EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this 1st day of October, 1998, by and between International Absorbents Inc., a
British Columbia corporation (the "Company"), Xxxxxx Xxxxx Xxxxx, an individual
resident of the Province of British Columbia, Canada, (the "Executive"), and
Absorption Corp ("Subsidiary"), a Nevada corporation.
WITNESSETH:
WHEREAS, the Executive has heretofore been serving as the Chairman and
President of the Company and serves as a member of The Board of Directors of the
Company and has the experience to provide services of an extraordinary character
which gives such services a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages in an action at law; and
WHEREAS, the Company desires to retain the services of the executive,
and the Executive desires to be employed by the Company for the term of this
Agreement.
WHEREAS, The Company's stock is publicly traded on the Over the Counter
Bulletin Board of the Dealers Association of.........(NASDAQ) or other stock
exchange as the Company determines appropriate.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Company and the Executive,
intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive as the Chairman
and President and the Executive accepts such employment and agrees to perform
services for the Company, subject always to such resolutions as are established
from time to time by the Board of Directors of the Company, for the period and
upon the other terms and conditions set forth in this Agreement.
2. TERM. The term of the Executive's employment hereunder shall be for
a period of five (5) years, commencing on the date of this Agreement and shall
be automatically extended for additional two (2) year periods unless either
party sends the other party a notice of its intention not to extend within 90
days before the expiration of the agreement or any extension.. The term of the
Executive's employment hereunder is subject to earlier termination as hereafter
specified.
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3. POSITION AND DUTIES.
3.1 SERVICE WITH THE COMPANY. During the term of this Agreement, the
Executive agrees to perform such executive employment duties as the
Company's Board of Directors (the "Board") shall assign to him from
time to time, and is customary for a similar position within the
Company's industry. As necessary, the executive will spend up to fifty
percent of his time (20 hours per week) on Company related activities.
The Executive's responsibilities shall include:
Overall guidance as to corporate direction and major decision-making
directly below the Board level.
Direct and assist in identifying and negotiating acquisitions,
divestitures and joint venture and other strategic relationships.
Direct and assist in identifying, vetting and selecting new employees
at a senior level.
Direct or carry out termination of senior employees.
Direct and participate in legal action, both as aggressor and defense.
Ongoing communication with staff concerning operating activities and
corporate performance for purposes of keeping the Board informed.
Coordinating investment relations activities.
Respond to shareholder demands and investor questions.
Chair board meetings, management meetings and shareholder meetings as
required and directed by the Board.
Raise Capital, negotiate financing and banking services.
3.2 NO CONFLICTING DUTIES. During the term hereof, the Executive shall
devote his time, effort and skill to the operation of the Company, and
will offer any directly relevant business opportunity he encounters to
the Company. The Executive hereby confirms that he is under no
contractual commitments inconsistent with his obligations set forth in
this Agreement, and that during the term of this Agreement, he will not
render or perform services, or enter into any contract to do so, for
any other corporation, firm, entity or person which are inconsistent
with the provisions of this Agreement.
4. COMPENSATION.
4.1(a) BASE SALARY. As compensation for all services to be rendered by
the Executive under this Agreement, the Company shall pay to the
Executive a base annual salary of $4,000 per month (the "Base Salary")
which shall be paid on a regular basis in accordance with the Company's
normal payroll procedures and policies. The Base Salary shall be
increased on June 1, 1999, to US$5,000 for the ensuing year. In each
successive year of the Executive's employment, the Employee shall
receive an increase in his base salary commencing June 1 of each year
so that the amount shall be 65% of the base salary of the average of
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the 2 highest paid managers/executives of the Company as of May of the
then current year
4.2 INCENTIVE BONUS. The Board of Directors of the Corporation shall
determine in April/May of each year on the basis of how much time and
effort the employee has contributed to the Corporation and the success
of the Corporation over the past year.
4.3 INCENTIVE COMPENSATION. The Company agrees to maintain an incentive
stock option plan which provides for shares under the rules and
policies of the applicable governing securities exchange rules for the
Company's stock. The Executive will receive a minimum of 200,000 stock
options in the first year which number will be reviewed annually. In
any one year, the Executive will be able to exercise his options at
which time he will be eligible for immediate reissue of an equal number
of new options. Such options shall be offered at the lowest price as
options issued to any other employees at that time and exercisable at
the earliest date permissible under the rules and policies of the
applicable governing securities exchange rules for the Company's stock.
If and when the Company instigates and EVA program, the Executive will
participate in the EVA program.
4.4 PARTICIPATION IN BENEFIT PLANS. The Executive shall be included to
the extent eligible thereunder in any and all plans of the Company
providing general benefits for the Company's employees, including but
not limited to Group Life Insurance, Hospitalization, Disability,
Medical, Dental, Pension, Profit Sharing, Savings and Stock Bonus
Plans. The Executive's participation in any such plan or program shall
be subject to the provisions, rules and regulations applicable thereto.
4.5 EXPENSES. In accordance with the Company's policies established
from time to time, the Company will pay or reimburse the Executive for
all reasonable and necessary out-of-pocket expenses on a basis
consistent with prior practice incurred by him in the performance of
his duties under this Agreement, subject to the presentment of
appropriate vouchers.
4.6 VACATION TIME. Executive shall be entitled to take paid vacation
time of up to six (6) weeks per year, in addition to the normal
holidays when the business is closed.
5. COMPENSATION UPON THE TERMINATION OF THE EXECUTIVE'S EMPLOYMENT BY THE
COMPANY.
(a) In the event that the Executive is terminated pursuant to Section
8.01 (disability), then the Executive shall be entitled to receive the
Executive's then current Base Salary
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for a period of three months after he is terminated or a total of nine
months from the start of the total disability of the Employee whichever
is the longer.
(b) In the event the Executive's employment is terminated pursuant to
Section 8.02 (death), Executive's beneficiary or a beneficiary
designated by the Executive in writing to the Company, or in the
absence of such beneficiary, the Executive's estate, shall be entitled
to receive the Executive's then current Base Salary through the end of
the month in which his death occurs.
(c) In the event that the Executive's employment is terminated pursuant
to Sections 8.03 (termination for cause), then he shall not be entitled
to any compensation other than his then current Base Salary which has
accrued through his date of termination. In the event that Executive's
employment is terminated pursuant to Section 8.04 (resignation), he
shall be entitled to his then current Base Salary which has accrued
through the date of termination.
(d) In the event the Executive is terminated by the Company pursuant to
Section 8.05 (Termination Without Cause), the Company shall continue to
pay to the Executive his monthly base salary for the remainder of the
sixty month period following the date of execution of this Agreement.
For Example, if the Executive is terminated without cause at the
conclusion of his second year of this contract, he shall be entitled to
receive his base salary for a period of three additional years for a
total of five years salary.
(e) In the event that the Executive's employment is terminated pursuant
to Sections 8.01, 8.02, 8.04 or 8.05, then Executive (or Executive's
beneficiary or estate in the case of termination pursuant to Section
8.02) shall also be entitled to annual incentive compensation prorated
as of the date of termination in the manner set forth in Section 4.02
above.
All payments required to be made by the Company to the Executive pursuant to
this Section 5 shall be paid in the manner and at the times specified in Section
4.01 hereof.
6. CONFIDENTIAL INFORMATION. Except as permitted or directed by the
Company's Board, the Executive shall not during the term of his
employment under this Agreement or at any time thereafter divulge,
furnish, disclose or make accessible (other than in the ordinary course
of the business of the Company) to anyone for use in any way any
confidential or secret knowledge or information of the Company which
the Executive has acquired or become acquainted with or will acquire or
become acquainted with prior to the termination of the period of his
employment by the Company (including employment by the Company prior to
the date of this Agreement), whether developed by himself or by others,
concerning any trade secrets, confidential or secret designs,
processes, formulae, software or computer programs, plans, devices or
material (whether or not patented or patentable, copyrighted or
copyrightable) directly or indirectly useful in any aspect of the
business of the Company, any confidential customer or supplier lists of
the Company, any confidential or secret development or
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research work of the Company, price lists, know how, forecasts, or any
other confidential, secret or non-public aspects of the business of the
Company. The Executive acknowledges that the above-described knowledge
or information constitutes a unique and valuable asset of the Company
acquired at great time and expense by the Company, and that any
disclosure or other use of such knowledge or information other than for
the sole benefit of the Company would be wrongful and would cause
irreparable harm to the Company. Both during and after the term of this
Agreement, the Executive will refrain from any acts or omissions that
would reduce the value of the use of such knowledge or information to
the Company. The foregoing obligations of confidentiality, however,
shall not apply to any knowledge or information which is now published
or which subsequently becomes generally publicly known, other than as a
direct or indirect result of the breach of this Agreement by the
Executive.
7. NON COMPETITION.
(a) If the term of Executive's employment under this Agreement is
terminated pursuant to Section 8.05, and the Company continues to
compensate the Executive under Section 5 of this Agreement, then
the Executive shall refrain from competing with the Company for
so long as he is entitled to receive compensation under this
agreement. In all other circumstances should the Executive agrees
he shall not, directly or indirectly engage in competition with
the Company in any manner or capacity (e.g., as a management
consultant, principal, partner, officer, director, stockholder or
management employee), in any phase of the Company's business for
a period of two years following the date on which the Executive
leaves the Corporation.
(b) The Executive further agrees that, during the term of this
Agreement, he will not, directly or indirectly, assist or
encourage any other person in carrying out, directly or
indirectly, any activity that would be prohibited by the above
provisions of this Section 7 if such activity were carried out by
the Executive, either directly or indirectly, and in particular
the Executive agrees that he will not, directly or indirectly,
induce any employee of the Company to carry out, directly or
indirectly, any such activity.
8. TERMINATION PRIOR TO EXPIRATION OF THE TERM.
8.1 DISABILITY. The Executive's employment shall terminate upon
the Executive's becoming totally or permanently disabled for a
period of six (6) months or more. For purposes of this Agreement,
the term "totally or permanently disabled" or "total or permanent
disability" means Executive's inability on account of sickness or
accident, whether or not job-related, to engage in regularly or
to perform adequately his assigned duties under this Agreement.
The Board of Directors shall determine, acting reasonably and
bona fide, whether the Executive can engage in regularly or
perform adequately his
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assigned duties using the reports of doctors and such other
information as may be helpful.
8.2 DEATH OF EXECUTIVE. The Executive's employment shall
terminate immediately upon the death of Executive.
8.3 TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment at any time for "Cause" (as
hereinafter defined) immediately upon written notice to
Executive. Such written notice shall set forth with
reasonable specificity the Company's basis for such
termination. As used herein, the term "Cause" shall mean
that the Executive shall have (i) in the reasonable
judgment of the Board of Directors committed a criminal act
or an act of fraud, embezzlement, breach of trust or other
act of gross misconduct, (ii) willfully violated written
corporate policy or rules of the Company, or (iii) in the
reasonable judgment of the Board of Directors, has
willfully refused to follow the written directions given by
the Board of Directors from time to time or breached any
covenant or obligation under this Agreement or other
agreement with the Company.
8.4 RESIGNATION. The Executive's employment shall be terminated
on the earlier of the date that is three (3) months
following the written submission of the Executive's
resignation to the Board or the earlier date such
resignation is accepted by the Board.
8.5 TERMINATION WITHOUT CAUSE. The Company may terminate the
Executive's employment without cause upon written notice to the
Executive. Termination "without cause" shall mean termination of
employment on any basis other than termination of Executive's
employment hereunder pursuant to Sections 8.01, 8.02, 8.03 or
8.04.
8.6 CHANGE OF CONTROL. In the event of change of control of the
Company, the Executive shall be entitled to receive all options,
whether vested or not, and any additional incentive packages
granted but which have not vested immediately upon the change of
control being completed and all such compensation shall be dealt
with in the same manner as for all other executives of the
Company unless such executive has different terms to his/her
contract.
8.7 SURRENDER OF RECORDS AND PROPERTY. Upon termination of his
employment with the Company, the Executive shall deliver promptly
to the Company all records, manuals, books, blank forms,
documents, letters, memoranda, notes, notebooks, reports, data,
tables, calculations or copies thereof, which are the property of
the Company and which relate in any way to the business,
products, practices or techniques of the Company, and all other
property, trade secrets and confidential information of the
Company, including, but not limited to, all documents which in
whole or in part contain any trade
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secrets or confidential information of the Company, which in any
of these cases are in his possession or under his control.
9. ASSIGNMENT. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party.
Upon such assignment by the Company, the Company shall obtain the
assignees' written agreement enforceable by Executive to assume and
perform, from and after the date of such assignment, the terms,
conditions and provisions imposed by this Agreement upon the Company.
After any such assignment by the Company and such written agreement by
the Assignee, the Company shall be discharged from all further
liability hereunder and such assignee shall thereafter be deemed to be
the Company for the purposes of all provisions of this Agreement
including this Section 9.
10. INJUNCTIVE RELIEF. The Executive agrees that it would be difficult
to compensate the Company fully for damages for any violation of the
provisions of this Agreement, including without limitation the
provisions of Sections 6 and 8.03. Accordingly, the Executive
specifically agrees that the Company shall be entitled to temporary and
permanent injunctive relief to enforce the provisions of this
Agreement. This provision with respect to injunctive relief shall not,
however, diminish the right of the Company to claim and recover damages
in addition to injunctive relief.
11. INDEMNIFICATION. The Company shall indemnify Executive as provided
in the Company's Bylaws.
12. MISCELLANEOUS.
12.1 GOVERNING LAW. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the
Province of British Columbia.
12.2 WITHHOLDING TAXES. The Company may withhold from any
benefits payable under this Agreement all federal, provincial,
state, city or other taxes as shall be required pursuant to any
law or governmental regulation or ruling.
12.3 AMENDMENTS. No amendment or modification of this Agreement
shall be deemed effective unless made in writing signed by the
parties hereto.
12.4 NO WAIVER. No term or condition of this Agreement shall be
deemed to have been waived nor shall there be any estoppel to
enforce any provisions of this Agreement, except by a statement
in writing signed by the party against whom enforcement of the
waiver or estoppel is sought. Any written waiver shall not be
deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the
future or as to any act other than that specifically waived.
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12.5 SEVERABILITY. To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted
here from and the remainder of such provision and of this
Agreement shall be unaffected and shall continue in full force
and effect. In furtherance and not in limitation of the
foregoing, should the duration or geographical extent of, or
business activities covered by any provision of this Agreement be
in excess of that which is valid and enforceable under applicable
law, then such provision shall be construed to cover only that
duration, extent or activities which may validly and enforceably
be covered. The Executive acknowledges the uncertainty of the law
in this respect and expressly stipulates that this Agreement
shall be given the construction which renders its provisions
valid and enforceable to the maximum extent (not exceeding its
express terms) possible under applicable law.
12.6 SURVIVAL. Sections 6, 7 and 9 shall survive termination of
this Agreement.
12.7 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement between Executive and Company with
respect to the transactions contemplated herein and supersedes
any and all prior or contemporaneous oral or written
communications with respect to the subject matter hereof, all of
which are merged herein. It is expressly understood and agreed
that, there being no expectations to the contrary between the
parties hereto no usage of trade or other regular practice or
method of dealing between the parties hereto shall be used to
modify, interpret, supplement or alter in any manner the express
terms of this Agreement or any part hereof. This Agreement shall
not be modified, amended or in any way altered except by an
instrument in writing signed by both of the parties hereto.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement
as of the day and year set forth above.
THE COMPANY:
INTERNATIONAL ABSORBENTS INC.
By: /s/ XXXX XXXXXXXXXX
-------------------
Title: Director
----------------
ATTEST:
/s/ XXXXXXX XXXXXXXXXXX
-----------------------
Director/Secretary
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[CORPORATE SEAL]
THE EXECUTIVE:
XXXXXX XXXXX
/s/ XXXXXX XXXXX
-----------------------
ATTEST:
/s/ XXXXXXX XXXXXXXXXXX
-----------------------
Director/Secretary
[CORPORATE SEAL]
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