS> 65,870
<OTHER-EXPENSES> 14,391
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,803
<INCOME-PRETAX> (5,554)
<INCOME-TAX> (1,689)
<INCOME-CONTINUING> (3,865)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,865)
<EPS-BASIC> (0.34)
<EPS-DILUTED> (0.34)
</TABLE>
