EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this 26th
day of August, 2004, and by and between Absorption Corp., a Nevada Corporation
(the "Company"), and Xxxx Xxxxx, an individual resident of the Province of
British Columbia, (the "Executive").
WITNESSETH:
WHEREAS, the Executive has heretofore been engaged by International Absorbents,
Inc. (the "Parent Company") to look after manufacturing, production and
operations of the Company and has the experience to provide services;
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
and each wants the terms and conditions as set out herein;
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 Chief Operations Officer in
charge of manufacturing, production and operations 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. This contract shall be
valid through October 20, 2005, which is the term of the employee's work
visa. If the work visa is renewed then this contract will be extended
subject to the terms of section 2.(retirement).
2. RETIREMENT
It is further understood that at the age of 60 years the contract shall be
reduced to a term of one year and renewable each year automatically if
neither party gives 90 days written notice to the other of their intention
to terminate this agreement. The term of the Executive's employment
hereunder is subject to earlier termination as hereafter specified save and
except that there will be no severance pay or benefits that extends beyond
the age of 65 years.
3. POSITION AND DUTIES
3.1 SERVICE WITH THE COMPANY
During the term of this Agreement, the Executive agrees to perform the
duties of Chief Operations Officer in charge of manufacturing, production
and operations including additional executive 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.
3.2 HOME OFFICE
The Company recognizes that as the Executive resides in Canada that he may
need from time to time to have an office at home with the necessary tools
and services to be able to carry on his functions from there. It is
understood that such additional equipment, furniture, other supplies and/or
other services will be at the Executive's cost. Nothing in this clause is
to relieve the Executive of his duties which include being available on a
day to day basis when the Company requires him.
3.3 NO CONFLICTING DUTIES
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During the term hereof, the Executive shall devote reasonable time, effort
and skill to managing the manufacturing production and operations as Chief
Operations Officer 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 company, firm, entity or person which are
inconsistent with the provisions of this Agreement.
4. COMPENSATION
4.1 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
$11,212.50 per month (the "Base Salary") which shall be paid commencing on
February 1, 2004 on a regular basis in accordance with the Company's normal
payroll procedures and policies together with all the Company's benefits.
The Executive's compensation will be reviewed on the same schedule as the
other executives of the Company.
4.2 BONUS
The Board of Directors of the Company shall set and determine each year how
bonuses will be awarded based on criteria agreed to by the Executive and
the Company. The bonus to be distributed will be determined by the
Compensation Committee in consultation with such persons as are necessary
as soon as possible after the financial results from the year are
available. It will be based primarily upon the target criteria as set at
the beginning of the fiscal year.
4.3 LONG TERM INCENTIVE
The Company agrees to maintain a long term incentive plan using stock
options, stock grants or other long term incentives which may provide for
cash, other remuneration or the issuance of stock options and granting of
shares under the rules and policies of the applicable governing securities
exchange rules for the stock of The Parent Company.
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
Executives, 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 regulation
applicable thereto. If for any reason the Executive cannot participate in
such program, his compensation will be adjusted in the cash equivalent.
Also, if the Executive pays United States payroll taxes for which he
currently is not eligible to receive benefits as a result of his current or
prior Canadian residency, his compensation will be adjusted in the cash
equivalent.
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 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 four (4)
weeks per year, in addition to the normal holidays when the business office
is closed.
5. COMPENSATION UPON THE TERMINATION OF THE EXECUTIVE'S EMPLOYMENT
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The Executive has been engaged by International Absorbents, Inc. since
April 4, 1986.
5.1 SEVERANCE WAGES
The Executive is to receive severance compensation and benefits under the
terms of this Agreement, the compensation and bonus shall be 24 months. The
bonus calculation will be based on the previous 2 year average.
5.2 SEVERANCE BENEFITS
In the event of termination of the Executive and his entitlement to
severance wages as provided in 5.1 the Executive shall be entitled to
receive the same severance benefits that went along with his salary for the
length of time set out in paragraph 5.1. If the executive has not moved to
the United States during the term of this contract and has not qualified to
receive U.S. Social Security benefits at the end of this severance salary
continuation, then he shall be compensated for Social Security payroll
taxes paid since January 1, 2004. In lieu of this compensation, the company
reserves the right to extend severance wages with the minimum payment(s)
that would complete the Executive's qualification for Social Security
benefits.
5.3 DISABILITY BENEFITS
In the event the Executive is terminated pursuant to Section 8.1
(disability) and is entitled to receive benefits from a plan to which the
Company contributed to disability benefits and such disability benefits
cease prior to the time set out in paragraph 5.1. Then the Company will
continue to pay the Executive his salary for the balance of the time
remaining as set out in 5.1 together with his benefits that may still be
applicable and not being covered by the disability insurance as set out in
5.2. If the benefits are not covered in the disability plan or the
disability plan term has run out prior to the time set out in 5.1 then the
Company will pay the same directly to the Executive or pursuant to the
Executive's direction to the provider of such coverage. Any stock options
or stock grants shall continue until they expire or such shorter period of
time as is required under securities legislation in Washington State, The
United States of America and British Columbia. The Compensation Committee
will evaluate the appropriateness of partial bonus achievement prior to the
time of disability.
5.4 SEVERANCE ON DEATH.
In the event the Executive's employment is terminated pursuant to Section
8.2 (death), the 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 Group Life
Insurance which are part of the Company benefits and in the absence of any
group life insurance or other life insurance benefits contributed to or
organized by the Company then the estate of the executive shall receive the
amounts set out in 5.1 and those that may be payable to the estate under
5.2. Any options or stock grants shall continue to their expiry date or
such shorter period of time as is required under securities legislation in
Washington State and The United States of America and British Columbia.
5.5 SEVERANCE ON TERMINATION FOR CAUSE
In the event that the Executive's employment is terminated pursuant to
Sections 8.3 (termination for cause), then he shall not be entitled to any
compensation other than his current Base Salary which has accrued and any
benefits set out in 5.2 calculated only to the date of termination. In the
event that Executive's employment is terminated pursuant to Section 8.4
(resignation), he shall be entitled to his then current Base Salary, any
benefits to the date of termination only and any bonus, if such, is accrued
or calculated monthly through to the date of termination.
5.6 SEVERANCE ON TERMINATION WITHOUT CAUSE
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In the event the Executive is terminated by the Company pursuant to Section
8.5 (Termination without Cause), the Executive shall receive severance as
set out in Sections 5.1 and 5.2 of this Agreement.
5.7 PAYMENT OF SEVERANCE
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 4.1 hereof. Any notice given to the Executive pursuant to Section 8
shall be counted as part of the time calculated and the payments of
benefits.
6. CONFIDENTIALITY 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 during 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
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 form 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 that as direct or indirect result of the breach of
this Agreement by the Executive.
7. NON COMPETITION
The Executive 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, 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.
7.1 The Executive agrees not to directly or indirectly or otherwise assist,
encourage any person to be involved in any manner to invest or promote any
business or activity of a similar nature if the Executive has terminated
this Agreement pursuant to Sections 8.1, 8.4 or 8.6 of this Agreement for a
period of ONE (1) YEAR or for the length of the severance pay, whichever is
the longer, from the date of termination.
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
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the Executive can engage in regularly or perform adequately his assigned
duties using the reports of doctors and such other information as may be
helpful. The Board may seek such advice as it deems necessary to make such
determination.
8.2 DEATH OF EXECUTIVE
The Executive's employment shall terminate immediately upon the death of
the 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, willfully
refused to follow the reasonable 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 or (iv) has acted in
such a manner that his actions constitute gross dereliction of his duties
as set out by the Company from time to time.
8.4 RESIGNATION
The Executive's employment shall be terminated on the earlier of the date
that is one (1) month 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 8.1, 8.2. 8.3 or 8.4.
Notice by the Company that this Agreement shall not be renewed as defined
in Section 2 herein, shall be defined as termination without cause
entitling the Executive to compensation as defined in Section 5.1 and 5.2
with the maximum payment being only to age 65. The company shall make every
reasonable effort to renew the work Visa and any action that that may
hinder this objective shall be deemed "Termination without cause".
8.6 SALE OF COMPANY OR INTERNATIONAL ABSORBENTS INC.
Should the Company's assets be sold or more than 51% of the capital stock
of the Company be sold or should the control of International Absorbents
Inc. (the owner of 100% of the issued and out standing shares of the
Company) change such that sixty (60%) percent of the then present Board
changes and not because of retirement, incapacity, sickness or voluntary
resignation causing a change in management practice of the Company then the
Executive shall be entitled to receive all options or stock grants made
subject to the provisions of the option plan or stock grant plan in force
with the Company at the time and any additional incentive packages granted,
but which have not vested immediately upon the sale of the Company or
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.
Should the management change the Executive's duties or make the execution
of the duties such that the Executive would have the right to claim
constructive dismissal then the executive shall have the right to claim
severance as if he had been terminated without cause. The Executive has an
equivalent right to severance if such constructive dismissal results from
the sale of the Company assets. Should the Executive be successful in such
claim then the Executive shall be entitled to all reasonable lawyer's costs
and disbursements that he has incurred in prosecuting such suit including
any other costs that were necessary.
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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 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 both parties, except for a Change in
Control as defined in Paragraph 8 and 8.6. 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 the
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 the Section 9. It is agreed by both parties to this
Agreement that in the case of a change of control of the Company as defined
in Section 8.6 of this Agreement, that this Agreement shall be
automatically assigned to the new controlling entity.
10 INDEMNIFICATION
The Company shall indemnify Executive as provided in the Company's Bylaws.
10.1 DIRECTORS AND OFFICERS INSURANCE
The Company shall maintain Directors and Officers insurance as decided by
the Board of Directors from time to time required to protect the Executive
from claims made against him as a result of his duties and performance of
his employment with the Company.
11 GENERAL PROVISIONS
11.1 GOVERNING LAW
This Agreement is made under and shall be governed by and construed in
accordance with the laws of the State of Washington.
11.2 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.
11.3 AMENDMENTS
No amendment or modification of this Agreement shall be deemed effective
unless made in writing signed by the parties hereto.
11.4 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
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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.
11.5 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 stipulated that this
Agreement shall be given the construction which renders its provisions
valid and enforceably to the maximum extent (not exceeding its express
terms) possible under applicable law.
11.6 SURVIVAL
Sections 6, 7, 8.7 and 9 shall survive termination of this Agreement.
11.7 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.
ABSORPTION CORP.
XXXXXX XXXXX, CEO XXXXXX XXXXXXX, INTERNATIONAL
Absorbents, Inc. Compensation Comm
/s/ Xxxxxx Xxxxx Xxxxxx Xxxxxxx
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XXXX XXXXX
/s/ Xxxx Xxxxx
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ATTEST:
/s/ Xxxxx Xxxxxxxx
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