<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 2, 1999
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 2, 1999, N-Viro International Corporation ("the Company")
executed a Sludge Stabilization Contract between the Company and the City of
Toledo, and issued a press release dated September 7, 1999, incorporated by
reference herein as Exhibits 1 and 2, respectively.
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: September 16, 1999 By: /s/ James K. McHugh
--------------------- ----------------------
James K. McHugh
Chief Financial Officer
<PAGE> 1
EXHIBIT 1
SLUDGE STABILIZATION CONTRACT
between
CITY OF TOLEDO
and
N-VIRO INTERNATIONAL CORPORATION
THIS CONTRACT IS MADE THIS first day of January, 2000 by and
between the City of Toledo, hereinafter called "TOLEDO" and N-Viro International
Corporation, hereinafter called the "PROCESSOR", both acting through properly
authorized officials.
NOW, THEREFORE, in consideration of the mutual promises,
covenants, conditions and terms to be kept and performed, it is agreed by the
parties as follows:
SECTION I - PROCESSING:
Article 1 - Scope of the Work:
- ------------------------------
This work or services to be performed by the PROCESSOR shall include all work or
services contained in this contract as supplemented by the following attachments
to this contract:
Exhibit A Equipment List
Exhibit B Sludge Management Plan, Water Reclamation
Division, City of Toledo, March 1999
Exhibit C Location Log Example
I-1.0. The PROCESSOR shall provide equipment (including rolling
equipment), personnel, labor, materials and expendables required
to execute the Process of Alkaline Stabilization and Subsequent
Accelerated Biosolid Drying to treat TOLEDO's wastewater biosolid
to USEPA EQS (Exceptional Quality Sludge) standards as identified
in 40 CFR, Part 503, Pathogens, 503.32 (a) (4), Alternative #2 and
Vector Attraction Reduction, 503.33 (b) (6). Such equipment and
materials include but are not limited to: Alkaline Admixture
treatment materials, conveyance, blending, trucking, mixing,
stacking, storage and feeding equipment.
I-1.1. TOLEDO shall furnish the existing site as described by the
recorded construction drawings known as "Sludge Stabilization
Facility" dated February 14, 1989 (revised).
I-1.2. TOLEDO agrees to lease the equipment listed on Exhibit A of the
attached agreement to the PROCESSOR for the sum of one dollar for
the life of the this contract. For this consideration the
PROCESSOR shall maintain monthly maintenance and maintenance
reports on all equipment. These maintenance reports shall be
available to TOLEDO upon
<PAGE> 2
request. The PROCESSOR shall follow the manufacturer
recommendation on the care and use of the equipment.
I-1.3. The PROCESSOR shall provide all expendable materials and shall pay
for all associated patent and royalty fees associated with the
processing facility.
I-1.4. TOLEDO will pay and provide for all water, storm and sanitary
utilities associated with the operation of the Sludge
Stabilization Facility. TOLEDO will also pay for all electric,
gas, building and grounds maintenance.
I-1.5. The PROCESSOR will supply any new equipment, including rolling
equipment, needed to maintain the Sludge Stabilization Process
(N-VIRO). The PROCESSOR is also responsible for maintenance and
repairs to "all rolling equipment".
I-1.6. The PROCESSOR will repair the existing process equipment, if it is
less than or equal to $500.00 the PROCESSOR will absorb the cost,
if the cost to repair existing process equipment inside the
building, including the exterior silos, is greater than $500.00,
TOLEDO will share equally in the cost of repair. The process
equipment is as follows:
- Both lime silos and associated controls
- Lime and sludge conveyance systems
- Lime and sludge Mixer
- Scrubber
I-1.7. TOLEDO shall also allow N-VIRO the use of "temporary" storage of
N-VIRO material at an designated area adjacent to the #9 aeration
tank until such time as TOLEDO deems it necessary to use the area.
TOLEDO will give the PROCESSOR six (6) months notice to vacate
unless unusual conditions arise. TOLEDO will have final say on the
use of this area. Any additional sludge storage area will be at
the expense of the PROCESSOR.
Article 2 - Biosolid Characteristics:
- -------------------------------------
I-2.0. TOLEDO agrees to provide a minimum of 35,000 wet tons of biosolid
per year from the existing biosolid hoppers located in the Sludge
Dewatering Building. Should TOLEDO be unable to supply the minimum
stated the PROCESSOR will not be entitled to monies for biosolids
not processed by the PROCESSOR. TOLEDO further agrees that the
total solids content will be a minimum of sixteen percent solids.
I-2.1. The PROCESSOR shall produce an end product that satisfies Article
I, Section I-1.0. of this agreement. The PROCESSOR shall utilize
an independent lab to confirm EQS is achieved in the final
product. Said findings shall be provided to TOLEDO, Division of
Water Reclamation, 3900 North Summit Street, Toledo, Ohio, 43611,
"Attention: Administrator, Operations" upon receipt by the
PROCESSOR.
Article 3 - Processing Schedule:
- --------------------------------
I-3.0. PROCESSOR shall provide TOLEDO an average daily volume of normal
processing and will notify TOLEDO at the end of their processing
day if the PROCESSOR is going to
<PAGE> 3
deviate significantly from this volume due to downtime or normal
work hour changes. This is required for the scheduling of
alternate means of sludge removal.
Article 4 - Quality Control:
- ----------------------------
I-4.0. The PROCESSOR shall provide the services of an independent lab to
institute quality control procedures and ascertain that the final
product meets the contract requirements. TOLEDO shall not be
charged with any additional cost for this service. All reports
submitted by the lab regarding quality control procedures or the
quality of the product shall be provided to TOLEDO upon
PROCESSOR's receipt of same. All reports shall be provided to the
Division of Water Reclamation at the address noted in paragraphs
I-2.1. All reports submitted to TOLEDO must be accompanied with a
signed copy of the following certification statement: "I CERTIFY
UNDER PENALTY OF LAW THAT THIS DOCUMENT AND ALL ATTACHMENTS WERE
PREPARED UNDER MY DIRECTION OR SUPERVISION IN ACCORDANCE WITH A
SYSTEM DESIGNED TO ASSURE THAT QUALIFIED PERSONNEL PROPERLY
GATHERED AND EVALUATED THE INFORMATION SUBMITTED. BASED ON MY
INQUIRY OF THE PERSON OR PERSONS WHO MANAGE THE SYSTEM, OR THOSE
DIRECTLY RESPONSIBLE FOR GATHERING THE INFORMATION, THE
INFORMATION SUBMITTED IS TO THE BEST OF MY KNOWLEDGE AND BELIEF
TRUE, ACCURATE, AND COMPLETE. I AM AWARE THAT THERE ARE
SIGNIFICANT PENALTIES FOR SUBMITTING FALSE INFORMATION, INCLUDING
THE POSSIBILITY OF FINES AND/OR IMPRISONMENT FOR KNOWING
VIOLATIONS."
Article 5 - Other Conditions:
- -----------------------------
I-5.0. The PROCESSOR shall be responsible for initiating, maintaining and
supervising all safety precautions and programs in connection with
the performance of this Agreement.
I-5.1. The PROCESSOR shall take reasonable precautions for safety of, and
shall provide reasonable protection to prevent damage, injury or
loss to:
a. Employees at the work place and other persons
who may be affected thereby;
b. The Work and materials and equipment to be
incorporated therein, whether in storage on or
off the site, under care, custody or control of
the PROCESSOR or the PROCESSOR's subcontractors
of any tier; and
c. Other property at the site or adjacent thereto,
such as trees, shrubs, lawns, walks, pavements,
roadways, structures and utilities.
d. The work place safety and health or injury
benefits of all employees of the PROCESSOR are
the sole responsibility of the PROCESSOR.
I-5.2. The PROCESSOR shall give notices and comply with applicable laws,
ordinances, rules, regulations and lawful orders of public
authorities bearing on safety of persons or property or their
protection from damage, injury or loss.
<PAGE> 4
I-5.3. The PROCESSOR shall erect and maintain, as required by existing
conditions and performance of the Service Agreement, reasonable
safeguards for safety and protection, including posting danger
signs and other warnings against hazards, promulgating safety
regulations.
I-5.4. The PROCESSOR shall designate a responsible member of the
PROCESSOR's organization at the site whose duty shall be the
prevention of accidents.
I-5.5. The PROCESSOR shall not load or permit any part of the work site
to be loaded so as to endanger its safety.
SECTION II - Marketing and Distribution:
Article 1 - Scope of the Work:
- ------------------------------
II-1.0. It is the objective of TOLEDO to beneficially reuse its sewage
sludge in an environmentally and economically sound manner. For
purposes of this contract, the term "N-Viro Soil" is defined to
mean a sludge product meeting USEPA EQS (Exceptional Quality
Sludge) standards as identified in 40 CFR, Part 503, Pathogens,
503.32 (a) (4), Alternative #2 and Vector Attraction Reduction,
503.33 (b) (6). N-Viro Soil has potential for reuse in various
applications, including agricultural liming, topsoil mixes and
land reclamation. The PROCESSOR will market and distribute N-Viro
Soil produced at the Bay View Water Reclamation Plant in
accordance with all the provisions described within this
agreement.
II-1.1. The PROCESSOR shall conduct marketing and distribution of N-Viro
Soil in accordance with all requirements of the City of Toledo,
Ohio, Sludge Management Plan as approved by the Ohio Environmental
Protection Agency and the proposed modifications thereto and the
Ohio EPA Administrative Policy for composted Sewage Sludge
Management, Exceptional Quality Sludge (EQS) product as defined by
40 CFR 503. These documents are contained in Exhibit B of this
contract. If federal, state or local regulations or requirements,
as they pertain to marketing and distribution of N-Viro Soil, are
modified after the date of this contract, a contract change order
will be negotiated, as appropriate.
II-1.2. The PROCESSOR shall transport N-Viro Soil from Bay View Water
Reclamation Plant to reuse, disposal, or processing sites in
covered containers double-locked to the container transport trucks
or in covered trucks. Trucks used to transport N-Viro Soil from
Bay View Water Reclamation Plant to field sites or any other
destination shall meet the legal dimension and weight limits for
highway vehicles as per Ohio Revised Code, Section 5577.04 and
5577.05, and Toledo Municipal Code, Section 339. No load limited
streets shall be used in the City of Toledo, except as allowed by
Section 339.09 of the Toledo Municipal Code.
TOLEDO will not pay the PROCESSOR for marketing and distribution
of any N-Viro Soil hauled in excess of the legal maximum allowable
load as indicated in Ohio Revised Code, Section 5577.04 and
5577.05.
<PAGE> 5
II-1.3. The PROCESSOR shall be responsible for the management of the
N-Viro Soil from the time it is loaded onto trucks for shipment
from Bay View Water Reclamation Plant until it has been properly
spread, applied or otherwise reached its final reuse state. The
PROCESSOR will immediately clean up any spillage resulting from
transportation of N-Viro Soil. The PROCESSOR shall own or have
access to equipment suitable for cleaning up spills on roads.
II-1.4. The PROCESSOR shall clean all trucks before leaving delivery sites
and Bay View Water Reclamation Plant so as to not track or spill
any N-Viro Soil onto roads.
II-1.5. The PROCESSOR shall coordinate and be responsible for loading of
all N-Viro Soil at the Sludge Stabilization Facility.
II-1.6. The PROCESSOR shall make every effort to remove released N-Viro
Soil from the stockpiles at the Sludge Stabilization Facility at
Bay View Water Reclamation Plant as promptly as possible. If in
the judgement of TOLEDO, the stockpiled quantity of released
N-Viro Soil becomes excessive to a point where N-Viro Soil
production must be halted, or legitimate complaints are received
relative to odors, dust and vectors or for any other
environmentally or aesthetic reason, then TOLEDO may seek
termination of this contract in accordance with Section II,
Article 5.13. of this contract.
II-1.7. The PROCESSOR shall record the names and addresses of the parties
receiving N-Viro Soil along with the quality and quantity received
and shall submit this information to the Division of Water
Reclamation with each monthly billing. Copies of bills of lading
from these parties can be used for documentation.
Article 2 - FIELD CONTROLS:
- ---------------------------
II-2.1. The PROCESSOR shall provide sufficient field personnel to properly
control field selection, storage pile siting and application
rates; to respond to complaints and to take remedial action for
hauling or site problems. Required personnel shall include the
services of an agronomist who can intelligently discuss the
benefits of the N-Viro Soil with potential customers and assist in
determining their needs. In addition, the PROCESSOR shall be
required to employ a field technician or inspector whose primary
duties will be to ensure that all contractual requirements and
government regulations are met and to take the necessary
corrective action when they are not.
The field technician shall ensure that the hauling schedules,
storage pile siting and the field application dates are
coordinated to meet the criteria established between TOLEDO and
Ohio EPA, as included in Great Lakes N-Viro, Inc., N-Viro Soil
Management Plan, For The Distribution And Marketing Of N-Viro Soil
In The State Of Ohio Update 1993 (see Exhibit B). A Location Log
(Exhibit C) is to be completed for each field with copies provided
on a weekly basis to Division to Water Reclamation and to the
Northwest District Office of Ohio EPA in Bowling Green. The
PROCESSOR shall notify TOLEDO and the Northwest District Office of
the Ohio EPA twenty-four (24) hours prior to shipment of N-Viro
Soil to any site. This notification can be accomplished either by
telephone contact with designated parties or by FAX using the
Location Log.
<PAGE> 6
Prior to any shipment of N-Viro Soil, the Health Department in the
County to which the N-Viro Soil is to be shipped shall be
notified. Any objections or concerns voiced by a particular County
Health Department must be resolved before any N-Viro Soil can be
delivered to that County. All licenses and/or permits required by
a particular County shall be acquired prior to delivery to that
County. All such objections and licensing and/or permitting
requirements are to be reported to the Manger, Division of Water
Reclamation in writing. Personnel from the Division of Water
Reclamation will be available to assist and attend any meetings
that require TOLEDO's participation. All meetings with County
officials are to be conducted with a spirit of cooperation so that
all parties are satisfied that it is in the best interest of each
party to distribute and market N-Viro Soil in that particular
County.
Article 3 - Regional Storage Sites:
- -----------------------------------
II-3.1. The PROCESSOR may, at its option and at no additional expense to
TOLEDO, establish Regional Storage Sites at various locations
throughout Northwest Ohio. These sites must have prior approval of
TOLEDO, the Northwest District Office of Ohio EPA, and the Health
Department of the County in which the storage site is located. In
locating a regional storage site, the PROCESSOR must take into
consideration such factors as odors, ponding, runoff, leachate
collection and disposal, vectors, airborne particulates during
loading and unloading operation, groundwater and well
contamination, neighborhood dwellings, duration of storage and
pile covering.
A record of the amount of N-Viro Soil shipped into and out of each
Regional Storage Site shall be maintained by the PROCESSOR and
submitted to the Division of Water Reclamation on a monthly basis.
This can be accomplished using bills of lading or shipping
invoices, copies of which must be kept for at least three years.
Article 4 - Compensation to be Paid to the PROCESSOR:
- -----------------------------------------------------
II-4.0. In consideration of the completion of the work described herein
and the fulfillment of all stipulations of this contract to the
satisfaction of TOLEDO, TOLEDO shall pay and the PROCESSOR further
agrees to receive and accept payment in full, for the life of the
contract, $39.60 (Thirty Nine Dollars and Sixty Cents) a wet ton
of biosolids processed at the Sludge Stabilization Facility.
II-4.1. For N-Viro Soil used by TOLEDO, the PROCESSOR will only charge
TOLEDO actual freight charges. If TOLEDO provides for the hauling
of N-Viro Soil, loading of the hauling vehicles will be provided
by the PROCESSOR at no extra charge.
II-4.3. The PROCESSOR shall invoice TOLEDO on a monthly basis. Each said
invoice shall indicate the number of loads and scale ticket for
each load. Invoices shall be submitted to:
Water Reclamation Division
Attention: Process Control Section
3900 North Summit Street
Toledo, Ohio 43611-3097
<PAGE> 7
II-4.4. TOLEDO shall pay monthly invoices within thirty (30) days of
receipt.
II-4.5. TOLEDO and the PROCESSOR agree the life of the contract to be five
(5) years from the date of this contract. However, either party
may terminate the agreement upon 30 days written notice, without
cause. With concurrence with both parties, this contract may be
extended for additional five years. If terminated by either party,
no cost shall be owed to either party.
Article 5 - Indemnification, Insurance & Other Conditions:
- ----------------------------------------------------------
II-5.0. PERFORMANCE BOND --- The PROCESSOR shall, at or before the
execution of this contract, furnish TOLEDO an acceptable corporate
surety bond in the penal amount of One Hundred Thousand Dollars
($100,000) payable to TOLEDO, or a cashier's check in lieu
thereof, and subject to the approval of the Mayor, for the
faithful performance of all duties and obligations imposed upon
PROCESSOR by and under the terms of the contract. If canceled, the
PROCESSOR must immediately furnish another required bond or the
contract shall be subject to termination.
II-5.1. INSURANCE, INDEMNITY AND HOLD HARMLESS --- Each party agrees to
and shall indemnify and hold harmless the other party to this
contract for any claim, cost, loss, damage or obligation resulting
from such party's breach of any of the conditions of this contract
or from any negligent or wrongful act or omission committed by
such party, its employees or agents. To the extent either party
has actual knowledge of any such claim, cost, loss, damage or
obligation, reasonable written notice shall be given to the other
party.
II-5.2. EQUAL OPPORTUNITY--- The PROCESSOR agrees that it will not
discriminate against any employee or applicant for employment
because of race, ancestry, religion, color, sex, age, national
origin, or disability.
II-5.3. SUSPENSION OF WORK ---
(A) TOLEDO may order the PROCESSOR in writing to suspend, delay,
or interrupt all or any part of the work for such period of time
as TOLEDO may determine to be appropriate for its convenience.
(B) If the performance of all or any part of the work is, for an
unreasonable period of time, suspended, delayed, or interrupted by
an act of TOLEDO in administration of this contract, or by its
failure to act within the time specified in this contract (or if
no time is specified, within a reasonable time), an adjustment
shall be made for any increase in the cost of performance of this
contract (excluding profit) necessarily caused by such
unreasonable suspension, delay, or interruption, and the contract
modified in writing accordingly. However, no adjustment shall be
made under this section for any suspension, delay, or interruption
to the extent (1) that performance would have been so suspended,
delayed, or interrupted by any other cause, including the fault or
negligence of the PROCESSOR or (2) for which an equitable
adjustment is provided for or excluded under any other provision
of this contract.
(C ) No claim under this section shall be allowed (1) for any
costs incurred more than 20 days before the PROCESSOR shall have
notified TOLEDO in writing of the act or
<PAGE> 8
failure to act involved (but this requirement shall not apply as
to a claim resulting from a suspension order), and (2) unless the
claim, in an amount stated, is asserted in writing as soon as
practicable after the termination of such suspension, delay, or
interruption, but not later than the date of final payment under
the contract.
II-5.4. TERMINATION FOR DEFAULT; DAMAGES FOR DELAY, TIME EXTENSIONS ---
(A) If the PROCESSOR refuses or fails to prosecute the work, or
any separable part of the work, with such diligence as will insure
its completion within any one year, or any extension thereof, or
fails to complete said work within such time, TOLEDO may by
written notice to the PROCESSOR, terminate his right to proceed
with the work or such part of the work as to which there has been
delay. In such event TOLEDO may take over the work and prosecute
the same to completion, by contract or otherwise, and may take
possession of and use in completing the work such materials,
appliance, and plant as may be on the site of the work and
necessary therefor. Whether or not the PROCESSOR's right to
proceed with the work is terminated, the PROCESSOR and its
sureties shall be liable for any damage to TOLEDO resulting from
the PROCESSOR's refusal or failure to complete the work within any
one year.
(B) The PROCESSOR's right to proceed shall not be terminated nor
the PROCESSOR charged with resulting damage if:
(1) The delay in the completion of the work arises from
causes other than normal weather beyond the control and
without the fault or negligence of the PROCESSOR,
including, but not restricted to, acts of God, acts of the
public enemy, acts of TOLEDO in either its sovereign or
contractual capacity, acts of another PROCESSOR in the
performance of a contract with TOLEDO, fires, floods,
epidemics, quarantine, restrictions, strikes, freight
embargoes, unusually severe weather.
(2) The PROCESSOR, within 10 days from the beginning of
any such delay (unless TOLEDO grants a further period of
time before the date of final payment under the contract),
notifies TOLEDO in writing of the causes of delay. TOLEDO
shall ascertain the facts and the extent of the delay and
extend the time for completing the work when, in its
judgment, the findings of fact justify such an extension.
TOLEDO's findings of fact shall be final and conclusive on
the parties, subject only to appeal as the remedies clause
of this contract provides.
(C) If, after notice of termination of the PROCESSOR's right to
proceed under the provisions of this section, it is determined for
any reason that the PROCESSOR was not in default under this
section, or that the delay was excusable under this section, the
rights and obligations of the parties shall be the same as if the
notice of termination has been issued under the section providing
for termination for convenience of TOLEDO.
(D) The rights and remedies of TOLEDO provided in this section are
in addition to any other rights and remedies provided by law or
under this contract.
II-5.5 REMEDIES --- Unless this contract provides otherwise, all claims,
counterclaims, disputes and other matters in question between
TOLEDO and the PROCESSOR arising out of or relating to this
agreement or its breach will be decided by arbitration if the
parties mutually
<PAGE> 9
agree, or in a court of competent jurisdiction within Ohio. This
contract shall be interpreted under the laws of the State of Ohio.
II-5.6 AUDIT; ACCESS TO RECORDS --- The PROCESSOR shall maintain books,
records, documents and other evidence directly pertinent to
performance on work under this contract in accordance with
generally accepted accounting principles and practices
consistently applied. The PROCESSOR shall also maintain the
financial information and data used in the preparation or support
of any negotiated contract or change order and a copy of the cost
summary submitted to TOLEDO. TOLEDO or any of its authorized
representatives shall have access to such books, records,
documents and other evidence for the purpose of inspection, audit
and copying. The PROCESSOR will provide proper facilities for such
access and inspection.
II-5.7 GRATUITIES ---
(A) If TOLEDO finds, after notice and hearing, that the PROCESSOR
or any of the PROCESSOR's agents or representatives offered or
gave gratuities (in the form of entertainment, gifts, or
otherwise) to any official, employee or agent of TOLEDO in an
attempt to secure a contract or favorable treatment in the
awarding, amending, or making any determinations related to the
performance of this contract, TOLEDO may, by written notice to the
PROCESSOR, terminate the right of the PROCESSOR to proceed under
this contract. TOLEDO may also pursue other rights and remedies
that the law or this contract provides. However, the existence of
the facts upon which TOLEDO makes such findings shall be in issue
and may be reviewed in proceedings under the remedies section of
this contract.
(B) In the event this contract is terminated as provided in
paragraph (A) of this section, TOLEDO shall be entitled (1) to
pursue the same remedies against the PROCESSOR as it could pursue
in the event of a breach of the contract by the PROCESSOR, and (2)
as a penalty in addition to any other damages to which it may be
entitled by law, to exemplary damages in an amount (as determined
by TOLEDO) which shall be not less than 3 nor more than 10 times
the costs the PROCESSOR incurs in providing any such gratuities to
any such officer or employee.
II-5.8. CLAIMS AGAINST THE PROCESSOR --- The PROCESSOR hereby agrees that
it will promptly pay all accounts and bills for labor and
materials contracted for by them for the Project herein
contemplated; and if at any time during the progress of the work
or before the final payment of any money due to the Contract or
under the terms of this Contract, there should be a claim for
labor and materials or for damages by reason of any acts,
omission, or neglect of the PROCESSOR in the prosecution of the
work and which shall be presented to the TOLEDO, TOLEDO may retain
such sum or sums from the monies due the PROCESSOR under this
Contract as would be necessary to discharge all such claims -
whether for labor or materials or for damages aforesaid and until
the validity of such claims shall be established and finally
determined and if established and finally determined as valid, all
such claims shall be paid from the amount retained if it be
sufficient for that purpose. Otherwise, if at any time TOLEDO
shall be satisfied that any of such claims are invalid and
groundless, any amount so retained shall be paid to the PROCESSOR,
and neither TOLEDO or any official thereof shall be liable to any
individual firm, or
<PAGE> 10
corporation making such claims for failure or refusal to hold and
retain any money due under this Contract for the purpose of
payment of such claim.
If the monies so retained under this Contract are insufficient to
pay all such claims presented to TOLEDO and adjudged by any court
of competent jurisdiction to be valid obligations of the
PROCESSOR, TOLEDO may at its discretion pay the same and the
PROCESSOR shall repay TOLEDO all sums so paid. TOLEDO may also, on
the written consent of the PROCESSOR, use any monies due or to
become due under this Contract for the purpose of paying any
claims presented to TOLEDO, for labor or materials used in this
project.
II-5.9. LAWS TO BE OBSERVED --- The PROCESSOR warrants that it is familiar
with and agrees at all times to comply with the Laws, Ordinances,
and Regulations of all Federal, State, City and other Governmental
Jurisdictions affecting the work, and it shall indemnify and save
harmless TOLEDO and its representatives, officers, agents,
consultants, and servants against any claims or liabilities
arising from the violation of any such law, ordinance, or
regulation, either by the PROCESSOR or its agents, servants, or
employees, or the negligence of such contractor, agent, servant,
or employee. The PROCESSOR shall not proceed with or finish any
work, even though same is called for in the Contract Documents, if
it is contrary to any such laws. The PROCESSOR will secure all
permits and/or licenses required to perform the duties and
responsibilities pursuant to this contract.
II-5.10. PERSONNEL AND PROPERTY PROTECTION --- The PROCESSOR shall comply
with all applicable provisions of the latest Federal, State, and
Municipal safety laws for the proper protection of both the
workmen and the public.
II-5.12. PUBLIC RELATIONS --- The PROCESSOR shall exercise due caution and
give high priority to maintaining good public relations in regard
to all activities under this contract and shall take prompt action
to resolve any citations, spills, damages, or complaints arising
from its operations under this contract. The PROCESSOR shall, at a
minimum, make verbal and written contact with representatives of
the County Commissioners, County Health Department, agricultural
Extension agent and Soil and Water Conservation District in each
county where N-Viro Soil is marketed and distributed. Said contact
shall be for the purpose of advising said officials of the product
characteristics and the marketing program, for the purpose of
assuring compliance with all applicable local rules and
regulations pertaining to marketing and use of the product, and
for the purpose of establishing working relations for speedy
resolution of any problems or concerns that may arise.
The PROCESSOR shall immediately notify the Division of Water
Reclamation of any citations, spills, hearings, damages or
complaints arising from performance of the services provided under
this Contract and shall within one week of each such occurrence
provide written confirmation of the date, time, location, nature
of incident, and names, addresses and phone numbers of principal
parties involved. The PROCESSOR shall recognize TOLEDO'S vested
interest in maintaining a safe, clean, and publicly acceptable
program and shall afford TOLEDO the opportunity to participate in
public relations efforts related to such incidents.
II-5.13. TERMINATION FOR CONVENIENCE ---
<PAGE> 11
(A) TOLEDO may terminate the performance of work under this
contract in accordance with this section in whole, or from time to
time in part, whenever TOLEDO shall determine that such
termination is in the best interest of TOLEDO. Any such
termination shall be effected by delivery to the PROCESSOR of a
notice of termination specifying the extent to which performance
of work under the contract is terminated, and the date upon which
such termination becomes effective.
(B) After receipt of a notice of termination, and except as
otherwise directed by TOLEDO, the PROCESSOR shall:
(1) Stop work under the contract on the date and to
the extent specified in the notice of
termination;
(2) Place no further orders or subcontracts for
materials, services or facilities except as
necessary to compete the portion of the work
under the contract which is not terminated;
(3) Terminate all orders and subcontracts to the
extent that they relate to the performance of
work terminated by the notice of termination;
(4) Assign to TOLEDO, in the manner, at the times,
and to the extent directed by TOLEDO, all of the
right, title, and interest of the PROCESSOR under
the orders and subcontracts so terminated. TOLEDO
shall have the right, in its discretion, to
settle or pay any or all claims arising out of
the termination of such orders and subcontracts;
(5) Settle all outstanding liabilities and all claims
arising out of such termination of orders and
subcontracts, with the approval or ratification
of TOLEDO to the extent TOLEDO may require.
TOLEDO's approval or ratification shall be final
for all the purposes of this section;
(6) Use its best efforts to sell, in the manner, at
the times, to the extent, and at the price or
prices that TOLEDO directs or authorizes, any
property of the types referred to in paragraph
(B)(6) of this section, but the PROCESSOR (I)
shall not be required to extend credit to any
purchaser, and (ii) may acquire any such property
under the conditions prescribed and at a price or
prices approved by TOLEDO. The proceeds of any
such transfer or disposition shall be applied in
reduction of any payments to be made by TOLEDO to
the PROCESSOR under this contract or shall
otherwise be credited to the price or cost of the
work covered by this contract or paid in such
other manner as TOLEDO may direct;
(7) Complete performance of such part of the work as
shall not have been terminated by the notice of
termination; and
(8) Take such action as may be necessary, or as
TOLEDO may direct, for the protection and
preservation of the property related to this
contract which is in the possession of the
PROCESSOR and in which TOLEDO has or may acquire
an interest.
(C) After receipt of a notice of termination, the PROCESSOR shall
submit to TOLEDO his termination claim, in the form and with the
certification TOLEDO prescribes. Such
<PAGE> 12
claim shall be submitted promptly but in no event later than 1
year from the effective date of termination, unless one or more
extensions in writing are granted by TOLEDO upon request of the
PROCESSOR made in writing within such 1-year period or authorized
extension. However, if TOLEDO determines that the facts justify
such action, TOLEDO may receive and act upon any such termination
claim at any time after such 1-year period or extension. If the
PROCESSOR fails to submit a termination claim within the time
allowed, TOLEDO may determine, on the basis of available
information, the amount, if any, due to the PROCESSOR because of
the termination. TOLEDO shall then pay to the PROCESSOR the amount
so determined.
(D) Subject to the provisions of paragraph (C), the PROCESSOR and
TOLEDO may agree upon the whole or any part of the amount or
amounts to be paid to the PROCESSOR because of the total or
partial termination of work under this section. The amount or
amounts may include a reasonable allowance for profit on work
done. However, such agreed amount or amounts, exclusive of
settlement costs, shall not exceed the total contract price as
reduced by the amount of payments otherwise made and as further
reduced by the contract price of work not terminated. The contract
shall be amended accordingly, and the PROCESSOR shall be paid the
agreed amount. Nothing in paragraph (E) of this section,
prescribing the amount to be paid to the PROCESSOR in the event of
failure of the PROCESSOR and TOLEDO to agree upon the whole amount
to be paid to the PROCESSOR because of the termination of work
under this clause, shall be deemed to limit, restrict, or
otherwise determine or affect the amount or amounts which may be
agreed upon to be paid to the PROCESSOR pursuant to this paragraph
(D).
(E) If the PROCESSOR and TOLEDO fail to agree, as paragraph (D) of
this section provides, on the whole amount to be paid to the
PROCESSOR because of the termination of work under this section,
TOLEDO shall determine, on the basis of available information, the
amount, if any, due to the PROCESSOR by reason of the termination
and shall pay to the PROCESSOR the amounts determined as follows:
(1) For all contract work performed before the
effective date of the notice of termination, the
total (without duplication of any items) of --
(I) The cost of such work;
(ii) The cost of settling and paying claims
arising out of the termination of work
under subcontracts or orders as
paragraph (B)(5) of this section
provides. This cost is exclusive of the
amounts paid or payable on account of
supplies or materials delivered or
services furnished by the subcontractor
before the effective date of the notice
of termination. These amounts shall be
included in the cost on account of which
payment is made under paragraph (1)(I)
of this section; and
(iii) A sum, as profit on paragraph (1)(I) of
this section, that TOLEDO determines to
be fair and reasonable. But, if it
appears that the PROCESSOR would have
sustained a loss on the entire contract
had it been completed, no profit shall
be included or allowed under this
paragraph (1)(iii) of this section, and
an appropriate adjustment
<PAGE> 13
shall be made reducing the amount of the
settlement to reflect the indicated rate
of loss; and
(2) The reasonable cost of the preservation and
protection of property incurred under paragraph
(B)(9) of this section; and any other reasonable
cost incidental to termination of work under this
contract, including expense incidental to the
determination of the amount due to the PROCESSOR
as the result of the termination of work under
this contract. The total sum to be paid to the
PROCESSOR under paragraph (E)(1) of this section
shall not exceed the total contract price as
reduced by the amount of payments otherwise made
and as further reduced by the contract price of
work not terminated. Except for normal spoilage,
and except to the extent that TOLEDO shall have
otherwise expressly assumed the risk of loss,
there shall be excluded from the amounts payable
to the PROCESSOR under paragraph (1) of this
section, the fair value, as determined by TOLEDO
of property which is destroyed, lost, stolen, or
damaged, to the extent that it is undeliverable
to TOLEDO, or to a buyer under paragraph (B)(7)
of this section.
(F) The PROCESSOR shall have the right to dispute under the
section of this contract entitled "Remedies" from any
determination TOLEDO makes under paragraph (C ) or (E) of this
section. But, if the PROCESSOR has failed to submit his claim
within the time provided in paragraph (C ) of this section and has
failed to request extension of such time, the PROCESSOR shall have
no right of appeal. In any case where TOLEDO has determined the
amount due under paragraph (C ) or (E) of this section, TOLEDO
shall pay to the PROCESSOR the following: (1) If there is no right
of appeal hereunder or if no timely appeal has been taken, the
amount so determined by TOLEDO or (2) if a "Remedies" proceeding
is initiated, the amount finally determined in such "Remedies"
proceeding.
(G) In arriving at the amount due the PROCESSOR under this section
there shall be deducted (1) all unliquidated advance or other
payments on account theretofore made to the PROCESSOR, applicable
to the terminated portion of this contract, (2) any claim which
TOLEDO may have against the PROCESSOR in connection with this
contract, and (3) the agreed price for, or the proceeds of sale
of, any materials, supplies, or other things kept by the PROCESSOR
or sold, under the provisions of this section, and not otherwise
recovered by or credited to TOLEDO.
(H) If the termination hereunder is partial before the settlement
of the terminated portion of this contract, the PROCESSOR may file
with TOLEDO a request in writing for an equitable adjustment of
the price or prices specified in the contact relating to the
continued portion of the contract (the portion not terminated by
the notice of termination). Such equitable adjustment as may be
agreed upon shall be made in the price or prices. Nothing
contained herein shall limit the right of TOLEDO and the PROCESSOR
to agree upon the amount or amounts to be paid to the PROCESSOR
for the completion of the continued portion of the contract when
the contract does not contain an established contract price for
the continued portion.
II-5.14. ASSIGNMENTS ---- The PROCESSOR shall not assign the whole or any
part of this Contract or any monies due or to become due hereunder
without written consent of
<PAGE> 14
TOLEDO. In case the PROCESSOR assigns all or any part of any
monies due or to become due under this Contract, the instrument of
assignment shall contain a clause substantially to the effect that
it is agreed that the right of the assignee(s) in and to any
monies due or to become due the PROCESSOR shall be subject to
prior liens of all persons, firms, and corporations for services
rendered or materials supplied for the performance of the work
called for in this Contract.
II-5.15. CHANGE IN WORK --- TOLEDO must authorize changes in, additions to,
or deductions from the work to be performed or the material to be
furnished pursuant to the provisions of the Contract. Adjustments,
if any, in the amounts to be paid to the PROCESSOR by reason of
any such change, addition, or deduction shall be determined by an
acceptable lump sum or unit price proposal from the PROCESSOR.
II-5.16. NOTICE AND SERVICE THEREOF --- Such notice shall be deemed to have
been given, as to TOLEDO, when written notice shall be delivered
to the Manager of Water Reclamation or shall have been placed in
the United States mail addressed to the Mayor, at the place where
the proposals for the Contract were opened; as to the PROCESSOR,
when a written notice shall be delivered to the chief
representative of the PROCESSOR at the site of the Project or by
mailing such written notice in the United States mail addressed to
the PROCESSOR at the place stated in this Bid; as to the Surety on
the performance of the bond, when a written notice is placed in
the United States mail addressed to the Surety at the home office
of such Surety or to its agents, who executed such performance or
other bond in behalf of such Surety.
II-5.17. DESIGNATION OF CITY REPRESENTATIVE --- TOLEDO hereby designates
the Commissioner or Manager of the Division of Water Reclamation
as its representative for all contacts and communications between
the PROCESSOR and TOLEDO with reference to this Contract. The
aforesaid official of TOLEDO, or in his absence, his duly
authorized representative, shall be available at all reasonable
times so that there may be authoritative communication between the
PROCESSOR and TOLEDO at all times.
II-5.18. SUBCONTRACTOR --- No portion of the Processing shall be
subcontracted without the written permission of TOLEDO.
II-5.19. CLEANING --- The PROCESSOR shall not, at any time, allow an
accumulation of waste materials which may become a hazard or be
unsightly in appearance at the sites of his operations. The
PROCESSOR shall at the completion of this Project remove all waste
materials, rubbish, and debris which are a result of his
operations from said sites and adjoining property.
II-5.20. MEASUREMENTS --- The basic unit of measurement is WET TONS of
biosolids removed from the Sludge Dewatering Building. The
PROCESSOR shall be required to weigh-in to determine the actual
amounts of biosolids removed from the Sludge Dewatering.
II-5.21. AMENDMENT OF CONTRACT --- The terms of this Contract may only be
amended in a writing signed by a duly authorized representative of
the PROCESSOR and by the Mayor.
II-5.22. SEVERABILITY CLAUSE --- If any provision, clause, sentence or
paragraph of this contract shall be held invalid, such invalidity
shall not affect the other provisions.
<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and date
first above written.
CITY OF TOLEDO, OHIO N-VIRO INTERNATIONAL
CORPORATION, INC.
By: /s/ Carlton S. Finkbeiner By: /s/ Terry J. Logan
------------------------------ -----------------------
Carlton S. Finkbeiner
Title: Mayor Title: /s/ President
---------------------------- -----------------------
Date: /s/ 9/2/99 Date: /s/ 8/27/99
---------------------------- -----------------------
APPROVED AS TO CONTENT: APPROVED AS TO FORM:
/s/ Donald Moline /s/ Barbara Herring
- ------------------------- ------------------------
Donald Moline, Director Barbara Herring
Public Utilities Department Acting Director - Law Department
/s/ Robert Stevenson
- -------------------------
Robert C. Stevenson
Commissioner, Treatment Services
/s/ Robert L. Johnson
- -------------------------
Robert L. Johnson, Manager
Division of Water Reclamation
<PAGE> 16
FISCAL OFFICER'S CERTIFICATE
----------------------------
I hereby certify that certificates will be furnished on purchase orders as
issued, provided that at the time there is sufficient money in the Treasury, or
in the process of collection, to the credit of the particular fund, division or
code to be benefited from this contract with
<TABLE>
<CAPTION>
<S> <C>
N-Viro International Corp. of 3450 W. Central Ave., Ste. 328, Toledo, OH 43606
- ------------------------------- ----------------------------------------------------
/s/ 9/2/99 /s/ John Bibish
- ------------------------------- -------------------------------------------------------
Date John Bibish
Director of Finance
City of Toledo
</TABLE>
<PAGE> 1
EXHIBIT 2
[logo] N-VIRO
N-Viro International Corporation
NEWS RELEASE FOR IMMEDIATE RELEASE
For More Information Contact:
J. Patrick Nicholson
N-Viro International Corporation
(419) 535-6374
TOLEDO AND N-VIRO RENEW CONTRACT
--------------------------------
Toledo, Ohio, September 7, 1999 - J. Patrick Nicholson, CEO and Chairman of
N-Viro International Corporation [NASDAQ/NVIC], announced today that Toledo and
N-Viro have signed a five-year extension of N-Viro's contract to manage the
N-Viro Soil(TM) facility located at the city's Bayview Wastewater Reclamation
plant.
Toledo has the option to renew the contract for five additional years. N-Viro
provides total management of all biosolids processed at the Toledo facility.
"The Toledo N-Viro Soil facility is now in its tenth year of operation and has
received numerous state and federal awards and recognition," Nicholson said.
"The Toledo facility is one of the most cost-effective `Exceptional Quality'
(EQ) facilities in the U.S. EQ is the highest standard of performance recognized
by the U.S. Environmental Protection Agency in the treatment of wastewater
residuals."
In addition to the Toledo operation, N-Viro co-owns two regional facilities and
provides operating, technical and marketing services to a number of public and
private licensees around the world.
According to Nicholson: "The Toledo facility serves as N-Viro's working model
for the training of both national and international licensees. Today, more than
75 publicly owned treatment plants are processing wastewater residuals using
N-Viro technology. The process pasteurizes disease-causing pathogens, fixates
metals, immobilizes nutrients to reduce pollution run-off and leaching of
waterways and ground water, and converts odorous sludge into a soil-like
product."
- MORE -
<PAGE> 2
Annual production at the Toledo facility is approximately 50,000 tons of N-Viro
Soil. To produce this amount of material, it utilizes N-Viro's initial patented
advanced alkaline stabilization technology, which usually includes aeration to
achieve accelerated drying.
All material is sold or used by the city.
In addition to Toledo's advanced alkaline stabilization process, other N-Viro
accelerated-drying options include: "Bio-Dry," a patented process to add
mechanical drying in lieu of aeration; "Bio-Blend," a patented process to
co-compost yard wastes using N-Viro Soil as a reagent; a patented bulk drying
process currently being used by VFL Technology, Inc., at its Wilmington,
Delaware, N-Viro facility; and an English patent-pending process which utilizes
enclosed recycling with passive drying.
"All of these processes," Nicholson said, "offer unique operating options; and,
in every case, an `EQ' marketable product with multiple sales opportunities is
produced. Each ton of product is protected by a $5 million product insurance
policy underwritten by N-Viro."
The Company cautions that words used in this document such as "expects,"
"anticipates," "believes" and "may," as well as similar words and expressions
used herein, identify and refer to statements describing events that may or may
not occur in the future. These forward-looking statements and the matters to
which they refer are subject to considerable uncertainty that may cause actual
results to be materially different from those described herein.
- 30 -
