Document:

Employment and Non-Interference Agreement dated May 12, 2005 (E.M. Chewning)

 Exhibit 10.36 
  
 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT 
  
 This Employment and Non-interference Agreement (this “Agreement”), is dated as of May 12, 2005, by and between E.
Michael Chewning (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’s
non-interference, upon the terms and conditions set forth in this Agreement. 
  
 NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows: 
  
 1. Nature of Employment 
  
 Subject to Section 3, the Company hereby employs Executive, and Executive
agrees to accept such employment, during the Term of Employment (as defined in Section 3(a)), as Senior Vice President 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, or such other appropriately authorized or designated executive officer of the Company. 
  
 2. Extent of Employment 
  
 (a) During the Term of Employment, Executive shall perform his obligations hereunder faithfully and to the best of his ability under the direction of the
Chief 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 time
established 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 illness
or 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, regulations
or rules of any governmental, regulatory or administrative body, agent or authority, any court or judicial authority, or any public, private or industry regulatory authority. Executive shall act in accordance with the laws, ordinances, regulations
or rules of any governmental, 

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

 
 3. Term of Employment; Termination 
  
 (a) The “Term of Employment” shall commence on May 12, 2005 and
shall continue through June 12, 2006 (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 Initial Term 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 of Employment may be terminated at any time by the Company. 
  
 (i) upon the death of Executive; 
  
 (ii) in the event that because of physical or mental disability, Executive is unable to perform and does not perform his duties hereunder,
for a continuous period of 90 days, and an experienced, recognized physician specializing in such disabilities certifies as to the foregoing in writing; 
  
 (iii) for Cause or Material Breach (each as defined in Section 3(d)); 
  
 (iv) upon the continuous poor or unacceptable performance of Executive’s duties to the Company, in the
sole judgment of the Board of Directors of the Company, which has remained uncured for a period of 90 days after the delivery of notice by the Company to the Executive of such dissatisfaction with Executive’s performance; or 
  
 (v) for any other reason not referred to in clauses (i)
through (iv), or for no reason, such that this Agreement shall be construed as terminable at will by the Company. Executive acknowledges that no representations or promises have been made concerning the grounds for termination or the future
operation of the Company’s business, and that nothing contained herein or otherwise stated by or on behalf of the Company modifies or amends the right of the Company to terminate Executive at any time, with or without Material Breach or Cause.
Termination shall become effective upon the delivery by the Company to Executive of notice specifying such termination and the reasons therefor, subject to the requirements for advance notice and an opportunity to cure provided in this Agreement, if
and to the extent applicable. 
  
 (c) Subject to the payments
contemplated by Section 3(d), the Term of Employment may be terminated at any time by Executive: 
  
 (i) upon the death of Executive; 
  

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 (ii) in the event that because of physical or mental disability, Executive is unable to
perform and does not perform his duties hereunder, for a continuous period of 90 days, and an experienced, recognized physician specializing in such disabilities certifies as to the foregoing in writing; 
  
 (iii) as a result of the Company’s material reduction
in Executive’s authority, perquisites, position, title or responsibilities (other than such a reduction by the Company because of a temporary illness or disability or such a reduction which affects all of the Company’s senior executives on
a substantially equal or proportionate basis as a result of financial results, conditions, prospects, reorganization, workout or distressed condition of the Company), or the Company’s willful, material violation of its obligations under this
Agreement, in each case, after 30 days’ prior written notice by Executive to the Company and its Board of Directors and the Company’s failure thereafter to cure such reduction or violation within such 30 days; or 
  
 (iv) voluntarily or for any reason not referred to in
clauses (i) through (iii), or for no reason, in each case, after 90 days’ prior written notice to the Company and its Board of Directors. 
  
 (d) For the purposes of this Section 3: 
  
 “Cause” shall mean any of the following: (i) Executive’s conviction of any crime or criminal offense involving the unlawful
theft or conversion of substantial monies or other property or any other felony (other than a criminal offense arising solely under a statutory provision imposing criminal liability on the Executive on a per se basis due to the offices held by the
Executive); or (ii) Executive’s conviction of fraud or embezzlement. “Material Breach” shall mean any of the following: (i) Executive’s breach of any of his fiduciary duties to the Company or its stockholders or making of a
willful misrepresentation or omission which breach, misrepresentation or omission would reasonably be expected to materially adversely affect the business, properties, assets, condition (financial or other) or prospects of the Company; (ii)
Executive’s willful, continual and material neglect or failure to discharge his duties, responsibilities or obligations prescribed by Sections 1 and 2 (other than arising solely due to physical or mental disability); (iii) Executive’s
habitual drunkenness or substance abuse which materially interferes with Executive’s ability to discharge his duties, responsibilities or obligations prescribed by Sections 1 and 2; (iv) Executive’s willful, continual and material breach
of any noncompetition or confidentiality agreement with the Company, including without limitation, those set forth in Sections 7 and 8 of this Agreement; and (v) Executive’s gross neglect of his duties and responsibilities, as determined by the
Company’s Board of Directors; in each case, for purposes of clauses (i) through (v), after the Company or the Board of Directors has provided 

  

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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 circumstances
and Material Breach within those 30 days. 
  
 (i)
In the event Executive’s employment is terminated pursuant to Section 3(b)(i) [death], 3(b)(ii) [disability] or 3(b)(v) [any other reason or no reason] or 3(c)(i) [death], 3(c)(ii) [disability] or 3(c)(iii) [material reduction], the Company
will: (A) pay to Executive (or his estate or representative) the full amounts to which the Executive would be entitled to under Section 4(a) for the period from effectiveness of termination through the 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 the
timetable and schedule for such payments contemplated therefor as if such termination did not occur, and will be subject to the other provisions of this Agreement, including Section 3(g) and Sections 7 and 8. If the Company makes the payments
required by this Section 3(d)(i), such payments will constitute severance and liquidated damages, and the Company will not be obligated to pay any further amounts to Executive under this Agreement or otherwise be liable to Executive in connection
with any termination. 
  
 (ii) In the event
Executive’s employment is terminated pursuant to Section 3(b)(iii) [Cause or Material Breach], 3(b)(iv) [poor performance], or 3(c)(iv) [voluntary], the Company will not be obligated to pay any further amounts to Executive under this Agreement.

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

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 (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 $183,380.08 per annum. The base salary shall be increased to a rate of $195,000.00 per annum; effective as of May 23, 2005 and such amounts may be increased (but not decreased)
annually at the discretion of the Compensation Committee of the Board of Directors based upon an annual review by the Compensation Committee of the Board of Directors of Executive’s performance. 
  
 (b) An annual 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 the
Compensation Committee of the Board of Directors. 
  
 5.
Reimbursement of Expenses 
  
 During the Term of
Employment, the Company shall pay all expenses, including without limitation, transportation, lodging and food for Executive to attend conventions, conferences and meetings that the Company determines are necessary or in the best interest of the
Company, and for any ordinary and reasonable expenses incurred by Executive in the conduct of the Business of the Company. Travel outside the United States shall be subject to the prior approval of an executive officer of the Company. 
  
 6. Benefits 
  
 During the Term of Employment, Executive shall be entitled to benefits
(including health, disability, pension and life insurance benefits consistent with Company policy, or as increased from time to time), in each case, in accordance with guidelines or established from time to time, by the Board of Directors for senior
executives of the Company. 
  
 7. Confidential Information

  
 (a) Executive acknowledges that his employment hereunder gives
him access to Confidential Information relating to the Company’s Business and its customers which must remain confidential. Executive acknowledges that this information is valuable, special, and a unique asset of the Company’s Business,
and that it has been and will be developed by the Company at considerable effort and expense, and if it were to be known 

  

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and used by others engaged in a Competitive Business, it would be harmful and detrimental to the interests of the Company. In consideration of the foregoing,
Executive hereby agrees and covenants that, during and after the Term of Employment, Executive will not, directly or indirectly in one or a series of transactions, disclose to any person, or use or otherwise exploit for Executive’s own benefit
or for the benefit of anyone other than the Companies, Confidential Information (as defined in Section 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 know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the Business (as defined in Section 10). Executive shall use his best
efforts to prevent the removal of any Confidential Information from the premises of the Companies, except as required in his normal course of employment by the Company. Executive shall use his best efforts to cause all persons or entities to whom
any Confidential Information shall be disclosed by him hereunder to observe the terms and conditions set forth herein as though each such person or entity was bound hereby. Executive shall have no obligation hereunder to keep confidential any
Confidential Information if and to the extent disclosure of any thereof is specifically required by law; provided, however, in the event disclosure is required by applicable law, Executive shall provide the Company with prompt notice of such
requirement, prior to making any disclosure, so that the Company may seek an appropriate protective order. At the request of the Company, Executive agrees to deliver to the Company, at any time during the Term of Employment, or thereafter, all
Confidential Information which he may possess or control. Executive agrees that all Confidential Information of the Companies (whether now or hereafter existing) conceived, discovered or made by him during the Term of Employment exclusively belongs
to the Companies (and not to Executive). Executive will promptly disclose such Confidential Information to the Company and perform all actions reasonably requested by the Company to establish and confirm such exclusive ownership. 
  
 (b) In the event that Executive breaches his obligations in any material
respect under this Section 7, the Company, in addition to pursuing all available remedies under this Agreement, at law or otherwise, and without limiting its right to pursue the same shall cease all payments to Executive under this Agreement.

  
 (c) The terms of this Section 7 shall survive the termination
of 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 Confidential Information and the capabilities of individuals employed by or affiliated with the Company, and that
interference in these relationships would cause irreparable injury to the Company. In consideration of this Agreement, Executive covenants and agrees that: 
  
 (i) During the Restricted Period (which shall not include any period of violation of this Agreement by the Executive), Executive will

  

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not, without the express written approval of the Board of Directors of the Company, anywhere in the Market, directly or indirectly, in one or a series of
transactions, own, manage, operate, control, invest or acquire an interest in, or otherwise engage or participate in, whether as a proprietor, partner, stockholder, lender, director, officer, employee, joint venturer, investor, lessor, supplier,
customer, agent, representative or other participant, in any Competitive Business without regard to (A) whether the Competitive Business has its office, manufacturing or other business facilities within or without the Market, (B) whether any of the
activities of Executive referred to above occur or are performed within or without the Market or (C) whether Executive resides, or reports to an office, within or without the Market; provided, however, that (x) Executive may, anywhere in the Market,
directly or indirectly, in one or a series of transactions, own, invest or acquire an interest in up to five percent (5%) of the capital stock of a corporation whose capital stock is traded publicly, or that (y) Executive may accept employment with
a successor company to the Company. 
  
 (ii)
During the Restricted Period (which shall not include any period of violation of this Agreement by Executive), Executive will not without the express prior written approval of the Board of Directors of the Company (A) directly or indirectly, in one
or a series of transactions, recruit, solicit or otherwise induce or influence any proprietor, partner, stockholder, lender, director, officer, employee, sales agent, joint venturer, investor, lessor, supplier, customer, agent, representative or any
other person which has a business relationship with the Company or had a business relationship with the Company within the twenty-four (24) month period preceding the date of the incident in question, to discontinue, reduce or modify such
employment, agency or business relationship with the Company, or (B) employ or seek to employ or cause any Competitive Business to employ or seek to employ any person or agent who is then (or was at any time within six months prior to the date
Executive or the Competitive Business employs or seeks to employ such person) employed or retained by the Company. Notwithstanding the foregoing, nothing herein shall prevent Executive from providing a letter of recommendation to an employee with
respect to a future employment opportunity. 
  
 (iii) The scope and term of this Section 8 would not preclude 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.

  

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 9. Inventions 
  
 (a) Each invention, improvement or discovery made or conceived by Executive, either individually or with others, during the
term of his employment with the Company, which invention, improvement or discovery is related to any of the lines of business or work of the Companies, any projected or potential activities which the Companies have investigated or hereinafter
investigates, or which result from or are suggested by any service performed by Executive for the Company, whether patentable or not, shall be promptly and fully disclosed by Executive to the Company. Executive assigns each such invention,
improvement or discovery, and the patents thereof, or related thereto, to the Company. Executive shall, during the term of his employment with the Company and thereafter without charge to the Company, but at the request and expense of the Company,
assist the Company in obtaining or vesting in itself patents upon such improvements and inventions. All such inventions, improvements or discoveries shall at all times become and remain the exclusive property of the Company. Executive represents
that he does not claim ownership of any inventions, improvements, formulae or discoveries which are excluded from this Agreement. 
  
 (b) In the event that Executive breaches his obligations in any material respect under Sections 7, 8 or this Section 9, the Company, in addition to
pursuing all available remedies under this Agreement, at law or otherwise, and without limiting its right to pursue the same shall cease all payments to Executive under this Agreement. 
  
 10. Definitions 
  
 “Business” means (a) the design, manufacture, lease and operation of pressurized and unpressurized space modules, flight hardware and
subsystems, and those other businesses and activities that are described in the Company’s Form 10-K for the fiscal year ended June 30, 2005, and Form 10-Q for the quarter ending December 31, 2005, or (b) any similar, incidental or related
business conducted or pursued by, or engaged in, or proposed to be conducted or pursued by or engaged in, by the Companies prior to the date hereof or at any time during the Term of Employment. 
  
 “Cause” is defined in Section 3(d). 
  
 “Change in Control” of the Company shall be deemed to occur on: (i)
the date that any person or group 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 series of 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 the right 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 Current Directors (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 approved by a majority of the Current Directors then on the Board of Directors of the Company); or (iii) the date of approval by the shareholders 

  

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of the Company of an agreement providing for (A) the merger or consolidation of the Company with another corporation 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 (without consideration 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 or where 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 other disposition 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, confidential study, data, calculations, software storage media or other compilation of
information, patent, patent application, copyright, trademark, trade name, service mark, service name, “know-how”, trade secrets, customer lists, details of client or consultant contracts, pricing policies, sales techniques, confidential
information relating to suppliers, information relating to the special and particular needs of the Companies’ customers operational methods, marketing plans or strategies, products and formulae, product development techniques or plans, business
acquisition plans or any portion or phase of any scientific or technical information, ideas, discoveries, designs, computer programs (including source of object codes), processes, procedures, research or technical data, improvements or other
proprietary or intellectual property of the Companies, whether or not in written or tangible form, and whether or not registered, and including all files, records, manuals, books, catalogues, memoranda, notes, summaries, plans, reports, records,
documents and other evidence thereof. The term “Confidential Information” does not include, and there shall be no obligation hereunder with respect to, information that is or becomes generally available to the public other than as a result
of a disclosure by Executive not permissible hereunder. 
  
 “Executive” means the individual identified in the first paragraph of this Agreement, or his or his estate, if deceased. 
  
 “Market” means any county in the United States of America and each similar jurisdiction in any other country in which the Business was conducted
or pursued by, engaged in by the Companies prior to the date hereof or is conducted or engaged in or pursued, or is proposed to be conducted or engaged in or pursued, by the Companies at any time during the Term of Employment. 
  

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 “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 termination. 
  
 “Subsidiary” means any corporation, limited liability company, joint venture, limited and general partnership, joint stock company, association or any other type of business entity of which the Company owns,
directly or indirectly through one or more intermediaries, more than fifty percent (50%) of the voting securities at the time of determination. 
  
 “Term of Employment” 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 delivered
personally, or sent by certified or registered mail, return receipt requested, as follows (or to such other addressee or address as shall be set forth in a notice given in the same manner): 
  

			
	If to Executive:	  	 E. Michael Chewning
 2225 Scenic Shore Drive

Seabrook, TX 77586

		
	If to Company:	  	 SPACEHAB, Incorporated
 Attention: Chief Financial
Officer
 12130 Highway 3, Bldg. 1
 Webster, Texas
77598-1504

  
 Any such notices shall
be deemed to be given on the date personally delivered or such return receipt is issued. 
  
 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 as Executive considers appropriate in connection with this Agreement,
is not subject to any covenants, agreements or restrictions, including without limitation any covenants, agreements or restrictions arising out of Executive’s prior employment, which would be 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 of the 

  

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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 shall not 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 any
provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. If any court determines that any provision of Section 8 or any
other provision hereof is unenforceable because of the power to reduce the scope or duration of such provision, as the case may be and, in its reduced form, such provision shall then be enforceable. 
  
 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 of any other breach of such other party. Each of the parties (and third party beneficiaries) to this Agreement will be entitled to enforce its rights under this breach of any
provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of Sections 7, 8 and 9 of this Agreement
and that any party (and third party beneficiaries) may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions in order to enforce or prevent any violations of the provisions of this Agreement. In the event either party takes legal action to enforce any of the terms or provisions of this Agreement against the other
party, the party against whom 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 its respective rights or obligations hereunder, without the prior written consent of the other. The parties agree and acknowledge that each of the Companies and the stockholders and
investors therein 

  

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are intended to be third party beneficiaries of, and have 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, understandings and 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 CHOICE
OF 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 OF
ANY 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 BE
COMMENCED 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 UPON
FORUM 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.

  
 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, ITS NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF CONDUCT OR DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS AGREEMENT, SHALL BE SUBMITTED TO, AND RESOLVED
EXCLUSIVELY PURSUANT TO ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. SUCH ARBITRATION SHALL TAKE PLACE IN 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, 

  

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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 provisions hereof. 
  
 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 same instrument. 
  

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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/    E. MICHAEL
CHEWNING        
	E. Michael Chewning
	
	SPACEHAB, INCORPORATED:
	
	/s/    MICHAEL E.
KEARNEY        
	Michael E. Kearney,
	President and Chief Executive Officer

  

 14Settlement Agreement and Mutual Release of all Claims dated May 25, 2005

 Exhibit 10.37 
  
 SETTLEMENT AGREEMENT AND 
  
 MUTUAL GENERAL RELEASE OF ALL CLAIMS 
  
 The parties to this Settlement Agreement And Mutual General Release of All Claims are SPACEHAB, Inc., a Washington corporation
(“SPACEHAB”), on the one hand, and four insurance syndicates at Lloyd’s of London, United Kingdom, Goshawk Syndicate No. 102, Euclidian Syndicate No. 1243, Ascot Underwriting Ltd. Syndicate No. 1414 and R.J. Kiln Syndicate No. 510
(hereinafter referred to collectively as “Underwriters”), on the other hand. 
  
 WHEREAS, on or about December 18, 1997, SPACEHAB and the United States National Aeronautics & Space Administration (“NASA”) entered into a contract entitled the Research and Logistics Mission Support (“ReALMS”)
contract, contract no. NAS9-97199, whereby SPACEHAB leased its Research Double Module (“RDM”) and other flight hardware to NASA for use onboard a Space Shuttle, which, inter alia, provided in Article H.11 that the government agrees to pay
the contractor [SPACEHAB] for any loss of the contractor’s flight hardware that occurs during the flight risk period, up to a maximum of $8 million, and 
  
 WHEREAS, on or about December 17, 2002, SPACEHAB and Underwriters entered into two policies of excess property insurance, policy number CG 6882 and CG 6883, for $10
million and $7.67 million, respectively, which insured SPACEHAB’s RDM and other flight hardware, and these policies were excess over NASA’s above $8 million, and the value of the RDM was significantly more than the amount of this
insurance, and 
  
 WHEREAS, on or about January 16, 2003, Space Shuttle Columbia
was launched with SPACEHAB’s RDM and other flight hardware onboard, and 
  
 WHEREAS, on February 1, 2003, SPACEHAB’s RDM and other flight hardware were destroyed when Space Shuttle Columbia disintegrated over Texas upon re-entry into Earth’s atmosphere (“the ACCIDENT”), and 
  
 WHEREAS, on February 3, 2003, SPACEHAB made claim to Underwriters for the total of the policy
limits of the two policies of $17.67 million, and SPACEHAB signed a sworn Proof of Loss 

  

 Page 1 of 7 

 
for each policy; and SPACEHAB signed a release for each policy; and Underwriters paid SPACEHAB the above policy limits on or about 14 February 2003; and

  
 WHEREAS, a dispute arose after the ACCIDENT between SPACEHAB and Underwriters,
Underwriters instituted suit against SPACEHAB in connection with the above policies insuring SPACEHAB’s above property on the flight of the Space Shuttle Columbia (the suit is docketed as Certain Underwriters at Lloyds of London v. SPACEHAB,
Inc., No. 04-2-04823-1 SEA in the Superior Court of the State of Washington for King County), and 
  
 WHEREAS, SPACEHAB has appealed the National Aeronautics and Space Administration (“NASA”) contracting officer’s denial of SPACEHAB’s claim demanding that NASA pay SPACEHAB the value of the SPACEHAB
property lost in the crash of the Space Shuttle Columbia to the Armed Services Board of Contract Appeals (“ASBCA”) (the appeal is docketed as ASBCA No. 54880), and 
  
 WHEREAS, SPACEHAB has filed an administrative claim under the United States Federal Tort Claims Act (“FTCA”) demanding that NASA
pay SPACEHAB the value of the SPACEHAB property lost in the crash of the Space Shuttle Columbia, and 
  
 WHEREAS, SPACEHAB has been awarded and received indemnification in the amount of $8 million from NASA for lost property in the crash of the Space Shuttle Columbia, and 
  
 WHEREAS, it is the intention of Underwriters and Spacehab to settle finally and fully all of
their disputes, differences and litigation described above in Certain Underwriters at Lloyds of London v. SPACEHAB, Inc. and to provide for the mutual, general release of each other as more fully set forth herein below, 
  
 NOW THEREFORE, SPACEHAB and Underwriters agree as follows: 
  

	1.	 FOR AND IN CONSIDERATION of the agreement by SPACEHAB to pay and guarantee to Underwriters the minimum sum of Five Hundred Thousand Dollars ($500,000), and for and
in further consideration of the above payment, the sharing agreement described below, this release, the mutual promises of the parties, and the filing of a dismissal with prejudice of the complaint described above, both parties, for themselves and
for their respective officers, directors, shareholders, managers, representatives, insurers, adjusters, attorneys, 

  

 Page 2 of 7 

	 	 
employees, agents, executors, administrators, successors and assigns do each hereby fully and finally release, waive, abandon and forever discharge each
other from any and all claims, counter claims, actions, suits, causes of action, obligations, controversies, debts, costs, expenses, damages, losses, and liabilities of whatever kind or nature, in law, equity, or otherwise, demands, agreements,
contracts, covenants, torts, rights, compensatory damages, including but not limited to damages for property damage, breach of contract, bad faith, negligence, misrepresentation, fraud, extracontractual damages, punitive or exemplary damages,
interest, costs, attorneys’ fees, expenses, controversies, and damages of any kind and nature whatsoever, past and future, whether known or unknown, which either party has asserted or alleged or could have asserted or alleged against each
other, by reason of, arising out of, or included in the above complaint filed by Underwriters relating to the disputes between the parties arising out of the ACCIDENT. 

  

	2.	SPACEHAB hereby agrees to pay Underwriters the following percentage of any amounts that SPACEHAB recovers from NASA under either ASBCA No. 54880 or the FTCA:

  

			
	Amount
Recovered

	  	 Percentage(s) to be Paid to Underwriters

	$0-8	  	0
	$8.0-8.5	  	100% ($0.5)
	$8.50-28	  	13.125% ($.5 & $2.56 = $3.06)
	$28-48	  	16.56% ($.5 & $2.56 &$3.31 = $6.37)
	$48-70	  	21% ($.5 & $2.56 & $3.31 $4.62 = $10.99)
	$70-87.7	  	38% ($.5 & 2.56 & $3.31 $4.62 & $6.73 = $17.72)

  
 (All amounts shown are
in millions of U.S. dollars.) Payment is due to Underwriters upon NASA’s payment of the amount(s) to SPACEHAB. 
  

	3.	 Except with respect to the second tranch (i.e. $8.0 – $8.5), Underwriters will pay SPACEHAB the same percentage of the total costs, including discovery
costs, experts, etc, and attorneys fees SPACEHAB incurs in pursuing claims against NASA from May 15, 2005 through termination of ASBCA No. 54880 and the FTCA claim whether by final decision (including any and all appeals), settlements or otherwise
in which Underwriters share in any amounts recovered from NASA. (For example, if SPACEHAB were to recover $48 million 

  

 Page 3 of 7 

	 	 
from NASA, Underwriters would pay SPACEHAB 16.56% of the costs and attorneys’ fees that SPACEHAB incurs in pursuing NASA from May 15, 2005 through
termination of ASBCA No. 54880 and the FTCA claim whether by final decision (including any and all appeals), settlements or otherwise. Underwriters are not required to share in any costs and attorney fees that SPACEHAB incurs in pursuing NASA if the
amount SPACEHAB recovers from NASA is less than, or equal to, $8.5 million. Underwriters’ obligation to pay a percentage of the above fees and costs is not due until thirty (30) days after Underwriters have received full payment of their
percentage of the recovery SPACEHAB finally obtains from NASA. Alternatively, SPACEHAB will credit any Underwriters’ share of the costs and fees against the sums due Underwriters before paying Underwriters’ their share of any recovery from
NASA. 

  

	4.	In addition to the amounts set forth above in Article 2, SPACEHAB guarantees the payment to Underwriters of $500,000 U.S. dollars regardless of the amount, if any or none (other
than the $8 million NASA has already paid), that SPACEHAB recovers from NASA. Payment of the $500,000 is due upon termination of ASBCA No. 54880 and the FTCA claim whether by final decision (including any and all appeals), settlement or otherwise.

  

	5.	If it becomes necessary under the Contract Disputes Act, SPACEHAB agrees to sign a certification that that part of its claim which includes Underwriters’ $17.67 million is made
in good faith, pursuant to 41 U.S.C. §605. 

  

	6.	SPACEHAB and Underwriters agree to reformation of the above policies of insurance to delete the WAIVER OF RECOURSE by Underwriters against NASA, so that NASA can not use the
purported waiver in the policies against Underwriters. SPACEHAB agrees that it was a mistake to include the waiver in the policies to the extent it pertains to NASA. 

  

	7.	SPACEHAB will keep all parties fully appraised of any and all significant developments, and upon execution by both parties of this Settlement Agreement and Mutual Release of All
Claims, the firm of Seyfarth Shaw LLP will agree to jointly represent SPACEHAB and Underwriters going forward in the prosecution of the claims against NASA. 

  

 Page 4 of 7 

	8.	SPACEHAB will consider Underwriters’ advice with respect to legal strategies, retention of legal counsel and the pursuit, settlement or termination of ASBCA No. 54880 and the
FTCA claim. SPACEHAB, however, will have final say with respect to these matters. 

  

	9.	Underwriters and SPACEHAB acknowledge: (i) that communications made pursuant to Article 7 are for the purpose of promoting their joint interest in pursuing NASA, and (ii) their
intention that all such communications are entitled to the protection of applicable attorney-client privileges. 

  

	10.	Underwriters will, within seven calendar days of the signing by both sides of this Settlement Agreement and Mutual General Release of All Claims dismiss with prejudice the complaint
and entire action in Certain Underwriters at Lloyds of London v. SPACEHAB, Inc., (Case No. 04-2-04823-1SEA). 

  

	11.	SPACEHAB and Underwriters agree to execute all documents which may be required to implement, and take any further action necessary to effect the intentions and provisions of this
Settlement Agreement. 

  

	12.	Excepting the outcome of the sharing agreement set forth above, SPACEHAB and Underwriters hereby acknowledge full and complete satisfaction of, and do hereby fully and finally
release and discharge each other, their officers, directors, shareholders, managers, representatives, attorneys, employees, agents, successors and assigns. 

  

	13.	It is further agreed that each releasing party will never commence, voluntarily aid, prosecute or cause to be commenced or prosecuted against the other releasing party any action or
proceeding based directly or indirectly upon any of the matters set forth above. 

  

	14.	SPACEHAB and Underwriters rely wholly upon their own judgment, belief and knowledge of the nature, extent and duration of their damages, and represent and warrant that they have not
been influenced to any extent whatever in making this Release by any representations or statements regarding said damages or regarding any other matters, made by the persons, companies, syndicates or corporations who are hereby released, or by any
person or persons representing the parties being released. 

  

 Page 5 of 7 

	15.	SPACEHAB and Underwriters hereby declare and represent that they are entering into this settlement and executing this mutual release after having received full legal advice as to
their rights from the respective attorneys representing them herein. 

  

	16.	It is further understood and agreed that this settlement is the compromise of disputed claims, and that the settlement is not to be construed as an admission or presumption of
liability on the part of SPACEHAB or Underwriters, by which liability is expressly denied. 

  

	17.	SPACEHAB and Underwriters agree to waive costs and to bear their own attorneys’ fees incurred prior to the execution by both parties of this Settlement Agreement and Mutual
Release of All Claims. 

  

	18.	This agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, representatives and assigns. 

  

	19.	This agreement is made and entered into in the District of Columbia and shall be interpreted, applied and enforced under and pursuant to the laws of the District of Columbia.

  

	20.	This agreement may be executed in counterparts and in duplicate originals. Photocopies of the agreement, disclosing affixed signatures to other copies, may be relied upon as prima
facie evidence of the fact of counterpart execution. If executed in duplicate, each duplicate copy shall be deemed as valid as an original copy. No distinction shall be made between typed documents and photocopied documents, provided that the copies
contain original signatures. 

  

	21.	This mutual release contains the ENTIRE AGREEMENT between the parties hereto, and the terms of this mutual release are contractual and not a mere recital. 

 

 Page 6 of 7 

 IN WITNESS THEREOF, the parties hereby affix their signatures. 
  

									
	 APPROVED AS TO FORM AND CONTENT
	 	 	 	 
			
	 	 	 	 	 Seyfarth Shaw LLP

				
	 DATED: May 19, 2005
	 	 	 	By:	 	/s/    JOSEPH J. DYER        
	 	 	 	 	 	 	 	 	 Joseph J. Dyer, attorneys for
 SPACEHAB

			
	 	 	 	 	 SPACEHAB, Inc.

				
	 DATED: May 20, 2005
	 	 	 	By:	 	/s/    BRIAN K.
HARRINGTON        
	 	 	 	 	 	 	 	 	Brian K. Harrington
	 	 	 	 	 	 	 	 	Sr. Vice President
			
	 APPROVED AS TO FORM AND CONTENT
	 	 	 	 
			
	 	 	 	 	 Michaelis, Montanari & Johnson

				
	 DATED: May 23, 2005
	 	 	 	By:	 	/s/    JAMES I.
MICHAELIS        
	 	 	 	 	 	 	 	 	 James I. Michaelis, attorneys for
 Underwriters

			
	 	 	 	 	 Underwriters

	 DATED: May 25, 2005
	 	 	 	 By:
	 	 Goshwak Syndicate No. 102

					
	 	 	 	 	 	 	 	 	/s/    Illegible        
					
	 	 	 	 	 	 	 By:
	 	 Euclidian Syndicate No. 1243

					
	 	 	 	 	 	 	 	 	/s/    Illegible        
					
	 	 	 	 	 	 	 By:
	 	 Ascot Underwriting Ltd. Syndicate
                 No. 1414

					
	 	 	 	 	 	 	 	 	/s/    Illegible        
					
	 	 	 	 	 	 	 By:
	 	 R.J. Kiln Syndicate No. 510

					
	 	 	 	 	 	 	 	 	/s/    Illegible        

  

 Page 7 of 7 

  
 AGREEMENT OF
REFORMATION OF INSURANCE POLICIES 
  
 The parties to this
Agreement of Reformation of Insurance Policies are SPACEHAB, Inc., a Washington corporation (“SPACEHAB”), on the one hand, and four insurance syndicates at Lloyd’s of London, United Kingdom, Goshawk Syndicate No. 102, Euclidian
Syndicate No. 1243, Ascot Underwriting Ltd. Syndicate No. 1414 and R.J. Kiln Syndicate No. 510 (hereinafter referred to collectively as “Underwriters”), on the other hand. 
  
 WHEREAS, on or about December 17, 2002, SPACEHAB and Underwriters entered into two policies of excess property insurance,
policy numbers CG 6882 and CG 6883, which insured SPACEHAB’s Research Double Module and other flight hardware, and 
  
 WHEREAS, the policies included a provision entitled “WAIVER OF RECOURSE,” whereby, at the request of SPACEHAB, Underwriters purported to waive
their right of recourse against the National Aeronautics and Space Administration (“NASA”), 
  
 NOW, THEREFORE, SPACEHAB and Underwriters agree as follows: 
  

	1.	SPACEHAB and Underwriters agree to reform the above policies of insurance, and the policies are hereby reformed, to delete the waiver of recourse by Underwriters against NASA.
SPACEHAB agrees that it was a mistake to include the waiver in the policies to the extent it pertains to NASA. 

  

	2.	Inasmuch as this waiver should not have been included in the policies in the first place, this agreement is made retroactive and effective as of the inception date of the policies,
December 1, 2002. 

  

	3.	This agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, representatives and assigns. 

  

 1 

	4.	This agreement is made and entered into in the District of Columbia and shall be interpreted, applied and enforced under and pursuant to the laws of the District of Columbia.

  
 APPROVED AS TO FORM AND CONTENT 
  

									
	 DATED: June     , 2005
	 	 	 	 Seyfarth Shaw LLP

					
	 	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	 	 Joseph J. Dyer, attorneys for
 SPACEHAB

  

									
	 DATED: June     , 2005
	 	 	 	 SPACEHAB, Inc.

					
	 	 	 	 	 	 	By:	 	 
					
	 	 	 	 	 	 	 	 	 

  
 APPROVED AS TO FORM AND CONTENT

  

									
	 DATED: June     , 2005
	 	 	 	 Michaelis, Montanari & Johnson

					
	 	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	 	 James I. Michaelis, attorneys for
 Underwriters

			
	 DATED: June     , 2005
	 	 	 	 Underwriters

	 	 	 	 	 	 	 By:
	 	 Goshawk Syndicate No. 102

					
	 	 	 	 	 	 	 	 	 
					
	 	 	 	 	 	 	 By:
	 	 Euclidian Syndicate No. 1243

					
	 	 	 	 	 	 	 	 	 
					
	 	 	 	 	 	 	 By:
	 	 Ascot Underwriting Ltd. Syndicate No. 1414

					
	 	 	 	 	 	 	 	 	 
					
	 	 	 	 	 	 	 By:
	 	 R.J. Klin Syndicate No. 510

					
	 	 	 	 	 	 	 	 	 

  

 2

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