EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
                                with W. T. Short


         This Employment and Non-Interference  Agreement (this "Agreement"),  is
dated as of July 1,  1998,  by and  between  W.T.  Short (the  "Executive")  and
SPACEHAB, INCORPORATED, a Washington corporation (the "Company").

                                   WITNESSETH:

         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 an  executive  of the Company in the  position of
Vice-President,  Johnson Engineering, and as an executive of JOHNSON ENGINEERING
CORPORATION,  a  wholly-owned  subsidiary  of the  Company,  in the  position of
President of JOHNSON ENGINEERING CORPORATION. Executive will also undertake such
duties and responsibilities as may be reasonably assigned to Executive from time
to time by the  President  of the  Company,  by the  Board of  Directors  of the
Company,  or by 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 President of the Company,  by the Company's  Board
         of Directors,  or by 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 the date hereof
         and shall continue for a term ending July 1, 1999 (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 within ninety (90) days prior to
         the end of the Initial Term or the 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;

                           (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
         non-competition   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  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.

                  (g)  Termination of the Term of Employment  will not terminate
         Sections 3(d), 3(f) and 7 through 22.

         4.       Compensation

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

                  (a) As  base  compensation  for  his  services  hereunder,  in
         semi-monthly  installments,  a base  salary  at a rate of not less than
         $171,200 per annum.  Such amounts may be increased  (but not decreased)
         annually at the discretion of the  Compensation  Committee of the Board
         of Directors based upon an annual review by the Compensation  Committee
         of the Board of Directors of Executive's performance.

                  (b) An annual bonus, if any, based on Executive's  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 any
fringe or employee benefits made available to similarly situated executives,  in
each case, in accordance  with  guidelines or established  from time to time, by
the Board of Directors.

         7.       Confidential Information

                  (a) Executive acknowledges that his employment hereunder gives
         him access to Confidential  Information relating to the Business of the
         Companies and their customers which must remain confidential. Executive
         acknowledges that this information is valuable,  special,  and a unique
         asset of the Business of the  Companies,  and that it has been and will
         be developed by the Companies at considerable  effort and expense,  and
         if it were to be known  and used by  others  engaged  in a  Competitive
         Business,  it would be harmful and  detrimental to the interests of the
         Companies.  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,  that 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
         Companies 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 and Non-Competition

                  (a)  Executive  acknowledges  that the services to be provided
         give him the opportunity to have special knowledge of the Companies and
         their  Confidential  Information  and the  capabilities  of individuals
         employed by or affiliated with the Companies,  and that interference in
         these relationships would cause irreparable injury to the Companies. 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 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 any of the Companies or
                  had a  business  relationship  with the  Companies  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
                  Companies,  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
                  Companies. 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.

         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 discovery 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  habitable space modules,  unpressurized space logistics and science
hardware,  including  unpressurized  pallets,  and those  other  businesses  and
activities  that are  described in the  Company's  Form 10-K for the fiscal year
ended June 30, 1998, or (b) the provision of services  relating to communication
satellite  launch  processing and  integration,  as performed by ASTROTECH SPACE
OPERATIONS, INC., a wholly-owned subsidiary of the Company, or (c) the provision
of engineering services to the National Aeronautics and Space Administration, as
performed by JOHNSON ENGINEERING  CORPORATION,  a wholly-owned subsidiary of the
Company, or (d) 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).

         "Companies"   means  the  Company,   any  of  its  direct  or  indirect
subsidiaries  and  affiliates  and any other entity  identified  by the Board of
Directors in its sole discretion, whether 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.

         "Executive"  means the individual  identified in the first paragraph of
this Agreement, or his or her 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.

         "Material Breach" is defined in Section 3(d).

         "Non-Interference  Period"  means the period  commencing on the date of
this  Agreement  and  continuing  through the twelfth month  anniversary  of the
termination of the Term of Employment.

         "Prior Employment Agreement" is defined in Section 12(a).

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

         "Subsidiary" means any corporation,  limited liability  company,  joint
venture,  limited and general partnership,  joint stock company,  association or
any other type of  business  entity  over 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:                   W.T. Short
                                             c/o Johnson Engineering Corporation
                                               555 Forge River Road
                                               Webster, Texas 77598

         with a copy to:                    Porter & Hedges, L.L.P.
                                                     700 Louisiana, 35th Floor
                                                     Houston, Texas 77002-2764
                                                     Attn: John M. Ransom

         If to Company:                     Johnson Engineering Corporation
                                               SPACEHAB, Incorporated
                                               1595 Spring Hill Road, Suite 360
                                               Vienna, Virginia 22182
                                               Attention: President

         with a copy to:                    Frank E. Morgan II
                                               Dewey Ballantine, LLP
                                               1301 Avenue of the Americas
                                               New York, New York 10019-6092

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

         12.      Previous Agreements; Executive's Representation

                  (a) Attached hereto as Annex A are all previous  employment or
         severance   agreements  by  and  between   Executive  and  the  Company
         (collectively,  the "Prior Employment  Agreements").  Executive and the
         Company  hereby  cancel,  void and render  without force and effect all
         Prior Employment Agreements,  and the Executive releases and discharges
         the Company from any further obligations or liabilities thereunder.

                  (b) Executive hereby warrants and presents 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  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  judgement 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 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  VIRGINIA,  EXCEPT THAT NO DOCTRINE OF
CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF VIRGINIA, 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 THE STATE OF VIRGINIA OR THE UNITED
STATES DISTRICT COURTS IN ARLINGTON, VIRGINIA. 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 TIES 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

         EXCEPT AS DESCRIBED IN SECTION 16, 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  ARLINGTON,
VIRGINIA,  AND SHALL BE SUBJECT TO THE SUBSTANTIVE LAW OF THE STATE OF VIRGINIA.
DECISIONS PURSUANT TO SUCH ARBITRATION SHALL BE FINAL, CONCLUSIVE AND BINDING ON
THE PARTIES.  UPON THE CONCLUSION OF  ARBITRATION,  EXECUTIVE OR THE COMPANY MAY
APPLY TO ANY COURT OF THE TYPE  DESCRIBED  IN SECTION 19 TO ENFORCE THE DECISION
PURSUANT TO SUCH  ARBITRATION.  IN CONNECTION  WITH THE  FOREGOING,  THE PARTIES
HEREBY  WAIVE ANY  RIGHTS TO A JURY  TRIAL TO  RESOLVE  ANY  DISPUTES  OR CLAIMS
RELATING TO THIS AGREEMENT OR ITS SUBJECT MATTER.

         21.      Further Action

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

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

                                   EXECUTIVE:


                                   /s/ W.T. Short
                                   W.T. Short



                                   SPACEHAB, INCORPORATED



                                  By:  /s/ David A. Rossi                     
                                  Name:  David A. Rossi
                                  Title: President