Settlement 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


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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,


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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 r ...