Document:

NOVASTAR
      RESOURCES LTD.

    

    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 Amended and
      Restated 2006 Stock Plan (the “Plan”). 

     

    
      	
              Name:

            	
              CORNELIUS
                J. MILMOE

            	
              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:

            	
              June
                5, 2006

            
	 	 
	
              Vesting
                Commencement Date:

            	
              December
                5, 2006

            
	 	 
	
              Option
                Price per Share:

            	
              $0.465

            
	 	 
	
              Total
                Number of Shares Granted:

            	
              525,000

            
	 	 
	
              Total
                Option Price:

            	
              $244,125

            
	 	 
	
              Type
                of Option:

            	
              Incentive 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 6/36 of the Total Number of Shares Granted
      (as
      specified above) on the Vesting Commencement Date and shall thereafter vest
      1/36
      on the first day of each month until all shares underlying the Option have
      vested. The Option shall immediately and automatically vest in full upon a
      Change of Control, the termination of the Optionee’s employment by the Company
      without Cause, or the termination of the Optionee’s employment by the Optionee
      for Good Reason. “Change of Control,” “Cause,” and “Good Reason” are each
      defined in that certain employment agreement between the Optionee and the
      Company, dated on or about the date hereof.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    NOVASTAR
      RESOURCES LTD.

    

    AMENDED
      AND RESTATED 2006 STOCK PLAN

    

    STOCK
      OPTION AGREEMENT

    

    This
      STOCK
      OPTION AGREEMENT (“Agreement”),
      dated as of the 5th day of June, 2006 is made by and between NOVASTAR RESOURCES
      LTD., a Nevada corporation (the “Corporation”), and CORNELIUS J. MILMOE (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 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (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: 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (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.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    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.

     

    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.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    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.

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    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]

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    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/
                Cornelius J.
                Milmoe             
                                   
                

            
	 	
              Cornelius
                J. Milmoe

            

    

     

    
      [Signature
        Page to Option Agreement]

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    NOTE
      RE: EXHIBITS

    

    EXHIBITS
      A AND B ARE TO BE SIGNED

    

    WHEN
      OPTIONS ARE EXERCISED,

    

    NOT
      WHEN OPTION AGREEMENT IS SIGNED.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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 May 22, 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.

    

    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:______________________________

            
	
              CORNELIUS
                J. MILMOE

            	 

    

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    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: _____________________________

    CORNELIUS
      J. MILMOE

    Date:__________________

     

    
      
        
        

      

      
        3NOVASTAR
      RESOURCES LTD.

    

    CONSULTING
      AGREEMENT

    

    CONSULTING
      AGREEMENT, dated as of June 13, 2006 (the “Agreement”), by and between NOVASTAR
      RESOURCES LTD., a Nevada corporation, having its principal place of business
      at
      8300 Greensboro Drive, Suite 800, McLean, VA 22102 (“Company”) and LARRY
      GOLDMAN, an individual residing at 5 Victory Road, Suffern, NY
      10901(“Consultant”).

    

    BACKGROUND

    

    Company
      desires to retain Consultant to perform the Services (as defined below) and
      Consultant desires to perform the Services for Company subject to the terms
      and
      conditions set forth below.

    

    NOW,
      THEREFORE, in consideration of the premises and mutual covenants hereinafter
      contained, the parties hereto intending to be legally bound hereby agree as
      follows:

    

    1. THE
      SERVICES.

    

    Subject
      to the terms of this Agreement, Consultant agrees to act as a consultant on
      behalf of Company and perform the following services ( the
“Services”):

    

    The
      Consultant will be the Treasurer and Acting Chief Financial Officer of the
      Company for a period of time expected to be approximately three (3) months
      until
      a permanent Treasurer and Chief Financial Officer is appointed. After a
      permanent Chief Financial Officer is appointed, the Consultant will provide
      financial consulting services and internal audit services and be named the
      manager of internal audit. In addition, the Consultant shall perform SOX 404
      compliance, SEC compliance, audit preparation for external auditors and such
      other similar tasks as Company may request.

    

    2. TERM.

    

    The
      initial term of this Agreement shall be for a period of one year; provided,
      however, that this Agreement shall automatically be extended for additional
      periods of one (1) year unless terminated by either party in accordance with
      Section 5. In the event of the termination of this Agreement, Consultant shall
      promptly return to Company any and all equipment, documents or materials in
      whatever form or medium, and all copies made thereof, which Consultant received
      from Company for purposes of this Agreement, as well as all Work Product as
      defined and described in Section 6 of this Agreement.

    

    3. FEES
      AND REIMBURSEMENT OF CERTAIN EXPENSES.

    

    A. Company
      shall pay Consultant a consulting fee (the “Fee”) equal to one hundred seventy
      dollars ($170) per hour for Services performed; provided that the Consultant
      shall not be permitted to bill more than ten hours in any one day. The Fee
      shall
      be payable per invoice every other week, no later than the 10th business day
      following the receipt by Company from Consultant of an invoice that sets forth
      in reasonable detail the number of hours Consultant worked and a description
      of
      the work Consultant performed. The Consultant shall be paid a Fee for a minimum
      of 40 hours of Service each month during the Term, whether or not the Consultant
      actually performs 40 hours of Service.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    B. The
      Company shall grant to the Consultant a nonqualified stock option for the
      purchase of 350,000 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 of grant. The option shall vest in equal monthly installments over
      a
      three (3) year period. If the Consultant is terminated without cause or if
      there
      is a change of control of the Company, then the option shall vest immediately.
      The term of the option shall be ten years.

    

    C. Upon
      termination of this Agreement for any reason, Consultant expressly understands
      and agrees that Company’ sole obligation shall be to pay Consultant the Fee for
      Services rendered through the effective date of termination or expiration,
      including any mandatory notice period.

    

    D.
       Reimbursement
      of any reasonable travel expenses, if any, shall be made according to Company’
corporate policy; provided, however, that in no event shall the Fee be paid
      for
      travel time. Consultant shall be reimbursed for other reasonable and necessary
      expenses actually incurred or paid by Consultant during the term or any
      extension thereof in the performance of the Services within twenty (20) business
      days of the submission and approval by Company of expense statements, vouchers,
      or other supporting information reasonably acceptable to Company. 

    

    E. Consultant
      shall not be entitled to participate in any fringe benefits or privileges given
      or extended by Company to its officers and employees, including without
      limitation, medical benefits, retirement plans or stock options. Consultant
      shall be responsible for the payment of all federal, state and local taxes
      including, without limitation, withholding and sales taxes, and, at the request
      of Company, Consultant shall provide to Company evidence that all of such
      payments have been made. Such evidence may include, at Company’ option, a
      written statement by Consultant that Consultant has timely and appropriately
      paid and withheld all appropriate taxes. Consultant warrants and represents
      that
      Consultant has complied with, and covenants that during the term of this
      Agreement or any extension thereof, Consultant shall continue to comply with
      all
      laws, rules and regulations required by appropriate government authorities
      for
      independent contractors, including the appropriate withholding, reporting and
      payment of all required taxes. Consultant shall indemnify and hold Company
      harmless from and against any claims, damages, debts, obligations, liabilities
      and expenses (including, without limitation, attorney’s fees and expenses and
      court costs) arising out of Consultant’s failure to perform any covenant
      contained in, or Consultant’s breach of any representation or warranty set forth
      in, this Section.

    

    4. DUTIES
      AND EXTENT OF SERVICES

    

    Upon
      the
      execution of this Agreement and throughout its term or any extension thereof,
      Consultant shall assume the position of consultant to Company and Consultant
      shall be available at all times necessary or appropriate in order for Consultant
      to effectively perform the Services. Consultant shall exert Consultant’s best
      efforts and attention to the affairs of Company. Consultant shall notify Company
      promptly of any other engagement or commitment which could reasonably be
      expected to interfere or conflict with the performance of Services
      hereunder.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    5. TERMINATION

    

    Consultant’s
      engagement hereunder shall terminate at the end of the term or any extension
      thereof as set forth in Section 2 hereof or sooner upon the occurrence of any
      of
      the following events:

    

    A. The
      termination of Consultant hereunder by Company at its option, for any reason
      or
      no reason, to be exercised by 180 days written notice from Company to
      Consultant.

    

    B. Consultant’s
      death.

    

    C. Upon
      delivery of written notice by Company to Consultant if Consultant materially
      breaches this Agreement; provided that the Company gives the Consultant a
      description of the material breach and at least twenty days to cure the
      breach.

    

    6. WORK
      FOR HIRE

    

    A. The
      parties acknowledge and agree that all rights, including without limitation
      ownership, patent and copyright, in any software, materials, reports (including,
      without limitation, report books, reference materials and other literature
      relating to Company’ products or services or otherwise related to the Services),
      memoranda, graphics, logos or other work product prepared by Consultant pursuant
      to the terms of this Agreement, or otherwise for Company (hereinafter the “Work
      Product”) vest in Company. The parties expressly acknowledge that the Work
      Product was specially ordered or commissioned by Company and further agree
      that
      it shall be considered a “Work Made for Hire” within the meaning of the
      copyright laws of the United States and that Company is entitled, as sole
      author, to the copyright and all other rights therein, throughout the world,
      including but not limited to, the right to make such changes therein and such
      uses thereof, as it may determine in its sole and absolute discretion. If,
      for
      any reason, the Work Product is not considered a “work made for hire” under the
      copyright laws of the United States as aforesaid, then Consultant hereby grants
      and assigns to Company, its successors and assigns, all of Consultant’s right,
      title and interest in the Work Product, including, but not limited to, the
      copyright therein throughout the world (and any renewal, extension or reversion
      copyright now or hereafter provided), and all other rights therein of any nature
      whatsoever, whether now known or hereafter devised including, but not limited
      to, the right to make changes therein, and such uses thereof, as Company may
      determine in its absolute discretion. Consultant also agrees to keep necessary
      records, made alone or with others during the course of performing Services
      pursuant to this Agreement, and agrees to furnish Company, upon request, with
      all such records.

    

    B. If
      Company is unable, after reasonable effort, to secure Consultant’s signature on
      any application for patent, copyright, trademark or other analogous registration
      or other documents regarding any legal protection relating to a Work Product,
      whether because of Consultant’s physical or mental incapacity or for any other
      reason whatsoever, Consultant hereby irrevocably designates and appoints Company
      and its duly authorized officers and agents as Consultant’s agent and
      attorney-in-fact, to act for and in Consultant’s behalf and stead to execute and
      file any such application or applications or other documents and to do all
      other
      lawfully permitted acts to further the prosecution and issuance of patent,
      copyright or trademark registrations or any other legal protection thereon
      with
      the same legal force and effect as if executed by Consultant.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    7. PROPRIETARY
      INFORMATION

    

    A. For
      purposes of this Agreement, “proprietary information” means information relating
      to the business of Company or any affiliated or subsidiary entity and shall
      include (but shall not be limited to) information encompassed in all Work
      Product, specifications, drawings, graphics, logos, designs, computer programs,
      source code, object code, models, methodologies, algorithms, user documentation,
      plans, formulas, proposals, marketing and sale plans, financial information,
      costs, pricing information, customer information, and all methods, concepts
      or
      ideas in or reasonably related to the business of Company or information of
      customers or clients of Company which Company is required to maintain as
      confidential.

    

    B. Consultant
      agrees to regard and preserve as confidential, all proprietary information,
      whether or not it has such information in writing, other physical or magnetic
      form or such information is contained in Consultant’s memory or the memory of
      any of Consultant’s agents or employees. Consultant shall not, without written
      authority from Company to do so, directly or indirectly, use for the benefit
      or
      purpose, nor disclose to any other person or entity, either during the term
      of
      Consultant’s engagement hereunder or thereafter, except as required by the
      conditions of Consultant’s engagement hereunder, any proprietary
      information.

    

    C. Consultant
      shall not disclose any reports, recommendations, conclusions or other results
      of
      the Services or the existence or the subject matter of this contract without
      the
      prior written consent of Company. In Consultant’s performance hereunder,
      Consultant shall comply with all legal obligations Consultant may now or
      hereafter have regarding the information or other property of any other person,
      firm or corporation.

    

    D. The
      foregoing obligations of this Paragraph shall not apply to any part of the
      information that (i) has been disclosed in publicly available sources of
      information, (ii) is, through no fault of Consultant, hereafter disclosed in
      publicly available sources of information, (iii) can be demonstrated to Company’
satisfaction that it is now in the possession of Consultant without any
      obligation of confidentiality, or (iv) has been or is hereafter lawfully
      disclosed to Consultant by a third party, but only to the extent that the use
      or
      disclosure thereof has been or is rightfully authorized by that third
      party.

    

    8. NO
      SOLICITATION AND COVENANT NOT TO COMPETE

    

    A. During
      the period commencing on the date hereof and ending two (2) years after the
      termination of Consultant’s engagement for any reason (the “Restricted Period”),
      Consultant shall not directly or indirectly induce, solicit, persuade or entice
      or attempt to induce, solicit, persuade or entice any of the employees,
      consultants or agents of Company to leave the employment of Company or to
      terminate the consultancy or agency relationship with Company, as the case
      may
      be.

    

    B. During
      the Restricted Period, Consultant shall not, without the written consent of
      a
      duly authorized officer of Company: (i) directly or indirectly, whether as
      principal, agent, stockholder, or in any other capacity, have a financial
      interest in any company or enterprise which is in competition with any business
      actively conducted by Company or any of its subsidiaries or affiliates;
      provided, however, that this shall not be deemed to preclude Consultant from
      owning not more than 1% of the stock or securities of any corporation, the
      shares of which are registered under Section 12 of the Securities Exchange
      Act
      of 1934, as amended or (ii) directly or indirectly, whether as principal, agent,
      stockholder, employee, consultant or in any other capacity, provide any services
      to any company or enterprise which would result in competition with the
      services, products and technologies sold, licensed or being developed or planned
      or otherwise contemplated by Company or any of its subsidiaries or affiliates
      at
      the time of the termination of this Agreement.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    C. During
      the Restricted Period, the Consultant shall not, directly or indirectly, induce,
      solicit, persuade or entice or attempt to induce, solicit persuade or entice
      any
      person who is then or has been within the preceding 12-month period a customer
      or account of Company or any of its affiliates, or any actual customer leads
      whose identity the Consultant learned of during the term of this Agreement
      or
      any extension thereof , to terminate or to adversely alter its contractual
      or
      other relationship with Company or any of its affiliates.

    

    D. During
      the term or any extension thereof the Consultant shall promptly disclose to
      Company any business idea or opportunity which falls within Company’ line of
      business or any logical extension thereof, which business idea or opportunity
      shall become the sole property of Company.

    

    E. Consultant
      hereby agrees that each provision herein shall be treated as a separate and
      independent clause, and the unenforceability of any one clause shall in no
      way
      impair the enforceability of any of the other clauses of the Agreement.
      Moreover, if one or more of the provisions contained in this Agreement shall
      for
      any reason be held to be excessively broad as to scope, activity, subject or
      otherwise so as to be unenforceable at law, such provision or provisions shall
      be construed by the appropriate judicial body by limiting or reducing it or
      them
      so as to be enforceable to the maximum extent compatible with the applicable
      law
      as it shall then appear. Consultant hereby further agrees that the language
      of
      all parts of this Agreement shall in all cases be construed as a whole according
      to its fair meaning and not strictly for or against either of the
      parties.

    

    9. INJUNCTIVE
      RELIEF

    

    Consultant
      acknowledges that the injury to Company resulting from any violation by
      Consultant of any of the covenants contained in this Agreement will be of such
      a
      character that Company cannot be adequately compensated by money damages, and,
      accordingly, Company may, in addition to pursuing its other remedies, obtain
      an
      injunction from any such violation; and no bond or other security shall be
      required in connection with such injunction.

    

    10. NOTICES

    

    Any
      notice of 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 set forth in the preamble of this Agreement, 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.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    11. NO
      RESTRICTIONS

    

    Consultant
      represents to Company, which relies on such representation, that Consultant
      is
      free to enter into this Agreement in that Consultant is not under any
      restrictions from a former employer or business that would preclude Consultant’s
      from making these agreements. Consultant understands that Company does not
      want
      Consultant to disclose to it any confidential information that Consultant may
      have obtained from a former employer, although Consultant is free to use
      Consultant’s general knowledge and past experience in the performance of the
      Services.

    

    12. GENERAL
      CONDITIONS

    

    A. The
      terms
      and conditions of Paragraphs 3E, 6, 7, 8, 9, 10, 11 and 12A hereof shall survive
      the termination of this Agreement or completion of the Services as the case
      may
      be.

    

    B. Consultant
      shall not assign this Agreement or delegate Consultant’s duties hereunder and
      shall not subcontract any of the Services to be performed hereunder without
      the
      prior written consent of Company. The Consultant may, however, provide Services
      hereunder through SEC Audit Prep, Inc., an entity controlled by the Consultant,
      and in such case, Fee payments shall be made to such entity; provided, however,
      that in such event, the Consultant shall continue to be the primary provider
      of
      the Services.

    

    C. Consultant
      shall perform the Services as an independent contractor and shall not be
      considered an employee of Company or partner, joint venturer or otherwise
      related to Company for any purpose. Accordingly, Consultant may not bind Company
      to any contract, agreement or arrangement.

    

    D. This
      Agreement shall be governed by the laws of the State of New York, without regard
      to its conflicts of laws.

    

    E. This
      Agreement constitutes the entire understanding between Consultant and Company
      respecting the Services described herein.

    

    F. 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.

    

    G. Facsimile
      execution and delivery of this Agreement is legal, valid and binding execution
      and delivery for all purposes.

    

    H. The
      Consultant shall be primarily based in New York; however, the Consultant will
      travel back and forth to the Washington, DC area, where the executive offices
      of
      the Company are based, on an as needed basis. The Consultant expects to travel
      to Washington, DC at least two times per month.

     

    [signature
      page follows]

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

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

    

      
        	
                NOVASTAR
                  RESOURCES LTD.

              	
                CONSULTANT:

              
	 	 
	 	 
	
                By:
                  /s/ Seth
                  Grae                     
                  

              	
                /s/
                  Larry
                  Goldman                           
                  

              
	
                Name:
                  SETH GRAE

              	
                Name:
                  LARRY GOLDMAN

              
	
                Title:
                  President and Chief Executive Officer

              	 

      

       

      
        
           

        

        
          7

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