<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:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] 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:
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2. Aggregate number of securities to which transaction applies:
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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):
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4. Proposed maximum aggregate value transaction:
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5. Total fee paid:
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[ ] 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:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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<PAGE> 2
INTERNATIONAL ABSORBENTS INC.
1569 DEMPSEY ROAD
NORTH VANCOUVER, BRITISH COLUMBIA
V7K 1S8
DEAR SHAREHOLDER:
You are cordially invited to attend the extraordinary general meeting of
shareholders of INTERNATIONAL ABSORBENTS INC. ("IAB") on December 20, 2000, at
10:00 AM, Pacific Standard Time, at the Xchange Conference Centre, 2nd Floor,
888 Dunsmuir Street, Vancouver, British Columbia.
At the extraordinary general meeting, IAB is asking shareholders for approval of
a four for one reverse stock split to decrease the number of shares of
outstanding common stock. The reverse stock split is an important step in
attaining the Company's objective of creating a stock value which better
represents the successful nature of the Company's fiscal performance.
International Absorbents' has applied for listing on a more senior stock
exchange where the Company currently satisfies all listing criteria with the
exception of stock price. The reverse stock split, whereby every four (4)
outstanding shares will be combined into one (1) new share, is expected to
assist in satisfying this last criteria. One immediate benefit of the
consolidation is that earnings per share will be increased by four times. For
example, this would mean that earnings per share in the Company's last fiscal
year, recorded at $0.07 per share, would be recorded at $0.27 per share.
Management believes that the combination of the above factors with the Company's
current growth rate of well over 20 percent annually will enhance the
acceptability of IAB's common stock by the financial community and investing
public. The Company's stock will also become more attractive and accessible to a
wider range of investors.
Accordingly, the board of directors has considered and approved an amendment to
the British Columbia Company Act Memorandum that will result in a four-for-one
reverse stock split and increase the amount of our authorized common stock,
after giving the effect to the reverse stock split.
You are urged to read the accompanying proxy statement, which provides you with
a description of the terms of the proposed transaction. IAB's board of directors
has approved the proposal and recommends that you vote "in favour of" the
proposal.
It is very important that your shares be represented at the extraordinary
general meeting. Whether or not you plan to attend the extraordinary general
meeting, please complete, sign, date and return the enclosed proxy card in the
postage-paid envelope provided.
Please do not send any of your stock certificates at this time. If the amendment
is approved and the reverse stock split is ratified, we will send you a letter
explaining the procedures to exchange your shares for the new shares.
Sincerely,
Gordon L. Ellis
Chairman and Chief Executive Officer
2
<PAGE> 3
INTERNATIONAL ABSORBENTS INC.
1569 DEMPSEY ROAD,
NORTH VANCOUVER, BRITISH COLUMBIA
CANADA V7K 1S8
(604) 681-6181
NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 20, 2000
Notice is hereby given that the Extraordinary General Meeting (the "Meeting") of
the shareholders of International Absorbents Inc. ("IAB" or the "Company"), a
corporation incorporated under the laws of British Columbia, Canada, will be
held on December 20, 2000 at 10:00 am Pacific Standard Time, at the Xchange
Conference Centre, 2nd Floor, 888 Dunsmuir Street, Vancouver, British Columbia,
Canada for the following purposes:
1. To approve and grant the board of directors the authority to amend
IAB's British Columbia Company Act Memorandum to provide for a stock
consolidation (reverse stock split) pursuant to which every four (4)
shares of our outstanding common stock would be combined into one (1)
new share of common stock and an increase in our authorized shares of
common stock from 25,000,000 to 100,000,000 shares after giving effect
to the reverse stock split.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on November 13, 2000 as
the record date for the determination of shareholders entitled to notice of and
to vote at the extraordinary general meeting or any adjournment(s) thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE EXTRAORDINARY GENERAL MEETING IN PERSON,
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED FORM OF
PROXY IN THE ENCLOSED ENVELOPE PROVIDED. A proxy will not be valid unless it is
received at the office of the Transfer Agent, Pacific Corporate Trust Company,
10th Floor 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 6th day of November 2000.
/s/ Gordon L. Ellis
----------------------------------
Gordon L. Ellis, Chairman
3
<PAGE> 4
INTERNATIONAL ABSORBENTS INC.
1569 Dempsey Road
North Vancouver, British Columbia
V7K 1S8
PROXY STATEMENT
EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 20, 2000
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, FOR USE AT THE EXTRAORDINARY GENERAL MEETING (THE "MEETING")
OF THE SHAREHOLDERS OF THE COMPANY TO BE HELD ON DECEMBER 20, 2000 AT THE TIME
AND PLACE AND FOR THE PURPOSES SET FORTH IN THE ACCOMPANYING NOTICE OF
EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS.
This Proxy Statement, dated October 20, 2000, and the accompanying Notice of
Extraordinary General Meeting and Form of Proxy are being mailed on or about
November 17, 2000 to shareholders of the Company entitled to vote at the
Extraordinary General Meeting, as of the record date, being November 13, 2000.
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.
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
Extraordinary General 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 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 10th
Floor 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 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, V6C 2T5, at any time up to and
including the last business day preceding 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.
4
<PAGE> 5
COMPLETION AND 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 vote 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 VOTE 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 APPROVAL TO GRANT THE BOARD OF DIRECTORS THE
AUTHORITY TO AMEND THE COMPANY'S BRITISH COLUMBIA COMPANY ACT MEMORANDUM TO
PROVIDE FOR A REVERSE STOCK SPLIT AND INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK AFTER THE EFFECT OF THE REVERSE STOCK SPLIT.
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 Extraordinary General
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 Extraordinary
General Meeting.
VOTING SHARES
As at October 20, 2000, 22,397,485 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 November 13, 2000.
The closing price of the Company's Common Shares on the OTC Bulletin Board on
October 20, 2000 was (US) $0.47.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
None of the Directors or Senior Officers of the Company, nor any person who has
held such a position since the beginning of the last completed financial year of
the Company; has any substantial or material interest, direct or indirect, by
way of beneficial ownership of securities or otherwise, in any matter to be
acted on at the Meeting except for insiders of the Company, whereby they may be
recipients of future amended options or warrants to purchase shares of the
Company, if the proposals are approved by the Shareholders at the meeting.
PRINCIPAL SHAREHOLDERS AND
SHARE OWNERSHIP OF MANAGEMENT
The following table provides information, as of October 20, 2000, 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.
5
<PAGE> 6
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
TITLE OF PERCENTAGE OF
CLASS NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT OWNED CLASS
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Gordon L. Ellis 1,418,250(1)(2)(3)(4)(5) 6.28%
North Vancouver, British Columbia, Canada
Common Stephen H. Silbernagel 625,000(6) 2.79%
Vancouver, British Columbia, Canada
Common John J. Sutherland 40,021(7) 0.18%
West Vancouver, British Columbia, Canada
Common Douglas E. Ellis 351,500(8)(9) 1.55%
White Rock, British Columbia, Canada
Common Shawn M. Dooley 486,213(10) 2.15%
Bellingham, Washington, USA
Common Directors and Executive Officers 3,010,150(11) 12.96%
as a Group (6 Persons)
--------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 83,500 common shares underlying incentive stock options granted to
Mr. G. Ellis.
(2) Includes 108,250 common shares underlying incentive
stock options granted to 495894 BC Ltd., a company wholly-owned by Mr. G.
Ellis.
(3) Includes 60,000 common shares held by Stelyconi Enterprises
Ltd. Mr. G. Ellis controls voting and dispositive powers.
(4) Includes 446,500 common shares held by Gordann Consultants Ltd.. Mr. G.
Ellis owns 51% interest and Mr. Ellis' spouse owns 49% interest in Gordann
Consultants Ltd., Mr. G. Ellis controls voting and dispositive powers.
(5) Includes 300,000 common shares held by ABE Industries (1980) Inc. Mr. G.
Ellis controls voting and dispositive powers.
(6) Includes 40,000 common shares underlying incentive stock options granted to
Mr. Silbernagel.
(7) Includes 40,000 common shares underlying incentive stock options granted to
Mr. Sutherland.
(8) Includes 175,000 common shares underlying incentive stock options granted
to Mr. D. Ellis.
(9) Includes 100,000 common share underlying share purchase warrants granted to
Mr. D. Ellis.
(10) Includes 187,500 common shares underlying incentive stock options granted
to Mr. Dooley.
(11) Includes 86,500 common shares underlying incentive stock options granted to
Mr. Thompson.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following information regarding the compensation of Directors and Executive
Officers of the Company is reiterated from the proxy statement regarding the
Annual General Meeting of Shareholders held June 12, 2000 in order to satisfy
the regulatory requirements of the British Columbia Securities Commission.
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 ending January 31st of the Company's CEO and its other Executive
Officers whose compensation exceeded (US) $100,000. Information is given for
each of the last three fiscal years ending January 31st, for each Executive
Officer who served at any time during such year as an Executive Officer of the
Company or its subsidiaries.
6
<PAGE> 7
<TABLE>
<CAPTION>
U.S. DOLLARS
------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------- ----------------------------------------------
AWARDS PAYOUTS
----------------------- -------------------
FISCAL
YEAR OTHER SECURITIES RESTRICTED ALL
NAME AND ENDING ANNUAL UNDER SHARES OR OTHER
POSITION JANUARY SALARY COMPEN- OPTIONS RESTRICTED LTIP COMPEN-
OF PRINCIPAL 31ST ($) BONUS SATION GRANTED SHARE UNITS PAY-OUTS SATION
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gordon L. Ellis 2000 57,149 Nil Nil 216,500 Nil N/A Nil
Chairman, President and 1999 44,800 Nil Nil 83,500 Nil N/A Nil
CEO 1998 43,820 Nil Nil Nil Nil N/A Nil
Douglas E. Ellis 2000 88,092 15,200 Nil 150,000 Nil N/A Nil
President of Subsidiary 1999 83,268 Nil 8,526 200,000(2) Nil N/A Nil
(1) 1998 57,544 Nil 1,434 Nil Nil N/A Nil
Shawn M. Dooley 2000 51,855 15,000 60,134 125,000 Nil N/A Nil
Vice President, 1999 49,084 Nil 40,725 125,000 Nil N/A Nil
Marketing(3) 1998 30,727 Nil 31,850 Nil Nil N/A Nil
------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) DOUGLAS ELLIS WAS APPOINTED PRESIDENT OF ABSORPTION CORP. IN MARCH 1999.
(2) INCLUDES 100,000 WARRANTS GRANTED TO MR. D. ELLIS IN JANUARY 1998.
(3) MR. DOOLEY WAS APPOINTED VICE PRESIDENT, SALES & MARKETING IN JULY 1998.
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, 2000,
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)
$1,866,241 with an assumed 5% annual rate of stock appreciation, and (b) (US)
$3,918,958 with an assumed 10% annual rate of stock appreciation.
<TABLE>
<CAPTION>
US DOLLARS
------------------------------------------------------------------------------------------------------------------------
% OF TOTAL POTENTIAL POTENTIAL
SECURITIES OPTIONS EXERCISE REALIZABLE REALIZABLE
UNDERLYING GRANTED TO OR BASE VALUE VALUE
OPTIONS EMPLOYEES PRICE ASSUMING 5% ASSUMING 10%
DATE OF GRANTED IN FISCAL ($/ EXPIRATION RATE OF RATE OF
NAME GRANT (#) YEAR SECURITY) DATE APPRECIATION APPRECIATION
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gordon L. Ellis Dec 29, 1999 216,500 25% $0.54 Dec 29, 2002 $18,428 $ 38,697
Douglas E. Ellis Dec 29, 1999 150,000 18% $0.54 Dec 29, 2002 $12,768 $ 26,811
Shawn M. Dooley Dec 29, 1999 125,000 14% $0.54 Dec 29, 2002 $10,640 $ 22,343
------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 8
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, 2000, and the value at January 31, 2000
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, 2000
---------------------------------------------------
NUMBER OF SHARES AGGREGATE VALUE OF EXERCISABLE/
ACQUIRED ON VALUE REALIZED NUMBER EXERCISABLE/ UNEXERCISABLE IN-THE-MONEY
NAME EXERCISE (#) ($) (1) UNEXERCISABLE OPTIONS OPTIONS ($) (2)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gordon L. Ellis 216,500 97,425 83,500 / 216,500 30,895 / 6,495
Douglas E. Ellis 100,000 41,000 200,000(3) / 150,000 69,000 / 4,500
Shawn M. Dooley 75,000 33,750 125,000 / 125,000 46,250 / 3,750
-----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the difference between the option exercise price and the closing
market price of the Company's shares at date of exercise.
(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, 2000 (i.e. fiscal year end) was (US) $0.57.
(3) The number of exercisable options amount includes 100,000 warrants granted
to Mr. D. Ellis in January 1998.
COMPENSATION OF DIRECTORS FOR LAST FISCAL YEAR
The following table sets forth information regarding certain types of
compensation paid or provided during the fiscal year ended January 31, 2000 to
each Director of the Company, except a Director who is an executive officer.
<TABLE>
<CAPTION>
U.S. DOLLARS
---------------------------------------------------------------------------------------------------------------------
CASH COMPENSATION SECURITY GRANTS
---------------------------------------------------- ------------------------------
NUMBER OF
ANNUAL CONSULTING NUMBER OF SECURITIES
RETAINER MEETING FEES/OTHER COMMON UNDERLYING
NAME FEES ($) FEES ($) FEES ($) SHARES (#) OPTIONS/SARS (#)
----------------------------------------------------------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C>
Stephen Silbernagel (1), Nil $200 per board meeting and Nil Nil 20,000
(2) $50 per committee meeting
John Sutherland (1), (2) Nil $200 per board meeting and Nil Nil 20,000
$50 per committee meeting
---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Compensation Committee
(2) Audit Committee
Under the Stock Option Plan, as at Fiscal Year-End January 31, 2000, stock
options to purchase a total of 1,498,400 Common Shares at exercise prices
ranging from (US) $0.20 to (US) $0.54, with expiry dates from October 1, 2000
were outstanding. Pursuant to the vesting terms of the stock option agreements,
stock options to purchase 658,000 Common Shares are eligible for exercise at
January 31, 2000.
Please see "PARTICULARS OF MATTERS TO BE ACTED UPON" (ITEM 1 OF THE FORM OF
PROXY) for a description of the effect of the share consolidation to all stock
options, submitted for approval to the shareholders at the Extraordinary General
Meeting.
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<PAGE> 9
REPRICING OF OPTIONS
The Compensation Committee did not amend any terms of existing stock option
agreements during the fiscal year ended January 31, 2000.
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 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. A total of 1,146,500 stock options were repriced to $0.20 per share as
a result of the repricing.
EMPLOYMENT AGREEMENTS
Pursuant to a verbal agreement, the Company entered into a management services
agreement with Current Systems, a proprietorship owned by Douglas E. Ellis. In
effect since January 1, 2000, Current Systems receives (US) $8,750 for
management services per month.
On October 1, 1998, the Company entered into an employment agreement with Gordon
L. Ellis, currently serving as Chairman and President of the Company. Effective
June 1, 1999, the Company pays US$5,000 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
On March 1, 2000, the Company has granted short-term loans totaling $190,000
with two of its directors. The purpose of loans was to enable Messrs. G. Ellis
and Silbernagel to exercise share purchase warrants, which were due to expire on
March 4, 2000. The share purchase warrants were attached to the units of a
private placement conducted by the Company in March 1998, which the Directors
had subscribed. The loans are unsecured and do not bear interest if paid by
December 31, 2000.
<TABLE>
<CAPTION>
LARGEST AMOUNT FINANCIALLY ASSISTED
NAME AND POSITION OF OUTSTANDING DURING AMOUNT OUTSTANDING AT SECURITIES PURCHASE DURING SECURITY FOR
PRINCIPAL FISCAL YEAR ENDING OCTOBER 20, 2000 FISCAL YEAR ENDING INDEBTEDNESS
-------------------- ------------------ --------------------- -------------------------- ------------
<S> <C> <C> <C> <C>
Gordon L. Ellis Nil $127,500 Nil Nil
Chairman, President and
CEO
Stephen Silbernagel, Nil $62,500 Nil Nil
Director
</TABLE>
No other Directors and Executive Officers and associates or affiliates of such
Directors or Executive Officers are or have been indebted to the Company since
the beginning of the last completed financial year of the Company.
9
<PAGE> 10
PARTICULARS OF MATTERS TO BE ACTED UPON
SHARE CONSOLIDATION
At the extraordinary meeting, shareholders will vote upon a proposal to amend
our British Columbia Company Act Memorandum (the "Memorandum"). The shareholders
are being asked to approve and grant the Board of Directors the authority to
amend the Company's Memorandum to consolidate the presently issued and unissued
common shares on a four-for-one reverse stock split, which is referred to as a
"consolidation" or a "reverse split" and increase the authorized number of
shares of common stock from 25,000,000 to 100,000,000 after giving effect to the
reverse split.
The principal objective of the consolidation is to increase the market price of
our common stock and enhance the acceptability of IAB's common stock by the
financial community and investing public. The Company intends to make
application to a recognized stock exchange to list the Company's shares for
trading. We believe that maintaining a listing on a recognized stock exchange
may provide us with a broader market for our financing transactions in which we
may engage. However, we cannot predict the effect the reverse split will have on
the market price for our common stock. The market price per new share of our
common stock after the reverse split may not rise in proportion to the reduction
in the number of old shares. In addition, the market price per new share may
never exceed or remain in excess of the minimum bid price for trading on a
recognized stock exchange. The market price of our common stock may also be
based on our performance and other factors, which may be unrelated to the number
of shares outstanding.
If the shareholders approve the proposal, each four (4) outstanding shares of
our common stock owned by a shareholder ("old shares"), would be consolidated
into one (1) new share ("new share") of the Company. IAB will not issue
fractional shares of its common stock. Any fractional shares that are caused as
a result of the consolidation will be rounded down to the nearest whole share.
Any fractions of shares will be cancelled and no compensation will be paid or
payable to the shareholders. The consolidation will affect all present
shareholders alike. The relative rights, preferences and qualifications of the
new shares will be identical to the old shares. Upon effectiveness of the
consolidation the purchase or conversion price and number of shares to be
acquired pursuant to each option, warrant or convertible instrument outstanding
will be adjusted proportionately.
If the special resolution regarding capitalization changes are approved, the
Board of Directors will file amendments to the Company's Memorandum with the
Province of British Columbia, Registrar of Companies to effectuate the reverse
split and the increase in our authorized shares of common stock. As soon as
practicable after the date of the consolidation, all registered shareholders
will receive a Letter of Transmittal so they may surrender their old
certificates for new certificates indicating the correct denomination.
INCREASE IN AUTHORIZED CAPITAL
As a result of the consolidation, the number of common stock which we will be
authorized to issue will automatically be reduced to 25,000,000 shares without
par value from 100,000,000. The Board of Directors considers that it is in the
best interest of the Company to increase the authorized capital of the Company
to 100,000,000 common shares without par value, after the share consolidation.
The proposed increase to our authorized shares of common stock is being made
primarily to meet existing share obligations upon the exercise of outstanding
warrants and options, to permit potential future financings or mergers or
acquisitions of other businesses assets or technologies.
The Board of Directors recommends that you vote "FOR" the proposal to amend our
British Columbia Company Act Memorandum.
At the Board of Directors meeting held September 29, 2000, the board of
directors approved the adoption of the amendments. The Board of directors has
concluded that the consolidation and the increase to our authorized shares of
common stock after giving effect to the consolidation are in the best interests
of IAB and its shareholders.
IF THE CONSOLIDATION IS APPROVED AT THE MEETING, THE BOARD OF DIRECTORS WILL
DETERMINE AT THEIR DISCRETION WHETHER OR NOT TO PROCEED AND CARRIES THE RIGHT TO
CANCEL THE SHARE CONSOLIDATION, IF SO DESIRED.
10
<PAGE> 11
The Special Resolution that will be presented to the shareholders in respect to
the share consolidation is as follows:
"BE IT RESOLVED, AS A SPECIAL RESOLUTION, that the shareholders grant the
board of directors the authority to effect:
(i) the authorized capital of the Company to be altered by consolidating
the existing 100,000,000 common shares without par value of which
22,397,485 are presently issued and outstanding; into 25,000,000
common shares without par value of which 5,599,371 common shares are
issued and outstanding; or such greater or lesser numbers as a result
of the consolidation or which may be approved by the Regulatory
Authorities;
(ii) The authorized capital of the Company be increased from 25,000,000
common shares without par value, or such greater or lesser number as
may have been approved by the Regulatory Authorities, to 100,000,000
common shares without par value; and
(iii) Paragraph 2 of the Company's Memorandum be altered to read as follows
2. The authorized capital of the Company consists of 100,000,000
common shares without par value.
OTHER MATTERS
It is not known that any other matters will come before the meeting other than
as set forth above and in the Notice of Extraordinary General Meeting, but if
such should occur the persons named in the accompanying form of proxy intend to
vote on them in accordance with their best judgement, exercising discretionary
authority with respect to amendments or variations of matters identified in the
Notice of Extraordinary General Meeting and other matters which may properly
come before the meeting or any adjournment thereof.
FORWARD-LOOKING STATEMENTS
This Proxy Statement and the documents incorporated herein by reference contain
certain forward-looking statements and information relating to IAB that are
based on the beliefs of IAB management, as well as assumptions made by, and
information currently, available to management. All statements other than
statement of historical fact are, or may be deemed to be, forward-looking
statements within the meaning of the Securities and Exchange Act, as amended.
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
11
<PAGE> 12
FORM OF PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INTERNATIONAL
ABSORBENTS INC. (THE "COMPANY") FOR THE EXTRAORDINARY GENERAL MEETING (THE
"MEETING") OF SHAREHOLDERS TO BE HELD AT THE XCHANGE CONFERENCE CENTRE, 2ND
FLOOR, 888 DUNSMUIR STREET, VANCOUVER, BRITISH COLUMBIA, CANADA ON WEDNESDAY
DECEMBER 20, 2000 AT 10:00 AM (PACIFIC TIME).
THE UNDERSIGNED MEMBER ("REGISTERED SHAREHOLDER") OF THE COMPANY HEREBY
APPOINTS, GORDON LLOYD ELLIS, AN EXECUTIVE OFFICER OF THE COMPANY OR FAILING
THIS PERSON, DOUGLAS E. ELLIS, SECRETARY OF THE COMPANY, OR IN THE PLACE OF THE
FOREGOING,_______________________________ (PRINT THE NAME), AS PROXYHOLDER FOR
AND ON BEHALF OF THE REGISTERED SHAREHOLDER WITH THE POWER OF SUBSTITUTION TO
ATTEND, ACT AND VOTE FOR AND ON BEHALF OF THE REGISTERED SHAREHOLDER IN RESPECT
OF ALL MATTERS THAT MAY PROPERLY COME BEFORE THE AFORESAID MEETING OF THE
REGISTERED SHAREHOLDERS OF THE COMPANY (THE "MEETING") AND AT EVERY ADJOURNMENT
THEREOF, TO THE SAME EXTENT AND WITH THE SAME POWERS AS IF THE UNDERSIGNED
REGISTERED SHAREHOLDER WERE PRESENT AT THE SAID MEETING, OR ANY ADJOURNMENT
THEREOF.
The Registered Shareholder hereby directs the proxyholder to vote the securities
of the Company recorded in the name of the Registered Shareholder as specified
herein.
THE UNDERSIGNED REGISTERED SHAREHOLDER HEREBY REVOKES ANY PROXY PREVIOUSLY GIVEN
TO ATTEND AND VOTE AT SAID MEETING.
REGISTERED HOLDER SIGN HERE: ______________________________________
DATE SIGNED: ___________________________
RESOLUTIONS (For full details of each item, please see the enclosed Notice of
Meeting and Proxy Statement)
<TABLE>
<CAPTION>
For Against Withhold
--------- -------- --------
<S> <C> <C> <C>
1. To grant the board of directors the
authority to alter the authorized capital
of the Company by consolidating the
existing issued and unissued common shares,
whereby each four (4) shares of common
stock will be combined into one (1) new
share of common stock and to increase the
authorized capital of the Company from
25,000,000 common shares without par value,
to 100,000,000 common shares without par
value after giving effect to the consolidation;
2. To transact such other business as may
properly come before the Meeting or any
adjournment or adjournments thereof.
</TABLE>
THIS PROXY MUST BE SIGNED AND DATED.
SEE IMPORTANT INSTRUCTIONS ON REVERSE.
<PAGE> 13
INSTRUCTIONS FOR COMPLETION OF PROXY
1. THIS PROXY IS SOLICITED BY THE MANAGEMENT OF THE COMPANY.
2. This form of proxy ("Instrument of Proxy") MUST BE SIGNED by you, the
Registered Shareholder, or by your attorney duly authorized by you in
writing, or, in the case of a corporation, by a duly authorized officer or
representative of the corporation; and IF EXECUTED BY AN ATTORNEY, OFFICER,
OR OTHER DULY APPOINTED REPRESENTATIVE, the original or a notarial copy of
the instrument so empowering such person, or such other documentation in
support as shall be acceptable to the Chairman of the Meeting, must
accompany the Instrument of Proxy.
3. IF THIS INSTRUMENT OF PROXY IS NOT DATED in the space provided, authority
is hereby given by you, the Registered Shareholder, for the proxyholder to
date this proxy seven (7) calendar days after the date on which it was
mailed to you, the Registered Shareholder, by Pacific Corporate Trust
Company.
4. A REGISTERED SHAREHOLDER WHO WISHES TO ATTEND THE MEETING AND VOTE ON THE
RESOLUTIONS IN PERSON, may simply register with the scrutineers before the
Meeting begins.
5. A REGISTERED SHAREHOLDER WHO IS NOT ABLE TO ATTEND THE MEETING IN PERSON
BUT WISHES TO VOTE ON THE RESOLUTIONS, may do the following:
(a) APPOINT ONE OF THE MANAGEMENT PROXYHOLDERS named on the Instrument of
Proxy, by leaving the wording appointing a nominee as is (i.e. do not
strike out the management proxyholders shown and do not complete the blank
space provided for the appointment of an alternate proxyholder). Where no
choice is specified by a Registered Shareholder with respect to a
resolution set out in the Instrument of Proxy, A MANAGEMENT APPOINTEE
ACTING AS A PROXYHOLDER WILL VOTE THE RESOLUTION AS IF THE REGISTERED
SHAREHOLDER HAD SPECIFIED AN AFFIRMATIVE VOTE;
OR
(b) APPOINT ANOTHER PROXYHOLDER, who need not be a Registered Shareholder
of the Company, to vote according to the Registered Shareholder's
instructions, by striking out the management proxyholder names shown and
inserting the name of the person you wish to represent you at the meeting
in the space provided for an alternate proxyholder. If no choice is
specified, the proxyholder has discretionary authority to vote as the
proxyholder sees fit.
6. THE SECURITIES REPRESENTED BY THIS INSTRUMENT OF PROXY WILL BE VOTED OR
WITHHELD FROM VOTING IN ACCORDANCE WITH THE INSTRUCTIONS OF THE REGISTERED
SHAREHOLDER ON ANY POLL of a resolution that may be called for and, if the
Registered Shareholder specifies a choice with respect to any matter to be
acted upon, the securities will be voted accordingly. Further, if so
authorized by this Instrument of Proxy, the securities will be voted by the
appointed proxyholder with respect to any amendments or variations of any
of the resolutions set out on the Instrument of Proxy or matters which may
properly come before the Meeting as the proxyholder in its sole discretion
sees fit.
7. If a Registered Shareholder has submitted an Instrument of Proxy, THE
REGISTERED SHAREHOLDER MAY STILL ATTEND THE MEETING AND MAY VOTE IN PERSON.
To do so, the Registered Shareholder must record his/her attendance with
the scrutineers before the commencement of the Meeting and revoke, in
writing, the prior votes.
TO BE REPRESENTED AT THE MEETING, VOTING INSTRUCTIONS MUST BE DEPOSITED AT THE
OFFICE OF "PACIFIC CORPORATE TRUST COMPANY" NO LATER THAN FORTY EIGHT ("48")
HOURS (EXCLUDING SATURDAYS, SUNDAYS AND HOLIDAYS) PRIOR TO THE TIME OF THE
MEETING, OR ADJOURNMENT THEREOF.
THE MAILING ADDRESS OF PACIFIC CORPORATE TRUST COMPANY IS
10TH FLOOR 625 HOWE STREET, VANCOUVER, BRITISH COLUMBIA, V6C 3B8,
AND ITS FAX NUMBER IS (604)689-8144.
