<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
PROXY STATEMENT
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: [ ]
CHECK THE APPROPRIATE BOX:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
INTERNATIONAL ABSORBENTS INC.
1569 DEMPSEY ROAD
NORTH VANCOUVER, BRITISH COLUMBIA, CANADA V7K 1S8 (Exact
--------------------------------------------------------
name of Registrant as specified in its charter)
NOT APPLICABLE
--------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
BRITISH COLUMBIA, CANADA
------------------------
(Jurisdiction of Incorporation or Organization)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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 transaction:
---------------------------------------------------------------
5. Total fee paid:
---------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] 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 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:
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<PAGE> 2
INTERNATIONAL ABSORBENTS INC.
1569 DEMPSEY ROAD,
NORTH VANCOUVER, BRITISH COLUMBIA
CANADA V7K 1S8
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 29, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Meeting") of the
shareholders of International Absorbents Inc. (the "Company"), a corporation
incorporated under the laws of British Columbia, Canada, will be held at Campney
& Murphy, Main Boardroom, 2100 - 1111 West Georgia Street, Vancouver, British
Columbia, Canada on Friday, June 29, 1999 at 10:00 a.m.
(Pacific time) for the following purposes:
1. To appoint PricewaterhouseCoopers, Chartered Accountants, as the Company's
independent public auditor for the fiscal year ending January 31, 2000.
2. To elect the following persons as Directors of the Company for a term of two
years:
Stephen H. Silbernagel
John J. Sutherland
3. To transact such other business as may properly come before the Meeting or
any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on May 21, 1999 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting or any adjournment(s) thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, SHAREHOLDERS ARE
URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED FORM OF PROXY IN THE
ENCLOSED ENVELOPE. A proxy will not be valid unless it is received at the office
of the Transfer Agent, Pacific Corporate Trust Company, Suite 830 - 625 Howe
Street, Vancouver, British Columbia, Canada V6C 3B6, not less than 48 hours
(excluding Saturdays, Sundays and holidays) before the time fixed for the
Meeting. A form of Proxy received at the offices of the Transfer Agent or
Company after this time, but prior to the Meeting, may be accepted or rejected
as late, at the discretion of the Chairman. Your form of Proxy will be returned
to you if you are present at the Meeting and should request its return.
DATED at Vancouver, British Columbia, BY ORDER OF THE BOARD OF DIRECTORS
the 26 day of May, 1999.
/s/ Gordon L. Ellis
----------------------------------------
Gordon L. Ellis, Chairman
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<PAGE> 3
INTERNATIONAL ABSORBENTS INC.
1569 Dempsey Road,
North Vancouver, British Columbia
Canada V7K 1S8
WWW.ABSORBENT.COM
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 29, 1999
================================================================================
SOLICITATION OF PROXIES
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES
BY THE BOARD OF DIRECTORS (THE "BOARD OF DIRECTORS" OR "BOARD") OF INTERNATIONAL
ABSORBENTS INC. (THE "COMPANY"), A CORPORATION INCORPORATED UNDER THE LAWS OF
BRITISH COLUMBIA, CANADA, FOR USE AT THE ANNUAL MEETING (THE "MEETING") OF THE
SHAREHOLDERS OF THE COMPANY TO BE HELD ON JUNE 29, 1999 AT THE TIME AND PLACE
AND FOR THE PURPOSES SET FORTH IN THE ACCOMPANYING NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS. This Proxy Statement, and the accompanying Notice and Form of
Proxy are being mailed to shareholders of the Company entitled to vote at the
Meeting on or about May 26, 1999. It is expected that the solicitation will be
primarily by mail. Proxies may also be solicited personally or by mail,
telephone or telegraph by directors ("Directors"), officers or regular employees
of the Company for no additional compensation, however, out-of-pocket expenses
will be reimbursed. Brokerage houses and other custodians, nominees and
fiduciaries will be requested, in connection with the shares registered in their
names, to forward solicitation materials to the beneficial owners of such
shares. The Company will reimburse brokerage firms and other persons
representing beneficial owners of the common shares for their reasonable
expenses in forwarding solicitation material to such beneficial owners. THE
COSTS OF THIS SOLICITATION WILL BE BORNE BY THE COMPANY.
Advance notice of the Meeting was published in Vancouver, British Columbia on
April 27, 1999.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the accompanying Form of Proxy are executive officers
("Executive Officers") of the Company planning to be in attendance at the
Meeting and nominated by the Board of Directors. A SHAREHOLDER DESIRING TO
APPOINT SOME OTHER PERSON (WHO NEED NOT BE A SHAREHOLDER) TO REPRESENT HIM OR
HER AT THE MEETING AS PROXYHOLDER MAY DO SO, EITHER BY:
(a) STRIKING OUT THE PRINTED NAMES AND INSERTING THE DESIRED
PERSON'S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY;
OR
(b) BY COMPLETING ANOTHER PROPER FORM OF PROXY.
The completed Form of Proxy must be received at the office of the transfer
agent, Pacific Corporate Trust Company (the "Transfer Agent"), located at Suite
830 - 625 Howe Street, Vancouver, British Columbia, Canada V6C 3B8, not less
than 48 hours (excluding Saturdays, Sundays and holidays) before the time fixed
for the Meeting or before the time that the Meeting is to be reconvened
following any adjournment thereof. A Form of Proxy received at the offices of
the Transfer Agent or the Company after this time, but prior to the Meeting, may
be accepted or rejected as late, at the discretion of the Chairman.
A shareholder's Form of Proxy will be returned if the shareholder is present at
the Meeting and should request its return. A shareholder who has given a Form of
Proxy may also revoke it by an instrument in writing delivered to the office of
the Transfer Agent or to the registered office of the Company, Suite 700 - 595
Howe Street, Vancouver, British Columbia, Canada V6C 2T5, at any time up to and
including the last business day preceding the day of the Meeting, or any
adjournment thereof, or to the Chairman of the Meeting on the day of the Meeting
or any adjournment thereof, or in any other manner provided by law. If the
shareholder is a corporation, any such instrument of revocation must be executed
under the corporate seal or by a duly authorized officer or attorney of the
corporation.
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<PAGE> 4
VOTING OF PROXIES
If the Form of Proxy is properly completed and returned to the Transfer Agent,
the shares represented by the Form of Proxy will be voted at the Meeting. Where
a shareholder indicates a choice with respect to any matter to be acted upon at
the Meeting, the shares will be voted in accordance with the specification so
made. IF A CHOICE IS NOT SO SPECIFIED, IT IS INTENDED THAT THE PERSON DESIGNATED
BY THE BOARD OF DIRECTORS IN THE ACCOMPANYING FORM OF PROXY WILL VOTE THE SHARES
REPRESENTED BY THE FORM OF PROXY IN FAVOUR OF EACH MATTER IDENTIFIED ON THE FORM
OF PROXY AND, THEREFORE, "FOR" THE NOMINEES OF THE COMPANY FOR DIRECTORS AND
AUDITOR
The Form of Proxy accompanying this Proxy Statement confers discretionary
authority upon the named proxyholder with respect to amendments or variations to
the matters identified in the accompanying Notice of Annual Meeting and with
respect to any other matters which may properly come before the Meeting. As of
the date of this Proxy Statement, the Board of Directors of the Company knows of
no such amendment or variation or matters to come before the meeting other than
those referred to in the accompanying Notice of Annual General Meeting.
VOTING SHARES
As at May 21, 1999, 19,618,052 common shares ("Common Shares") without par value
of the Company were issued and outstanding, each such share carrying the right
to one vote at the Meeting. The Record Date as of which members are entitled to
receive notice of and to vote at the Meeting is May 21, 1999. The closing price
of the Company's Common Shares on the OTC Bulletin Board on May 21, 1999 was
(US) $0.30.
FINANCIAL STATEMENTS
The Company's 1999 Annual Report, which contains the consolidated financial
statements for the Company's fiscal year ended January 31, 1999 and Management's
Discussion and Analysis thereon, is being mailed with this Proxy Statement to
shareholders entitled to notice of the Meeting.
AUDITOR
APPOINTMENT OF AUDITOR (ITEM 1 OF FORM OF PROXY)
The Board of Directors of the Company recommends PricewaterhouseCoopers,
Chartered Accountants, for appointment by the shareholders as the Company's
independent public auditor for the fiscal year ended January 31, 2000.
PricewaterhouseCoopers has acted as the Company's auditor since fiscal 1985 and
will have a representative present at the Meeting to make a statement, if they
desire to do so, and to respond to any questions from the shareholders.
PRINCIPAL SHAREHOLDERS AND
SHARE OWNERSHIP OF MANAGEMENT
The following table provides information, as at April 30; 1999, with respect to
Common Share ownership by (i) the persons known to management beneficially
owning Common Shares carrying more than 5% of the voting rights attached to all
Common Shares of the Company, (ii) each Director, (iii) the Chief Executive
Officer, (iv) each Executive Officer named in the Summary Compensation Table,
and (v) all Directors and Executive Officers as a group. Except as otherwise
indicated in the footnotes below, all of the shares listed for a person named in
the table are directly held, with sole voting and dispositive power.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PERCENTAGE OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT OWNED CLASS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Gordon L. Ellis 1,788,250(1)(2)(3)(4)(5) 8.44%
North Vancouver, British Columbia, Canada
Common Stephen H. Silbernagel 823,500(7)(8) 3.17%
Vancouver, British Columbia, Canada
Common John J. Sutherland 60,021(9) 0.28%
West Vancouver, British Columbia, Canada
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PERCENTAGE OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT OWNED CLASS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Douglas E. Ellis 256,500(10)(11) 1.21%
White Rock, British Columbia, Canada
Common Shawn M. Dooley 402,212(12)(13) 1.90%
Bellingham, WA 98226
Common Directors and Executive Officers 3,423,983(14) 15.45%
as a Group (5 Persons)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 258,250 common shares underlying incentive stock options granted
to Mr. Ellis.
(2) Includes 200,000 common shares and 100,000 underlying common share
purchase warrants held by Mr. Ellis' spouse. Mr. Ellis disclaims
beneficial ownership of, and voting or dispositive powers over these
shares.
(3) Includes 40,000 common shares and 20,000 underlying common share purchase
warrants held by Stelyconi Enterprises Ltd.. Mr. Ellis controls voting and
dispositive powers.
(4) Includes 200,000 common shares and 100,000 underlying share purchase
warrants held by Gordann Consultants Ltd.. Mr. Ellis owns 51% interest and
Mr. Ellis' spouse owns 49% interest in Gordann Consultants Ltd., Mr. Ellis
controls voting and dispositive powers.
(5) Includes 200,000 common shares and 100,000 underlying common share
purchase warrants held by ABE Industries (1980) Inc. Mr. Ellis controls
voting and dispositive powers.
(6) Includes 380,000 common shares and 190,000 common share underlying share
purchase warrants granted to Mr. Ellis.
(7) Includes 60,000 common shares underlying incentive stock options granted
to Mr. Silbernagel.
(8) Includes 250,000 common shares underlying share purchase warrants granted
to Mr. Silbernagel.
(9) Includes 60,000 common shares underlying incentive stock options granted
to Mr. Sutherland.
(10) Includes 100,000 common shares underlying incentive stock options granted
to Mr. Ellis.
(11) Includes 100,000 common share underlying share purchase warrants granted
to Mr. Ellis
(12) Includes 75,000 common shares underlying incentive stock options granted
to Mr. Dooley
(13) Includes 88,237 common shares underlying share purchase warrants held by
Mr. Dooley
(14) Includes 93,500 common shares underlying incentive stock options granted
to Mr. Thompson
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), as
amended, requires the Company's officers and Directors, and persons who
beneficially own more than 10% of a registered class of the Company's equity
securities, to file reports of securities ownership and changes in such
ownership with the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc. Officers, Directors and greater than 10%
beneficial owners also are required by the rules promulgated by the Securities
and Exchange Commission to furnish the Company with copies of all Section 16(a)
forms they file.
The officers, Directors and greater than 10% beneficial owners became subject to
Section 16 on February 1, 1993 at which time the Company was no longer deemed a
"foreign private issuer" as such term is defined in Rule 3b-4 of the Securities
Exchange Act of 1934. Based solely upon a review of the copies of such forms
furnished to the Company, the Company believes that, during the period from
February 1, 1995 to the date of this Proxy Statement, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS (ITEM 2 OF FORM OF PROXY)
The Articles of the Company provide for a Board of Directors consisting of not
fewer than three (3) members. The number of Directors may be determined by
resolution of the Board of Directors at any meeting; presently, the Board has
set the number of Directors at five (5). In addition, the Articles of the
Company provide for division of the Board of Directors into two (2) classes,
whereby the term of office for each class of Directors alternately expires upon
the second succeeding general meeting. At the present time, Class I has three
(3) Directors with expiring terms in 2000 and Class II has two (2) Directors
with expiring terms in 1999.
Unless otherwise directed in the accompanying Form of Proxy, the persons
appointed in the Form of Proxy intend to nominate and vote the shares
represented by such Form of Proxy "FOR" the election of the following nominee
for the office of Director of the Company, to serve as Class II Directors for a
term of two years, or until their successor is duly elected or appointed, unless
their office is earlier vacated in accordance with the Articles of the Company
or they become disqualified to act as a Director. The nominees are presently
Directors and will have their term of office as a Director expire at the
Meeting.
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<PAGE> 6
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
PRESENT POSITION SERVED AS DATE TERM AS
CLASS DIRECTOR AGE WITH COMPANY DIRECTOR DIRECTOR TO
SINCE EXPIRE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
II Stephen H. Silbernagel 52 Director 1988 1999
II John J. Sutherland 49 Director 1988 1999
- ----------------------------------------------------------------------------------------------------
</TABLE>
Although the Company does not contemplate that the above named nominees will
refuse or be unable to accept or serve as Directors of the Company, the persons
appointed in the enclosed accompanying Form of Proxy intend, if a nominee
becomes unavailable, to vote the shares represented by the Form of Proxy "FOR"
the election of such other person as may be nominated or designated by the Board
of Directors, unless they are directed by the Form of Proxy to do otherwise.
The following information is provided in respect to Class I Directors of the
Company who will continue to serve as Directors until the expiration of their
terms on the dates indicated:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------- -----------------
PRESENT POSITION SERVED AS DATE TERM AS
CLASS NOMINEE AGE WITH COMPANY DIRECTOR DIRECTOR TO
SINCE EXPIRE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
I Gordon L. Ellis 52 Director, 1985 2000
Chairman,
President & CEO
- ----------------------------------------------------------------------------------------------------
I Douglas E. Ellis 47 Director, 1998 2000
Secretary,
President of
Absorption Corp
I Shawn M. Dooley 39 Director, VP 1998 2000
Marketing
- ----------------------------------------------------------------------------------------------------
</TABLE>
The brother of Gordon Ellis, Douglas Ellis, is the President of Absorption Corp.
("Absorption"), the Company's U.S. operating subsidiary. No other family
relationship exists between any Director, Executive Officer, or significant
employee.
The following is a brief summary of the business experience, during the past
five years, of each Director and nominee for Director of the Company. Messrs.
Gordon Ellis, Silbernagel, Sutherland and Douglas Ellis are citizens of Canada
and Mr. Dooley is an American citizen.
Gordon L. Ellis has been Chairman of the Company since July 1988, President and
CEO since November 1996, and a Director of the Company since July 1985. Mr.
Ellis is also a Director of Absorption, and is Chairman and a Director of
Polymer Solutions, Inc. ("PSI"), a publicly-held company listed on the Vancouver
Stock Exchange, which operates a plant in Chico, California, using advanced
polymer technology to develop and provide environmentally safe, non-toxic,
industrial wood coating and adhesive products. Mr. Ellis is a Director of
eXcape.Net Inc. a private company engaged in the development and operation of a
computer network to provide EDI and electronic financial services in Asia. Mr.
Ellis is a Director, President and CEO of Total Absorb Inc. ("TAI"), the
Company's Canadian marketing and distribution subsidiary which markets and
distributes pet litter.
Stephen H. Silbernagel has been a Director of the Company since June 1988. Mr.
Silbernagel is a lawyer, practising in Vancouver, British Columbia and is a
partner in the firm Silbernagel & Company. Mr. Silbernagel is a Director of PSI.
John J. Sutherland has been a Director of the Company since August 1988. Mr.
Sutherland is a Certified General Accountant and is President and CEO of ASC
Avcan Systems Corporation ("ASC"). Prior to joining ASC in January 1997, Mr.
Sutherland was Vice-President Finance of Arequipa Resources Ltd., and a
financial consultant to public and private companies in Vancouver, British
Columbia. Mr. Sutherland is a Director of PSI. Mr. Sutherland is a Director of
JCI Technologies Inc., a publicly-held company listed on the Alberta Stock
Exchange and was Vice-President of Finance of Zen International Resources Ltd.
from January 1996 to January 1997.
Douglas E. Ellis has been a Director of the Company since July 1998. Effective
March 1999, Mr. Ellis became President of Absorption and he has been with
Absorption for 13 years. Prior to joining and helping to build Absorption's
Bellingham facility, Mr. Ellis spent many years in the heavy construction
industry as a project engineer for pulp & paper mills and related projects.
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<PAGE> 7
Shawn M. Dooley has been a Director of the Company since July 1998. Mr. Dooley
is Vice-President, Marketing for Absorption and has been associated with
Absorption for the past seven years. Previous to joining the Company, Mr. Dooley
spent nine years at Purina Mills, Inc. Mr. Dooley holds Bachelor of Science
degrees in Agricultural Education and Agricultural Resource Economics.
EXECUTIVE OFFICERS OF THE COMPANY
For the purpose of this Proxy Statement, "Executive Officer" of the Company
means the Chairman and any Vice-Chairman of the Board of Directors, where that
person performs the functions of such officer on a full-time basis, the
President, and any Vice-President in charge of a principal business unit such as
sales, finance or production, and any officer of the Company or of a subsidiary
who performs a policy-making function in respect of the Company, whether or not
such officer is also a Director of the Company or the subsidiary.
The Executive Officers of the Company, (including positions held with
subsidiaries Absorption and TAI), their ages, principal occupations and business
experience for the past five years, and tenures as Executive Officers are shown
in the following table. Executive Officers are appointed by, and serve at the
pleasure of, the Board of Directors.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
OFFICE HELD
NAME AGE SINCE OFFICE HELD WITH COMPANY OR SUBSIDIARY
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gordon L. Ellis 52 1988 Chairman
President and CEO (since November, 1996)
Chairman and Director of Absorption
President and CEO of TAI
See "Election of Directors"
Douglas E. Ellis 47 1999 President of Absorption
1998 Director
1998 Secretary
1997 Secretary of Absorption
Shawn M. Dooley 39 1998 Director
1998 VP Marketing
David Thompson 38 1998 CFO
- ------------------------------------------------------------------------------------------------
</TABLE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The aggregate cash payments made to the Company's Executive Officers and their
management companies by the Company and its subsidiaries during the financial
year ended January 31, 1999 was (US) $355,629 as reimbursement for office rent
and supporting services, and management services provided to the Company during
the current year and prior years. Please see "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS".
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the total direct or
indirect (management service agreements) compensation during the last three
fiscal years of the Company's CEO and its other Executive Officers whose
compensation exceeded (US) $100,000. Information is given for each of the last
three fiscal years for each Executive Officer who served at any time during such
year as an Executive Officer of the Company or its subsidiaries.
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<PAGE> 8
<TABLE>
<CAPTION>
U.S. DOLLARS
- ---------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------------------------------------
AWARDS PAYOUTS
----------------------------------------
RESTRICTED
OTHER SECURITIES SHARES OR ALL
NAME AND FISCAL ANNUAL UNDER RESTRICTED OTHER
POSITION YEAR COMPEN- OPTIONS SHARE LTIP COMPEN-
OF PRINCIPAL ENDING SALARY ($) BONUS SATION GRANTED UNITS PAY-OUTS SATION
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gordon L. Ellis 1999 44,800 Nil 1,376 83,500 Nil N/A Nil
Chairman, President and CEO(1) 1998 43,820 Nil 1,465 Nil Nil N/A Nil
1997 7,342 Nil 269 216,599(2) Nil N/A Nil
Douglas E. Ellis 1998 83,268 Nil 8,526 200,000(4) Nil N/A Nil
President of Subsidiary(3) 1997 57,544 Nil 1,434 Nil Nil N/A Nil
1996 55,771 Nil Nil 100,000(2) Nil N/A Nil
Shawn M. Dooley 1998 49,084 Nil 40,725 125,000 Nil N/A Nil
Vice President, Marketing(5) 1997 30,727 Nil 31,850 Nil Nil N/A Nil
1996 N/A N/A N/A N/A N/A N/A N/A
Geoffrey C. Lawrence 1998 23,692 Nil Nil Nil Nil N/A Nil
Former Officer and Director of 1997 111,569 Nil Nil Nil Nil N/A Nil
Subsidiary(6) 1996 36,615 Nil 6,605 110,000(7) Nil N/A Nil
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Gordon Ellis has been the President and Chief Executive Officer of the
Company since November 1996.
(2) Pursuant to the approval from shareholders at the July 1998 Annual
General Meeting amendments were implemented to reprice existing stock
options granted, to an exercise price of $0.20 per Common Share.
(3) Douglas Ellis was appointed President of Absorption Corp. in March 1999.
(4) Includes 100,000 warrants granted to Mr. Ellis in January 1998.
(5) Mr. Dooley was appointed Vice President, Marketing in July 1998.
(6) Mr. Lawrence resigned as President and Chief Executive officer of
Absorption Corp. in March 1998.
(7) Includes 110,000 warrants granted to Mr. Lawrence to expire in
December, 1999.
OPTION GRANTS
The Company has never granted stock appreciation rights ("SAR's") and it is
currently intended that none be granted in the future. The following table sets
forth information regarding all grants of options to the individuals named in
the Summary Compensation Table during the fiscal year ended January 31, 1999,
and the potential realizable value of such options using a 5% and 10% assumed
annual rate of appreciation in the price of the Company's Common Shares. The
particular assumed annual rates of stock appreciation used in this table are
specified under the rules and regulations of the Securities and Exchange
Commission and are not necessarily indicative of future stock price performance
or the Company's projections thereof. Over a three-year option term, the
corresponding increase in the Company's market capitalization over the same
period (measured from the end of the last fiscal year) would be (a) (US)
$679,715 with an assumed 5% annual rate of stock appreciation, and (b) (US)
$1,427,349 with an assumed 10% annual rate of stock appreciation.
<TABLE>
<CAPTION>
U.S. DOLLARS
- --------------------------------------------------------------------------------------------------------
MARKET
VALUE OF
SECURITIES
% OF TOTAL UNDERLYING
SECURITIES EXERCISE OPTIONS OPTIONS ON
UNDER OR BASE GRANTED TO THE DATE
OPTIONS PRICE EMPLOYEES OF GRANT
DATE OF GRANTED ($/ IN FISCAL ($/SECURITY)
NAME GRANT (#) SECURITY) YEAR (1) EXPIRATION DATE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gordon L. Ellis Oct 1, 1998 83,500 $0.20 12% $14,195 Oct 1, 2001
Douglas E. Ellis Oct 1, 1998 100,000 $0.20 14% $17,000 Oct 1, 2001
Shawn M. Dooley Oct 1, 1998 125,000 $0.20 17% $21,250 Oct 1, 2001
Geoffrey C. N/A Nil N/A N/A N/A N/A
Lawrence
- --------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 9
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth information concerning the exercise of options
during the fiscal year ended January 31, 1999, and the value at January 31, 1999
of unexercised "in-the-money" options held by each of the executive officers
named in the Summary Compensation Table. Once vested, all options are
exercisable, in whole or in part, at any time until date of expiration.
<TABLE>
<CAPTION>
U.S. DOLLARS
- ----------------------------------------------------------------------------------------------------------
AT JANUARY 31, 1999
------------------------------------------------
NUMBER OF AGGREGATE VALUE OF EXERCISABLE/
SHARES VALUE NUMBER EXERCISABLE/ UNEXERCISABLE
NAME ACQUIRED ON REALIZED UNEXERCISABLE IN-THE-MONEY OPTIONS
EXERCISE(#) ($) (1) OPTIONS ($)(2)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gordon L. Ellis - - 216,500 / 83,500 4,330 / 1,670
Douglas E. Ellis - - 200,000 / 100,000(3) 2,000 / 2,000
Shawn M. Dooley 75,000 / 125,000 1,500 / 2,500
Geoffrey C. Lawrence - - 110,000/Nil(4) Nil / Nil
ALL DIRECTORS AND - - 608,500 / 461,500 10,170 / 9,230
EXECUTIVE OFFICERS AS A
GROUP (TOTAL 6)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the difference between the option exercise price and the
closing market price of the Company's shares.
(2) In-the-Money Options are those where the market value of the underlying
securities as at the most recent fiscal year end exceeds the option
exercise price. The closing market price of the Company's shares as at
January 31, 1999 (i.e. fiscal year end) was (US) $0.22.
(3) The number of unexercised options amount includes 100,000 warrants
granted to Mr. Ellis in January 1998.
(4) Includes 110,000 warrants granted to Mr. Lawrence in December, 1996 to
expire December 31, 1999
At the 1998 Annual General Meeting an affirmative vote of the majority of
shareholders approved amendments to the 1993 Equity Incentive Stock Option Plan.
The Board of Directors of the Company also approved amendments to the Company's
1993 Stock Plan U.S. Participants. The amendments entailed the repricing of
options granted from exercise prices ranging from (US) $0.50 to (US) $1.69 per
Common Share to an exercise price of (US) $0.20 per Common Share on existing
stock options.
At January 31, 1999, stock options to purchase a total of 1,427,836 Common
Shares at exercise prices ranging from (US).$0.20 to (US) $0.91, with expiry
dates from August 13, 1999 to October 1, 2001 were outstanding. Pursuant to the
vesting terms of the stock option agreements, stock options to purchase 966,336
Common Shares are eligible for exercise at January 31, 1999.
EMPLOYMENT AGREEMENTS
Pursuant to a verbal agreement, the Company entered into a management services
agreement with Current Systems, a company controlled by Douglas E. Ellis, for
the services of Douglas E. Ellis. Effective March 31, 1998, Current Systems
receives (US) $7,083 for management services and (US) $650 in recoverable
expenses per month.
On October 1, 1998, the Company entered into an employment agreement with Gordon
L. Ellis, serving as Chairman and President of the Company. The Company pays
US$4,000 per month for management services and Mr Ellis is permitted to
participate in the Company's Benefit Plan and Stock Option Plan. The management
agreement is terminable immediately upon notice by either party.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
Other than routine indebtedness, none of the Directors, Executive Officers and
proposed nominees for election as Directors of the Company, and associates or
affiliates of such Directors, Executive Officers or proposed nominees are or
have been indebted to the Company since the beginning of the last completed
financial year of the Company.
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<PAGE> 10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since the commencement of the Company's last completed fiscal year, no insider
of the Company, proposed nominee for election as a Director of the Company, nor
any associate or affiliate of such insider or proposed nominee, has been
materially interested in any transaction of the Company, nor is any such person
interested in any proposed transaction which has materially affected or would
materially affect the Company (or any of its subsidiaries) except for the
matters referred to below. With regard to any matter involving an actual or
potential conflict of interest with any member of the Company's Board of
Directors, it has been the policy of the Board to exclude the interested
Director from voting on such a matter.
Effective February 1, 1995, the Company and its two subsidiaries rent their
executive office space and office equipment in Vancouver, British Columbia from
ABE Industries (1980) Inc. ("ABE"), a company controlled by Gordon L. Ellis, for
a total monthly fee of (US) $500 per month. Management believes this rental fee
is less than rents charged by third parties for similar accommodations.
During the year ended January 31, 1999 ABE was paid (US) $46,425 for office rent
and related services, plus reimbursement of accounting, investor relations and
secretarial services. As of January 31, 1999, no monies were owed to ABE for
office services.
In March 1998 the Company entered into subscription agreements for employee
stock purchases to eliminate the debt related to the convertible debentures
outstanding at that time. Management participated in the private placement and
were issued shares of the Company.
In March 1998 the Company purchased the outstanding Escrow Shares from Gordon L.
Ellis. Subject to an Escrow Agreement in August 1988, 560,000 common shares were
issued to acquire the remaining shareholdings in Absorption and Canadian
Absorption Corp. to be released upon an earn-out provision based on the
cumulative cash flow from operations. The outstanding Escrow Shares were
purchased for (US) $50,000 and the proceeds were reinvested through the employee
stock purchase. Mr Ellis purchased 588,235 common shares at $0.085 per unit,
with each unit consisting of one common share and one common share purchase
warrant to purchase 294,117 common shares at US$0.25 per share.
The Company has entered into a management services agreement with Gordon L.
Ellis (President & C.E.O. of the Company) and Current Systems for the services
of Douglas E. Ellis (President and Secretary of Absorption. Please see
"COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS" for description of the
remuneration paid or payable under these agreements.
The Company has granted stock options and warrants to certain of its Directors
and Executive Officers. See "COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS".
SPECIAL BUSINESS
The Board of Directors of the Company resolve that no special business is being
solicited at this time, other than what may come before the Board at the Annual
General Meeting.
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
It is not known that any other matters will come before the meeting other than
as set forth above and in the Notice of Annual General Meeting, but is such
should occur the persons named in the accompanying Form of Proxy intend to vote
on them in accordance with their best judgment, exercising discretionary
authority with respect to amendments or variations of matters identified in the
Notice of Annual Meeting and other matters which may properly come before the
meeting or any adjournment thereof.
PROPOSALS OF SHAREHOLDERS
In accordance with the rules of the Securities and Exchange Commission,
shareholders of the Company may present proposals to the Company for inclusion
in the Company's Proxy Statement prepared in connection with its next Annual
General Meeting of Shareholders. Proposals to be included in the Proxy Statement
prepared in connection with the next Annual General Meeting scheduled to be held
in June of 2000 must be received by the Company no later than January 31, 2000,
in order to be considered for inclusion.
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<PAGE> 11
ANNUAL REPORT
The Annual Report for the Fiscal Year ended January 31, 1999 is being mailed to
shareholders with this Proxy Statement. The Annual Report is not to be
considered as proxy soliciting material. A copy of the Company's Annual Report
on Form 10-KSB (without exhibits) will be provided upon written request to the
Secretary, c/o the Company's address at 1569 Dempsey Road, North Vancouver,
British Columbia, Canada V7K 1S8.
BOARD APPROVAL
The contents of this Proxy Statement have been approved and its mailing has been
authorized by a resolution of the Board of Directors of the Company.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gordon L. Ellis
----------------------------------------
Gordon L. Ellis, Chairman
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<PAGE> 12
INTERNATIONAL ABSORBENTS INC.
1569 DEMPSEY ROAD
NORTH VANCOUVER, BRITISH COLUMBIA
CANADA V7K 1S8
FORM OF PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
INTERNATIONAL ABSORBENTS INC. (THE "COMPANY") FOR THE ANNUAL AND SPECIAL
MEETING (THE "MEETING") OF SHAREHOLDERS TO BE HELD JUNE 29, 1999.
================================================================================
The undersigned, a registered shareholder of the Company, hereby appoints GORDON
LLOYD ELLIS, an Executive Officer of the Company, or instead of him ________ as
proxyholder, with full powers of substitution and appointment, to attend and
vote on behalf of the undersigned at the Meeting of shareholders of the Company
to be held on June 29, 1999, and at any adjournment thereof. The undersigned
hereby revokes any Form of Proxy heretofore given with respect to the Meeting or
any adjournment thereof.
The proxyholder is hereby directed to vote as follows:
1. To appoint PricewaterhouseCoopers (formerly Price Waterhouse), Chartered
Accountants, as the Company's independent public auditor for the fiscal year
ending January 31, 2000.
FOR ( ) WITHHOLD ( )
2. To elect the following persons as Directors of the Company for a term of two
years:
<TABLE>
<CAPTION>
NAME CLASS
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Stephen H. Silbernagel II FOR ( ) WITHHOLD ( )
John J. Sutherland II FOR ( ) WITHHOLD ( )
======================================================================================
</TABLE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED OR WITHHELD FROM VOTING ON
ANY BALLOT IN ACCORDANCE WITH THE INSTRUCTIONS OF THE SHAREHOLDER.
WHERE THE UNDERSIGNED HAS NOT SPECIFIED A CHOICE WITH RESPECT TO ANY OF THE
FOREGOING MATTERS, THIS PROXY CONFERS DISCRETIONARY AUTHORITY WITH RESPECT TO
SUCH MATTER(S) UPON THE ABOVE-NAMED PROXYHOLDER. IF NO SPECIFICATION IS MADE,
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN FAVOUR OF THOSE ITEMS.
THIS PROXY CONFERS DISCRETIONARY AUTHORITY WITH RESPECT TO AMENDMENTS OR
VARIATIONS OF THE MATTERS IDENTIFIED IN THE NOTICE OF ANNUAL MEETING AND WITH
RESPECT TO OTHER MATTERS WHICH MIGHT PROPERLY COME BEFORE THE MEETING.
THE UNDERSIGNED HEREBY
ACKNOWLEDGES RECEIPT OF THE NOTICE Signature: _____________________________
OF ANNUAL MEETING, THE PROXY
STATEMENT AND THE COMPANY'S ANNUAL Name: _____________________________
REPORT FOR THE FISCAL YEAR ENDED (Please Print)
JANUARY 31, 1999 Address: _____________________________
_____________________________
Number of shares _____________________________
Dated this ____ day of ________________, 1999
================================================================================
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<PAGE> 13
NOTES TO FORM OF PROXY:
1. SHAREHOLDERS HAVE THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A
SHAREHOLDER) TO REPRESENT THEM AT THE MEETING OF SHAREHOLDERS OTHER THAN
MANAGEMENT NOMINEES. If you desire to designate as a proxyholder a
person other than Mr. Ellis, the management nominee, you should either
strike out his name and insert in the space provided the name of the
person you desire to designate as proxyholder or complete another proper
form of proxy.
2. A proxy, to be valid, must be dated and signed by the member or by
his attorney authorized in writing or, where the member is a
corporation, under its corporate seal or by duly authorized and
appointed officer, attorney or representative of the corporation. Please
sign exactly as your name appears on the proxy. If the proxy is executed
by an attorney for an individual shareholder or by an officer, attorney
or representative or a corporate shareholder, the instrument so
empowering the officer, attorney or representative as the case may be,
or a notarial copy thereof, must accompany the proxy instrument. If this
proxy is not dated in the space provided, it is deemed to bear the date
on which it is mailed to the shareholder.
3. A proxy, to be effective, must be deposited at the office of the
Transfer Agent, Pacific Corporate Trust Company, Suite 830 - 625 Howe
Street, Vancouver, British Columbia, Canada V6C 3B8, not less than 48
hours (excluding Saturdays, Sundays and holidays) before the time fixed
for the Meeting or before the time that the Meeting is to be reconvened
following the adjournment thereof.
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<PAGE> 14
SUPPLEMENTAL MAILING LIST RETURN CARD
(National Policy 41)
NOTICE TO SHAREHOLDERS OF INTERNATIONAL ABSORBENTS INC.
On October 28, 1987, the Canadian Securities Administrators gave approval to
National Policy Statement No. 41 - Shareholder Communication (the "Policy")
which essentially established a framework for communication between issuers and
their registered and non-registered shareholders.
Companies incorporated in British Columbia were formerly required to deliver
interim (semi-annual) financial statements only to their registered
shareholders. The Policy now exempts companies from having to deliver these
statements to their registered shareholders if the companies send 1st, 2nd and
3rd quarter financial statements to those shareholders, whether registered or
not, who request in writing to receive them.
If you are a registered or non-registered shareholder, and wish to be placed on
a supplemental mailing list for the receipt of these financial statements, you
must complete and return the Supplemental Return Card below.
The supplemental mailing list will be updated each year and, therefore, a Return
Card will be required annually in order to receive quarterly financial
statements. All other shareholder mailings will continue to be mailed to
registered shareholders in the normal manner without the completion of a Return
Card.
=======================================================
TO: INTERNATIONAL ABSORBENTS INC. (the "Company")
The undersigned certifies that he/she/it is the owner of securities (other than
debt instruments) of the Company, and requests that he/she/it be placed on the
Company's Supplemental Mailing List in respect of its quarterly financial
statements.
- -------------------------------------------------
Name (Please print)
- -------------------------------------------------
Address
- -------------------------------------------------
City/Province (or State)/Postal Code
- ------------------------------------------------ --------------------------
Signature of shareholder, or if shareholder is a Dated
company, signature of authorized signatory.
PLEASE COMPLETE AND RETURN THIS DOCUMENT ALONG WITH YOUR PROXY IN THE ATTACHED
ENVELOPE OR AS INDICATED below. AS THE SUPPLEMENTAL LIST WILL BE UPDATED EACH
YEAR, A RETURN CARD WILL BE REQUIRED FROM YOU ANNUALLY IN ORDER FOR YOUR NAME TO
REMAIN ON THE LIST.
International Absorbents Inc.
1569 Dempsey Road
North Vancouver, British Columbia, Canada V7K 1S8
Tel: (604) 681-6181
Fax: (604) 904-4105
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