AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER
 
This AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER is entered into as of
August 8, 2006 (this “Amendment”) among NOVASTAR RESOURCES LTD., a Nevada
corporation (“Company”), TP ACQUISITION CORP., a Delaware corporation and
wholly-owned subsidiary of Company (“Acquisition Sub”), and THORIUM POWER, INC.,
a Delaware corporation (“Thorium Power”). Capitalized terms used, but not
otherwise defined, herein have the meanings ascribed to such terms in the
Agreement (as defined below).
 
BACKGROUND
 
The Parties entered into an Agreement and Plan of Merger on February 14, 2006
(the “Agreement”) relating to the acquisition by Company of one hundred percent
(100%) of the outstanding common stock of Thorium Power through a reverse merger
of Acquisition Sub with and into Thorium Power. The Agreement was thereafter
amended on June 12, 2006. The Parties now desire to enter into this Amendment to
further modify the terms of the Agreement as more specifically set forth herein.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the mutual promises of the parties hereto,
and of good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
 
1. Amendment to Section 1.2(a). Section 1.2(a) of the Agreement is deleted in
its entirety and in lieu thereof the following new Section 1.2(a) is inserted:
 
“(a)         Purchase Price.
 
(i) At the Closing, each issued and outstanding share of Thorium Power’s common
stock, $0.05 par value per share (the “Thorium Power Common Stock”) other than
shares of Thorium Power Common Stock held by Company shall be converted into the
right to receive 25.628 shares of Company’s common stock, $0.001 par value per
share (the “Company Common Stock”).
 
(ii) At the Closing, each Exchangeable Security that has an exercise price of
$5.00 or $1.00 (constituting the only prices at which Exchangeable Securities
are exercisable) shall be converted into the right to receive 22.965 and 12.315
shares of Company Common Stock, respectively.
 
(iii) All shares of Thorium Power Common Stock and all Exchangeable Securities
will no longer be outstanding and will automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate representing any such
shares of Thorium Power Common Stock or certificate or other instrument
evidencing any such Exchangeable Securities that are so exchanged shall cease to
have any rights with respect thereto, except the right to receive the shares of
Company Common Stock to be issued in consideration therefor upon the surrender
of such certificate or other instrument in accordance with Section 1.2(c),
without interest.
 

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(iv) Any securities convertible into or exercisable for shares of Thorium Power
Common Stock (the “Thorium Power Convertible Securities”) immediately prior to
the Effective Time (other than the Exchangeable Securities) will become, at the
Effective Time, securities exercisable for such number of shares of Company
Common Stock as the holder of such securities would have received had such
holder converted such securities into Thorium Power Common Stock immediately
prior to the Closing. Appropriate adjustment will be made to any exercise or
conversion price of such securities.”
 
2.             Agreement. In all other respects, the Agreement shall remain in
full force and effect.
 
3.            Counterparts. This Amendment 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.
 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of
the date first above written.
 

        NOVASTAR RESOURCES LTD.  
   
   
    By:   /s/ Seth Grae  

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Name: Seth Grae   Title: President and Chief Executive Officer

 

        TP ACQUISITION CORP.  
   
   
    By:   /s/ Seth Grae  

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Name: Seth Grae   Title: President and Chief Executive Officer

        THORIUM POWER, INC.  
   
   
    By:   /s/ Seth Grae  

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Name: Seth Grae   Title: President and Chief Executive Officer

 
 

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