Exhibit 10.26

 

 

CONSULTING AGREEMENT

 

AGREEMENT NO. 2004-006-SHI-VJF

 

P.O. No. _______________

 

This Consulting Agreement (“Agreement”) is entered into as of June 01, 2004, by and between SPACEHAB, Inc., a Washington state Corporation, having offices at: 12130 Highway 3, Bldg. 1, Webster, TX 77598 (hereinafter “SPACEHAB”), and V.J.F. Russian Consulting LTD., A Texas Limited Liability Company, (hereinafter “CONSULTANT”).

 

RECITALS

 

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WHEREAS, CONSULTANT will market and promote SPACEHAB’s capabilities and services to RSC Energia, the Russian Federal Space Agency and other Russian entities (the “Russian Entities”) involved in the exploration and development of space, and;

 

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WHEREAS, CONSULTANT will support and assist SPACEHAB in the negotiation of service contracts and agreements between SPACEHAB and the Russian Entities, and;

 

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WHEREAS, as requested, CONSULTANT will provide technical expertise and services in support of SPACEHAB’s activities under contracts with the Russian Entities, and;

 

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WHEREAS, in representing SPACEHAB, CONSULTANT will at all times comply with all applicable laws, regulations and legal requirements, including the Iran Nonproliferation Act of 2000, the Foreign Corrupt Practices Act, and Federal Acquisition Regulations and shall adhere to SPACEHAB’s Export Compliance Policy and Code of Conduct.

 

NOW THEREFORE, In consideration of the foregoing and of the mutual promises contained herein, it is agreed as follows:

 

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AGREEMENT

 

Basic Term:

 

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The Effective Date of this agreement shall be June 1, 2004 and will continue for a period of twenty-four (24) months ending May 31, 2006.

 

Option Term:

 

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Upon written notice given to Consultant not less than ninety (90) days prior to the completion of the Basic Term, SPACEHAB may exercise its option to renew all or part of this Agreement for one additional six (6) month period.

 

Exclusivity:

 

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CONSULTANT will represent SPACEHAB exclusively to the Russian Entities for all U.S. Government or U.S. Government related contracts. For non-U.S. Government contracts exclusivity shall apply to the area of SPACEHAB’s core business of payload integration and space transportation services.

 

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CONSULTANT will not enter into any agreements, except as provided below, with the Russian Entities, but shall offer any such agreements to SPACEHAB who may, at its sole discretion, enter into such agreements.

 

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CONSULTANT may enter into contracts with the Russian Entities that provide services to commercial entities (the “Commercial Contracts”) that are not in conflict with SPACEHAB’s core business; for example, payload facility development and commercial utilization where the customer is not the U.S. Government.

 

Reimbursement Schedule for Services:

 

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SPACEHAB will pay CONSULTANT a Retainer Fee in the amount of $ 180,000 annually, paid in monthly installments of $15,000 beginning on the Effective Date.

 

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SPACEHAB will pay CONSULTANT for technical consulting services rendered on the Lockheed Martin Shipping Contract; the Boeing Company representation contract and the SMDP Contract (the “Existing Contracts”) at an hourly rate of $167.50 for actual hours performed by CONSULTANT’S Senior Project Manager (as approved by SPACEHAB), provided such hours shall be approved in advance by SPACEHAB.

 

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SPACEHAB will pay CONSULTANT for technical consulting services rendered on any new contracts entered into by SPACEHAB, either under this agreement or otherwise, (the “New Contracts”) at an hourly rate of $170.00 where the customer (at any level) is the U.S. Government, and an hourly rate of $250.00 for non-U.S. Government customers, for actual

 

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hours performed by CONSULTANT’s Senior Project Manager (as approved by SPACEHAB), provided such hours shall be approved in advance by SPACEHAB.

 

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SPACEHAB will reimburse CONSULTANT for travel costs, at U.S. Government published per diem amounts (CONUS/OCONUS), with travel performed by CONSULTANT in discharge of its services hereunder, provided that such all travel shall be approved in advance by SPACEHAB. All travel shall be in accordance with SPACEHAB Policy No. SHI-SMS-A0028.

 

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SPACEHAB will pay CONSULTANT a Contingent Award Fee, computed and paid within thirty (30) days of the end of each calendar year quarter (March 31; June 30; September 30 and December 31) during the term hereof as the corresponding percentage from the table below times the New Contract Gross Margin (SPACEHAB’s revenue from all New Contracts (specifically excluding the Existing Contracts) as reported for external financial statements during such quarter less Direct Costs from Russian Entities in accordance with such New Contracts as reported for external financial statements during such quarter):

 

New Contract Gross Margin		Contingent Award Fee Percentage
		High Direct Cost*					Low Direct Cost*
Less than $ 500,000		0	%		to		0	%
Over $     500,000 up to $  3,000,000		7	%		to		12	%
Over $  3,000,000 up to $  5,000,000		9	%		to		14	%
Over $  5,000,000 up to $  7,000,000		9.5	%		to		16	%
Over $  7,000,000 up to $10,000,000		10	%		to		17	%
Over $10,000,000		10	%		to		18	%

 

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SPACEHAB Direct Costs are costs recorded by SPACEHAB as Cost of Revenues in its public financial reports for each quarter for each New Contract, less payments to Russian Entities included in the computation of the New Contract Gross Margin.

 

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SPACEHAB Direct Costs that are less than 10% of a New Contract’s Gross Margin for each quarter would be considered Low Direct Costs. SPACEHAB Direct Costs that are more than 40% of a New Contract’s Gross Margin for each quarter would be considered High Direct Costs. SPACEHAB will present its Direct Costs in good faith and at all times use its best efforts to keep its Direct Costs for purposes hereof reasonable.

 

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The Contingent Award Fee as presented above is computed from the following:

 

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Revenue from New Contracts: The recognized revenue under Generally Accepted Accounting Principals or other accounting rules prescribed for SPACEHAB’s external financial statements.

 

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Direct Costs from Russian Entities: The component of Cost of Revenue recognized under GAAP directly attributed to Russian Entities under the New Contracts.

 

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New Contract Gross Margin: Revenue from New Contracts less Direct Costs from Russian Entities applicable to such New Contracts.

 

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SPACEHAB Direct Costs: Cost of Revenue recognized under GAAP by SPACEHAB for New Contracts, less Direct Costs from Russian Entities.

 

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An example of such computation follows:

 

•      Revenue		$	10,000,000
•      Direct Costs from Russian Entities			6,000,000
•      New Contract Gross Margin			4,000,000
Assuming:
•      SPACEHAB Direct Costs			360,000		(9% of $4,000,000)
•      Contingent Award Fee			560,000		(14% of $4,000,000)

 

Timekeeping, Invoicing, Payment and Audit for Technical Consulting Services only:

 

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SPACEHAB shall provide CONSULTANT’S employees, assigned to SPACEHAB, access to SPACEHAB’S electronic timesheet system. The CONSULTANT’S employees shall record all time worked in accordance with SPACEHAB instructions and assigned charge numbers. The CONSULTANT’S employees must obtain SPACEHAB electronic approval on each timesheet. SPACEHAB is responsible for ensuring charge numbers are correct and CONSULTANT is responsible for the accuracy of all other timesheet records and associated documents (e.g. invoices).

 

B.	In consideration of completion of the work or labor hour services provided by the CONSULTANT, compliance with all provisions of this Agreement, each Work Authorization, and approved timesheets, the CONSULTANT will be paid in accordance with the established billing rates and for hours worked only.

 

Any other allowable and reimbursable expenses (e.g., travel) requires prior approval by SPACEHAB and shall be listed as a separate line item on the invoice or on a SPACEHAB approved expense account form. CONSULTANT, its employees, and/or agents will provide completed expense reports, including receipts, with each invoice to substantiate expenses. CONSULTANT, its employees, and/or agents will be reimbursed for allowable cost only. All travel will be coordinated through SPACEHAB in accordance with current Federal Travel Regulations.