Document:

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                                                                   EXHIBIT 10.13

                              [SPACEDEV LOGO HERE]

                              EMPLOYMENT AGREEMENT

                                 BY AND BETWEEN

                                 SPACEDEV, INC.

                                       AND

                                EMERY E. SKARUPA

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                                 SPACEDEV, INC.
                              EMPLOYMENT AGREEMENT

         This At-Will Employment Agreement ("Agreement") is made and entered
into as of the date written next to the signature lines by and between SPACEDEV,
INC., a Colorado corporation (the "Company"), and the undersigned individual
(the "Employee").

         1. EMPLOYMENT. The Company hereby employs Employee as the position
listed on Schedule A to this Agreement which incorporated herein by this
reference. Employee accepts such employment and agrees to perform services for
the Company, subject always to such resolutions as are established from time to
time by the Board of Directors of the Company and its President.

         2. AT-WILL EMPLOYMENT. Employee acknowledges and understands that the
employment is "at-will". Employee and Company may terminate this Agreement at
any time with or without cause and without notice.

         3. POSITION AND DUTIES.

              3.1. SERVICES WITH THE COMPANY. Employee agrees to perform such
duties and exercise such powers as specified under Schedule A and as may from
time to time be assigned to Employee by the Company's Board of Directors (the
"Board") and its President. Employee shall duly and diligently perform all
duties assigned to Employee while in the employ of the Company. Employee shall
be bound by and faithfully observe and abide by all rules and regulations of the
Company which are brought to their notice or of which they should be reasonably
aware.

              3.2. NO CONFLICTING DUTIES. Employee shall devote sufficient
productive time, ability, and attention to the business of the Company during
the term of this Agreement in a manner that will serve the best interests of the
Company. During the term hereof, Employee shall not serve as an officer,
director, employee, consultant or advisor to any other business without the
prior written consent of the Company's Board, which shall not be unreasonably
withheld. Employee hereby confirms Employee is under no contractual commitments
inconsistent with Employee's obligations set forth in this Agreement. During the
term of this Agreement, Employee will not render or perform services, or enter
into any contract to do so, for any other corporation, firm, entity or person
that are inconsistent with the provisions of this Agreement. This Agreement
shall not be interpreted to prohibit Employee from making passive personal
investments or conduct private business affairs if those activities do not
materially interfere with the services required under this Agreement. However,
Employee shall not directly or indirectly, acquire, hold, or retain any interest
in any business competing with or similar in nature to the business of the
Company.

              3.3. COMPETITIVE ACTIVITIES. During the term of this Agreement,
Employee shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director,
or in any other individual or representative capacity, engage or participate in
any business that is in competition in any manner whatsoever with the business
of the Company.

              3.4. UNIQUENESS OF EMPLOYEE'S SERVICES. Employee hereby represents
and agrees that the services to be performed under the terms of this Agreement
are of a special, unique, unusual, extraordinary, and intellectual character
that gives them a unique value, the loss of which cannot be adequately
compensated in damages in an action at law. Employee, therefore, expressly
agrees that the Company, in addition to any other rights or remedies that the
Company may possess, shall be entitled to injunctive and other equitable relief
to prevent or remedy the breach of this Agreement by Employee.

         4. COMPENSATION.

              4.1. BASE SALARY. As compensation for all services to be rendered
by Employee under this Agreement, the Company shall pay to Employee a base
annual salary as described in Schedule A. Employee's salary shall be paid on a
regular basis in accordance with the Company's normal payroll procedures and
policies.

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              4.2. BONUS. Based on the Company's performance and Employee's
success in meeting annual objectives, the Company has the discretion to offer
Employee an annual bonus in cash and/or stock and/or stock options. A
description of the Bonus Compensation is set forth in Schedule A along with the
conditions and criteria.

              4.3 INCENTIVE STOCK OPTION. The Company has adopted an Incentive
Stock Option Plan (the "Plan") which Employee shall be eligible to participate
in.. A copy of the Plan is being provided to Employee concurrently with this
Agreement. Any incentive stock options issued to Employee shall be subject to
the terms and conditions of the Plan.

              4.4. MEDICAL INSURANCE. Employee shall have the right to
participate in the Company's comprehensive medical insurance plan upon the terms
and conditions of other similar situated employees of the Company.

              4.5. EXPENSES. The Company shall reimburse Employee for all
pre-approved business or travel expenses and office-related expenses incurred by
Employee in the performance of Employee's duties.

              4.6. ANNUAL VACATION. Employee shall be entitled vacation time
each year without loss of compensation. The number of vacation days is specified
in Schedule A of this Agreement. In the event that Employee is unable for any
reason to take the total amount of vacation time authorized herein during any
year, Employee shall be deemed to have waived any entitlement to vacation time
for that year, unless a carryover is specifically approved by the Company in
writing.

         5. PROPRIETARY MATTER. Except as permitted or directed by the Company,
Employee shall not during the term of employment or at any time thereafter
divulge, furnish, disclose, or make accessible (other than in the ordinary
course of the business of the Company) to anyone for use in any way any
confidential, secret, or proprietary knowledge or information of the Company
("Proprietary Matter") which Employee has acquired or become acquainted with or
will acquire or become acquainted with, whether developed by himself or by
others, including, but not limited to, any trade secrets, confidential or secret
designs, processes, formulae, software or computer programs, plans, devices or
material (whether or not patented or patentable, copyrighted or copyrightable)
directly or indirectly useful in any aspect of the business of the Company, any
confidential customer, distributor or supplier lists of the Company, any
confidential or secret development or research work of the Company, or any other
confidential, secret or non-public aspects of the business of the Company.
Employee acknowledges that the Proprietary Matter constitutes a unique and
valuable asset of the Company acquired at great time and expense by the Company,
and that any disclosure or other use of the Proprietary Matter other than for
the sole benefit of the Company would be wrongful and would cause irreparable
harm to the Company. Both during and after the term of this Agreement, Employee
will refrain from any acts or omissions that would reduce the value of
Proprietary Matter to the Company. The foregoing obligations of confidentiality,
however, shall not apply to any knowledge or information which is now published
or which subsequently becomes generally publicly known, other than as a direct
or indirect result of the breach of this Agreement by Employee.

         6. VENTURES. If, during the term of this Agreement, Employee is engaged
in or associated with the planning or implementing of any project, program, or
venture involving the Company and a third party or parties, all rights in the
project, program, or venture shall belong to the Company and shall constitute a
corporate opportunity belonging exclusively to the Company. Except as expressly
approved in writing by the Company, Employee shall not be entitled to any
interest in such project, program, or venture or to any commission, finder's fee
or other compensation in connection therewith, other than the compensation to be
paid to Employee as provided in this Agreement.

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         7. SOLICITATION OF CUSTOMERS AND SOLICITATION OF EMPLOYEES.

              7.1. AGREEMENT NOT TO SOLICIT CUSTOMERS. Employee agrees that
during the term of employment by the Company hereunder and for the period in
which any covenant not to compete is in effect hereunder, Employee will not,
either directly or indirectly, on Employee's own behalf or in the service or on
behalf of others, solicit, divert or appropriate, or attempt to solicit, divert,
or appropriate, to any competing business (i) any person or entity whose account
is with the Company or any distributor of the Company that is/was sold or
serviced by or under the direct or indirect supervision of Employee during the
year preceding the termination of such employment, or (ii) any person or entity
whose account has been directly solicited at least twice by the Company within
the eighteen (18) month period prior to the date of any above described event.

              7.2. AGREEMENT NOT TO SOLICIT EMPLOYEES. During Employee's
employment by the Company hereunder and for the three-year period following the
termination of such employment for any reason, Employee shall not, either
directly or indirectly, on Employee's own behalf or in the service or on behalf
of others solicit, divert or hire away, or attempt to solicit, divert or hire
away any person then employed by the Company or serving the Company as an
independent contractor.

         8. SURRENDER OF RECORDS AND PROPERTY. Upon termination of employment
with the Company, Employee shall deliver promptly to the Company all records,
electronic media, manuals, books, blank forms, documents, letters, memoranda,
notes, notebooks, reports, data, tables, and calculations or copies thereof,
which are the property of the Company and which relate in any way to the
business, products, practices or techniques of the Company, and all other
property (keys, office equipment, computers, mobile phones, credit cards, etc.)
of the Company and Proprietary Matter, including but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in Employee's
possession or under Employee's control.

         9. ASSIGNMENT. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party, except
that the Company may, without the consent of Employee, assign its rights and
obligations under this Agreement to any corporation, firm or other business
entity (i) with or into which the Company may merge or consolidate, or (ii) to
which the Company may sell or transfer all or substantially all of its assets or
of which fifty percent (50%) or more of the equity investment and of the voting
control is owned, directly or indirectly, by, or is under common ownership with,
the Company. Upon such assignment by the Company, the Company shall obtain the
assignees' written agreement enforceable by Employee to assume and perform, and
after the date of such assignment, the terms, conditions, and provisions imposed
by this Agreement upon the Company. After any such assignment by the Company and
such written agreement by the assignee, the Company shall be discharged from all
further liability hereunder and such assignee shall thereafter be deemed to be
the Company for the purposes of all provisions of this Agreement including this
section.

         10. INJUNCTIVE RELIEF. Employee agrees that it would be difficult to
compensate the Company fully for damages for any violation of the provisions of
this. Accordingly, Employee specifically agrees that the Company shall be
entitled to temporary and permanent injunctive relief to enforce the provisions
of this Agreement. This provision with respect to injunctive relief shall not,
however, diminish the right of the Company to claim and recover damages in
addition to injunctive relief.

         11. INDEMNIFICATION. The company shall indemnify Employee as provided
in the California Corporations Code, Company Articles or Company's Bylaws in
effect at the commencement of this Agreement. The scope of indemnification to
which Employee is entitled shall not be diminished, but may be expanded by the
Company, by amendment of the Company's Bylaws, Articles of Incorporation or
otherwise. Employee shall indemnify and hold the Company harmless from all
liability for loss, damages or injury resulting from the negligence or
misconduct of Employee.

         12. MISCELLANEOUS.

              12.1 GOVERNING LAW. This Agreement is made under and shall be
government by and construed in accordance with the laws of the State of
California.

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              12.2 PRIOR AGREEMENTS AND ARBITRATION. This Agreement contains the
entire agreement of the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings with respect to such subject
matter, and the parties hereto have made no agreements, representations or
warranties relating to the subject matter of this Agreement which are not set
forth herein. Any dispute(s) or differences(s) which arise during the course of
this Agreement and which either involve its interpretation or meaning, or relate
to performance required hereunder shall be submitted to and resolved by binding
arbitration; provided, however, that the parties are not waiving and are
expressly reserving their right to seek injunctive relief by judicial process.
Nevertheless, the parties may, by subsequent consent, agree to submit requests
for injunctive relief to an arbitrator or arbitration panel. If either party
shall, in the opinion of the other party, be in breach of or default in the
performance or observance of any term or condition of this Agreement, the
non-defaulting party shall notify the defaulting party in writing of such fact,
and the defaulting party shall have ten (10) days from the receipt of such
notice to remedy or correct such breach or default. If the non-defaulting party
asserts that the breach or default has not been timely and properly cured, it
may commence arbitration as described herein and ask the arbitrator to deem this
Agreement terminated and/or grant such relief as is shown appropriate. In the
event the parties are unable to agree upon an arbitrator to hear and resolve
their differences (hereinafter the "Dispute"), each party shall designate one
person licensed as an attorney in California. Said two attorneys shall select
the neutral arbitrator. Unless agreed upon by the parties to the contrary,
arbitration shall be by a single, neutral arbitrator (hereinafter, the
"Arbitrator"). If the two designated attorneys cannot agree on the selection of
the Arbitrator, the matter of the selection of the Arbitrator shall be submitted
to the presiding judge of the Sacramento County Superior Court. In such event,
the selection shall be limited to one person from a panel of retired judges,
each party hereto submitting three names for the court to consider and from
which the Arbitrator shall be selected. The Arbitrator shall have the full and
absolute authority to interpret this Agreement, to deem conduct by the parties
as either in compliance with or in breach of this Agreement, to terminate this
Agreement, and (if a breach is found) to award appropriate damages or relief.
The Dispute shall be settled in accordance with then existing substantive law
and, to the fullest extent possible, with California substantive law. While
evidence may be accepted, omitted, considered or excluded in the discretion of
the Arbitrator, the Arbitrator shall be bound by the California rules of
evidence and by the California Arbitration Act (CCP 1280 et seq.). The final
decision of the Arbitrator shall be served on the parties, in writing, within
twenty (20) days after conclusion of the arbitration hearing. The Arbitrator's
decision shall be binding and conclusive. Neither party shall pursue, prosecute
or otherwise file any legal action or proceeding (other than to seek injunctive
relief as described above). Except as provided in CCP 1286.2, no appeal shall be
taken from the Arbitrator's decision or from any subsequent court order
confirming said decision. The parties shall equally advance the costs incurred
by arbitration. The Arbitrator, however, shall have the discretion to award such
costs as well as attorneys' fees to the party prevailing in the arbitration
proceedings.

              12.3 WITHHOLDING TAXES. The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.

              12.4 AMENDMENTS. No amendment or modification of this Agreement
shall be deemed effective unless made in writing signed by the parties hereto.

              12.5 NO WAVIER. No term or condition of this Agreement shall be
deemed to have been waived nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.

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              12.6 SEVERABILITY. To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted here from and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.

              12.7 SURVIVAL. Sections 5, 6, 7, and 8 shall survive termination
of this Agreement.

              12.8 NOTICES. Any and all notices, requests or other
communications required or permitted in or by any provision of this Agreement
shall be in writing and may be delivered personally or by certified mail
directed to the addressee at such person's or entity's last known post office
address, and if given by certified mail, shall be deemed to have been delivered
when deposited in such, mail postage prepaid.

              12.9 LEGAL PROCEEDINGS. In the event of legal proceedings,
including arbitration as set forth in Section 13.2 above, the prevailing party
shall be entitled, in addition to such relief as is deemed to be appropriate, to
recover such costs and reasonable attorneys' fees as are incurred therein.

              This Agreement is executed on May 24, 2002, in San Diego,
California.

COMPANY:
SPACEDEV, INC.
                                                       EMPLOYEE:

By: /s/ James W. Benson                                /s/ Emery E. Skarupa
-----------------------                                --------------------
Title:  CEO

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                                 SPACEDEV, INC.
                           EMERY SKARUPA --SCHEDULE A

STARTING DATE:  May 28, 2002
POSITION:  Vice President of Operations
DUTIES AND RESPONSIBILITIES:
================================================================================
     JOB DESCRIPTION: As Vice President of Operations, you will be responsible
     for managing all engineering and manufacturing aspects of the Company
     including the development of short-term and long-term planning and program
     management and assisting with strategic sales and finance planning. You
     will report directly to the CEO.
     RESPONSIBILITIES INCLUDE BUT ARE NOT LIMITED TO: Help build a corporate
     culture based on the "microcomputer way of thinking" and "Great Group"
     theory - meaning using smaller, modern technology, innovative and creative
     thinking in all departments - especially engineering.
              Foster a united and mutually cooperative team spirit, and
     structure the management infrastructure to encourage and reward creativity,
     while isolating the designers, engineers and technicians from such mundane
     distractions as procurement hassles, etc.
              Help build an aggressive and productive sales force to accomplish
     the short-term and long-term growth of profitable new business in the
     commercial, military and civil sectors.
              Accomplish the efficient and profitable growth and performance of
     the satellite and propulsion programs and their projects by implementing
     simple but standard procedures that enable fast turnaround projects, high
     quality and profitability, without burdening the project teams with
     unnecessary procedures and techniques.
              Standardize, distribute and implement common procedures for
     cost-effective and smoothly operating requisitioning, purchasing (with our
     own standard terms and conditions), receiving, inspection, acceptance and
     storage of such purchases.
              Standardize and implement a robust employee review system.
              Seek highly motivated and enthusiastic new employees at or below
     the market, while offering potentially valuable incentives for performance
     and employment longevity. Weed out the deadwood.
================================================================================
BASE SALARY PER ANNUM: $100,000. BONUS: Company and Employee agree to work
together in the first 30 days to agree on mutually acceptable goals and
objectives for a performance bonus.
SPACEDEV STOCK OPTIONS: Employee is eligible to participate in the SpaceDev's
annual Incentive Stock Option Plan. Employee will also receive incentive stock
options (defined in the Stock Option Plan) to purchase up to 120,000 SpaceDev
common shares to be granted at the date of the signing of this agreement and
vesting over a period of 60 months, as follows:

         ------------------- ------------------------ --------------------------
         STOCK OPTIONS       EXERCISE PRICE           VESTING
         ------------------- ------------------------ --------------------------
         12,000              FMV* at Grant Date       6 mos. after Grant Date
         ------------------- ------------------------ --------------------------
         12,000              FMV at Grant Date        12 mos. after Grant Date
         ------------------- ------------------------ --------------------------
         12,000              FMV at Grant Date        18 mos. after Grant Date
         ------------------- ------------------------ --------------------------
         12,000              FMV at Grant Date        24 mos. after Grant Date
         ------------------- ------------------------ --------------------------
         12,000              FMV at Grant Date        30 mos. after Grant Date
         ------------------- ------------------------ --------------------------
         12,000              FMV at Grant Date        36 mos. after Grant Date
         ------------------- ------------------------ --------------------------
         12,000              FMV at Grant Date        42 mos. after Grant Date
         ------------------- ------------------------ --------------------------
         12,000              FMV at Grant Date        48 mos. after Grant Date
         ------------------- ------------------------ --------------------------
         12,000              FMV at Grant Date        54 mos. after Grant Date
         ------------------- ------------------------ --------------------------
         12,000              FMV at Grant Date        60 mos. after Grant Date
         ------------------- ------------------------ --------------------------
         * Fair Market Value
VACATION DAYS PER ANNUM: 3 weeks (combined vacation & sick leave), 2 Personal
Days
MEDICAL/DENTAL/OTHER BENEFITS PLAN: Standard SpaceDev Plan per Employee
Handbook.

                                       8<PAGE>

                                                                   EXHIBIT 10.14

                        CONFIDENTIAL SEPARATION AGREEMENT
                          AND GENERAL RELEASE OF CLAIMS

         THIS CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE OF CLAIMS
(the "Agreement") dated May 31, 2002 is between Charles H. Lloyd ("Employee")
and SpaceDev, Inc. (the "Company"), a Colorado corporation and Integrated Space
Systems, Inc., a California corporation ("ISS")(for purposes of this Agreement,
references to the Company include ISS). As used in this Agreement, the Company
refers to SpaceDev, Inc. and all parents, subsidiaries, divisions, predecessors,
and successors of SpaceDev, Inc.

                                    RECITALS

         WHEREAS, Employee wishes to resign his positions as Chief Financial
Officer and Chief Operating Officer of the Company and as Chief Executive
Officer and Chief Financial Officer of ISS on the terms and conditions set forth
herein; and

         WHEREAS, Company and ISS has each accepted Employee's resignation from
each of these positions on the terms and conditions set forth herein;

         NOW, THEREFORE, the parties agree as follows:

                                    AGREEMENT

         1. RESIGNATION AS AN OFFICER AND BOARD MEMBER OF THE COMPANY.
Employee's employment as Chief Financial Officer and Chief Operating Officer of
the Company, and Chief Executive Officer and Chief Financial Officer of ISS,
will terminate effective as of June 14, 2002 (the "Separation Date") and
Employee will resign from such position on the Separation Date. On the
Separation Date, Employee will also resign from the Company's Board of Directors
and the Board of Directors of ISS, effective as of the Separation Date.

         2. OBLIGATIONS OF THE COMPANY.

                  a. In exchange for the release of claims and other promises
         set forth in this Agreement and the attached Addendum A, the Company
         agrees to provide Employee with the following benefits:

                                    (1) Employee will receive an aggregate
                  payment of Thirty-Six Thousand Dollars ($36,000) payable in
                  four installments of Nine Thousand Dollars ($9,000) each on
                  the Separation Date, the thirty-day anniversary of the
                  Separation Date, the sixty-day anniversary of the Separation
                  Date, and the ninety-day anniversary of the Separation Date.
                  An Event of Default in payment of any of the amounts due
                  hereunder will result in a late payment penalty equal to five
                  percent (5%) of the value of the payment. All payments made
                  under this Section 1(a)(1) shall have no withholding and
                  reported at the end of the year on a Form 1099.. For the
                  purposes of this Agreement, an "Event of Default" shall mean
                  the failure to make any payment required hereunder no later
                  than fifteen (15) days of the due date.
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                           (2) Employee shall receive payment of salary for
                  services rendered through the Separation Date at his current
                  base salary (less applicable withholdings) payable
                  semi-monthly pursuant to the payroll procedures regularly
                  established. Employee shall receive all accrued but unpaid
                  salary as of the Separation Date on the Separation Date.

                           (3) Employee shall receive reimbursement for accrued
                  but unpaid expenses reasonably incurred by him in carrying out
                  his duties as Chief Financial Officer and Chief Operating
                  Officer of the Company, and Chief Executive Officer and Chief
                  Financial Officer of ISS, in an amount of $_______.

                           (4) Employee will be compensated for all accrued and
                  unused vacation at the Separation Date, less applicable
                  withholding taxes, payable on the Separation Date.

                           (5) The Company agrees to maintain Employee's current
                  email account, telephone number and voice mail with the
                  Company and to provide Employee access thereto until 12:00
                  p.m. on the Separation Date.

                           (6) Employee shall be allowed to remove all personal
                  belongings from the Company's facilities up until 12:00 p.m.
                  on the Separation Date.

                           (7) The Company shall, at the Company's expense,
                  within thirty (30) days of the termination date provide
                  Employee with an opinion of counsel regarding to the
                  transferability of Twenty-five Thousand (25,000) restricted
                  common shares purchased from the Company by him in December
                  2000 under Rule 144 of the Securities Act of 1933.

                  b. In addition to the foregoing, the Company hereby
         acknowledges the terms of each of the four non-statutory option grants
         issued to Employee during the course of his employment with the Company
         and acknowledges and confirms that each of said non-statutory stock
         option shall remain exercisable for a period of five (5) years from the
         Date of Grant, as defined therein. The Company agrees that it shall not
         take any action to terminate the options at an earlier date or to
         otherwise impair Employee's rights thereunder or thereto. The Company
         further acknowledges that, pursuant to Section 14 of each such option,
         the Company agreed to register the shares underlying each such grant.
         The Company agrees to maintain its registration statement on Form S-8,
         filed on October 5, 2000, with respect to all shares underlying the
         options until June 13, 2007.

                  c. Employee understands and acknowledges that Employee will
         not be entitled to any benefits or payments from the Company other than
         those expressly set forth in this Section 2. Employee acknowledges and
         agrees that this Agreement supersedes the terms set forth in any
         employment agreement previously executed between himself and ISS and
         the Employee's and the Company's and/or ISS's obligations under any
         such Employment Agreement are hereby terminated in their entirety,
         effective as of the Separation Date.

                  d. The parties shall jointly announce the resignation of
         Employee to the Company's other employees on the Separation Date, in a
         manner and characterization agreeable to both parties.

         3. OBLIGATIONS OF EMPLOYEE. In exchange for the benefits described
above in Section 2, Employee agrees to the following:

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                  a. Employee agrees to continue in his current positions until
         May 31, 2002, at which time he shall take a two (2) week vacation
         ending on the Separation Date; provided, however, that Employee agrees
         make himself available to the Company for the purposes of closing out
         any current items of business and briefing any new employees during the
         week beginning June 10, 2002. Any time spent in the office that week
         will be counted as work and will not be a reduction of vacation time.

                  b. Employee agrees to regard and preserve as confidential all
         information obtained by him relating or pertaining to the Company's
         business, projects, products, customers, trade secrets, confidential
         information (including business and financial information), inventions,
         and to all of his activities for or on behalf of the Company, and not
         to publish or disclose any part of such information to others or use
         the same for his own purposes or the purposes of others, during the
         term of three (3) years from the Separation Date.

                  c. Employee will not solicit, or initiate any solicitation of,
         any Company employee to leave his/her employment with the Company to
         commence a relationship with Employee or any other employer for a
         period ending one (1) year following the Separation Date.

                  d. For a period of one (1) year from the date of execution of
         this Agreement, Employee will not, either directly or indirectly, (a)
         induce or attempt to induce any customer of the Company to terminate
         its relationship with the Company, (b) induce or attempt to induce any
         present customer to withdraw, curtail or cancel its relationship with
         the Company, or (c) engage in any act or activity that would interfere
         with or harm any business relationship the Company may have with any
         customer, or (d) at any time hereafter, use any name similar to the
         Company's or hold himself out to be acting on the Company's behalf
         except as expressly permitted by this Agreement.

         4. RELEASE. In exchange for the benefits described in Section 2,
Employee agrees to execute the release (the "Release") attached to this
Agreement as "Addendum A" on or promptly following the Separation Date subject
to the Company also executing such Release.

         5. ARBITRATION. Any claim, dispute, or controversy arising out of or in
any way relating to this Agreement or the alleged breach of this Agreement will
be submitted by the parties to binding arbitration in San Diego County,
California by American Arbitration Association or by a judge to be mutually
agreed upon. This Section 5 will not prevent either party from seeking
injunctive relief (or any other provisional remedy) from any court having
jurisdiction over the parties and the subject matter of their dispute relating
to Employee's obligations under Section 3 hereof.

         6. ATTORNEYS' FEES. The prevailing party will be entitled to recover
from the losing party its attorneys' fees and costs (including expert witness
fees) incurred in any arbitration, lawsuit or other proceeding brought to
enforce any right arising out of this Agreement.

         7. CONFIDENTIALITY. Each party acknowledges that such party has not
disclosed any of the terms of this Agreement to anyone other than such party's
counsel and/or Employee's spouse/domestic partner. Each party agrees, on behalf
of itself and its agents, to the extent permitted by law, not to disclose, or to
take every reasonable precaution to prevent disclosure of, any of the terms of
this Agreement or consideration for this Agreement (the "Settlement
Information") to third parties, and agrees that there will be no publicity,
directly or indirectly, concerning any Settlement Information. Each party agrees
to take every reasonable precaution to disclose Settlement Information only to
such party's attorney, accountant, tax authorities, and Employee's
spouse/domestic partner, if and only if these individuals have a reasonable and

                                       3
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justifiable need to know of such Settlement Information, provided, however, that
any person or entity to whom such disclosure is made will, prior to disclosure
and to the extent permitted by law, acknowledge the confidentiality of such
information and agree to keep such information confidential. In the event the
Company is required to file a copy of this Agreement with the U.S. Securities &
Exchange Commission, it agrees to request, to the maximum extent allowed by that
agency, the confidential treatment of the terms of this Agreement. Each party
acknowledges that the confidentiality of the terms of this Agreement is a
material inducement to such party in entering into it. Any dispute concerning
this confidentiality provision will be resolved through arbitration before the
American Arbitration Association in San Diego County, California (the
"Arbitrator") pursuant to Section 5.

         8. NON-DISPARAGEMENT; PRESS RELEASE. Employee agrees to refrain from
disparagement, criticism, defamation or slander of the Company or any of its
employees, officers, directors, agents, products or services to anyone,
including but not limited to other employees and any past, present or
prospective customers. The Company, on behalf of itself and each of its officers
and directors, agrees to maintain its neutral reference policy in regard to
Employee and refrain from disparagement, criticism, defamation and slander of
Employee to anyone, including but not limited to, other employees of the Company
and any past, present or prospective customer of the Company. The Company agrees
that no press release will be made with respect to termination of Employee's
employment with the Company and Employee and the Company shall agree to the
characterization of the termination in the Company's required disclosure to the
U.S. Securities & Exchange Commission on Form 8-K, which shall be filed on or
before June 19, 2002--but not before June 14.

         9. NO ADMISSION OF LIABILITY. The Company and Employee understand and
acknowledge that this Agreement constitutes a compromise and settlement. No
action taken by the parties hereto, or either of them, either previously or in
connection with this Agreement will be deemed or construed to be (a) an
admission of the truth or falsity of any claims or (b) an acknowledgment or
admission by a party of any fault or liability whatsoever to the other party or
to any third party.

         10. NO KNOWLEDGE OF WRONGDOING. Employee has no knowledge of any
wrongdoing involving improper or false claims against a federal or state
governmental or regulatory agency, including listing agencies or exchange or
other wrongdoing, that involves Employee or other present or former Company
employees.

         11. SUCCESSORS. The provisions of this Agreement will extend and inure
to the benefit of, and be binding upon the respective legal successors and
assigns of the Company and Employee in addition to the Company and Employee.

         12. INTEGRATION. This Agreement constitutes the entire Agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior negotiations and Agreements, whether written or oral with
the exception of Employee's obligations under any Confidentiality Agreement.

         13. NO ORAL MODIFICATION. This Agreement may not be altered or amended
except by a written document executed by Employee and the Company.

         14. GOVERNING LAW. This Agreement will in all respects be governed by
the laws of the State of California as applied to agreements entered into and to
be performed entirely within California between California residents.

         15. EFFECTIVE DATE. This Agreement is effective as of May ___, 2002,
provided that the Release, and the Company's obligations pursuant to Section 2
above, shall become effective on the tenth day after the Release has been signed
by both parties (the "Effective Date"), unless sooner revoked by Employee. If
Employee desires to revoke the Release, Employee must deliver or cause to be
delivered a written statement of revocation from Employee prior to the Effective
Date to James W. Benson at the Company.

                                       4
<PAGE>

         16. NO REPRESENTATIONS. Each party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.

         17. COUNTERPARTS. This Agreement may be executed in counterparts, and
each counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned.

         18. SEVERABILITY. In the event that any one or more of the provisions
contained herein will for any reason be held to be unenforceable in any respect
under any statute, rule or law of any state or of the United States of America,
such unenforceability will not affect any other provision of this Agreement,
but, with respect only to the jurisdiction holding the provision to be
unenforceable, this Agreement will then be construed as if such unenforceable
provision or provisions had never been contained herein.

         IN WITNESS WHEREOF, the parties have executed this Agreement at San
Diego, California on the day and year first above mentioned.

EMPLOYEE:                                             SPACEDEV, INC.:

Charles H. Lloyd                             By: /S/ James W. Benson
                                                 -------------------------------
                                                 James W. Benson

/S/ Charles H. Lloyd                         Title: Chief Executive officer
--------------------------
Signature

Date: 5/31/02                                 Date:  5/31/02
      --------------------                          ----------------------------

                                             INTEGRATED SPACE SYSTEMS, INC.

                                             By: /S/ James W. Benson
                                                 -------------------------------
                                                 James W. Benson

                                             Title:  President

                                             Date:  5/31/02
                                                   -----------------------------

                                       5
<PAGE>

                                   ADDENDUM A

         THIS GENERAL RELEASE OF CLAIMS ("Release") is between Charles H. Lloyd
("Employee") and SpaceDev, Inc., a Colorado corporation and Integrated Space
Systems, Inc., a California corporation (collectively, the "Company").

         1. PAYMENT OF SEPARATION BENEFITS. The Company has agreed that if
Employee signs this Release it will provide Employee the benefits (the
"Separation Benefits") set forth in Employee's Confidential Separation Agreement
and General Release of Claims dated May 31, 2002 (the "Separation Agreement").
Employee understands that he is not entitled to these Separation Benefits unless
he signs this Release.

         2. RELEASE.

                  (a) Employee and the Company, on behalf of themselves and
         their respective heirs, executors, successors and assigns, hereby fully
         and forever release each other and their respective heirs, executors,
         successors, agents, officers and directors, from and agree not to sue
         concerning, any and all claims, actions, obligations, duties, causes of
         action, whether now known or unknown, suspected or unsuspected, that
         either of them may possess based upon or arising out of any matter,
         cause, fact, thing, act, or omission whatsoever occurring or existing
         at any time prior to and including the date hereof (collectively, the
         "Released Matters"), including without limitation,

                           (1) any and all claims relating to or arising from
                  employee's employment with the Company and the termination of
                  either such relationship;

                           (2) any and all claims relating to, or arising from,
                  Employee's right to purchase, or actual purchase of, shares of
                  stock of the Company, including, without limitation, any
                  claims of fraud, misrepresentation, breach of fiduciary duty,
                  breach of duty under applicable state corporate law, and
                  securities fraud under any state or federal law;

                           (3) any and all claims for wrongful discharge of
                  employment; termination in violation of public policy;
                  discrimination; breach of contract, both express and implied;
                  breach of a covenant of good faith and fair dealing, both
                  express and implied; promissory estoppel; negligent or
                  intentional infliction of emotional distress; negligent or
                  intentional misrepresentation; negligent or intentional
                  interference with contract or prospective economic advantage;
                  unfair business practices; defamation; libel; slander;
                  negligence; personal injury; assault; battery; invasion of
                  privacy; false imprisonment; and conversion;

                           (4) any and all claims for violation of any federal,
                  state or municipal statute, including, but not limited to,
                  Title VII of the Civil Rights Act of 1964, the Civil Rights
                  Act of 1991, the Age Discrimination in Employment Act of 1967,
                  the Americans with Disabilities Act of 1990, the Fair Labor
                  Standards Act, the Employee Retirement Income Security Act of
                  1974, the Worker Adjustment and Retraining Notification Act,
                  Older Workers Benefit Protection Act, the California Fair
                  Employment and Housing Act, and the California Labor Code
                  section 201, et. seq.;

                           (5) any and all claims for violation of the federal,
                  or any state, constitution;

                           (6) any and all claims arising out of any other laws
                  and regulations relating to employment or employment
                  discrimination;

                                       1
<PAGE>

                           (7) any and all claims for attorneys' fees and costs;
                  and

                           (8) any and all claims either the Company or Employee
                  may have against the other for any acts by either occurring at
                  any time prior to the execution of this Release.

                  Each of the parties agrees that the foregoing enumeration of
         claims released is illustrative, and the claims hereby released are in
         no way limited by the above recitation of specific claims, it being the
         intent of the parties to fully and completely release all claims
         whatsoever in any way relating to the Employee's employment with the
         Company and to the termination of such employment. This release does
         not extend to any obligations incurred under the Separation Agreement,
         nor to any claims arising from Employee's willful misconduct in his
         official capacities for the Company prior to the date of this
         Agreement.

                  (b) Employee represents that he has no lawsuits, claims or
         actions pending in his name, or on behalf of any other person or
         entity, against the Company or any other person or entity referred to
         herein. Employee also represents that he does not intend to bring any
         claims on his own behalf against the Company or any other person or
         entity referred to herein.

                  (c) Employee and the Company acknowledge that they have been
         advised by legal counsel and are familiar with Section 1542 of the
         Civil Code of the State of California, which states:

                  A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
                  DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
                  EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
                  MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

                  The Company and Employee each expressly waives any right or
         benefit which they have or may have under Section 1542 of the
         California Civil Code or any similar provision of the statutory or
         non-statutory law of any other jurisdiction. The parties acknowledge
         that in the future they may discover claims or facts in addition to or
         different from those that they now know or believe to exist with
         respect to the subject matter of this Release, and that each of
         Employee and the Company intends to fully, finally, and forever settle
         all of the Released matters in exchange for the Separation Benefits.
         This Release will remain in effect as a full and complete release
         notwithstanding the discovery or existence of any additional claims or
         facts.

         3. ACKNOWLEDGMENT OF WAIVER OF CLAIMS UNDER ADEA. Employee acknowledges
that Employee is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Employee and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the Effective Date of this Release, Employee acknowledges that the
consideration given for this Release in addition to anything of value to which
Employee was already entitled. Employee further acknowledges that he has been
advised by this writing that:

                  (a) He should consult with an attorney prior to executing this
         Release;

                  (b) He has had at least twenty-one (21) days within which to
         consider this Release, although he may accept the terms of this Release
         at any time within those 21 days;

                                       2
<PAGE>

                  (c) He has seven (7) days following the execution of this
         Release by the parties to revoke this Release; and

                  (d) This Release will not be effective until the revocation
         period has expired.

         4. VOLUNTARY EXECUTION OF RELEASE. This Release is executed voluntarily
and without any duress or undue influence on the part or behalf of the parties
hereto, with the full intent of releasing all claims. The parties acknowledge
that:

                  (a) they have read this Release;

                  (b) they have been represented in the preparation,
         negotiation, and execution of this Release by legal counsel of their
         own choice or that they have voluntarily declined to seek such counsel;

                  (c) they understand the terms and consequences of this Release
         and of the releases it contains;

                  (d) they are fully aware of the legal and binding effect of
         this Release.

EMPLOYEE HAS CONSULTED WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE AND
UNDERSTANDS THAT, BY SIGNING THIS RELEASE, HE IS GIVING UP ANY LEGAL CLAIMS HE
HAS AGAINST THE COMPANY. EMPLOYEE FURTHER ACKNOWLEDGES THAT HE DOES SO
KNOWINGLY, WILLINGLY, AND VOLUNTARILY IN EXCHANGE FOR THE BENEFITS DESCRIBED IN
THE SEPARATION AGREEMENT.

CHARLES H. LLOYD                            SPACEDEV, INC.

/s/ Charles H. Lloyd                        By: /s/ James W. Benson
---------------------------------               -------------------------------
Signature                                        James W. Benson, CEO

Date: 5/31/02                               Date: 5/31/02
      ---------------------------                 ------------------------------

                                            INTEGRATED SPACE SYSTEMS, INC.

                                            By: /s/ James W. Benson
                                                --------------------------------
                                                James W. Benson, President

                                            Date: 5/31/02
                                                  ------------------------------

                                       3

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