<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 16, 1998
N-VIRO INTERNATIONAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-21802 34-1741211
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
3450 W. CENTRAL AVENUE, SUITE 328
TOLEDO, OHIO 43606
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (419) 535-6374
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 5. OTHER ITEMS
On September 16, 1998, N-Viro International Corporation ("the Company")
executed two (2) employment agreements with Company insiders, incorporated by
reference herein as Exhibits 1 and 2.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
N-VIRO INTERNATIONAL CORPORATION
Dated: January 15, 1999 By: /s/ James K. Mchugh
----------------------------- -------------------
James K. McHugh
Chief Financial Officer
<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Employment Agreement") is made and
entered into as of the 16th day of September, 1998 (the "Execution Date"), by
and between N-Viro International Corporation, a Delaware corporation (the
"Company"), and J. Patrick Nicholson, an individual ("Employee").
W I T N E S S E T H:
--------------------
WHEREAS, the Company owns and licenses the N-Viro Process, a
patented technology to treat and recycle wastewater sludge and other bio-organic
wastes, utilizing certain alkaline and mineral by-products produced by cement,
lime, electric utilities and other industries (such activities, together with
all other activities of the Company and its subsidiaries, as conducted at or
prior to the termination of this Employment Agreement, and any future activities
reasonably related thereto which are contemplated by the Company and/or its
subsidiaries at the termination of this Employment Agreement identified in
writing by the Company to Employee at the date of such termination, are
hereinafter collectively referred to as the "Business Activities");
WHEREAS, the Company desires to employ Employee upon the terms and
subject to the terms and conditions set forth in this Employment Agreement; and,
WHEREAS, Employee desires to be employed by the Company upon the
terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
promises, covenants and conditions herein contained and for other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound hereby agree as
follows:
Section 1. EMPLOYMENT. The Company hereby employs Employee, and
Employee hereby accepts employment with the Company, all upon the terms and
subject to the conditions set forth in this Employment Agreement.
Section 2. CAPACITY AND DUTIES. Employee is and shall be employed
in the capacity of Chairman of the Board, Chief Executive Officer and President
of the Company and its
<PAGE> 2
subsidiaries and shall have such other duties, responsibilities and authorities
as are assigned to him by the Board of Directors of the Company (the "Board") so
long as such additional duties, responsibilities and authorities are consistent
with Employee's position and level of authority as Chairman of the Board, Chief
Executive Officer and President of the Company; PROVIDED, HOWEVER, Employee
shall resign as President upon the appointment by the Board of Terry L. Logan as
President and Chief Operating Officer of the Company. Employee shall report
directly to the Board. Subject to the control and general directions of the
Board and the general policies and guidelines established by the Board and
except as otherwise herein provided, Employee shall devote all of his business
time, best efforts and attention to promote and advance the business of the
Company and its subsidiaries and to perform diligently and faithfully all the
duties, responsibilities and obligations of Employee to be performed by him
under this Employment Agreement. So long as Employee is employed by the Company,
the Company shall use its best efforts to cause the Nominating Committee of the
Board or the Board, if there is no Nominating Committee of the Board, to
nominate Employee for reelection as a director of the Company for a three year
term upon expiration of his current term as a director of the Company and, if so
nominated, Employee shall consent to serve as a director if elected. During the
Employment Period (as hereinafter defined), Employee shall not be employed in
any other business activity, whether or not such activity is pursued for gain,
profit or other pecuniary advantage; provided, HOWEVER, that this restriction
shall not be construed as preventing Employee from (i) investing his personal
assets in a business which does not compete with the Company or its subsidiaries
or with any other company or entity affiliated with the Company, where the form
or manner of such investment will not require services of any significance on
the part of Employee in the operation of the affairs of the business in which
such investment is made and in which his participation is solely that of a
passive investor or advisor or (ii) being engaged in those activities listed on
Exhibit 2 attached hereto; PROVIDED FURTHER, HOWEVER, that the activities
described in clause (ii) of this sentence shall not unreasonably interfere with
Employee's performance of his obligations under this Employment Agreement.
Section 3. TERM OF EMPLOYMENT. The term of employment of Employee
by the Company pursuant to this Employment Agreement shall be for the period
(the "Employment Period") commencing on September 16, 1998 (the "Commencement
Date") and ending on September 15, 2003 or such earlier date that Employee's
employment is terminated in accordance with the provisions of this Employment
Agreement (the "Termination Date").
Section 4. PLACE OF EMPLOYMENT. Employee's principal place of work
shall be located at the principal offices of the Company in the Toledo, Ohio
area. The Company and Employee
2
<PAGE> 3
acknowledge that Employee's principal place of work is consistent with the
extensive national and international business travel which may be required of
Employee in connection with the performance of his duties, responsibilities and
authorities under this Agreement.
Section 5. COMPENSATION. During the Employment Period, subject to
all the terms and conditions of this Employment Agreement and, except as
otherwise provided in Section 10, as compensation for all services to be
rendered by Employee under this Employment Agreement, the Company shall pay to
or provide Employee with the following:
5.01 BASE SALARY. Subject to increase as provided in this
Section 5.01, the Company shall pay to Employee a base annual salary
(the "Base Salary") at the rate of at least One Hundred Forty-Four
Thousand Dollars ($144,000) per year from the Commencement Date through
December 31, 1999, payable at such intervals (at least monthly) as
salaries are paid generally to other executive officers of the Company.
On or before January 1, 2000 and on or before each January 1 thereafter
during the Employment Term, Employee's Base Salary shall be reviewed by
the Board and increased to an amount determined in good faith by the
Board based upon a complete review of Employee's performance under this
Employment Agreement during the prior year and the growth and
profitability of the Company and Employee's contributions thereto,
which review shall be communicated in writing to Employee.
5.02 CASH BONUS. At the sole and exclusive discretion of the
Board, the Company shall pay to Employee an annual cash bonus (the
"Cash Bonus") in an amount determined in good faith by the Board based
upon a complete review of Employee's performance under this Employment
Agreement during the prior year and the growth and profitability of the
Company and Employee's contribution thereto. Any Cash Bonus payable to
Employee pursuant to this Section 5.02 shall be payable, if at all, on
or before March 15, of each year during the Employment Period based
upon Employees performance for the prior calendar year.
5.03 OTHER BENEFITS. The Company shall provide Employee with
the other benefits specified on Exhibit 5.03 attached hereto.
5.04 STOCK OPTION. The Company shall grant to Employee the
sole and exclusive right and option to purchase Fifty Thousand (50,000)
shares of the Common Stock, par value $.01 per share, of the Company
(the "Company Common Stock") at a price per share equal to the closing
sale price of the Company Common Stock on August 14, 1998 as reported
on the NASDAQ Small Caps Market and upon the terms and subject to the
conditions set forth in the form of Stock Option Agreement attached
hereto as Exhibit 5.04 (the "Stock Option Agreement"), which the
Company and Employee shall each execute and deliver to the other as of
the Execution Date.
3
<PAGE> 4
Section 6. ADHERENCE TO STANDARDS. Employee shall comply with the
written policies, standards, rules and regulations of the Company from time to
time established for all executive officers of the Company.
Section 7. REVIEW OF PERFORMANCE. The Board shall periodically
review and evaluate the performance of Employee under this Employment Agreement
with Employee.
Section 8. EXPENSES. The Company shall reimburse Employee for all
reasonable, ordinary and necessary expenses (including, but not limited to,
automobile and other business travel and customer entertainment expenses)
incurred by him in connection with his employment hereunder; PROVIDED, HOWEVER,
Employee shall render to the Company a complete and accurate accounting of all
such expenses in accordance with the substantiation requirements of Section 274
of the Internal Revenue Code of 1986, as amended (the "Code"), as a condition
precedent to such reimbursement.
Section 9. TERMINATION WITH CAUSE BY THE COMPANY. This Employment
Agreement may be terminated with Cause (as hereinafter defined) by the Company
provided that the Company shall (i) give Employee the Notice of Termination (as
hereinafter defined) and (ii) pay Employee his annual base salary through the
Termination Date (as hereinafter defined) at the rate in effect at the time the
Notice of Termination is given plus any bonus or incentive compensation which
has been earned or has become payable pursuant to the terms of any compensation
or benefit plan as of the Termination Date, but which has not yet been paid.
Section 10. TERMINATION WITHOUT CAUSE BY THE COMPANY OR FOR GOOD
REASON BY EMPLOYEE. This Employment Agreement may be terminated by (i) the
Company by reason of the death or Disability (as hereinafter defined) of
Employee, (ii) the Company without Cause by giving Employee written notice of
such termination, (iii) Employee for Good Reason (as hereinafter defined) and
(iv) Employee not for Good Reason after giving Employer sixty (60) days prior
written notice before such termination. In the event of termination of this
Employment Agreement under this Section 10, the Company shall pay Employee his
Base Salary through the Termination Date at the rate in effect at the time of
the Termination Date plus any bonus or incentive compensation which has been
earned or has become payable pursuant to the terms of any compensation or
benefit plan as of the Termination Date, but which has not yet been paid. In the
event of termination of this Employment Agreement under this Section 10 by the
Company (other than by reason of the death or Disability of Employee) or by
Employee for Good Reason and such termination is on or prior to September 15,
2003, the Company shall continue to pay to Employee, in addition to the other
benefits specifically provided for in this Section, his Base Salary through
September 15, 2003, as if this Employment Agreement had not been
4
<PAGE> 5
terminated. In the event of termination of this Employment Agreement under this
Section 10 by the Company by reason of the death or Disability of Employee,
without Cause or after September 15, 2003 by Employee for Good Reason or after
September 15, 2003, the Company shall provide medical and hospitalization
coverage comparable to that provided by the Company during Employee's lifetime
to Employee and his spouse for their respective lives and the Company shall pay
the Deferred Compensation to Employee during his lifetime beginning on the first
day of the month immediately succeeding the Termination Date and on the first
day of each successive month thereafter until the death of Employee; PROVIDED,
HOWEVER, if this Employment Agreement is terminated under this Section 10 by the
Company without Cause or by Employee for Good Reason and the Base Salary is paid
by the Company to Employee through September 15, 2003, then the Deferred
Compensation shall begin on October 1, 2003. This Section 10 shall not be
interpreted so as to limit any benefits to which Employee, as a terminated
employee of the Company, or his family may be entitled under the Company's life
insurance, medical, hospitalization or disability plans following his
Termination Date or under applicable law.
Section 11. DEFINITIONS. In addition to the words and terms
elsewhere defined in this Employment Agreement, certain capitalized words and
terms used in this Employment Agreement shall have the meanings given to them by
the definitions and descriptions in this Section 12 unless the context or use
indicates another or different meaning or intent, and such definition shall be
equally applicable to both the singular and plural forms of any of the
capitalized words and terms herein defined. The following words and terms are
defined terms under this Employment Agreement:
11.01 "Deferred Compensation" shall mean a monthly sum
determined by taking Fifty Dollars ($50.00) and multiplying such sum by
the number of full calendar months that the Employee has been employed
by the Company pursuant to this Employment Agreement or otherwise;
PROVIDED, HOWEVER, that the Deferred Compensation should not exceed Six
Thousand Dollars ($6,000) per month; PROVIDED FURTHER, HOWEVER, that if
the Employment Agreement is terminated by the Company pursuant to
Section 10 without Cause or by Employee for Good Reason, then for
purposes of computing the Deferred Compensation, the Employment Period
shall be deemed to have expired on September 15, 2003.
11.02 "Disability" shall mean a physical or mental illness
which, in the judgment of the Company after consultation with the
licensed physician attending Employee, impairs Employee's ability to
substantially perform his duties under this Employment Agreement as an
employee and as a result of which he shall have been absent from his
duties with the Company on a full-time basis for three (3) consecutive
months.
5
<PAGE> 6
11.03 A termination with "Cause" shall mean a termination of
this Employment Agreement (i) by reason of a good faith determination
by the Board that Employee (A) failed to substantially perform his
duties with the Company (other than a failure resulting from his
incapacity due to physical or mental illness) after a written demand
for substantial performance has been delivered to him by the Board,
which demand specifically identifies the manner in which the Board
believes he has not substantially performed his duties and Employee has
failed to substantially perform as requested within a reasonable time,
(B) has engaged in conduct the consequences of which are materially
adverse to the Company, monetarily or otherwise, (C) is found guilty of
fraud, dishonesty or other acts of gross misconduct or misfeasance in
the performance of his duties under this Employment Agreement, by a
court of competent jurisdiction whose decision is final and
non-appealable (D) is found to be an alcoholic or under the influence
of drugs or other similar substance while performing his duties under
this Employment Agreement or (E) is convicted of a felony or (ii)
because the Company makes an assignment for the benefit of creditors,
files a voluntary petition in bankruptcy, is involuntarily adjudicated
to bankrupt, is liquidated or dissolved or sells substantially all of
its assets. No act, or failure to act, on Employee's part shall be
grounds for termination with Cause unless he has acted or failed to act
with an absence of good faith or without a reasonable belief that his
action or failure to act was in or at least not opposed to the best
interests of the Company. Notwithstanding the foregoing, Employee shall
not be deemed to have been terminated with Cause unless there shall
have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership
of the Board (exclusive of Employee) at a meeting of the Board called
and held for the purpose of terminating Employee (after reasonable
notice to Employee and opportunity for him, together with his counsel,
to be heard before the Board), finding that in the good faith opinion
of the Board, Employee failed to perform his duties or engaged in
conduct in the manner or of the type set forth above in the first
sentence of this Section 11.03 and specifying the particulars thereof
in detail.
11.04 "Good Reason" shall mean the occurrence of any of the
following events without Employee's prior express written consent: (i)
except as otherwise contemplated in this Employment Agreement, any
material change in Employee's status, title, authorities or
responsibilities (including reporting responsibilities) under this
Employment Agreement which represents a demotion from such status,
title, position or responsibilities (including reporting
responsibilities); the assignment to him of any duties or work
responsibilities which are materially inconsistent with his status,
title, position or work responsibilities set forth in this Employment
Agreement or which are materially inconsistent with the status, title,
position or work responsibilities of a Chairman of the Board, Chief
Executive Officer or President of a publicly traded corporation; or any
removal of Employee from, or failure to appoint, elect, reappoint or
reelect Employee to, any of such positions, except in connection with
the termination of his employment with Cause, or as a result of his
death or Disability; PROVIDED, HOWEVER, that no change in title,
authorities or responsibilities customarily attributable solely to the
Company ceasing to be a publicly traded corporation shall constitute
Good Reason hereunder; (ii) the relocation of the principal office of
the Company or the reassignment of Employee to a location more
6
<PAGE> 7
than thirty (30) miles from Toledo, Ohio; (iii) the failure by the
Company to continue in effect any incentive, bonus or other
compensation plan in which Employee participates, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has
been made with respect to the failure to continue such plan, or the
failure by the Company to continue Employee's participation therein, or
any action by the Company which would directly or indirectly materially
reduce his participation therein or reward opportunities thereunder;
PROVIDED, HOWEVER, that Employee continues to meet all eligibility
requirements thereof; (iv) the failure by the Company to continue in
effect any employee benefit plan (including any medical,
hospitalization, life insurance or disability benefit plan in which
Employee participates), or any material fringe benefit or prerequisite
enjoyed by him unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to the
failure to continue such plan, or the failure by the Company to
continue Employee's participation therein, or any action by the Company
which would indirectly or indirectly materially reduce his
participation therein or reward opportunities thereunder, or the
failure by the Company to provide him with the benefits to which he is
entitled under this Employment Agreement; PROVIDED, HOWEVER, that
Employee continues to meet all eligibility requirements thereof; (v)
any other material breach by the Company of any provision of this
Employment Agreement; (vi) the failure of the Company to obtain a
satisfactory agreement from any successor or assign of the Company to
assume and agree to perform this Employment Agreement, as contemplated
in Section 22; (vii) any purported termination of Employee's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of this Employment Agreement; and for purposes of this
Employment Agreement, no such purported termination shall be effective;
or (viii) any Change of Control (as hereinafter defined) of the
Company.
11.05 CHANGE OF CONTROL. "Change of Control" shall be deemed
to have occurred when: (i) securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding
voting securities are acquired pursuant to a tender offer or an
exchange offer by a person or entity which is not a wholly-owned
subsidiary of the Company or any of its affiliates; (ii) a merger or
consolidation is consummated in which the Company is a constituent
corporation and which results in less than 50% of the outstanding
voting securities of the surviving or resulting entity being owned by
the then existing stockholders of the Company; (iii) a sale is
consummated by the Company of substantially all of the Company's assets
to a person or entity which is not a wholly-owned subsidiary of the
Company or any of its affiliates; or (iv) during any period of two
consecutive years, individuals who, at the beginning of such period,
constituted the Board cease, for any reason, to constitute at least a
majority thereof, unless the election or nomination for election for
each new director was approved by the vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of the period.
11.06 NOTICE OF TERMINATION. "Notice of Termination" shall
mean a written notice which shall indicate the specific termination
provision in this Employment Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the provision so
indicated; PROVIDED, HOWEVER, no such purported
7
<PAGE> 8
termination shall be effective without such Notice of Termination;
PROVIDED FURTHER, HOWEVER, any purported termination by the Company or
by Employee shall be communicated by a Notice of Termination to the
other party hereto in accordance with Section 13 of this Employment
Agreement.
Section 12. FEES AND EXPENSES. The Company shall pay all legal
fees and related expenses (including the costs of experts, evidence and counsel)
incurred by Employee as a result of a contest or dispute over Employee's
termination of employment if such contest or dispute is resolved in Employee's
favor.
Section 13. NOTICES. For the purposes of this Employment
Agreement, notices and all other communications provided for in the Employment
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or sent by certified mail, return receipt requested,
postage prepaid, or by expedited (overnight) courier with established national
reputation, shipping prepaid or billed to sender, in either case addressed to
the respective addresses last given by each party to the other (provided that
all notices to the Company shall be directed to the attention of the Board with
a copy to the Secretary of the Company) or to such other address as either party
may have furnished to the other in writing in accordance herewith. All notices
and communication shall be deemed to have been received on the date of delivery
thereof, on the third business day after the mailing thereof, or on the second
day after deposit thereof with an expedited courier service, except that notice
of change of address shall be effective only upon receipt.
Section 14. LIFE INSURANCE. The Company may, at any time after the
execution of this Employment Agreement, apply for and procure as owner and for
its own benefit, life insurance on Employee, in such amounts and in such form or
forms as the Company may determine. Employee shall, at the request of the
Company, submit to such medical examinations, supply such information, and
execute such documents as may be required by the insurance company or companies
to whom the Company has applied for such insurance. Employee hereby represents
that to his knowledge he is in excellent physical and mental condition and is
not under the influence of alcohol, drugs or similar substance.
Section 15. PROPRIETARY INFORMATION AND INVENTIONS. Employee
understands and acknowledges that:
15.01 TRUST. Employee's employment creates a relationship of
confidence and trust between Employee and the Company with respect to
certain information applicable to the business of the Company and its
subsidiaries and affiliates (collectively, the "Group") or applicable
to the business of any licensee, vendor or customer of any of the
Group, which may be made known to Employee by the Group
8
<PAGE> 9
or by any licensee, vendor or customer of any of the Group or learned
by Employee during the Employment Period.
15.02 PROPRIETARY INFORMATION. The Group possesses and will
continue to possess information that has been created, discovered, or
developed by, or otherwise become known to, the Group (including,
without limitation, information created, discovered, developed or made
known to by Employee during the period of or arising out of his
employment by the Company) or in which property rights have been or may
be assigned or otherwise conveyed to the Group, which information has
commercial value in the business in which the Group is engaged and is
treated by the Group as confidential. Except as otherwise herein
provided, all such information is hereinafter called "Proprietary
Information", which term, as used herein, shall also include, but shall
not be limited to, data, functional specifications, computer programs,
know-how, research, patents, inventions, discoveries, processes,
procedures, formulae, technology, improvements, developments, designs,
marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices, costs,
and customer, supplier and potential acquisition candidates lists.
Notwithstanding anything contained in this Employment Agreement to the
contrary, the term "Proprietary Information" shall not include (i)
information which is in the public domain, (ii) information which is
published or otherwise becomes part of the public domain through no
fault of Employee, (iii) information which Employee can demonstrate was
in Employee's possession at the time of disclosure and was not acquired
by Employee directly or indirectly from any of the Group on a
confidential basis, (iv) information which becomes available to
Employee on a non-confidential basis from a source other than any of
the Group and which source, to the best of Employee's knowledge, did
not acquire the information on a confidential basis or (v) information
required to be disclosed by any federal or state law, rule or
regulation or by any applicable judgment, order or decree or any court
or governmental body or agency having jurisdiction in the premises.
All Proprietary Information shall be the sole property of the Group and their
respective assigns. Employee assigns to the Company any rights Employee may have
or acquire in such Proprietary Information. At all times, both during Employee's
employment by the Company and after its termination, Employee shall keep in
strictest confidence and trust all Proprietary Information, and Employee shall
not use or disclose any Proprietary Information without the written consent of
the Group, except as may be necessary in the ordinary course of performing
Employee's duties as an employee of the Company.
Section 16. INVENTIONS. Any and all inventions, conceptions,
processes, discoveries, improvements, patent rights, letter patents, programs,
copyrights, trademarks, trade names and applications therefor, in the United
States and other countries, whether patentable or not, and any and all rights
and interest in, to and under the same, that are conceived, made, acquired, or
possessed
9
<PAGE> 10
by Employee, alone or with other employees, during the term of this Employment
Agreement, or within two (2) years thereafter shall become the exclusive
property of the Company and shall at all times and for all purposes be regarded
as acquired and held by Employee in a fiduciary capacity for the sole benefit of
the Company, and the Employee hereby assigns and agrees to assign the same to
the Company without further compensation. Employee agrees that, upon request, he
will promptly make all disclosures, execute all applications, assignments or
other instruments and perform all acts whatsoever necessary or desired by the
Company to vest and confirm in it, its successors, assigns and nominees, fully
and completely, all rights and interests created or contemplated by this
Section.
Section 17. SURRENDER OF DOCUMENTS. Employee shall, at the request
of the Company, promptly surrender to the Company or its nominee any Proprietary
Information or document, memorandum, record, letter or other paper in his
possession or under his control relating to the operation, business or affairs
of the Group.
Section 18. PRIOR EMPLOYMENT AGREEMENTS. Employee represents and
warrants that Employee's performance of all the terms of this Employment
Agreement and as an employee of the Company does not, and will not, breach any
agreement to keep in confidence proprietary information acquired by Employee in
confidence or in trust prior to Employee's employment by the Company. Employee
has not entered into, and shall not enter into, any agreement, either written or
oral, which is in conflict with this Employment Agreement or which would be
violated by Employee entering into, or carrying out his obligations under, this
Employment Agreement.
Section 19. RESTRICTIVE COVENANT. Employee acknowledges and
recognizes Employee's possession of Proprietary Information and the highly
competitive nature of the business of the Group and, accordingly, agrees that in
consideration of the premises contained herein Employee will not, during the
period of Employee's employment by the Company and for a period of two (2) years
following the Termination Date, (i) directly or indirectly engage in any
Business Activities in the world, whether such engagement shall be as an
employer, officer, director, owner, employee, consultant, stockholder, partner
or other participant in any Business Activities, (ii) assist others in engaging
in any Business Activities in the manner described in the foregoing clause (i),
or (iii) induce employees of the Company to terminate their employment with the
Company or engage in any Business Activities in the world; PROVIDED, HOWEVER,
that the ownership of the outstanding capital stock of a corporation whose
shares are traded on a national securities exchange or on the over-the-counter
market shall not be deemed engaging in any Business Activities.
10
<PAGE> 11
Section 20. REMEDIES. Employee acknowledges and agrees that the
Company's remedy at law for a breach or a threatened breach of the provisions
herein would be inadequate, and in recognition of this fact, in the event of a
breach or threatened breach by Employee of any of the provisions of this
Employment Agreement, it is agreed that the Company shall be entitled to,
equitable relief in the form of specific performance, a temporary restraining
order, a temporary or permanent injunction or any other equitable remedy which
may then be available, without posting bond or other security. Employee
acknowledges that the granting of a temporary injunction, a temporary
restraining order or other permanent injunction merely prohibiting Employee from
engaging in any Business Activities would not be an adequate remedy upon breach
or threatened breach of this Employment Agreement, and consequently agrees upon
any such breach or threatened breach to the granting of injunctive relief
prohibiting Employee from engaging in any activities prohibited by this
Employment Agreement. No remedy herein conferred is intended to be exclusive of
any other remedy, and each and every such remedy shall be cumulative and shall
be in addition to any other remedy given hereunder now or hereinafter existing
at law or in equity or by statute or otherwise.
Section 21. SUCCESSIVE EMPLOYMENT NOTICE. Within five (5) business
days after the Termination Date, Employee shall provide notice to the Company of
Employee's next intended employment. If such employment is not known by Employee
at such date, Employee shall notify the Company immediately upon determination
of such information. Employee shall continue to provide the Company with notice
of Employee's place and nature of employment and any change in place or nature
of employment during the period ending two (2) years after the Termination Date.
Failure of Employee to provide the Company with such information in an accurate
and timely fashion shall be deemed to be a breach of this Employment Agreement
and shall entitle the Company to all remedies provided for in this Employment
Agreement as a result of such breach.
Section 22. SUCCESSORS. This Employment Agreement shall be binding
on the Company and any successor to any of its businesses or assets. Without
limiting the effect of the prior sentence, the Company shall use its best
efforts to require any successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Employment Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment had
taken place. As used in this Employment Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor or assign to its business
and/or assets as aforesaid which assumes and agrees to perform this Employment
Agreement or which is
11
<PAGE> 12
otherwise obligated under this Agreement by the first sentence of this Section
22, by operation of law or otherwise.
Section 23. BINDING EFFECT. This Employment Agreement shall inure
to the benefit of and be enforceable by Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Employment Agreement to Employee's estate.
Section 24. MODIFICATION AND WAIVER. No provision of this
Employment Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Employee and
such officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Employment Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
Section 25. HEADINGS. Headings used in this Agreement are for
convenience only and shall not be used to interpret or construe its provisions.
Section 26. WAIVER OF BREACH. The waiver of either the Company or
Employee of a breach of any provision of this Employment Agreement shall not
operate or be construed as a waiver of any subsequent breach by either the
Company or Employee.
Section 27. AMENDMENTS. No amendments or variations of the terms
and conditions of this Employment Agreement shall be valid unless the same is in
writing and signed by all of the parties hereto.
Section 28. SEVERABILITY. The invalidity or unenforceability of
any provision of this Employment Agreement, whether in whole or in part, shall
not in any way affect the validity and/or enforceability of any other provision
herein contained. Any invalid or unenforceable provision shall be deemed
severable to the extent of any such invalidity or unenforceability. It is
expressly understood and agreed that while the Company and Employee consider the
restrictions contained in this Employment Agreement reasonable for the purpose
of preserving for the Company the good will, other proprietary rights and
intangible business value of the Company if a final judicial determination is
made by a court having jurisdiction that the time or territory or any other
restriction contained in this Employment Agreement is an unreasonable or
otherwise unenforceable restriction against Employee, the provisions
12
<PAGE> 13
of such clause shall not be rendered void but shall be deemed amended to apply
as to maximum time and territory and to such other extent as such court may
judicially determine or indicate to be reasonable.
Section 29. GOVERNING LAW. This Employment Agreement shall be
construed and enforced pursuant to the laws of the State of Ohio.
Section 30. ARBITRATION. Any controversy or claim arising out of
or relating to this Employment Agreement or any transactions provided for
herein, or the breach thereof, other than a claim for injunctive relief shall be
settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association (the "Rules") in effect at the time demand
for arbitration is made by any party. The evidentiary and procedural rules in
such proceedings shall be kept to the minimum level of formality that is
consistent with the Rules. One arbitrator shall be named by the Company, a
second shall be named by Employee and the third arbitrator shall be named by the
two arbitrators so chosen. In the event that the third arbitrator is not agreed
upon, he or she shall be named by the American Arbitration Association.
Arbitration shall occur in Toledo, Ohio or such other location agreed to by the
Company and Employee. The award made by all or a majority of the panel of
arbitrators shall be final and binding, and judgment may be entered in any court
of law having competent jurisdiction. The award is subject to confirmation,
modification, correction, or vacation only as explicitly provided in Title 9 of
the United States Code. The prevailing party shall be entitled to an award of
pre- and post-award interest as well as reasonable attorneys' fees incurred in
connection with the arbitration and any judicial proceedings related thereto.
Section 31. COUNTERPARTS. This Employment Agreement may be
executed in more than one (1) counterpart and each counterpart shall be
considered an original.
Section 32. EXHIBITS. The Exhibits attached hereto are
incorporated herein by reference and are an integral part of this Employment
Agreement.
Section 33. SECTIONS. Unless the context requires a different
meaning, all references to "Sections" in this Agreement shall mean the Section
of this Agreement.
Section 34. PUBLICITY. Press releases and other publicity
materials relating to the transactions contemplated by this Employment Agreement
shall be released by the parties hereto only after review and with the consent
of the other party; PROVIDED, HOWEVER, that if legal counsel for the Company
advises the Company that disclosure of this Employment Agreement is required
under applicable federal or state securities laws, then the Company shall be
permitted to make such disclosure in the form recommended by such legal counsel
without the prior consent of Employee.
13
<PAGE> 14
Section 35. CONSULTING AGREEMENT. If Employee is still acting as
an executive officer of the Company at September 15, 2003, then Employee and the
Company shall enter into the Consulting Agreement in the form of Exhibit 35
attached hereto.
IN WITNESS WHEREOF, this Employment Agreement has been duly
executed by the Company and Employee in four (4) counterparts as of the date
first above written.
N-VIRO INTERNATIONAL CORPORATION
By /s/ James K. McHugh
-------------------------------
James K. McHugh CFO
/s/ J. Patrick Nicholson
-------------------------------
J. Patrick Nicholson
/s/ James D. O'Neil
-------------------------------
James D. O'Neil Witness
14
<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Employment Agreement") is made and
entered into as of the 16th day of September, 1998 (the "Execution Date"), by
and between N-Viro International Corporation, a Delaware corporation (the
"Company"), and Terry J. Logan, an individual ("Employee").
W I T N E S S E T H:
--------------------
WHEREAS, the Company own and licenses the N-Viro Process, a
patented technology to treat and recycle wastewater sludge and other bio-organic
wastes, utilizing certain alkaline and mineral by-products produced by cement,
lime, electric utilities and other industries (such activities, together with
all other activities of the Company and its subsidiaries, as conducted at or
prior to the termination of this Employment Agreement, and any future activities
reasonably related thereto which are contemplated by the Company and/or its
subsidiaries at the termination of this Employment Agreement identified in
writing by the Company to Employee at the date of such termination, are
hereinafter collectively referred to as the "Business Activities");
WHEREAS, the Company desires to employ Employee upon the terms and
subject to the terms and conditions set forth in this Employment Agreement; and,
WHEREAS, Employee desires to be employed by the Company upon the
terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
promises, covenants and conditions herein contained and for other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound hereby agree as
follows:
Section 1. EMPLOYMENT. The Company hereby employs Employee, and
Employee hereby accepts employment with the Company, all upon the terms and
subject to the conditions set forth in this Employment Agreement.
Section 2. CAPACITY AND DUTIES. Employee is and shall be employed
in the capacity of President and Chief Operating Officer of the Company and its
subsidiaries and shall have
<PAGE> 2
such other duties, responsibilities and authorities as are assigned to him by
the Board of Directors of the Company (the "Board") so long as such additional
duties, responsibilities and authorities are consistent with Employee's position
and level of authority as President and Chief Operating Officer of the Company.
Employee shall report directly to the Chairman of the Board and Chief Executive
Officer of the Company. Subject to the control and general directions of the
Chairman of the Board and Chief Executive Officer of the Company and the general
policies and guidelines established by the Board and except as otherwise herein
provided, Employee shall devote all of his business time, best efforts and
attention to promote and advance the business of the Company and its
subsidiaries and to perform diligently and faithfully all the duties,
responsibilities and obligations of Employee to be performed by him under this
Employment Agreement. Employee's duties shall include the on-going management
and oversight of the general business affairs and operations of the Company and
its subsidiaries and shall include, but not be limited to, matters relating to
research and development, technical direction, international sales, national
policy and governmental regulations and relations including those relating to
water and the environment. So long as Employee is employed by the Company, the
Company shall use its best efforts to cause the Nominating Committee of the
Board or the Board, if there is no Nominating Committee of the Board, to
nominate Employee for reelection as a director of the Company for a three year
term upon expiration of his current term as a director of the Company and, if so
nominated, Employee shall consent to serve as a director if elected. During the
Employment Period (as hereinafter defined), Employee shall not be employed in
any other business activity, whether or not such activity is pursued for gain,
profit or other pecuniary advantage; PROVIDED, HOWEVER, that this restriction
shall not be construed as preventing Employee from (i) investing his personal
assets in a business which does not compete with the Company or its subsidiaries
or with any other company or entity affiliated with the Company, where the form
or manner of such investment will not require services of any significance on
the part of Employee in the operation of the affairs of the business in which
such investment is made and in which his participation is solely that of a
passive investor or advisor or (ii) being engaged in those activities listed on
Exhibit 2 attached hereto; PROVIDED FURTHER, HOWEVER, that the activities
described in clause (ii) of this sentence shall not unreasonably interfere with
Employee's performance of his obligations under this Employment Agreement.
Section 3. TERM OF EMPLOYMENT. The term of employment of Employee
by the Company pursuant to this Employment Agreement shall be for the period
(the "Employment Period") commencing on July 1, 1999 (the "Commencement Date")
and ending on June 30, 2004 or such earlier
2
<PAGE> 3
date that Employee's employment is terminated in accordance with the provisions
of this Employment Agreement (the "Termination Date").
Section 4. PLACE OF EMPLOYMENT. Employee's principal place of work
shall be located at the principal offices of the Company in the Toledo, Ohio
area. The Company and Employee acknowledge that Employee's principal place of
work is consistent with the extensive national and international business travel
which may be required of Employee in connection with the performance of his
duties, responsibilities and authorities under this Agreement.
Section 5. COMPENSATION. During the Employment Period, subject to
all the terms and conditions of this Employment Agreement and, except as
otherwise provided in Section 10, as compensation for all services to be
rendered by Employee under this Employment Agreement, the Company shall pay to
or provide Employee with the following:
5.01 BASE SALARY. The Company shall pay to Employee a base
annual salary (the "Base Salary") at the rate of at least One Hundred
Forty-Four Thousand Dollars ($144,000) per year from the Commencement
Date through December 31, 2000, payable at such intervals (at least
monthly) as salaries are paid generally to other executive officers of
the Company. On or before January 1, 2001 and on or before each January
1 thereafter during the Employment Term, Employee's Base Salary shall
be reviewed by the Board and increased to an amount determined in good
faith by the Board based upon a complete review of Employee's
performance under this Employment Agreement during the prior year and
the growth and profitability of the Company and Employee's
contributions thereto, which review shall be communicated in writing to
Employee.
5.02 CASH BONUS. At the sole and exclusive discretion of the
Board, the Company shall pay to Employee an annual cash bonus (the
"Cash Bonus") in an amount determined in good faith by the Board based
upon a complete review of Employee's performance under this Employment
Agreement during the prior year and the growth and profitability of the
Company and Employee's contribution thereto. Any Cash Bonus payable to
Employee pursuant to this Section 5.02 shall be payable, if at all, on
or before March 15, of each year during the Employment Period based
upon Employees performance for the prior calendar year.
5.03 OTHER BENEFITS. The Company shall provide Employee with
the other benefits specified on Exhibit 5.03 attached hereto.
5.04 STOCK OPTION. The Company shall grant to Employee the
sole and exclusive right and option to purchase Fifty Thousand (50,000)
shares of the Common Stock, par value $.01 per share, of the Company
(the "Company Common Stock") at a price per share equal to the closing
sale price of the Company Common Stock on August 14, 1998 as reported
on the NASDAQ Small Caps Market and upon the terms and subject to the
conditions set forth in the form of Stock Option
3
<PAGE> 4
Agreement attached hereto as Exhibit 5.04 (the "Stock Option
Agreement"), which the Company and Employee shall each execute and
deliver to the other as of the Execution Date.
Section 6. ADHERENCE TO STANDARDS. Employee shall comply with the
written policies, standards, rules and regulations of the Company from time to
time established for all executive officers of the Company.
Section 7. REVIEW OF PERFORMANCE. The Board and/or the Chief
Executive Officer of the Company shall periodically review and evaluate the
performance of Employee under this Employment Agreement with Employee.
Section 8. EXPENSES. The Company shall reimburse Employee for all
reasonable, ordinary and necessary expenses (including, but not limited to,
automobile and other business travel and customer entertainment expenses)
incurred by him in connection with his employment hereunder; PROVIDED, HOWEVER,
Employee shall render to the Company a complete and accurate accounting of all
such expenses in accordance with the substantiation requirements of Section 274
of the Internal Revenue Code of 1986, as amended (the "Code"), as a condition
precedent to such reimbursement.
Section 9. TERMINATION WITH CAUSE BY THE COMPANY. This Employment
Agreement may be terminated with Cause (as hereinafter defined) by the Company
provided that the Company shall (i) give Employee the Notice of Termination (as
hereinafter defined) and (ii) pay Employee his annual base salary through the
Termination Date (as hereinafter defined) at the rate in effect at the time the
Notice of Termination is given plus any bonus or incentive compensation which
have been earned or have become payable pursuant to the terms of any
compensation or benefit plan as of the Termination Date, but which have not yet
been paid.
Section 10. TERMINATION WITHOUT CAUSE BY THE COMPANY OR FOR GOOD
REASON BY EMPLOYEE. This Employment Agreement may be terminated by (i) the
Company by reason of the death or Disability (as hereinafter defined) of
Employee, (ii) the Company by giving Employee written notice of such
termination, (iii) Employee for Good Reason (as hereinafter defined) and (iv)
Employee not for Good Reason after giving Employer sixty (60) days prior written
notice before such termination. In the event of termination of this Employment
Agreement under this Section 10, the Company shall pay Employee his Base Salary
through the Termination Date at the rate in effect at the time of the
Termination Date plus any bonus or incentive compensation which have been earned
or have become payable pursuant to the terms of any compensation or benefit plan
as of the Termination Date, but
4
<PAGE> 5
which have not yet been paid. In the event of termination of this Employment
Agreement under this Section 10 by the Company (other than by reason of the
death or Disability of Employee) or by Employee for Good Reason and such
termination is on or prior to June 30, 2004, the Company shall pay to Employee,
in addition to the other benefits specifically provided for in this Section, his
Base Salary for the one (1) year period beginning on the Termination Date;
PROVIDED, HOWEVER, that if such Termination under this Section 10 is by the
Company (other than by reason of the death or Disability of Employee) prior to
June 30, 2000, the Company shall pay to Employee his Base Salary for the two (2)
year period beginning on the Termination Date. In the event of termination of
this Employment Agreement under this Section 10 by the Company by reason of the
death or Disability of Employee or by the Company or Employee, in either case,
after May 31, 2004, the Company shall provide medical and hospitalization
coverage comparable to that provided by the Company during Employee's lifetime
to Employee and his spouse for their respective lives. In the event of
termination of this Employment Agreement under this Section 10 by the Company or
Employee, in either case after May 31, 2004, the Company shall pay the Deferred
Compensation to Employee during his lifetime beginning on the first day of the
month immediately succeeding the Termination Date and on the first day of each
successive month thereafter until the death of Employee. This Section 10 shall
not be interpreted so as to limit any benefits to which Employee, as a
terminated employee of the Company, or his family may be entitled under the
Company's life insurance, medical, hospitalization or disability plans following
his Termination Date or under applicable law.
Section 11. DEFINITIONS. In addition to the words and terms
elsewhere defined in this Employment Agreement, certain capitalized words and
terms used in this Employment Agreement shall have the meanings given to them by
the definitions and descriptions in this Section 11 unless the context or use
indicates another or different meaning or intent, and such definition shall be
equally applicable to both the singular and plural forms of any of the
capitalized words and terms herein defined. The following words and terms are
defined terms under this Employment Agreement:
11.01 "Deferred Compensation" shall mean a monthly sum
determined by taking Fifty Dollars ($50.00) and multiplying such sum by
the number of full calendar months during the Employment Period;
provided, however, that the Deferred Compensation should not exceed Six
Thousand Dollars ($6,000) per month.
11.02 "Disability" shall mean a physical or mental illness
which, in the judgment of the Company after consultation with the
licensed physician attending Employee, impairs Employee's ability to
substantially perform his duties under this Employment Agreement as an
employee and as a result of which he shall have been
5
<PAGE> 6
absent from his duties with the Company on a full-time basis for three
(3) consecutive months.
11.03 A termination with "Cause" shall mean a termination of
this Employment Agreement by reason of a good faith determination by
the Board that Employee (i) failed to substantially perform his duties
with the Company (other than a failure resulting from his incapacity
due to physical or mental illness) after a written demand for
substantial performance has been delivered to him by the Board, which
demand specifically identifies the manner in which the Board believes
he has not substantially performed his duties and Employee has failed
to substantially perform as requested within a reasonable time, (ii)
has engaged in conduct the consequences of which are materially adverse
to the Company, monetarily or otherwise, (iii) the Company makes an
assignment for the benefit of creditors, files a voluntary petition in
bankruptcy, is involuntarily adjudicated to bankrupt, is liquidated or
dissolved or sells substantially all of its assets, (iv) Employee is
found guilty of fraud, dishonesty or other acts of gross misconduct or
misfeasance in the performance of his duties under this Employment
Agreement by a court of competent jurisdiction whose decision is final
and non-appealable, (v) Employee is found to be an alcoholic or under
the influence of illegal drugs or other similar substance while
performing his duties under this Employment Agreement or (vi) Employee
is convicted of a felony. No act, or failure to act, on Employee's part
shall be grounds for termination with Cause unless he has acted or
failed to act with an absence of good faith or without a reasonable
belief that his action or failure to act was in or at least not opposed
to the best interests of the Company. Notwithstanding the foregoing,
Employee shall not be deemed to have been terminated with Cause unless
there shall have been delivered to him a copy of a resolution duly
adopted by the affirmative vote of not less than a majority of the
entire membership of the Board (exclusive of Employee) at a meeting of
the Board called and held for the purpose of terminating Employee
(after reasonable notice to Employee and opportunity for him, together
with his counsel, to be heard before the Board), finding that in the
good faith opinion of the Board, Employee failed to perform his duties
or engaged in conduct in the manner or of the type set forth above in
the first sentence of this Section 11.03 and specifying the particulars
thereof in detail.
11.04 "Good Reason" shall mean the occurrence of any of
the following events without Employee's prior express written consent:
(i) any material change in Employee's status, title, authorities or
responsibilities (including reporting responsibilities) under this
Employment Agreement which represents a demotion from such status,
title, position or responsibilities (including reporting
responsibilities); the assignment to him of any duties or work
responsibilities which are materially inconsistent with his status,
title, position or work responsibilities set forth in this Employment
Agreement or which are materially inconsistent with the status, title,
position or work responsibilities of a President or Chief Operating
Officer of a publicly traded corporation; or any removal of Employee
from, or failure to appoint, elect, reappoint or reelect Employee to,
any of such positions, except in connection with the termination of his
employment with Cause, or as a result of his death or Disability;
PROVIDED, HOWEVER, that no change in title, authorities or
responsibilities customarily
6
<PAGE> 7
attributable solely to the Company ceasing to be a publicly traded
corporation shall constitute Good Reason hereunder; (ii) the relocation
of the principal office of the Company or the reassignment of Employee
to a location more than thirty (30) miles from Toledo, Ohio; (iii) the
failure by the Company to continue in effect any incentive, bonus or
other compensation plan in which Employee participates, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to the failure to continue such plan,
or the failure by the Company to continue Employee's participation
therein, or any action by the Company which would directly or
indirectly materially reduce his participation therein or reward
opportunities thereunder; PROVIDED, HOWEVER, that Employee continues to
meet all eligibility requirements thereof; (iv) the failure by the
Company to continue in effect any employee benefit plan (including any
medical, hospitalization, life insurance or disability benefit plan in
which Employee participates), or any material fringe benefit or
prerequisite enjoyed by him unless an equitable arrangement (embodied
in an ongoing substitute or alternative plan) has been made with
respect to the failure to continue such plan, or the failure by the
Company to continue Employee's participation therein, or any action by
the Company which would directly or indirectly materially reduce his
participation therein or reward opportunities thereunder, or the
failure by the Company to provide him with the benefits to which he is
entitled under this Employment Agreement; PROVIDED, HOWEVER, that
Employee continues to meet all eligibility requirements thereof; (v)
any other material breach by the Company of any provision of this
Employment Agreement; (vi) the failure of the Company to obtain a
satisfactory agreement from any successor or assign of the Company to
assume and agree to perform this Employment Agreement, as contemplated
in Section 22 hereof; (vii) any purported termination of Employee's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of this Employment Agreement; and for
purposes of this Employment Agreement, no such purported termination
shall be effective; or (viii) any Change of Control (as hereinafter
defined) of the Company.
11.05 CHANGE OF CONTROL. "Change of Control" shall be deemed
to have occurred when: (i) securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding
voting securities are acquired pursuant to a tender offer or an
exchange offer by a person or entity which is not a wholly-owned
subsidiary of the Company or any of its affiliates; (ii) a merger or
consolidation is consummated in which the Company is a constituent
corporation and which results in less than 50% of the outstanding
voting securities of the surviving or resulting entity being owned by
the then existing stockholders of the Company; (iii) a sale is
consummated by the Company of substantially all of the Company's assets
to a person or entity which is not a wholly-owned subsidiary of the
Company or any of its affiliates; or (iv) during any period of two
consecutive years, individuals who, at the beginning of such period,
constituted the Board cease, for any reason, to constitute at least a
majority thereof, unless the election or nomination for election for
each new director was approved by the vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of the period.
7
<PAGE> 8
11.06 NOTICE OF TERMINATION. "Notice of Termination" shall
mean a written notice which shall indicate the specific termination
provision in this Employment Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the provision so
indicated; PROVIDED, HOWEVER, no such purported termination shall be
effective without such Notice of Termination; PROVIDED FURTHER,
HOWEVER, any purported termination by the Company or by Employee shall
be communicated by a Notice of Termination to the other party hereto in
accordance with Section 4 of this Employment Agreement.
Section 12. FEES AND EXPENSES. The Company shall pay all legal
fees and related expenses (including the costs of experts, evidence and counsel)
incurred by Employee as a result of a contest or dispute over Employee's
termination of employment if such contest or dispute is resolved in Employee's
favor.
Section 13. NOTICES. For the purposes of this Employment
Agreement, notices and all other communications provided for in the Employment
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or sent by certified mail, return receipt requested,
postage prepaid, or by expedited (overnight) courier with established national
reputation, shipping prepaid or billed to sender, in either case addressed to
the respective addresses last given by each party to the other (provided that
all notices to the Company shall be directed to the attention of the Board with
a copy to the Secretary of the Company) or to such other address as either party
may have furnished to the other in writing in accordance herewith. All notices
and communication shall be deemed to have been received on the date of delivery
thereof, on the third business day after the mailing thereof, or on the second
day after deposit thereof with an expedited courier service, except that notice
of change of address shall be effective only upon receipt.
Section 14. LIFE INSURANCE. The Company may, at any time after the
execution of this Employment Agreement, apply for and procure as owner and for
its own benefit, life insurance on Employee, in such amounts and in such form or
forms as the Company may determine. Employee shall, at the request of the
Company, submit to such medical examinations, supply such information, and
execute such documents as may be required by the insurance company or companies
to whom the Company has applied for such insurance. Employee hereby represents
that to his knowledge he is in excellent physical and mental condition and is
not under the influence of alcohol, drugs or similar substance.
8
<PAGE> 9
Section 15. PROPRIETARY INFORMATION AND INVENTIONS. Employee
understands and acknowledges that:
15.01 TRUST. Employee's employment creates a relationship of
confidence and trust between Employee and the Company with respect to
certain information applicable to the business of the Company and its
subsidiaries and affiliates (collectively, the "Group") or applicable
to the business of any licensee, vendor or customer of any of the
Group, which may be made known to Employee by the Group or by any
licensee, vendor or customer of any of the Group or learned by Employee
during the Employment Period.
15.02 PROPRIETARY INFORMATION. The Group possesses and will
continue to possess information that has been created, discovered, or
developed by, or otherwise become known to, the Group (including,
without limitation, information created, discovered, developed or made
known to by Employee during the period of or arising out of his
employment by the Company) or in which property rights have been or may
be assigned or otherwise conveyed to the Group, which information has
commercial value in the business in which the Group is engaged and is
treated by the Group as confidential. Except as otherwise herein
provided, all such information is hereinafter called "Proprietary
Information", which term, as used herein, shall also include, but shall
not be limited to, data, functional specifications, computer programs,
know-how, research, patents, inventions, discoveries, processes,
procedures, formulae, technology, improvements, developments, designs,
marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices, costs,
and customer, supplier and potential acquisition candidates lists.
Notwithstanding anything contained in this Employment Agreement to the
contrary, the term "Proprietary Information" shall not include (i)
information which is in the public domain, (ii) information which is
published or otherwise becomes part of the public domain through no
fault of Employee, (iii) information which Employee can demonstrate was
in Employee's possession at the time of disclosure and was not acquired
by Employee directly or indirectly from any of the Group on a
confidential basis, (iv) information which becomes available to
Employee on a non-confidential basis from a source other than any of
the Group and which source, to the best of Employee's knowledge, did
not acquire the information on a confidential basis or (v) information
required to be disclosed by any federal or state law, rule or
regulation or by any applicable judgment, order or decree or any court
or governmental body or agency having jurisdiction in the premises.
All Proprietary Information shall be the sole property of the Group and their
respective assigns. Employee assigns to the Company any rights Employee may have
or acquire in such Proprietary Information. At all times, both during Employee's
employment by the Company and after its termination, Employee shall keep in
strictest confidence and trust all Proprietary Information, and Employee shall
not use or disclose any Proprietary Information without the written consent of
the
9
<PAGE> 10
Group, except as may be necessary in the ordinary course of performing
Employee's duties as an employee of the Company.
Section 16. INVENTIONS. Any and all inventions, conceptions,
processes, discoveries, improvements, patent rights, letter patents, programs,
copyrights, trademarks, trade names and applications therefor, in the United
States and other countries, whether patentable or not, and any and all rights
and interest in, to and under the same, that are conceived, made, acquired, or
possessed by Employee, alone or with other employees, during the term of this
Employment Agreement, or within two (2) years thereafter shall become the
exclusive property of the Company and shall at all times and for all purposes be
regarded as acquired and held by Employee in a fiduciary capacity for the sole
benefit of the Company, and the Employee hereby assigns and agrees to assign the
same to the Company without further compensation. Employee agrees that, upon
request, he will promptly make all disclosures, execute all applications,
assignments or other instruments and perform all acts whatsoever necessary or
desired by the Company to vest and confirm in it, its successors, assigns and
nominees, fully and completely, all rights and interests created or contemplated
by this Section.
Section 17. SURRENDER OF DOCUMENTS. Employee shall, at the request
of the Company, promptly surrender to the Company or its nominee any Proprietary
Information or document, memorandum, record, letter or other paper in his
possession or under his control relating to the operation, business or affairs
of the Group.
Section 18. PRIOR EMPLOYMENT AGREEMENTS. Employee represents and
warrants that Employee's performance of all the terms of this Employment
Agreement and as an employee of the Company does not, and will not, breach any
agreement to keep in confidence proprietary information acquired by Employee in
confidence or in trust prior to Employee's employment by the Company. Employee
has not entered into, and shall not enter into, any agreement, either written or
oral, which is in conflict with this Employment Agreement or which would be
violated by Employee entering into, or carrying out his obligations under, this
Employment Agreement.
Section 19. RESTRICTIVE COVENANT. Employee acknowledges and
recognizes Employee's possession of Proprietary Information and the highly
competitive nature of the business of the Group and, accordingly, agrees that in
consideration of the premises contained herein Employee will not, during the
period of Employee's employment by the Company and for a period of two (2) years
following the Termination Date, (i) directly or indirectly engage in any
Business Activities in the world that relate to the treatment of biosolids,
whether such engagement shall be as an employer,
10
<PAGE> 11
officer, director, owner, employee, consultant, stockholder, partner or other
participant in any Business Activities, (ii) assist others in engaging in any
Business Activities in the manner described in the foregoing clause (i), or
(iii) induce employees of the Company to terminate their employment with the
Company or engage in any Business Activities in the world; PROVIDED, HOWEVER,
that the ownership of the outstanding capital stock of a corporation whose
shares are traded on a national securities exchange or on the over-the-counter
market shall not be deemed engaging in any Business Activities.
Section 20. REMEDIES. Employee acknowledges and agrees that the
Company's remedy at law for a breach or a threatened breach of the provisions
herein would be inadequate, and in recognition of this fact, in the event of a
breach or threatened breach by Employee of any of the provisions of this
Employment Agreement, it is agreed that the Company shall be entitled to,
equitable relief in the form of specific performance, a temporary restraining
order, a temporary or permanent injunction or any other equitable remedy which
may then be available, without posting bond or other security. Employee
acknowledges that the granting of a temporary injunction, a temporary
restraining order or other permanent injunction merely prohibiting Employee from
engaging in any Business Activities would not be an adequate remedy upon breach
or threatened breach of this Employment Agreement, and consequently agrees upon
any such breach or threatened breach to the granting of injunctive relief
prohibiting Employee from engaging in any activities prohibited by this
Employment Agreement. No remedy herein conferred is intended to be exclusive of
any other remedy, and each and every such remedy shall be cumulative and shall
be in addition to any other remedy given hereunder now or hereinafter existing
at law or in equity or by statute or otherwise.
Section 21. SUCCESSIVE EMPLOYMENT NOTICE. Within five (5) business
days after the Termination Date, Employee shall provide notice to the Company of
Employee's next intended employment. If such employment is not known by Employee
at such date, Employee shall notify the Company immediately upon determination
of such information. Employee shall continue to provide the Company with notice
of Employee's place and nature of employment and any change in place or nature
of employment during the period ending two (2) years after the Termination Date.
Failure of Employee to provide the Company with such information in an accurate
and timely fashion shall be deemed to be a breach of this Employment Agreement
and shall entitle the Company to all remedies provided for in this Employment
Agreement as a result of such breach.
Section 22. SUCCESSORS. This Employment Agreement shall be binding
on the Company and any successor to any of its businesses or assets. Without
limiting the effect of the prior
11
<PAGE> 12
sentence, the Company shall use its best efforts to require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Employment Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place. As used in this
Employment Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor or assign to its business and/or assets as aforesaid which
assumes and agrees to perform this Employment Agreement or which is otherwise
obligated under this Agreement by the first sentence of this Section 22, by
operation of law or otherwise.
Section 23. BINDING EFFECT. This Employment Agreement shall inure
to the benefit of and be enforceable by Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Employment Agreement to Employee's estate.
Section 24. MODIFICATION AND WAIVER. No provision of this
Employment Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Employee and
such officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Employment Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
Section 25. HEADINGS. Headings used in this Agreement are for
convenience only and shall not be used to interpret or construe its provisions.
Section 26. WAIVER OF BREACH. The waiver of either the Company or
Employee of a breach of any provision of this Employment Agreement shall not
operate or be construed as a waiver of any subsequent breach by either the
Company or Employee.
Section 27. AMENDMENTS. No amendments or variations of the terms
and conditions of this Employment Agreement shall be valid unless the same is in
writing and signed by all of the parties hereto.
12
<PAGE> 13
Section 28. SEVERABILITY. The invalidity or unenforceability of
any provision of this Employment Agreement, whether in whole or in part, shall
not in any way affect the validity and/or enforceability of any other provision
herein contained. Any invalid or unenforceable provision shall be deemed
severable to the extent of any such invalidity or unenforceability. It is
expressly understood and agreed that while the Company and Employee consider the
restrictions contained in this Employment Agreement reasonable for the purpose
of preserving for the Company the good will, other proprietary rights and
intangible business value of the Company if a final judicial determination is
made by a court having jurisdiction that the time or territory or any other
restriction contained in this Employment Agreement is an unreasonable or
otherwise unenforceable restriction against Employee, the provisions of such
clause shall not be rendered void but shall be deemed amended to apply as to
maximum time and territory and to such other extent as such court may judicially
determine or indicate to be reasonable.
Section 29. GOVERNING LAW. This Employment Agreement shall be
construed and enforced pursuant to the laws of the State of Ohio.
Section 30. ARBITRATION. Any controversy or claim arising out of
or relating to this Employment Agreement or any transactions provided for
herein, or the breach thereof, other than a claim for injunctive relief shall be
settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association (the "Rules") in effect at the time demand
for arbitration is made by any party. The evidentiary and procedural rules in
such proceedings shall be kept to the minimum level of formality that is
consistent with the Rules. One arbitrator shall be named by the Company, a
second shall be named by Employee and the third arbitrator shall be named by the
two arbitrators so chosen. In the event that the third arbitrator is not agreed
upon, he or she shall be named by the American Arbitration Association.
Arbitration shall occur in Toledo, Ohio or such other location agreed to by the
Company and Employee. The award made by all or a majority of the panel of
arbitrators shall be final and binding, and judgment may be entered in any court
of law having competent jurisdiction. The award is subject to confirmation,
modification, correction, or vacation only as explicitly provided in Title 9 of
the United States Code. The prevailing party shall be entitled to an award of
pre- and post-award interest. All legal fees' incurred by any party to the
arbitration, in connection with the arbitration and any judicial proceedings
related thereto shall be paid by such party. The fees of the arbitrators shall
be split between Employee and the Company.
13
<PAGE> 14
Section 31. COUNTERPARTS. This Employment Agreement may be
executed in more than one (1) counterpart and each counterpart shall be
considered an original.
Section 32. EXHIBITS. The Exhibits attached hereto are
incorporated herein by reference and are an integral part of this Employment
Agreement.
Section 33. SECTIONS. Unless the context requires a different
meaning, all references to "Sections" in this Agreement shall mean the Section
of this Agreement.
Section 34. PUBLICITY. Press releases and other publicity
materials relating to the transactions contemplated by this Employment Agreement
shall be released by the parties hereto only after review and with the consent
of the other party; PROVIDED, HOWEVER, that if legal counsel for the Company
advises the Company that disclosure of this Employment Agreement is required
under applicable federal or state securities laws, then the Company shall be
permitted to make such disclosure in the form recommended by such legal counsel
without the prior consent of Employee.
IN WITNESS WHEREOF, this Employment Agreement has been duly
executed by the Company and Employee in four (4) counterparts as of the date
first above written.
N-VIRO INTERNATIONAL CORPORATION
By /s/ J. Patrick Nicholson
-----------------------------
J. Patrick Nicholson CEO
/s/ Terry J. Logan
-----------------------------
Terry J. Logan
/s/ Ellen R. Vermilyea
-----------------------------
Ellen R. Vermilyea Witness
14
<PAGE> 15
Exhibit 2
- ---------
Perform normal unpaid activities expected of a faculty emeritus of The Ohio
State University. This includes occasional guest lectures and service on
graduate student advisory committees.
Provide service as an unpaid advisor to federal and state regulatory agencies,
private organizations, and professional societies in which Dr. Logan has
membership.
Serve as Editor, Associate Editor, or reviewer of scientific journals, books, or
special publications.
Present paid or unpaid invited lectures or technical papers at conferences or
symposia.
15
