| 1. |
A
copy of my original statement is
attached.
|
| 2. |
Contrary
to the Company’s 8-K statement, October 9 was the first time I had ever
been told I would be terminated by the Company or that such an action
was
being contemplated. According to the 8-K, this topic was apparently
being
discussed and agreed upon with other officers and directors well before
that date. The Company has not explained why it made SEC filings in
September and October, characterizing me as an officer and director
or
allowed me to endorse such documents when in fact it had decided to
terminate my employment relationship and remove me as a
director.
|
| 3. |
The
Company’s claim that I was a Novastar Director in the January-March time
frame and “refused” to serve is false. It is contradicted by the Company’s
April 6, 2006 8-K filing which states that in that period Paul G. Carter
and Charles H. Merchant were the only directors of the Company and
that on
April 2, 2006, Seth Grae, Thomas Graham, Jr. and Cornelius J. Milmoe
“became” members of the Board of Directors. The Company’s September 29 8-k
filing also confirms that I did not become a director until April 2,
2006.
The Company’s comment that I made the effectiveness of a Directors and
Officers Liability policy a precondition to my assuming the directorship
is true, and it only demonstrates my prudence. Mr. Grae and Mr. Graham
also adopted this course, deferring their service on the Board until
April
2.
|
| 4. |
To
clarify my statement regarding the “generous bonus”, which the Company
disputes, I was referring to the
Company’s redemption of 2 million shares of stock owned by Mr. Grae, at a
price of $0.31 per share, in order to pay the past due income taxes
on the
stock previously issued to Mr. Grae pursuant to the merger agreement.
This
$635,000 expense was reported in the 10-K financial statements as an
“Accrued payroll tax liability” and is described in Note 6 to those
statements.
|
| 5. |
I
did not participate in the Company’s Tuesday October 17th
decision to announce a stock buy-back. It was announced after I had
resigned from the Board.
|
| 10-27-06 |
/s/
|
Cornelius J. Milmoe | ||
|
Date |
Cornelius J. Milmoe |