<PAGE>   1
                                                                   EXHIBIT 10.94

                                                  Supplemental Agreement (SA) 01
                                                                2 September 1998







                        COST PLUS INCENTIVE FEE CONTRACT
                                 NUMBER SHB 1014
                                 AUGUST 14, 1997
                                       FOR
            MULTIPLE MISSION INTEGRATION AND OPERATION (I&O) SUPPORT
                                     BETWEEN
                         MCDONNELL DOUGLAS CORPORATION,
                          A WHOLLY-OWNED SUBSIDIARY OF
                               THE BOEING COMPANY

                              499 BOEING BOULEVARD
                            HUNTSVILLE, ALABAMA 35824
                                       AND
                             SPACEHAB, INCORPORATED
                              1595 SPRING HILL ROAD
                                    SUITE 360
                             VIENNA, VIRGINIA 22182



<PAGE>   2
                                                  Supplemental Agreement (SA) 01
                                                                2 September 1998

                                TABLE OF CONTENTS


Article 1       -    Entire Agreement..........................................1
Article 2       -    Definitions...............................................1
Article 3       -    Scope of Work.............................................1
Article 4       -    Studies/Analyses..........................................1
Article 5       -    Period of Performance.....................................2
Article 6       -    Contract Amount...........................................2
Article 7       -    Payment...................................................3
Article 8       -    Limitation of Funds.......................................3
Article 9       -    Supplies/Services and Delivery Schedule...................4
Article 10      -    Title and Delivery........................................4
Article 11      -    Packaging and Marking.....................................4
Article 12      -    Inspection and Acceptance.................................5
Article 13      -    Place of Performance......................................5
Article 14      -    Items, Equipment, Property, Services to be Furnished
                     by SPACEHAB, Inc. And/or the Government on a
                     "No Charge" Basis.........................................5
Article 15      -    Exchange of Technical Information.........................6
Article 16      -    Excusable Delays..........................................6
Article 17      -    Changes...................................................7
Article 18      -    Amendments................................................8
Article 19      -    Stop Work Orders..........................................8
Article 20      -    Notices...................................................8
Article 21      -    Key Personnel.............................................9
Article 22      -    Termination...............................................9
Article 23      -    Governing Law.............................................9
Article 24      -    Arbitration/Disputes......................................9
Article 25      -    Audit....................................................10
Article 26      -    Indemnity Against Patent Infringement....................10
Article 27      -    Limitation of Liability..................................11
Article 28      -    Insurance and Indemnification............................10
Article 29      -    MDC Employee Injury......................................11
Article 30      -    Warranty.................................................11
Article 31      -    Relationship of Parties..................................11

                                       i
<PAGE>   3

Article 32      -    Manned Space Flight Item.................................12
Article 33      -    Order of Precedence......................................12
Article 34      -    Technical Data...........................................12
Article 35      -    Patent Rights............................................12
Article 36      -    Use of Company Logo......................................12

                                       ii
<PAGE>   4
                                                  Supplemental Agreement (SA) 01
                                                                2 September 1998

THIS CONTRACT, by and between SPACEHAB, Inc. with an address at 1595 Spring Hill
Road, Suite 360, Vienna, Virginia 22182 (hereinafter referred to as "SPACEHAB,
Inc." or "SHI") and McDonnell Douglas Corporation, A Wholly-Owned Subsidiary of
The Boeing Company, with an address at 499 Boeing Boulevard, Huntsville, Alabama
35824, (hereinafter referred to as "MDC"). (McDonnell Douglas Corporation
represents and warrants that it is acting on behalf of The Boeing Company and
that it has the corporate power and authority to legally add The Boeing Company
to the terms and conditions of this Contract.) The parties hereby agree as
follows:

Article 1 - Entire Agreement

This Contract, all exhibits and other documents incorporated herein by
reference, whether or not attached hereto, constitute the complete and exclusive
statement of the Contract between the parties hereto. This Contract supersedes
any previous understanding or agreement between SHI and MDC (oral or written)
with respect to the subject matter hereof. Further, this Contract constitutes a
definitization of Letter Contract SHB 1014 dated 14 August 1997 including
modifications thereto through Modification No. 24 dated 20 August 1998 between
SHI and MDC, subject to an equitable adjustment of Estimated Target Cost Plus
Target Incentive Fee resulting from these modifications.

Article 2 - Definitions

A.       The term "MDC" shall include McDonnell Douglas Corporation, A
         Wholly-Owned Subsidiary of The Boeing Company, formerly known as
         McDonnell Douglas Aerospace - Huntsville.

B.       The terms "General Agreement," "Basic Agreement," "Basic Terms and
         Conditions," "Agreement" and "Contract" shall mean this Contract and
         shall be deemed to include all exhibits, specifications, drawings, or
         other documents incorporated herein by reference.


Article 3 - Scope of Work

MDC is the prime Contractor responsible for performance of all work set forth in
this Contract, including work to be performed by any subcontractor.

MDC shall perform the work identified in Exhibit A, "SPACEHAB Multi-Mission
Integration and Operations Contract Statement of Work, enclosed herein and made
a part hereof.

In accordance with the Statement of work requirements herein, it is intended
that MDC will perform the Integration and Operations of four (4) SPACEHAB
science missions (1 single module mission and 3 double module missions) and 5
SPACEHAB cargo double module missions aboard the NASA Orbiter within the
Contract period of performance and maintain accountability and operation of
SPACEHAB hardware which was developed by the Phase C/D Contracts SHB 1001, SHB
1010 and SHB 1013, or the I&O Contracts SHB 1002 and SHB 1009 between SHI and
MDC.


Article 4 - Studies/Analyses

A.       Task Directives. As set forth in WBS 9.1.9.5 of the Statement of Work,
         MDC will be required to perform Studies/Analyses as specified in
         written Task Directives. Task Directives may be authorized solely by
         the SHI personnel specified in Article 20 and will be jointly signed by
         the appropriate MDC personnel. These directives shall define the scope
         of work for the task to be performed, provide the time and place of
         performance desired, provide the total funding

                                       1
<PAGE>   5
         authorized for this task by this Task Directive, and will provide such
         other instructions as may be required to properly define the effort. No
         work is to be performed under this clause unless authorized by a
         Specific Task Directive.

B.       The Studies/Services effort will be cost plus fixed fee of 12% and not
         subject to the cost/fee sharing arrangement described in Article 6.
         Funding authorization shall be issued annually on a SHI fiscal year
         basis. Funding authorized for each study area and each SHI fiscal year
         shall be defined in Exhibit D of this contract. If at any time during
         the current year, MDC has reason to believe the effort will exceed the
         authorized funding, MDC will notify SHI and furnish with such
         notification, a new estimate of the total funding required. In the
         event SHI desires to continue the effort, a contract change will be
         issued authorizing the additional funding and the contract will be
         adjusted. The annual level of effort under this article is anticipated
         to be on the order of 5 to 10 equivalent personnel plus travel and
         miscellaneous materials.

C.       Financial Management. Costs incurred under this provision for Studies
         shall be reported as a part of the 9.1.9.5 WBS, with expenditures
         segregated by Task Directive in the Monthly Compliance Report.

Article 5 - Period of Performance

MDC shall perform the work called for under this Contract in accordance with the
agreed to Statement of Work as specified in Article 3 herein, including
preparation and submission of all reports, during the period of performance
beginning 14 August 1997 and continuing through 31 December 2002, and as may be
extended by mutual agreement.

Article 6 - Contract Amount

A.       General. This is a Cost Plus Incentive Fee Contract. The following
         estimated target cost and target incentive fee is established for the
         effort required by the Contract for services as specified in Statement
         of Work defined in Article 3 above and in accordance with the schedule
         specified in Article 9 for nine (9) SPACEHAB missions. The amounts
         include negotiated target cost and target incentive fee for
         Modifications 3, 6, 11, and 12 to the Letter Contract.


         Estimated Target Cost:                               $86,810,379
         Estimated Target Incentive Fee:                      $10,365,680
         Estimated Target Cost Plus Target Incentive Fee:     $97,176,059
         Estimated Studies Cost:                              $ 2,269,935
         Estimated Studies Fixed Fee:                         $   276,565
         Total Estimated Contract Price:                      $99,722,559

B.       Target Cost and Target Incentive Fee. The Target Cost and Incentive Fee
         of 12% specified in Paragraph A above are subject to adjustment if the
         Contract is modified in accordance with Article 6.C.2 below.

         1.       "Target Cost," as used in this Contract, shall mean the cost
                  of this Contract as initially negotiated, and as modified in
                  accordance with the Changes Clause of this Contract.

         2.       "Target Incentive Fee" as used in this Contract, shall mean
                  the fee that is subject to the Incentive formula, as described
                  in Article 6.C.1 below.

C.       Fees payable.

                                       2
<PAGE>   6
         1.       The Total Target Incentive Fee shall be payable under this
                  Contract in accordance with Article 7 below and shall be
                  increased by 30 cents for every dollar that the actual cost
                  incurred (exclusive of fees) is less than the Target Cost, or
                  decreased by 30 cents for every dollar that the actual cost
                  exceeds Target Cost. In no event shall the Total Target
                  Incentive Fee, as modified, be more than 15% or be less than
                  8% of the Total Target Cost.

         2.       Equitable Adjustment. When the work under this Contract is
                  increased or decreased by a modification to this Contract,
                  then the Target Cost and Incentive Fee shall be modified as
                  appropriate in a supplemental agreement to this Contract.

D.       Estimated Studies Cost and Estimated Studies Fixed Fee specified in
         Paragraph A above are allocated to specific studies areas under WBS
         9.1.9.5 and to SPACEHAB fiscal years in accordance with Exhibit C
         attached hereto. The specific amounts in Paragraph A above and in
         Exhibit C are subject to adjustment in accordance with Article 4.B
         above.

E.       Facilities Capital Cost of Money. Facilities capital cost of money
         shall be an allowable cost under this contract.

F.       Exclusion of Taxes. The parties agree that no sales or use tax, either
         Alabama or Florida has been included in the target cost. Sales or use
         tax, if any, shall be subject to the Changes Clause of this Contract.

Article 7 - Payment

A.       MDC shall submit invoices monthly for the payment of actual costs
         incurred plus the Target Incentive Fee of 12%. Such invoices shall be
         submitted to SHI at:

                  SPACEHAB, Inc.
                  1595 Spring Hill Road
                  Suite 360
                  Vienna, VA  22182

         Payment will be made by or on behalf of SPACEHAB, Inc. to:

                  McDonnell Douglas Corporation
                  P. O. Box 516
                  St. Louis, Missouri 63166
                  Attention:  Accounts Receivable

Such invoices shall be due and payable by SHI, 30 days after receipt of an
invoice. If any such invoice remains unpaid 45 days after receipt of such
invoice, MDC shall have the right to stop work under this Contract. If such
invoice continues to remain unpaid 60 days after receipt of such invoice, MDC
may at its option, consider SHI to have breached this Contract and may pursue
remedies as provided by law.

Article 8 - Limitation of Funds

A.       The sum of $17,356,207 is presently available for payment and is
         allotted to this contract covering the period of performance through 31
         December 1998. It is anticipated that from time to time additional
         funds will be allotted in writing to this contract up to the total
         estimated contract price. When additional funds are allotted from time
         to time for continued performance

                                       3
<PAGE>   7

         of the work under this contract, the parties shall agree on the
         applicable period of performance which shall be covered by such funds.

B.       MDC agrees to use its best efforts to perform, or have performed,
         the work on this contract up to the point at which the total amount
         paid and payable by SHI under the contract approximates but does not
         exceed the amount specified in Paragraph (A). Unless otherwise agreed
         in writing, SHI shall not be obligated to reimburse MDC for costs
         incurred in excess of the total amount allotted by SHI to this contract
         during the stated period of performance.

C.       Upon expenditure of 85% of allotted funds set forth in Paragraph (A),
         MDC shall notify SHI in writing as to the estimated amount of
         additional funds required for the timely performance of the contract.
         Such notice shall specify any additional funds and period of
         performance required.

D.       If, after the notification called for in Paragraph (C) above,
         additional funds are not allotted to this contract, MDC may request
         that this contract be terminated, in accordance with the provisions of
         the Terminations Clause of this contract, and SHI shall comply.

E.       MDC is not obligated to continue performance under this contract
         (including actions under the Termination clause of this contract) or
         otherwise incur costs, which when added to the applicable fee would be
         in excess of the amount then allotted to the contract by SHI until SHI
         notifies MDC in writing that the amount allotted has been increased.

Article 9 - Supplies/Services and Delivery Schedule

A.       The scope of work to be performed under this Contract shall include,
         the provision of all labor, materials, services, and equipment
         necessary to perform the work as set forth in Exhibit A, SPACEHAB
         Multi-Mission Integration and Operations Contract Statement of Work.

B.       The flight schedule for which MDC shall provide services is as follows:

                           MISSION          LAUNCH DATE

         -     Science 1, single module     October, 1998
         -     Cargo 1, double module        April, 1999
         -     Cargo 2, double module       October, 1999
         -     Science 2, double module       May, 2000
         -     Cargo 3, double module       December, 2000
         -     Science 3, double module       June, 2001
         -     Cargo 4, double module       November, 2001
         -     Science 4, double module       April, 2002
         -     Cargo 5, double module       November, 2002

C.       MDC shall submit on a monthly basis to SHI a compliance report mutually
         agreeable to MDC and SHI which documents MDC's expenditures pertaining
         to this contract.

Article 10 - Title and Delivery

The point of delivery for any hardware required shall be Cape Canaveral, Florida
USA. The point of delivery for any data required shall be SPACEHAB, Inc.,
Vienna, VA.

Article 11 - Packaging and Marking

                                       4
<PAGE>   8
Packaging and marking for shipment of all items ordered hereunder shall be in
accordance with good commercial practice, and adequate to ensure both acceptance
by common carrier and safe transportation at the most economical rate(s).

Article 12 - Inspection and Acceptance

The place of final inspection and acceptance for the services and deliverable
hardware called for under this Contract shall be SHI's facility at Cape
Canaveral, Florida, or other designated place(s) or performance. The place of
inspection and acceptance of all deliverable reports and documentation shall be
at SHI, Vienna, VA with copy to SHI Houston, Texas and SHI Cape Canaveral, FL as
specified by SHI.

Article 13 - Place of Performance

MDC shall perform the work under this contract at its facility located in
Huntsville, Alabama, at SHI's facility located at Cape Canaveral, Florida, and
at any other locations as may be required.

Article 14 - Items, Equipment, Property, Services to be Furnished by SPACEHAB,
Inc. and/or the Government on a "No Charge" Basis

A.       SHI and/or the Government shall furnish to MDC, for use in connection
         with and under the terms of this contract on a "no-charge" basis, the
         SHI and/or Government owned equipment, property, items, services, etc.
         which are suitable for the intended use. SPACEHAB Furnished Equipment
         (SFE) to be provided is identified in Exhibit B. Government Furnished
         Property (GFP) to be provided is identified in Exhibit B.

B.       Off nominal conditions, inadequacies, and delivery delays in SHI and/or
         Government supplied items identified herein will be the basis for a MDC
         Contract Change proposal and subsequent Contract amendment reflecting
         the cost, fee, schedule, and technical impact of defective or late
         delivery of SHI and/or Government supplied items.

C.       MDC is authorized to commingle all material without physical
         segregation or identification to the individual SHI contracts. The
         applicability of NASA FAR 52.245-5 Government Property is agreed to
         apply to Government furnished or owned equipment only and does not
         apply to purchases under this Contract since it is understood that
         title to all items provided under this Contract would vest with
         SPACEHAB, Inc.

D.       SPACEHAB Furnished Equipment as identified in Exhibit B will include
         the following information:

         -        Acceptance Data Package (ADP)

         -        Functional capabilities

         -        Interface definition

         -        Environmental constraints

         -        Mechanical characteristics (dimensions, weight, c.g., etc...)

         -        Electrical power requirements (peak, start-up/in-rush,
                  profile, ...)

         -        Special requirements (commanding, downlink,...)

         -        Verification data (including safety data)

         -        Test requirements for processing/integration activities

         -        Operations requirements and procedures (flight and ground)

                                       5
<PAGE>   9

         Maintenance/repair of SFE that was designed and built by SHI will be
         the responsibility of SHI. Boeing shall be responsible to report
         hardware failures immediately to SHI via Material Review Record (MRR).
         To do this, Boeing will perform trouble shooting to locate problem to,
         but not within, the SFE component. Boeing support to SHI for trouble
         shooting within the SFE component and shipping or repairing the
         component will be authorized by task directive and is funded under the
         Studies/Services element of the statement of work (Reference Article 4
         and SOW paragraph 9.1.9.5).

         Boeing shall be provided an ADP for all SFE at turnover. SFE hardware
         and corresponding documentation shall be identified by part number
         including revision level (and serial number when appropriate).
         Changes/revisions post turnover (to Boeing) shall be accompanied by the
         appropriate revised documentation and updated ADP.

Article 15 - Exchange of Technical Information

During the term of this Contract, SHI and MDC, to the extent of their right to
do so, agree to exchange all such technical and management information as may
reasonably be required for each to perform its obligations hereunder. To the
extent that proprietary information of either party is disclosed, such
information or data which is (i) submitted in writing, must be designated by an
appropriate stamp, marking or legend thereon to be of proprietary or
confidential nature, or (ii) orally submitted, must be identified as proprietary
or confidential prior to disclosure and the disclosing party notifies the
receiving party, in writing, specifically identifying any such proprietary or
confidential information so orally submitted within thirty days after such oral
submission. Notwithstanding termination or expiration of this Contract, each
party will keep in confidence and prevent the disclosure of all such proprietary
information and data, whether technical or commercial, to any third party.
Neither party shall be liable for disclosure of any such proprietary information
or data, if such information:

A.       Was in the public domain at the time it was disclosed, or later becomes
         part of the public domain other than throughout the action of the party
         receiving it; or

B.       Was known to the party receiving it at the time of disclosure; or

C.       Is disclosed with the prior written approval of the other party; or

D.       Is disclosed by the party providing the same, to others, on a
         non-restricted basis; or

E.       Is disclosed inadvertently despite the exercise of the same degree of
         care that the receiving party takes to preserve or safeguard its own
         proprietary information; or

F.       Becomes known to the receiving party from a source other than the
         disclosing party without breach of this Section by the receiving party;
         or

G.       Is disclosed one (1) year after expiration or termination of this
         Contract; or

H.       Is disclosed to a government agency for certification or export license
         purposes, taking all reasonable precautions to prevent further
         disclosure by such agency.

Article 16 - Excusable Delays

                                       6
<PAGE>   10
Except for default of subcontractors at any tier, MDC shall not be in default
because of any failure to perform this Contract under its terms if the failure
arises from causes beyond the control and without the fault or negligence of
MDC. Examples of these causes include but are not limited to are (1) acts of God
or of the public enemy, (2) acts of Government in either its sovereign or
contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine
restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe
weather. In each instance, the failure to perform must be beyond the control and
without the fault or negligence of MDC. "Default" includes failure to make
progress in the work so as to endanger performance.

MDC shall not be in default, if the failure to perform is caused by the failure
of a subcontractor at any tier to perform or make progress, and if the cause of
the failure was beyond the control of both MDC and subcontractor, and without
fault or negligence of either, unless (1) MDC knew of other sources to obtain
the subcontracted supplies or services from to meet schedule; (2) SHI ordered
MDC in writing to purchase these supplies or services from the other source; and
(3) MDC failed to comply reasonably with this order.

If SHI determined that any failure to perform results from one or more of the
causes above, the delivery schedule shall be revised, subject to the rights of
SHI under the Termination Clause of this Contract.

Article 17 - Changes

A.       SHI may at any time, by written order, and with such concurrence to not
         be unreasonably withheld from MDC, make changes within the general
         scope of this Contract in any one or more of the following:

         (1)      Description of services to be performed.

         (2)      Time of performance (i.e., hours of the day, days of the week,
                  etc.).

         (3)      Place of performance of the services.

         (4)      Drawings, designs, or specifications.

         (5)      Method of shipment or packing of supplies.

         (6)      Place of delivery.

         (7)      Types and amounts of SHI and/or Government-Furnished Property
                  to be provided.

B.       If any such change causes an increase or decrease in the estimated cost
         of, or the time required for, performance of any part of the work under
         this contract, whether or not changed by the order, or otherwise
         affects any other terms and conditions of this contract, SHI shall make
         an equitable adjustment in the (1) estimated cost, delivery or
         completion schedule, or both; (2) amount of fee; and (3) other affected
         terms and shall modify the contract accordingly.

C.       MDC shall assert its right to an adjustment under this clause within 60
         days from the date of receipt of the written order. However, if SHI
         decides that the facts justify it, SHI may receive and act upon a
         proposal submitted before final payment of the contract.

D.       Failure to agree to any adjustment shall be a dispute under the
         Disputes Clause. However, nothing in this clause shall excuse MDC from
         proceeding with the contract as changed.

E.       Notwithstanding the terms and conditions of paragraphs (a) and (b)
         above, the estimated cost of this contract and, if this contract is
         incrementally funded, the funds allotted for the performance of this
         contract, shall not be increased or considered to be increased except
         by specific written modification of the contract indicating the new
         contract estimated cost and, if this contract is incrementally funded,
         the new amount allotted to the contract. Until this modification is
         made,

                                       7
<PAGE>   11
         MDC shall not be obligated to continue performance or incur costs
         beyond the point established in the Limitation of Funds Clause of this
         Contract.

Article 18 - Amendments

Neither this Contract, nor any term or condition thereof, shall be amended or
changed in any manner except by an instrument in writing hereto, executed by
both parties acting through their duly authorized representatives.

Article 19 - Stop Work Orders

SHI may, at any time, by written order to MDC, require MDC to stop all, or any
part, of the work called for by this contract for a period of up to 90 days
after the order is delivered to MDC, and for any further period to which the
parties may agree. The order shall be specifically identified as a stop-work
order issued under this clause. Upon receipt of the order, MDC shall immediately
comply with its terms and take all reasonable steps to minimize the incurrence
of costs allocable to the work covered by the order during the period of work
stoppage.

Article 20 - Notices

A.       Except as herein specifically provided otherwise, all notices, reports,
         and other communications hereunder shall be given in writing either by
         personal delivery, by first class mail, or by electronic transmission,
         addressed to the respective parties as specified herein below.

B.       The date upon which any such communication is personally delivered or,
         if such communication is transmitted by mail or by electronic
         transmission, the date upon which it is received by the addressee,
         shall be deemed to be the effective date of such communication.

C.       Each party shall promptly advise the other in the event of any change
         in their respective addresses.

D.       The SHI personnel authorized to issue written orders, in accordance
         with the Changes Clause, are M.E. Grayson, W.S.Dawson, or Nelda
         Wilbanks. The SHI personnel authorized to issue written Task Directives
         in accordance with Article 4. are M. D. Steffey, J. M. Lounge, and B.
         A. Harris.

         The SHI personnel authorized to give technical direction are E. M.
         Chewning and D. A. Bland.

E.       The addresses of SHI and MDC, for the purpose of Paragraph A above, are
         as follows:

                           FOR COMMUNICATION TO SPACEHAB, INC.

                           SPACEHAB, Inc.
                           1595 Spring Hill Road, Suite 360
                           Vienna, VA  22182
                           Attention:  Nelda Wilbanks with copies to E.M.
                           Chewning and D. A. Bland.

                           When transmitted by mail:  Same as above
                           When transmitted by electronic transmission:
                                                     Fax Number:  (703) 821-3070

                           FOR COMMUNICATION TO MDC

                                       8
<PAGE>   12

                           The Boeing Company
                           499 Boeing Boulevard
                           Huntsville, AL  35824
                           Attention:  Contract Administrator with copy to
                                       SPACEHAB Program Manager

                           When transmitted by mail:  Same as above

                           When transmitted by electronic transmission:
                                                     Fax Number:  (256) 461-2460

Article 21 - Key Personnel

The personnel listed below are considered essential to the work being performed
under this contract. Before removing, replacing, or diverting any of the listed
personnel, MDA shall notify SHI in advance, and shall provide rationale
including identification and qualifications of candidate replacement, and shall
not remove, replace or divert such personnel without SHI's written consent,
which shall not be unreasonably withheld. In such event, the list of personnel
shall then be amended accordingly.

Key Personnel           Title/Position

J. H. James             Director, SPACEHAB Program
E. L. Streams           Senior Manager, SPACEHAB Product Engineering
R. K. Keen              Senior Manager, SPACEHAB Multi Mission Integration and
                        Operations
D. A. Biggs             Senior Manager, SPACEHAB Integration and Operations
W. A. Koelle            Senior Manager, SPACEHAB Safety and Mission Assurance
W. H. Turner            Senior Manager, SPACEHAB Ground Operations

Article 22 - Termination

A.       SHI may terminate this Contract at any time by written notice, in whole
         or in part, if SPACEHAB, in its sole discretion, determines that a
         termination is in its own best interest. SHI shall terminate by
         delivering to the Contractor a Notice of Termination specifying the
         extent of termination and the effective date. To minimize the cost of
         effecting the termination in accordance with MDC policy, best efforts
         shall be made by SHI to provide 60 to 90 days notice prior to the
         effective date of termination.

B.       In the event of a termination, SHI will reimburse MDC for all costs
         incurred, including applicable fee and termination costs. For purposes
         of the Termination Clause, incurred costs includes all outstanding
         commitments not yet paid and for delivery of all hardware, software and
         services, whether complete or incomplete, identified herein, to SHI.
         Termination costs are those actual and reasonable costs incurred in
         terminating the Contract including usual and customary severance pay
         and other labor costs in the ordinary course of business or as
         otherwise required by law, storage and protection costs, and costs of
         settlement and termination of subcontracts.

C.       SHI may terminate this contract if MDC fails to deliver the goods or
         perform the services required by this contract within the time
         specified and any extension thereto granted by SHI.

Article 23 - Governing Law

This agreement shall be governed by and interpreted in accordance with the law
of the State of Delaware.

Article 24 - Arbitration/Disputes

                                       9
<PAGE>   13

Disputes arising out of the interpretation or execution of this contract which
cannot be resolved by negotiation shall, at the request of either Party, (after
giving 30 days notice to the other Party) be submitted to arbitration. The
arbitration tribunal shall sit in Huntsville, AL. Disputes shall be finally
settled in accordance with the Rules of Conciliation and Arbitration of the
American Arbitration Association by one or more arbitrators designated in
conformity with those Rules. The decision to submit a dispute shall not excuse
either party from the timely performance of its obligations hereunder which are
not the subject matter of the dispute. Further, if the lack of resolution of the
matter in dispute will adversely impact the timely completion of preparation for
launch activities, MDC and SHI will perform the matter in dispute in the manner
determined by SHI, within the framework of this Contract and without prejudice
to the final resolution of the matter in dispute.

Article 25 - Audit

A.       MDC will maintain accurate records of labor hours expended, subcontract
         billings and travel costs incurred by Cost Charge Number. Such records
         shall be made available for inspection by an independent certified
         public account retained by SHI during normal business hours for a
         period of three (3) years after completion of this Contract.

B.       MDC's books, records, documents and other supporting data shall be made
         available to an independent certified public accountant retained by SHI
         for inspection and audit as reasonably required in conjunction with the
         negotiation of any changes hereunder, including termination claims.

C.       In case of any dispute, the parties agree to continue Contract
         performance pending resolution.


Article 26 - Indemnity Against Patent Infringement

A.       MDC shall indemnify SHI against any liabilities or losses which SHI may
         be required to pay in the case of any actual or alleged infringement of
         any United States patent or any negotiation or litigation based
         thereon, with respect to any products purchased pursuant to the terms
         of this Contract unless such products are made to a specific and detail
         design furnished by SHI which is not a modification of a MDC design.
         Such liabilities or losses (i) include: (a) counsel fees, (b) cost of
         replacing any infringing product with a suitable non-infringing
         substitute or of otherwise curing any infringement, but (ii) do not
         include any losses by SHI due to loss of use, at any time, of equipment
         or component utilizing any of said products which are the subject of
         any actual or alleged infringement.

B.       With respect to any such actual or alleged patent infringement for
         which MDC is obligated to indemnify SHI: (i) MDC shall, as soon as
         practicable, report to SHI promptly and in reasonable written detail,
         each notice of claim against MDC of patent infringement; and (ii) SHI
         will notify MDC as soon as practicable after receipt by SHI of
         appropriate notice of any charge of infringement or commencement of any
         suit or action for infringement against SHI in either case, MDC shall
         have the option to (a) conduct negotiations with the party or parties
         charging infringement or (b) assume, conduct and control the defense of
         any suit or action of infringement against MDC or SHI. In the event MDC
         does not pursue either option, then SHI shall have the option to
         conduct such negotiations and defense without expense or liability to
         SHI as provided under Paragraph A. above.

Article 27 - Limitation of Liability

                                       10
<PAGE>   14

In no event, shall MDC be liable under any legal or equitable theory (including
but not limited to contract, tort, negligence, or strict liability) for any
incidental or consequential damages, including but not limited to damages for
lost profits, lost sales, or loss of use of property.

Article  28 - Insurance and Indemnification

Upon delivery and final acceptance by SHI of a SPACEHAB module, SHI shall
indemnify and save harmless MDC, its subcontractors and any officers, directors,
employees, and agents of any of them from any liability and expense on account
of loss of damage to the property of third parties (including the US Government)
or bodily injury to any persons, including death, caused by or resulting from
the use of the goods furnished hereunder and/or arising from the provision of
services under this Contract excepting only such loss, damage, or injury caused
by the indemnities willful misconduct, and SHI shall defend any suits or other
proceedings brought against MDC and its subcontractors and the officers,
directors, employees, and agents of any of them on account thereof an shall pay
all expenses and satisfy all judgments which may be incurred or rendered against
them or any of them in connection therewith. MDC shall give SHI prompt written
notice of any claim of such loss, damage, or injury and shall cooperate with SHI
and its insurers in every reasonable way in defending against such claim. SHI
shall obtain insurance, naming MDC as an additional named insured, against such
liabilities to third parties as are referred to in this paragraph.

MDC shall indemnify SHI against any liability, loss, claim, and/or proceeding in
respect of personal injury to and/or death of any person, or loss or damage to
property, arising out of the performance of the Contract; but only if the same
is due to the negligent acts or omission of MDC, its employees or agents; or any
subcontractor, its employees or agents.

Article 29 - MDC Employee Injury

MDC shall indemnify and hold harmless SHI, its officers, agents, and employees
from any liability, loss or damage they may suffer as a result of death or
injury to any MDC employees connected with or related to the performance of
Contract work on SHI's premises, and which results from the negligence of MDC,
its officers, agents, or employees.

Article 30 - Warranty

A.       MDC hereby warrants to SHI that all deliverables furnished under this
         contract shall be free from defects in workmanship for a period of one
         (1) year from the date of their acceptance. The cost of and associated
         fees for remedies of any defects shall be paid pursuant to the payment
         provisions of this contract. SHI shall notify MDC in writing, via fax
         or any equivalent means within 48 hours of any defects found after
         acceptance of the products. MDC's liability under this clause shall not
         extend:

         1.       to defects arising from the misuse of the items after
                  acceptance.

         2.       to defects in materials, assemblies or other supplies issued
                  by SHI for incorporation therein, provided always that MDC
                  shall have properly exercised its duties as custodian of such
                  issues and shall have incorporated them in accordance with the
                  requirements of the contract.

B.       MDC's warranty shall not extend to compensation for damage resulting
         from the use of articles covered by the contract after acceptance.
         Consequently, SHI and/or SHI customers shall have no claim against MDC
         for damage suffered by it.

                                       11
<PAGE>   15
C.       Where defects in items are remedied by repair under this warranty, the
         repaired item shall be warranted for the remainder of the unexpired
         warranty. Where defective items are replace by new ones the full
         guarantee period stipulated in the Contract shall apply to such
         replacement items form the date of their acceptance.

D.       EXCEPT AS PROVIDED IN THIS ARTICLE, MDC MAKES NO WARRANTIES OF ANY
         KIND, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF
         MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

Article 31 - Relationship of Parties

This Contract is not intended by the parties to constitute or create a joint
venture, partnership or formal business organization of any kind. The rights and
obligations of the parties shall be only those expressly set forth herein. The
relationship established by this Contract is exclusively that of seller and
buyer.

Article 32 - Manned Space Flight Item

MDC shall include the following statement in all subcontracts and purchase
orders placed by it in support of this Contract, without exception as to amount
or subcontractual level:

         For use in manned space flight; materials, manufacturing, and
         workmanship of highest quality standards are essential to astronaut
         safety.

         If you are able to supply the desired item with a higher quality than
         that of the items specified or proposed, you are requested to bring
         this fact to the immediate attention of the purchaser.

Article 33 - Order of Precedence

In the event of any conflict between Contract and the Statement of Work, the
contract shall take precedence.

Article 34 - Technical Data

All technical data, of whatever type or kind, produced and deliverable under
this Contract shall be the "joint" property of SHI and MDC, and SHI and MDC
shall each have a "royalty-free" right or license to use such data for any
purpose including performance under this Contract.

Article 35 - Patent Rights

All discovery or inventions of whatever type or kind first made or reduced to
practice in connection with the performance of this Contract are the "joint"
property of SHI and MDC, and SHI and MDC (and any of the parties' present or
future employees, agents, consultants or subcontractors pursuant to contractual
rights with one of the parties - hereinafter "Agent") shall each have a
royalty-free right or license therein.

Article 36 - Use of Company Logo

Use of The Boeing Company logo by SHI in marketing presentations and printed or
electronic publications shall be coordinated with and approved by MDC prior to
dissemination.




                                       12
<PAGE>   16
IN WITNESS WHEREOF, the parties have caused their duly authorized representative
to execute this Contract in duplicate.

MCDONNELL DOUGLAS CORPORATION,                 SPACEHAB, INC.
A WHOLLY-OWNED SUBSIDIARY OF
THE BOEING COMPANY




By:  _____________________________             By:

Name:       W.D. McBride                       Name:      Nelda Wilbanks

Title:     Senior Contracts Administrator      Title:    Contracts Administrator

Date: _____________________________            Date:






                                       13