RELEASE

RELEASE

This Release (hereinafter “Release”) is made and given by and between (i) Scott Tibbitts (the “Shareholder Agent”), as (A) the Shareholder Agent designated pursuant to Section 7.5 of the Agreement and Plan of Merger and Reorganization dated October 24, 2005, as subsequently amended, among Starsys Research Corporation, a Colorado corporation, Monoceros Acquisition Corp., a Colorado corporation, SpaceDev, Inc., a Colorado corporation, the Shareholder Agent as a Key Shareholder, and the Shareholder Agent as such Shareholder Agent (the “Merger Agreement”), acting as the agent for and with binding effect upon all of the Shareholders, and also (B) to the extent expressly indicated in this Release, in his personal capacity, and (ii) SpaceDev, Inc., a Delaware corporation (hereinafter “SpaceDev”).  The following terms not otherwise defined in this Release shall have the meanings given to them in the Merger Agreement:  “Key Shareholder,” “Performance Consideration,” “Shareholders” and “Accounting Dispute.”

RECITALS

A.           SpaceDev is the successor to SpaceDev, Inc., a Colorado corporation.

B.           The Merger Agreement provided for the payment of earnout Performance Consideration under certain conditions (see, e.g., Section 2.4(c) of the Merger Agreement) to the Shareholders.

C.           A dispute exists between the Shareholder Agent (acting as the agent for and with binding effect upon all of the Shareholders) and SpaceDev as to whether any such Performance Consideration (or, in the alternative, damages for Merger Agreement breaches which defeated Performance Consideration) is rightly payable, and if so then in what amount; this dispute is not solely an Accounting Dispute.

D.           Under Sections 2.5(c)(2) and 8.3 of the Merger Agreement, such disputes are subject to dispute resolution as if they had arisen under Section 7.4(b)(1) of the Merger Agreement.  Such dispute resolution could involve arbitration under Section 7.6 of the Merger Agreement.  In addition, in the event of disputes under Section 7.4(b)(1) (and/or Section 7.6) of the Merger Agreement, SpaceDev is entitled under Section 7.4(c) of the Merger Agreement to withhold distribution of disputed Performance Consideration pending dispute resolution.

E.           Section 7.5 of the Merger Agreement provides that the Shareholder Agent is appointed and constituted as the exclusive agent for the Shareholders to agree to, negotiate and enter into settlements and compromises with respect to claims made or any other action to be taken by or on behalf of any Shareholders under Article VII of the Merger Agreement.

F.           Section 2.17(c)(2) of the Merger Agreement provides that if the Merger Agreement is adopted by the Shareholders (which it indeed was), then all Shareholders shall be deemed to have consented to and approved the terms and conditions of the Escrow Agreement contemplated thereby and the appointment of the Shareholder Agent as the attorney-in-fact and agent for the Shareholders.  In turn, the Escrow Agreement (among SpaceDev, Inc., a Colorado corporation, Scott Tibbitts, as Shareholder Agent, and Zions First National Bank; dated January 31, 2006) provides in Section 4.2 thereof that the Shareholder Agent shall serve as the exclusive representative and agent for the Shareholders in relation to or in connection with (among other things) the Merger Agreement or the Transactions (as defined in the Merger Agreement), including to (among other things) agree to, negotiate and enter into settlements and compromises with respect to any action to be taken by or on behalf of any Shareholders under Article VII of the Merger Agreement. Moreover, Section 4.6 of the Escrow Agreement confirms explicitly that any decision, act, omission, consent or instruction of the Shareholder Agent in relation to any matter referred to in Article VII of the Merger Agreement shall constitute a decision, omission, act, consent or instruction for all of the Shareholders, and shall be final, binding and conclusive upon each and every Shareholder, and SpaceDev may, without inquiry, conclusively rely upon any such decision, act, omission, consent or instruction of the Shareholder Agent as being the decision, act, omission, consent or instruction of every Shareholder.

G.           SpaceDev denies all allegations and claims of the Shareholder Agent and the Shareholders, but in order to achieve the benefits of peace and avoid the expense of contentious dispute resolution is willing to, in exchange for and subject to the release and agreements set forth in this Release made by the Shareholder Agent, acting as the agent for and with binding effect upon all of the Shareholders, pay the Shareholder Agent, acting as the agent for and for the purpose of pro rata distribution to all of the Shareholders, the following consideration (the “Settlement Amount”), which the Shareholder Agent, acting as the agent for and with binding effect upon all of the Shareholders, acknowledges that SpaceDev would not agree to pay but for this Release:

H.           The Shareholder Agent, acting as the agent for and with binding effect upon all of the Shareholders, acknowledges the sufficiency of the Settlement Amount to be received by him, and in return desires to release SpaceDev from any and all claims which the Shareholder Agent, each Shareholder and all of the Shareholders has, or might have, against SpaceDev relating to or in connection with the Merger Agreement and/or the Transactions.

NOW, THEREFORE: