re: staff options For those who may be miffed about the price of...

re: staff options For those who may be miffed about the price of the staff options I sent an email & received this reply back. I'm posting it so we don't inundate the company with the same questions.

The options are designed to encourage key staff to increase the value of the Company by their efforts. They also should provide incentive for continuity of service with the Company. To this end employee's receiving an allocation will have to be with Tox until 30 June 2008 to receive all the options (they only received 1/3 on 30 June 2006, and 1/3 on 30 June 2007 see vesting conditions). Tox is a service company and retaining key employees in a tight employment market is vital for the future success of the Company.

Issuing options of this nature which are well out of the money do not act as an incentive and if they are too far out are even seen as a non event. We believe that Tox shares need to be plus 6 to 8 cents above the exercise price for the options to be of real value to the employee. The incentive to the employees involved is to grow the Company as much as possible to generate the best result for themselves and this is also clearly in the best interest of all shareholders. If the Company stagnates the options have no value at all to the employees.

I am disappointed that shareholders should see this as feeding ourselves at the trough. I would point out that all these options go to people who are full time employees of Tox and have made and will be in a position to be able to make a very significant contribution to the advancement of Tox Free.
Steve Gostlow the MD is the only director to get options and his are subject to shareholder approval in general meeting. Steve is a very important and devoted worker for the Company.

We have had a number of analysts, brokers and investors visit the operations of the Company over the last 9 months or so and a consistent question has been how do we incentivise staff.

We have had positive responses to the incentive options from all shareholders who have commented so far except for yourself.

I hope this goes some way to clarifying the incentive options issue, I certainly do not believe we have in any way undervalued the Company or diminished value for existing shareholders.

The shortfall on the expired listed options was very small and were distributed to staff who had made a tremendous effort in the past year, often in difficult circumstances at the time, to effect the turnaround of the Company.

Yours faithfully
Ian Burton
Chairman