EXHIBIT 10.4

                                 SPACEDEV, INC.
                    NOTICE OF NON-PLAN GRANT OF STOCK OPTION

Mark  N. Sirangelo (the "OPTIONEE") has been granted an option (the "OPTION") to
purchase  certain  shares  of  Stock  of SpaceDev, Inc., a Colorado corporation,
pursuant  to  the  NON-PLAN  STOCK OPTION AGREEMENT attached hereto (the "OPTION
AGREEMENT"),  as  follows:

DATE  OF  OPTION  GRANT:          December  20,  2005

NUMBER  OF  OPTION  SHARES:       1,900,000

EXERCISE  PRICE:                  $1.40  per  share *

INITIAL  EXERCISE  DATE:          Date  of  Option  Grant

INITIAL  RESTRICTION  DATE:       Date  of  Option  Grant

OPTION  EXPIRATION  DATE:         The  date  five (5) years after  the  Date  of
                                  Option Grant.

TAX  STATUS  OF  OPTION:          Nonstatutory.

VESTED  SHARES:                   All  Option  Shares shall be Vested Shares  as
                                  of the Initial Exercise  Date.

RESTRICTED  SHARES:                All Vested Shares shall be Restricted Shares,
                                   and  accordingly, subject to the restrictions
                                   set  forth  in  Section  11.1  of  the Option
                                   Agreement;  provided,  however,  that  Vested
                                   Shares shall cease to be Restricted Shares in
                                   accordance  with  the  following  schedule:

                                   500,000  Vested  Shares  shall  cease  to  be
                                   Restricted   Shares    upon    the    Initial
                                   Restriction  Date.

                                   100,000  Vested  Shares  shall  cease  to  be
                                   Restricted Shares upon the earlier of (i) the
                                   twelve  (12) month anniversary of the Initial
                                   Restriction Date, provided such date is prior
                                   to  the termination of the Optionee's Service
                                   with the Participating Company Group and (ii)
                                   the  fourth  anniversary   of   the   Initial
                                   Restriction  Date.

                                   100,000  Vested  Shares  shall  cease  to  be
                                   Restricted Shares upon the earlier of (i) the
                                   eighteen  (18)  month  anniversary   of   the
                                   Initial  Restriction Date, provided such date
                                   is prior to the termination of the Optionee's
                                   Service  with the Participating Company Group
                                   and  (ii)  the  fourth  anniversary  of   the
                                   Initial  Restriction  Date.


*  Based  on  the closing sale price reported on the OTCBB on the date of grant.

                                 PAGE 1


                                   350,000  Vested  Shares  shall  cease  to  be
                                   Restricted Shares upon the earlier of (i) the
                                   date  the  Company's Stock achieves a Ten Day
                                   VWAP  (as defined in the Option Agreement) of
                                   $3.00 per share, and subject to adjustment as
                                   provided  in  Section   9   of   the   Option
                                   Agreement, provided such date is prior to the
                                   termination  of  the  Optionee's Service with
                                   the  Participating Company Group and (ii) the
                                   fourth anniversary of the Initial Restriction
                                   Date.

                                   350,000  Vested  Shares  shall  cease  to  be
                                   Restricted Shares upon the earlier of (i) the
                                   date  the  Company's Stock achieves a Ten Day
                                   VWAP  of  $4.50  per  share,  and  subject to
                                   adjustment  as  provided  in Section 9 of the
                                   Option Agreement, provided such date is prior
                                   to  the termination of the Optionee's Service
                                   with the Participating Company Group and (ii)
                                   the  fourth  anniversary   of   the   Initial
                                   Restriction  Date.

                                   125,000  Vested  Shares  shall  cease  to  be
                                   Restricted Shares upon the earlier of (i) the
                                   date  the  Company's  Stock  is  listed   for
                                   trading  on  the New York Stock Exchange, the
                                   Nasdaq  National Market or the American Stock
                                   Exchange,  provided such date is on or before
                                   December  31,   2007   and   prior   to   the
                                   termination  of  the  Optionee's Service with
                                   the  Participating Company Group and (ii) the
                                   fourth anniversary of the Initial Restriction
                                   Date.

                                   125,000  Vested  Shares  shall  cease  to  be
                                   Restricted  Shares  upon  the  earlier of (i)
                                   completion  of a Secondary Offering Financing
                                   Transaction  (as  defined  in  the Employment
                                   Agreement  of  even date herewith between the
                                   Company   and    the   Optionee,   which   is
                                   incorporated   herein   by   reference   (the
                                   "EMPLOYMENT   AGREEMENT")),   provided   such
                                   Secondary  Offering  Financing Transaction is
                                   completed  on or before December 31, 2007 and
                                   prior  to  the  termination of the Optionee's
                                   Service with the Participating Company Group,
                                   and provided, further, the Company's Stock is
                                   then listed for trading on the New York Stock
                                   Exchange,  the  Nasdaq National Market or the
                                   American  Stock Exchange, and (ii) the fourth
                                   anniversary  of the Initial Restriction Date.


                                 PAGE 2

                                   250,000  Vested  Shares  shall  cease  to  be
                                   Restricted  Shares  upon  the earliest of (i)
                                   the  commencement  of  the  Renewal  Term (as
                                   defined  in  the  Employment   Agreement)  if
                                   applicable,    (ii)    the   termination   of
                                   Optionee's  Service  with  the  Participating
                                   Company  Group without Cause (as such term is
                                   defined  in  the  Employment  Agreement)  and
                                   (iii)  the  fourth anniversary of the Initial
                                   Restriction  Date.


                                 PAGE 3

     Capitalized  terms used in this Notice and not otherwise defined shall have
the  meanings  given  them  in  the  Option  Agreement.

     By  their  signatures  below,  the  Company and the Optionee agree that the
Option is governed by this Notice and by the provisions of the Option Agreement,
which is attached to and made a part of this document. The Optionee acknowledges
receipt of a copy of the Option Agreement, represents that the Optionee has read
and  is  familiar  with its provisions, and hereby accepts the Option subject to
all  of  its  terms  and  conditions.


SPACEDEV,  INC.                             OPTIONEE

By:   /s/ James W. Benson                     /s/ Mark N. Sirangelo
    --------------------------------        ------------------------------------
      James W. Benson                        Mark N. Sirangelo
      Chief Executive Officer
                                                12/20/05
                                            ------------------------------------
                                            Date


                                            Address:  13855  Stowe  Drive
                                            Poway,  CA  92064
                                            Fax:  (858)  375-1000


ATTACHMENTS:  Non-Plan  Stock  Option  Agreement


                                 PAGE 4

THE  SECURITIES  WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN QUALIFIED
WITH  THE  COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE OFFER
OR  SALE  OF  SUCH  SECURITIES  OR  THE  PAYMENT  OR  RECEIPT OF ANY PART OF THE
CONSIDERATION  THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE
OF  SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF
THE  CALIFORNIA  CORPORATIONS CODE.  THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE  EXPRESSLY  CONDITIONED  UPON  SUCH QUALIFICATION BEING OBTAINED, UNLESS THE
SALE  IS  SO  EXEMPT.

THE  SECURITIES  WHICH  ARE THE SUBJECT OF THIS AGREEMENT HAVE BEEN ACQUIRED FOR
INVESTMENT  AND  NOT  WITH  A  VIEW  TO,  OR  IN  CONNECTION  WITH,  THE SALE OR
DISTRIBUTION  THEREOF.  NO  SUCH  SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE  REGISTRATION  STATEMENT  RELATED  THERETO  OR  AN  OPINION OF COUNSEL
SATISFACTORY  TO  THE  COMPANY  THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES  ACT  OF  1933.

                                 SPACEDEV, INC.
                         NON-PLAN STOCK OPTION AGREEMENT

     SpaceDev,  Inc., a Colorado corporation, has granted to the individual (the
"OPTIONEE") named in the Notice of Non-Plan Grant of Stock Option (the "NOTICE")
to  which  this  Non-Plan  Stock  Option  Agreement  (the "OPTION AGREEMENT") is
attached  an  option (the "OPTION") to purchase certain shares of Stock upon the
terms  and  conditions  set  forth  in the Notice and this Option Agreement.  By
signing  the Notice, the Optionee: (a) represents that the Optionee has read and
is  familiar  with  the  terms  and  conditions  of  the  Notice and this Option
Agreement,  including  the Effect of Termination of Service set forth in Section
7,  (b)  accepts  the  Option  subject to all of the terms and conditions of the
Notice  and  this  Option Agreement, (c) agrees to accept as binding, conclusive
and  final  all  decisions  or  interpretations  of the Board upon any questions
arising  under the Notice or this Option Agreement, and (d) acknowledges receipt
of  a  copy  of  the  Notice  and  this  Option  Agreement.

     1.     DEFINITIONSAND  CONSTRUCTION.

          1.1  DEFINITIONS. Whenever used herein, the following terms shall have
     their  respective  meanings  set  forth  below:

               (a)  "BOARD"  means  the  Board of Directors of the Company, or a
          duly  authorized  committee  thereof.

               (b)  "CODE"  means the Internal Revenue Code of 1986, as amended,
          and  any  applicable  regulations  promulgated  thereunder.

               (c)  "COMPANY"  means  SpaceDev, Inc., a Colorado corporation, or
          any  successor  corporation  thereto.


                                 PAGE 1


               (d)  "CONSULTANT" means a person engaged to provide consulting or
          advisory  services  (other  than  as  an  Employee or a Director) to a
          Participating  Company, provided that the identity of such person, the
          nature  of  such  services  or  the  entity to which such services are
          provided  would  not  preclude  the  Company  from offering or selling
          securities  to  such  person pursuant to this Agreement in reliance on
          either  the exemption from registration provided by Rule 701 under the
          Securities Act or, if the Company is required to file reports pursuant
          to Section 13 or 15(d) of the Exchange Act, registration on a Form S-8
          Registration  Statement  under  the  Securities  Act.

               (e)  "DIRECTOR"  means  a  member of the Board or of the board of
          directors  of  any  other  Participating  Company.

               (f)  "DISABILITY"  means  the  inability  of  the Optionee, after
          reasonable  accommodation  by  the  Participating  Company  Group,  to
          perform  his  substantial  and  material  duties  due  to  a mental or
          physical  injury  or illness for a period of 120 consecutive days (not
          including  any  vacation  days)  in  any  twelve month period or for a
          period  of  180  total  days  (not including any vacation days) in any
          twelve  month  period.

               (g) "EMPLOYEE" means any person treated as an employee (including
          an  officer  or  a Director who is also treated as an employee) in the
          records  of  a  Participating Company; provided, however, that neither
          service  as  a  Director  nor  payment  of  a  director's fee shall be
          sufficient  to  constitute  employment for purposes of this Agreement.
          The  Company  shall determine in good faith and in the exercise of its
          discretion  whether  an  individual  has become or has ceased to be an
          Employee  and  the  effective  date of such individual's employment or
          termination  of  employment,  as  the  case  may  be.

               (h)  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
          amended.

               (i)  "FAIR  MARKET VALUE" means, as of any date, the value of the
          Stock  determined  as  follows:

               (i)  If the Stock is traded on or through a Principal Market, the
               Fair  Market Value of a share of Stock shall be the closing sales
               price  for  such  stock  (or  the  closing  bid, if no sales were
               reported) as quoted on such exchange or market on the trading day
               immediately  prior  to  the  date in question, as reported in The
               Wall  Street  Journal  or  such  other  source as the Board deems
               reliable.  Unless otherwise provided by the Board, if there is no
               closing  sales  price  (or closing bid if no sales were reported)
               for the Stock on the date in question, then the Fair Market Value
               shall  be  the  closing selling price (or closing bid if no sales
               were  reported)  on  the  last  preceding  date  for  which  such
               quotation  exists.

               ii)  If the Stock is not traded on or through a Principal Market,
               the  Fair  Market  Value shall be determined by the Board in good
               faith.

               (j)  "INCENTIVE  STOCK OPTION" means an option intended to be (as
          set forth in the Option Agreement) and which qualifies as an incentive
          stock  option  within  the  meaning  of  Section  422(b)  of the Code.

               (k)  "INSIDER"  means  an officer or a Director of the Company or
          any other person whose transactions in Stock are subject to Section 16
          of  the  Exchange  Act.

               (l)  "NONSTATUTORY  STOCK OPTION" means an option not intended to
          be (as set forth in the Option Agreement) or which does not qualify as
          an  Incentive  Stock  Option.

               (m)  "OPTION  SHARES"  means  the shares of Stock subject to this
          Option.

               (n)  "PARENT  CORPORATION"  means  any  present or future "parent
          corporation" of the Company, as defined in Section 424(e) of the Code.

               (o)  "PARTICIPATING  COMPANY"  means  the  Company  or any Parent
          Corporation  or  Subsidiary  Corporation.

               (p)  "PARTICIPATING  COMPANY  GROUP" means, at any point in time,
          all  corporations collectively which are then Participating Companies.

               (q)  "PRINCIPAL  MARKET"  means  the  Nasdaq National Market, the
          Nasdaq  Capital  Market, the OTCBB, the American Stock Exchange or the
          New  York  Stock  Exchange,  whichever  is  at  the time the principal
          trading exchange, market or inter-dealer or automated quotation system
          for  the  Stock  and,  for  purposes  of  calculating  VWAP, for which
          Bloomberg  Financial,  L.P.  publishes  the  necessary  reports.

               (r)  "SECURITIES  ACT"  means  the  Securities  Act  of  1933, as
          amended.

               (s) "SERVICE" means the Optionee's employment or service with the
          Participating Company Group, whether in the capacity of an Employee, a
          Director  or  a Consultant. The Optionee's Service shall not be deemed
          to have terminated merely because of a change in the capacity in which
          the  Optionee  renders Service to the Participating Company Group or a
          change  in  the  Participating  Company for which the Optionee renders
          such Service, provided that there is no interruption or termination of
          the  Optionee's  Service. Furthermore, the Optionee's Service with the
          Participating  Company Group shall not be deemed to have terminated if
          the  Optionee takes any military leave, sick leave, or other bona fide
          leave  of  absence approved by the Company; provided, however, that if
          any  such  leave  exceeds ninety (90) days, on the ninety-first (91st)
          day  of  such  leave  the  Optionee's  Service shall be deemed to have
          terminated  unless  the Optionee's right to return to Service with the
          Participating  Company  Group  is  guaranteed  by statute or contract.
          Notwithstanding  the  foregoing,  unless  otherwise  designated by the
          Company or required by law, a leave of absence shall not be treated as
          Service  for  purposes  of  determining  vesting  under  this  Option
          Agreement.  The  Optionee's Service shall be deemed to have terminated
          either  upon  an actual termination of Service or upon the corporation
          for  which the Optionee performs Service ceasing to be a Participating
          Company.

               (t)  "STOCK"  means  the common stock of the Company, as adjusted
          from  time  to  time  in  accordance  with  Section  9.

               (u)  "SUBSIDIARY  CORPORATION"  means  any  present  or  future
          "subsidiary  corporation" of the Company, as defined in Section 424(f)
          of  the  Code.

               (v) "TRADING DAY" means any day other than a Saturday or a Sunday
          on  which  the  Principal  Market  is  open  for  trading  in  equity
          securities.
               (w)  "TEN  DAY  VWAP"  means,  with  respect  to  any  date  of
          determination,  the  arithmetic  mean  of  the  VWAP  for the ten (10)
          consecutive Trading Days ending on such date or, if such date is not a
          Trading  Day,  the  next  preceding  Trading  Day.

               (x)  "VWAP"  means,  with  respect to any Trading Day, the volume
          weighted  average price of the Stock on such Trading Day (equal to the
          aggregate  sales  price of all trades of Stock during such Trading Day
          on the Principal Market divided by the total number of shares of Stock
          traded  during  such Trading Day on the Principal Market), as reported
          by  Bloomberg  Financial,  L.P.  using  the  AQR  function.



                                 PAGE 3


          Capitalized terms used herein and not otherwise defined shall have the
          meanings  given  them  in  the  Notice.

     1.2     CONSTRUCTION.  Captions  and  titles  contained  herein  are  for
convenience  only  and  shall  not  affect  the meaning or interpretation of any
provision  of  this  Option  Agreement.  Except  when otherwise indicated by the
context,  the singular shall include the plural and the plural shall include the
singular.  Use  of  the  term  "or"  is not intended to be exclusive, unless the
context  clearly  requires  otherwise.

     2.     TAX  STATUS OF OPTION.  This Option is intended to be a Nonstatutory
Stock  Option  and  shall not be treated as an Incentive Stock Option within the
meaning  of  Section  422(b)  of  the  Code.

     3.     ADMINISTRATION.

     All  questions  of interpretation concerning this Option Agreement shall be
determined  by  the  Board.  All  determinations by the Board shall be final and
binding  upon  all  persons  having an interest in the Option.  Any officer of a
Participating  Company  shall have the authority to act on behalf of the Company
with  respect  to  any  matter,  right,  obligation,  or  election  which is the
responsibility  of  or  which  is  allocated to the Company herein, provided the
officer  has  apparent authority with respect to such matter, right, obligation,
or  election.

     4.     EXERCISEOFTHE  OPTION.

     4.1     RIGHT TO EXERCISE.  Except as otherwise provided herein, the Option
shall  be  exercisable  on  and after the Initial Exercise Date and prior to the
termination  of the Option (as provided in Section 6) in an amount not to exceed
the  Number of Vested Shares (determined in accordance with the Notice) less the
number  of  shares  previously  acquired  upon  exercise  of  the  Option.

     4.2  METHOD  OF EXERCISE. Exercise of the Option shall be by written notice
to  the  Company  in  the form of Exhibit A hereto (the "EXERCISE NOTICE") which
must  state  the  election to exercise the Option, the number of whole shares of
Stock for which the Option is being exercised and such other representations and
agreements as to the Optionee's investment intent with respect to such shares as
may be required pursuant to the provisions of this Option Agreement. The written
notice  must  be  signed  by  the  Optionee  and must be delivered in person, by
certified  or  registered mail, return receipt requested, by confirmed facsimile
transmission,  or  by  such  other means as the Company may permit, to the Chief
Financial  Officer  of  the  Company,  or other authorized representative of the
Participating Company Group, prior to the termination of the Option as set forth
in  Section  6,  accompanied by full payment of the aggregate Exercise Price for
the  number  of  shares  of  Stock being purchased. If exercise is by means of a
Cashless  Exercise,  as defined in Section 4.3, then such written notice must be
accompanied  by  such  other forms described in Section 4.3. The Option shall be
deemed  to  be exercised upon receipt by the Company of such written notice, the
aggregate  Exercise  Price,  if  applicable,  the  forms  required  for Cashless
Exercise,  if  applicable,  and, if required by the Company, an executed copy of
this  Agreement.


                                 PAGE 4


     4.3  PAYMENT OF EXERCISE PRICE. Except as otherwise provided below, payment
of  the aggregate Exercise Price for the number of shares of Stock for which the
Option  is  being  exercised  shall  be  made  (i)  in  cash,  by check, or cash
equivalent,  (ii)  by  means  of  a  Cashless  Exercise, as defined below, (iii)
subject  to the limitations stated below, by means of a Net Exercise, as defined
below,  or  (iv)  by  any  combination  of  the  foregoing.  Optionee  shall  be
responsible  for  filing  any  reports  of  remittance or other foreign exchange
filings required in order to pay the exercise price. A "CASHLESS EXERCISE" means
the  delivery  of  a  properly  executed  notice   together   with   irrevocable
instructions  to  a broker in a form acceptable to the Company providing for the
assignment to the Company of the proceeds of a sale or loan with respect to some
or  all of the shares of Stock acquired upon the exercise of the Option pursuant
to  a  program  or  procedure  approved  by  the  Company  (including,   without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated  from  time to time by the Board of Governors of the Federal Reserve
System).  The  right  to  Cashless  Exercise  is  subject to the limitations and
restrictions  described  in this Agreement. The Company reserves, at any and all
times,  the  right  to  decline  to  approve  or  terminate  any such program or
procedure  if  any only if such program or procedure is prohibited by applicable
law.  A  "NET  EXERCISE"  is  an  arrangement pursuant to which the Company will
reduce  the  number  of  Option Shares issued upon exercise of the Option by the
largest  whole  number  of  Option Shares with a Fair Market Value that does not
exceed the aggregate Exercise Price; provided, however, the Company shall accept
a  cash  or other payment from you to the extent of any remaining balance of the
aggregate  Exercise  Price  not  satisfied  by such holding back of whole Option
Shares. Net Exercise shall be available only for exercise with respect to Vested
Shares  that  have  ceased  to  be  Restricted Shares. Net Exercise shall not be
available  for  any  Option  Shares  until  the  Company  has adopted FAS123, as
revised,  which  under applicable accounting rules is required to be adopted for
the  Company's fiscal year ending December 31, 2006. Net Exercise also shall not
be  available  to  the  extent  the  Board  determines  in  good  faith that the
availability  of  Net  Exercise  would  cause  the  Company  to incur a material
accounting expense that would not be incurred in the absence of the availability
of  Net  Exercise.

     4.4  TAX  WITHHOLDING.  At the time the Option is exercised, in whole or in
part, or at any time thereafter as requested by the Company, the Optionee hereby
authorizes  withholding  from  payroll  and  any  other  amounts  payable to the
Optionee,  and  otherwise  agrees  to  make adequate provision for (including by
means  of  a Cashless Exercise to the extent permitted by the Company), any sums
required  to  satisfy  the  federal,  state,  local  and foreign tax withholding
obligations  of  the  Participating  Company  Group,  if  any,  which  arise  in
connection  with  the Option, including, without limitation, obligations arising
upon (i) the exercise, in whole or in part, of the Option, (ii) the transfer, in
whole  or  in part, of any shares acquired upon exercise of the Option, or (iii)
the operation of any law or regulation providing for the imputation of interest.
The  Option  is  not  exercisable  unless the tax withholding obligations of the
Participating  Company  Group are satisfied. Accordingly, the Company shall have
no  obligation  to deliver shares of Stock until the tax withholding obligations
of  the  Participating  Company  Group  have  been  satisfied  by  the Optionee.

     4.5  CERTIFICATE  REGISTRATION.  Except  in the event the Exercise Price is
paid by means of a Cashless Exercise, the certificate for the shares as to which
the  Option is exercised shall be registered in the name of the Optionee, or, if
applicable,  in  the  names  of  the  heirs  of  the  Optionee.

     4.6  RESTRICTIONS  ON GRANT OF THE OPTION AND ISSUANCE OF SHARES. The grant
of  the  Option  and the issuance of shares of Stock upon exercise of the Option
shall  be  subject  to  compliance  with all applicable requirements of federal,
state  or  foreign  law  with  respect to such securities. The Option may not be
exercised  if  the  issuance of shares of Stock upon exercise would constitute a
violation  of  any applicable federal, state or foreign securities laws or other
law  or  regulations  or the requirements of any stock exchange or market system
upon  which  the  Stock  may  then be listed. In addition, the Option may not be
exercised  unless (i) a registration statement under the Securities Act shall at
the  time  of  exercise  of  the  Option be in effect with respect to the shares
issuable  upon exercise of the Option or (ii) in the opinion of legal counsel to
the  Company,  the  shares issuable upon exercise of the Option may be issued in
accordance  with  the  terms  of  an  applicable exemption from the registration
requirements  of  the  Securities Act. THE OPTIONEE IS CAUTIONED THAT THE OPTION
MAY  NOT  BE  EXERCISED  UNLESS  THE  FOREGOING  CONDITIONS  ARE  SATISFIED.


                                 PAGE 5

ACCORDINGLY,  THE  OPTIONEE  MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED
EVEN  THOUGH  THE  OPTION IS VESTED. The inability of the Company to obtain from
any  regulatory  body  having  jurisdiction the authority, if any, deemed by the
Company's  legal  counsel to be necessary to the lawful issuance and sale of any
shares  subject  to  the  Option  shall  relieve the Company of any liability in
respect  of  the failure to issue or sell such shares as to which such requisite
authority  shall  not  have been obtained. As a condition to the exercise of the
Option,  the Company may require the Optionee to satisfy any qualifications that
may  be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as
may be requested by the Company. Any shares which are issued will be "restricted
securities"  as  that  term  is defined in Rule 144 under the Securities Act, as
further  described  in  Section  7  of  the  Exercise  Notice,  unless  they are
registered  under  the  Securities  Act.  The  Company is under no obligation to
register  the  shares  of  Stock  issuable  upon  exercise  of  this  Option.

     4.7  FRACTIONAL  SHARES.  The  Company  shall  not  be  required  to  issue
fractional  shares  upon  the  exercise  of  the  Option.

     5.     NONTRANSFERABILITY  OF  THE  OPTION.

     The Option may be exercised during the lifetime of the Optionee only by the
Optionee  or  the  Optionee's  guardian  or  legal representative and may not be
assigned  or  transferred in any manner except by will or by the laws of descent
and  distribution.  Following  the  death  of  the  Optionee, the Option, to the
extent  provided  in  Section  7,  may  be  exercised  by  the  Optionee's legal
representative or by any person empowered to do so under the deceased Optionee's
will  or  under  the  then  applicable  laws  of  descent  and  distribution.

     6.     TERMINATION  OF  THE  OPTION.

     The  Option  shall terminate and may no longer be exercised on the first to
occur  of  (a)  the Option Expiration Date, (b) the last date for exercising the
Option  following  termination of the Optionee's Service as described in Section
7,  or  (c)  a  Change  in  Control  to  the  extent  provided  in  Section  8.

     7.     EFFECT  OF  TERMINATION  OF  SERVICE.

     7.1     OPTION  EXERCISABILITY.

          (a)  DISABILITY.  If  the  Optionee's  Service  with the Participating
     Company  Group  terminates  because  of the Disability of the Optionee, the
     Option,  to the extent unexercised and exercisable on the date on which the
     Optionee's  Service  terminated,  may  be exercised by the Optionee (or the
     Optionee's  guardian  or  legal  representative)  at  any time prior to the
     expiration  of  twelve  (12)  months after the date on which the Optionee's
     Service  terminated,  but  in any event no later than the Option Expiration
     Date.

          (b)  DEATH.  If  the Optionee's Service with the Participating Company
     Group  terminates  because of the death of the Optionee, the Option, to the
     extent  unexercised  and  exercisable  on  the date on which the Optionee's
     Service terminated, may be exercised by the Optionee's legal representative
     or  other person who acquired the right to exercise the Option by reason of
     the  Optionee's


                                 PAGE 6


     death  at  any time prior to the expiration of twelve (12) months after the
     date  on which the Optionee's Service terminated, but in any event no later
     than  the Option Expiration Date. The Optionee's Service shall be deemed to
     have  terminated  on account of death if the Optionee dies within three (3)
     months  after  the  Optionee's  termination  of  Service.

          (c)  CAUSE.  If  the Optionee's Service with the Participating Company
     Group  is  terminated  for Cause (as such term is defined in the Employment
     Agreement),  the  Option,  to the extent unexercised and exercisable by the
     Optionee  on  the  date  on which the Optionee's Service terminated, may be
     exercised  by  the  Optionee  at any time prior to the expiration of ninety
     (90) days after the date on which the Optionee's Service terminated, but in
     any  event  no  later  than  the  Option  Expiration  Date.

          (d)  OTHER  TERMINATION OF SERVICE. If the Optionee's Service with the
     Participating  Company  Group terminates for any reason, except Disability,
     death  or  Cause,  the Option, to the extent unexercised and exercisable by
     the Optionee on the date on which the Optionee's Service terminated, may be
     exercised  by  the  Optionee  at  any  time  prior to the expiration of one
     hundred  eighty  (180)  days  (or  such  other  longer  period  of  time as
     determined  by  the  Board,  in its discretion) after the date on which the
     Optionee's  Service  terminated,  but in any event no later than the Option
     Expiration  Date.

     7.2     EXTENSION  IF EXERCISE PREVENTED BY LAW.  If the Optionee's Service
with  the  Participating Company Group is terminated pursuant to Section 7.1(a),
(b) or (d), and if the exercise of the Option within the applicable time periods
set  forth  therein  is  prevented  by the provisions of Section 4.6, the Option
shall remain exercisable until one hundred eighty (180) days after the date that
the  Option again becomes exercisable, but in any event no later than the Option
Expiration  Date.  The  Company  shall  provide  the  Optionee  with  prompt
notification  of  the  beginning  of  any  such  period  of  exercisability.

     7.3  EXTENSION IF SALE PROHIBITED OR OPTION UNREGISTERED. If the Optionee's
Service  with  the Participating Company Group is terminated pursuant to Section
7.1(a),  (b)  or  (d),  and if a registration statement under the Securities Act
shall  not be in effect with respect to the shares issuable upon exercise of the
Option  at  the time the Optionee's Service with the Participating Company Group
terminates, the Option shall remain exercisable until ninety (90) days after the
date  such a registration statement is effective, but in any event no later than
the  Option  Expiration Date. The Company shall provide the Optionee with prompt
notification  of  the  beginning  of  any  such  period  of  exercisability.

     7.4  EXTENSION  IF  OPTIONEE  SUBJECT  TO  SECTION 16(B). If the Optionee's
Service  with  the Participating Company Group is terminated pursuant to Section
7.1(a),  (b)  or (d), and if a sale within the applicable time periods set forth
therein  of  shares  acquired  upon the exercise of the Option would subject the
Optionee  to  suit  under  Section  16(b)  of the Exchange Act, the Option shall
remain  exercisable  until  the  earliest  to  occur of (i) the tenth (10th) day
following  the  date  on  which  a  sale of such shares by the Optionee would no
longer  be  subject to such suit, (ii) the one hundred and ninetieth (190th) day
after  the  Optionee's  termination  of  Service, or (iii) the Option Expiration
Date.


                                 PAGE 7


     7.5  EXTENSION  IF  OPTIONEE SUBJECT TO INSIDER TRADING POLICY. The Company
may,  from  time  to  time,  have  a policy prohibiting officers from trading in
securities  of  the  Company  during certain periods of time when they may be in
possession  of  material,  undisclosed  information ("BLACKOUT PERIODS"). If the
Optionee's  Service  with the Participating Company Group is terminated pursuant
to Section 7.1(a), (b) or (d), and if the last day of any of the applicable time
periods  set  forth  therein  is during such a Blackout Period, then this Option
shall  automatically  remain exercisable until fourteen (14) days after the date
that  there is no longer in effect a Blackout Period applicable to the Optionee.
The Company shall provide the Optionee with prompt notification of the beginning
of  any  such  period  of exercisability. Notwithstanding the provisions of this
Section  7.5,  in  no  event  may  this  Option  by  exercised  after the Option
Expiration  Date.

     8.     CHANGE  IN  CONTROL.

     8.1     DEFINITIONS.

          (a)  An  "OWNERSHIP  CHANGE EVENT" shall be deemed to have occurred if
     any  of the following occurs with respect to the Company: (i) the direct or
     indirect  sale or exchange in a single or series of related transactions by
     the  shareholders  of  the  Company of more than fifty percent (50%) of the
     voting  stock  of  the Company; (ii) a merger or consolidation in which the
     Company  is  a  party;  (iii)  the  sale,  exchange,  or transfer of all or
     substantially  all  of  the assets of the Company; or (iv) a liquidation or
     dissolution  of  the  Company.

          (b)  A  "CHANGE  IN CONTROL" shall mean an Ownership Change Event or a
     series  of  related Ownership Change Events (collectively, a "TRANSACTION")
     wherein  the shareholders of the Company immediately before the Transaction
     do  not retain immediately after the Transaction, in substantially the same
     proportions  as  their  ownership  of  shares of the Company's voting stock
     immediately before the Transaction, direct or indirect beneficial ownership
     of  more than fifty percent (50%) of the total combined voting power of the
     outstanding  voting stock of the Company or the corporation or corporations
     to  which  the  assets  of  the  Company  were transferred (the "TRANSFEREE
     CORPORATION(S)"),  as  the  case  may  be.  For  purposes  of the preceding
     sentence,  indirect beneficial ownership shall include, without limitation,
     an  interest  resulting  from  ownership of the voting stock of one or more
     corporations  which, as a result of the Transaction, own the Company or the
     Transferee  Corporation(s),  as the case may be, either directly or through
     one  or  more  subsidiary  corporations.  The Board shall have the right to
     determine  whether  multiple  sales or exchanges of the voting stock of the
     Company  or  multiple  Ownership  Change  Events  are  related,  and  its
     determination  shall  be final, binding and conclusive. Notwithstanding the
     foregoing,  the  proposed  merger  of Starsys Research Corporation with and
     into  a wholly owned subsidiary of the Company shall not be deemed a Change
     in  Control.

     8.2     EFFECT  OF  CHANGE  IN  CONTROL  ON  OPTION.

          (a) In the event of a Change in Control, then notwithstanding anything
     else  herein to the contrary, the Lock-Up Restrictions set forth in Section
     11.1  hereof  shall  expire  immediately prior to the Change in Control, if
     Optionee  is in the Service of the Participating Company Group at that time
     or  within  ninety (90) days prior thereto. Any termination of such Lock-Up
     Restrictions  solely  by


                                 PAGE 8


     reason  of  this  Section 8.2 shall be conditioned upon the consummation of
     the  Change  in  Control. The Optionee may condition any notice of exercise
     upon  the  consummation  of the Change in Control. Any shares acquired upon
     exercise of the Option prior to the Change in Control and any consideration
     received  pursuant  to  the  Change  in Control with respect to such shares
     shall  continue  to  be subject to all applicable provisions of this Option
     Agreement  except  as  otherwise  provided  herein.

          (b)  As  of  the effective time and date of any Change in Control, the
     surviving,  continuing,  successor,  or  purchasing corporation or ultimate
     parent  corporation  thereof,   as  the  case   may  be   (the   "ACQUIRING
     CORPORATION"), may either assume the Company's rights and obligations under
     options or substitute for options a substantially equivalent option for the
     Acquiring  Corporation's  stock. The Option shall terminate and cease to be
     outstanding effective as of the date of the Change in Control to the extent
     that  the  Option  is  neither  assumed or substituted for by the Acquiring
     Corporation  in  connection  with the Change in Control nor exercised as of
     the  date  of  the  Change  in  Control.  Furthermore,  notwithstanding the
     foregoing,  if  the corporation the stock of which is subject to the Option
     immediately  prior  to  an  Ownership  Change  Event  described  in Section
     8.1(a)(i)  constituting  a Change in Control is the surviving or continuing
     corporation  and  immediately  after  such Ownership Change Event less than
     fifty  percent (50%) of the total combined voting power of its voting stock
     is held by another corporation or by other corporations that are members of
     an  affiliated  group  within  the  meaning  of Section 1504(a) of the Code
     without regard to the provisions of Section 1504(b) of the Code, the Option
     shall  not terminate unless the Board otherwise provides in its discretion.

     9.     ADJUSTMENTS  FOR  CHANGES  IN  CAPITAL  STRUCTURE.

     In  the  event  of  any  stock  dividend, stock split, reverse stock split,
recapitalization,  combination,  reclassification,  or  similar  change  in  the
capital  structure  of the Company, appropriate adjustments shall be made in the
number, Exercise Price and class of shares of stock subject to the Option and in
the  Stock  price  targets set forth in the Notice.  If a majority of the shares
which  are  of  the  same class as the shares that are subject to the Option are
exchanged  for,  converted into, or otherwise become (whether or not pursuant to
an Ownership Change Event) shares of another corporation (the "NEW SHARES"), the
Board  may  unilaterally  amend  the  Option  to  provide  that  the  Option  is
exercisable  for  New Shares.  In the event of any such amendment, the Number of
Option  Shares,  the Exercise Price and the Stock price targets set forth in the
Notice  shall  be  adjusted in a fair and equitable manner, as determined by the
Board,  in  its discretion.  Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 9 shall be rounded down to
the nearest whole number, and in no event may the Exercise Price be decreased to
an  amount  less than the par value, if any, of the stock subject to the Option.
The  adjustments  determined  by  the  Board pursuant to this Section 9 shall be
final,  binding  and  conclusive.

     10.     RIGHTS  AS  A  SHAREHOLDER,  EMPLOYEE  OR  CONSULTANT.

     The  Optionee  shall  have  no  rights as a shareholder with respect to any
shares covered by the Option until the date of the issuance of a certificate for
the  shares  for  which  the  Option  has  been  exercised  (as evidenced by the
appropriate  entry  on the books of the Company or of a duly authorized transfer
agent of the Company).  No adjustment shall be made for dividends, distributions

                                 PAGE 9

or  other rights for which the record date is prior to the date such certificate
is issued, except as provided in Section 9.  If the Optionee is an Employee, the
Optionee  understands  and  acknowledges that, except as otherwise provided in a
separate,  written  employment agreement between a Participating Company and the
Optionee,  the  Optionee's employment is "at will" and is for no specified term.
Nothing  in  this  Option  Agreement shall confer upon the Optionee any right to
continue  in the Service of a Participating Company or interfere in any way with
any right of the Participating Company Group to terminate the Optionee's Service
as  an  Employee  or  Consultant,  as  the  case  may  be,  at  any  time.

     11.     LOCK-UP  AGREEMENTS.

     11.1     GENERAL  RESTRICTIONS.  The  Optionee  hereby  agrees  that  the
Optionee shall not offer, sell, contract to sell, pledge, hypothecate, grant any
option  to  purchase  or  make  any  short  sale  of,  any  Restricted  Shares.
11.2     RESTRICTIONS  RELATING TO PUBLIC OFFERINGS.  The Optionee hereby agrees
that  in  the  event of any underwritten public offering of stock, including but
not limited to an initial public offering of stock, made by the Company pursuant
to  an  effective  registration  statement  filed  under the Securities Act, the
Optionee shall not offer, sell, contract to sell, pledge, hypothecate, grant any
option to purchase or make any short sale of, or otherwise dispose of any shares
of  stock  of the Company or any rights to acquire stock of the Company for such
period  of time from and after the effective date of such registration statement
as  may  be  established  by the underwriter for such public offering; provided,
however, that such period of time shall not exceed one hundred eighty (180) days
from  the effective date of the registration statement to be filed in connection
with  such  public offering.  The foregoing limitation shall not apply to shares
registered  in  the  public  offering  under  the  Securities  Act.

     12.     LEGENDS.

     The  Company  may  at any time place legends referencing and any applicable
federal,  state  or  foreign  securities  law  restrictions  on all certificates
representing shares of stock subject to the provisions of this Option Agreement.
The  Optionee  shall,  at  the  request  of the Company, promptly present to the
Company  any  and  all certificates representing shares acquired pursuant to the
Option in the possession of the Optionee in order to carry out the provisions of
this Section.  Unless otherwise specified by the Company, legends placed on such
certificates  may  include,  but  shall  not  be  limited  to,  the  following:

     "THE  SECURITIES  EVIDENCED  BY  THIS  CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER  THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED  OR  HYPOTHECATED  UNLESS  THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER  SUCH  ACT  COVERING  SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH
RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY  TO  THE  COMPANY,  STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION  IS  EXEMPT  FROM  THE  REGISTRATION  AND  PROSPECTUS  DELIVERY
REQUIREMENTS  OF  SUCH  ACT."


                                 PAGE 10


     "THE  SECURITIES  EVIDENCED  BY  THIS  CERTIFICATE  ARE  SUBJECT TO CERTAIN
RESTRICTIONS  ON  TRANSFER  AS  SET  FORTH  IN A NON-PLAN STOCK OPTION AGREEMENT
ENTERED  INTO BETWEEN THE HOLDER OF THESE SHARES AND THE COMPANY. A COPY OF SUCH
AGREEMENT  IS  ON  FILE  AT  THE  PRINCIPAL  OFFICE  OF  THE  COMPANY."

     13.     RESTRICTIONS  ON  TRANSFER  OF  SHARES.

     No  shares  acquired  upon  exercise  of the Option may be sold, exchanged,
transferred  (including,  without limitation, any transfer to a nominee or agent
of  the  Optionee),  assigned,  pledged,  hypothecated or otherwise disposed of,
including  by  operation  of  law,  in  any  manner  which  violates  any of the
provisions  of this Option Agreement and any such attempted disposition shall be
void.  The Company shall not be required (a) to transfer on its books any shares
which will have been transferred in violation of any of the provisions set forth
in  this  Option  Agreement or (b) to treat as owner of such shares or to accord
the  right  to  vote as such owner or to pay dividends to any transferee to whom
such  shares  will  have  been  so  transferred.

     14.     MISCELLANEOUS  PROVISIONS.

     14.1     BINDING EFFECT.  Subject to the restrictions on transfer set forth
herein,  this Option Agreement shall inure to the benefit of and be binding upon
the  parties  hereto  and  their  respective  heirs,  executors, administrators,
successors  and  assigns.

     14.2  TERMINATION OR AMENDMENT. The Board may terminate or amend the Option
at  any  time;  provided,  however,  that  except  as provided in Section 8.2 in
connection  with  a  Change  in  Control,  no  such termination or amendment may
adversely  affect  the  Optionee without the consent of the Optionee unless such
termination  or  amendment  is  necessary  to  comply with any applicable law or
government  regulation.  No amendment or addition to this Option Agreement shall
be  effective  unless  in  writing.

     14.3  NOTICES. Any notice required or permitted hereunder shall be given in
writing  and  shall  be deemed effectively given (except to the extent that this
Option  Agreement  provides  for  effectiveness only upon actual receipt of such
notice) upon personal delivery or upon deposit in the United States Post Office,
by registered or certified mail, with postage and fees prepaid, addressed to the
other  party  at the address shown below that party's signature or at such other
address  as  such  party may designate in writing from time to time to the other
party.

     14.4  INTEGRATED AGREEMENT. The Notice and this Option Agreement constitute
the  entire  understanding  and  agreement of the Optionee and the Participating
Company Group with respect to the subject matter contained herein or therein and
supersedes  any prior agreements, understandings, restrictions, representations,
or  warranties  among  the  Optionee  and  the  Participating Company Group with
respect  to  such  subject  matter other than those as set forth or provided for
herein  or therein. To the extent contemplated herein or therein, the provisions
of  the Notice and the Option Agreement shall survive any exercise of the Option
and  shall  remain  in  full  force  and  effect.

                                 PAGE 11

     14.5 APPLICABLE LAW. This Option Agreement shall be governed by the laws of
the  State  of  California  as  such  laws  are  applied  to  agreements between
California  residents entered into and to be performed entirely within the State
of  California.

     14.6  COUNTERPARTS.  The  Notice  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.

     14.7  REGISTRATION  STATEMENT. The Company shall register all of the Shares
subject  to  the  Option  on  the first registration statement on Form S-8 to be
filed  by the Company with the Securities and Exchange Commission after the date
hereof,  which  shall in no event be later than June 30, 2006. After filing, the
Company  shall  use its reasonable best efforts to maintain the effectiveness of
such  Form  S-8.

     14.8 IRC SECTION 409A. To the extent that this Option Agreement or any part
thereof  is  deemed  to  be a nonqualified deferred compensation plan subject to
Section  409A  of  the  Code  and  the  regulations  and  guidance   promulgated
thereunder,  (i) the provisions of this Option Agreement shall be interpreted in
a  manner  to  comply  in good faith with Section 409A of the Code, and (ii) the
parties  hereto  agree  to  amend  this  Option Agreement, if necessary, for the
purposes  of  complying  with Section 409A of the Code promptly upon issuance of
any  regulations  or guidance thereunder; provided that any such amendment shall
not  materially  change  the  present  value of the benefits payable to Optionee
hereunder  or  otherwise materially and adversely affect Optionee or the Company
without  the  written  consent  of  Optionee or the Company, as the case may be.


                                 PAGE 12




                                                                      EXHIBIT A
                                           Optionee:

                                                  Date:

                          STOCK OPTION EXERCISE NOTICE

SpaceDev,  Inc.
Attention:  Chief  Financial  Officer


Ladies  and  Gentlemen:

     1.     OPTION.  I  was  granted an option (the "OPTION") to purchase shares
of  the  common  stock  (the "SHARES") of SpaceDev, Inc., a Colorado corporation
(the  "COMPANY"),  pursuant  to my Notice of Non-Plan Grant of Stock Option (the
"NOTICE")  and  my  Non-Plan  Stock Option Agreement (the "OPTION AGREEMENT") as
follows:

Grant  Number:
Date  of  Option  Grant:
Number  of  Option  Shares:
Exercise  Price  per  Share: $

     2.     EXERCISE  OF  OPTION.  I  hereby  elect  to  exercise  the Option to
purchase  the  following  number  of  Shares:
Total  Shares  Purchased:
Total  Exercise  Price  (Total  Shares  X  Price  per  Share)  $

     The exercise of the Option is conditioned upon a Change in Control pursuant
to  Section  8.2 of my Option Agreement (check the following box if applicable).

     3.     PAYMENTS.  I enclose payment in full of the total exercise price for
the  Shares  in  the  following  form(s),  as authorized by my Option Agreement:

[  ]  Cash:         $
[  ]  Check:        $
[  ]  Net Exercise  $


                                 PAGE 1


     4.     TAX WITHHOLDING.  I enclose payment in full of my withholding taxes,
if  any,  as  follows:

            (CONTACT CHIEF FINANCIAL OFFICER FOR AMOUNT OF TAX DUE.)

[  ]  Cash:     $
[  ]  Check:     $

     5.     OPTIONEE  INFORMATION.

     My  address  is:



My  Social  Security  Number  is:


     6.     BINDING  EFFECT.  I  agree  that  the  Shares  are being acquired in
accordance  with  and  subject  to  the  terms, provisions and conditions of the
Option  Agreement,  to  all  of which I hereby expressly assent.  This Agreement
shall  inure  to  the  benefit  of  and be binding upon the my heirs, executors,
administrators,  successors  and  assigns.

7.     TRANSFER.  I  understand  and  acknowledge  that the Shares have not been
registered  under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and  that  consequently  the  Shares  must  be held indefinitely unless they are
subsequently  registered  under  the  Securities  Act,  an  exemption  from such
registration  is  available,  or they are sold in accordance with Rule 144 under
the  Securities  Act.  I  further understand and acknowledge that the Company is
under  no  obligation to register the Shares.  I understand that the certificate
or  certificates  evidencing  the  Shares  will  be imprinted with legends which
prohibit  the  transfer  of  the  Shares  unless  they  are  registered  or such
registration is not required in the opinion of legal counsel satisfactory to the
Company.

     I  am  aware  that Rule 144 under the Securities Act, which permits limited
public  resale  of securities acquired in a nonpublic offering, is not currently
available  with  respect  to  the Shares and, in any event, is available only if
certain conditions are satisfied.  I understand that any sale of the Shares that
might  be  made in reliance upon Rule 144 may only be made in limited amounts in
accordance  with  the  terms and conditions of such rule and that a copy of Rule
144  will  be  delivered  to  me  upon  request.

                                 PAGE 2


I understand that I am purchasing the Shares pursuant to the terms of the Notice
and  my Option Agreement, copies of which I have received and carefully read and
understand.



     Very  truly  yours,

     ----------------------------------
     Print  Name:




Receipt  of  the  above  is  hereby  acknowledged.


SpaceDev,  Inc.

By:
Title:
Dated:


                                 PAGE 3