<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
N-VIRO INTERNATIONAL CORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
N-VIRO INTERNATIONAL CORPORATION
3450 W. CENTRAL AVENUE, SUITE 328
TOLEDO, OHIO 43606
------------------------
April 19, 1999
To all N-Viro International Corporation Stockholders:
The Board of Directors joins us in inviting you to attend the Annual Meeting
of Stockholders. The meeting will be held in the West Point Room of the Toledo
Club, 235 14th Street, Toledo, Ohio on May 13, 1999. The meeting will begin at
3:00 p.m. (local time). Registration will begin at 2:30 p.m. Refreshments will
be served before the meeting.
In addition to the matters described in the attached Proxy Statement, we
will report on the business and progress of N-Viro during 1998 and for the first
quarter of 1999. N-Viro's performance for the year ended December 31, 1998 is
discussed in the enclosed 1998 Annual Report to Stockholders.
We hope you will be able to attend the meeting and look forward to seeing
you there.
Sincerely,
/s/ J. PATRICK NICHOLSON
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
/s/ JAMES K. McHUGH
CHIEF FINANCIAL OFFICER AND
SECRETARY/TREASURER
<PAGE>
N-VIRO INTERNATIONAL CORPORATION
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
AND
PROXY STATEMENT
MEETING DATE
MAY 13, 1999
------------------------
YOUR VOTE IS IMPORTANT!
YOU ARE URGED TO SIGN, DATE, AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
<PAGE>
N-VIRO INTERNATIONAL CORPORATION
3450 W. CENTRAL AVENUE, SUITE 328
TOLEDO, OHIO 43606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1999
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of N-Viro
International Corporation will be held in the Corinthian Room of the Toledo
Club, 235 14th Street, Toledo, Ohio on May 13, 1999. The Annual Meeting will
begin at 3:00 p.m. (local time), for the purpose of considering and acting upon:
1. The election of four Class III Directors for a term of three years.
2. The ratification of the appointment of McGladrey & Pullen, LLP to serve
as independent auditors for the Company for its year ended 1999.
3. The transaction of such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on April 2, 1999, will be
entitled to notice of, and to vote at, such Annual Meeting or any adjournment
thereof. Information relating to matters to be considered and voted on at the
Annual Meeting is set forth in the Proxy Statement accompanying this notice.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James K. McHugh
CHIEF FINANCIAL OFFICER, SECRETARY AND
TREASURER
Toledo, Ohio
April 19, 1999
PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. THE
PROXY MAY BE REVOKED BY YOU AT ANY TIME, AND GIVING YOUR PROXY WILL NOT AFFECT
YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE ANNUAL MEETING.
<PAGE>
N-VIRO INTERNATIONAL CORPORATION
3450 W. CENTRAL AVENUE, SUITE 328
TOLEDO, OHIO 43606
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1999
GENERAL
THIS PROXY STATEMENT IS FURNISHED TO THE STOCKHOLDERS OF N-VIRO
INTERNATIONAL CORPORATION (THE "COMPANY") BY ITS MANAGEMENT AND THE BOARD OF
DIRECTORS IN CONNECTION WITH THE SOLICITATION OF PROXIES IN THE ENCLOSED FORM TO
BE USED IN VOTING AT THE ANNUAL MEETING OF STOCKHOLDERS (THE "ANNUAL MEETING"),
WHICH IS SCHEDULED TO BE HELD ON TUESDAY, MAY 13, 1999 AT 3:00 P.M. (LOCAL TIME)
AS SET FORTH IN THE FOREGOING NOTICE. At the Annual Meeting, the stockholders
will be asked to elect four Class III Directors, ratify the appointment of
McGladrey & Pullen, LLP to serve as independent auditors of the Company and
transact such other business as may properly come before the Annual Meeting or
any adjournment thereof.
A share cannot be voted at the Annual Meeting unless the holder thereof is
present or represented by proxy. When proxies in the accompanying form are
returned properly executed and dated, the shares represented thereby will be
voted at the Annual Meeting. If a choice is specified in the proxy, the shares
represented thereby will be voted in accordance with such specification. If no
specification is made, the proxy will be voted FOR the action proposed. Any
stockholder giving a proxy has the right to revoke it any time before it is
voted by filing with the Secretary/Treasurer of the Company a written
revocation, or by filing a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. The revocation of a proxy
will not be effective until notice thereof has been received by the Secretary/
Treasurer of the Company.
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, Directors and officers of the Company may
solicit proxies by telephone, facsimile or personal interview. The Company will
reimburse Directors and officers for their reasonable out-of-pocket expenses in
connection with such solicitation. The Company will request brokers and nominees
who hold shares in their names to furnish this proxy material to the persons for
whom they hold shares and will reimburse such brokers and nominees for their
reasonable out-of-pocket expenses in connection therewith. The Company has hired
Corporate Investors Communications to solicit proxies for a fee not to exceed
$3,000, plus expenses and other customary charges.
The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the total number of shares of common stock outstanding on the
record date shall constitute a quorum for the transaction of business by such
holders at the Annual Meeting. The four nominees for election as Class III
Directors who receive the highest number of votes therefor at the Annual Meeting
shall be elected as Class III Directors. The ratification of the appointment of
McGladrey & Pullen, LLP as independent auditors shall require the affirmative
vote of a majority of the holders of shares of common stock present or
represented by proxy at the Annual Meeting where a quorum is present.
The executive offices of the Company are located at 3450 West Central
Avenue, Suite 328, Toledo, Ohio 43606. The telephone number is (419) 535-6374.
The approximate date on which this material was first sent to stockholders was
April 19, 1999. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1998, INCLUDING THE FINANCIAL STATEMENTS, MAY BE OBTAINED
WITHOUT CHARGE BY WRITING TO THE CORPORATE SECRETARY, N-VIRO INTERNATIONAL
CORPORATION AT THE ABOVE ADDRESS.
THE DATE OF THIS PROXY STATEMENT IS APRIL 19, 1999.
<PAGE>
VOTING SECURITIES OUTSTANDING
AND PRINCIPAL HOLDERS THEREOF
The Company had outstanding 2,579,733 shares of common stock, $.01 par value
per share (the "shares of common stock"), on April 2, 1999. These shares of
common stock constitute the only class of outstanding voting securities of the
Company. Stockholders of record at the close of business on April 2, 1999 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
thereof. Each share of common stock is entitled to one vote on all matters to
come before the Annual Meeting. Stockholders are not permitted to cumulate votes
for the purpose of electing directors or otherwise.
At April 2, 1999, the following were the only persons known to the Company
to own beneficially more than 5% of the outstanding shares of common stock:
<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING SHARES
SHARES OF COMMON STOCK OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON STOCK AS OF APRIL 2, 1999
- ------------------------------------------------------ ----------------------- ---------------------------------
<S> <C> <C>
N-Viro Energy Systems, Ltd.(1) 488,117 18.92%
3450 West Central Avenue, Suite 328
Toledo, Ohio 43606
N-Viro Energy Systems, Inc.(2) 208,844 8.10%
3450 West Central Avenue, Suite 328
Toledo, Ohio 43606
J. Patrick Nicholson(3) 839,625 32.55%
3450 West Central Avenue, Suite 328
Toledo, Ohio 43606
Kevin D. Clark 158,000(4) 6.12%
790 North Milwaukee Street
Milwaukee, WI 53202
</TABLE>
PROPOSAL 1 -- ELECTION OF FOUR DIRECTORS
The By-Laws of the Company provide that the Board of Directors shall be
divided into three classes of equal or approximately equal number and that the
number of Directors shall from time to time be fixed and determined by a vote of
a majority of the Company's entire Board of Directors serving at the time of
such vote. The Directors are elected for a three-year term or until the election
and qualification of their respective successors. It is intended by the Board
that proxies received will be voted to elect the four Class III Directors named
below to serve for a three-year term until their respective successors are
elected and have qualified or until their earlier resignation or removal.
- ------------------------
(1) N-Viro Energy Systems, Ltd. (the "Partnership") is a limited partnership and
was one of the predecessor entities that combined to form the Company in
October 1993. The general partners of the Partnership are J. Patrick
Nicholson, Chairman, Chief Executive Officer and President of the Company,
N-Viro Energy Systems, Inc., a corporation of which Mr. Nicholson is the
controlling stockholder, and four trusts established for the benefit of Mr.
Nicholson's children. Under the limited partnership agreement for the
Partnership, Mr. Nicholson, as general partner, has the voting and
dispositive power over the shares of common stock held by the Partnership.
(2) N-Viro Energy Systems, Inc. is the corporate general partner of the
Partnership.
(3) J. Patrick Nicholson is the Chairman, Chief Executive Officer and President
of the Company.
(4) Information derived from a Schedule 13G filed on December 11, 1998 by Kevin
D. Clark, an individual. Such individual has the sole power to vote (or to
direct the vote) and sole power to dispose (or to direct the disposition of)
158,000 shares of common stock.
2
<PAGE>
If any nominee declines or is unable to accept such nomination to serve as a
Class III Director, events which the Board does not now expect, the proxies
reserve the right to substitute another person as a Board nominee, or to reduce
the number of Board nominees, as they shall deem advisable. The Proxy solicited
hereby will not be voted to elect more than four Class III Directors.
CLASS III
DIRECTORS TO BE ELECTED
WALLACE G. IRMSCHER, AGE 76. Mr. Irmscher has been self-employed as a consultant
in the construction and construction materials industry since 1995. Prior to the
time, Mr. Irmscher was an officer and Director of Newfoundland Resources and
Mining Limited (quarry operation), an entity that was the subject of bankruptcy
proceedings in 1995. Mr. Irmscher is a Director of United States Lime and
Minerals, Inc. (publicly traded company), has served as a Director of the
Company since May 1995 and is a member of the Board's Audit and Finance
Committees.
CHARLES B. KAISER, JR., AGE 75. From 1957 until his retirement in 1990, Mr.
Kaiser was general counsel to the St. Louis Metropolitan Sewer District. Mr.
Kaiser is also a former President of both the Water Environment Federation and
the Association of Metropolitan Sewerage Agencies. Mr. Kaiser has served as a
Director of the Company since May 1993 and is a member of the Board's Audit and
Finance Committees.
FREDERICK H. KURTZ, AGE 64. Mr. Kurtz is President of PARCOR Incorporated
(consulting firm). From May 1993 to June 1995, Mr. Kurtz was the Chief Operating
Officer of the Company and was the Executive Director of the Middlesex County
Utility Authority from 1986 to 1993. Mr. Kurtz has served as Director of the
Company since May 1993, is currently Vice Chairman of the Board and is a member
of the Board's Compensation and Nominating Committees.
DANIEL J. HASLINGER, AGE 43. Mr. Haslinger is Chief Executive Officer and Owner
of Micro Macro Integrated Technologies. Mr. Haslinger is also Chief Executive
Officer of both WJZE 97.3FM Mission Radio Broadcasting and Buckeye Beef. Mr.
Haslinger is President of N-Viro Filipino, a licensee of the Company. Mr.
Haslinger is up for election for the first time with the Company and will be a
member of the Board's Audit and Nominating Committees.
CLASS I
DIRECTORS WHOSE TERMS CONTINUE(1)
BOBBY B. CARROLL, AGE 65. Mr. Carroll is the President and Chief Executive
Officer of Pozzolanic Contracting & Supply Co., a supplier of roadway
construction materials in the Southeast U.S.. Mr. Carroll also acts as a
consultant to the Company with respect to various matters. Mr. Carroll has
served as a Director of the Company since May 1997 and is a member of the
Board's Compensation and Finance Committees.
J. PATRICK NICHOLSON, AGE 62. Mr. Nicholson became Chairman, Chief Executive
Officer of the Company in May 1993. In 1979, he founded the Partnership, one of
the predecessor entities that combined to form the Company in October 1993. From
the Partnership's inception to present, Mr. Nicholson has served as one of its
general partners and is the controlling stockholder of N-Viro Energy Systems,
Inc., the corporate general partner of the Partnership. Mr. Nicholson has served
as a Director of the Company since May 1993.
B.K. WESLEY COPELAND, AGE 65. Mr. Copeland, a physical chemist, was the Founder
of the International Science and Technology Institute, Inc., as well as Founder
and CEO of the Foundation for Economic Development. Mr. Copeland has served as a
Director of the Company since May 1997 and is a member of the Board's
Compensation and Nominating Committees.
- ------------------------
(1) The terms of Messrs. Carroll, J. Nicholson and Copeland expire in 2000.
3
<PAGE>
CLASS II
DIRECTORS WHOSE TERMS CONTINUE(2)
TERRY J. LOGAN, PH.D., AGE 56. Dr. Logan is a professor of Agronomy at The Ohio
State University. Dr. Logan served as President of Pan-American N-Viro Inc.
(affiliate of the Company) from 1994 through 1995 and is the President of Logan
Environmental, Inc. (environmental consulting firm). Dr. Logan also acts as a
consultant to the Company with respect to various matters. Dr. Logan has signed
an employment agreement with the Company to become President and Chief Operating
Officer effective July 1, 1999. Dr. Logan has been a member of the Board since
May 1993.
JAMES D. O'NEIL, P.E., AGE 68. Mr. O'Neil has served as the Vice-President of
Engineering and Operations since May, 1993. Prior to that date, Mr. O'Neil was
Vice-President and General Manager of Leon Boulton & Son, Inc., for 14 years,
and subsequently self-employed as an engineering consultant. Mr. O'Neil has been
a member of the Board since August, 1997.
MICHAEL G. NICHOLSON, AGE 32. Mr. Nicholson has served as the Vice-President of
Sales and Marketing of the Company since December, 1996. Prior to that date, Mr.
Nicholson served the Company and the Partnership in various management positions
in sales. Mr. Nicholson is the son of J. Patrick Nicholson, Chairman, Chief
Executive Officer and President of the Company. Mr. Nicholson has been a member
of the Board since February, 1998.
THE MANAGEMENT AND THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY
RECOMMEND THAT YOU VOTE "FOR" THE ELECTION OF THE ABOVE NOMINEES FOR CLASS III
DIRECTORS. The nominees who receive the highest number of votes at the Annual
Meeting shall be elected as Directors.
BOARD AND COMMITTEES
Pursuant to Delaware law, under which the Company is organized, the
Company's business, property and affairs are managed under the direction of the
Board of Directors. The Board met five times during the year ended December 31,
1998. The Board has appointed standing Audit, Compensation, Finance and
Nominating Committees. In 1998, each incumbent Director attended at least 75% of
the aggregate meetings of the Board and the Committees on which they served,
except B.K. Wesley Copeland, who attended three of the five meetings.
The Audit Committee of the Board of Directors currently consists of three
members and met four times during the year ended December 31, 1998. The Audit
Committee recommends the appointment of auditors and oversees the accounting and
internal audit functions of the Company.
The Compensation Committee of the Board of Directors currently consists of
three members and met once during the year ended December 31, 1998. The
Compensation Committee determines officers' salaries and bonuses and administers
the grant of stock options pursuant to the Company's Stock Option Plan.
The Finance Committee of the Board of Directors currently consists of three
members and did not meet during the year ended December 31, 1998. The Finance
Committee assists in monitoring cash flow requirements of the Company and
approves any internal or external financing or leasing arrangements.
The Nominating Committee of the Board of Directors currently consists of
three members and met twice during year ended December 31, 1998. The Nominating
Committee considers and recommends to the Board of Directors nominees for
election to the Board of Directors. The Nominating Committee may, in its
discretion, consider nominations by stockholders proposed for the 2000 Annual
Meeting. All stockholder nominations should be directed to N-Viro International
Corporation, 3450 W. Central Avenue,
- ------------------------
(2) The terms of Messrs. Logan, O'Neil and M. Nicholson expire in 2001.
4
<PAGE>
Suite 328, Toledo, Ohio 43606, Attention: Secretary/Treasurer. Such stockholder
recommendations must
be in writing, contain a description of the nominee's qualifications and his or
her consent to serve and must be received by the Company no later than January
10, 2000.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth, as of April 2, 1999, unless otherwise
specified, certain information with respect to the beneficial ownership of the
Company's shares of common stock by each person who is a Director of the
Company, a nominee for the Board, each of the named Executive Officers, and by
the Directors and Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP OF COMMON
STOCK AS APRIL 2, PERCENT OF
NAME OF BENEFICIAL OWNER 1999 CLASS
- ------------------------------------------------------------------------- ------------------- ---------------
<S> <C> <C>
Bobby B. Carroll......................................................... 125,600(1)(2) 4.87%
B.K. Wesley Copeland..................................................... 9,000(2) .35%
Daniel Haslinger......................................................... 12,500(2) .48%
Wallace G. Irmscher...................................................... 9,100(2) .35%
Charles B. Kaiser, Jr.................................................... 9,300(2) .36%
Frederick H. Kurtz....................................................... 76,300(2) 2.96%
Terry L. Logan........................................................... 29,487(2) 1.14%
James K. McHugh.......................................................... 11,726(2) .45%
J. Patrick Nicholson..................................................... 839,625(2)(3) 32.55%
Michael G. Nicholson..................................................... 26,570(2) 1.03%
James D. O'Neil.......................................................... 11,425(2) .44%
All Directors and Executive Officers as a group (11 persons)............. 1,160,633(4) 44.99%
</TABLE>
- ------------------------
(1) Includes 41,600 Shares actually owned by Pozzolanic Contracting & Supply
Co., a company of which Mr. Carroll is the controlling shareholder.
(2) Includes shares not actually owned by such individuals as of April 2, 1999,
but of which beneficial ownership could be acquired currently by such
individuals upon the exercise of outstanding options.
(3) Includes 488,117 shares owned by the Partnership, of which Mr. Nicholson is
a general partner, and 208,844 shares owned by N-Viro Energy Systems, Inc.,
a corporation of which Mr. Nicholson is the controlling shareholder.
(4) Includes an aggregate of 154,150 shares not actually owned by such Directors
and Executive Officers as of April 2, 1999, but of which beneficial
ownership could be acquired currently by such Directors and Executive
Officers upon the exercise of outstanding options.
EXECUTIVE OFFICERS OF THE COMPANY
The following information is furnished as to the Executive Officers of the
Company:
J. PATRICK NICHOLSON, AGE 62. Mr. Nicholson has served as Chairman, Chief
Executive Officer and President of the Company since its inception in May 1993.
As described above, Mr. Nicholson served in a similar capacity to the
Partnership prior to that date.
JAMES K. MCHUGH, AGE 40. Mr. McHugh has served as Chief Financial Officer,
Secretary and Treasurer of the Company since January 1997. Prior to that date,
Mr. McHugh served the Company and the Partnership in various capacities
including Controller and Director of Accounting and Taxation.
5
<PAGE>
REMUNERATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table presents the total compensation awarded to, earned by,
or paid to, the Chief Executive Officer of the Company during 1997 and 1998.
There were no other Executive Officers of the Company who were serving at the
end of 1998 and whose total annual salary and bonus, if any, exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
----------------------- COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#)(1) COMPENSATION ($)
- ------------------------------------------------ --------- ---------- ----------- --------------- -----------------------
<S> <C> <C> <C> <C> <C>
J. Patrick Nicholson............................ 1998 $ 131,250 21,000 50,000 0
Chairman, Chief Executive 1997 $ 125,600 0 5,000 0
Officer and President 1996 $ 147,500 0 0 0
</TABLE>
- ------------------------
(1) The numbers shown represent the number of shares of common stock for which
options were granted to the named Executive Officer in 1997 and 1998.
EMPLOYMENT AGREEMENTS
On July 1, 1993, Mr. Nicholson entered into a three-year employment
agreement with the Company providing for automatic one-year renewals and minimum
annual salary of $250,000. Such agreement also provides that Mr. Nicholson shall
be entitled to (i) bonuses to be payable at the discretion of the Board of
Directors, and (ii) such medical and other benefits, including insurance and
pension plan, as are provided to other Executive Officers of the Company.
Effective March 1, 1998, Mr. Nicholson voluntarily agreed to reduce his minimum
annual salary to $131,250 for the year ended December 31, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
% OF TOTAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION
UNDERLYING EMPLOYEES EXERCISE OR FOR OPTION TERM(1)
OPTIONS IN FISCAL BASE PRICE EXPIRATION ---------------------
NAME GRANTED(2) YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ------------------------------------- ----------- ----------- ------------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. Patrick Nicholson................. 50,000 20.5% $ 2.50 2/14/2009 $ 78,612 $ 199,218
</TABLE>
- ------------------------
(1) The potential realizable value through the expiration date of each option
has been determined on the basis of the closing price on August 14, 1998,
compounded annually over the term of the option, net of the exercise price.
These values have been determined based upon assumed rates of appreciation
and are not intended to forecast the possible future appreciation, if any,
of the price or value of the Company's common stock.
(2) All options have been granted pursuant to the Amended and Restated N-Viro
International Stock Option Plan. Options granted are exercisable on the date
of grant and on each succeeding anniversary thereof as to 20% of the shares
of common stock issuable with respect to such options.
- ------------------------
6
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED IN-
THE-MONEY
NUMBER OF UNEXERCISED OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR FISCAL YEAR
ACQUIRED VALUE END(2) END($)(3)
ON REALIZED -------------------------- ---------------
NAME EXERCISE(1) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE
- ----------------------------------- ----------------- ------------- ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
J. Patrick Nicholson............... 0 $ 0 37,000 43,000 $ 0
<CAPTION>
NAME UNEXERCISABLE
- ----------------------------------- -----------------
<S> <C>
J. Patrick Nicholson............... $ 0
</TABLE>
- ------------------------
(1) No options were exercised by the named Executive Officer in 1998.
(2) All options have been adjusted to reflect a one-for-four reverse stock split
effective October 31, 1995.
(3) Options are "in-the-money" only if the closing market price of the common
stock on December 31, 1998 exceeded the exercise price of the options. There
were no "in-the-money" options held by Executive Officers of the Company on
December 31, 1998 at $1.375 per share closing price.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive additional
compensation for serving as Directors. Effective April 1, 1994, non-employee
Directors no longer receive cash compensation, but receive stock options
pursuant to the Company's Stock Option Plan. Each Director currently receives a
grant of 500 shares of Common Stock of the Company per meeting attended, as
approved by the Compensation Committee on May 9, 1997. Directors of the Company
are reimbursed for out-of-pocket expenses incurred in attending meetings of the
Board of Directors or any committees thereof.
COMPENSATION COMMITTEE INTERLOCKS
During 1998, the members of the Compensation Committee consisted of Mr.
Copeland, Mr. Carroll and Mr. Kurtz, each of whom is a non-employee Director of
the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation of the Company's Executive Officers is determined by the
Compensation Committee of the Board of Directors.
The Committee's compensation philosophy is to provide competitive forms and
levels of compensation compared to industrial companies of similar size and
business area. This philosophy is intended to assist the Company in attracting,
retaining and motivating executives with superior leadership and management
abilities. Consistent with this philosophy, the Committee determines a total
compensation structure for each officer, consisting primarily of salary, bonus
and stock options. The proportions of the various elements of compensation vary
among the officers depending upon their levels of responsibility.
The Committee establishes salaries at a level intended to be competitive
with the average salaries of Executive Officers in comparable companies with
adjustments made to reflect the financial health of the Company. Bonuses are
intended to provide executives with an opportunity to receive additional cash
compensation, but only if they earn it through Company and individual
performance.
Long-term incentives are provided through stock options granted under the
Company's Stock Option Plan. The stock options represent an additional vehicle
for aligning management's and stockholders' interest, specifically motivating
executives to remain focused on the market value of the Common Stock in addition
to earnings per share and return on equity goals.
The Committee, subject to any employment agreement in effect with its
Executive Officers reviews and recommends to the Board of Directors for approval
the salaries, bonuses and long-term incentives of the Company's officers,
including its most highly compensated Executive Officers. In addition, the
7
<PAGE>
Committee grants stock options under the Company's Stock Option Plan to
Executive Officers and other selected employees, Directors and to consultants,
and otherwise administers the Company's Stock Option Plan.
The Committee has not formulated any policy regarding qualifying
compensation paid to the Company's Executive Officers for deductibility under
the limits of Section 162(m) of the Internal Revenue Code of 1986, as amended,
because the Committee does not anticipate that any executive officers would
receive compensation in excess of such limits in the foreseeable future.
With respect to Chief Executive Officer compensation, Mr. Nicholson's base
salary for 1998 was $131,250. Mr. Nicholson's base salary is determined by his
Employment Agreement which entitles him to a minimum annual base salary of
$250,000. See "Employment Agreements." However, Mr. Nicholson has reduced his
base salary in each of the four preceding years. He will be paid an annual
minimum base salary of $131,250 for 1999. Mr. Nicholson will continue to accept
a reduced base salary until such time as the Company's profitability permits
payment of the $250,000 annual minimum base salary provided for in his
Employment Agreement.
The Committee is also responsible for recommending to the Board of Directors
bonus amounts payable to Mr. Nicholson, the Chief Executive Officer. Any bonuses
payable will be determined by the Committee, based on the same elements and
factors relating to the other Executive Officers of the Company. A $21,000 bonus
was paid to Mr. Nicholson in 1998. As the founder and the largest beneficial
owner (32.55% of total shares of common stock outstanding) of the Company, Mr.
Nicholson has a significant portion of his wealth invested in the Company's
stock. Mr. Nicholson's level of stock ownership continues to provide a strong
link between Company performance and the resulting rewards.
Compensation Committee of the Board of Directors
N-Viro International Corporation
Bobby B. Carroll
B.K. Wesley Copeland
Frederick H. Kurtz
8
<PAGE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change and
the cumulative total shareholder return on the Company's shares against the
cumulative total return of the NASDAQ Stock Market (U.S. Companies) Index and an
index comprised of Peer Group companies selected by the Company. The Peer Group
consists of six companies considered to be either competitors or similar to the
Company. Upon written request to the Secretary/Treasurer, N-Viro International
Corporation, 3450 West Central Avenue, Suite 328, Toledo, Ohio 43606, the
Company shall provide stockholders with the names of the component issuers. The
data is for the period beginning October 12, 1993, the date of the Company's
initial public offering, and ending December 31, 1998. The calculation assumes
that $100 was invested at the close of business on October 12, 1993 and all
dividends are assumed to be reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PEER GROUP NASDAQ INDEX N-VIRO
<S> <C> <C> <C>
1/1/98 100 100 100
84 96 112
74 91 44
78 99 38
12/31/98 61 98 28
64 107 26
73 122 26
93 137 14
12/30/99 89 138 8
89 145 14
88 157 15
93 162 20
1/1/01 54 170 9
51 161 9
56 190 8
63 223 10
1/1/02 56 208 10
64 244 9
79 251 12
73 226 10
1/1/03 88 294 6
</TABLE>
Except to the extent the Company specifically incorporates this information
by reference, the foregoing Report of the Compensation Committee and Stock Price
Performance Graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). This information shall not otherwise be
deemed filed under such Acts.
SECTION 16(A) COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Directors and
Executive Officers, and persons who own beneficially more than ten percent (10%)
of the shares of common stock of the Company, to file reports of ownership and
changes of ownership with the Securities and Exchange Commission. Copies of all
filed reports are required to be furnished to the Company pursuant to Section
16(a). Based solely on the reports received by the Company and on written
representations from reporting persons, the Company believes that the Directors
and Executive Officers complied with all applicable filing requirements during
the fiscal year ended December 31, 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Bobby B. Carroll, a consultant to and Director of the Company, is currently
under a consulting contract with the Company that will pay him $60,000 per year
through 2002. In addition, Pozzolanic Contracting & Supply Co., a company of
which Mr. Carroll is the controlling shareholder, sells materials to the Company
in the ordinary course of business, the aggregate amount was approximately
$68,000 in 1998.
9
<PAGE>
Frederick Kurtz, a consultant to and Director of the Company, received
consulting fees in the amounts of $30,000 in 1998 and $30,000 in 1997. Mr. Kurtz
was paid these fees in the form of shares of common stock in the Company.
Dr. Terry J. Logan, Ph.D., a consultant to and Director of the Company,
received consulting fees in the amounts of $88,000 in 1998 and $41,333 in 1997.
Dr. Logan is also the controlling shareholder of Logan Environmental, Inc., an
environmental consulting firm which performs consulting services for the Company
from time to time.
Charles Kaiser, a consultant to and Director of the Company, received
consulting fees in the amounts of $4,500 in 1998 and $3,500 in 1997.
James D. O'Neil, a Director of the Company, has been employed as
Vice-President of Engineering and Operations of the Company since March, 1993.
Prior to that date, Mr. O'Neil was Vice-President and General Manager of Leon
Boulton + Son, Inc. for 14 years, and subsequently self-employed as an
engineering consultant. For the years ended 1998 and 1997, Mr. O'Neil earned
$105,000 and $76,100, respectively, from the Company.
Michael Nicholson, a Director of the Company, has been employed as
Vice-President of Sales and Marketing of the Company since December, 1996. Prior
to that date, Mr. Nicholson served the Company and the Partnership in various
management positions in sales. For the years ended 1998 and 1997, Mr. Nicholson
earned $83,500 and $73,400, respectively, from the Company. Mr. Nicholson is the
son of J. Patrick Nicholson, Chairman, Chief Executive Officer and President of
the Company.
PROPOSAL 2 -- RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The firm of McGladrey & Pullen, LLP served as independent auditors of the
Company for the year ended December 31, 1998 and has been selected by the
Company to serve as its independent auditors for the year ending December 31,
1999. McGladrey & Pullen, LLP became the Company's independent auditors on
January 10, 1996, succeeding Ernst & Young LLP which served as the Company's
independent auditors of the Company since the Company's inception in 1993.
Although the submission of this matter for approval by the stockholders is not
legally required, the Board believes that such submission follows sound business
practice and is in the best interests of the stockholders. If the appointment is
not ratified by the holders of a majority of the shares present in person or by
proxy at the Annual Meeting, the Directors will consider the selection of
another accounting firm. If such a selection were made, it may not become
effective until 2000 because of the difficulty and expense of making such a
substitution. Representatives of McGladrey & Pullen, LLP, are expected to attend
the Annual Meeting and will be available to respond to appropriate questions.
Those representatives will have the opportunity to make a statement if they
desire to do so.
Audit services of McGladrey & Pullen, LLP for the year ended December 31,
1998 included the audit of the financial statements of the Company included in
the Annual Report to Shareholders for 1998, services related to filings with the
Securities and Exchange Commission and consultation and assistance on accounting
related matters.
The services furnished by McGladrey & Pullen, LLP have been at customary
rates and terms. There are no existing direct or indirect understandings or
agreements that place a limit on future years' audit fees.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" THE RATIFICATION OF MCGLADREY & PULLEN, LLP. The affirmative vote of the
holders of a majority of shares of common stock present in person or by proxy at
the Annual Meeting will be required for such ratification.
10
<PAGE>
OTHER MATTERS
The Company is not aware of any matters to be presented for action at the
Annual Meeting other than the matters set forth above. If any other matters do
properly come before the meeting or any adjournment thereof, it is intended that
the persons named in the proxy will vote in accordance with their judgment on
such matters.
STOCKHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Stockholders' proposals intended to be presented at the 2000 Annual Meeting
of Stockholders must be received by the Company no later than January 7, 2000
for inclusion in the Company's proxy statement and form of proxy relating to
that meeting.
BY THE ORDER OF THE BOARD OF DIRECTORS
/s/ James K. McHugh
CHIEF FINANCIAL OFFICER, SECRETARY AND
TREASURER
11
<PAGE>
N-VIRO INTERNATIONAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders
To Be Held May 13, 1999
Revoking all prior proxies, the undersigned, a stockholder of N-VIRO
INTERNATIONAL CORPORATION (the "Company"), hereby appoints J. Patrick
Nicholson and James K. McHugh, and each of them, attorneys and agents of the
undersigned, with full power of substitution to vote all shares of the Common
Stock, par value $.01 per share (the "Common Stock"), of the undersigned in
the Company at the Annual Meeting of Stockholders of the Company to be held
in the West Point Room of the Toledo Club, 235 14th Street, Toledo, Ohio
on May 13, 1999 at 3:00 p.m., local time, and at any adjournment thereof,
as fully and effectively as the undersigned could do if personally present
and voting, hereby approving, ratifying and confirming all that said
attorneys and agents or their substitutes may lawfully do in place of the
undersigned as indicated below.
1. Election of Class III FOR all nominees listed below
Directors (EXCEPT AS MARKED TO THE CONTRARY BELOW) / /
WITHHOLD AUTHORITY
TO VOTE FOR ALL NOMINEES LISTED BELOW / /
Nominees: Wallace G. Irmscher, Charles B. Kaiser, Jr., Frederick H. Kurtz
and Daniel Haslinger
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- ------------------------------------------------------------------------------
2. Ratify the appointment of McGladrey & Pullen, LLP as independent auditors.
/ / FOR / / AGAINST / / ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
(CONTINUED AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
DIRECTIONS INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE LISTED
NOMINEES AS CLASS III DIRECTORS AND FOR PROPOSAL 2.
Please sign exactly as name appears below.
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in the full corporation name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
Dated , 1999
-------------------------------
------------------------------------------
Signature
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Signature (if held jointly)
/ / PLEASE CHECK HERE IF YOU PLAN TO
ATTEND THE ANNUAL MEETING
