**EXHIBIT 10.123**

 

**EMPLOYMENT AND NON-INTERFERENCE AGREEMENT**

 

This Employment and Non-Interference Agreement (this “Agreement”), is dated as of January 9, 2004, by and betweenBrian K. Harrington (the “Executive”) and SPACEHAB, Incorporated, a Washington corporation (the “Company”). 

 

WHEREAS, the Company wishes to retain the future services of Executive for the Company; 

 

WHEREAS, Executive is willing, upon the terms and conditions set forth in this Agreement, to provide services hereunder; and

 

WHEREAS, the Company wishes to secure Executive’snon-interference, upon the terms and conditions set forth in this Agreement. 

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows: 

 

 

Subject to Section 3, the Company hereby employs Executive, and Executive agrees to accept such employment, during the Term of Employment (as defined inSection 3(a)), as Senior Vice President and Chief Financial Officer and to undertake such duties and responsibilities as may be reasonably assigned to Executive from time to time by the Chief Executive Officer, Board of Directors of the Company, orsuch other appropriately authorized or designated executive officer of the Company. 

 

 

(a) During the Term of Employment, Executive shall perform his obligations hereunder faithfully and to the best of his ability under the direction of theChief Executive Officer, Chief Operating Officer, Board of Directors of the Company, or such other appropriately authorized or designated executive officer of the Company, and shall abide by the rules, customs and usages from time to timeestablished by the Company. 

 

(b) During the Term of Employment,Executive shall devote all of his business time, energy and skill as may be reasonably necessary for the performance of his duties, responsibilities and obligations under this Agreement (except for vacation periods and reasonable periods of illnessor other incapacity), consistent with past practices and norms with respect to similar positions. 

 

(c) Nothing contained herein shall require Executive to follow any directive or to perform any act which would violate any laws, ordinances, regulationsor rules of any governmental, regulatory or administrative body, agent or authority, any court or judicial authority, or any public, private or industry regulatory authority. Executive shall act in accordance with the laws, ordinances, regulationsor rules of any governmental, 

 

regulatory or administrative body, agent or authority, any court or judicial authority, or any public, private or industry regulatory authority. 

 
 3.Term of Employment; Termination
 

(a) The “Term of Employment” shall commence on January 1, 2004 and shall continue through December 31, 2005 (the “Initial Term”),subject to automatic annual renewal for one-year terms thereafter (the “Additional Term”), unless either the Company or Executive notifies the other party of its intent not to renew at least ninety (90) days prior to the end of the InitialTerm or Additional Term as the case may be. Should Executive’s employment by the Company be earlier terminated pursuant to Section 3(b), the Term of Employment shall end on the date of such earlier termination. 

 

(b) Subject to the payments contemplated by Section 3(d), the Term ofEmployment may be terminated at any time by the Company: 

 

(i) upon the death of Executive; 

 

(ii) in the event that because of physical or mental disability, Executive is unable to perform and does not perform his duties hereunder, for a continuous period of 90 days, and an experienced, recognized physicianspecializing in such disabilities certifies as to the foregoing in writing; 

 

(iii) for Cause or Material Breach (each as defined in Section 3(d)); 

 

(iv) upon the continuous poor or unacceptable performance of Executive’s duties to the Company, in the sole judgment of the Board ofDirectors of the Company, which has remained uncured for a period of 90 days after the delivery of notice by the Company to the Executive of such dissatisfaction with Executive’s performance; or 

 

(v) for any other reason not referred to in clauses (i)through (iv), or for no reason, such that this Agreement shall be construed as terminable at will by the Company. Executive acknowledges that no representations or promises have been made concerning the grounds for termination or the futureoperation of the Company’s business, and that nothing contained herein or otherwise stated by or on behalf of the Company modifies or amends the right of the Company to terminate Executive at any time, with or without Material Breach or Cause.Termination shall become effective upon the delivery by the Company to Executive of notice specifying such termination and the reasons therefor, subject to the requirements for advance notice and an opportunity to cure provided in this Agreement, ifand to the extent applicable. 

 

(c) Subject to the paymentscontemplated by Section 3(d), the Term of Employment may be terminated at any time by Executive: 

 

(i) upon the death of Executive; 

 

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(ii) in the event that because of physical or mental disability, Executive is unable toperform and does not perform his duties hereunder, for a continuous period of 90 days, and an experienced, recognized physician specializing in such disabilities certifies as to the foregoing in writing; 

 

(iii) as a result of the Company’s material reductionin Executive’s authority, perquisites, position, title or responsibilities (other than such a reduction by the Company because of a temporary illness or disability or such a reduction which affects all of the Company’s senior executives ona substantially equal or proportionate basis as a result of financial results, conditions, prospects, reorganization, workout or distressed condition of the Company), or the Company’s willful, material violation of its obligations under thisAgreement, in each case, after 30 days’ prior written notice by Executive to the Company and its Board of Directors and the Company’s failure thereafter to cure such reduction or violation within such 30 days; or 

 

(iv) voluntarily or for any reason not referred to inclauses (i) through (iii), or for no reason, in each case, after 90 days’ prior written notice to the Company and its Board of Directors. 

 

(d) For the purposes of this Section 3: 

 

“Cause” shall mean any of the following: (i) Executive’s conviction of any crime or criminal offense involving the unlawfultheft or conversion of substantial monies or other property or any other felony (other than a criminal offense arising solely under a statutory provision imposing criminal liability on the Executive on a per se basis due to the offices held by theExecutive); or (ii) Executive’s conviction of fraud or embezzlement. “Material Breach” shall mean any of the following: (i) Executive’s breach of any of his fiduciary duties to the Company or its stockholders or making of awillful misrepresentation or omission which breach, misrepresentation or omission would reasonably be expected to materially adversely affect the business, properties, assets, condition (financial or other) or prospects of the Company; (ii)Executive’s willful, continual and material neglect or failure to discharge his duties, responsibilities or obligations prescribed by Sections 1 and 2 (other than arising solely due to physical or mental disability); (iii) Executive’shabitual drunkenness or substance abuse which materially interferes with Executive’s ability to discharge his duties, responsibilities or obligations prescribed by Sections 1 and 2; (iv) Executive’s willful, continual and material breachof any noncompetition or confidentiality agreement with the Company, including without limitation, those set forth in Sections 7 and 8 of this Agreement; and (v) Executive’s gross neglect of his duties and responsibilities, as determined by theCompany’s Board of Directors; in each case, for purposes of clauses (i) through (v), after the Company or the Board of Directors has provided 

 

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Executive with 30 days’ written notice of such circumstances and the possibility of a Material Breach, and Executive fails to cure such circumstancesand Material Breach within those 30 days. 

 

(i)In the event Executive’s employment is terminated pursuant to Section 3(b)(i) [death], 3(b)(ii) [disability] or 3(b)(v) [any other reason or no reason] or 3(c)(i) [death], 3(c)(ii) [disability] or 3(c)(iii) [material reduction], the Companywill: (A) pay to Executive (or his estate or representative) the full amounts to which the Executive would be entitled to under, Section 4(a) for the period from effectiveness of termination through the sixth month anniversary of termination; and(B) pay to Executive (or his estate or representative) the benefits described in Section 6 through the sixth month anniversary of termination. Payment of the amounts and provision of the benefits described above will be made in accordance with thetimetable and schedule for such payments contemplated therefor as if such termination did not occur, and will be subject to the other provisions of this Agreement, including Section 3(g) and Sections 7 and 8. If the Company makes the paymentsrequired by this Section 3(d)(i), such payments will constitute severance and liquidated damages, and the Company will not be obligated to pay any further amounts to Executive under this Agreement or otherwise be liable to Executive in connectionwith any termination. 

 

(ii) In the eventExecutive’s employment is terminated pursuant to Section 3(b)(iii) [Cause or Material Breach], 3(b)(iv) [poor performance], or 3(c)(iv) [voluntary], the Company will not be obligated to pay any further amounts to Executive under this Agreement.

 

(iii) Notwithstanding the provisions ofparagraphs (i) and (ii) above, in the event Executive’s employment is terminated within twelve months following a Change in Control pursuant to Section 3(b)(v) [by the Company for any other reason or no reason] or Section 3(c)(iii) [by theExecutive for material reduction], the Company will (A) pay to Executive (or his estate or representative) a lump-sum amount equal to one times the sum of (1) the Executive’s then-current base salary and (2) the average of the last two annualbonuses paid to the Executive and (B) pay to Executive (or his estate or representative) the benefits described in Section 6 through the twelfth month anniversary of termination. 

 

If the Company makes the payments required by this Section 3(d)(iii), such payments will constituteseverance and liquidated damages, and the Company will not be obligated to pay any further amounts to Executive under this Agreement or otherwise be liable to Executive in connection with any termination, 

 

Except as expressly set forth above, all other terms andconditions of the Employment Agreement shall remain in full force and effect. 

 

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(e) In the event the Term of Employment is terminated and the Company is obligated to make payments toExecutive pursuant to Section 3(d)(i), Executive shall have a duty to seek to obtain alternative employment; and if Executive thereafter obtains alternative employment, the Company’s payment obligations under Section 3(d)(i), including itsobligation to provide insurance coverage, if any, will be mitigated and reduced by and to the extent of Executive’s compensation under such alternative employment during the period for which payments are owed by the Company pursuant to Section3(d)(i). Moreover, in the event that Executive is employed by or engaged in a Competitive Business as contemplated by Section 8(a)(i), then the Company will thereupon no longer be obligated to make payments under Section 3(d)(i). 

 

(f) In the event the Term of Employment is terminated and the Company isobligated to make payments pursuant to Section 3(d)(i), Executive hereby waives any and all claims against the Company and its respective officers, directors, employees, agents, or representatives, stockholders and affiliates relating to hisemployment during the term hereof and this Agreement. 

 

(g)Termination of the Term of Employment will not terminate Sections 3(d), 3(f), and 7 through 21. 

 
 4.Compensation
 

During the Term of Employment, the Company shall pay to Executive: 

 

(a) As base compensation for his services hereunder, in bi-weekly installments, a base salary at a rate of not less than$200,000 per annum. Such amounts may be increased (but not decreased) annually at the discretion of the Compensation Committee of the Board of Directors based upon an annual review by the Compensation Committee of the Board of Directors ofExecutive’s performance. 

 

(b) An annual incentive bonus,if any, based on Executive’s and/or Company’s performance as determined and approved by the Compensation Committee of the Board of Directors. 

 

(c) An annual stock option grant, if any, based on Executive’s, Company’s and/or Company Stock performance as determined and approved by theCompensation Committee of the Board of Directors. 

 
 5.Reimbursement of Expenses
 

During the Term of Employment, the Company shall pay all expenses, including without limitation, transportation, lodging and food for Executive to attendconventions, conferences and meetings that the Company determines are necessary or in the best interest of the Company, and for any ordinary and reasonable expenses incurred by Executive in the conduct of the Business of the Company. Travel outsidethe United States shall be subject to the prior approval of an executive officer of the Company. 

 

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 6.Benefits
 

During the Term of Employment, Executive shall be entitled to benefits (including health, disability, pension and life insurance benefits consistent withCompany policy, or as increased from time to time), in each case, in accordance with guidelines or established from time to time, by the Board of Directors for senior executives of the Company. 

 
 7.Confidential Information
 

(a) Executive acknowledges that his employment hereunder gives him access to Confidential Information relating to the Company’s Business and itscustomers which must remain confidential. Executive acknowledges that this information is valuable, special, and a unique asset of the Company’s Business, and that it has been and will be developed by the Company at considerable effort andexpense, and if it were to be known and used by others engaged in a Competitive Business, it would be harmful and detrimental to the interests of the Company. In consideration of the foregoing, Executive hereby agrees and covenants that, during andafter the Term of Employment, Executive will not, directly or indirectly in one or a series of transactions, disclose to any person, or use or otherwise exploit for Executive’s own benefit or for the benefit of anyone other than the Companies,Confidential Information (as defined in Section 10), whether prepared by Executive or not; provided, however, that any Confidential Information may be disclosed to officers, representatives, employees and agents of the Companies who need to knowsuch Confidential Information in order to perform the services or conduct the operations required or expected of them in the Business (as defined in Section 10). Executive shall use his best efforts to prevent the removal of any ConfidentialInformation from the premises of the Companies, except as required in his normal course of employment by the Company. Executive shall use his best efforts to cause all persons or entities to whom any Confidential Information shall be disclosed byhim hereunder to observe the terms and conditions set forth herein as though each such person or entity was bound hereby. Executive shall have no obligation hereunder to keep confidential any Confidential Information if and to the extent disclosureof any thereof is specifically required by law; provided, however, in the event disclosure is required by applicable law, Executive shall provide the Company with prompt notice of such requirement, prior to making any disclosure, so that the Companymay seek an appropriate protective order. At the request of the Company, Executive agrees to deliver to the Company, at any time during the Term of Employment, or thereafter, all Confidential Information which he may possess or control. Executiveagrees that all Confidential Information of the Companies (whether now or hereafter existing) conceived, discovered or made by him during the Term of Employment exclusively belongs to the Companies (and not to Executive). Executive will promptlydisclose such Confidential Information to the Company and perform all actions reasonably requested by the Company to establish and confirm such exclusive ownership. 

 

(b) In the event that Executive breaches his obligations in any material respect under this Section 7, the Company, inaddition to pursuing all available remedies under 

 

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this Agreement, at law or otherwise, and without limiting its right to pursue the same shall cease all payments to Executive under this Agreement.

 

(c) The terms of this Section 7 shall survive the terminationof this Agreement regardless of who terminates this Agreement or the reasons therefor. 

 
 8.Non-Interference
 

(a) Executive acknowledges that the services to be provided give him the opportunity to have special knowledge of the Company and its ConfidentialInformation and the capabilities of individuals employed by or affiliated with the Company, and that interference in these relationships would cause irreparable injury to the Company. In consideration of this Agreement, Executive covenants andagrees that: 

 

(i) During the Restricted Period(which shall not include any period of violation of this Agreement by the Executive), Executive will not, without the express written approval of the Board of Directors of the Company, anywhere in the Market, directly or indirectly, in one or aseries of transactions, own, manage, operate, control, invest or acquire an interest in, or otherwise engage or participate in, whether as a proprietor, partner, stockholder, lender, director, officer, employee, joint venturer, investor, lessor,supplier, customer, agent, representative or other participant, in any Competitive Business without regard to (A) whether the Competitive Business has its office, manufacturing or other business facilities within or without the Market, (B) whetherany of the activities of Executive referred to above occur or are performed within or without the Market or (C) whether Executive resides, or reports to an office, within or without the Market; provided, however, that (x) Executive may, anywhere inthe Market, directly or indirectly, in one or a series of transactions, own, invest or acquire an interest in up to five percent (5%) of the capital stock of a corporation whose capital stock is traded publicly, or that (y) Executive may acceptemployment with a successor company to the Company. 

 

(ii) During the Restricted Period (which shall not include any period of violation of this Agreement by Executive), Executive will not without the express prior written approval of the Board of Directors of the Company (A) directly orindirectly, in one or a series of transactions, recruit, solicit or otherwise induce or influence any proprietor, partner, stockholder, lender, director, officer, employee, sales agent, joint venturer, investor, lessor, supplier, customer, agent,representative or any other person which has a business relationship with the Company or had a business relationship with the Company within the twenty-four (24) month period preceding the date of the incident in question, to discontinue, reduce ormodify such employment, agency or business relationship with the Company, or (B) employ or seek to employ or cause any Competitive Business to employ or seek to employ any person or 

 

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agent who is then (or was at any time within six months prior to the date Executive or the Competitive Business employs or seeks to employ such person)employed or retained by the Company. Notwithstanding the foregoing, nothing herein shall prevent Executive from providing a letter of recommendation to an employee with respect to a future employment opportunity. 

 

(iii) The scope and term of this Section 8 would notpreclude him from earning a living with an entity that is not a Competitive Business. 

 

(b) The terms of this Section 8 shall survive termination of this Agreement regardless of who terminates this Agreement or the reasons therefor. 

 
 9.Inventions
 

(a) Each invention, improvement or discovery made or conceived by Executive, either individually or with others, during the term of his employment withthe Company, which invention, improvement or discovery is related to any of the lines of business or work of the Companies, any projected or potential activities which the Companies have investigated or hereinafter investigates, or which result fromor are suggested by any service performed by Executive for the Company, whether patentable or not, shall be promptly and fully disclosed by Executive to the Company. Executive assigns each such invention, improvement or discovery, and the patentsthereof, or related thereto, to the Company. Executive shall, during the term of his employment with the Company and thereafter without charge to the Company, but at the request and expense of the Company, assist the Company in obtaining or vestingin itself patents upon such improvements and inventions. All such inventions, improvements or discoveries shall at all times become and remain the exclusive property of the Company. Executive represents that he does not claim ownership of anyinventions, improvements, formulae or discoveries which are excluded from this Agreement. 

 

(b) In the event that Executive breaches his obligations in any material respect under Sections 7, 8 or this Section 9, the Company, in addition to pursuing all available remedies under this Agreement, at law orotherwise, and without limiting its right to pursue the same shall cease all payments to Executive under this Agreement. 

 
 10.Definitions
 

“Business” means (a) the design, manufacture, lease and operation of pressurized and unpressurized space modules, flight hardware andsubsystems, and those other businesses and activities that are described in the Company’s Form 10-K for the fiscal year ended June 30, 2003, and Form 10-Q for the quarter ending September 30, 2003, or (b) any similar, incidental or relatedbusiness conducted or pursued by, or engaged in, or proposed to be conducted or pursued by or engaged in, by the Companies prior to the date hereof or at any time during the Term of Employment. 

 

“Cause” is defined in Section 3(d). 

 

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“Change in Control” of the Company shall be deemed to occur on: (i) the date that any person orgroup deemed a person under Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Act”), other than the Company and its subsidiaries as determined immediately prior to that date, in a transaction or seriesof transactions has become the beneficial owner, directly or indirectly (with beneficial ownership determined as provided in Rule 13d-3, or any successor rule, under such Act) of 20% or more of the outstanding securities of the Company having theright under ordinary circumstances to vote at an election of the Board of Directors of the Company; (ii) the date on which one-third or more of the members of the Board of Directors of the Company shall consist of persons other than CurrentDirectors (for these purposes, a “Current Director” shall mean any member of the Board of Directors of the Company as of the effective date of the Plan and any successor of a Current Director whose nomination or election has been approvedby a majority of the Current Directors then on the Board of Directors of the Company); or (iii) the date of approval by the shareholders of the Company of an agreement providing for (A) the merger or consolidation of the Company with anothercorporation where the shareholders of the Company, immediately prior to the merger or consolidation, would not beneficially own, immediately after the merger or consolidation, shares entitling such shareholders to 50% or more of all votes (withoutconsideration of the rights of any class of stock to elect directors by a separate class vote) to which all shareholders of the corporation issuing cash or securities in the merger or consolidation would be entitled in the election of directors orwhere the members of the Board of Directors of the Company, immediately prior to the merger or consolidation, would not be members of the Board of Directors of the Company immediately after the merger or consolidation or (B) the sale or otherdisposition of all or substantially all the assets of the Company. 

 

“Companies” means the Company and any of its direct or indirect subsidiaries, now existing or hereafter existing. 

 

“Company” is defined in the introduction. 

 

“Competitive Business” means any business which competes, directly or indirectly, with the Business in the Market. 

 

“Confidential Information” means any trade secret, confidentialstudy, data, calculations, software storage media or other compilation of information, patent, patent application, copyright, trademark, trade name, service mark, service name, “know-how”, trade secrets, customer lists, details of clientor consultant contracts, pricing policies, sales techniques, confidential information relating to suppliers, information relating to the special and particular needs of the Companies’ customers operational methods, marketing plans orstrategies, products and formulae, product development techniques or plans, business acquisition plans or any portion or phase of any scientific or technical information, ideas, discoveries, designs, computer programs (including source of objectcodes), processes, procedures, research or technical data, improvements or other proprietary or intellectual property of the Companies, whether or not in written or tangible form, and whether or not registered, and including all files, records,manuals, books, catalogues, memoranda, notes, summaries, plans, reports, records, documents and 

 

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other evidence thereof. The term “Confidential Information” does not include, and there shall be no obligation hereunder with respect to,information that is or becomes generally available to the public other than as a result of a disclosure by Executive not permissible hereunder. 

 

“Executive” means the individual identified in the first paragraph of this Agreement, or his or his estate, if deceased. 

 

“Market”, means any county in the United States of America and eachsimilar jurisdiction in any other country in which the Business was conducted or pursued by, engaged in by the Companies prior to the date hereof or is conducted or engaged in or pursued, or is proposed to be conducted or engaged in or pursued, bythe Companies at any time during the Term of Employment. 

 

“Material Breach” is defined in Section 3(d). 

 

“Restricted Period” means the period commencing on the date of this Agreement and continuing through the sixth month anniversary of the termination of the Term of Employment. 

 

“Subsidiary” means any corporation, limited liability company,joint venture, limited and general partnership, joint stock company, association or any other type of business entity of which the Company owns, directly or indirectly through one or more intermediaries, more than fifty percent (50%) of the votingsecurities at the time of determination. 

 

“Term ofEmployment” is defined in Section 3(a). 

 
 11.Notice
 

Any notice, request, demand or other communication required or permitted to be given under this Agreement shall be given in writing and if deliveredpersonally, or sent by certified or registered mail, return receipt requested, as follows (or to such other addressee or address as shall be set forth in a notice given in the same manner): 

 

If to Executive:
  
Brian K. Harrington

2426 Inwood Drive

Houston, Texas 77019

If to Company:
  
SPACEHAB, Incorporated

12130 Highway 3, Bldg.1

Webster, Texas 77598-1504

 

Any such notices shallbe deemed to be given on the date personally delivered or such return receipt is issued. 

 

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 12.Executive’s Representation
 

Executive hereby warrants and represents to the Company that Executive has carefully reviewed this Agreement and has consulted with such advisors asExecutive considers appropriate in connection with this Agreement, is not subject to any covenants, agreements or restrictions, including without limitation any covenants, agreements or restrictions arising out of Executive’s prior employment,which would be breached or violated by Executive’s execution of this Agreement or by Executive’s performance of his duties hereunder: 

 
 13.Other Matters
 

Executive agrees and acknowledges that the obligations owed to Executive under this Agreement are solely the obligations of the Company, and that none ofthe Companies’ stockholders, directors, officers, affiliates, representatives, agents or lenders will have any obligations or liabilities in respect of this Agreement and the subject matter hereof. 

 
 14.Validity
 

If, for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof shallnot be affected thereby. 

 
 15.Severability
 

Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if anyprovision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any otherjurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. If any court determines that any provision of Section 8 or anyother provision hereof is unenforceable because of the power to reduce the scope or duration of such provision, as the case may be and, in its reduced form, such provision shall then be enforceable. 

 
 16.Waiver of Breach: Specific Performance
 

The waiver by the Company or Executive of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver ofany other breach of such other party. Each of the parties (and third party beneficiaries) to this Agreement will be entitled to enforce its rights under this breach of any provision of this Agreement and to exercise all other rights existing in itsfavor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of Sections 7, 8 and 9 of this Agreement and that any party (and third party beneficiaries) may in its sole discretionapply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief, including temporary 

 

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restraining orders, preliminary injunctions and permanent injunctions in order to enforce or prevent any violations of the provisions of this Agreement. Inthe event either party takes legal action to enforce any of the terms or provisions of this Agreement against the other party, the party against whom judgment is rendered in such action shall pay the prevailing party’s costs and expenses,including but not limited to, attorneys’ fees, incurred in such action. 

 
 17.Assignment; Third Parties
 

Neither Executive nor the Company may assign, transfer, pledge, hypothecate, encumber or otherwise dispose of this Agreement or any of his or itsrespective rights or obligations hereunder, without the prior written consent of the other. The parties agree and acknowledge that each of the Companies and the stockholders and investors therein are intended to be third party beneficiaries of, andhave rights and interests in respect of, Executive’s agreements set forth in Sections 7, 8 and 9. 

 
 18.Amendment; Entire Agreement
 

This Agreement may not be changed orally but only by an agreement in writing agreed to by the party against whom enforcement of any waiver, change,modification, extension or discharge is sought. This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter of this Agreement, and supersedes and replaces all prior Agreements, understandingsand commitments with respect to such subject matter. 

 
 19.Litigation
 

THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT NO DOCTRINE OF CHOICEOF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF THE STATE OF TEXAS, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OFANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. SUBJECT TO SECTION 20, EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT MAY BECOMMENCED IN THE COURTS OF HARRIS COUNTY, TEXAS. OR THE UNITED STATES DISTRICT COURTS IN THE STATE OF TEXAS. EXECUTIVE AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPONFORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 19 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER JURISDICTION.

 

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 20.Arbitration
 

EXECUTIVE AND THE COMPANY AGREE THAT ANY DISPUTE BETWEEN OR AMONG THE PARTIES TO THIS AGREEMENT RELATING TO OR IN RESPECT OF THIS AGREEMENT, ITSNEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF CONDUCT OR DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS AGREEMENT, SHALL BE SUBMITTED TO, AND RESOLVED EXCLUSIVELY PURSUANT TO ARBITRATION IN ACCORDANCE WITH THE COMMERCIALARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. SUCH ARBITRATION SHALL TAKE PLACE IN HOUSTON, HARRIS COUNTY, TEXAS, AND SHALL BE SUBJECT TO THE SUBSTANTIVE LAW OF THE STATE OF TEXAS. DECISIONS PURSUANT TO SUCH ARBITRATION SHALL BE FINAL,CONCLUSIVE AND BINDING ON THE PARTIES. UPON THE CONCLUSION OF ARBITRATION, EXECUTIVE OR THE COMPANY MAY APPLY TO ANY COURT OF THE TYPE DESCRIBED IN SECTION 19 TO ENFORCE THE DECISION PURSUANT TO SUCH ARBITRATION. IN CONNECTION WITH THE FOREGOING,THE PARTIES HEREBY WAIVE ANY RIGHTS TO A JURY TRIAL TO RESOLVE ANY DISPUTES OR CLAIMS RELATING TO THIS AGREEMENT OR ITS SUBJECT MATTER. 

 
 21.Further Action
 

Executive and the Company agree to perform any further acts and to execute and deliver any documents which may be reasonable to carry out the provisionshereof. 

 
 22.Counterparts
 

This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the sameinstrument. 

 

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IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first written above.

 

EXECUTIVE:
/s/    BRIAN K. HARRINGTON        **Brian K. Harrington**
 
SPACEHAB, INCORPORATED:/s/    MICHAEL E. KEARNEY        
**Michael E. Kearney, President and Chief**

**Executive Officer**

 

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