X0202 3 2006-03-17 0 0001084554 NOVASTAR RESOURCES LTD. NVAS 0001357549 GRAE SETH 1249 BEVERLY ROAD MCLEAN VA 22101 1 1 0 0 CEO and President Common Stock, $0.001 par value 6000000 D Employee Stock Option (Right to Buy) 0.795 2016-02-14 Common Stock, $0.001 par value 7200000 D The option vests with respect to 6/48 of the total number of shares granted on August 14, 2006 and thereafter vests in equal monthly installment of 1/48 over a four year term until all shares underlying the option have vested. The option immediately and automatically vests in full upon a Change of Control, the termination of Seth Grae's employment by the Company without Cause, or the cessation of Seth Grae's employment at the Company by Seth Grae for Good Reason. "Change of Control", "Cause", and "Good Reason" are each defined in that certain employment agreement between Seth Grae and the Company, effective as of February 14, 2006 (such employment agreement was filed as Exhibit 10.2, and the stock option agreement was filed as Exhibit 10.3, to a Current Report on Form 8-K of the Company that was filed on February 21, 2006). Directorship shall only become effective on April 2, 2006. /s/ Seth Grae 2006-03-27