UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant o
Check
the
appropriate box:
x Preliminary
Proxy
Statement
o
Confidential, For Use of the Commission
only (as permitted by Rule 14c-5(d)(2))
o Definitive
Proxy Statement
o Definitive
Additional
Materials
o Soliciting
Material under §
240.14a-12
NOVASTAR
RESOURCES LTD.
(Name
of
Registrant as Specified in Its Charter)
Payment
of Filing Fee (Check the appropriate box):
x No
Fee Required
o $125
per Exchange Act Rules
O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule
14A.
o Fee
computed on table below per
Exchange Act Rules 14a-6(i)(4) and 0-11.
(1)
Title
of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3)
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total
fee paid:
o Fee
paid previously with
preliminary materials:
o Check
box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for
which the offsetting fee was paid previously. Identify the previous filing
by
registration statement number, or the form or schedule and the date of its
filing.
(1)
Amount previously paid:
(2)
Form,
Schedule or Registration Statement No.:
(3)
Filing party:
(4)
Date
filed:
NOVASTAR
RESOURCES LTD.
_____________________________________________
Notice
of Special Meeting of Stockholders
_____________________________________________
Notice
is
hereby given that a special meeting of stockholders of Novastar Resources Ltd.,
a Nevada corporation, will be held at the offices of Thelen Reid & Priest
LLP, located at 701 8th Street NW, Washington,
DC 20001 on
Friday, September 29, 2006, beginning at 10:00 a.m. EST. The special meeting
will be held for the following purposes:
1. To
approve the Second Amended and Restated Novastar 2006 Stock Plan (the
Plan);
2. To
approve an amendment to the articles of incorporation of the Company that 1)
changes the name of the Company to “Thorium Power, Ltd.”, 2) increases the
number of authorized common shares from 250,000,000 to 500,000,000 (the
Amendment) and 3) increases the maximum number of directors that may appointed
to the Board of Directors of the Company from five (5) to fifteen (15);
and
3. To
transact such other business as may properly come before the meeting or any
postponements or adjournments of the meeting.
August
18, 2006 has been fixed as the record date for the determination of stockholders
entitled to notice of and to vote at the special meeting and any postponements
or adjournments, and only stockholders of record at the close of business on
that date are entitled to notice and to vote at the special
meeting.
We
hope
that you will use this opportunity to take an active part in our affairs by
voting on the business to come before the special meeting either by executing
and returning the enclosed proxy card or by casting your vote in person at
the
special meeting.
Stockholders
unable to attend the special meeting in person are requested to date and sign
the enclosed proxy card as promptly as possible. A stamped envelope is enclosed
for your convenience. If a stockholder receives more than one proxy card because
he or she owns shares registered in different names or addresses, each proxy
card should be completed and returned.
By
Order
of the Board of Directors,
/s/
Seth Grae
Seth
Grae
President
and CEO
******************************
Novastar
Resources Ltd.
8300
Greensboro Drive
Suite
800
McLean,
VA 22102
_____________________________________________
PROXY
STATEMENT
_____________________________________________
GENERAL
INFORMATION
Proxy
Solicitation
This
proxy statement is being first mailed on or about August 29, 2006, to
stockholders of Novastar Resources Ltd. by the board of directors to solicit
proxies for use at the special meeting of stockholders to be held at the offices
of Thelen Reid & Priest LLP, 701 8th St. NW, Washington, D.C. 20001, on
Friday, September 29, 2006, beginning at 10:00 a.m. EST, and any postponements
or adjournments to the meeting, for the purposes set forth in the accompanying
notice of special meeting.
Proxies
for use at the meeting are being solicited by our board of directors and will
be
solicited chiefly by mail. In addition to the solicitation of proxies by mail,
directors, officers and regular employees may communicate with stockholders
personally or by mail, telephone, telegram, or otherwise for the purpose of
soliciting proxies, but no additional compensation will be paid to any of these
persons for solicitation. The cost of soliciting proxies, including expenses
in
connection with preparing and mailing this proxy statement, will be borne by
the
Company. In addition, we will reimburse banks, brokers and other nominees for
their reasonable out-of-pocket expenses in forwarding soliciting material to
beneficial owners of shares held of record by these persons.
Only
one
proxy statement is being delivered to two or more security holders who share
an
address unless we have received contrary instruction from one or more of the
security holders. We will promptly deliver upon written or oral request a
separate copy of the proxy statement to a security holder at a shared address
to
which a single copy of the document was delivered. If you would like to request
additional copies of the proxy statement, or if in the future you would like
to
receive multiple copies of proxy statements, information statements or annual
reports, or, if you are currently receiving multiple copies of these documents
and would, in the future, like to receive only a single copy, please so instruct
Dennis Hays, the Company’s Corporate Secretary, by writing to him at 8300
Greensboro Drive, Suite 800, McLean, Virginia, 22102.
Revocability
and Voting of Proxy
A
form of
proxy for use at the special meeting and a return envelope for the proxy are
enclosed. Stockholders may revoke the authority granted by their execution
of
proxies at any time before their effective exercise by filing with our Secretary
a written notice of revocation or a duly executed proxy bearing a later date,
or
by voting in person at the meeting. Shares of common stock represented by
executed and unrevoked proxies will be voted in accordance with the choice
or
instructions specified. If no specifications are given, the proxies
solicited by the board of directors will be voted "FOR" the approval of our
Second Amended and Restated 2006 Stock Plan, the approval of the amendment
to
our articles of incorporation referred to in paragraph 2 of the accompanying
notice of special meeting, and such other matters as may duly come before the
meeting.
Record
Date and Voting Rights
August
18, 2006 has been fixed as the record date for the determination of stockholders
entitled to notice of and to vote at the special meeting, and any postponements
or adjournments. As of the record date, there were 155,126,474 shares of our
common stock issued and outstanding. A majority of the shares entitled to vote,
present in person or represented by proxy, will constitute a quorum at the
meeting. With respect to the tabulation of proxies for purposes of constituting
a quorum, abstentions and broker non-votes are treated as present.
Each
share of common stock issued and outstanding on the record date is entitled
to
one vote on any matter presented for consideration and action by the
stockholders at the special meeting. The affirmative vote of the holders of
a
majority of the outstanding shares of common stock is required for the adoption
of our Second Amended and Restated 2006 Stock Plan and of the amendments to
our
articles of incorporation referred to in paragraph 2 of the accompanying notice
of
special meeting.
Under
the
Nevada General Corporation Law, stockholders do not have any rights of appraisal
or similar rights of dissenters with respect to any of the proposals set forth
in this proxy statement.
Interest
of Officers and Directors in Matters to Be Acted Upon
None
of
our officers or directors have any interest in any of the matters to be acted
upon.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information relating to the beneficial ownership
of
the Company’s common stock by the Company’s officers and directors,
individually, and by the Company’s officers and directors as a group as of July
11, 2006.
|
Name
of Stockholder
|
Number
of Shares
|
Percentage
of Class
|
|
Seth
Grae
|
6,000,000
|
5.5%
|
|
Thomas
Graham, Jr.
|
190,000
|
*
|
|
Cornelius
J. Milmoe
|
75,000
|
*
|
|
Andrey
Mushakov
|
0
|
|
|
Dennis
Hays
|
0
|
|
|
Larry
Goldman
|
75,000
|
*
|
|
Directors
and officers as a group (4 persons)
|
6,340,000
|
5.8%
|
*
Less
than 1%.
EXECUTIVE
COMPENSATION
The
following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to Seth Grae, the Company’s Chief
Executive Officer, Paul Carter, the Company’s former Chief Executive Officer,
President and Chairman, and Charles H. Merchant, the Company’s Interim Chief
Executive Officer, Chief Operating Officer and Secretary, during the Company’s
last three completed fiscal years. No executive officer of the Company received
total annual salary and bonus in excess of $100,000 during any of the last
three
completed fiscal years.
SUMMARY
COMPENSATION TABLE
|
Name
And
Principal
Position
|
Year
|
Annual
Compensation
|
Long-Term
Compensation
|
|
Salary
($)
|
Bonus
($)
|
Other
Annual
Comp-
ensation
($)
(3)
|
Awards
|
Payouts
|
All
Other
Compen-
sation
($)
|
|
Restricted
Stock
Awards
($)
|
Securities
Under-lying
Options/
SARs
(#)
|
LTIP
Payouts
($)
|
| |
|
|
|
|
|
|
|
|
|
Seth
Grae, Chief Executive Officer (1)
|
2006
|
38,095
|
0
|
0
|
5,000,000
|
7,200,000
|
0
|
0
|
|
2005
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
2004
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
| |
|
|
|
|
|
|
|
|
|
Paul
Carter, Former Chief Executive Officer, President, and Chairman
(2)
|
2006
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
2005
|
0
|
0
|
40,000
|
0
|
0
|
0
|
0
|
|
2004
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
| |
|
|
|
|
|
|
|
|
|
Charles
H. Merchant,
Interim
Chief Executive Officer, Chief Operating Officer and
Secretary(3)
|
2006
|
0
|
0
|
0
|
85,000
|
0
|
0
|
0
|
|
2005
|
0
|
0
|
0
|
42,500
|
0
|
0
|
0
|
|
2004
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
_____________________________
(1) Mr.
Grae
became the Company’s Chief Executive Officer on March 17, 2006.
(2) Mr.
Carter served as Novastar’s Chief Executive Officer from 2002 until December 1,
2005.
(3) Mr.
Merchant served as Novastar’s interim Chief Executive Officer from December 1,
2005 until March 17, 2006.
(4) The
value
of perquisites and other personal benefits, securities and property for the
named executive officers that do not exceed the lesser of $1,000 or 10% of
the
total of the annual salary and bonus is not reported herein.
OPTION/SARs
GRANTS IN LAST FISCAL YEAR
The
following table sets forth the grant of stock options made during the year
ended
June 30, 2006 to the persons named in the Summary Compensation
Table:
|
Name
|
Number
of Securities
Underlying
Options
Granted
|
%
of Total Options Granted to Employees in Fiscal
Period
|
Exercise
Price
per Share
|
Expiration
Date
|
| |
|
|
|
|
|
Seth
Grae
|
7,200,000
|
[
]
|
$0.795
|
February
14, 2016
|
|
Paul
Carter
|
0
|
N/A
|
N/A
|
N/A
|
|
Charles
H. Merchant
|
0
|
N/A
|
N/A
|
N/A
|
AGGREGATED
OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR-END OPTION/SAR VALUES
The
following table sets forth information with respect to unexercised stock options
held by the persons named in the Summary Compensation Table at June 30, 2006.
No
stock options were exercised in the last fiscal year by those
persons.
| |
Number
of Unexercised
Options
at Fiscal Year-End
|
Value
of Unexercised in-
the-Money
Options at Fiscal
Year-End($)
|
|
Name
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
| |
|
|
|
|
|
Seth
Grae
|
0
|
7,200,000
|
0
|
0
|
| |
|
|
|
|
|
Paul
Carter
|
0
|
0
|
0
|
0
|
| |
|
|
|
|
|
Charles
H. Merchant
|
0
|
0
|
0
|
0
|
| |
|
|
|
|
LONG-TERM
INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
The
following table sets forth information with respect to awards made to persons
named in the Summary Compensation Table pursuant to a long-term incentive plan
in the fiscal year ended June 30, 2006.
|
Name
|
Number
of Shares, Units or Other Rights
|
Performance
or Other Period Under Maturation or Payout
|
Estimated
Future Payouts Under Non-Stock
Price-Based
Plans
|
|
Threshold
|
Target
|
Maximum
|
|
Seth
Grae
|
0
|
0
|
0
|
0
|
0
|
|
Paul
Carter
|
0
|
0
|
0
|
0
|
0
|
|
Charles
H. Merchant
|
0
|
0
|
0
|
0
|
0
|
Compensation
of Directors
Novastar
does not currently have any independent directors. All of Novastar’s current
directors are also officers of Novastar and are compensated for the services
that they provide to Novastar in their capacity as officers. The current
directors of Novastar do not receive any additional compensation for the
services they provide to Novastar as directors. Directors are reimbursed for
out
of pocket expenses incurred as a result of their participation on Novastar’s
board. Novastar intends to compensate independent directors that are elected
or
appointed to Novastar’s board in the future.
Employment
Agreements
On
February 14, 2006, Novastar and Seth Grae entered into an employment agreement
whereby Mr. Grae became Chief Executive Officer and President of the Company.
Pursuant to the employment agreement, Novastar has agreed to pay Mr. Grae an
annual salary of $275,000 for performing the duties described in the employment
agreement. In addition, Novastar issued to Mr. Grae pursuant to the agreement
5,000,000 shares of restricted stock and granted to Mr. Grae 7,200,000
non-qualified stock options, with a term of ten years at an exercise price
of
$0.795 per share. The options vest with respect to 6/48 of the total number
of
shares granted on August 14, 2006 and vest 1/48 on the first day of each month
thereafter until all options have vested. The 5,000,000 shares of restricted
stock vest immediately on issuance but 2,500,000 may not be directly or
indirectly sold, transferred or otherwise disposed of for a period of one year
and the remaining 2,500,000 for a period of two years, except for sales,
transfers or other dispositions made to family members, for estate planning
purposes, or pursuant to a qualified domestic relations order. The shares will
also be subject to the provisions of Rule 144 promulgated under the Securities
Act. Mr. Grae was named CEO of Novastar on March 17, 2006, though the agreement
did not take effect until April 2, 2006, the date that Novastar obtained D&O
liability insurance coverage, and the agreement terminates on April 2, 2011
the
fifth anniversary of the date of the agreement.
On
June
5, 2006, the Company entered into a definitive employment agreement
with
Cornelius J. Milmoe, the Chief Operating Officer and a
Director of the Company. Under the terms of the agreement,
the
Company agreed to pay Mr. Milmoe an annual salary of $200,000, as consideration
for performance of his duties as Chief Operating Officer. Mr. Milmoe was paid
an
amount equal to a 75% pro rata share of his annual salary, as consideration
for
services already performed by him on behalf of the Company from April 3, 2006
through May 1, 2006. In addition, the Company has agreed (i) to issue to Mr.
Milmoe, 75,000 (37,500 restricted) shares of the common stock the Company and
(ii) to grant to Mr. Milmoe an incentive ten-year option for the purchase of
525,000 shares of the common stock the Company, at an exercise price of $0.465
per share. The initial
term of
the Mr. Milmoe’s employment agreement will be one year and but will
automatically be extended for
additional one-year periods unless terminated by either party in accordance
with
its terms and conditions.
Pursuant
to a consulting agreement dated June 13, 2006, Larry Goldman became Novastar's
Treasurer and Acting Chief Financial Officer. Mr. Goldman owns a total of 75,000
restricted shares of Novastar Common Stock, which were issued upon entry into
the consulting agreement
with Mr.
Goldman. Mr.
Goldman
receives hourly compensation of $170.00 for services provided to Novastar,
subject to a maximum of ten hours per day. The contract includes payment for
a
minimum of 40 hours per month. The contract can be terminated by Novastar at
any
time, but Novastar must provide at least 180 days advance written notice.
Pursuant to the consulting agreement, Mr. Goldman was granted nonqualified
options for the purchase of an additional 350,000 shares of Novastar common
stock pursuant to Novastar's 2006 stock plan. Upon consummation of the merger,
Mr. Goldman will own a total of 75,000 shares of Novastar common stock and
options to purchase a total of 350,000 shares of Novastar common
stock.
On
July
27, 2006, Ambassador Graham entered into an employment and stock option
agreement with Novastar. Under the employment
agreement, Ambassador Graham acts as the Chairman and Secretary of
Novastar. Pursuant to the employment agreement, Novastar has agreed to pay
Ambassador Graham an annual salary of $130,000 for part-time employment of
an
average of three out of five business days per week or 24 hours of his business
time per week. In addition, Novastar granted to Ambassador Graham non-qualified
stock options for the purchase of 1,500,000 shares, with a term of ten years
at
an exercise price of $0.49 per share. The options vest in equal monthly
installments over a three year period. Ambassador Graham owns a total of 40,025
shares of Thorium Power common stock and options to purchase 100,000 shares
of
Thorium Power common stock at an exercise price of $10 per share. Ambassador
Graham owns 190,000 shares of Novastar common stock. Upon consummation of the
merger, Ambassador Graham will own a total of 1,215,761 shares of Novastar
common stock and he will own options to purchase 4,062,800 shares of Novastar
common stock.
On
July
27, 2006, Mr. Mushakov entered into an employment and stock option agreement
with Novastar. Under the employment agreement, Mr. Mushakov was appointed as
the
Executive Vice President - International Nuclear Operations. Pursuant to the
employment agreement, Novastar has agreed to pay Mr. Mushakov an annual salary
of $160,000 for performing the duties described in the agreement. In addition,
Novastar issued to Mr. Mushakov, pursuant to the agreement, 1,500,000 shares
of
restricted stock and granted Mr. Mushakov 2,250,000 non-qualified stock options
with a term of ten years at an exercise price of $0.49 per share. On July 27,
2006, 234,375 options vested and the remaining 2,015,625 options will vest
in
equal monthly installments. The 1,500,000 shares of restricted stock vest
immediately on issuance, but 750,000 may not be directly or indirectly sold,
transferred or otherwise disposed of for a period of one year and the remaining
750,000 for a period of two years, except for sales, transfers or other
dispositions made to family members for estate planning purposes or pursuant
to
a qualified domestic relations order. Mr. Mushakov owns options to purchase
a
total of 37,500 shares of Thorium Power common stock. Upon consummation of
the
merger, Mr. Mushakov will own 1,500,000 shares of Novastar common stock and
3,211,050 options to purchase shares of Novastar common stock.
On
July
10, 2006, Mr. Hays entered into an employment agreement with Novastar. Under
the
employment agreement, Mr. Hays was appointed as the Vice President, Director
of
Government Relations and Corporate Secretary of the Company. Pursuant to the
employment agreement, Novastar agreed to pay Mr. Hays an annual salary of
$175,000 for performing the duties described in the agreement. Mr. Hays will
also be eligible for an annual bonus of up to 50% of his annual salary at the
sole discretion of the Board of Directors. In addition, Novastar granted to
Mr.
Hays pursuant to the agreement 500,000 non-qualified stock options with a term
of three years at an exercise price of $0.49 per share. The options will vest
in
equal monthly installments.
Other
than the agreements with Messrs. Grae, Milmoe, Goldman, Graham, Mushakov, and
Hays, the Company has not entered into formal employment agreements with any
other of its executive officers.
Benefit
Plans
On
July
17, 2006, Novastar amended and restated its Amended and Restated 2006 Stock
Plan. The Plan permits the Board of Directors (or a committee as designated
by
the Board of Directors), as the administrator of the plan, to grant certain
types of incentive stock options and share awards to persons in a business
relationship with the Company. The description of the Plan below under the
caption “The Second Amended and Restated 2006 Stock Plan,” provides disclosure
of all of the material provisions of the Plan.
Other
than the Plan, the Company does not have any pension plan, profit sharing plan,
or similar plans for the benefit of the Company’s officers, directors or
employees. However, the Company may establish such plans in the
future.
Proposal
No. 1
APPROVAL
OF THE
THE
SECOND AMENDED AND RESTATED 2006 STOCK PLAN
On
July
17, 2006, the board of directors amended and restated the Plan, which was
originally adopted on April 25, 2006, subject to the receipt of stockholder
approval of the Plan within one year of its adoption. The Following is a summary
of all of the material provisions of the Plan. Reference is made to the full
text of the Plan, which is attached hereto as Appendix
A.
SUMMARY
DESCRIPTION OF THE PLAN
Purpose.
The
purpose of the Plan is to secure for the Company and its stockholders the
benefits arising from capital stock ownership by employees, officers and
directors of, and consultants or advisors to, the Company and its subsidiary
corporations who are expected to contribute to the Company’s future growth and
success. The Plan permits grants of options to purchase shares of common stock
and awards of shares of common stock that are restricted (i.e.,
subject to a vesting).
Administration.
The Plan
will be administered by the Board of Directors or a committee. The plan is
currently being administered by the Company’s Board of Directors. The Board of
Directors has the authority to determine the specific terms and conditions
of
all options and restricted stock awards granted under the Plan, including,
without limitation, the number of shares subject to each option or restricted
stock award, the price to be paid for the shares and the applicable vesting
criteria. The Board of Directors will make all other determinations necessary
or
advisable for the administration of the Plan.
Eligibility.
Options
and restricted shares may be granted under the Plan to persons who are, at
the
time of grant, in a business relationship with the Company; provided,
that
incentive stock options may only be granted to individuals who are employees
of
the Company (within the meaning of Section 3401(c) of the Internal Revenue
Code
of 1986, as amended (the Code). The Plan defines business relationship as a
relationship in which a person is serving the Company, its parent, if
applicable, or any of its subsidiaries in the capacity of an employee, officer,
director, advisor or consultant.
Shares
Available for Awards.
Subject
to adjustment as described below, (a) no more than an aggregate of 75 million
may be issued under incentive stock options during the term of the Plan, (b)
no
more than 37.5 million shares may be issued in the form of restricted share
awards during the term of the Plan, (c) the maximum number of shares with
respect to which options may be granted to one person during any fiscal year
may
not exceed 8 million shares, and (d) the maximum number of restricted shares
which may be granted to one person during any fiscal year may not exceed 5
million shares.
The
number and kind of shares available under the Plan are subject to adjustment
in
the event of certain reorganizations, mergers, combinations, recapitalizations,
stock splits, stock dividends, or other similar events which change the number
or kind of shares outstanding.
Vesting
and Option Periods.
Except
as may be provided in an applicable option agreement or restricted stock
purchase agreement, no option or restricted stock award made to a reporting
person (for purposes of Section 16(b) of the Securities Exchange Act of 1934)
under the Plan may be exercisable or may vest until at least six (6) months
after the date of grant, and once exercisable, an option will remain exercisable
until the expiration or earlier termination of the option. Each option made
to a
participant will expire on such date as is determined by the Board of Directors,
but not later than 10 years after the date of grant.
Transferability.
The Plan
provides, with limited exceptions, that rights or benefits under any option
are
not assignable or transferable except by will or the laws of descent and
distribution, and that only the participant may exercise the option during
the
participant’s lifetime. Restricted shares may only be transferred after the
applicable restrictions have lapsed.
Option
Grants.
An
option is the right to purchase shares of common stock at a future date at
a
specified price. An option may either be an incentive stock option, as defined
in the Code, or a nonqualified stock option. An incentive stock option may
not
be granted to a person who owns more than 10% of the total combined voting
power
of all classes of stock unless the exercise price is at least 110% of the fair
market value of shares of common stock subject to the option (compared to 100%
of fair market value for persons holding less than 10%) and such option by
its
terms is not exercisable after expiration of five (5) years from the date such
option is granted (compared to 10 years for persons holding less than 10%).
To
the extent that the aggregate fair market value (defined for this purpose as
the
fair market value of the stock subject to the options as of the date of grant
of
the options) of stock with respect to which incentive stock options first become
exercisable in any calendar year exceeds $100,000 (taking into account stock
subject to incentive stock options granted under the Plan or any other plan),
such options will be treated as nonqualified stock options.
Full
payment in cash or by check to the order of the Company in an amount equal
to
the exercise price of the options being exercised for shares purchased on the
exercise of any option, except as provided below, must be made at the time
of
such exercise by or (i) by delivery of shares of common stock having a fair
market value on the date of exercise equal in amount to the exercise price
of
the options being exercised, (ii) through any cashless exercise feature that
may
be included in the option agreement covering a particular option grant or (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 or (iii) by
any
combination of such methods of payment.
Restricted
Stock Awards.
The
Board of Directors may, from time to time in its discretion, award restricted
shares to participants having a business relationship with the Company and
may
determine the number of restricted shares awarded and the terms and conditions
of, and the amount of payment, if any, to be made by the recipient for such
restricted shares. At the time an award of restricted shares is made, the Board
of Directors is required to establish a period of time applicable to such award
which shall not be less than one year nor more than 10 years. Each award of
restricted shares may have a different restricted period. In lieu
of
establishing a restricted period, the Board of Directors may establish
restrictions based only on the achievement of specified performance measures.
At
the time an award is made, the Board of Directors may, in its discretion,
prescribe conditions for the incremental lapse of restrictions during the
restricted period and for the lapse of termination of restrictions upon the
occurrence of other conditions in addition to or other than the expiration
of
the restricted period with respect to all or any portion of the restricted
shares. Such conditions may include, without limitation, the death or disability
of the employee to whom restricted shares are awarded, retirement of the
employee pursuant to normal or early retirement under any retirement plan of
the
Company or termination of the employee’s employment other than for cause, or the
occurrence of a change in control of the Company. Such conditions may also
include performance measures. The Board of Directors may also, in its
discretion, shorten or terminate the restricted period or waive any conditions
for the lapse or termination of restrictions with respect to all or any portion
of the restricted shares at any time after the date the award is made.
Holders
of restricted shares generally have the rights and privileges of a stockholder
as to such restricted shares, including the right to vote such restricted
shares, except that the following restrictions apply: (i) with respect to each
restricted share, the employee shall not be entitled to delivery of a
certificate without a legend until the expiration or termination of the
restricted period, and the satisfaction of any other conditions prescribed
by
the Board of Directors, relating to such restricted share; (ii) with respect
to
each restricted share, such share may not be sold, transferred, assigned,
pledged, or otherwise encumbered or disposed of until the expiration of the
restricted period, and the satisfaction of any other conditions prescribed
by
the Board of Directors, relating to such restricted share (except, subject
to
the provisions of the employee’s stock restriction agreement, by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules promulgated thereunder); and
(iii) all of the restricted shares as to which restrictions have not at the
time
lapsed shall be forfeited and all rights of the employee to such restricted
shares shall terminate without further obligation on the part of the Company
unless the employee has remained a regular full-time employee of the Company
or
any of its subsidiaries, or a consultant to the Company or a subsidiary under
a
post-employment consulting arrangement, until the expiration or termination
of
the restricted period and the satisfaction of any other conditions prescribed
by
the Board of Directors applicable to such restricted shares.
Termination
of Employment.
Generally, an optionee may exercise an option (but only to the extent such
option was exercisable at the time of termination of the optionee’s business
relationship) at any time within three (3) months following the termination
of
the optionee’s business relationship with the Company or within one (1) year if
such termination was due to the death or disability of the optionee, but, except
in the case of the optionee’s death, in no event later than the expiration date
of the option. If the termination of the optionee’s employment is for cause or
is otherwise attributable to a breach by the optionee of an employment or
confidentiality or non-disclosure agreement, the option shall expire immediately
upon such termination. The Board of Directors has the power to determine what
constitutes a termination for cause or a breach of an employment or
confidentiality or non-disclosure agreement, whether an optionee has been
terminated for cause or has breached such an agreement, and the date upon which
such termination for cause or breach occurs.
No
incentive stock option may be exercised unless at the time of such exercise
the
optionee is, and has been continuously since the date of grant of his or her
option, employed by the Company, except that: (i) an incentive stock option
may
be exercised within the period of three (3) months after the date the optionee
ceases to be an employee of the Company (or within such lesser period as may
be
specified in the applicable option agreement), provided,
that
the agreement with respect to such option may designate a longer exercise period
and that the exercise after such three (3) month period shall be treated as
the
exercise of a non-statutory option under the Plan; (ii) if the optionee dies
while in the employ of the Company, or within three (3) months after the
optionee ceases to be such an employee, the incentive stock option may be
exercised by the person to whom it is transferred by will or the laws of descent
and distribution within the period of one (1) year after the date of death
(or
within such lesser period as may be specified in the applicable option
agreement); and (iii) if the optionee becomes disabled (within the meaning
of
Section 22(e)(3) of the Code or any successor provisions thereto) while in
the
employ of the Company, the incentive stock option may be exercised within the
period of one (1) year after the date the optionee ceases to be such an employee
because of such disability (or within such lesser period as may be specified
in
the applicable option agreement).
Recapitalizations,
Mergers and Related Transactions.
If,
through or as a result of any recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar transaction, (i)
the
outstanding shares of common stock are increased, decreased or exchanged for
a
different number or kind of shares or other securities of the Company, or (ii)
additional shares or new or different shares or other non-cash assets are
distributed with respect to such shares of common stock or other securities,
an
appropriate and proportionate adjustment is made in (x) the maximum number
and
kind of shares reserved for issuance under the Plan, (y) the number and kind
of
restricted shares granted and shares or other securities subject to any then
outstanding options under the Plan, and (z) the exercise price for each share
subject to any then outstanding options under the Plan, without changing the
aggregate purchase price as to which such options remain
exercisable.
If
the
Company is the surviving corporation in any reorganization, merger or
consolidation of the Company with one or more other corporations, any then
outstanding restricted shares or option granted pursuant to the Plan will
pertain to and apply to the securities to which a holder of the number of shares
of common stock subject to such restricted shares or options would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the purchase
price.
If
there
is a consolidation or merger in which the Company is not the surviving
corporation, or sale of all or substantially all of the assets of the Company
in
which outstanding shares of common stock are exchanged for securities, cash
or
other property of any other corporation or business entity or in the event
of a
liquidation of the Company (collectively, a Corporate Transaction), the Board
of
Directors of the Company, or the board of directors of any corporation assuming
the obligations of the Company, may, in its discretion, take any one or more
of
the following actions, as to outstanding options and restricted shares: (i)
provide that such options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), (ii) upon written notice, provide that all unexercised options will
terminate immediately prior to the consummation of such transaction unless
such
options are exercised by the optionee within a specified period following the
date of such notice, (iii) in the event of a Corporate Transaction under the
terms of which holders of the common stock will receive upon consummation
thereof a cash payment for each share surrendered in the Corporate Transaction
(the Transaction Price), make or provide for a cash payment to the optionees
equal to the difference between (A) the Transaction Price times the number
of
shares of common stock subject to such outstanding options (to the extent then
exercisable at prices not in excess of the Transaction Price) and (B) the
aggregate exercise price of all such outstanding options in exchange for the
termination of such options, and (iv) provide that all restrictions on
restricted shares shall lapse in full or in part and all or any outstanding
options shall become exercisable in full or in part immediately prior to such
event.
Termination
of or Amendments to the Plan.
The
authority to grant new options under the Plan will terminate on the earlier
of
the close of business on February 16, 2016, or the date on which all shares
available for issuance under the Plan shall have been issued pursuant to the
exercise or cancellation or restricted shares or options granted under the
Plan,
unless the Plan is terminated prior to that time by the Board of Directors.
Such
termination typically will not affect rights of participants which accrue prior
to such termination. The Board of Directors may at any time, and from time
to
time, modify or amend the Plan in any respect, except that if at any time the
approval of the stockholders of the Company is required under Section 422 of
the
Code or any successor provision with respect to incentive stock options, or
under Rule 16b-3, the Committee may not effect such modification or amendment
without such approval. Amendments to the Plan will not, without the written
consent of a participant, adversely affect such participant’s rights under an
option previously granted.
Material
Federal Income Tax Consequences of Awards under the Plan.
The
following is a brief discussion of the federal income tax consequences of Awards
under the present provisions of the Code (with a limited discussion of Section
409A of the Code based upon the IRS guidance published as of the date of this
prospectus). The Company's deductions for compensation paid under the Plan
are
in all cases subject to the requirement of reasonableness.
The
American Jobs Creation Act of 2004 (Act) added Section 409A to the Code, which
prescribes strict rules for amounts deferred under “nonqualified deferred
compensation plans.” The rules generally apply only to amounts deferred after
December 31, 2004, and earnings on those amounts. For purposes of Section 409A
of the Code, an amount is considered “deferred” at the time that it was earned
and would have been paid but for a deferral election.
Section
409A of the Code rules cover any “nonqualified deferred compensation plan,”
which includes any plan, agreement, or arrangement that provides for the
deferral of compensation. On January 10, 2005, the Internal Revenue Service
(IRS) issued Notice 2005-1, providing preliminary guidance on the impact of
Section 409A of the Code on equity compensation plans. On September 29, 2005,
the IRS issued subsequent guidance, in the form of proposed regulations
(Proposed 409A Regulations), which also addressed how Section 409A of the Code
will apply to plans like the Plan and outstanding awards under such plans.
The
IRS is expected to issue final regulations later in 2006. The following
discussion of federal income taxes reflects the initial guidance and the
Proposed 409A Regulations, but may need to be changed to reflect the final
regulations, when issued. Furthermore, the Plan and certain Awards under the
Plan might have to be revised to conform to the requirements of Section 409A
of
the Code.
Incentive
Stock Options.
In
general, neither the grant nor exercise of an incentive stock option will cause
the recognition of ordinary income by the Participant provided the Participant
does not dispose of the underlying Shares within two years from the date of
the
grant of the option or within one year after the exercise of the option.
However, the amount by which the fair market value of the Shares at the time
of
exercise exceeds the exercise price will be treated as an item includable in
the
tax base upon which "alternative minimum tax" may be imposed. In general,
neither the grant nor the exercise of an incentive stock option will produce
a
tax deduction for the Company.
If
the
Shares purchased by the Participant pursuant to the exercise of an incentive
stock option are disposed of after the expiration of two years from the date
of
the grant of the option and after one year from the date of exercise, the gain
or loss on the sale, based upon the difference between the amount realized
and
the exercise price, will constitute long-term capital gain or loss. If the
Shares purchased by a Participant pursuant to the exercise of an incentive
stock
option are sold at a gain prior to the expiration of either of such periods,
so
much of the gain as does not exceed the difference between the exercise price
and the lesser of the fair market value of the Shares on the date of exercise
or
the amount realized on the date of sale will be taxable as ordinary income
to
the Participant; and a tax deduction will be allowable to the Company in an
amount equal to the ordinary income recognized by the Participant.
According
to the Proposed 409A Regulations, the grant of an incentive stock option does
not constitute a deferral of compensation and is not covered by Section 409A
of
the Code. Subsequent modifications that would cause the option no longer to
qualify as an incentive stock option could, however, result in a deferral of
compensation subject to Section 409A of the Code.
Nonqualified
Stock Options.
The
grant of a nonqualified option will not cause the recognition of ordinary income
by the Participant or entitle the Company to a deduction for federal income
tax
purposes because, under existing Treasury Regulations, such an option does
not
have a "readily ascertainable" fair market value. The exercise of a nonqualified
option that is not subject to any restrictions on the Participant's ownership
or
disposition thereof will cause the recognition of ordinary income in an amount
equal to the difference between the exercise price and the fair market value
on
the exercise date of the Shares purchased by the Participant, and a tax
deduction will be available to the Company in an amount equal to the ordinary
income recognized by the Participant. If restrictions regarding forfeiture
and
transferability apply to the Shares upon exercise, the time of recognition
of
ordinary income and the amount thereof, and the availability of a tax deduction
to the Company, generally will be determined when such restrictions cease to
apply.
According
to the Proposed 409A Regulations, the grant of a nonqualified stock option
will
constitute a deferral of compensation and will be covered by Section 409A of
the
Code unless: (i) the option is for stock of the service recipient (which
includes a parent or subsidiary related to the service recipient); (ii) the
exercise price is not less than the fair market value of the underlying stock
on
date of grant and the number of Shares subject to the option is fixed on the
original date of grant of the option; (iii) the receipt, transfer or exercise
of
the underlying stock is subject to Section 83 of the Code; and (iv) the option
does not include any feature for the deferral of compensation other than the
deferral of recognition of income until the later of exercise or disposition
of
the option under Treasury Regulation § 1.83-7, or the time the stock acquired
pursuant to the exercise of the option first becomes substantially vested (as
defined in Treasury Regulation § 1.83-3(b)). Even if a nonqualified stock option
satisfies these requirements, subsequent modifications could result in a
deferral of compensation subject to Section 409A of the Code.
Restricted
Stock Awards.
In
general, if stock is granted to the participant but is subject to a "substantial
risk of forfeiture" (e.g., rights to ownership of the stock or units are
conditioned upon the future performance of substantial services by the
Participant) and is nontransferable, a taxable event occurs when the risk of
forfeiture lapses or the stock becomes transferable, whichever first occurs.
At
that time, the participant will recognize ordinary income to the extent of
the
excess of the fair market value of the stock on such date over the participant's
cost (if any) for the stock, and the same amount is then deductible by the
Company. Under certain circumstances, the Participant, by making an election
under Section 83(b) of the Code within 30 days after receiving the award, can
accelerate federal income tax recognition with respect to stock subject to
a
substantial risk or forfeiture and transferability restrictions, in which event
the ordinary income amount and the Company's deduction will be measured and
timed as of the grant date of the stock. Any cash dividends received by the
participant with respect to stock prior to the date on which the risk of
forfeiture lapses or the stock becomes transferable will be treated by the
participant as compensation taxable as ordinary income, and the Company will
be
entitled to a deduction equal to the amount of ordinary income realized by
the
participant.
According
to the Proposed 409A Regulations, restricted stock is not subject to Section
409A of the Code merely because taxation is delayed until the restrictions
lapse; however, other features could cause Section 409A of the Code to apply
to
restricted stock. In addition, Section 409A of the Code would not generally
apply to stock units that are paid on vesting or within 2 ½ months of the end of
year in which they vested, but would apply to stock units that are paid more
than 2 ½ months after the end of year during which they vested.
NEW
PLAN BENEFITS
NOVASTAR
RESOURCES LTD. 2006 STOCK PLAN
|
Name
and Position
|
Dollar
Value ($)
|
Number
of Shares
|
|
Seth
Grae
CEO
and President
|
3,600,000
|
7,200,000
|
|
Cornelius
J. Milmoe
Chief
Operating Officer
|
262,500
|
525,000
|
|
Larry
Goldman
Chief
Financial Officer
|
175,000
|
350,000
|
|
Thomas
Graham Jr.
Chairman
|
750,000
|
1,500,000
|
|
Dennis
Hays
Vice
President and Secretary
|
250,000
|
500,000
|
|
Andrey
Mushakov
Executive
Vice President - International Nuclear Operations
|
1,125,000
|
2,250,000
|
|
Executive
Group
|
6,162,500
|
12,325,000
|
|
Non-Executive
Director Group
|
N/A
|
N/A
|
|
Non-Executive
Officer Employee Group
|
3,852,262.50
|
7,704,525
|
The
Company’s common stock, $0.01 par value per share, is the security underlying
the options and restricted share grants that may be made from time to time
under
the Plan. The Company may issue up to 75,000,000 shares of its common stock,
up
to 75,000,000 options to acquire its common stock and up to 37,500,000
restricted shares pursuant to awards granted under the Plan. As of July 10,
2006, the closing price of the Company’s common stock as quoted on the
Over-the-Counter Bulletin Board was $0.50. The market value of all of the common
stock underlying the Plan as of such date was $10,000,000. The Company does
not
expect to receive any consideration for the grant or extension of options or
restricted share awards under the Plan.
Vote
Required
The
affirmative vote of the holders of a majority of the outstanding shares of
common stock is required for the adoption of this proposal. Abstentions and
non-broker votes have the same legal effect as a vote cast against this
Proposal.
THE
BOARD OF DIRECTORS DEEMS PROPOSAL NO. 1 - APPROVAL OF THE AMENDED AND RESTATED
2006 STOCK PLAN TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS
AND RECOMMENDS A VOTE “FOR” APPROVAL THEREOF.
PROPOSAL
NO. 2
APPROVAL
OF AN AMENDMENT OF THE ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED COMMON
SHARES FROM 250,000 TO 500,000
The
board
of directors has approved an amendment to our articles of incorporation to
increase the number of authorized shares of common stock from 250,000,000 to
500,000,000. The proposed amendment is attached hereto as Appendix
B.
There
were 155,126,474 shares
of
common stock outstanding as of the Record Date.
On
February 21, 2006, the Company reported its entry into an Agreement and Plan
of
Merger, dated February 14, 2006, with Thorium Power, Inc. (Thorium Power) and
TP
Acquisition Corp., a subsidiary of the Company (Acquisition Sub), relating
to
the acquisition by the Company of one hundred percent (100%) of the outstanding
capital stock of Thorium Power through a reverse merger of Acquisition Sub
with
and into Thorium Power. In connection with the Merger, the Company will issue
159,504,127 shares of its common stock, including 23,866,104 shares of common
stock which are issuable upon the exercise of options and warrants granted
in
connection with the Merger.
As
a
result of the stock issuances associated with the Merger, potential stock
issuances under the Second Amended and Restated 2006 Stock Plan, and other
share
commitments, the total number of shares of common stock authorized for issuance
by the Company must be increased.
This
amendment of our articles of incorporation will increase of the number of
authorized shares of common stock to 500,000,000 in order to accommodate the
total number of shares that the Company could be required to issue and to
provide the Company with greater flexibility with respect to its capital
structure for such purposes as additional equity financing and stock based
acquisitions that may occur in the future. Subsequent to the increase, the
Board
of Directors could issue stock without the approval of the stockholders.
Having
a
substantial number of authorized but unissued shares of common stock that are
not reserved for specific purposes will allow the Company to take prompt action
with respect to corporate opportunities that develop, without the delay and
expense of convening a meeting of stockholders or obtaining the written consent
of stockholders for the purpose of approving an increase in the Company’s
capitalization. The issuance of additional shares of common stock may, depending
upon the circumstances under which these shares are issued, reduce stockholders’
equity per share and may reduce the percentage ownership of common stock by
existing stockholders.
It
is not
the present intention of the board of directors to seek stockholder approval
prior to any issuance of shares of common stock that would become authorized
by
the amendment unless otherwise required by law or regulation. Frequently,
opportunities arise that require prompt action, and it is the belief of the
board of directors that the delay necessitated for stockholder approval of
a
specific issuance could be to the detriment of the Company and its stockholders.
When
issued, the additional shares of common stock authorized by the amendment will
have the same rights and privileges as the shares of common stock currently
authorized and outstanding. Holders of common stock have no preemptive rights
and, accordingly, stockholders would not have any preferential rights to
purchase any of the additional shares of common stock when additional shares
are
issued.
The
increase in our authorized shares of common stock described above is a condition
to the closing of the Merger and must be effected prior to the time the Merger
becomes effective.
Vote
Required
The
affirmative vote of the holders of a majority of the outstanding shares of
common stock is required for the adoption of this proposal. Abstentions and
non-broker votes have the same legal effect as a vote cast against this
Proposal. If approved, the amendment will become effective following the filing
of the certificate of amendment with the Secretary of State of the State of
Nevada.
THE
BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 - APPROVAL OF AN AMENDMENT OF THE
ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED COMMON SHARES FROM 250,000,000
TO 500,000,000 TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS
AND RECOMMENDS A VOTE “FOR” APPROVAL THEREOF.
Proposal
No. 3
APPROVAL
OF AMENDMENT OF THE ARTICLES OF INCORPORATION TO CHANGE OUR NAME TO THORIUM
POWER, LTD.
The
Board
of Directors has approved an amendment to our articles of
incorporation
changing
the Company’s name to “Thorium Power, Ltd.” The name change is intended to more
accurately reflect the nature our business after the Merger is completed.
Vote
Required
The
affirmative vote of the holders of a majority of the outstanding shares of
common stock is required for the adoption of this proposal. Abstentions and
broker non-votes have the same legal effect as a vote cast against this
proposal. If approved, the amendment will become effective following the filing
of the certificate of amendment with the Secretary of State of the State of
Nevada.
THE
BOARD OF DIRECTORS DEEMS PROPOSAL NO. 3 - APPROVAL OF AN AMENDMENT OF THE
ARTICLES OF INCORPORATION TO CHANGE OUR NAME TO THORIUM POWER, LTD. TO BE IN
THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE “FOR”
APPROVAL THEREOF.
Proposal
No. 4
APPROVAL
OF AMENDMENT OF THE ARTICLES OF INCORPORATION TO INCREASE THE MAXIMUM NUMBER
OF
DIRECTORS THAT MAY BE APPOINTED TO THE COMPANY’S BOARD OF DIRECTORS FROM FIVE
(5) TO FIFTEEN (15)
The
Board
of Directors has approved an amendment to our articles of incorporation
increasing the maximum number of directors that may be appointed to the
Company’s Board of Directors from five (5) to fifteen (15).
We
believe that our board of directors should consist of a significant number
of
directors who are not affiliated with the Company. We also believe that our
directors should possess the breadth and depth of experience and skills
necessary for proper oversight of our affairs and adequate participation of
unaffiliated directors in key committees of the board, particularly those
committees the composition of which could in the future be subject to applicable
listing requirements or regulations.
The
proposed authorization will provide flexibility for the Board of Directors
to
make future appointments as and when suitable candidates are needed and
identified. This will also facilitate our ability to address evolving governance
standards and facilitate compliance with any new rules, regulations or standards
issued or adopted by the Securities and Exchange Commission or by an applicable
securities exchange.
Vote
Required
The
affirmative vote of the holders of a majority of the outstanding shares of
common stock is required for the adoption of this proposal. Abstentions and
broker non-votes have the same legal effect as a vote cast against this
proposal. If approved, the amendment will become effective following the filing
of the certificate of amendment with the Secretary of State of the State of
Nevada.
THE
BOARD OF DIRECTORS DEEMS PROPOSAL NO. 4 - APPROVAL OF AN AMENDMENT OF THE
ARTICLES OF INCORPORATION TO INCREASE THE MAXIMUM NUMBER OF DIRECTORS THAT
MAY
BE APPOINTED TO THE COMPANY’S BOARD OF DIRECTORS FROM FIVE (5) TO FIFTEEN
(15).
OTHER
BUSINESS AT THE SPECIAL MEETING
Management
is not aware of any others matters to come before the special meeting. However,
to the extent that additional matters do come before the meeting or any
postponement or adjournment thereof, the proxies confer discretionary authority
with respect to acting thereon, and the persons named in such proxies intend
to
vote, act and consent in accordance with their best judgment with respect
thereto.
SHAREHOLDER
PROPOSALS
Any
shareholder who wishes to submit a proposal for action to be included in the
proxy statement for our 2007 special meeting of shareholders must submit the
proposal so that it is received by our corporate secretary by May 27,
2007.
MISCELLANEOUS
All
stockholder inquiries, including requests for the following: (i) change of
address; (ii) replacement of lost stock certificates; (iii) common stock name
registration changes; (iv) quarterly reports on Form 10-QSB; (v) Annual Reports
on Form 10-KSB; (vi) proxy material; and (vii) information regarding
stockholdings, should be directed to Dennis Hays, Corporate Secretary, at 8300
Greensboro Drive, Suite 800, McLean, Virginia, 22102.
In
addition, the Company’s public reports, including quarterly reports on Form
10-QSB, Annual Reports on Form 10-KSB and proxy statements can be obtained
through the Securities and Exchange Commission’s EDGAR Database over the
Internet at www.sec.gov.
By
Order of the Board of Directors
/s/Seth
Grae
Chief
Executive Officer and President
August
29, 2006
NOVASTAR
RESOURCES LTD.
PROXY
CARD
Special
Meeting of Shareholders
September
29, 2006
This
Proxy is solicited on behalf of the Board of Directors.
The
undersigned shareholder(s) of NOVASTAR RESOURCES LTD., a Nevada corporation,
hereby acknowledge(s) receipt of the Proxy Statement dated August 29, 2006,
and
hereby appoint(s) Seth Grae and Thomas Graham, Jr., and each of them acting
alone without the other, proxy and attorney-in-fact, with full power of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at a special meeting of Shareholders of Novastar Resources Ltd.,
to
be held on Friday, September 29, 2006 at 10:00 a.m. EST, at the offices of
Thelen Reid & Priest LLP, located at 701 8th Street NW, Washington, DC 20001
and at any postponement or adjournments thereof, and to vote all shares of
common stock which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth on the reverse side:
PLEASE
MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE
(Continued,
and to be signed and dated, on the reverse side.)
THE
DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL NOS. 1 through 4.
THE
SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1 THROUGH 3. IF
ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING THE PERSON NAMED IN THIS
PROXY WILL VOTE IN THEIR DISCRETION.
Vote
on
Proposals
Proposal
No. 1 - To approve the Company’s Second Amended and Restated 2006 Stock
Plan.
¨ FOR ¨ AGAINST
¨ ABSTAIN
Proposal
No. 2 - To authorize an amendment to the Company's Articles of Incorporation
in
order to increase the authorized number of shares of common stock from
250,000,000 shares to 500,000,000 shares.
¨ FOR ¨ AGAINST
¨ ABSTAIN
Proposal
No. 3 - To authorize an amendment to the Company's Articles of Incorporation
changing the Company’s name to Thorium Power, Ltd.
¨ FOR
¨ AGAINST
¨ ABSTAIN
Proposal
No. 4 -
To
authorize an amendment to the Company’s Articles of Incorporation increasing the
maximum number of directors that may be appointed to the Company’s Board of
Directors from five (5) to fifteen (15).
¨ FOR
¨ AGAINST
¨ ABSTAIN
The
undersigned acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Proxy Statement furnished therewith.
PLEASE
SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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Please
sign exactly as name appears at left. Each joint owner should sign.
Executors, administrators, trustees, etc. should give full title
as such.
If signer is a corporation, please give full corporate name by duly
authorized officer. If a partnership, please sign in partnership
name by
authorized person.
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Date: |
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Appendix
A
NOVASTAR
RESOURCES LTD.
SECOND
AMENDED AND RESTATED 2006 STOCK PLAN
1.Purpose.
The
purpose of this plan (the “Plan”) is to secure for Novastar Resources Ltd. (the
“Corporation”) and its stockholders the benefits arising from capital stock
ownership by employees, officers and directors of, and consultants or advisors
to, the Corporation and its subsidiary corporations who are expected to
contribute to the Corporation’s future growth and success. The Plan permits
grants of options to purchase shares of Common Stock, $0.001 par value per
share, of the Corporation (“Common Stock”) and awards of shares of Common Stock
that are restricted as provided in Section 12 (“Restricted Shares”). Those
provisions of the Plan which make express reference to Section 422 of the
Internal Revenue Code of 1986, as amended or replaced from time to time (the
“Code”), shall apply only to Incentive Stock Options (as that term is defined in
the Plan).
2. Type
of Options and Administration.
(a) Types
of Options.
Options
granted pursuant to the Plan shall be authorized by action of the Board of
Directors of the Corporation (or a Committee designated by the Board of
Directors) and may be either incentive stock options (“Incentive Stock Options”)
meeting the requirements of Section 422 of the Code or non-statutory options
which are not intended to meet the requirements of Section 422 of the
Code.
(b) Administration.
The
Plan will be administered by the Board of Directors of the Corporation, whose
construction and interpretation of the terms and provisions of the Plan shall
be
final and conclusive. The Board of Directors may in its sole discretion grant
Restricted Shares and options to purchase shares of Common Stock and issue
shares upon exercise of such options as provided in the Plan. The Board shall
have authority, subject to the express provisions of the Plan, to construe
the
respective option and Restricted Share agreements and the Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan, to determine
the
terms and provisions of the respective option and Restricted Share agreements,
which need not be identical, and to make all other determinations in the
judgment of the Board of Directors necessary or desirable for the administration
of the Plan. The Board of Directors may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any option or
Restricted Share agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect and it shall be the sole and final
judge
of such expediency. No director or person acting pursuant to authority delegated
by the Board of Directors shall be liable for any action or determination under
the Plan made in good faith. The Board of Directors may, to the full extent
permitted by or consistent with applicable laws or regulations (including,
without limitation, applicable state law and Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 (the “Exchange Act”), or any successor rule
(“Rule 16b-3”)), delegate any or all of its powers under the Plan to a committee
(the “Committee”) appointed by the Board of Directors, and if the Committee is
so appointed all references to the Board of Directors in the Plan shall mean
and
relate to such Committee with respect to the powers so delegated. Any director
to whom an option or stock grant is awarded shall be ineligible to vote upon
his
or her option or stock grant, but such option or stock grant may be awarded
any
such director by a vote of the remainder of the directors, except as limited
below.
(c) Applicability
of Rule 16b-3.
Those
provisions of the Plan which make express reference to Rule 16b-3 shall apply
to
the Corporation only at such time as the Corporation’s Common Stock is
registered under the Exchange Act, and then only to such persons as are required
to file reports under Section 16(a) of the Exchange Act (a “Reporting
Person”).
(d) Compliance
with Section 162(m) of the Code.
Section
162(m) of the Code, added by the Omnibus Budget Reconciliation Act of 1993,
generally limits the tax deductibility to publicly held companies of
compensation in excess of $1,000,000 paid to certain “covered employees”
(“Covered Employees”). It is the Corporation’s intention to preserve the
deductibility of such compensation to the extent it is reasonably practicable
and to the extent it is consistent with the Corporation’s compensation
objectives. For purposes of this Plan, Covered Employees of the Corporation
shall be those employees of the Corporation described in Section 162(m)(3)
of
the Code.
(e) Special
Provisions Applicable to Options Granted to Covered Employees.
In
order for the full value of options granted to Covered Employees to be
deductible by the Corporation for federal income tax purposes, the Corporation
may intend for such options to be treated as “qualified performance based
compensation” as described in Treas. Reg. §1.162-27(e) (or any successor
regulation). In such case, options granted to Covered Employees shall be subject
to the following additional requirements:
(i) such
options and rights shall be granted only by a committee comprised solely of
two
or more “outside directors”, within the meaning of Treas. Reg. § 1.162.27(e)(3);
and
(ii) the
exercise price of such options shall in no event be less than the Fair Market
Value (as defined below) of the Common Stock as of the date of grant of such
options.
(f) Section
409A of the Code.
The
Board of Directors may only grant those awards that either comply with the
applicable requirements of Section 409A of the Code, or do not result in the
deferral of compensation within the meaning of Section 409A of the
Code.
3. Eligibility.
(a) General.
Options
and Restricted Shares may be granted to persons who are, at the time of grant,
in a Business Relationship (as defined below) with the Corporation; provided,
that Incentive Stock Options may only be granted to individuals who are
employees of the Corporation (within the meaning of Section 3401(c) of the
Code). A person who has been granted an option or Restricted Shares may, if
he
or she is otherwise eligible, be granted additional options or Restricted Shares
if the Board of Directors shall so determine. For purposes of the Plan,
“Business Relationship” means that a person is serving the Corporation, its
parent, if applicable, or any of its subsidiaries, if applicable, in the
capacity of an employee, officer, director, advisor or consultant.
(b) Grant
of Options to Reporting Persons.
From
and after the registration of the Common Stock of the Corporation under the
Exchange Act, the selection of a director or an officer who is a Reporting
Person (as the terms “director” and “officer” are defined for purposes of Rule
16b-3) as a recipient of an option or Restricted Shares, the timing of the
option or Restricted Share grant, the exercise price of the option and the
number of Restricted Shares or shares subject to the option shall be determined
either (i) by the Board of Directors, or (ii) by a committee consisting of
two
or more “Non-Employee Directors” having full authority to act in the matter. For
the purposes of the Plan, a director shall be deemed to be a “Non-Employee
Director” only if such person qualifies as a “Non-Employee Director” within the
meaning of Rule 16b-3, as such term is interpreted from time to time.
4. Stock
Subject to Plan.
The
stock
subject to options granted under the Plan or grants of Restricted Shares shall
be shares of authorized but unissued or reacquired Common Stock. Subject to
adjustment as provided in Section 16 below, the maximum number of shares of
Common Stock of the Corporation (“Shares”) which may be issued and sold under
the Plan is 75 million Shares. If any Restricted Shares shall be reacquired
by
the Corporation, forfeited or an option granted under the Plan shall expire,
terminate or is canceled for any reason without having been exercised in full,
the forfeited Restricted Shares or unpurchased Shares subject to such option
shall again be available for subsequent option or Restricted Share grants under
the Plan. Subject to adjustment in accordance with Section 16:
(a) No
more
than an aggregate of 75 million Shares may be issued under Incentive Stock
Options during the term of the Plan;
(b) No
more
than an aggregate of 37.5 million Shares may be issued in the form of Restricted
Shares during the term of the Plan;
(c) The
maximum number of Shares with respect to which options may be granted to any
one
person during any fiscal year of the Corporation may not exceed eight million
Shares; and
(d) The
maximum number of Restricted Shares which may be granted to any one person
during any fiscal year of the Corporation may not exceed five million
Shares.
These
limits shall be applied and construed consistently with Section 162(m) of the
Code.
5. Forms
of Option and Restricted Share Agreements.
As
a
condition to the grant of Restricted Shares or an option under the Plan, each
recipient of Restricted Shares or an option shall execute an option or
Restricted Share agreement in such form not inconsistent with the Plan as may
be
approved by the Board of Directors. Such option or Restricted Share agreements
may differ among recipients.
6. Purchase
Price.
(a) General.
The
purchase price per Share deliverable upon the exercise of an option shall be
determined by the Board of Directors at the time of grant of such option;
provided, however, that the exercise price of an option shall not be less than
100% of the Fair Market Value (as hereinafter defined) of a Share, at the time
of grant of such option, or less than 110% of such Fair Market Value in the
case
of an Incentive Stock Option described in Section 11(b). “Fair Market Value” of
a Share as of a specified date for the purposes of the Plan shall mean the
closing price of a Share on the principal securities exchange on which such
Shares are traded on the day immediately preceding the date as of which Fair
Market Value is being determined, or on the next preceding date on which such
Shares are traded if no shares were traded on such immediately preceding day,
or
if the Shares are not traded on a securities exchange, Fair Market Value shall
be deemed to be the average of the high bid and low asked prices of the Shares
in the over-the-counter market on the day immediately preceding the date as
of
which Fair Market Value is being determined or on the next preceding date on
which such high bid and low asked prices were recorded. In no case shall Fair
Market Value be determined with regard to restrictions other than restrictions
which, by their terms, will never lapse. The Board of Directors may also permit
optionees, either on a selective or aggregate basis, to simultaneously exercise
options and sell the Shares thereby acquired, pursuant to a brokerage or similar
arrangement, approved in advance by the Board of Directors, and to use the
proceeds from such sale as payment of the purchase price of such
shares.
(b) Payment
of Purchase Price.
Options
granted under the Plan may provide for the payment of the exercise price by
delivery of cash or a check to the order of the Corporation in an amount equal
to the exercise price of such options, or, to the extent provided in the
applicable option agreement, (i) by delivery to the Corporation of Shares having
a Fair Market Value on the date of exercise equal in amount to the exercise
price of the options being exercised, (ii) through any cashless exercise feature
that may be included in the option agreement covering a particular option grant,
(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.
7. Option
Period.
Subject
to earlier termination as provided in the Plan, each option and all rights
thereunder shall expire on such date as determined by the Board of Directors
and
set forth in the applicable option agreement, provided, that such date shall
not
be later than (10) ten years after the date on which the option is
granted.
8. Exercise
of Options.
Each
option granted under the Plan shall be exercisable either in full or in
installments at such time or times and during such period as shall be set forth
in the option agreement evidencing such option, subject to the provisions of
the
Plan. No option granted to a Reporting Person for purposes of the Exchange
Act,
however, shall be exercisable during the first six months after the date of
grant. Subject to the requirements in the immediately preceding sentence, if
an
option is not at the time of grant immediately exercisable, the Board of
Directors may (i) in the agreement evidencing such option, provide for the
acceleration of the exercise date or dates of the subject option upon the
occurrence of specified events, and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such option,
unless it would cause an option that otherwise qualified as an Incentive Stock
Option to lose Incentive Stock Option treatment by application of Section
422(d)(1) of the Code and Section 11(c) of the Plan.
9. Nontransferability
of Options.
No
option
granted under this Plan shall be assignable or otherwise transferable by the
optionee except by will or by the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined in the Code or Title I of
the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or the
rules thereunder. An option may be exercised during the lifetime of the optionee
only by the optionee. In the event an optionee dies during his employment by
the
Corporation or any of its subsidiaries, or during the three-month period
following the date of termination of such employment, his option shall
thereafter be exercisable, during the period specified to the full extent to
which such option was exercisable by the optionee at the time of his death
during the periods set forth in Section 10 or 11(d). If any optionee should
attempt to dispose of or encumber his or her options, other than in accordance
with the applicable terms of this Plan or the applicable option agreement,
his
or her interest in such options shall terminate.
10. Effect
of Termination of Employment or Other Relationship.
Except
as
provided in Section 11(d) with respect to Incentive Stock Options, and subject
to the provisions of the Plan and the applicable option agreement, an optionee
may exercise an option (but only to the extent such option was exercisable
at
the time of termination of the optionee’s employment or other relationship with
the Corporation) at any time within three (3) months following the termination
of the optionee’s employment or other relationship with the Corporation or
within one (1) year if such termination was due to the death or disability
of
the optionee, but, except in the case of the optionee’s death, in no event later
than the expiration date of the Option. If the termination of the optionee’s
employment is for cause or is otherwise attributable to a breach by the optionee
of an employment or confidentiality or non-disclosure agreement, the option
shall expire immediately upon such termination. The Board of Directors shall
have the power to determine what constitutes a termination for cause or a breach
of an employment or confidentiality or non-disclosure agreement, whether an
optionee has been terminated for cause or has breached such an agreement, and
the date upon which such termination for cause or breach occurs. Any such
determinations shall be final and conclusive and binding upon the optionee.
11. Incentive
Stock Options.
Options
granted under the Plan which are intended to be Incentive Stock Options shall
be
subject to the following additional terms and conditions:
(a) Express
Designation.
All
Incentive Stock Options granted under the Plan shall, at the time of grant,
be
specifically designated as such in the option agreement covering such Incentive
Stock Options.
(b) 10%
Stockholder.
If any
employee to whom an Incentive Stock Option is to be granted under the Plan
is,
at the time of the grant of such option, the owner of stock possessing more
than
10% of the total combined voting power of all classes of stock of the
Corporation (after taking into account the attribution of stock ownership rules
of Section 424(d) of the Code), then the following special provisions shall
be
applicable to the Incentive Stock Option granted to such
individual:
(i) The
purchase price per share of the Common Stock subject to such Incentive Stock
Option shall not be less than 110% of the Fair Market Value of one share of
Common Stock at the time of grant; and
(ii) the
option exercise period shall not exceed five years from the date of
grant.
(c) Dollar
Limitation.
For so
long as the Code shall so provide, options granted to any employee under the
Plan (and any other incentive stock option plans of the Corporation) which
are
intended to constitute Incentive Stock Options shall not constitute Incentive
Stock Options to the extent that such options, in the aggregate, become
exercisable for the first time in any one calendar year for shares of Common
Stock with an aggregate Fair Market Value, as of the respective date or dates
of
grant, of more than $100,000 (or such other limitations as the Code may
provide).
(d) Termination
of Employment, Death or Disability.
No
Incentive Stock Option may be exercised unless, at the time of such exercise,
the optionee is, and has been continuously since the date of grant of his or
her
option, employed by the Corporation, except that, unless otherwise specified
in
the applicable option agreement:
(i) an
Incentive Stock Option may be exercised within the period of three months after
the date the optionee ceases to be an employee of the Corporation (or within
such lesser period as may be specified in the applicable option agreement),
provided, that the agreement with respect to such option may designate a longer
exercise period and that the exercise after such three-month period shall be
treated as the exercise of a non-statutory option under the Plan;
(ii) if
the
optionee dies while in the employ of the Corporation, or within three months
after the optionee ceases to be such an employee, the Incentive Stock Option
may
be exercised by the person to whom it is transferred by will or the laws of
descent and distribution within the period of one year after the date of death
(or within such lesser period as may be specified in the applicable option
agreement); and
(iii) if
the
optionee becomes disabled (within the meaning of Section 22(e)(3) of the Code
or
any successor provisions thereto) while in the employ of the Corporation, the
Incentive Stock Option may be exercised within the period of one year after
the
date the optionee ceases to be such an employee because of such disability
(or
within such lesser period as may be specified in the applicable option
agreement).
For
all
purposes of the Plan and any option granted hereunder, “employment” shall be
defined in accordance with the provisions of Section 1.421-1(h) of the Income
Tax Regulations (or any successor regulations). Notwithstanding the foregoing
provisions no Incentive Stock Option may be exercised after its expiration
date.
12. Restricted
Shares.
(a) Awards.
The
Board of Directors may from time to time in its discretion award Restricted
Shares to persons having a Business Relationship with the Corporation and may
determine the number of Restricted Shares awarded and the terms and conditions
of, and the amount of payment, if any, to be made by such persons. Each award
of
Restricted Shares will be evidenced by a written agreement executed on behalf
of
the Corporation and containing terms and conditions not inconsistent with the
Plan as the Board of Directors shall determine to be appropriate in its sole
discretion.
(b) Restricted
Period; Lapse of Restrictions.
At the
time an award of Restricted Shares is made, the Board of Directors shall
establish a period of time (the “Restricted Period”) applicable to such award
which shall not be less than one year nor more than ten years. Each award of
Restricted Shares may have a different Restricted Period. In lieu of
establishing a Restricted Period, the Board of Directors may establish
restrictions based only on the achievement of specified performance measures.
At
the time an award is made, the Board of Directors may, in its discretion,
prescribe conditions for the incremental lapse of restrictions during the
Restricted Period and for the lapse or termination of restrictions upon the
occurrence of other conditions in addition to or other than the expiration
of
the Restricted Period with respect to all or any portion of the Restricted
Shares. Such conditions may include, without limitation, the death or disability
of the participant to whom Restricted Shares are awarded, retirement of the
participant pursuant to normal or early retirement under any retirement plan
of
the Corporation or termination by the Corporation of the participant’s
employment other than for cause, or the occurrence of a change in control of
the
Corporation. Such conditions may also include performance measures, which,
in
the case of any such award of Restricted Shares to a participant who is a
“covered employee” within the meaning of Section 162(m) of the Code, shall be
based on one or more of the following criteria: earnings per share, market
value
per share, return on invested capital, return on operating assets and return
on
equity. The Board of Directors may also, in its discretion, shorten or terminate
the Restricted Period or waive any conditions for the lapse or termination
of
restrictions with respect to all or any portion of the Restricted Shares at
any
time after the date the award is made.
(c) Rights
of Holder; Limitations Thereon.
Upon an
award of Restricted Shares, a stock certificate representing the number of
Restricted Shares awarded to the participant shall be registered in the
participant’s name and, at the discretion of the Board of Directors, will be
either delivered to the participant with an appropriate legend or held in
custody by the Corporation or a bank for the participant’s account. The
participant shall generally have the rights and privileges of a stockholder
as
to such Restricted Shares, including the right to vote such Restricted Shares,
except that the following restrictions shall apply: (i) with respect to each
Restricted Share, the participant shall not be entitled to delivery of an
unlegended certificate until the expiration nor termination of the Restricted
Period, and the satisfaction of any other conditions prescribed by the Board
of
Directors, relating to such Restricted Share; (ii) with respect to each
Restricted Share, such share may not be sold, transferred, assigned, pledged,
or
otherwise encumbered or disposed of until the expiration of the Restricted
Period, and the satisfaction of any other conditions prescribed by the Board
of
Directors, relating to such Restricted Share (except, subject to the provisions
of the participant’s stock restriction agreement, by will or the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
by the Code or Title I of ERISA or the rules promulgated thereunder) and (iii)
all of the Restricted Shares as to which restrictions have not at the time
lapsed shall be forfeited and all rights of the participant to such Restricted
Shares shall terminate without further obligation on the part of the Corporation
unless the participant has remained in a Business Relationship with the
Corporation or any of its subsidiaries until the expiration or termination
of
the Restricted Period and the satisfaction of any other conditions prescribed
by
the Board of Directors applicable to such Restricted Shares. Upon the forfeiture
of any Restricted Shares, such forfeited shares shall be transferred to the
Corporation without further action by the participant. At the discretion of
the
Board of Directors, cash and stock dividends with respect to the Restricted
Shares may be either currently paid or withheld by the Corporation for the
participant’s account, and interest may be paid on the amount of cash dividends
withheld at a rate and subject to such terms as determined by the Board of
Directors. The participant shall have the same rights and privileges, and be
subject to the same restrictions, with respect to any shares received pursuant
to Section 16 hereof.
(d) Delivery
of Unrestricted Shares.
Upon
the expiration or termination of the Restricted Period and the satisfaction
of
any other conditions prescribed by the Board of Directors, the restrictions
applicable to the Restricted Shares shall lapse and a stock certificate for
the
number of Restricted Shares with respect to which the restrictions have lapsed
shall be delivered, free of all such restrictions, except any that may be
imposed by law including without limitation securities laws, to the participant
or the participant’s beneficiary or estate, as the case may be. The Corporation
shall not be required to deliver any fractional share of Common Stock but will
pay, in lieu thereof, the fair market value (determined as of the date the
restrictions lapse) of such fractional share to the participant or the
participant’s beneficiary or estate, as the case may be.
13. Additional
Provisions.
(a) Additional
Provisions.
The
Board of Directors may, in its sole discretion, include additional provisions
in
option or Restricted Stock agreements covering options or Restricted Stock
granted under the Plan, including without limitation, restrictions on transfer,
repurchase rights, rights of first refusal, commitments to pay cash bonuses,
to
make, arrange for or guaranty loans or to transfer other property to optionees
upon exercise of options, or such other provisions as shall be determined by
the
Board of Directors; provided, that such additional provisions shall not be
inconsistent with any other term or condition of the Plan and such additional
provisions shall not cause any Incentive Stock Option granted under the Plan
to
fail to qualify as an Incentive Stock Option within the meaning of Section
422
of the Code or result in the imposition of an additional tax under Section
409A
of the Code.
(b) Acceleration,
Extension, Etc.
The
Board of Directors may, in its sole discretion, (i) accelerate the date or
dates
on which all or any particular option or options granted under the Plan may
be
exercised or (ii) extend the dates during which all, or any particular, option
or options granted under the Plan may be exercised if it would not cause any
Incentive Stock Option granted under the Plan to fail to qualify as an Incentive
Stock Option within the meaning of Section 422 of the Code or result in the
imposition of an additional tax under Section 409A of the Code.
14. General
Restrictions.
(a) Investment
Representations.
The
Corporation may require any person to whom Restricted Shares or an option is
granted, as a condition of receiving such Restricted Shares or exercising such
option, to give written assurances in substance and form satisfactory to the
Corporation to the effect that such person is acquiring the Restricted Shares
or
Common Stock subject to the option for his or her own account for investment
and
not with any present intention of selling or otherwise distributing the same,
and to such other effects as the Corporation deems necessary or appropriate
in
order to comply with federal and applicable state securities laws, or with
covenants or representations made by the Corporation in connection with any
public offering of its Common Stock.
(b) Compliance
with Securities Law.
Each
option and grant of Restricted Shares shall be subject to the requirement that
if, at any time, counsel to the Corporation shall determine that the listing,
registration or qualification of the Restricted Shares or shares subject to
such
option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, or that the
disclosure of non-public information or the satisfaction of any other condition
is necessary as a condition of, or in connection with the issuance or purchase
of shares thereunder, such Restricted Shares shall not be granted and such
option may not be exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval, or satisfaction of such
condition shall have been effected or obtained on conditions acceptable to
the
Board of Directors. Nothing herein shall be deemed to require the Corporation
to
apply for or to obtain such listing, registration or qualification, or to
satisfy such condition.
15. Rights
as a Stockholder.
The
holder of an option shall have no rights as a stockholder with respect to any
shares covered by the option (including, without limitation, any rights to
receive dividends or non-cash distributions with respect to such shares) until
the date of issue of a stock certificate to him or her for such shares. No
adjustment shall be made for dividends or other rights for which the record
date
is prior to the date such stock certificate is issued.
16. Adjustment
Provisions for Recapitalization, Reorganizations and Related Transactions.
(a) Recapitalization
and Related Transactions.
If,
through or as a result of any recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar transaction, (i)
the
outstanding shares of Common Stock are increased, decreased or exchanged for
a
different number or kind of shares or other securities of the Corporation,
or
(ii) additional shares or new or different shares or other non-cash assets
are
distributed with respect to such shares of Common Stock or other securities,
an
appropriate and proportionate adjustment shall be made in (x) the maximum number
and kind of shares reserved for issuance under the Plan, (y) the number and
kind
of Restricted Shares granted and shares or other securities subject to any
then
outstanding options under the Plan, and (z) the exercise price for each share
subject to any then outstanding options under the Plan, without changing the
aggregate purchase price as to which such options remain exercisable.
Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 16 if such adjustment (i) would cause the Plan to fail to comply with
Section 422 of the Code or with Rule 16b-3 or (ii) would be considered as the
adoption of a new plan requiring stockholder approval.
(b) Reorganization,
Merger and Related Transactions.
If the
Corporation shall be the surviving corporation in any reorganization, merger
or
consolidation of the Corporation with one or more other corporations, any then
outstanding Restricted Shares or option granted pursuant to the Plan shall
pertain to and apply to the securities to which a holder of the number of shares
of Common Stock subject to such Restricted Shares or options would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the purchase price as to which
such options may be exercised so that the aggregate purchase price as to which
such options may be exercised shall be the same as the aggregate purchase price
as to which such options may be exercised for the shares remaining subject
to
the options immediately prior to such reorganization, merger, or
consolidation.
(c) Board
Authority to Make Adjustments.
Any
adjustments made under this Section 16 will be made by the Board of Directors,
whose determination as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive. No fractional shares will be
issued under the Plan on account of any such adjustments.
17. Merger,
Consolidation, Asset Sale, Liquidation, Etc.
(a) General.
In the
event of a consolidation or merger in which the Corporation is not the surviving
corporation, or sale of all or substantially all of the assets of the
Corporation in which outstanding shares of Common Stock are exchanged for
securities, cash or other property of any other corporation or business entity
or in the event of a liquidation of the Corporation (collectively, a “Corporate
Transaction”), the Board of Directors of the Corporation, or the board of
directors of any corporation assuming the obligations of the Corporation, may,
in its discretion, take any one or more of the following actions, as to
outstanding options: (i) provide that such Restricted Shares or options shall
be
assumed, or equivalent Restricted Shares or options shall be substituted, by
the
acquiring or succeeding corporation (or an affiliate thereof), provided that
any
such options substituted for Incentive Stock Options shall meet the requirements
of Section 424(a) of the Code, (ii) upon written notice, provide that all
unexercised options and Restricted Shares will terminate immediately prior
to
the consummation of such transaction unless such options are exercised by the
optionee within a specified period following the date of such notice, (iii)
in
the event of a Corporate Transaction under the terms of which holders of the
Common Stock of the Corporation will receive upon consummation thereof a cash
payment for each share surrendered in the Corporate Transaction (the
“Transaction Price”), make or provide for a cash payment to the optionees equal
to the difference between (A) the Transaction Price times the number of shares
of Common Stock subject to such outstanding options (to the extent then
exercisable at prices not in excess of the Transaction Price) and (B) the
aggregate exercise price of all such outstanding options in exchange for the
termination of such options, and (iv) provide that all restrictions on
Restricted Shares shall lapse in full or in part and all or any outstanding
options shall become exercisable in full or in part immediately prior to such
event.
(b) Substitute
Restricted Shares or Options.
The
Corporation may grant Restricted Shares or options under the Plan in
substitution for Restricted Shares or options held by persons in a Business
Relationship with another corporation who enter into a Business Relationship
with the Corporation, or a subsidiary of the Corporation, as the result of
a
merger or consolidation of the employing corporation with the Corporation or
a
subsidiary of the Corporation, or as a result of the acquisition by the
Corporation, or one of its subsidiaries, of property or stock of the other
corporation. The Corporation may direct that substitute Restricted Shares or
options be granted on such terms and conditions as the Board of Directors
considers appropriate in the circumstances.
18. No
Special Employment Rights.
Nothing
contained in the Plan or in any Restricted Share or option agreement shall
confer upon any holder of Restricted Shares or optionee any right with respect
to the continuation of his or her employment by, or other Business Relationship
with, the Corporation or interfere in any way with the right of the Corporation
at any time to terminate such employment or Business Relationship or to increase
or decrease the compensation of the optionee.
19. Other
Employee Benefits.
Except
as
to plans which by their terms include such amounts as compensation, the amount
of any compensation deemed to be received by an employee as a result of the
grant of Restricted Shares or lapse of restrictions thereon, the exercise of
an
option or the sale of shares received upon such exercise will not constitute
compensation with respect to which any other employee benefits of such employee
are determined, including, without limitation, benefits under any bonus,
pension, profit-sharing, life insurance or salary continuation plan, except
as
otherwise specifically determined by the Board of Directors.
20. Amendment
of the Plan.
(a) The
Board
of Directors may at any time, and from time to time, modify or amend the Plan
in
any respect, except that if at any time the approval of the stockholders of
the
Corporation is required under Section 422 of the Code or any successor provision
with respect to Incentive Stock Options, or the legal requirements relating
to
the administration of equity compensation plans, if any, under applicable
provisions of federal securities laws, applicable state corporate and securities
laws, the Code, the rules of any applicable stock exchange or national market
system or quotation system on which the Common Stock is listed or quoted, and
the applicable laws and rules of any foreign country or jurisdiction where
awards are, or will be, granted under the Plan.
(b) The
termination or any modification or amendment of the Plan shall not, without
the
consent of an optionee or holder of Restricted Shares, affect his or her rights
under an option or grant of Restricted Shares previously granted to him or
her.
With the consent of the optionee or holder of Restricted Shares affected, the
Board of Directors may amend outstanding option or Restricted Share agreements
in a manner not inconsistent with the Plan. The Board of Directors shall have
the right to amend or modify the terms and provisions of the Plan and of any
outstanding Incentive Stock Options granted under the Plan to the extent
necessary to qualify any or all such options for such favorable federal income
tax treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code.
21. Withholding.
(a) The
Corporation shall have the right to deduct from payments of any kind otherwise
due to the optionee or holder of Restricted Shares any federal, state or local
taxes of any kind required by law to be withheld with respect to any shares
issued upon exercise of options or lapse of restrictions on Restricted Shares
under the Plan. Subject to the prior approval of the Corporation, which may
be
withheld by the Corporation in its sole discretion, the optionee or holder
of
Restricted Shares may elect to satisfy such obligations, in whole or in part,
(i) by causing the Corporation to withhold shares of Common Stock otherwise
issuable pursuant to the exercise of an option or lapse of restrictions on
Restricted Shares or (ii) by delivering to the Corporation shares of Common
Stock already owned by the optionee or holder of Restricted Shares. The shares
so delivered or withheld shall have a Fair Market Value equal to such
withholding obligation as of the date that the amount of tax to be withheld
is
to be determined. An optionee who has made an election pursuant to this Section
21(a) may satisfy his or her withholding obligation only with shares of Common
Stock which are not subject to any repurchase, forfeiture, unfulfilled vesting
or other similar requirements.
(b) The
acceptance of shares of Common Stock upon exercise of an Incentive Stock Option
shall constitute an agreement by the optionee (i) to notify the Corporation
if
any or all of such shares are disposed of by the optionee within two years
from
the date the option was granted or within one year from the date the shares
were
transferred to the optionee pursuant to the exercise of the option, and (ii)
if
required by law, to remit to the Corporation, at the time of and in the case
of
any such disposition, an amount sufficient to satisfy the Corporation’s federal,
state and local withholding tax obligations with respect to such disposition,
whether or not, as to both (i) and (ii), the optionee is in the employ of the
Corporation at the time of such disposition.
(c) Notwithstanding
the foregoing, in the case of a Reporting Person whose options have been granted
in accordance with the provisions of Section 3(b) herein, no election to use
shares for the payment of withholding taxes shall be effective unless made
in
compliance with any applicable requirements of Rule 16b-3.
22. Section
162(m) of the Code.
The
Board of Directors, in its sole discretion, may require that one or more
agreements contain provisions which provide that, in the event Section 162(m)
of
the Code, or any successor provision relating to excessive employee
remuneration, would operate to disallow a deduction by the Corporation for
all
or part of any payment of an award under the Plan, a grantee’s receipt of the
portion that would not be deductible by the Corporation shall be deferred to
either the earliest date at which the Board reasonably anticipates that the
grantee’s remuneration either does not exceed the limit set forth in Section
162(m) of the Code or is not subject to Section 162(m) of Code, or the calendar
year in which the grantee separates from service. This Section 22 shall be
applied and construed consistently with Section 409A of the Code and the
regulations (and guidance) thereunder.
23. Effective
Date and Duration of the Plan.
(a) Effective
Date.
The
Plan shall become effective when adopted by the Board of Directors, but no
Incentive Stock Option granted under the Plan shall become exercisable unless
and until the Plan shall have been approved by the Corporation’s stockholders.
If such stockholder approval is not obtained within twelve (12) months after
the
date of the Board’s adoption of the Plan, no options previously granted under
the Plan shall be deemed to be Incentive Stock Options and no Incentive Stock
Options shall be granted thereafter. Amendments to the Plan not requiring
stockholder approval shall become effective when adopted by the Board of
Directors; amendments requiring stockholder approval (as provided in Section
20)
shall become effective when adopted by the Board of Directors, but no Incentive
Stock Option granted after the date of such amendment shall become exercisable
(to the extent that such amendment to the Plan was required to enable the
Corporation to grant such Incentive Stock Option to a particular optionee)
unless and until such amendment shall have been approved by the Corporation’s
stockholders. If such stockholder approval is not obtained within twelve (12)
months of the Board’s adoption of such amendment, any Incentive Stock Options
granted on or after the date of such amendment shall terminate to the extent
that such amendment to the Plan was required to enable the Corporation to grant
such option to a particular optionee. Subject to this limitation, options may
be
granted under the Plan at any time after the effective date and before the
date
fixed for termination of the Plan.
(b) Termination.
Unless
sooner terminated in accordance with Section 17, the Plan shall terminate upon
the earlier of (i) the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the Board of Directors, or (ii)
the
date on which all shares available for issuance under the Plan shall have been
issued pursuant to the exercise or cancellation of Restricted Shares or options
granted under the Plan. If the date of termination is determined under (i)
above, then Restricted Shares or options outstanding on such date shall continue
to have force and effect in accordance with the provisions of the instruments
evidencing such Restricted Shares or options.
24. Governing
Law.
The
provisions of this Plan shall be governed and construed in accordance with
the
laws of the State of Nevada without regard to the principles of conflicts of
laws.
Adopted
by the Board of Directors on July 17, 2006.
Appendix
B
DEAN
HELLER
Secretary
of State
204
North
Carson Street, Suite 1
Carson
City, Nevada 89701-4299
(775)
684
5708
Website:
secretaryofstate.biz
Certificate
of Amendment
(PURSUANT
TO NRS 78.385 and 78.390)
Important:
Read attached instructions before completing
form.
Certificate
of Amendment to Articles of Incorporation
For
Nevada Profit Corporation
(Pursuant
to NRS 78.385 and 78.390 - After Issuance of Stock)
1.
Name
of
corporation: Novastar Resources Ltd.
2.
The
articles have been amended as follows: (provide article numbers, if
available):
Article
1
of the Company’s Articles is amended to read: “Thorium Power, Ltd.”
Article
4
of the Company’s Articles is amended to read:
Authorized
Capital. The aggregate number of shares that the corporation will have authority
to issue is five hundred and fifty million (550,000,000), of which five hundred
million (500,000,000) shares will be common stock, with a par value of $0.001
per share, and fifty million (50,000,000) shares will be preferred stock, with
a
par value of $0.001 per share. This preferred stock may be divided into and
issued in series, each of which shall be so designated as to distinguish the
shares thereof from the shares of all other series and classes. The board of
directors of the corporation is authorized, within any limitations prescribed
by
law, to fix and determine the designations, qualifications, preferences,
limitations and terms of the shares of any series of preferred
stock.
Article
6
of the Company’s Articles is amended to read:
Board
of
Directors. The members of the governing board shall be styled “Directors” and
their number shall not be less than one (1) nor more than fifteen
(15).
3.
The
vote
by which the stockholders holding shares in the corporation entitling them
to
exercise at least a majority of the voting power, or such greater proportion
of
the voting power as may be required in the case of a vote by classes or series,
or as may be required by the provisions of the articles of incorporation have
voted in favor of the amendment is: [
]%
4.
Effective
date of filing (optional):
____________________________________________
(must
not
be later than 90 days after the certificate is filed)
5.
Officer
Signature
(required): ____________________________________________
*If
any
proposed amendment would alter or change any preference or any relative or
other
right given to any class or series of outstanding shares, then the amendment
must be approved by the vote, in addition to the affirmative vote otherwise
required, of the holders of shares representing a majority of the voting power
of each class or series affected by the amendment regardless of limitations
or
restrictions on the voting power thereof.
IMPORTANT:
Failure
to include any of the above information and submit the proper fees may cause
this filing to be rejected.
SUBMIT
IN DUPLICATE
This
form must be accompanied by appropriate fees. See attached fee
schedule.