Document:

Unassociated Document

    

      

        Exhibit
          10.2

        Mushakov
          Option Agreement

    

    NOVASTAR
      RESOURCES LTD.

    

    SECOND
      AMENDED AND RESTATED 2006 STOCK PLAN

    

    NOTICE
      OF GRANT

    

    Capitalized
      but otherwise undefined terms in this Notice of Grant and the attached Stock
      Option Agreement shall have the same defined meanings as in the Second Amended
      and Restated 2006 Stock Plan (the “Plan”). 

    

    
      	
              Name:
                ANDREY
                MUSHAKOV

            	
              Address:
                c/o
                Novastar Resources Ltd.,

            
	 	
              8300
                Greensboro Drive, Suite 800, 

            
	 	
              McLean,
                VA 22102

            

    

    

    You
      have
      been granted an option (the “Option”) to purchase Common Stock of the
      Corporation, subject to the terms and conditions of the Plan and the attached
      Stock Option Agreement, as follows:

    

    
      	
              Date
                of Grant:

            	
              July
                27, 2006

            
	 	 
	
              Vesting
                Commencement Date:

            	
              July
                27, 2006

            
	 	 
	
              Option
                Price per Share:

            	
              $0.49

            
	 	 
	
              Total
                Number of Shares Granted:

            	
              2,250,000

            
	 	 
	
              Total
                Option Price:

            	
              $1,102,500

            
	 	 
	
              Type
                of Option:

            	
              Nonqualified
                Stock Option

            
	 	 
	
              Term/Expiration
                Date:

            	
              Ten
                (10) years after Date of Grant

            

    

    

    Vesting
      Schedule:

    

    The
      Option shall vest, in whole or in part, in accordance with the following
      schedule:

     

    The
      Option shall vest with respect to 234,375 shares on the Vesting Commencement
      Date and the remaining 2,015,625 shares shall thereafter vest in equal monthly
      installments of 46,875 shares on each one month anniversary of the Vesting
      Commencement Date until all shares underlying the Option have vested. The Option
      shall immediately and automatically vest in full upon a Change of Control,
      upon
      the termination of the Optionee’s employment by the Company without Cause or
      upon cessation by the Optionee of his employment with the Company for Good
      Reason. For purposes of this Notice of Grant, the terms “Change of Control”,
“Cause” and “Good Reason” shall have the meanings given for them in the
      Employment Agreement, between the Optionee and the Company, of even date
      herewith.

     

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

        
        

      

    

    NOVASTAR
      RESOURCES LTD.

    

    SECOND
      AMENDED AND RESTATED 2006 STOCK PLAN

    

    STOCK
      OPTION AGREEMENT

    

     

    This
      STOCK
      OPTION AGREEMENT (“Agreement”),
      dated as of the 27th day of July, 2006 is made by and between NOVASTAR RESOURCES
      LTD., a Nevada corporation (the “Corporation”), and ANDREY MUSHAKOV (the
“Optionee,” which term as used herein shall be deemed to include any successor
      to the Optionee by will or by the laws of descent and distribution, unless
      the
      context shall otherwise require).

     

    BACKGROUND

     

    Pursuant
      to the Corporation’s Second Amended and Restated 2006 Stock Plan (the “Plan”),
      the Corporation, acting through the Committee of the Board of Directors (if
      a
      committee has been formed to administer the Plan) or its entire Board of
      Directors (if no such committee has been formed) responsible for administering
      the Plan (in either case, referred to herein as the “Committee”), approved the
      issuance to the Optionee, effective as of the date set forth above, of a stock
      option to purchase shares of Common Stock of the Corporation at the price (the
      “Option Price”) set forth in the attached Notice of Grant (which is expressly
      incorporated herein and made a part hereof, the “Notice of Grant”), upon the
      terms and conditions hereinafter set forth.

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual premises and undertakings hereinafter set forth,
      the
      parties hereto agree as follows:

     

    1. Option;
      Option Price.
      On
      behalf of the Corporation, the Committee hereby grants to the Optionee the
      option (the “Option”) to purchase, subject to the terms and conditions of this
      Agreement and the Plan (which is incorporated by reference herein and which
      in
      all cases shall control in the event of any conflict with the terms, definitions
      and provisions of this Agreement), that number of shares of Common Stock of
      the
      Corporation set forth in the Notice of Grant, at an exercise price per share
      equal to the Option Price as is set forth in the Notice of Grant (the “Optioned
      Shares”). If designated in the Notice of Grant as an “incentive stock option,”
the Option is intended to qualify for Federal income tax purposes as an
“incentive stock option” within the meaning of Section 422 of the Code. A copy
      of the Plan as in effect on the date hereof has been supplied to the Optionee,
      and the Optionee hereby acknowledges receipt thereof.

     

    2. Term.
      The term
      (the “Option Term”) of the Option shall commence on the date of this Agreement
      and shall expire on the Expiration Date set forth in the Notice of Grant unless
      such Option shall theretofore have been terminated in accordance with the terms
      of the Notice of Grant, this Agreement or of the Plan.

     

    3. Time
      of Exercise.
      

     

    (a) Unless
      accelerated in the discretion of the Committee or as otherwise provided herein,
      the Option shall become exercisable during its term in accordance with the
      Vesting Schedule set out in the Notice of Grant. Subject to the provisions
      of
      Sections 5 and 8 hereof, shares as to which the Option becomes exercisable
      pursuant to the foregoing provisions may be purchased at any time thereafter
      prior to the expiration or termination of the Option.

     

    
      
         

      

      
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    (b) Anything
      contained in this Agreement to the contrary notwithstanding, to the extent
      the
      Option is intended to be an Incentive Stock Option, the Option shall not be
      exercisable as an Incentive Stock Option, and shall be treated as a
      Non-Statutory Option, to the extent that the aggregate Fair Market Value on
      the
      date hereof of all stock with respect to which Incentive Stock Options are
      exercisable for the first time by the Optionee during any calendar year (under
      the Plan and all other plans of the Corporation, its parent and its
      subsidiaries, if any) exceeds $100,000.

     

    4. Termination
      of Option.

     

    (a) 
      The
      Optionee may exercise the Option (but only to the extent the Option was
      exercisable at the time of termination of the Optionee’s employment with the
      Corporation, its parent or any of its subsidiaries) at any time within three
      (3)
      months following the termination of the Optionee’s employment with the
      Corporation, its parent or any of its subsidiaries, but not later than the
      scheduled expiration date. If the termination of the Optionee’s employment is
      for cause or is otherwise attributable to a breach by the Optionee of an
      employment, non-competition, non-disclosure or other material agreement, the
      Option shall expire immediately upon such termination. If the Optionee is a
      natural person who dies while in employment with the Corporation, its parent
      or
      any of its subsidiaries, this option may be exercised, to the extent of the
      number of shares with respect to which the Optionee could have exercised it
      on
      the date of his death, by his estate, personal representative or beneficiary
      to
      whom this option has been assigned pursuant to Section 9 of the Plan, at any
      time within the twelve (12) month period following the date of death. If the
      Optionee is a natural person whose employment with the Corporation, its parent
      or any of its subsidiaries is terminated by reason of his disability, this
      Option may be exercised, to the extent of the number of shares with respect
      to
      which the Optionee could have exercised it on the date the employment was
      terminated, at any time within the twelve (12) month period following the date
      of such termination, but not later than the scheduled expiration date. At the
      expiration of such three (3) or twelve (12) month period or the scheduled
      expiration date, whichever is the earlier, this Option shall terminate and
      the
      only rights hereunder shall be those as to which the Option was properly
      exercised before such termination.

     

    (b) Anything
      contained herein to the contrary notwithstanding, the Option shall not be
      affected by any change of duties or position of the Optionee (including a
      transfer to or from the Corporation, its parent or any of its subsidiaries)
      so
      long as the Optionee continues in a Business Relationship with the Corporation,
      its parent or any of its subsidiaries.

     

    5. Procedure
      for Exercise.

     

    (a) The
      Option may be exercised, from time to time, in whole or in part (but for the
      purchase of whole shares only), by delivery of a written notice in the form
      attached as Exhibit
      A
      hereto
      (the “Notice”) from the Optionee to the Secretary of the Corporation, which
      Notice shall: 

     

    
      
         

      

      
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    (i) state
      that the Optionee elects to exercise the Option;

     

    (ii) state
      the
      number of shares with respect to which the Option is being exercised (the
“Optioned Shares”);

     

    (iii) state
      the
      method of payment for the Optioned Shares pursuant to Section 5(b);

     

    (iv) state
      the
      date upon which the Optionee desires to consummate the purchase of the Optioned
      Shares (which date must be prior to the termination of such Option and no later
      than 30 days from the delivery of such Notice);

     

    (v) include
      any representations of the Optionee required under Section 8(b); 

     

    (vi) if
      the
      Option shall be exercised in accordance with Section 9 of the Plan by any person
      other than the Optionee, include evidence to the satisfaction of the Committee
      of the right of such person to exercise the Option; and

     

    (b) Payment
      of the Option Price for the Optioned Shares shall be made either (i)
      by
      delivery of cash or a check to the order of the Corporation in an amount equal
      to the Option Price, (ii) if approved by the Committee, by delivery to the
      Corporation of shares of Common Stock of the Corporation having a Fair Market
      Value on the date of exercise equal in amount to the Option Price of the options
      being exercised, (iii) by any other means which the Board of Directors
      determines are consistent with the purpose of the Plan and with applicable
      laws
      and regulations (including, without limitation, the provisions of Rule 16b-3
      and
      Regulation T promulgated by the Federal Reserve Board), or (iv) by any
      combination of such methods of payment. Notwithstanding
      any provisions herein to the contrary, if the Fair Market Value of one share
      of
      Common Stock of the Corporation is greater than the Option Price (at the date
      of
      calculation as set forth below), in lieu of paying the Option Price in cash,
      the
      Optionee may elect to receive shares equal to the value (as determined below)
      of
      the Optioned Shares by delivering notice of such election to the Corporation
      in
      which event the Corporation shall issue to the Optionee a number of shares
      of
      Common Stock computed using the following formula:

     

    X
      =
Y(A-B)

    A
      

     

    
      	
            	 	Where	
              X

            	
              =

            	
              the
                number of shares of Common Stock to be issued to the
                Optionee

            

    

     

    
      	 	 	 	
              Y

            	
              =

            	
              the
                number of Optioned Shares

            

    

     

    
      	 	 	 	
              A

            	
              =

            	
              the
                Fair Market Value of one share of Common Stock (at the date of such
                calculation)

            

    

     

    
      
        	 	 	 	
                B

              	
                =

              	
                Option
                  Price (as adjusted to the date of such
                  calculation)

              

      

       

    

     

    (c) The
      Corporation shall issue a stock certificate in the name of the Optionee (or
      such
      other person exercising the Option in accordance with the provisions of Section
      9 of the Plan) for the Optioned Shares as soon as practicable after receipt
      of
      the Notice and payment of the aggregate Option Price for such
      shares.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

     

    6. No
      Rights as a Stockholder.
      The
      Optionee shall not have any privileges of a stockholder of the Corporation
      with
      respect to any Optioned Shares until the date of issuance of a stock certificate
      pursuant to Section 5(c).

     

    7.  Adjustments. The
      Plan
      contains provisions covering the treatment of options in a number of
      contingencies such as stock splits and mergers. Provisions in the Plan for
      adjustment with respect to stock subject to options and the related provisions
      with respect to successors to the business of the Corporation are hereby made
      applicable hereunder and are incorporated herein by reference. In general,
      the
      Optionee should not assume that options would survive the acquisition of the
      Corporation.

     

    8. Additional
      Provisions Related to Exercise.
      

     

    (a) The
      Option shall be exercisable only on such date or dates and during such period
      and for such number of shares of Common Stock as are set forth in this
      Agreement.

     

    (b) To
      exercise the Option, the Optionee shall follow the procedures set forth in
      Section 5 hereof. Upon the exercise of the Option at a time when there is not
      in
      effect a registration statement under the Securities Act of 1933, as amended
      (the “Securities Act”), relating to the shares of Common Stock issuable upon
      exercise of the Option, the Committee in its discretion may, as a condition
      to
      the exercise of the Option, require the Optionee (i) to execute an Investment
      Representation Statement substantially in the form set forth in Exhibit
      B
      hereto
      and (ii) to make such other representations and warranties as are deemed
      appropriate by counsel to the Corporation. 

     

    (c) Stock
      certificates representing shares of Common Stock acquired upon the exercise
      of
      Options that have not been registered under the Securities Act shall, if
      required by the Committee, bear an appropriate restrictive legend referring
      to
      the Securities Act. No shares of Common Stock shall be issued and delivered
      upon
      the exercise of the Option unless and until the Corporation and/or the Optionee
      shall have complied with all applicable Federal or state registration, listing
      and/or qualification requirements and all other requirements of law or of any
      regulatory agencies having jurisdiction.

     

    9.  No
      Evidence of Employment or Service.
      Nothing
      contained in the Plan or this Agreement shall confer upon the Optionee any
      right
      to continue in employment with the Corporation, its parent or any of its
      subsidiaries or interfere in any way with the right of the Corporation, its
      parent or its subsidiaries (subject to the terms of any separate agreement
      to
      the contrary) to terminate the Optionee’s employment or to increase or decrease
      the Optionee’s compensation at any time.

     

    
      
         

      

      
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    10. Restriction
      on Transfer.
      The
      Option may not be transferred, pledged, assigned, hypothecated or otherwise
      disposed of in any way by the Optionee, except by will or by the laws of descent
      and distribution, and may be exercised during the lifetime of the Optionee
      only
      by the Optionee. If the Optionee dies, the Option shall thereafter be
      exercisable, during the period specified in Section 4, by his executors or
      administrators to the full extent to which the Option was exercisable by the
      Optionee at the time of his death. The Option shall not be subject to execution,
      attachment or similar process. Any attempted assignment, transfer, pledge,
      hypothecation or other disposition of the Option contrary to the provisions
      hereof, and the levy of any execution, attachment or similar process upon the
      Option, shall be null and void and without effect. The words “transfer” and
“dispose” include without limitation the making of any sale, exchange,
      assignment, gift, security interest, pledge or other encumbrance, or any
      contract therefor, any voting trust or other agreement or arrangement with
      respect to the transfer of any interest, beneficial or otherwise, in the Option,
      the creation of any other claim thereto or any other transfer or disposition
      whatsoever, whether voluntary or involuntary, affecting the right, title,
      interest or possession with respect to the Option.

     

    11. Specific
      Performance.
      Optionee expressly agrees that the Corporation will be irreparably damaged
      if
      the provisions of this Agreement and the Plan are not specifically enforced.
      Upon a breach or threatened breach of the terms, covenants and/or conditions
      of
      this Agreement or the Plan by the Optionee, the Corporation shall, in addition
      to all other remedies, be entitled to a temporary or permanent injunction,
      without showing any actual damage, and/or decree for specific performance,
      in
      accordance with the provisions hereof and thereof. The Board of Directors shall
      have the power to determine what constitutes a breach or threatened breach
      of
      this Agreement or the Plan. Any such determinations shall be final and
      conclusive and binding upon the Optionee.

     

    12. Disqualifying
      Dispositions.
      To the
      extent the Option is intended to be an Incentive Stock Option, and if the
      Optioned Shares are disposed of within two years following the date of this
      Agreement or one year following the issuance thereof to the Optionee (a
“Disqualifying Disposition”), the Optionee shall, immediately prior to such
      Disqualifying Disposition, notify the Corporation in writing of the date and
      terms of such Disqualifying Disposition and provide such other information
      regarding the Disqualifying Disposition as the Corporation may reasonably
      require.

     

    13. Notices.
      All
      notices or other communications which are required or permitted hereunder shall
      be in writing and sufficient if (i)
      personally delivered or sent by telecopy, (ii)
      sent by
      nationally-recognized overnight courier or (iii)
      sent by
      registered or certified mail, postage prepaid, return receipt requested,
      addressed as follows:

     

    if
      to the
      Optionee, to the address (or telecopy number) set forth on the Notice of Grant;
      and

    

    if
      to the
      Corporation, to its principal executive office as specified in any report filed
      by the Corporation with the Securities and Exchange Commission or to such
      address as the Corporation may have specified to the Optionee in writing,
      Attention: Corporate Secretary.

     

    or
      to
      such other address as the party to whom notice is to be given may have furnished
      to the other party in writing in accordance herewith. Any such communication
      shall be deemed to have been given (i) when delivered, if personally delivered,
      or when telecopied, if telecopied, (ii) on the first Business Day (as
      hereinafter defined) after dispatch, if sent by nationally-recognized overnight
      courier and (iii) on the third Business Day following the date on which the
      piece of mail containing such communication is posted, if sent by mail. As
      used
      herein, “Business Day” means a day that is not a Saturday, Sunday or a day on
      which banking institutions in the city to which the notice or communication
      is
      to be sent are not required to be open. 

     

    
      
         

      

      
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    14. No
      Waiver.
      No
      waiver of any breach or condition of this Agreement shall be deemed to be a
      waiver of any other or subsequent breach or condition, whether of like or
      different nature.

     

    15. Optionee
      Undertaking.
      The
      Optionee hereby agrees to take whatever additional actions and execute whatever
      additional documents the Corporation may in its reasonable judgment deem
      necessary or advisable in order to carry out or effect one or more of the
      obligations or restrictions imposed on the Optionee pursuant to the express
      provisions of this Agreement.

     

    16. Modification
      of Rights.
      The
      rights of the Optionee are subject to modification and termination in certain
      events as provided in this Agreement and the Plan.

     

    17. Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of Nevada applicable to contracts made and to be wholly performed
      therein, without giving effect to its conflicts of laws principles.

     

    18. Counterparts;
      Facsimile Execution.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed to be an original, but all of which together shall constitute one and
      the
      same instrument. Facsimile execution and delivery of this Agreement is legal,
      valid and binding execution and delivery for all purposes.

     

    19. Entire
      Agreement.
      This
      Agreement (including the Notice of Grant) and the Plan, and, upon execution,
      the
      Notice and Investment Representation Statement, constitute the entire agreement
      between the parties with respect to the subject matter hereof, and supersede
      all
      previously written or oral negotiations, commitments, representations and
      agreements with respect thereto.

     

    20. Severability.
      In the
      event one or more of the provisions of this Agreement should, for any reason,
      be
      held to be invalid, illegal or unenforceable in any respect, such invalidity,
      illegality or unenforceability shall not affect any other provisions of this
      Agreement, and this Agreement shall be construed as if such invalid, illegal
      or
      unenforceable provision had never been contained herein. 

     

    21. WAIVER
      OF JURY TRIAL.
      THE
      OPTIONEE HEREBY EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY
      JURY
      IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
      COUNTERCLAIM THEREIN.

     

    

    [Signature
      Page Follows]

    

    
      
         

      

      
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    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Option Agreement as of the date first written
      above.

    

    
      	 	
              NOVASTAR
                RESOURCES LTD.

            
	
               

            	 
	 	 
	 	
              By:
                /s/ Seth Grae

            
	 	
              Seth
                Grae

            
	 	
              President
                and Chief Executive Officer

            
	 	 
	 	 
	 	 
	 	
              OPTIONEE:

            
	 	 
	 	 
	 	
              /s/
                Andrey Mushakov

            
	 	
              Andrey
                Mushakov

            

    

    

    [Signature
      Page to Option Agreement]

    
      
         

      

      
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    NOTE
      RE: EXHIBITS

    

    

    EXHIBITS
      A AND B ARE TO BE SIGNED

    

    WHEN
      OPTIONS ARE EXERCISED,

    

    NOT
      WHEN OPTION AGREEMENT IS SIGNED.

    

    

    
      
         

      

      
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    EXHIBIT
      A

    

    NOVASTAR
      RESOURCES LTD.

    

    AMENDED
      AND RESTATED 2006 STOCK PLAN

    

    EXERCISE
      NOTICE

    

    Novastar
      Resources Ltd.

    Attention:
      Chief Executive Officer

    

    1. Exercise
      of Option.
      Effective as of today, _______________________, 20__ , the undersigned (the
      “Optionee”) hereby elects to exercise the Optionee’s option to purchase
      ________________ shares of the Common Stock (the “Shares”) of Novastar Resources
      Ltd. (the “Corporation”) under and pursuant to the Amended and Restated 2006
      Stock Plan (the “Plan”) and the Stock Option Agreement dated July 27, 2006 (the
“Stock Option Agreement”), with the purchase of the Shares to be consummated on
      ______________ ___, ____ (the “Effective Date”), which date is prior to the
      termination of the Option and no later than 30 days from the date of delivery
      of
      this Notice.

    

    2. Representations
      of the Optionee.
      The
      Optionee acknowledges that the Optionee has received, read and understood the
      Plan and the Stock Option Agreement and agrees to abide by and be bound by
      their
      terms and conditions. 

    

    3. Rights
      as Shareholder; Shares Subject to Stockholders Agreement.
      Until
      the stock certificate evidencing such Shares is issued (as evidenced by the
      appropriate entry on the books of the Corporation or of a duly authorized
      transfer agent of the Corporation), no right to vote or receive dividends or
      any
      other rights as a stockholder shall exist with respect to the Shares,
      notwithstanding the exercise of the Option. The Corporation shall issue (or
      cause to be issued) such stock certificate promptly after the Effective Date,
      provided the applicable price has been paid and the required documents have
      been
      received. No adjustment will be made for a dividend or other right for which
      the
      record date is prior to the date the stock certificate is issued, except as
      otherwise provided in the Plan. Unless waived by the Corporation in writing,
      the
      Shares shall automatically become subject to the terms and conditions of any
      stockholders agreement or similar agreement to which a majority of the
      outstanding capital stock of the Corporation is subject at the time of exercise
      and the Optionee shall sign as a condition to the issuance of the Shares such
      joinder agreement, signature pages or other documents in order to evidence
      the
      Optionee’s agreement to be so bound.

    

    4. Tax
      Consultation.
      The
      Optionee understands that the Optionee may suffer adverse tax consequences
      as a
      result of the Optionee’s purchase or disposition of the Shares. The Optionee
      represents that the Optionee has consulted with any tax consultants the Optionee
      deems advisable in connection with the purchase or disposition of the Shares
      and
      that the Optionee is not relying on the Corporation for any tax
      advice.

    

    5. Successors
      and Assigns.
      The
      Corporation may assign any of its rights under the Stock Option Agreement to
      single or multiple assignees (who may be stockholders, officers, directors,
      employees or consultants of the Corporation), and this Agreement shall inure
      to
      the benefit of the successors and assigns of the Corporation. Subject to the
      restrictions on transfer set forth in the Stock Option Agreement, this Agreement
      shall be binding upon the Optionee and his or her heirs, executors,
      administrators, successors and assigns.

    
      
         

      

      
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    6. Interpretation.
      Any
      dispute regarding the interpretations of this Agreement shall be submitted
      by
      the Optionee or by the Corporation forthwith to the Committee, which shall
      review such dispute at its next regular meeting. The resolution of such a
      dispute by the Committee shall be final and binding on the Corporation and
      on
      the Optionee.

    

    7. Governing
      Laws: Severability.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of New York applicable to contracts made and to be wholly performed
      therein, without giving effect to its conflicts of laws principles. Should
      any
      provision of this Agreement be determined by a court of law to be illegal or
      unenforceable, the other provisions shall nevertheless remain effective and
      shall remain enforceable.

    

    8. Notices.
      Any
      notice required or permitted hereunder shall be given in writing and shall
      be
      deemed effectively given if given in the manner specified in the Stock Option
      Agreement.

    

    9. Further
      Instruments.
      The
      parties agree to execute such further instruments and to take such further
      action as may be reasonably necessary to carry out the purposes and intent
      of
      this Agreement.

    

    10. Delivery
      of Payment.
      The
      Optionee herewith delivers to the Corporation the full Option Price for the
      Shares.

    

    11. Entire
      Agreement.
      The
      Plan, the Notice of Grant, and the Stock Option Agreement are incorporated
      herein by reference. This Agreement, the Plan, the Notice of Grant, the Stock
      Option Agreement, and the Investment Representation Statement constitute the
      entire agreement of the parties and supersede in their entirety all prior
      undertakings and agreements of the Corporation and the Optionee with respect
      to
      the subject matter hereof.

    

    
      	
              Submitted
                by:

            	
              Accepted
                by:

            
	 	 
	
              OPTIONEE:

            	
              NOVASTAR
                RESOURCES LTD.

            
	 	 
	 	 
	 	
              By:_____________________________

            
	 	 
	
              ___________________________

            	
              Its:______________________________

            

    

    ANDREY
      MUSHAKOV

    

    

    

    
      
         

      

      
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    EXHIBIT
      B

    

    NOVASTAR
      RESOURCES LTD.

    

    AMENDED
      AND RESTATED 2006 STOCK PLAN

    

    

    INVESTMENT
      REPRESENTATION STATEMENT

    

    
      	 	 	 
	
              OPTIONEE

            	
              :

            	
              ___________________________________

            
	 	 	 
	
              CORPORATION

            	
              :

            	
              NOVASTAR
                RESOURCES LTD.

            
	 	 	 
	
              SECURITY

            	
              :

            	
              Common
                Stock

            
	 	 	 
	
              AMOUNT

            	
              :

            	
              ___________________________________

            
	 	 	 
	
              DATE

            	
              :

            	
              ___________________________________

            

    

    

    In
      connection with the purchase of the above-listed Securities, the undersigned
      Optionee represents to the Corporation the following:

    

    (a) The
      Optionee is aware of the Corporation’s business affairs and financial condition
      and has acquired sufficient information about the Corporation to reach an
      informed and knowledgeable decision to acquire the Securities. The Optionee
      is
      acquiring these Securities for investment for the Optionee’s own account only
      and not with a view to, or for resale in connection with, a “distribution”
thereof within the meaning of the Securities Act of 1933, as amended (the
“Securities Act”).

    

    (b) The
      Optionee acknowledges and understands that the Securities constitute “restricted
      securities” under the Securities Act and have not been registered under the
      Securities Act in reliance upon a specific exemption therefrom, which exemption
      depends upon, among other things, the bona fide nature of the Optionee’s
      investment intent as expressed herein. In this connection, the Optionee
      understands that, in the view of the Securities and Exchange Commission, the
      statutory basis for such exemption may be unavailable if the Optionee’s
      representation was predicated solely upon a present intention to hold these
      Securities for the minimum capital gains period specified under tax statutes,
      for a deferred sale, for or until an increase or decrease in the market price
      of
      the Securities, or for a period of one year or any other fixed period in the
      future. The Optionee further understands that the Securities must be held
      indefinitely unless they are subsequently registered under the Securities Act
      or
      an exemption from such registration is available. The Optionee further
      acknowledges and understands that the Corporation is under no obligation to
      register the Securities. The Optionee understands that the certificate
      evidencing the Securities will be imprinted with a legend which prohibits the
      transfer of the Securities unless they are registered or such registration
      is
      not required in the opinion of counsel satisfactory to the Corporation and
      other
      legends required under the applicable state or federal securities
      laws.

    

    

    Signature
      of Optionee: _____________________________

    ANDREY
      MUSHAKOV

    Date:__________________

    

    
      
         

      

      
        12Unassociated Document

    

      Exhibit
        10.3

      Graham
        Employment Agreement

    

     

    EMPLOYMENT
      AGREEMENT

    

    EMPLOYMENT
      AGREEMENT, dated as of July 27, 2006 (this “Agreement”), between NOVASTAR
      RESOURCES LTD., a Nevada corporation (the “Company”), and THOMAS GRAHAM, JR., an
      individual (the “Executive”).

    

     

    BACKGROUND

    

    The
      Company wishes to secure the services of the Executive as the Chairman of the
      Board of Directors for the Company (and to serve as Corporate Secretary until
      this position is filled permanently with a suitable candidate) upon the terms
      and conditions hereinafter set forth, and the Executive wishes to render such
      services to the Company upon the terms and conditions hereinafter set forth.
      

    

     

    AGREEMENT

    

    NOW,
      THEREFORE, in consideration of the foregoing and the mutual covenants herein
      contained and for other good and valuable consideration, the receipt and
      adequacy of which are hereby acknowledged, the parties hereto, intending to
      be
      legally bound, agree as follows:

     

    1.  Employment
      by the Company.
      The
      Company agrees to employ the Executive as Chairman of the Board of Directors
      (and to serve as Corporate Secretary until this position is filled permanently
      with a suitable candidate) and the Executive accepts such employment. The
      Executives’ responsibilities will be those customary duties for Executives at
      similar companies. The Executive shall be employed on a part-time basis working
      on average approximately three full days per week (24 hours per week).

     

    2.  Term
      of
      Employment. The term of this Employment Agreement (the "Term") shall be for
      the
      initial period commencing on the date hereof and ending on the first anniversary
      of the date thereof (provided that the provisions of Section 5 hereof shall
      survive any such termination), unless the Executive is earlier terminated as
      provided in Section 4 hereof. The Term of this Agreement shall automatically
      be
      extended for additional one year periods following the expiration of the initial
      Term unless either party notifies the other party in writing that it does not
      want to renew this Agreement within 30 days prior to the expiration of the
      initial Term or any renewal Term.

     

    3.  Compensation.
      As full compensation for all services to be rendered by the Executive to the
      Company and/or its Subsidiaries and/or Affiliates in all capacities during
      the
      Term, the Executive shall receive the following compensation and
      benefits:

     

    3.1  Salary.
      Beginning as of April 2, 2006, an annual base salary of $130,000 (the "Base
      Salary") payable not less frequently than monthly or at more frequent intervals
      in accordance with the then customary payroll practices of the Company. The
      Board of Directors of the Company shall review the Executive’s performance on an
      annual basis and shall suggest increases (but not decreases) to the Executive’s
      Base Salary as the Board of Directors of the Company in its sole discretion
      deems appropriate. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.2  Equity
      Participation.
      

     

    (a)  The
      Company shall grant to the Executive stock options for the purchase of 1,500,000
      shares of the Company’s Common Stock. The Option’s exercise price will be equal
      to the fair market value of the Company’s Common Stock on
      the
      date that the Employment Agreement is entered into. The options shall vest
      in
      equal monthly installments over a three-year period. If the Employee is
      terminated without cause, then the options shall vest immediately.

     

    3.3  Participation
      in Employee Benefit Plans; Other Benefits.
      The
      Executive shall not be permitted during the Term to participate in employee
      benefit plans now or hereafter maintained by or on behalf of the
      Company.

     

    3.4  Vacation.
      The
      Executive shall be entitled to four (4) weeks of paid vacation time per year
      which shall accrue monthly on a pro-rata basis. 

     

    3.5  Expenses.
      The
      Company shall pay or reimburse the Executive for all reasonable and necessary
      expenses actually incurred or paid by the Executive during the Term in the
      performance of the Executive's duties under this Agreement, upon submission
      and
      approval of expense statements, vouchers or other supporting information in
      accordance with the then customary practices of the Company.

     

    3.6  Withholding
      of Taxes.
      The
      Company may withhold from any benefits payable under this Agreement all federal,
      state, city and other taxes as shall be required pursuant to any law or
      governmental regulation or ruling.

     

    4.  Termination.

     

    4.1  Termination
      upon Death.
      If the
      Executive dies during the Term, this Agreement shall terminate as of the date
      of
      his death.

     

    4.2  Termination
      upon Disability.
      If
      during the Term the Executive becomes physically or mentally disabled, whether
      totally or partially, so that the Executive is unable to perform his essential
      job functions hereunder for a period aggregating 180 days during any
      twelve-month period, and it is determined by a physician acceptable to both
      the
      Company and the Executive that, by reason of such physical or mental disability,
      the Executive shall be unable to perform the essential job functions required
      of
      him hereunder for such period or periods, the Company may, by written notice
      to
      the Executive, terminate this Agreement, in which event the Term shall terminate
      10 days after the date upon which the Company shall have given notice to the
      Executive of its intention to terminate this Agreement because of the
      disability. The Executive shall have no right to receive any compensation or
      benefit under this Employment Agreement following the termination of this
      Employment Agreement as set forth above due to disability. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    4.3  Termination
      for Cause.
      The
      Company may at any time by written notice to the Executive terminate this
      Agreement immediately and the Executive shall have no right to receive any
      compensation or benefit hereunder on and after the date of such notice, in
      the
      event that an event of "Cause" occurs. For purposes of this Agreement "Cause"
      shall mean (a) conviction of a felony, bad faith or willful gross misconduct
      that, in any case, results in material damage to the business or reputation
      of
      the Company; (b) the willful commission by the Executive of acts that are
      dishonest and demonstrably or materially injurious to the Company, monetarily
      or
      otherwise; (c) willful and continued failure to perform his duties hereunder
      (other than such failure resulting from the Executive’s incapacity due to
      physical or mental illness or after the issuance of a notice of termination
      by
      the Executive for Good Reason) within 30 days after the Company delivers to
      him
      a written demand for performance that specifically identifies the actions to
      be
      performed; or (d) a material breach of any of the covenants set forth in the
      Employment Agreement. For purposes of this Section 4.3, no act or failure to
      act
      by the Executive shall be considered “willful” if such act is done by the
      Executive in the good faith belief that such act is or was to be beneficial
      to
      the Company or one or more of its businesses, or such failure to act is due
      to
      the Executive’s good faith belief that such action would be materially harmful
      to the Company or one of its businesses. 

     

    4.4  Termination
      without Cause.
      The
      Company may terminate this Employment Agreement at any time, without cause,
      upon
      60 days' written notice by the Company to the Executive and the Executive shall
      have no right to receive any compensation or benefit hereunder after such
      termination.

     

    4.5  Termination
      for Good Reason.
      The
      Executive may terminate his employment for Good Reason after giving the Company
      detailed written notice thereof, if the Company shall have failed to cure the
      event or circumstance constituting Good Reason within 30 business days after
      receiving such notice. “Good Reason” shall mean the occurrence of any of the
      following without the written consent of the Executive: (a) the assignment
      to
      the Executive of duties inconsistent with this Agreement or a diminution in
      his
      titles or authority; (b) any failure by the Company to comply with Section
      3
      hereof in any material way; (c) the requirement of the Executive to relocate
      to
      a location that is more than 50 miles from the Executive’s work location on the
      effective date of this Agreement (8300 Greensboro Drive, Suite 800, McLean,
      VA
      22102), or (d) any material breach of this Agreement by the Company. The
      Executive’s right to terminate his employment hereunder for Good Reason shall
      not be affected by his incapacity due to physical or mental illness. The
      Executive’s continued employment shall not constitute consent to, or a waiver of
      rights with respect to, any act or failure to act constituting Good Reason.
      The
      Executive shall have no right to receive any compensation or benefit hereunder
      on and after the date of termination.

     

    4.6  Without
      Good Reason.
      The
      Executive shall have the right to terminate his employment hereunder without
      Good Reason by providing the Company with 60 days advance written notice of
      termination. The Executive shall have no right to receive any compensation
      or
      benefit hereunder on and after the date of termination.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    5.  Certain
      Covenants of the Executive.

     

    5.1  Covenants.
      The
      Executive acknowledges that: (i) his work for the Company and its Subsidiaries
      and Affiliates, will bring him into close contact with many confidential
      affairs, documents, and information not readily available to the public; and
      (ii) the covenants contained in this Section 5 will not involve a substantial
      hardship upon his future livelihood. In order to induce the Company to enter
      into this Employment Agreement, the Executive covenants and agrees
      that:

     

    5.2  Non-Compete.
      During
      the Term and for a period of twelve (12) months following the termination of
      the
      Executive's employment with the Company or any of its Subsidiaries or Affiliates
      (the "Restricted Period"), the Executive shall not, directly or indirectly,
      (i)
      in any manner whatsoever engage in any capacity with any business competitive
      with the Company, any of its Subsidiaries or any of its Affiliates (the
      "Company's Business") for the Executive's own benefit or for the benefit of
      any
      person or entity other than the Company or any Subsidiary or Affiliate; or
      (ii)
      have any interest as owner, sole proprietor, shareholder, partner, lender,
      director, officer, manager, employee, consultant, agent or otherwise in any
      business competitive with the Company's Business; provided,
      however,
      that
      the Executive may hold, directly or indirectly, solely as an investment, not
      more than two percent (2%) of the outstanding securities of any person or entity
      which are listed on any national securities exchange or regularly traded in
      the
      over-the-counter market notwithstanding the fact that such person or entity
      is
      engaged in a business competitive with the Company's Business. In addition,
      during the Restricted Period, the Executive shall not develop any property
      or
      invention for use in the Company's Business on behalf of any person or entity
      other than the Company, its Subsidiaries and Affiliates.

     

    5.3  Confidential
      Information.
      During
      the Restricted Period, the Executive shall not, directly or indirectly, disclose
      to any person or entity who is not authorized by the Company or any Subsidiary
      or Affiliate to receive such information, or use or appropriate for his own
      benefit or for the benefit of any person or entity other than the Company or
      any
      Subsidiary or Affiliate, any documents or other papers relating to the Company's
      Business or the customers of the Company or any Subsidiary or Affiliate,
      including, without limitation, files, business relationships and accounts,
      pricing policies, customer lists, computer software and hardware, or any other
      materials relating to the Company's Business or the customers of the Company
      or
      any Subsidiary or Affiliate or any trade secrets or confidential information,
      including, without limitation, any business or operational methods, drawings,
      sketches, designs or product concepts, know-how, marketing plans or strategies,
      product development techniques or plans, business acquisition plans, financial
      or other performance data, personnel and other policies of the Company or any
      Subsidiary or Affiliate, whether generated by the Executive or by any other
      person, except as required in the course of performing his duties hereunder
      or
      with the express written consent of the Company; provided,
      however,
      that
      the confidential information shall not include any information readily
      ascertainable from public or published information, or trade sources (other
      than
      as a direct or indirect result of unauthorized disclosure by the
      Executive).

     

    5.4  Employees
      of and Consultants to the Company.
      During
      the Restricted Period, the Executive shall not, directly or indirectly (other
      than in furtherance of the business of the Company), initiate communications
      with, solicit, persuade, entice, induce or encourage any individual who is
      then
      or who has been within the 12-month period preceding the Executive’s termination
      of employment with the Company, an employee of or consultant to the Company
      or
      any of its Subsidiaries or Affiliates to terminate employment with, or a
      consulting relationship with, the Company or such Subsidiary or Affiliate,
      as
      the case may be, or to become employed by or enter into a contract or other
      agreement with any other person, and the Executive shall not approach any such
      employee or consultant for any such purpose or authorize or knowingly approve
      the taking of any such actions by any other person.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    5.5  Solicitation
      of Customers.
      During
      the Restricted Period, the Executive shall not, directly or indirectly, initiate
      communications with, solicit, persuade, entice, induce, encourage (or assist
      in
      connection with any of the foregoing) any person who is then or has been within
      the 12-month period preceding the Executive’s termination of employment with the
      Company a customer or account of the Company or its Subsidiaries or Affiliates,
      or any actual customer leads whose identity the Executive learned during the
      course of his employment with the Company, to terminate or to adversely alter
      its contractual or other relationship with the Company or its Subsidiaries
      or
      Affiliates.

     

    5.6  Rights
      and Remedies Upon Breach.
      If the
      Executive breaches, or threatens to commit a breach of, any of the provisions
      of
      Section 5 hereof (collectively, the "Restrictive Covenants"), the Company and
      its Subsidiaries and Affiliates shall, in addition to the rights set forth
      this
      Employment Agreement, have the right and remedy to seek from any court of
      competent jurisdiction specific performance of the Restrictive Covenants or
      injunctive relief against any act which would violate any of the Restrictive
      Covenants, it being acknowledged and agreed that any such breach or threatened
      breach will cause irreparable injury to the Company and its Subsidiaries and
      Affiliates and that money damages will not provide an adequate remedy to the
      Company and its Subsidiaries and Affiliates.

     

    5.7  Severability
      of Covenants.
      If any
      of the Restrictive Covenants, or any part thereof, is held by a court of
      competent jurisdiction or any foreign, federal, state, county or local
      government or other governmental, regulatory or administrative agency or
      authority to be invalid, void, unenforceable or against public policy for any
      reason, the remainder of the Restrictive Covenants shall remain in full force
      and effect and shall in no way be affected, impaired or invalidated, and such
      court, government, agency or authority shall be empowered to substitute, to
      the
      extent enforceable, provisions similar thereto or other provisions so as to
      provide to the Company and its Subsidiaries and Affiliates, to the fullest
      extent permitted by applicable law, the benefits intended by such
      provisions.

     

    5.8  Enforceability
      in Jurisdictions.
      The
      parties intend to and hereby confer jurisdiction to enforce the Restrictive
      Covenants upon the courts of any jurisdiction within the geographical scope
      of
      such Covenants. If the courts of any one or more of such jurisdictions hold
      the
      Restrictive Covenants wholly invalid or unenforceable by reason of the breadth
      of such scope or otherwise, it is the intention of the parties that such
      determination not bar or in any way affect the Company's right to the relief
      provided above in the courts of any other jurisdiction within the geographical
      scope of such Restrictive Covenants, as to breaches of such Restrictive
      Covenants in such other respective jurisdictions, such Restrictive Covenants
      as
      they relate to each jurisdiction being, for this purpose, severable into diverse
      and independent covenants.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    6.  Indemnification. 

     

    6.1  General.
      The
      Company agrees that if the Executive is made a party or is threatened to be
      made
      a party to any action, suit or proceeding, whether civil, criminal,
      administrative or investigative (a "Proceeding"), other than a Proceeding
      initiated by the Company to enforce its rights under this Agreement, by reason
      of the fact that the Executive is or was a trustee, director or officer of
      the
      Company, or any predecessor to the Company or any of their Affiliates or is
      or
      was serving at the request of the Company, any predecessor to the Company,
      or
      any of their affiliates as a trustee, director, officer, member, employee or
      agent of another corporation or a partnership, joint venture, limited liability
      company, trust or other enterprise, including, without limitation, service
      with
      respect to employee benefit plans, whether or not the basis of such Proceeding
      is alleged action in an official capacity as a trustee, director, officer,
      member, employee or agent while serving as a trustee, director, officer, member,
      employee or agent, the Executive shall be indemnified and held harmless by
      the
      Company to the fullest extent authorized by Nevada law, as the same exists
      or
      may hereafter be amended, against all Expenses incurred or suffered by the
      Executive in connection therewith, and such indemnification shall continue
      as to
      the Executive even if the Executive has ceased to be an officer, director,
      trustee or agent, or is no longer employed by the Company and shall inure to
      the
      benefit of his heirs, executors and administrators. Notwithstanding the
      foregoing, the Executive shall not be entitled to indemnification by the Company
      in respect of, and to the extent that, any Expenses arising as a result of
      the
      bad faith, willful misconduct or gross negligence of the Executive, or the
      Executive’s conviction of a felony. 

     

    6.2  Expenses.
      As used
      in this Agreement, the term "Expenses" shall include, without limitation,
      damages, losses, judgments, liabilities, fines, penalties, excise taxes,
      settlements, and costs, attorneys' fees, accountants' fees, and disbursements
      and costs of attachment or similar bonds, investigations, and any expenses
      of
      establishing a right to indemnification under this Agreement.

     

    6.3  Enforcement.
      If a
      claim or request under this Section 6 is not paid by the Company or on its
      behalf, within thirty (30) days after a written claim or request has been
      received by the Company, the Executive may at any time thereafter bring suit
      against the Company to recover the unpaid amount of the claim or request and
      if
      successful in whole or in part, the Executive shall be entitled to be paid
      also
      the expenses of prosecuting such suit. All obligations for indemnification
      hereunder shall be subject to, and paid in accordance with, applicable
      Nevada law.

     

    6.4  Partial
      Indemnification.
      If the
      Executive is entitled under any provision of this Agreement to indemnification
      by the Company for some or a portion of any Expenses, but not, however, for
      the
      total amount thereof, the Company shall nevertheless indemnify the Executive
      for
      the portion of such Expenses to which the Executive is entitled.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    6.5  Advances
      of Expenses.
      Expenses incurred by the Executive in connection with any Proceeding shall
      be
      paid by the Company in advance upon request of the Executive that the Company
      pay such Expenses, but only in the event that the Executive shall have delivered
      in writing to the Company (i) an undertaking to reimburse the Company for
      Expenses with respect to which the Executive is not entitled to indemnification
      and (ii) a statement of his good faith belief that the standard of conduct
      necessary for indemnification by the Company has been met.

     

    6.6  Notice
      of Claim.
      The
      Executive shall give to the Company notice of any claim made against him for
      which indemnification will or could be sought under this Agreement. In addition,
      the Executive shall give the Company such information and cooperation as it
      may
      reasonably require and as shall be within the Executive's power and at such
      times and places as are convenient for the Executive.

     

    6.7  Defense
      of Claim.
      With
      respect to any Proceeding as to which the Executive notifies the Company of
      the
      commencement thereof:

     

    (a)  The
      Company will be entitled to participate therein at its own expense;

     

    (b)  Except
      as
      otherwise provided below, to the extent that it may wish, the Company will
      be
      entitled to assume the defense thereof, with counsel reasonably satisfactory
      to
      the Executive, which in the Company's sole discretion may be regular counsel
      to
      the Company and may be counsel to other officers and directors of the Company
      or
      any subsidiary. The Executive also shall have the right to employ his own
      counsel in such action, suit or proceeding if he reasonably concludes that
      failure to do so would involve a conflict of interest between the Company and
      the Executive, and under such circumstances the fees and expenses of such
      counsel shall be at the expense of the Company.

     

    (c)  The
      Company shall not be liable to indemnify the Executive under this Agreement
      for
      any amounts paid in settlement of any action or claim effected without its
      written consent. The Company shall not settle any action or claim in any manner
      which would impose any penalty that would not be paid directly or indirectly
      by
      the Company or limitation on the Executive without the Executive's written
      consent. Neither the Company nor the Executive will unreasonably withhold or
      delay their consent to any proposed settlement.

     

    (d)  Non-exclusivity.
      The
      right to indemnification and the payment of expenses incurred in defending
      a
      Proceeding in advance of its final disposition conferred in this Section 6
      shall
      not be exclusive of any other right which the Executive may have or hereafter
      may acquire under any statute or certificate of incorporation or by-laws of
      the
      Company or any subsidiary, agreement, vote of shareholders or disinterested
      directors or trustees or otherwise.

     

    7.  Other
      Provisions.

     

    7.1  Notices.
      Any
      notice or other communication required or which may be given hereunder shall
      be
      in writing and shall be delivered personally, telecopied, telegraphed or
      telexed, or sent by certified, registered or express mail, postage prepaid,
      to
      the parties at the addresses specified on the signature page hereto, or at
      such
      other addresses as shall be specified by the parties by like notice, and shall
      be deemed given when so delivered personally, telecopied, telegraphed or
      telexed, or if mailed, two days after the date of mailing, to the addresses
      specified on the signature page hereto, or, in the case of the Company, to
      such
      other address as the Company may specify as the address for its executive
      offices in any reports filed by the Company with the Securities and Exchange
      Commission.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    7.2  Entire
      Agreement.
      This
      Agreement contains the entire agreement between the parties with respect to
      the
      subject matter hereof and supersedes all prior contracts and other agreements,
      written or oral, with respect thereto. 

     

    7.3  Waivers
      and Amendments.
      This
      Agreement may be amended, modified, superseded, cancelled, renewed or extended,
      and the terms and conditions hereof may be waived, only by a written instrument
      signed by the parties or, in the case of a waiver, by the party waiving
      compliance. No delay on the part of any party in exercising any right, power
      or
      privilege hereunder shall operate as a waiver thereof, nor shall any waiver
      on
      the part of any party of any right, power or privilege hereunder, nor any single
      or partial exercise of any right, power or privilege hereunder preclude any
      other or further exercise thereof or the exercise of any other right, power
      or
      privilege hereunder.

     

    7.4  Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with and subject
      to,
      the laws of the State of Nevada applicable to agreements made and to be
      performed entirely within such state.

     

    7.5  Binding
      Effect; Benefit.
      This
      Agreement shall inure to the benefit of and be binding upon the parties hereto
      and any successors and assigns permitted or required by Section 7.6 hereof.
      Nothing in this Agreement, expressed or implied, is intended to confer on any
      person other than the parties hereto or such successors and assigns, any rights,
      remedies, obligations or liabilities under or by reason of this
      Agreement.

     

    7.6  Assignment.
      This
      Agreement, and the Executive's rights and obligations hereunder, may not be
      assigned by the Executive. The Company may assign this Agreement and its rights,
      together with its obligations, hereunder in connection with any sale, transfer
      or other disposition of all or substantially all of its assets or business,
      whether by merger, consolidation or otherwise.

     

    7.7  Definitions.
      For
      purposes of this Agreement:

     

    (a)  "Affiliate"
      shall
      mean a person that, directly or indirectly, controls or is controlled by, or
      is
      under common control with the Company;

     

    (b)  “Subsidiary"
      shall
      mean any person or entity as to which the Company, directly or indirectly,
      owns
      or has the power to vote, or to exercise a controlling influence with respect
      to, fifty percent (50%) or more of the securities of any class of such person,
      the holders of which class are entitled to vote for the election of directors
      (or persons performing similar functions) of such person.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    7.8  D&O
      Insurance.
      During
      the term of this Agreement, the Company shall maintain D&O insurance with
      the level of coverage of at least $5 million.

     

    7.9  Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original but all of which together shall constitute one and the same
      instrument.

     

    7.10  Headings.
      The
      headings in this Agreement are for reference purposes only and shall not in
      any
      way affect the meaning or interpretation of this Employ-ment
      Agreement.

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      above written.

    

    

    
      	 	 	NOVASTAR RESOURCES LTD.. 
	 	 	 
	 	 	By:  /s/
              Seth Grae  
	 	 	
              Seth
                Grae 

            
	 	 	
              Chief
                Executive Officer  

            
	 	 	 
	 	 	Address:    8300
              Greensboro Drive, Suite 800  
	 	 	
              McLean,
                VA 22102 

            
	 	 	 
	 	 	EXECUTIVE: 
	 	 	 
	 	 	/s/ Thomas Graham,
              Jr. 
	 	 	Thomas Graham, Jr. 
	 	 	Address: 
               c/o
              8300 Greensboro Drive, Suite 800  
	 	 	
              McLean,
                VA 22102  

            

    

     

    

    

    
      
        
        

      

      
        9

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