EMPLOYMENT AGREEMENT



         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into

this 1st day of October, 1998, by and between International Absorbents Inc., a

British Columbia corporation (the "Company"), Gordon Lloyd Ellis, an individual

resident of the Province of British Columbia, Canada, (the "Executive"), and

Absorption Corp ("Subsidiary"), a Nevada corporation.



                                   WITNESSETH:





         WHEREAS, the Executive has heretofore been serving as the Chairman and

President of the Company and serves as a member of The Board of Directors of the

Company and has the experience to provide services of an extraordinary character

which gives such services a peculiar value, the loss of which cannot be

reasonably or adequately compensated in damages in an action at law; and





         WHEREAS, the Company desires to retain the services of the executive,

and the Executive desires to be employed by the Company for the term of this

Agreement.





         WHEREAS, The Company's stock is publicly traded on the Over the Counter

Bulletin Board of the Dealers Association of.........(NASDAQ) or other stock

exchange as the Company determines appropriate.





         NOW, THEREFORE, in consideration of the premises and the mutual

covenants and agreements set forth herein, the Company and the Executive,

intending to be legally bound, hereby agree as follows:



         1. EMPLOYMENT. The Company hereby employs the Executive as the Chairman

and President and the Executive accepts such employment and agrees to perform

services for the Company, subject always to such resolutions as are established

from time to time by the Board of Directors of the Company, for the period and

upon the other terms and conditions set forth in this Agreement.



         2. TERM. The term of the Executive's employment hereunder shall be for

a period of five (5) years, commencing on the date of this Agreement and shall

be automatically extended for additional two (2) year periods unless either

party sends the other party a notice of its intention not to extend within 90

days before the expiration of the agreement or any extension.. The term of the

Executive's employment hereunder is subject to earlier termination as hereafter

specified.





                                   Page 1 of 9

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3.       POSITION AND DUTIES.



         3.1 SERVICE WITH THE COMPANY. During the term of this Agreement, the

         Executive agrees to perform such executive employment duties as the

         Company's Board of Directors (the "Board") shall assign to him from

         time to time, and is customary for a similar position within the

         Company's industry. As necessary, the executive will spend up to fifty

         percent of his time (20 hours per week) on Company related activities.



         The Executive's responsibilities shall include:



         Overall guidance as to corporate direction and major decision-making

         directly below the Board level.



         Direct and assist in identifying and negotiating acquisitions,

         divestitures and joint venture and other strategic relationships.



         Direct and assist in identifying, vetting and selecting new employees

         at a senior level.



         Direct or carry out termination of senior employees.



         Direct and participate in legal action, both as aggressor and defense.



         Ongoing communication with staff concerning operating activities and

         corporate performance for purposes of keeping the Board informed.



         Coordinating investment relations activities.



         Respond to shareholder demands and investor questions.



         Chair board meetings, management meetings and shareholder meetings as

         required and directed by the Board.



         Raise Capital, negotiate financing and banking services.



         3.2 NO CONFLICTING DUTIES. During the term hereof, the Executive shall

         devote his time, effort and skill to the operation of the Company, and

         will offer any directly relevant business opportunity he encounters to

         the Company. The Executive hereby confirms that he is under no

         contractual commitments inconsistent with his obligations set forth in

         this Agreement, and that during the term of this Agreement, he will not

         render or perform services, or enter into any contract to do so, for

         any other corporation, firm, entity or person which are inconsistent

         with the provisions of this Agreement.

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