<PAGE> 1
As filed with the Securities and Exchange Commission on July ___, 1997
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
N-VIRO INTERNATIONAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN GOVERNING INSTRUMENT)
DELAWARE 34-1741211
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
3450 West Central Avenue, Suite 328
Toledo, Ohio 43606
Telephone: 419-535-6374
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
J. PATRICK NICHOLSON
Chairman of the Board, Principal Executive Officer and President
N-Viro International Corporation
3450 West Central Avenue, Suite 328
Toledo, Ohio 43606
Telephone: 419-535-6374
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to :
James F. White, Jr., Esquire
Shumaker, Loop & Kendrick, LLP
North Courthouse Square
1000 Jackson
Toledo, Ohio 43624
(419) 241-9000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration number of the earlier registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(2) REGISTRATION FEE(2)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 350,000 $1.75 $612,500 $200
par value $.01 per Share
============================================================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee based
on the average of the high and low prices of the Common Stock on the NASDAQ
Smallcaps National Market System on July 11, 1997.
(2) The registration fee was calculated in accordance with the requirements of
Rule 457(c) based on the fact that the securities to be offered hereby are to be
offered upon the basis of fluctuating market prices. Accordingly, in computing
the amount of the registration fee, the Company used the average of the bid and
asked prices as of July 11 1997.
</TABLE>
<PAGE> 2
PROSPECTUS Filed Pursuant to Rule 424(b)(3)
Registration No. ___ ______
350,000 SHARES
N-VIRO INTERNATIONAL CORPORATION
COMMON STOCK
- --------------------------------------------------------------------------------
The shares (the "Shares") offered hereby are shares of common stock, par value
$.01 per share (the "Common Stock"), of N-Viro International Corporation, a
Delaware corporation ("N-Viro" or the "Company"). The Shares are owned, or
subject to options to purchase held, by certain shareholders of the Company
("Selling Stockholders").
The shares of Common Stock of the Company are traded on the Nasdaq National
SmallCap Market System under the symbol "NVIC." On July 11, 1997, the last
reported sale price of the shares of the Common Stock on the Nasdaq National
SmallCap Market System was $1.75 per share.
The Shares may be offered and sold from time to time by Selling Stockholders
through agents, brokers or dealers or directly to one or more purchasers in
negotiated transactions at market prices prevailing at the time of sale or at
prices related to such market prices or through a combination of such methods.
See "Plan of Distribution." No shares of Common Stock offered under this
Prospectus may be sold without the delivery of this Prospectus or supplement
thereto describing such shares of Common Stock and the method and terms of
offering thereof.
The Selling Stockholders and brokers executing selling orders on behalf of the
Selling Stockholders may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933, and the rules and regulations promulgated
thereunder, as amended from time to time (the "Securities Act"), in which event
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<PAGE> 3
commissions received by such brokers may be deemed to be underwriting
commissions under the Securities Act. Although each Selling Stockholder may
sell all or a portion of the Shares, no Selling Stockholder is required to make
any such sale. However, Frank Manchak, Jr., a Selling Stockholder ("Manchak"),
may, depending on the market price for the Common Stock at any particular time
as well as other factors, have an economic incentive to sell some or all of the
Shares. This economic incentive arises out of certain provisions in that
certain Second Amendment to Settlement Agreement (the "Second Amendment to
Settlement Agreement") dated as of July 18, 1997 by and among Manchak, N-Viro
Energy Systems, Ltd., an Ohio limited partnership and the holder of a majority
of the issued and outstanding shares of Common Stock of the Company ("NVESL"),
the Company, N-Viro Energy Systems, Inc., an Ohio corporation and the managing
general partner of NVESL and American N-Viro Resources, Inc., an Ohio
corporation and a former affiliate of the Company. A copy of the Second
Amendment to Settlement Agreement was filed by the Company with the Securities
and Exchange Commission (the "Commission") on July 18, 1997, as an Exhibit to a
Form 8-K filed on such date. This Form 8-K has been incorporated herein by
reference. Pursuant to other provisions in the Second Amendment to Settlement
Agreement, Manchak also has agreed to use his good faith best efforts to sell
prior to November 1, 1997 such number of the Shares as is necessary to enable
Manchak to realize aggregate proceeds of sale, after allowance for broker's
fees, commissions and expenses, of $380,000. See discussion under the caption
"Plan of Distribution."
PROSPECTIVE PURCHASERS OF THE SHARES SHOULD CONSIDER CAREFULLY THE MATTERS SET
FORTH UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 19.
THE SHARES HAVE NOT BEEN, AND PRIOR TO THE DATE OF RE-SALE BY SELLING
STOCKHOLDERS WILL NOT BE, REGISTERED WITH OR REVIEWED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION OR SECURITIES
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<PAGE> 4
LAW ADMINISTRATOR NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION OR SECURITIES LAW ADMINISTRATOR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS, ANY DISCLOSURES OR OTHER MATERIALS CONCERNING
THE COMPANY, THE COMMON STOCK OR THE SHARES OFFERED HEREBY. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
The date of this Prospectus is July 21, 1997.
This Prospectus contains or incorporates by reference "Forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934, and the rules and regulations
promulgated thereunder, as amended from time to time (the "Exchange Act"). All
statements, other than statements of historical facts, included in this
Prospectus including, without limitation, statements regarding the Company's
business strategy, plans, objectives and beliefs of management regarding future
operations, revenues and income, are forward-looking statements. The Company can
give no assurance that any forward-looking statements will prove to be correct.
Some of the factors that could cause actual results to differ materially from
the Company's expectations are discussed herein under the caption "Risk
Factors."
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Exchange Act, and,
in accordance therewith, files reports, proxy statements and other information
with the Commission. The Registration
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<PAGE> 5
Statement (defined below), as well as such reports, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at its Regional Offices at
Seven World Trade Center, New York, New York 10048 and at Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W. Washington, D.C. 20549. The
Commission also maintains a web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants,
such as the Company, that file electronically with the Commission. The Common
Stock is listed and traded on the Nasdaq National SmallCap Market System and
certain of the Company's reports, proxy statements and other information can be
inspected at the offices of the Nasdaq National Market at 1735 K Street, N.W.,
Washington, D.C. 20006-1506.
This Prospectus is part of a Registration Statement on Form S-3 (together with
any amendments or supplements and exhibits thereto, the "Registration
Statement"), filed by the Company with the Commission under the Securities Act.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement. This Prospectus contains summaries of
certain provisions of other documents and instruments related to some of the
transactions described herein. The Company believes that such summaries contain
fair statements of such documents and instruments, however, the summaries do not
purport to be complete and are qualified in their entirety by reference to the
rest of the original documents and instruments.
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No broker, dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus or any supplement thereto, and, if given or made,
such information or representations must not be relied upon as having been
authorized. Additionally, prospective purchasers of the Shares should note that
the Company expressly disavows any obligation to correct, comment upon, or
otherwise respond in any way to any unauthorized statements. This Prospectus and
any supplement thereto do not constitute an offer of any securities other than
those to which it relates or an offer to sell, or a solicitation of an offer to
buy, to any person in any jurisdiction where such an offer or solicitation would
be unlawful. Neither the delivery of this Prospectus or any supplement thereto
nor any sale made hereunder or thereunder shall, under any circumstance, create
any implication that the information contained herein or therein is correct as
of any time subsequent to their respective dates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission pursuant to
the Exchange Act, are incorporated herein by reference and made a part of this
Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996;
2. The Company's Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1997;
3. The Company's Current Report on Form 8-K dated July 18, 1997.
4. The Company's Notice of Annual Meeting of Stockholders and Proxy Statement
with respect to the annual meeting of the Company held on May 9, 1997.
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5. All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Shares shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the respective dates of filing of such documents.
Any statement contained in a document or information incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document that also is, or is deemed to be,
incorporated herein by reference, modifies or supersedes such statement or
information. Any such statement or information so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company undertakes to provide, without charge, to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all of the documents
or information referred to above that has been or may be incorporated by
reference in this Prospectus (excluding exhibits to such documents unless such
exhibits are specifically incorporated by reference). Requests for such
documents should be directed to N-Viro International Corporation, 3450 West
Central Avenue, Suite 328, Toledo, OH 43606, Attn: James K. McHugh, Chief
Financial Officer, Secretary and Treasurer, telephone (419) 535-6374.
THE COMPANY
The Company is engaged primarily in the business of owning and licensing the
N-Viro Process(TM), a patented technology to treat and recycle wastewater
sludges and other bio-organic wastes, utilizing certain alkaline by-products
produced by the cement, lime and other related industries. The principal office
of
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<PAGE> 8
the Company is located at 3450 West Central Avenue, Suite 328, Toledo, OH 43606,
and its telephone number is (419) 535-6374.
USE OF PROCEEDS
The Company will not receive any part of the proceeds of the sale of the Shares.
PLAN OF DISTRIBUTION
All of the Shares are owned beneficially and of record by Manchak. Manchak
originally acquired such Shares pursuant to the terms of the Second Amendment to
Settlement Agreement. The Second Amendment to Settlement Agreement largely
dictates the plan of distribution for the Shares.
The Second Amendment to Settlement Agreement Resolving Certain Litigation.
- --------------------------------------------------------------------------
The Second Amendment to Settlement Agreement was executed by the
Company in an effort to resolve substantially all of the remaining outstanding
issues with respect to the settlement of that certain lawsuit entitled FRANK
MANCHAK, JR. V. N-VIRO ENERGY SYSTEMS, LTD. that was filed by Manchak in the
United States District Court for the Central District of California, Case No.
CV-93-3042-ABC. This suit, involving a patent infringement claim against the
Company, among others, was settled by the Company in February of 1995. Pursuant
to the terms of the original settlement agreement, the Company agreed to pay
Manchak $1.5 million over a period of 13 months. In April of 1996, the original
settlement agreement was amended to provide the Company with more time to settle
its monetary obligation to Manchak. The amendment also increased the amount owed
to Manchak by $300,000.
At the time of execution of the Second Amendment to Settlement Agreement, the
Company's outstanding obligations to Manchak totaled $410,000. On July 18,
1997, the Company made a payment to Manchak of $30,000. The remaining balance
of $380,000 (the "Company's Outstanding Obligation")
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<PAGE> 9
will be due and payable in full on November 15, 1997 without interest. The
amount of this obligation, however, will be reduced if Manchak sells any of the
Shares and may be further reduced by certain payments, described below, that may
be made by the Company or the Escrow Agent (as hereinafter defined) to Manchak
between August 1 and November 15, 1997.
Source of the Shares.
---------------------
Pursuant to the terms of the Second Amendment to Settlement Agreement, Manchak
received 250,000 shares of Common Stock as well as an option to purchase an
additional 100,000 shares of Common Stock at a purchase price of $2.50 per
share. Prior to November 1, 1997, Manchak may, but is not required to, sell
Shares. Of the 250,000 shares of Common Stock issued to Manchak under the Second
Amendment to Settlement Agreement, 100,000 shares are being held in escrow by
Shumaker, Loop & Kendrick, LLP, special counsel to the Company (the "Escrow
Agent"). The terms of the escrow are described in the paragraphs below.
Limitations on Resale.
----------------------
The number of shares of Common Stock that may be sold by Manchak and the
aggregate amount of proceeds from such sales that Manchak may receive on a
monthly basis are subject to certain limitations set forth in the Second
Amendment to Settlement Agreement. These limitations preclude Manchak from
selling more than 45,000 shares of Common Stock during the months of July,
August and September and 55,000 shares of Common Stock in October of 1997. The
number of shares of Common Stock that Manchak may sell on a monthly basis is
limited further by a provision in the Second Amendment to Settlement Agreement
limiting the aggregate amount of proceeds that Manchak may receive from his
sales of Common Stock to $90,000 per month during the months of July, August and
September and $110,000 during the month of October. Once Manchak realizes an
amount equal to or greater than the proceeds
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<PAGE> 10
limitation in any given month, Manchak is required to refrain from making any
additional sales of shares of Common Stock during such months.
Reduction of the Company's Outstanding Obligation.
--------------------------------------------------
All sums received by Manchak as a result of his sale of the Shares, reduced by
any transaction costs, such as broker's fees and commissions incurred by Manchak
in the course of such sales, will reduce the aggregate amount of the Company's
Outstanding Obligation on a dollar for dollar basis. As an inducement to Manchak
to enter into the Second Amendment to Settlement Agreement, the Company has
guaranteed to Manchak that he will receive at least $60,000 per month during the
months of July, August, September and October either from (x) his sales of the
Common Stock offered hereby, (y) through supplemental payments or, (z) the
redemption of some or all of the Shares by the Company. Any such supplemental
payments as well as any proceeds from the Company's redemption of Shares will
reduce, on a dollar for dollar basis, the amount of the Company's Outstanding
Obligation to Manchak.
The Escrow.
-----------
On or about October 1, 1997, based solely upon information provided by Manchak
and reviewed by the Company, the Escrow Agent will calculate (i) the amount of
the Company's Outstanding Obligation as at the close of business on September
30, 1997 (the "Remaining Obligation") and (ii) the number of Shares held by
Manchak as at the close of business on September 30, 1997 (the "Remaining
Shares"). After determining the amount of the Remaining Obligation and the
number of Remaining Shares, the Escrow Agent shall multiply the number of
Remaining Shares by two and subtract such number of dollars from the amount of
the Remaining Obligation to calculate the "Share Deficit Amount". Finally, the
Escrow Agent shall divide the Share Deficit Amount by two and shall deliver to
Manchak such number of shares of Common Stock from the shares of Common Stock
held in escrow. The remaining shares of escrowed Common Stock, if any, shall be
returned to the Company and retired.
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In addition to 100,000 Shares, the Company also has agreed to place $100,000 in
escrow to meet certain of its contingent obligations to Manchak pursuant to the
terms of the Second Amendment to Settlement Agreement. This $100,000 will be
transferred by the Company to the Escrow Agent on August 15, 1997. Until such
time as the funds in escrow are exhausted, all payments required to be made by
the Company to Manchak pursuant to the terms of the Second Amendment to
Settlement Agreement shall be made by the Escrow Agent from the funds held in
escrow. After the funds held in escrow are exhausted, and prior to August 15,
1997, payments shall be made directly by the Company. At the Company's option it
may satisfy the Share Deficit Amount through the Escrow Agent's delivery to
Manchak of a cash payment in an amount equal to the Share Deficit Amount. On
November 15, 1997, after satisfaction of the Company's Outstanding Obligation,
any remaining funds held in escrow shall be distributed to the Company.
Discharge of the Company's Outstanding Obligation.
--------------------------------------------------
On November 15, 1997, the remaining portion of the Company's Outstanding
Obligation to Manchak shall become due and payable. Under the terms of the
Second Amendment to Settlement Agreement, the Company will satisfy any remaining
portion of the Company's Outstanding Obligation by redeeming, at a price of
$2.00 per share, such number of the Shares held by Manchak at such time as is
necessary such that the aggregate amount of funds received by Manchak as a
result of his sales of the Shares, exclusive of any transaction costs, such as
broker's fees and commissions, plus any cash payments received by Manchak from
the Company or the Escrow Agent pursuant to the terms of the Second Amendment to
Settlement Agreement shall equal $410,000. Manchak is under no obligation to
sell any of the Shares to the Company on November 15, 1997. However, any such
Shares that Manchak decides to retain on such date shall reduce the amount of
the Company's Outstanding Obligation by the sum of $2.00 per share.
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The Option.
-----------
The option granted to Manchak with respect to the purchase of an additional
100,000 shares of Common Stock at a purchase price of $2.50 per share shall
become exercisable on November 15, 1997 and shall be exercisable for a period of
up to sixty days following such date. Pursuant to the terms of the Second
Amendment to Settlement Agreement and the option, Manchak has the right to
resell all or a portion of the shares acquired pursuant to the terms of the
option back to the Company at a price of $3.00 per share at any time during the
two business days immediately following the date of the exercise of the option.
Manchak forfeits this right, however, in the event that he sells any of the
shares acquired upon exercise of the option in a public offering pursuant to an
effective registration statement under the Securities Act. Prior to exercising
the option, Manchak also has the right, in his sole and absolute discretion, to
require the Company to repurchase all or a portion of the 100,000 shares of
Common Stock covered by the option by paying Manchak an amount equal to $.50 per
share multiplied by the number of shares of Common Stock with respect to which
Manchak is willing to forfeit his option.
Use of Broker/Dealer.
---------------------
Pursuant to relevant provisions in the Second Amendment to Settlement Agreement,
Manchak has made covenants and agreed that all of his trading, if any, in the
Shares initially shall be conducted by and through a registered broker/dealer
selected by the Company. Such broker/dealer shall be one of the Company's market
makers. The Company shall not provided any type of inducement whatsoever to the
selected broker/dealer in exchange for such services. However, it is anticipated
that such broker/dealer shall receive from Manchak brokerage fees and
commissions in exchange for all services rendered.
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THE INFORMATION SET FORTH IN THIS "PLAN OF DISTRIBUTION" SECTION SUMMARIZES AND
RESTATES CERTAIN TERMS AND PROVISIONS IN THE SECOND AMENDMENT TO SETTLEMENT
AGREEMENT. THE COMPANY BELIEVES THAT SUCH SUMMARY CONTAINS A FAIR STATEMENT OF
SUCH DOCUMENT, HOWEVER, THE SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS
QUALIFIED BY REFERENCE TO THE SECOND AMENDMENT TO SETTLEMENT AGREEMENT WHICH WAS
FILED AS AN EXHIBIT TO THE COMPANY'S FORM 8-K DATED JULY 17, 1997.
PRICE RANGE OF SHARES AND DISTRIBUTION HISTORY
The shares of Common Stock are traded on the Nasdaq SmallCap Market System under
the symbol "NVIC." As of July 11, 1997, there were approximately 925 holders of
record of the shares of Common Stock. The following table sets forth for the
periods shown the high and low sale prices for the shares of Common Stock as
reported on the Nasdaq SmallCap Market System and the cash dividends paid on the
shares of Common Stock: On July 11, 1997, the last reported sale price of the
shares as reported by Nasdaq was $1.75 per share
<TABLE>
<CAPTION>
High Low Dividends Paid
per Share
<S> <C> <C> <C>
1995
First Quarter.............................. $ 13 $ 5-1/4 $ -0-
Second Quarter............................. 8 5-1/2 -0-
Third Quarter.............................. 6-1/2 1-3/4 -0-
Fourth Quarter............................. 4 1-5/8 -0-
1996
First Quarter.............................. 6 1-3/4 -0-
Second Quarter............................. 6 3 -0-
Third Quarter.............................. 6 2-3/8 -0-
Fourth Quarter............................. 4-1/4 1-7/8 -0-
1997
First Quarter.............................. 3 2 -0-
Second Quarter............................. 2-1/8 1-5/16 -0-
Third Quarter (through July 11)............ 1-7/8 1-5/8 -0-
</TABLE>
The Company has not paid dividends to date.
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CAPITALIZATION
The following table sets forth the capitalization of the Company as of March 31,
1997 and as adjusted to reflect the sale of the Shares and certain documents
since March 31, 1997:
<TABLE>
<CAPTION>
March 31, 1997
Actual As adjusted
<S> <C> <C>
Borrowings under line of credit arrangements (1) ....................... $ 55,000 $ 55,000
Contractual obligation, non-interest bearing (2) ....................... 477,500 97,500
Other short-term obligations (3) ....................................... 1,995,136 1,735,636
Notes payable, related partnership (4) ................................. 195,188 45,188
Other long-term obligations ............................................ 62,736 62,736
Shareholders' equity
Preferred stock, $.01 par value;
Authorized - 5,000,000 shares
Issued and Outstanding - none
Common stock, $.01 par value;
Authorized - 45,000,000 shares
Issued and Outstanding - 2,094,250 and 2,580,750 as adjusted (5) (6) 20,943 25,808
Additional paid-in capital ............................................. 12,048,456 13,083,091
Retained earnings (deficit) ............................................ (9,873,963) (9,873,963)
Less: Treasury stock, at cost ......................................... (617,977) (617,977)
Total capitalization 4,363,019 4,613,019
<FN>
(1) The Company has a $100,000 secured working capital line of credit
arrangement with a local bank.
(2) The adjusted amount reflects the elimination of the Company's Outstanding
Obligation to Manchak by issuance of 250,000 shares of Common Stock. Such
adjustment may prove to be incorrect. See discussion under the captions "Plan of
Distribution" and "Highly Leveraged Business Operations."
(3) Effective as of June 1997, the Company satisfied $259,500 of short-term
obligations through the issuance and delivery of 86,500 shares of Common Stock
to certain creditors of the Company. This is reflected in the adjusted amount.
See discussion under the caption "Recent Developments."
(4) Prior to June of 1997, the Company was indebted to NVESL pursuant to the
terms of three promissory notes in the aggregate amount of $191,500. In June of
1997, the Company satisfied $150,000 of its outstanding obligation to NVESL
through the issuance and delivery to NVESL of 50,000 shares of Common Stock.
This is reflected in the adjusted amount. See discussion under the caption
"Recent Developments."
(5) The adjusted amount reflects the issuance of 136,500 shares of Common Stock
to certain creditors of the Company in June of 1997, as well as the issuance of
all of the Shares, including the Shares to be issued pursuant to the option
granted to Manchak. Such adjustment may prove to be incorrect in the event that
the option is not exercised or the option shares are redeemd. See discussion
under the captions "Plan of Distribution" and "Recent Developments."
(6) This figure excludes 250,000 shares reserved for issuance pursuant to the
Company's Stock Option Plan, as amended.
</TABLE>
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SELECTED CONSOLIDATED FINANCIAL DATA
The following selected combined statement of operations data for the years ended
December 31, 1992, the period January 1, 1993 through October 19, 1993, the
consolidated statement of operations data for the period October 20, 1993
through December 31, 1993, the consolidated statement of operations data for the
years ended December 31, 1994, 1995 and 1996; and the combined and consolidated
balance sheet data set forth below as of December 31, 1992, 1993, 1994, 1995 and
1996 respectively, have been derived from the financial statements of the
Company which have been audited by Ernst & Young LLP, independent auditors for
the years ending December 31, 1994, and the period January 1, 1993 through
October 19, 1993 and the period October 20, 1993 through December 31, 1993, and
McGladrey & Pullen, LLP for the years ending December 31, 1995 and 1996. Also
set forth below are selected consolidated financial data of the Company for the
three months ended March 31, 1997 and 1996, which have been derived from the
unaudited financial statements for those periods. The unaudited financial
statements include all adjustments, consisting of normal recurring accruals,
which the Company considers necessary for a fair presentations of the financial
position and the results of operations for these periods. In the opinion of
management, the financial data presented below reflects all adjustments (which
are of a normal recurring nature) necessary to present fairly the Company's
financial position and results of operations. The data presented below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Financial Statements and
Supplementary Data appearing in the Company's Form 10-K for the period ended
December 31, 1996 and the Company's Form 10-Q for the period ended March 31,
1997 which have been incorporated herein by reference.
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<TABLE>
<CAPTION>
====================================================================================================================================
Statement of Operations Data (in thousands, except per share data):
- ------------------------------------------------------------------------------------------------------------------------------------
Three Three 12/31/96 12/31/95 12/31/94 Total for 10/20/93 1/1/93 thru 12/31/92
months months 1993 thru 10/19/93
ended ended 12/31/93 (1)
3/31/97 3/31/96 (1)
(unaudited) (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $1,069 $954 $4,224 $5,214 $4,552 $4,619 $1,128 $3,491 $4,449
- ------------------------------------------------------------------------------------------------------------------------------------
Net income 164 105 (193) (1,815) (7,342) (1,622) (686) (936) 61
(loss)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $.08 $.05 $(0.09) $(0.89) $(3.66) n/a $(0.34) n/a n/a
(loss) per
share (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma n/a n/a n/a n/a n/a n/a n/a (936) n/a
Net loss
====================================================================================================================================
====================================================================================================================================
Balance Sheet Data (in thousands):
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 3/31/96 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets $4,363 $4,599 $4,167 $5,062 $6,560 $12,860 n/a n/a $4,659
- ------------------------------------------------------------------------------------------------------------------------------------
Notes payable $696 n/a $1,188 $1,540 $1,661 $420 n/a n/a $675
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholder $195 $0 $197 n/a n/a n/a $1,585
Advance
====================================================================================================================================
<FN>
(1) Amounts represent the total of the combined results of the Company and
certain affiliates for the period from January 1 through October 19,
1993 and the consolidated results of the Company for the period from
October 20 through December 31, 1993.
(2) Per share amounts have been restated for a one-for-four reverse stock
split effective October 31, 1995.
(3) Certain affiliates of the Company were, at one time, subchapter S
corporations or, in one case, as a limited partnership, and therefore
were not subject to federal and state income taxes at the corporate or
partnership level; as a result, their income or losses were passed
through to their respective shareholders or partners. Pro forma net
income (loss) reflects a provision for pro forma income taxes that
would have been recorded had these affiliates been taxed on a combined
basis as a C corporation for all periods presented.
The Company's auditors have set forth in the financial statements the issue of
the Company's ability to continue as a "going concern". These issues are
discussed in the financial statements and in the liquidity section of the
management's Discussion and Analysis of Financial Condition and Results of
Operations in the Company's Form 10-K for the period ended December 31, 1996 and
the Company's Form 10-Q for the period ended March 31, 1997 which have been
incorporated herein by reference.
</TABLE>
RECENT DEVELOPMENTS
Reduction in Short-Term Debt.
-----------------------------
In June of 1997, the Company reached agreements with three trade creditors to
eliminate, in the aggregate, $259,500 of the Company's short-term debt in
exchange for the Company's issuance and delivery to such creditors, in the
aggregate, of 86,500 shares of Common Stock. All three trade creditors are
current members of the Board of Directors of the Company, J. Patrick Nicholson,
Bobby B. Carroll and Frederick H. Kurtz. Additionally, Mr. Nicholson is the
Chairman of the Board, Chief Executive Officer and President of the Company. The
number of shares of Common Stock issued to, and the corresponding
-16-
<PAGE> 17
amount of short-term debt forgiven by, Mr. Nicholson, Mr. Carroll and Mr. Kurtz
is set forth in the table below. All such shares of Common Stock were issued and
delivered to the Company's creditors pursuant to appropriate exemptions from
registration under the Securities Act and state securities laws. All of the
exchanges were evidenced by written Share Exchange Agreements between the
Company and each of the creditors. Copies of such Share Exchange Agreements were
filed as Exhibits to the Company's Form 8-K filed on July 18, 1997 which has
been incorporated herein by reference.
<TABLE>
<CAPTION>
=============================================================================================
Creditor Amount of Cancelled Debt No. of Shares Issued in Exchange
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
J. Patrick Nicholson $48,000 16,000
- ---------------------------------------------------------------------------------------------
Bobby B. Carroll $150,000 50,000
- ---------------------------------------------------------------------------------------------
Frederick H. Kurtz $61,500 20,500
=============================================================================================
</TABLE>
In addition to the share exchanges described above, the Company, in June of
1997, also reached agreement with NVESL to cancel $150,000 of the Company's
$176,500 aggregate short-term debt to NVESL. In exchange for the cancellation of
the three promissory notes evidencing the debt, the Company agreed to issue and
deliver to NVESL (i) 50,000 shares of Common Stock and (ii) a promissory note in
the amount of $26,500. The shares of Common Stock issued and delivered to NVESL
were issued and delivered pursuant to applicable exemptions from registration
under the Securities Act and state securities laws. Further, this exchange was
evidenced by a written Share Exchange Agreement which was filed by the Company
as an Exhibit to the Company's Form 8-K filed on July 18, 1997. Such Form 8-K
has been incorporated herein by reference.
The overall effect of the share exchanges described above was to reduce the
amount of the Company's short-term liabilities by $409,500 and to increase the
number of issued and outstanding shares of Common Stock by 136,500 shares.
-17-
<PAGE> 18
Resolution of Collection Dispute.
---------------------------------
As reported in the Company's Form 10-K for the period ended December 31, 1996,
the Company incurred costs through 1996 for engineering and other work in
preparation for the construction of a privately operated treatment facility in
Honolulu, Hawaii. The site selected for the construction of this facility was
rejected by the Mayor of Honolulu on October 30, 1996. Since that time, the
Company has attempted to collect approximately $860,000 from the City of
Honolulu to compensate the Company for monies directly invested in the Honolulu
project. Such sum represents the Company's investment in design, engineering and
specification, contracts, and permits for the site.
In February of 1997, the Company made a formal request of the City of Honolulu
for reimbursement of all costs incurred through such date, plus incidental
costs. On July 15, 1997, the City and County of Honolulu (the "City of
Honolulu") adopted a change order (the "Change Order") amending its original
agreement with the Company so as to facilitate (i) the Company's participation
in the design and construction of a wastewater treatment plant at a new site
selected by the City of Honolulu; (ii) the reimbursement of the Company for
certain costs and expenses incurred by the Company during the course of
planning and preparation for the initial site and (iii) the settlement of a
third party claim related to permitting, design and engineering work performed
by the third party in connection with the other site. Specifically, the Change
Order obligates the City of Honolulu to pay the Company $749,651. Of this
amount, approximately $133,000 is to be allocated to the payment of a claim
brought by a third party, $200,000 is to be paid by the City of Honolulu to the
Company on or before July 30, 1997, and $250,000 is to be paid pursuant to the
terms of a letter of obligation. Any remaining sums due to the Company, as well
as all costs incurred by the Company between June 30, 1997 and December 31,
1997, will be paid to the Company on or before November 30, 1998 in the event
that the parties fail to reach an agreement with respect to the construction of
a facility at the new site. Otherwise, it is anticipated that any remaining
sums due the Company, will be paid in accordance with the terms and provisions
of the Change Order.
-18-
<PAGE> 19
A copy of such Change Order was included as an Exhibit to the Company's Form 8-K
filed on July 17, 1997 which is incorporated herein by reference.
THE INFORMATION SET FORTH IN THIS "RECENT DEVELOPMENTS" SECTION SUMMARIZES AND
RESTATES CERTAIN TERMS AND PROVISIONS IN THE CHANGE ORDER. THE COMPANY BELIEVES
THAT SUCH SUMMARY CONTAINS A FAIR STATEMENT OF THIS DOCUMENT, HOWEVER, SUCH
SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED BY REFERENCE TO THE
CHANGE ORDER, WHICH WAS FILED AS AN EXHIBIT TO THE COMPANY'S FORM 8-K DATED JULY
17, 1997, which is incorporated herein by reference.
RISK FACTORS
Prior to purchasing the Shares, prospective investors should consider carefully
the following risk factors, together with the other information contained
elsewhere in this Prospectus.
Lack of Profitability; Lack of Capital.
---------------------------------------
Although the Company has achieved net income of $164,000 or $.08 per share for
the three (3) months ended March 31, 1997, the Company incurred net losses
of $193,000 or $.09 per share and $1,815,000 or $.89 per share for the years
ended December 31, 1996 and 1995, respectively. Further, the Company has
experienced net losses in each of the five (5) most recently completed fiscal
years, resulting in an accumulated deficit of approximately $9,874,000 as of
March 31, 1997. The Company historically has financed its operations
principally through the sale of equity and debt securities and through funds
provided by operating activities. There can be no assurances that the Company
will operate profitably in the future or generate positive cash flow from
operations. There can be no assurances that capital needed for the future or to
meet the Company's current obligations will be available on acceptable terms or
even at all.
-19-
<PAGE> 20
Highly Leveraged Business Operations.
-------------------------------------
As of March 31, 1997, the Company had short-term debt of $157,000 and long-term
debt of $540,000, the current portion of which was $477,500. The Company also
had long-term borrowings from an affiliate of the Company of $195,000, the
current portion of which was approximately $95,000, as of March 31, 1997.
Accordingly, the Company will require substantial cash flow to meet its debt
service requirements. The Company's ability to make payments of principal and
interest on these obligations in a timely manner or even at all will depend on
the Company's future performance, which is subject to general economic and
business factors, many of which are beyond the Company's control. The Company's
potential obligations under the Second Amendment to Settlement Agreement are an
additional factor affecting the Company's ability to service its existing debt.
If Manchak is unable to sell all or a portion of the Shares at a price equal to
or in excess of $2.00 per share, this will significantly increase the Company's
short-term debt and cash requirements. If the Company defaults on its
obligations to Manchak, Manchak may institute proceedings to gain ownership and
possession of certain collateral securing the Company's obligations under the
Second Amendment to Settlement Agreement. Such collateral includes the
Company's patents on the N-Viro Process(TM). The loss of such patents could
have a materially adverse effect on the Company's financial condition, results
of operations and the value of the Shares. See discussion under the caption
"RELIANCE ON PATENT PROTECTION, PROPRIETARY TECHNOLOGY AND TRADE NAME."
Risk of Losing NASDAQ Smallcap Market System Listing.
-----------------------------------------------------
The failure of the Company to meet the maintenance requirements of the Nasdaq
SmallCap Market System could result in the Company's securities being delisted
from the NASDAQ SmallCap Market System. The Company's securities may be removed
from the Nasdaq SmallCap Market System if the shares of Common Stock trade at a
value of less that $1.00 per share. As of July 11, 1997, the shares of Common
Stock were trading on the NASDAQ SmallCap Market at $1.75 per share.
-20-
<PAGE> 21
Given the terms and provisions of the Second Amendment to Settlement Agreement,
it is likely that Manchak will be seeking to sell between 100,000 and 190,000 of
the Shares during the period of July through October of 1997. It is unknown what
effect, if any, such sales will have on the market price of the shares of Common
Stock. However, it is possible that such sales will have a dilutive effect and
thus may significantly decrease the market price for the Company's securities. A
decrease that results in a per share price for the Common Stock of less than
$1.00 could result in the Company's securities being delisted from the Nasdaq
SmallCap Market System.
If the Common Stock is removed from the Nasdaq SmallCap Market System, it is
likely that the Company's securities would trade on the over the counter market
electronic bulletin board or the "pink sheets" maintained by the National
Quotation Bureau, Inc. These distribution forms are generally considered to be
less efficient than the Nasdaq National SmallCap Market System. Accordingly,
delisting from the Nasdaq SmallCap Market System may result in a material
decline in the stock price, stockholder difficulty in conducting trades and the
impairment of the Company's ability to obtain future financing.
"Penny Stock" Status.
---------------------
If, at any time, the Company's securities are not listed for trading on the
Nasdaq SmallCap Market System, the Company's securities could become subject to
the "penny stock rules" adopted pursuant to Section 15(g) of the Exchange Act.
Many brokers do not trade "penny stock" because of difficulties in complying
with the requirements of the penny stock rules and, as a result, the number of
broker-dealers willing to act as market makers in such securities is limited. If
the shares of Common Stock become subject to Section 15(g) of the Exchange Act,
this could materially adversely affect the value of the shares of Common Stock,
the ability of stockholders to dispose of their shares of Common Stock and the
Company's ability to raise additional capital.
-21-
<PAGE> 22
Reliance on Patent Protection, Proprietary Technology and Trade Name.
---------------------------------------------------------------------
The Company's ability to be profitable depends, to a significant extent, on its
ability to protect the patents that it owns, maintain trade secret protection
and operate without infringing on the proprietary rights of third parties. The
Company currently has five (5) United States patents relating to the N-Viro
Process(TM). The Company also has obtained patents and filed additional patent
applications related to the N-Viro Process(TM) in various foreign jurisdictions.
However, there can be no assurance that others will not independently develop
similar superior technologies or designs around the patented process developed
by the Company.
Furthermore, to the extent that the Company has developed, and continues to
develop, improvements in the N-Viro Process(TM), the future success of the
Company may depend on its ability to obtain patents covering such improvements.
There can be no assurance that the Company will develop additional proprietary
processes that are patentable, that any patents issued to or owned by the
Company will provide the Company with competitive advantages or will not be
challenged by third parties or that the patents of others will not have an
adverse affect on the ability of the Company to conduct its business or
implement its business strategy.
It is possible the Company may need to acquire licenses to use, or to contest
the validity of, issued or pending patents of third parties relating to, the
Company's technology. There can be no assurance that any such license would be
made available to the Company on terms acceptable to the Company, if at all, or
that the Company would prevail in any such contest. From time to time, various
entities and persons, including Manchak, have alleged that the Company is
infringing patents held by such entities or persons. The Company has incurred
and could incur in the future substantial costs in defending itself in suits
brought against the Company on its patents or in enforcing its patents by
bringing suit against third parties.
-22-
<PAGE> 23
In addition to patent protection, the Company also relies extensively on trade
secrets and proprietary know-how and technology that it seeks to protect, in
part, by confidentiality agreements with its licensees, employees and
consultants. There can be no assurance that these agreements will not be
breached, that the Company would, have any suitable remedies for any breach, or
that the Company's trade secrets and proprietary know-how will not otherwise
become known or become independently discovered by others.
Potential Environmental Liability.
----------------------------------
The Comprehensive Environmental Response, Compensation and Liability Act of
1980, and the rules and regulations promulgated thereunder, as amended from time
to time ("CERCLA"), and comparable state enactments, impose strict liability
(liability without fault) for releases of hazardous substances. Parties with
potential liability under CERCLA include owners and operators of the site at
which the release occurred, parties who created the hazardous substances
released at the site and parties who arranged for the transportation of
hazardous substances to such site. Biosolids, by-products and end products of
the N-Viro Process(TM), including N-Viro Soil(TM), have the potential to contain
hazardous substances. The Company could face claims by governmental authorities,
private individuals and other persons alleging that hazardous substances were
released during the treatment process or from the use of end products including
N-Viro Soil(TM). The Company also may be exposed to certain environmental claims
resulting from the actions of purchasers of N-Viro Soil(TN). The Company's
financial condition, results of operations and the value of the shares of Common
Stock offered hereby could be materially adversely affected by a finding that
the Company or purchasers of N-Viro Soil(TM) are a responsible party under
CERCLA or a finding that the Company violated any environmental law.
Reliance on Environmental Regulation.
-------------------------------------
Federal and state environmental legislation and regulations require substantial
expenditures by wastewater sludge generators and impose liabilities on such
entities for noncompliance. Environmental laws and
-23-
<PAGE> 24
regulations are, and will continue to be, a principal factor affecting the
marketability of the Company's services and products. Any changes in these laws
or regulations may materially adversely affect the operations of the Company by
imposing additional regulatory compliance costs on the Company, and/or on
wastewater sludge generators who may be potential customers of the Company. Such
additional costs may prevent customers from using the Company's treatment
methods, and purchasing the Company's products and services. To the extent that
demand for the Company's products and services is created by the need to comply
with environmental laws and regulations, any relaxation in either (i) the
standards created by such laws and regulations, or (ii) enforcement of such laws
and regulations may reduce the demand for the Company's products and services,
and may materially adversely affect the Company's financial condition, results
of operations and the value of the Shares.
Regulatory Requirements of Operations.
--------------------------------------
The Company operates in a highly regulated environment. The wastewater treatment
and other plants at which the Company's processes are and may be implemented are
required to have permits and approvals from federal, state and local governments
for the operation of such facilities. In addition, the construction of biosolid
treatment facilities may require a number of permits and approvals, and may, in
certain instances, require an environmental impact study. Any of such permits or
approvals or applications therefor, may be subject to denial, revocation or
modification under various circumstances. Also, if new environmental legislation
or regulations are enacted or existing legislation or regulations are amended or
are enforced differently, the Company may be required to obtain additional
permits or approvals. The process of obtaining a required permit or approval may
be lengthy and expensive and the issuance of such permit or the obtaining of
such approval may be subject to public opposition. There can be no assurances
that the Company will be able to meet applicable regulatory requirements or that
further attempts by state or local authorities to prohibit the land application
or agricultural use of biosolids will not be successful,
-24-
<PAGE> 25
either of which could materially adversely affect the Company's financial
condition, results of operations and the value of the Shares.
Larger and More Established Competition.
----------------------------------------
The Company competes with other businesses, including businesses in the solid
waste collection and disposal business. In many cases, these competitors are
larger and more firmly established than the Company. In addition, many of such
competitors have greater marketing and development budgets and greater capital
resources than the Company. Accordingly, there can be no assurance that the
Company will be able to achieve and maintain a competitive position in the
Company's industry.
Sales Strategy.
---------------
The Company's current strategy is to expand as a marketer of technology for
biosolids management and beneficial reuse of organic materials and related
services through an on-going sales effort in selected markets. Inherent in such
strategy are certain risks, such as increasing demand for liquidity and capital
resources and increasing debt service requirements. The market for the Company's
products and services is highly competitive and management expects that certain
competitors will have significantly greater capital than the Company and,
accordingly, greater opportunities to pursue sales prospects. The success of the
Company's strategy and its ability to meet its short and long-term financial
obligations will depend in part on the Company's ability to continue to contract
for future sales. There can be no assurance the current strategy will result in
the desired effect of improving the Company's competitive position or its
financial condition.
Risk of Market Acceptance of the Company's Products and Services.
-----------------------------------------------------------------
There can be no assurances that (i) wastewater sludge generators who may be
potential customers of the Company will view any of the Company's biosolid
treatment methods as an economically and
-25-
<PAGE> 26
environmentally acceptable technology for the treatment and recycling of
wastewater sludges, (ii) that the Company will be successful in marketing the
Company's products or services, or (iii) that the economic terms under which
wastewater sludge generators may be willing to use the Company's services will
be profitable to the Company. Moreover, there can be no assurances that
producers of the by-products used in the Company's treatment methods will supply
such by-products to the Company or its customers at economically acceptable
prices. Any of the market forces referred to in the preceding sentences could
materially adversely affect the Company's financial condition, results of
operations and the value of the Shares.
Dependence on Key Personnel.
----------------------------
The Company's operations are heavily dependent on the continued efforts of its
senior management, including J. Patrick Nicholson, the Chairman of the Board and
Chief Executive Officer of the Company. Although the Company has entered into an
employment agreement with Mr. Nicholson, the loss of the services of Mr.
Nicholson and other members of senior management may have a material adverse
affect on the Company's financial condition, results of operations and the value
of the Shares.
Control by J. Patrick Nicholson.
--------------------------------
NVESL, currently, the Company's largest stockholder, controls approximately 38.6
percent of the issued and outstanding shares of Common Stock. J. Patrick
Nicholson, together with a corporation controlled by Mr. Nicholson and four
trusts established for the benefit of his children, are the general partners of
NVESL. Accordingly, Mr. Nicholson effectively controls NVESL and the shares of
Common Stock owned by NVESL. Additionally, Mr. Nicholson directly owns and has
the power to vote and invest an additional .8 percent of the issued and
outstanding shares of Common Stock. As long as NVESL retains its shares of
Common Stock and does not make a distribution of such stock to its partners, Mr.
Nicholson
-26-
<PAGE> 27
will, in all likelihood, be able to elect all of the directors of the Company
and otherwise control the Company.
Lack of Dividends on Common Stock.
----------------------------------
The Company has paid no dividends on its Common Stock to date and there are no
plans for paying dividends in the future.
Potential Anti-Takeover Effect of Certain Charter Provisions.
-------------------------------------------------------------
The Company's Certificate of Incorporation and Bylaws contain provisions that
provide for staggered terms for members of the Company's Board of Directors and
provide further that vacancies on the Board of Directors may be filled by a
majority of the directors then in office. The Certificate of Incorporation
requires the approval of the holders of at least 66-2/3 percent of the
outstanding capital stock entitled to vote on such matters in order to approve
amendments to such provisions. These provisions may have the affect of making it
more difficult for a third party to acquire, or of discouraging acquisition bids
for, the Company and could limit the price that certain investors might be
willing to pay in the future for shares of the Common Stock. This is
particularly true in light of the control over the Company exercised by J.
Patrick Nicholson. See discussion under the caption "Control by J. Patrick
Nicholson."
Future Issuances of Preferred Stock.
------------------------------------
The Company may issue preferred stock in the future without stockholder approval
and upon such terms and conditions, and having such rights, privileges and
preferences, as the Board of Directors may determine in its sole and absolute
discretion. The rights of the holders of the Common Stock will be subject and
subordinate to, and may be adversely affected by, the rights of the holders of
any preferred stock that may be issued in the future. The issuance of preferred
stock, while providing flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it
-27-
<PAGE> 28
more difficult for a third party to acquire, or discouraging a third party from
acquiring, a majority of the outstanding Common Stock. While the Company has not
issued any preferred stock to date and has no present intention to issue any
shares of its preferred stock, there can be no assurances the Company will not
do so in the future.
Shares Eligible for Future Sale; Issuance of Additional Shares.
---------------------------------------------------------------
Future sales of shares of Common Stock by the Company and its stockholders
could adversely affect the prevailing market price of the Common Stock. There
are currently 2,094,250 shares of Common Stock which are freely tradeable or
eligible for resale pursuant to Rule 144 promulgated under the Securities Act.
Further, the Company has granted options to purchase up to an additional
258,825 shares of Common Stock, including the options granted to Selling
Stockholders. At this time, it is anticipated that up to 425,000 additional
shares of Common Stock will become freely tradeable or eligible for resale
pursuant to Rule 144 within the next twelve months, this includes the Shares.
Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales may occur, could have a material adverse effect on
the market price of the Common Stock. Pursuant to its Certificate of
Incorporation, the Company has the authority to issue additional shares of
Common Stock and preferred stock. The issuance of such shares could result in
the dilution of the voting power of Common Stock purchased hereunder. See
"Description of Common Stock."
Currency Exchange Risk.
-----------------------
The Company receives royalty and certain other payments from licensees in
foreign currencies and converts such amounts, when received, into United States
dollars at the then applicable exchange rate. The Company does not engage in any
currency hedging transactions and, as a result, is subject to the risk of
fluctuations in the exchange rate between the United States dollar and such
foreign currencies. Adverse
-28-
<PAGE> 29
fluctuations in currency exchange rates could materially adversely affect the
Company's financial condition, results of operations and the value of the
Shares.
Risk of Cost Overruns.
----------------------
Historically, the majority of the Company's contracts are on a fixed price or
per unit basis. Risks inherent in such contracts include cost overruns on
projects caused by unanticipated price increases, unanticipated problems,
inefficient project management, inaccurate estimation of labor or material costs
or disputes over the terms and specification of contract performance. There can
be no assurance that cost overruns will not occur in the future and have a
material adverse effect on the Company's financial condition and results of
operations. In addition, in order to remain competitive in the future, the
Company may have to agree to enter into more fixed price and per unit contracts
than in the past.
Business Subject to Weather Conditions.
---------------------------------------
Although the Company provides its services on a year-round basis, the Company's
services may be adversely affected by inclement weather conditions affecting the
operations of the Company's customers. Extended periods of rain, cold weather or
other inclement weather conditions may result in delays in commencing or
completing projects, in whole or in part. Any such delays may materially
adversely affect the Company's operations and profitability and may adversely
affect the performance of other projects due to scheduling and staffing
conflicts.
SELLING STOCKHOLDERS.
The following table sets forth certain information, as of the date hereof, with
respect to the number of shares of Common Stock beneficially owned and being
offered hereby by the Selling Stockholders:
-29-
<PAGE> 30
<TABLE>
<CAPTION>
=============================================================================================================================
Percentage of No. of Shares of
No. of Shares Aggregate No. of Common Stock
Beneficially Shares of Common Offered Hereby
Owned(Computed on a Stock Issued and (computed on a fully
Name: fully diluted basis) Outstanding diluted basis)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Frank Manchak, Jr. 350,000 14.00% 350,000
=============================================================================================================================
</TABLE>
Description of Common Stock.
----------------------------
The Company has authorized 45,000,000 shares of Common Stock, par value $.01 per
share. Holders of the Common Stock are entitled to cast one vote for each share
held of record, to receive such dividends as may be declared by the Board of
Directors out of legally available funds and to share ratably in any
distribution of the Company's assets after payment of all debts and other
liabilities, upon liquidation, dissolution or winding up. Cumulative voting is
not allowed for the election of directors. Holders of the Common Stock do not
have preemptive rights or other rights to subscribe for additional shares, and
the Common Stock is not subject to redemption. The Board of Directors is
expressly authorized from time to time to provide for the issuance of shares of
preferred stock in one or more series, with such voting powers and with such
designations, preferences and other rights and qualifications, limitations or
restrictions thereof as shall be stated and stated and expressed in the
resolution providing for the issue thereof adopted by the Board of Directors.
The Board of Directors may issue such preferred stock without stockholder
approval, and the voting and conversion rights of such stock potentially could
adversely affect the voting power of the holders of the Common Stock.
EXPERTS
The consolidated financial statements and the related consolidated financial
statement schedules incorporated in this Prospectus be reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 have
been audited by McGladrey & Pullen L.L.P., independent auditors, as
-30-
<PAGE> 31
stated in their reports which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Shares have been
passed upon for the Company by Shumaker, Loop & Kendrick, LLP, Toledo, Ohio.
-31-
<PAGE> 32
TABLE OF CONTENTS
Available information.................................................4
Incorporation of Certain Documents by Reference.......................6
The Company...........................................................7
Use of Proceeds.......................................................8
Plan of Distribution..................................................8
Price Range of Shares and Distribution History.......................13
Capitalization.......................................................14
Selected Consolidated Financial Data.................................15
Recent Developments..................................................16
Risk Factors.........................................................19
Selling Stockholders.................................................30
Experts..............................................................31
Legal Matters........................................................31
-32-
<PAGE> 33
350,000 SHARES
N-VIRO INTERNATIONAL CORPORATION
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
July 21, 1997
<PAGE> 34
PART II
-------
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Expenses payable in connection with the issuance and distribution of the
securities to be registered are estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fees..................$ 200
Legal fees and expenses......................................... 22,000
Accounting fees and expenses.................................... 2,000
Miscellaneous................................................... 3,000
TOTAL...........................................................$ 27,200
</TABLE>
Item 15. Indemnification of Officers and Directors.
Article 9 of the Company's Certificate of Incorporation provides that the
Company shall, to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law ("DGCL"), as the same may be amended and supplemented,
indemnify each director and officer of the Company from and against any and all
of the expenses, liabilities or other matters referred to in or covered by said
Section and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled to
under any bylaw, agreement, vote of stockholders, vote of disinterested
directors or otherwise, and shall continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs, executors and
administrators of such persons and the Corporation may purchase and maintain
insurance on behalf of any director or officer to the extent permitted by
Section 145 of the DGCL.
The Company's By-Laws (the "By-Laws") provide that the Company shall indemnify,
to the extent permitted by the GCL, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director or officer of the Company, or is
or was serving at the request of the Company as a director, officer, employee,
trustee, partner or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him in connection with such action, suit or proceeding.
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<PAGE> 35
Item 16. Exhibits
Exhibit
Number Exhibit
- --------------
4.1 Certificate of Incorporation.
4.2 By-Laws of N-Viro International Corporation.
5.1 Opinion of Shumaker, Loop & Kendrick, LLP.
23.1 Consent of McGladrey & Pullen, independent auditors.
23.2 Consent of Shumaker, Loop & Kendrick, LLP to the use
of their opinion as an exhibit to this Registration
Statement is included in their opinion filed herewith
as Exhibit 5.1.
24.1 Powers of Attorney.
Item 17. Undertakings
(a) RULE 415 OFFERING. The undersigned hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the commission pursuant to Rule 424(b) if, in the aggregate, the
charges in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act that are incorporated
by reference in the Registration Statement.
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<PAGE> 36
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY
REFERENCE. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) POLICY REGARDING INDEMNIFICATION. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions or otherwise, the Company has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE> 37
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Toledo, State of Ohio on July 21, 1997.
N-Viro International Corporation
By:/S/ J. Patrick Nicholson
----------------------------
J. Patrick Nicholson
Chairman of the Board, Chief
Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ J. PATRICK NICHOLSON Chairman of the Board, Chief Executive July 21, 1997
J. Patrick Nicholson Officer and President
/S/ JAMES K. MCHUGH Chief Financial Officer, Secretary and July 21, 1997
James K. McHugh Treasurer
/S/ BOBBY B. CARROLL Director July 21, 1997
Bobby B. Carroll
/S/ WALLACE G. IRMSCHER Director July 21, 1997
Wallace G. Irmscher
/S/ CHARLES B. KAISER, JR. Director July 21, 1997
Charles B. Kaiser, Jr.
/S/ FREDERICK H. KURTZ Director July 21, 1997
Frederick H. Kurtz
/S/ TERRY L. LOGAN Director July 21, 1997
Terry L. Logan
/S/ B.K. WESLEY COPELAND Director July 21, 1997
B.K. Wesley Copeland
*By:/S/ J. PATRICK NICHOLSON
------------------------
J. PATRICK NICHOLSON, Attorney-in-Fact
</TABLE>
-37-
<PAGE> 1
Exhibit #4.1
CERTIFICATE OF INCORPORATION
OF
N-VIRO INTERNATIONAL CORPORATION
The undersigned incorporator, for the purpose of incorporating or
organizing a corporation under the General Corporation Law of the State of
Delaware, certifies as follows:
ARTICLE ONE
The name of the Corporation is N-Viro International Corporation.
ARTICLE TWO
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle 19801. The name of its registered agent at such address is
The Corporation Trust Company.
ARTICLE THREE
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE FOUR
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is fifty million (50,000,000) shares,
of which five million (5,000,000) shares, designated as Preferred Stock, shall
have a par value of One Cent ($.01) per share (the "Preferred Stock"), and
forty-five million (45,000,000) shares, designated as Common Stock, shall have a
par value of One Cent ($.01) per share (the "Common Stock").
A statement of the powers, preferences and rights, and the
qualifications, Limitations or restrictions thereof, in respect of each class of
stock of the Corporation is as follows:
PREFERRED STOCK
The Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more classes or series. The designations, powers,
preferences and relative, optional, conversion and other special rights, and the
qualifications, limitations and restrictions thereof, of Preferred Stock of each
class or series shall be such as are stated and expressed herein and, to the
extent not stated and expressed herein, shall be such as may be fixed by the
Board of Directors (authority so to do being hereby expressly granted) and
stated and expressed in a resolution or resolutions adopted by the Board of
Directors providing for the issue of Preferred Stock of such class or series.
Such resolution or resolutions shall (a) specify the class or series to which
such Preferred Stock shall belong, (b) fix the dividend rate therefor, (c) fix
the amount which the holders of Preferred Stock of such class or series shall be
entitled to be paid in the event of a voluntary liquidation, dissolution or
winding up of the Corporation, (d) state whether or not Preferred Stock of such
class or series shall be redeemable and at what times and under what conditions
and the amount or amounts payable thereon in the event of redemption, (e) fix
<PAGE> 2
the voting powers of the holders of Preferred Stock of such class or series,
whether full or limited, or without voting powers, but in no event shall the
holders of Preferred Stock of such class or series be entitled to more than one
vote for each share held at all meetings of the stockholders of the Corporation;
and may, in a manner not inconsistent with the provisions of this ARTICLE FOUR,
(i) limit the number of shares of such class or series which may be issued, (ii)
provide for a sinking or purchase fund for the redemption or purchase of shares
of such class or series and the terms and provisions governing the operation of
any such fund and the status as to reissuance of shares of Preferred Stock
purchased or otherwise reacquired or redeemed or retired through the operation
thereof, (iii) impose conditions or restrictions upon the creation of
indebtedness of the Corporation or upon the issue of additional Preferred Stock
or other capital stock ranking equally therewith or prior thereto as to
dividends or distribution of assets on liquidation, and (iv) grant such other
special rights to the holders of Preferred Stock of such class or series as the
Board of Directors may determine and which are not inconsistent with the
provisions of this ARTICLE FOUR. The term "fix for such class or series" and
similar terms shall mean stated and expressed in a resolution or resolutions
adopted by the Board of Directors providing for the issue of Preferred Stock of
the class or series referred to therein, No further action or vote of the
stockholders shall be required for any action taken by the Board of Directors
pursuant to this ARTICLE FOUR,
COMMON STOCK
1. DIVIDENDS,
Subject to the preferred rights of the holders of shares of any class
or series of Preferred Stock as provided by the Board of Directors with respect
to any such class or series of Preferred Stock, the holders of the Common Stock
shall be entitled to receive, as and when declared by the Board of Directors
out of the funds of the Corporation legally available therefor, such dividends
(payable in cash, stock or otherwise) as the Board of Directors may from time
to time determine, payable to stockholders of record on such dates, not
exceeding sixty (60) days preceding the dividend payment dates, as shall be
fixed for such purpose by the Board of Directors in advance of payment of each
particular dividend.
2. LIQUIDATION
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after the distribution or payment
to the holders of shares of any class or series of Preferred Stock as provided
by the Board of Directors with respect to any such class or series of Preferred
Stock, the remaining assets of the Corporation available for distribution to
stockholders shall be distributed among and paid to the holders of Common Stock
ratably in proportion to the number of shares of Common Stock held by them
respectively.
3. VOTING RIGHTS.
Except as otherwise required by law or as provided by the Board of
Directors with respect to any class or series of Preferred Stock, the entire
voting power and all voting rights shall be vested exclusively in the Common
Stock. Each holder of shares of Common Stock shall be entitled to one vote for
each share standing in his name on the books of the Corporation.
-2-
<PAGE> 3
ARTICLE FIVE
The name and mailing address of the incorporator is as follows:
Thomas A. Lupica, Esq.
Spengler Nathanson
608 Madison Avenue, Suite 1000
Toledo, Ohio 43604-1169
The powers of the incorporator shall not terminate until the Directors of the
Corporation are duly elected and qualified,
ARTICLE SIX
1. BOARD OF DIRECTORS
The number of Directors shall initially be nine (9). Without further action or
vote of the stockholders, the Directors shall have the power to increase the
number of Directors to twelve (12) by majority vote. The Directors shall be
classified with respect to the time for which they shall severally hold office
into three classes, with each class having as nearly equal number of Directors
as possible. The Class I Directors shall be elected to hold office for an
initial term expiring at the 1994 annual meeting of stockholders, the Class B
Directors shall be elected to hold office for an initial term expiring at the
1995 annual meeting of stockholders, and the Class III Directors shall be
elected to hold office for an initial term expiring at the 1996 annual meeting
of stockholders, with the members of each Class of Directors to hold office
until their successors have been duty elected and qualified. At each annual
meeting of stockholders, the successors to the Class of Directors whose term
expires at that meeting shall be elected to hold office for a term expiring at
the annual meeting of stockholders held in the third year following the year of
their election and until their successors have been duly elected and qualified.
At each annual meeting of stockholders at which a quorum is present, the persons
receiving a plurality of the votes cast shall be Directors. No Director or Class
of Directors may be removed from office by a vote of the stockholders at any
time except for cause, Election of Directors need not be by written ballot
unless the By-Laws of the Corporation so provide.
2. VACANCIES.
Any vacancy on the Board of Directors resulting from death,
retirement, resignation, disqualification or removal from office or other cause,
as well as any vacancy resulting from an increase in the number of Directors
which occurs between annual meetings of the stockholders at which Directors are
elected, shall be filled only by a majority vote of the remaining Directors then
in office, though less than a quorum, except that those vacancies resulting from
removal from office by a vote of the stockholders may be filled by a vote of the
stockholder's at the same meeting at which such removal occurs. The Directors
chosen to fill vacancies shall hold office for a term expiring at the end of the
next annual meeting of stockholders at which the term of the Class to which they
have been elected expires. No decrease in the number of Directors constituting
the Board of Directors shall shorten the term of any incumbent Director.
Notwithstanding the foregoing, whenever the holders of one or more
classes or series of Preferred Stock shall have the right, voting separately, as
a class or series, to elect Directors, the election, term of office, filling of
vacancies, removal and other features of such Directorships shall be governed by
the terms of the resolution or resolutions adopted by the
<PAGE> 4
Board of Directors pursuant to ARTICLE FOUR applicable thereto, and each
Director so elected shall not be subject to the provisions of this ARTICLE FIVE
unless otherwise provided therein.
3. POWER TO MAKE, ALTER AND REPEAL BY-LAWS,
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter and
repeal the By-Laws of the Corporation.
4. AMENDMENT AND REPEAL OF ARTICLE SIX.
Notwithstanding any provision of this Certificate of Incorporation and
of the By-Laws, and notwithstanding the fact that a lesser percentage may be
specified by Delaware law, unless such action has been approved by a majority
vote of the full Board of Directors, the affirmative vote of sixty-six and
two-thirds percent (66-2/3 %) of the votes which all stockholders of the then
outstanding shares of capital stock of the Corporation would be entitled to cast
thereon, voting together as a single class, shall be required to amend or repeal
any provisions of this ARTICLE SIX or to adopt any provision inconsistent with
this ARTICLE SIX. In the event such action has been previously approved by a
majority vote of the full Board of Directors, the affirmative vote of a majority
of the outstanding stock entitled to vote thereon shall be sufficient to amend
or repeal any provision of this ARTICLE SIX or adopt any provision inconsistent
with this ARTICLE SIX.
ARTICLE SEVEN
The Corporation reserves the right to amend, alter, change or repeal
any provision in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute.
ARTICLE EIGHT
No Director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
Director, except for liability (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law or (iv) for
any transaction from which the Director derived an improper personal benefit.
ARTICLE NINE
The Corporation shall, to the fullest extent permitted by Section 145
of the Delaware General Corporation Law, as the same may be amended and
supplemented, indemnify each Director and officer of the Corporation from and
against any and a.11 of the expenses, liabilities or other matters referred to
in or covered by said Section and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Laws, agreement, vote of stockholders, vote of
disinterested Directors or otherwise, and shall continue as to a person who has
ceased to be a Director or officer and shall inure to the benefit of the heirs,
executors and administrators of such persons and the Corporation may purchase
and maintain insurance on behalf of any
-4-
<PAGE> 5
Director or officer to the extent permitted by Section 145 of the Delaware
General Corporation Law.
ARTICLE TEN
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as consequence or such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and ALSO on the Corporation.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Incorporation as of this 28th day of April, 1993.
INCORPORATOR
Thomas A. Lupica
-6-
<PAGE> 1
Exhibit #4.2
BY-LAWS
OF
N-VIRO INTERNATIONAL CORPORATION
ARTICLE I
Stockholders
------------
SECTION 1. ANNUAL MEETING. The annual meeting of the
stockholders of the Corporation shall be held on such date., at such time and at
such place within or without the State of Delaware as ma be designated by the
Board of Directors. for the purpose of electing Directors and for the
transaction of such other business as may be properly brought, before the
meeting,
SECTION 2. SPECIAL MEETINGS Except as otherwise provided in
the Certificate of Incorporation, a special meeting of the stockholders of the
Corporation may be called at any time by the Board of Directors or the
President. Any special meeting of the stockholders shall be held on such date,
at such time and at Such place within or \ without the State of Delaware as the
Board of Directors or the officer calling the meeting may designate. At a
special meeting of the stockholders, no business shall be transacted and no
corporate action shall be taken other than that stated in the notice of the
meeting unless all of the stockholders are present in person or by proxy, in
which case any and all business may be transacted at the meeting even though the
meeting is held without notice.
SECTION 3. NOTICE OF MEETINGS. Except as otherwise provided in
these By-Laws or by law. a written notice of each meeting of the stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder of the Corporation entitled to vote at
such meeting at his address as it appears on the records of the Corporation. The
notice shall state the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting, is called.
SECTION 4. QUORUM. At any meeting of the stockholders, the
holders of a majority in number of the total outstanding, shares of stock, of
the Corporation entitled to vote at such meeting, present in person or
represented by proxy,, shall constitute a quorum of the stockholders for all
purposes, unless the representation of a larger number of shares shall be
required by law, by the Certificate of Incorporation or by, these By-Laws, in
which case the representation of the number of shares so required shall
constitute a quorum; provided that at any meeting of the stockholders at which
the holders of any class of stock of the Corporation shall be entitled to vote
separately as a class, the holders of a majority in number of the total
outstanding shares of such class, present in person or represented by proxy,
shall constitute a quorum for purposes of such class vote unless the
representation of a larger number of shares of such class shall be required by
law, by the Certificate of Incorporation or by these By-Laws.
<PAGE> 2
SECTION 5. ADJOURNED MEETINGS. Whether or not a quorum shall
be present in person or represented at any meeting of the stockholders, the
holders of a majority in number of the shares of stock of the Corporation
present in person or represented by proxy and entitled to vote at such meeting
may adjourn from time to time; provided, however, that if the holders of any
class of stock of the Corporation are entitled to vote separately as a class
upon any matter at such meeting , any adjournment of the meeting in respect of
action by such class upon such matter shall be determined by the holders of a
majority of the shares of such class present in person or represented by proxy
and entitled to vote at such meeting. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting the stockholders, or the holder of any class of stock
entitled to vote separately as a class, as the case may be, may transact any
business which might have been transacted by them at the original meeting. If
the adjournment is for more than thirty (30) days, or if after the adjournment a
new, record date is fixed for the adjourned meeting,, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
adjourned meeting.
SECTION 6. ORGANIZATION. The President or, in his absence, a
Vice President shall call all meetings of the stockholders to order, and shall
act as Chairman of such meetings. In the absence of the President and all of the
Vice Presidents, the holders of a majority in number of the shares of stock of
the Corporation present in person or represented by proxy and entitled to vote
at such meeting shall elect a Chairman.
The Secretary of the Corporation shall act as Secretary of all meetings
of the stockholders; but in the absence of the Secretary, the Chairman may
appoint any person to act as Secretary of the meeting . It shall be the duty of
the Secretary to prepare and make, at least ten (10) days before every meeting
of stockholders, a complete list of stockholders entitled to vote at such
meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares re-registered in the name of each
stockholder. Such list shall be open, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held,
for the ten (10) days next preceding the meeting, to the examination of any
stockholder, for any purpose germane to the meeting,, during ordinary business
hours, and shall be produced and kept at the time and place of the meeting
during the whole time thereof and subject to the inspection of any stockholder
who may be present.
SECTION 7. VOTING. Except as otherwise provided in the
Certificate of Incorporation or by law, each stockholder shall be entitled to
one vote for each share of the capital stock of the Corporation registered in
the name of such stockholder upon the books of the Corporation. Each stockholder
entitled to vote at a meeting of stockholders or to express consent or dissent
to corporate action in writing without a meeting may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted or acted upon
after three (3) years from its date, unless the proxy provides for a longer
period. When directed by the presiding officer or upon the demand of any
stockholder, the vote upon any matter before a meeting of stockholders shall be
by ballot. Except as otherwise provided by law or by the Certificate of
Incorporation., Directors shall be elected by a plurality of the votes cast at a
meeting(, of stockholders by the stock holders entitled to vote in the election
and, whenever any corporate action, other than the election of Directors is to
be taken, it
<PAGE> 3
shall be authorized by a majority of the votes cast at a meeting of stockholders
by the stockholders entitled to vote thereon.
Shares of the capital stock of the Corporation belonging to
the Corporation or to another corporation, if a majority of the shares entitled
to vote in the election of directors of such other corporation is held, directly
or indirectly, by the Corporation, shall neither be entitled to vote nor be
counted for quorum purposes.
SECTION 8. INSPECTORS. When required by law or directed by the
presiding officer or upon the demand of any stockholder entitled to vote, but
not otherwise, the polls shall be opened and closed, the proxies and ballots
shall be received and taken in charge, and all questions touching, the
qualification of voters, the validity of proxies and 'the acceptance or
rejection of votes shall be decided at any meeting of the stockholders by two or
more Inspectors who may be appointed by the Board of Directors before the
meeting, or if not so appointed, shall be appointed by the presiding, officer at
the meeting . If any person so appointed fails to appear or act, the vacancy may
be filled by appointment in like manner.
SECTION 9. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Unless
otherwise provided in the Certificate of Incorporation, any action required to
be taken or which may be taken at any annual or special meeting of the
stockholders of the Corporation, may be taken without a meeting, without prior
notice and without a vote, if a consent is in writing, setting forth the action
so taken, shall be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize to take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of any such corporate action
without a meeting by less than unanimous written consent shall be given to those
stock holders who have not consented in writing
ARTICLE II
Board Of Directors
------------------
SECTION 1. NUMBER AND TERM OF OFFICE. The business and affairs
of the Corporation shall be managed by or under the direction of a Board of
Directors, none of whom need to be stockholders of the Corporation. The number
of Directors constituting the Board of Directors shall be fixed from time to
time by resolution passed by a majority of the Board of Directors. The Directors
shall be classified with respect to the time for which they shall severally hold
office into three (3) classes as nearly equal in number as possible. Except as
hereinafter otherwise provided for the filling of vacancies, the Class I
Directors shall hold office for an initial term expiring at the 1994 annual
meeting of stockholders, the Class II Directors shall hold office for an initial
term expiring at the 1995 annual meeting of stockholders and the Class III
Directors shall hold office for an initial term expiring at the 1996 annual
meeting of stockholders, with the members of each class of Directors to hold
office until their respective successors have been duly elected and qualified or
until their earlier resignation or removal. Thereafter, at each annual meeting,
of stockholders, the
-3-
<PAGE> 4
successors to the class of Directors whose term expires at that meeting shall be
elected to hold office for a term expiring, at the annual meeting of
stockholders held in the third year following the year of their election and
until their respective successors have been duly elected and qualified or until
their earlier resignation or removal.
SECTION 2. REMOVAL, VACANCIES AND ADDITIONAL DIRECTORS. The
stockholders may, at any special meeting the notice of which shall state that it
is called for that purpose, remove, with or without cause, any Director and fill
the vacancy; provided that whenever any Director shall have been elected by the
holders of any class of stock of the Corporation voting separately as a class
under the provisions of the Certificate of Incorporation, such Director may be
removed and the vacancy filled only by the holders of that class of stock voting
separately as a class. Vacancies caused by any such removal and not filled by
the stockholders at the meeting at which such removal shall have been made, or
any vacancy caused by the death or resignation of any Director or for any other
reason, and any newly created directorship resulting from any increase in the
authorized number of Directors, may be filled by the affirmative vote of a
majority of the Directors then in office, although less than a quorum, and any
Director so elected to fill any such vacancy or newly created directorship shall
hold office until his successor is elected and qualified or until his earlier
resignation or removal. The Directors chosen to fill vacancies shall hold office
for a term expiring at the end of the next annual meeting of stockholders at
which the term of the class to which they have been elected expires. No decrease
in the number of Directors constituting the Board of Directors shall shorten the
term of any incumbent Director. When one or more Directors shall resign
effective at a future date, a majority of the Directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or resignations
shall become effective, and each Director so chosen shall hold office as herein
provided in connection with the filling, of other vacancies.
SECTION 3. PLACE OF MEETING. The Board of Directors may hold
its meetings in such place or places in the State of Delaware or outside the
State of Delaware as the Board from time to time shall determine.
SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such times and places as the Board from time to time
by resolution shall determine. No notice shall be required for any regular
meeting of the Board of Directors; but a copy of every resolution fixing or
changing the time or place of regular meetings shall be mailed to every Director
at least five (5) days before the first meeting, held in pursuance thereof.
SECTION 5. SPECIAL MEETINGS Special meetings of the Board of
Directors shall be held whenever called by direction of the President, or by any
two of the Directors then in office.
Notice of the day, hour and place of holding of each special meeting
shall be given by mailing the same at least two (2) days before the meeting or
by causing, the same to be transmitted
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by telegraph, cable or wireless at least one day before the meeting to each
Director. Unless otherwise indicated in the notice thereof, any and all business
other than an amendment of these By-Laws may be transacted at any special
meeting, and an amendment of these By-Laws may be acted upon if the notice of
the meeting, shall have stated that the amendment of these By-Laws is one of the
purposes of the meeting. At any meeting at which every Director shall be
present, even though without any notice, any business may be transacted,
including the amendment of these By-Laws.
SECTION 6. QUORUM. Subject to the provisions of Section 2 of
this ARTICLE II. a majority of the members of the Board of Directors in office
(but in no case less than one third (1/3) of the total number of Directors nor
less than two (2) Directors) shall constitute a quorum for the transaction of
business and the vote of the majority of the Directors present at any meeting of
the Board of Directors at which a quorum is present shall be the act of the
Board of Directors. If at any meeting, of the Board there is less than a quorum
present, a majority of those present may adjourn the meeting from time to time.
SECTION 7. ORGANIZATION. The President shall preside at all
meetings of the Board of directors. In the absence of the President. a Chairman
shall be elected from the Directors present, The Secretary of the Corporation
shall act as Secretary of all meetings of the Directors; but in the absence of
the Secretary, the Chairman may appoint any person to act as Secretary of the
meeting,
SECTION 8. COMMITTEES. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the Directors of the
Corporation. The Board may designate one or more Directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided by resolution passed by a majority of the
whole Board, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and the affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting,
an agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending- to the stock-holders a dissolution of the
Corporation or a revocation of a dissolution, or amending these By-Laws, and
unless such resolution, these By-Laws, or the Certificate of Incorporation
expressly so provide, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock.
SECTION 9. CONFERENCE TELEPHONE MEETINGS. Unless otherwise
restricted by the Certificate of Incorporation or by these By-Laws, the members
of the Board of Directors or any
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<PAGE> 6
committee designated by the Board, may participate in a meeting, of the Board of
such committee. as the case may be. by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall constitute presence in
person at such meeting.
SECTION 10. CONSENT OF DIRECTORS OR COMMITTEE IN LIEU OF
MEETING. Unless otherwise restricted by the Certificate of Incorporation or by
these By-Laws, any action required or permitted to be taken at any meeting of
the Board of Directors, or of any committee thereof, may be taken without a
meeting if all members of the Board or committee, as the case may be, consent
thereto in writing and the writing or writings are filed with the minutes of
proceedings of the Board or committee, as the case may be.
ARTICLE III
Officers
--------
SECTION 1. OFFICERS. The officers of the Corporation shall be
a President, one or more Vice Presidents, a Secretary and a Treasurer, and such
additional officers, if any, as shall be elected by the Board of Directors
pursuant to the provisions of Section 6 of this ARTICLE III. The President, one
or more Vice Presidents, the Secretary and the Treasurer
shall be elected by the Board of Directors at its first meeting after each
annual meeting of the stockholders. The failure to hold such election shall not
of itself terminate the term of office of any officer. All officers shall hold
office at the pleasure of the Board of Directors. Any officers may resign at any
time upon written notice to the Corporation. Officers may, but need not, be
Directors. Any number of offices may be held by the same person.
All Officers, agents and employees shall be subject to
removal, with or without cause, at any time by the Board of Directors. The
removal of an officer without cause shall be without prejudice to his contract
rights, if any. The election or appointment of an officer shall not of itself
create contract rights. All agents and employees other than officers elected by
the Board of Directors shall also be subject to removal, with or without cause,
at any time by the officers appointing them.
Any vacancy caused by the death of any officer, his
resignation, his removal, or otherwise, may be filled by the Board of Directors,
and any officer so elected shall hold office at the pleasure of the Board of
Directors.
In addition to the powers and duties of the officers of the
Corporation as set forth in these By-Laws, the officers shall have such
authority and shall perform such duties as from time to time may be determined
by the Board of Directors.
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<PAGE> 7
SECTION 2. POWERS AND DUTIES OF THE PRESIDENT. The President
shall be the chief executive officer of the Corporation and, subject to the
control of the Board of Directors, shall have general charge and control of all
its business and affairs and shall have all powers and shall perform all duties
incident to the office of President. He shall preside at all meetings of the
stockholders and at all meetings of the Board of Directors and shall have such
other powers and perform such other duties as may from time to time be assigned
to him by these By-Laws or by the Board of Directors.
SECTION 3. POWERS AND DUTIES OF THE VICE PRESIDENTS. Each Vice
President shall have all powers and shall perform all duties incident to the
office of Vice President and shall have such other powers and perform such other
duties as may from time to time be assigned to him by these By-Laws or by the
Board of Directors or by the President.
SECTION 4. POWERS AND DUTIES OF THE SECRETARY. The Secretary
shall keep the minutes of all meetings of the Board of Directors and the minutes
of all meetings of the stockholders in books provided for that purpose; he shall
attend to the giving or serving of all notices of the Corporation: he shall have
custody of the corporate seal of the Corporation and shall affix the same to
Such documents and other papers as the Board of Directors or the President shall
authorize and direct; he shall have charge of the stock certificate books,
transfer books and stock ledgers and such other books and papers as the Board of
Directors or the President shall direct, all of which shall at all reasonable
times be open to the examination of any Director, upon application, at the
office of the Corporation during, business hours; and he shall have all powers
and shall perform all duties incident to the office of Secretary and shall have
such other powers and shall perform such other duties as may from time to time
be assigned to him by these By-Laws or by the Board of Directors or the
President.
SECTION 5. POWERS AND DUTIES OF THE TREASURER. The Treasurer
shall have custody of, and when proper shall pay out, disburse or otherwise
dispose of, all funds and securities of the . Corporation which may have come
into his hands; he may endorse on behalf of the Corporation for collection
checks, notes and other obligations and shall deposit the same to the credit of
the Corporation in such bank or banks or depository or depositories as the Board
of Directors may designate; he shall sign all receipts and vouchers for payments
made to the Corporation; he shall enter or cause to be entered regularly in the
books of the Corporation kept for the purpose full and accurate accounts of all
moneys received or paid or otherwise disposed of by him and whenever required by
the Board of Directors or the President shall render statements of such
accounts; he shall, at all reasonable times, exhibit his books and accounts to
any Director of the Corporation, upon application, at the office of the
Corporation during business hours; and he shall have all powers and shall
perform all duties incident of the office of Treasurer and shall also have such
other powers and shall perform such other duties as may from time to time be
assigned to him by these By-Laws or by the Board of Directors or the President.
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SECTION 6. ADDITIONAL OFFICERS. The Board of Directors may
from time to time elect such other officers (who may but need not be Directors),
including a Controller, Assistant Treasurers, Assistant Secretaries and
Assistant Controllers, as the Board may deem advisable and such officers shall
have such authority and shall perform such duties as may from time to time be
assigned to them by the Board of Directors or the President.
The Board of Directors may from time to time by resolution
delegate to any Assistant Treasurer or Assistant Treasurers any of the powers or
duties herein assigned to the Treasurer; and may similarly delegate to any
Assistant Secretary or Assistant Secretaries any of the powers or duties herein
assigned to the Secretary.
SECTION 7. GIVING OF BOND BY OFFICERS. All officers of the
Corporation, if required to do so by the Board of Directors, shall furnish bonds
to the Corporation for the faithful performance of their duties, in such
penalties and with such conditions and security as the Board shall require.
SECTION 8. VOTING UPON STOCKS. Unless otherwise ordered by the
Board. of Directors, the President or any Vice President shall have full power
and authority on behalf of the Corporation to attend and to act and to vote, or
in the name of the Corporation to execute proxies to vote, at any meeting of
stockholders of any corporation in which the Corporation may hold stock, and at
any such meeting, shall possess and may exercise, in person or by proxy, any
and all rights, powers and privileges incident to the ownership of such stock.
The Board of Directors may from time to time. by resolution, confer like powers
upon any other person or persons.
SECTION 9. COMPENSATION OF OFFICERS. The officers of the
Corporation shall be entitled to receive such compensation for their services as
shall from time to time be determined by the Board of Directors.
ARTICLE IV
Indemnification of Directors and Officers
-----------------------------------------
SECTION 1. NATURE OF INDEMNITY . The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding,, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was or has
agreed to become a Director or officer of the Corporation, or is or was serving,
or has agreed to serve at the request of the Corporation as a Director or
officer of another corporation. partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been taken or omitted in
such capacity, and may indemnify any person who was or is a party or is
threatened to be made a party to such an action, suit or proceeding by reason of
the fact that he is or was or has agreed to become an employee or agent of the
Corporation, or is or was serving, or has
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<PAGE> 9
agreed to serve at the request of the Corporation as an employee or agent of
another corporation, partnership, Joint venture, trust or other enterprise,
against expenses (including attorneys fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or on his behalf in
connection with such action, suit or proceeding and any appeal therefrom, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful; except that in the case of an action or suit by or in the right of
the Corporation to procure a 'judgment in its favor (i) such indemnification
shall be limited to expenses (including attorneys' fees) actually and reasonably
incurred by such person in the defense or settlement of such action or suit, and
(ii) no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper.
The termination of any action, suit or proceeding by 'judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDRE or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 2. SUCCESSFUL DEFENSE. To the extent that a Director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in SECTION
I of this ARTICLE IV or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including, attorneys' fees) actually and
reasonably incurred by him in connection therewith.
SECTION 3. DETERMINATION THAT INDEMNIFICATION IS PROPER. Any
indemnification of a Director or officer of the Corporation under SECTION 1 of
this ARTICLE IV (unless ordered by a court) shall be made by the Corporation
unless a determination is made that indemnification of the Director or officer
is not proper in the circumstances because he has not met the applicable
standard of conduct set forth in SECTION 1. Any indemnification of an employee
or agent of the Corporation under SECTION I (unless ordered by a court) may be
made by the Corporation upon a determination that indemnification of the
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in SECTION 1. Any such determination
shall be made (i) by the Board of Directors by a majority vote of a quorum
consisting of Directors who were not parties to such action, suit or proceeding,
or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested Directors so directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders.
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SECTION 4. ADVANCE PAYMENT OF EXPENSES. Unless the Board of
Directors otherwise determines in a specific case, expenses incurred by a
Director or officer in defending a civil or criminal action suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the Director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this ARTICLE IV. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate. The Board of Directors may authorize the
Corporation's legal counsel to represent such Director, officer, employee or
agent in any action, suit or proceeding, whether or not the Corporation is a
party to such action, suit or proceeding.
SECTION 5. SURVIVAL:, PRESERVATION OF OTHER RIGHTS. The
foregoing, indemnification provisions shall be deemed to be a contract between
the Corporation and each Director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware General Corporation law are in effect and any repeal
or modification thereof' shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any action,
suit or proceeding previously or thereafter brought or threatened based in whole
or in part upon any such state of facts. Such a contract right may not be
modified retroactively without the consent of such Director, officer, employee
or a-agent.
The indemnification provided by this ARTICLE IV shall not be deemed
exclusive of any other right to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person, The
Corporation may enter into an agreement with any of its Directors, officers,
employees or agents providing for indemnification and advancement of expenses,
including attorneys, fees, that may change, enhance, qualify or limit any right
to indemnification or advancement of expenses created by this ARTICLE IV.
SECTION 6. SEVERABILITY. If this ARTICLE IV or any portion
hereof shall be invalidated on any ground by any court of competent
Jurisdiction, then the Corporation shall nevertheless indemnify each Director or
officer and may indemnify each employee or agent of the Corporation as to costs,
charges and expenses (including attorneys, fees), judgments, fines and amounts
paid in settlement with respect to any action, suit or proceeding, whether
civil, criminal, administrative or investigative, including an action by or in
the right of the Corporation, to the fullest extent permitted by any applicable
portion of this ARTICLE IV that shall not have been 'Invalidated and to the
fullest extent permitted by applicable law.
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SECTION 7. SUBROGATION. In the event of payment of
indemnification to a person described in SECTION I of this ARTICLE IV, the
Corporation shall be subrogated to the extent of such payment to any right of
recovery such person may have and such person, as a condition of receiving-
indemnification from the Corporation, shall execute all documents and do all
things that the Corporation may deem-n necessary or desirable to perfect such
right of recovery, including the execution of such documents necessary to enable
the Corporation effectively to enforce any such recovery.
SECTION 8. NO DUPLICATION OF PAYMENTS. The Corporation shall
not be liable under this ARTICLE IV to make any payment in connection with any
claim made against a Person described in SECTION I of this ARTICLE IV to the
extent such person has otherwise received payment (under any insurance policy,
By-Law or otherwise) of the amounts otherwise indemnifiable hereunder.
ARTICLE V
Stock,-Seal-Fiscal Year
-----------------------
SECTION 1. CERTIFICATES FOR SHARES OF STOCK. The certificates
for shares of stock of the Corporation shall be in such form, not inconsistent
with the Certificate of Incorporation, as shall be approved by the Board of
Directors. All certificates shall be signed by the President or a Vice President
and by the Secretary or an Assistant Secretary of the Treasurer or an Assistant
Treasurer, and shall not be valid unless so signed.
In case any officer or officers who shall have signed any such
certificate or certificates shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates had not ceased
to be such officer or officers of the Corporation.
All certificates for shares of stock shall be consecutively
numbered as the same are issued. The name of the person owning the shares
represented thereby with-the-number of such shares and the date of issue thereof
shall be entered on the books of the Corporation.
Except as hereinafter provided, all certificates surrendered
to the Corporation for transfer shall be canceled, and no new certificates shall
be issued until former certificates for the same number of shares have been
surrendered and canceled.
SECTION 2. LOST, STOLEN OR DESTROYED CERTIFICATES. Whenever a
person owning a certificate for shares of stock of the Corporation alleges that
it has been lost, stolen or destroyed, he shall file in the office of the
Corporation's affidavit setting forth, to the best of his knowledge and belief,
the time, place and circumstances of the loss, theft or destruction, and, if
required by the
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Board of Directors, a bond of indemnity or other indemnification sufficient in
the opinion of the Board of Directors to indemnify the Corporation and its
agents against any claim that may be made against it or them on account of the
alleged loss, theft or destruction of any such certificate or the issuance of a
new certificate in replacement therefor. Thereupon the Corporation may cause to
be issued to such person a new certificate in replacement for the certificate
alleged to have been lost, stolen or destroyed. Upon the stub of every new
certificate so issued shall be noted the fact of such issue and the number, date
and the name of the registered owner of the lost, stolen or destroyed
certificate in lieu of which the new certificate is issued.
SECTION 3. TRANSFER OF SHARES. Shares of stock of the
Corporation shall be transferred on the books of the Corporation by the holder
thereof, in person or by his attorney duly authorized in writing, upon surrender
and cancellation of certificates for the number of shares of stock to be
transferred, except as provided in SECTION 2 of this ARTICLE V.
SECTION 4. REGULATIONS. The Board of Directors shall have
power and authority to make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation.
SECTION 5. RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting or to receive payment of any dividend or
other distribution or allotment of any rights, or to exercise any rights in
respect of any chance, conversion or exchange of stock or for the purpose of any
other lawful action, as the case may be, the Board of Directors may fix, in
advance, a record date, which shall not be (i) more than sixty (60) nor less
than ten (10) days before the date of such meeting, or (ii) in the case of
corporate action to be taken by consent in writing without a meeting, prior to,
or more than ten (10) days after, the date upon which the resolution fixing the
record date is adopted by the Board of Directors, or (iii) more than sixty (60)
days prior to any other action.
If no record date is fixed, the record date for determining,
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given or, if notice is waived, at the close of business on the date next
preceding the day on which the meeting is held; the record date for determining
stockholders entitled to express consent to corporate action in writing without
a meeting, when no prior action by the Board of Directors is necessary, shall be
the day on which the first written consent is delivered to the Corporation; and
the record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however. that the Board of Directors may
fix a new record date for the adjourned meeting.
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SECTION 6. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors shall have power to declare
and pay dividends upon shares of stock of the Corporation, but only out of funds
available for the payment of dividends as provided by law.
Subject to the provisions of the Certificate of Incorporation,
any dividends declared upon the stock of the Corporation shall be payable on
such date or dates as the Board of Directors shall determine. If the date fixed
for the payment of any dividend shall in any year fall upon a legal holiday,
then the dividend payable on such date shall be paid on the next day not a legal
holiday.
SECTION 7. CORPORATE SEAL. The Board of Directors may provide
a suitable seal, containing, the name of the Corporation, which seal shall be
kept in the custody of the Secretary. A duplicate of the seal may be kept and be
used by any officer of the Corporation designated by the Board of Directors or
the President.
SECTION 8. FISCAL YEAR. The fiscal year of the Corporation
shall be such fiscal year as the Board of Directors from time to time by
resolution shall determine.
ARTICLE VI
Miscellaneous Provisions
------------------------
SECTION 1. CHECKS, NOTES, ETC. All checks, drafts, bills of
exchange, acceptances, notes or other obligations or orders for the payment of
money shall be signed and, if so required by the Board of Directors,
countersigned by such officers of the Corporation and/or other persons as the
Board of Directors from time to time shall designate.
Checks, drafts, bills of exchange, acceptances, notes,
obligations and orders for the payment of money made payable to the Corporation
may be endorsed for deposit to the credit of the Corporation with a duly
authorized depository by the Treasurer and/or, such other officers or persons as
the Board of Directors from time to time may designate.
SECTION 2. LOANS. No loans and no renewals of any loans shall
be contracted on behalf of the Corporation except as authorized by the Board of
Directors. When authorized to do so, any officer or agent of the Corporation may
effect loans and advances for the Corporation from any bank, trust company or
other institution or from any firm, corporation or individual, and for such
loans and advances may make, execute and deliver promissory notes, bonds or
other evidences of indebtedness of the Corporation. When authorized so to do,
any officer or agent of the Corporation may pledge, hypothecate or transfer, as
security for the payment of any and all loans, advances, indebtedness and
liabilities of the Corporation, any and all stocks, securities and other
personal property at any time held by the Corporation, and to that end may
endorse, assign-n and deliver the same. Such authority may be general or
confined to specific instances.
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SECTION 3. CONTRACTS. Except as otherwise provided in these
By-Laws or by law or as otherwise directed by the Board of Directors, the
President or any Vice President shall be authorized to execute and deliver, in
the name and on behalf of the Corporation, all agreements, bonds, contracts,
deeds, mortgages, and other instruments, either for the Corporation's own
account or in a fiduciary or other capacity, and the seal of the Corporation, if
appropriate, shall be affixed thereto by any of such officers or the Secretary
or an Assistant Secretary. The Board of Directors. the President or any Vice
President designated by the Board of Directors may authorize any other officer,
employee or a agent to execute and deliver, in the name and on behalf of the
Corporation, agreements, bonds, contracts, deeds, mortgages, and other
instruments, either for the Corporation's own account or in a fiduciary or other
capacity, and, if appropriate, to affix the seal of the Corporation thereto. The
grant of such authority by the Board of any such officer may be general or
confined to specific instances.
SECTION 4. WAIVERS OF NOTICE. Whenever any notice whatever is
required to be given by law, by the Certificate of Incorporation or by these
By-Laws to any person or persons, a waiver thereof in writing, signed by the
person or persons entitled to the notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
SECTION 5. OFFICES OUTSIDE OF DELAWARE. Except as otherwise
required by the laws of the State of Delaware, the Corporation may have an
office or offices and keep its books, documents and papers outside of the State
of Delaware at such place or places as from time to time may be determined by
the Board of Directors or the President.
ARTICLE VII
Amendments
----------
These By-Laws and any amendment thereof may be altered,
amended or repealed, or new By-Laws may be adopted, by the Board of Directors at
any regular or special meeting by the affirmative vote of a majority of all of
the members of the Board, provided in the case of any special meeting at which
all of the members of the Board are not present, that the notice of such meeting
shall have stated that the amendment of these By-Laws was one of the purposes of
the meeting; but these By-Laws and any amendment thereof may be altered, amended
or repealed or new By-Laws may be adopted by the holders of a majority of the
total outstanding stock of the Corporation entitled to vote at any annual
meeting or at any special meeting, provided, in the case of any special meeting,
that notice of such proposed alteration, amendment, repeal or adoption is
included in the notice of the meeting.
<PAGE> 1
EXHIBIT 5.1
-----------
SHUMAKER, LOOP & KENDRICK., LLP
1000 Jackson Street
Toledo, Ohio 43624
419-321-1209
July 21, 1997
J. Patrick Nicholson
Chairman of the Board, Chief
Executive Officer and President
N-Viro International Corporation
3450 West Central Avenue
Suite 328
Toledo, Ohio 43606
Re: N-Viro International Corporation
Registration Statement on Form S-3
SEC File No. 333-_______
Dear Mr. Nicholson:
We have acted as counsel to N-Viro International Corporation (the "Company") in
connection with the preparation and filing of its Registration Statement on Form
S-3 with the Securities and Exchange Commission pursuant to the requirements of
the Securities Act of 1933, as amended, for the registration of 350,000 shares
of the Company's Common Stock, par value $.01 per share (the "Shares").
In connection with the following opinion, we have examined and have relied upon
such documents, records, certificates, statements and instruments as we have
deemed necessary and appropriate to render the opinion herein set forth.
Based upon the foregoing, it is our opinion that the Shares held by the Selling
Stockholder, as described in the Registration Statement, when sold in the manner
set forth in the Registration Statement, will be legally issued, fully paid and
nonassessable.
The undersigned hereby consents to the filing of this opinion as Exhibit 5.1 to
the Registration Statement and the use of its name in the Registration Statement
under the caption "Legal Matters" of the Prospectus.
Very truly yours,
SHUMAKER, LOOP & KENDRICK, LLP
By: /S/ GREGORY C. YADLEY
-------------------------
Gregory C. Yadley
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 (No. 33-_____) of our report dated February 26, 1997,
which includes an emphasis paragraph relating to an uncertainty as to the
Company's ability to continue as a going concern, which appears in the Annual
Report on Form 10-K of N-Viro International Corporation for the year ended
December 31, 1996.
We also consent to the reference to our Firm under the caption "Experts" and
"Selected Consolidated Financial Data" in the Registration Statement and
related Prospectus.
/s/ McGladrey & Pullen, LLP
---------------------------
McGladrey & Pullen, LLP
July 16, 1997
Elkhart, Indiana
<PAGE> 1
EXHIBIT #24.1
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a
director of N-Viro International Corporation (the "Company"), a Delaware
corporation that contemplates filing a Registration Statement on Form S-3 ("Form
S-3") with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933, as amended, for the purpose of registering under such
Act of up to 350,000 shares of the Company's Common Stock, $.01 par value,
hereby constitutes and appoints J. PATRICK NICHOLSON and JAMES K. McHUGH his
true and lawful attorneys-in-fact and agents, and each of them (with full power
of substitution and resubstitution), with full power to act without the other,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, in the capacity as director, to sign such Form S-3 and any and all
amendments and supplements, including post-effective amendments thereto, and to
file such Form S-3 and each such amendment and supplement, including
post-effective amendments, so signed, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, any and all applications or other documents in connection with the
listing of the Company's Common Stock on the NASDAQ National Market and any and
all documents required to be filed with any state securities regulatory board or
commission pertaining to the Form S-3, hereby granting unto said
attorney-in-fact and agent full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned hereunto sets his hand
this 9th day of
July , 1997. /s/ Charles B. Kaiser, Jr.
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Charles B. Kaiser, Jr.
Director
<PAGE> 2
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a
director of N-Viro International Corporation (the "Company"), a Delaware
corporation that contemplates filing a Registration Statement on Form S-3 ("Form
S-3") with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933, as amended, for the purpose of registering under such
Act of up to 350,000 shares of the Company's Common Stock, $.01 par value,
hereby constitutes and appoints J. PATRICK NICHOLSON and JAMES K. McHUGH his
true and lawful attorneys-in-fact and agents, and each of them (with full power
of substitution and resubstitution), with full power to act without the other,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, in the capacity as director, to sign such Form S-3 and any and all
amendments and supplements, including post-effective amendments thereto, and to
file such Form S-3 and each such amendment and supplement, including
post-effective amendments, so signed, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, any and all applications or other documents in connection with the
listing of the Company's Common Stock on the NASDAQ National Market and any and
all documents required to be filed with any state securities regulatory board or
commission pertaining to the Form S-3, hereby granting unto said
attorney-in-fact and agent full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned hereunto sets his hand
this 9th day of
July , 1997. /s/ Bobby B. Carroll
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Bobby B. Carroll
Director
<PAGE> 3
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a
director of N-Viro International Corporation (the "Company"), a Delaware
corporation that contemplates filing a Registration Statement on Form S-3 ("Form
S-3") with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933, as amended, for the purpose of registering under such
Act of up to 350,000 shares of the Company's Common Stock, $.01 par value,
hereby constitutes and appoints J. PATRICK NICHOLSON and JAMES K. McHUGH his
true and lawful attorneys-in-fact and agents, and each of them (with full power
of substitution and resubstitution), with full power to act without the other,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, in the capacity as director, to sign such Form S-3 and any and all
amendments and supplements, including post-effective amendments thereto, and to
file such Form S-3 and each such amendment and supplement, including
post-effective amendments, so signed, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, any and all applications or other documents in connection with the
listing of the Company's Common Stock on the NASDAQ National Market and any and
all documents required to be filed with any state securities regulatory board or
commission pertaining to the Form S-3, hereby granting unto said
attorney-in-fact and agent full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned hereunto sets his hand
this 9th day of
July , 1997. /s/ B.K. Wesley Copeland
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B.K. Wesley Copeland
Director
<PAGE> 4
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a
director of N-Viro International Corporation (the "Company"), a Delaware
corporation that contemplates filing a Registration Statement on Form S-3 ("Form
S-3") with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933, as amended, for the purpose of registering under such
Act of up to 350,000 shares of the Company's Common Stock, $.01 par value,
hereby constitutes and appoints J. PATRICK NICHOLSON and JAMES K. McHUGH his
true and lawful attorneys-in-fact and agents, and each of them (with full power
of substitution and resubstitution), with full power to act without the other,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, in the capacity as director, to sign such Form S-3 and any and all
amendments and supplements, including post-effective amendments thereto, and to
file such Form S-3 and each such amendment and supplement, including
post-effective amendments, so signed, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, any and all applications or other documents in connection with the
listing of the Company's Common Stock on the NASDAQ National Market and any and
all documents required to be filed with any state securities regulatory board or
commission pertaining to the Form S-3, hereby granting unto said
attorney-in-fact and agent full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned hereunto sets his hand
this 9th day of
July , 1997. /s/ Wallace G. Irmscher
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Wallace G. Irmscher
Director
<PAGE> 5
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a
director of N-Viro International Corporation (the "Company"), a Delaware
corporation that contemplates filing a Registration Statement on Form S-3 ("Form
S-3") with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933, as amended, for the purpose of registering under such
Act of up to 350,000 shares of the Company's Common Stock, $.01 par value,
hereby constitutes and appoints J. PATRICK NICHOLSON and JAMES K. McHUGH his
true and lawful attorneys-in-fact and agents, and each of them (with full power
of substitution and resubstitution), with full power to act without the other,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, in the capacity as director, to sign such Form S-3 and any and all
amendments and supplements, including post-effective amendments thereto, and to
file such Form S-3 and each such amendment and supplement, including
post-effective amendments, so signed, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, any and all applications or other documents in connection with the
listing of the Company's Common Stock on the NASDAQ National Market and any and
all documents required to be filed with any state securities regulatory board or
commission pertaining to the Form S-3, hereby granting unto said
attorney-in-fact and agent full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned hereunto sets his hand
this 9th day of
July , 1997 /s/ Charles B. Kaiser, Jr.
- --------- --------------------------
Charles B. Kaiser, Jr.
Director
<PAGE> 6
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a
director of N-Viro International Corporation (the "Company"), a Delaware
corporation that contemplates filing a Registration Statement on Form S-3 ("Form
S-3") with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933, as amended, for the purpose of registering under such
Act of up to 350,000 shares of the Company's Common Stock, $.01 par value,
hereby constitutes and appoints J. PATRICK NICHOLSON and JAMES K. McHUGH his
true and lawful attorneys-in-fact and agents, and each of them (with full power
of substitution and resubstitution), with full power to act without the other,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, in the capacity as director, to sign such Form S-3 and any and all
amendments and supplements, including post-effective amendments thereto, and to
file such Form S-3 and each such amendment and supplement, including
post-effective amendments, so signed, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, any and all applications or other documents in connection with the
listing of the Company's Common Stock on the NASDAQ National Market and any and
all documents required to be filed with any state securities regulatory board or
commission pertaining to the Form S-3, hereby granting unto said
attorney-in-fact and agent full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned hereunto sets his hand
this 9th day of
July , 1997. /s/ Frederick H. Kurtz
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Frederick H. Kurtz
Director
<PAGE> 7
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a
director of N-Viro International Corporation (the "Company"), a Delaware
corporation that contemplates filing a Registration Statement on Form S-3 ("Form
S-3") with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933, as amended, for the purpose of registering under such
Act of up to 350,000 shares of the Company's Common Stock, $.01 par value,
hereby constitutes and appoints J. PATRICK NICHOLSON and JAMES K. McHUGH his
true and lawful attorneys-in-fact and agents, and each of them (with full power
of substitution and resubstitution), with full power to act without the other,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, in the capacity as director, to sign such Form S-3 and any and all
amendments and supplements, including post-effective amendments thereto, and to
file such Form S-3 and each such amendment and supplement, including
post-effective amendments, so signed, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, any and all applications or other documents in connection with the
listing of the Company's Common Stock on the NASDAQ National Market and any and
all documents required to be filed with any state securities regulatory board or
commission pertaining to the Form S-3, hereby granting unto said
attorney-in-fact and agent full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned hereunto sets his hand
this 9th day of
July , 1997. /s/ Terry J. Logan
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Terry J. Logan
Director
