SPACEDEV  PROPRIETARY  INFORMATION          4

                                                       Jim Benson, Chairman, CEO
                                             13855 Stowe Drive  Poway, CA  92064
                                             (858) 375-2020  Fax: (858) 375-1000
                                                        e-mail: jim@SpaceDev.com
                                                                ----------------
                                                                www.spacedev.com
                                                                ----------------


                              July  12,  2004


Steve  Durst
Lunar  Enterprise  Corporation


Dear  Steve,

Thank  you  for  your interest in continuing the work we previously performed in
the  first phase of the Lunar Dish Observatory mission study.  We are excited to
pick-up  where  we  left  off,  and  to  have this opportunity to add additional
technical  and  engineering  detail  to  that  previous  work.

This  letter  contract  confirms  an  agreement between SpaceDev, Inc. and Lunar
Enterprise  Corporation,  a  wholly  owned  subsidiary  of  Space Age Publishing
Company of Hawaii and California, related to the proposed multi-wavelength Lunar
Dish  Observatory  Mission.

Lunar  Enterprise  agrees  to  pay  SpaceDev  the amounts show below in "Payment
Schedule"  for  the  work  to  be performed in accordance with the "Statement of
Work"  and  "Deliverables"  sections  described  below.

SpaceDev  is  willing  to  provide one warrant to purchase one share of SpaceDev
common  stock  for  each  four  dollars  spent under this agreement (for example
37,500  warrants  for  $150,000  spent).  Since  we  do not have an open private
placement,  as  we  did  last  year,  we  believe  this  approach provides Lunar
Enterprise  with  the  opportunity  to  realize  a  return  on its commitment to
SpaceDev,  and to grow along with SpaceDev.  The price of the five year warrants
will  be  set  at  a price relative to the stock's market price at the time this
agreement  is  executed.  We have never made this kind of offer to any customer,
and  we  are doing it for you because you are already an investor and supporter,
and  we want to create a special opportunity for you to share in our current and
future  successes, which you are in part helping to create through this project.

With  a  signing  on  July  16,  work  will  begin  on  Friday,  July  20, 2004.

We  are  looking forward to completing this next important step toward returning
humanity  to  the  Moon,  and  are  looking  forward  to  the  possibility  of
progressively  larger  steps  as  SpaceDev works with you to make this mission a
reality.

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Please  sign below and forward the initial payment at your earliest convenience.

Onward  and  upward!


Jim

/s/ James W. Benson
CEO
SpaceDev,  Inc.




Accepted  by:                              Dated:  July 20, 2004

Steve  Durst


/s/ Steve Durst
Director
Lunar  Enterprise  Corporation

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                 Lunar Enterprise Lunar Dish Observatory Mission

                 Statement of Work for Observatory Mission Study

                           PREPARED BY SPACEDEV, INC.



STUDY  FEE:  THE  FEE  FOR  THIS  STUDY  IS  $150,000.

STUDY  OBJECTIVE:

Present a feasible and verifiable technical concept for a Lunar Dish Observatory
(LDO)  mission  and  spacecraft with a small multi-wavelength astronomy payload,
with  a  focus  on  technical  issues  related  to  a  safe  landing at the most
appropriate  site.  SpaceDev  will  assemble  an  engineering  team  consisting
primarily of SpaceDev engineers, supplemented by experienced specialists for any
areas of science or engineering not possessed by SpaceDev.  This second phase of
the  study  will  address  the  items below in more detail and depth than in the
prior  phase,  with the addition of some new tasks.  The depth and detail of the
analysis  and  design  effort will be the maximum possible commensurate with the
funding  available  to  the  project.

SCHEDULE:

THIS  PROJECT  WILL  BE PERFORMED FROM JULY 20, 2004, THROUGH NOVEMBER 26, 2004.

STATEMENT  OF  WORK:
--------------------

-     Refine  Program  Management  Plan  to  include:

     o  Schedule  based  on  a  2-year  lander  program  (milestone  based)
     o  Staffing  plan
     o  Increased  accuracy  of  cost  /  budget  plan
     o  Identify  resources  needed  (test  facilities  )
     o Work with Lunar Enterprise to identify unique vendors and funding sources

-     Evaluate  possible  Lunar  landing sites. A south-pole site is recommended
due  to  mutual  visibility to Earth, deep space and solar energy and because of
possible  ice  water.  The  study  will  include:

     o  Survey  useful  data  from  current  Lunar  missions  and expected to be
     available  before  the  LDO  launch  date
     o  Radiation  environment
     o  Thermal  &  atmospheric  environment
     o  Expected  seasons
     o  Terrain  for  landing  purposes
     o  Earth  angle  viewing
     o  Viewing  angle  to  deep  space
     o  Solar  power  availability

-     Refine  trajectories  to  determine  nominal  approach  to  Moon

-     Obtain  more  detailed  information  and  prices  for  appropriate  launch
vehicles

-     Conceptual  vehicle  design:

     o  Space  vehicle  structure
          Mass  breakdown  /  budget
          Thermal  protection  requirements  on  Lunar  surface

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     o  Concept  of  Operations
     o  Propulsion  System
          Fuel  /  tank  trades
          Delta-V  requirements  /  budget  by  mission  phase
     o  Landing  System  for  a  precision  landing  (instruments,  controls and
     actuators)
          Evaluation  of  potential  landing  and  obstacle avoidance subsystems
          (e.g.  LIDAR)
          SpaceDev  MoTV  derivative
     o  Communications
          By  mission  phase
               -  In  Earth  orbit
               -  During  travel  to  Moon
               -  During  Lunar  orbit
               -  During  decent  to  Lunar  surface
               -  During  nominal  mission  operations
          Study  possible  frequency  bands  to  be  utilized
          Define  data  volume  and  frequency  of  transmission
          Design  communication  system  architecture
          Define  ground  station  requirements
          Perform  communications  link  analyses
     o  On-Board  Computer
          Data  storage  requirements
          Data  volume  requirements
          Processing  requirements
     o  Software  /  Communications  protocol
          Research  implications  of 1.3 second delay each way on communications
          Define  command  and  control  method
          Define  ground  segment  for  posting  /  distributing  science  data
     o  Power  System
          Analysis  of  power  budget  by  mission  phase
          Conceptual  design  of  power  system
               -  Batteries
               -  Solar  array,  size,  deployables,  etc.
     o  Guidance,  Navigation  and  Control
          By  mission  phase
               -  In  Earth  orbit
               -  During  travel  to  Moon
               -  While  orbiting  the  Moon
               -  During  nominal  mission  operations
               -  During  decent  to  Lunar  surface
                    o  Define  detection  methodology  and  sensors (e.g. hazard
                    avoidance  LIDAR,  etc.)
          Define  control  methodology  and  actuators
          Identify  vendors for unique hardware (star tracker, kick motor, gyro,
          etc.

-     Prepare  a rough order of magnitude plan, schedule and cost estimate for a
follow-up  manned  Lunar  Dish  Observatory  maintenance  mission.

     o Identify hardware currently available or that is expected to be available
in  time  to  support  the  manned  mission

-     Prepare  and  Present  Mission  Study  Results  at  International  Lunar
Conference  in  India

     o  PowerPoint  Slide  Presentation,  including  material  for  the  IAF
     o  Animation  of  all  or  part  of  the  Lunar  Mission

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     o  Two  scale  models of the Lunar Dish Observatory suitable for conference
exhibition  -  one  each  for  Lunar  Enterprise  Corp.  and SpaceDev's exhibits


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DELIVERABLES:
-------------

SpaceDev  will  prepare  monthly  status  and  progress  reports  in the form of
PowerPoint  presentations.  The  monthly  reports  will  be  accompanied  by  a
telephonic  description  of the report highlights.  Final PowerPoint and written
reports  will  be delivered by November 26, 2004, and will summarize significant
mission  study  results and recommendations.  In addition, a presentation at the
International  Lunar  Conference  in  India  will be prepared and presented by a
SpaceDev employee.  The final report will include detailed recommendations as to
the  next  steps  to  be  performed.

PAYMENT  SCHEDULE

ON  SIGNING  JULY  20:  $30,000
AUGUST  20:  $30,000
SEPTEMBER  17:  $30,000
OCTOBER  15:  $30,000
NOVEMBER  26:  $30,000


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