<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12.
</TABLE>
N-VIRO INTERNATIONAL CORP
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
N-VIRO INTERNATIONAL CORPORATION
3450 W. CENTRAL AVENUE, SUITE 328
TOLEDO, OHIO 43606
April 5, 2000
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 11, 2000. 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 1999 and for the
first quarter of 2000. N-Viro's performance for the year ended December 31, 1999
is discussed in the enclosed 1999 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
----------------------------------
J. PATRICK NICHOLSON
Chairman of the Board of Directors
and Chief Executive Officer
/s/: Terry J. Logan
----------------------------------
TERRY J. LOGAN
President and
Chief Operating Officer
/s/: James K. McHugh
----------------------------------
JAMES K. McHUGH
Chief Financial Officer and
Secretary/Treasurer
<PAGE> 3
N-VIRO INTERNATIONAL CORPORATION
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
AND
PROXY STATEMENT
MEETING DATE
MAY 11, 2000
--------------
YOUR VOTE IS IMPORTANT!
YOU ARE URGED TO SIGN, DATE, AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
<PAGE> 4
N-VIRO INTERNATIONAL CORPORATION
3450 W. Central Avenue, Suite 328
Toledo, Ohio 43606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 2000
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
N-Viro International Corporation will be held in the West Point Room of the
Toledo Club, 235 14th Street, Toledo, Ohio on May 11, 2000. The Annual Meeting
will begin at 3:00 p.m. (local time), for the purpose of considering and acting
upon:
1. The election of three Class I Directors for a term of three
years.
2. The ratification of the appointment of Hausser + Taylor, LLP
to serve as independent auditors for the Company for its year
ended 2000.
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 March 24, 2000, 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
--------------------------------------
James K. McHugh
Chief Financial Officer, Secretary and
Treasurer
Toledo, Ohio
April 5, 2000
- -------------------------------------------------------------------------------
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> 5
N-VIRO INTERNATIONAL CORPORATION
3450 W. CENTRAL AVENUE, SUITE 328
TOLEDO, OHIO 43606
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
May 11, 2000
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 THURSDAY, MAY 11, 2000 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 three Class I Directors, ratify the
appointment of Hausser + Taylor, 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 three nominees for election as Class I
Directors who receive the highest number of votes therefor at the Annual Meeting
shall be elected as Class I Directors. The ratification of the appointment of
Hausser + Taylor, 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 5, 2000. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1999, 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 5, 2000.
<PAGE> 6
VOTING SECURITIES OUTSTANDING
AND PRINCIPAL HOLDERS THEREOF
The Company had outstanding 2,632,483 shares of common stock, $.01 par
value per share (the "shares of common stock"), on March 24, 2000. 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 March 24, 2000
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 March 24, 2000, 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>
- --------------------------------------------- --------------------------------- --------------------------------------
Shares of Common Stock Percentage of Outstanding Shares
Name and Address of Beneficial Owner Beneficially Owned of Common Stock as of March 24, 2000
- --------------------------------------------- --------------------------------- --------------------------------------
<S> <C> <C>
N-Viro Energy Systems, Inc.(1) 346,319 13.16%
3450 West Central Avenue, Suite 328
Toledo, Ohio 43606
- -------------------------------------------- --------------------------------- ------------------------------------
J. Patrick Nicholson (2) 532,323 20.22%
3450 West Central Avenue, Suite 328
Toledo, Ohio 43606
- --------------------------------------------- --------------------------------- ------------------------------------
</TABLE>
PROPOSAL 1 - ELECTION OF THREE 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 three Class I 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.
If any nominee declines or is unable to accept such nomination to serve
as a Class I 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 three Class I Directors.
CLASS I
DIRECTORS TO BE ELECTED
BOBBY B. CARROLL, AGE 66. 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.
________________________
(1) N-Viro Energy Systems, Inc. is the corporate general partner of N-Viro
Energy Systems, Limited, a limited partnership that 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 and Chief Executive Officer 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.
(2) J. Patrick Nicholson is the Chairman and Chief Executive Officer of
the Company.
- 2 -
<PAGE> 7
J. PATRICK NICHOLSON, AGE 63. 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 66. 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.
CLASS II
DIRECTORS WHOSE TERMS CONTINUE(1)
TERRY J. LOGAN, PH.D., AGE 57. Dr. Logan became Chief Operating Officer and
President of the Company in July 1999. From 1971 until his retirement in July
1999, Dr. Logan was a professor of Agronomy at The Ohio State University. Dr.
Logan served as President of Pan-American N-Viro Inc. (subsidiary of the
Company) from 1994 through 1995 and is the President of Logan Environmental,
Inc. (environmental consulting firm). Dr. Logan has been a member of the Board
since May 1993.
JAMES D. O'NEIL, P.E., AGE 69. 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 and is a member of the Board's
Nominating Committee.
MICHAEL G. NICHOLSON, AGE 33. 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 and is a member of the Board's Nominating
Committee.
CLASS III
DIRECTORS WHOSE TERMS CONTINUE(2)
WALLACE G. IRMSCHER, AGE 77. 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 76. 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.
_____________________
(1) The terms of Messrs. Logan, O'Neil and M. Nicholson expire in 2001.
(2) The terms of Messrs. Irmscher, Kaiser and Haslinger expire in 2002.
-3-
<PAGE> 8
DANIEL J. HASLINGER, AGE 44. 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 has served as a Director of the Company since May 1999 and is a member
of the Board's Audit and Compensation Committees.
THE MANAGEMENT AND THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY
RECOMMEND THAT YOU VOTE "FOR" THE ELECTION OF THE ABOVE NOMINEES FOR CLASS I
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 four times during the year ended December 31,
1999. The Board has appointed standing Audit, Compensation, Finance and
Nominating Committees. In 1999, each incumbent Director attended at least 75% of
the aggregate meetings of the Board and the Committees on which they served,
except Frederick Kurtz, who attended one of the four meetings.
The Audit Committee of the Board of Directors currently consists of
three members and met four times during the year ended December 31, 1999. 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 twice during the year ended December 31, 1999. 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 met once during the year ended December 31, 1999. 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, 1999. 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 2001 Annual
Meeting. All stockholder nominations should be directed to N-Viro International
Corporation, 3450 W. Central Avenue, 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 12, 2001.
-4-
<PAGE> 9
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth, as of March 24, 2000, 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 of March 24,
Name of Beneficial Owner 2000 Percent of Class
- ----------------------------------------- ------------------------------ ------------------------
<S> <C> <C>
Bobby B. Carroll 126,000(1)(2) 4.79%
- ----------------------------------------- ------------------------------ ------------------------
B.K. Wesley Copeland 9,300(2) .35%
- ----------------------------------------- ------------------------------ ------------------------
Daniel Haslinger 1,800(2) .07%
- ----------------------------------------- ------------------------------ ------------------------
Wallace G. Irmscher 10,725(2) .41%
- ----------------------------------------- ------------------------------ ------------------------
Charles B. Kaiser, Jr. 10,850(2) .41%
- ----------------------------------------- ------------------------------ ------------------------
Terry L. Logan 42,987(2) 1.63%
- ----------------------------------------- ------------------------------ ------------------------
James K. McHugh 19,321(2) .73%
- ----------------------------------------- ------------------------------ ------------------------
J. Patrick Nicholson 532,323(2)(3) 20.22%
- ----------------------------------------- ------------------------------ ------------------------
Michael G. Nicholson 40,601(2) 1.54%
- ----------------------------------------- ------------------------------ ------------------------
James D. O'Neil 18,825(2) .72%
---------------------------------------- ------------------------------ ------------------------
- ----------------------------------------- ------------------------------ ------------------------
All Directors and Executive Officers as 812,732(4) 30.87%
a group (10 persons)
- ----------------------------------------- ------------------------------ ------------------------
</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
March 24, 2000, but of which beneficial ownership could be
acquired currently by such individuals upon the exercise of
outstanding options.
(3) Includes 450 shares owned by the Partnership, of which Mr.
Nicholson is a general partner, and 346,319 shares owned by
N-Viro Energy Systems, Inc., a corporation of which Mr.
Nicholson is the controlling shareholder.
(4) Includes an aggregate of 183,325 shares not actually owned by
such Directors and Executive Officers as of March 24, 2000,
but of which beneficial ownership could be acquired currently
by such Directors and Executive Officers upon the exercise of
outstanding options.
-5-
<PAGE> 10
EXECUTIVE OFFICERS OF THE COMPANY
The following information is furnished as to the Executive Officers of
the Company:
J. PATRICK NICHOLSON, AGE 63. Mr. Nicholson has served as Chairman and Chief
Executive Officer 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.
TERRY J. LOGAN, AGE 57. Dr. Logan has served as Chief Operating Officer of the
Company since July 1999. As described above, Dr. Logan served as a professor at
The Ohio State University prior to that date.
JAMES K. McHUGH, AGE 41. 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.
REMUNERATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table presents the total compensation awarded to, earned
by, or paid to, the Chief Executive Officer and the Vice-President of
Engineering and Operations of the Company during 1998 and 1999. There were no
other Executive Officers of the Company who were serving at the end of 1999 and
whose total annual salary and bonus, if any, exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
------------------- Compensation All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#)(1) Compensation ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
J. Patrick Nicholson 1999 $ 131,750 -0- -0- -0-
Chairman and Chief Executive 1998 $ 131,250 21,000 50,000 -0-
Officer 1997 $ 125,600 -0- 5,000 -0-
James D. O'Neil 1999 $ 105,500 -0- -0- -0-
Vice-President of Engineering 1998 $ 105,000 -0- 25,000 -0-
and Operations 1997 $ 76,100 -0- 3,000 -0-
- --------------------------------
</TABLE>
(1) The numbers shown represent the number of shares of common
stock for which options were granted to the named Executive
Officers in 1997, 1998 and 1999.
EMPLOYMENT AGREEMENTS
On June 14, 1999, Dr. Logan entered into a five-year employment
agreement with the Company at a minimum annual salary of $144,000, reviewable
annually at January 1 during the employment term. Such agreement also provides
that Dr. Logan shall be entitled to (i) bonuses to be payable at the discretion
of the Board of Directors, (ii) other benefits, including insurance and pension
plan, as are provided to other Executive Officers of the Company, and (iii)
stock options to purchase 50,000 shares of the Company's common stock. Effective
July 1, 1999, Dr. Logan voluntarily agreed to reduce his minimum annual salary
to $120,000 for the years ended December 31, 1999 and 2000.
On December 2, 1999, Mr. Nicholson entered into a two and one-half-year
employment agreement with the Company at a minimum annual salary of $144,000,
reviewable annually at January 1 during the employment term. Such agreement also
provides that Mr. Nicholson shall be entitled to (i) bonuses to be payable at
the discretion of the Board of Directors, (ii) such medical and other benefits,
including insurance and pension plan, as are provided to other
-6-
<PAGE> 11
Executive Officers of the Company, and (iii) stock options to purchase 50,000
shares of the Company's common stock. Effective December 2, 1999, Mr. Nicholson
voluntarily agreed to reduce his minimum annual salary to $131,250 for the years
ended December 31, 1999 and 2000.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
----------------------------- -------------- ------------- ------------- -------------- ---------------------------
% of Total Potential Realizable
Number of Options Value at Assumed Annual
Securities Granted to Rates of Stock Price
Underlying Employees Exercise or Appreciation for Option
Options in Fiscal Base Price Expiration Term
Name Granted Year ($/share) Date 5% ($) 10% ($)
----------------------------- -------------- ------------- ------------- -------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Patrick Nicholson -0- n/a n/a n/a n/a n/a
----------------------------- -------------- ------------- ------------- -------------- ------------- -------------
James D. O'Neil -0- n/a n/a n/a n/a n/a
----------------------------- -------------- ------------- ------------- -------------- ------------- -------------
- --------------------------------
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
- -------------------------- ------------- ------------- ------------------------------ ------------------------------
Shares Value Value of Unexercised
Acquired On Realized Number of Unexercised In-The-Money Options at
Name Exercise(1) ($)(1) Options at Fiscal Year End(2) Fiscal Year End ($)(3)
- -------------------------- ------------- ------------- ------------------------------ ------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- -------------------------- ------------- ------------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
J. Patrick Nicholson -0- $-0- 48,000 32,000 $281 $188
- -------------------------- ------------- ------------- ------------- ---------------- ------------- ----------------
James D. O'Neil -0- $-0- 17,325 16,800 $169 $113
- -------------------------- ------------- ------------- ------------- ---------------- ------------- ----------------
- --------------------------------
</TABLE>
(1) No options were exercised by the named Executive Officers in
1999.
(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, 1999 exceeded the exercise
price of the options. There were 10,100 options "in-the-money"
that were held by Executive Officers of the Company on
December 31, 1999 at $1.65625 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 through May 13,
1999, non-employee Directors no longer received cash compensation, but received
stock options pursuant to the Company's Stock Option Plan. Each Director
received a grant of 500 shares of Common Stock of the Company per meeting
attended, as approved by the Compensation Committee on May 9, 1997. Effective
May 14, 1999, non-employee directors no longer receive stock options, but
receive a payment of 400 shares of unregistered Common Stock of the Company per
meeting attended, as approved by the Compensation Committee on May 13, 1999. The
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
From January 1, 1999 to November 16, 1999, 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. Mr. Kurtz resigned as a
Board member effective November 17, 1999, and was replaced on the Compensation
Committee by Mr. Haslinger.
-7-
<PAGE> 12
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
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 1999 was $131,250. Mr. Nicholson's base salary is determined by
his Employment Agreement which entitles him to a minimum annual base salary of
$144,000. See "Employment Agreements." However, Mr. Nicholson has reduced his
base salary in each of the five preceding years. He will be paid an annual
minimum base salary of $131,250 for 2000. Mr. Nicholson will continue to accept
a reduced base salary until such time as the Company's profitability permits
payment of the $144,000 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. As
the founder and the largest beneficial owner (20.22% 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
Daniel Haslinger
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<PAGE> 13
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, 1999. The calculation assumes
that $100 was invested at the close of business on October 12, 1993 and all
dividends are assumed to be reinvested.
[GRAPH INSERTED HERE]
<TABLE>
<CAPTION>
======================================================================================================================
12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NASDAQ Index 100.0 141.3 173.9 213.1 300.2 545.7
- ----------------------------------------------------------------------------------------------------------------------
Company 100.0 28.6 32.1 35.7 19.6 23.7
- ----------------------------------------------------------------------------------------------------------------------
Peer Group 100.0 146.1 87.9 92.0 143.5 109.2
======================================================================================================================
</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, 1999.
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<PAGE> 14
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 of which
was approximately $29,000 in 1999.
Frederick Kurtz, a consultant to and former Director of the Company,
received consulting fees in the amounts of $8,250 in 1999 and $30,000 in 1998.
Mr. Kurtz was paid these fees in the form of shares of common stock in the
Company. Mr. Kurtz resigned his position on the Board of Directors on November
17, 1999.
Dr. Terry J. Logan, Ph.D., the Chief Operating Officer and Director of
the Company, received consulting fees in the amounts of $36,000 in 1999 (for
services rendered through June 30, 1999) and $88,000 in 1998. Dr. Logan is also
the controlling shareholder of Logan Environmental, Inc., an environmental
consulting firm which performs administrative 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 $-0- in 1999 and $4,500 in 1998.
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. Mr. O'Neil has announced his retirement as an employee
of the Company effective June 1, 2000. The Company expects to retain the
services of Mr. O'Neil as an outside consultant for the remainder of the fiscal
year.
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 1999 and 1998, Mr. Nicholson
earned $84,000 and $83,500, 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
On September 21, 1999, McGladrey & Pullen, LLP, the Registrant's
certifying accountant, resigned as the certifying accountant for the Registrant
by so notifying the Registrant in writing. McGladrey & Pullen, LLP served as the
Company's independent auditors of the Company since January 10, 1996. McGladrey
& Pullen, LLP issued, for the periods ended December 31, 1997 and 1998, an
unqualified opinion, without qualification, disclaimer, adverse opinion or any
uncertainties. McGladrey & Pullen, LLP voluntarily resigned as the certifying
accountant for the Registrant. Neither the Registrant, nor its Board of
Directors or any committee thereof made a decision to change accountants. There
were no disagreements with McGladrey & Pullen, LLP during the Registrant's two
most recent fiscal years and subsequent interim periods on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure which, if not resolved to the satisfaction of McGladrey &
Pullen, LLP, would have caused it to make a reference to the subject matter of
the disagreement in connection with its report. There have been no reportable
events within the Registrant's two most recent fiscal years and subsequent
interim periods. On November 9, 1999, at a meeting of the Board of Directors,
Hausser + Taylor, LLP, was approved as the Registrant's newly engaged certifying
independent accountant for the fiscal year ending December 31, 1999.
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 2001 because of the difficulty and expense of making such
a substitution. Representatives of Hausser + Taylor, 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 Hausser + Taylor, LLP for the year ended December 31,
1999 included the audit of the financial statements of the Company included in
the Annual Report to Shareholders for 1999, services related to filings with the
Securities and Exchange Commission and consultation and assistance on accounting
related matters.
-10-
<PAGE> 15
The services furnished by Hausser + Taylor, 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 HAUSSER + TAYLOR, 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.
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
The Board of Directors requests that any shareholder proposals intended
for inclusion in the Company's proxy materials for the 2001 Annual Meeting be
submitted to James K. McHugh, Chief Financial Officer, Treasurer and Corporate
Secretary of the Company, in writing no later than January 12, 2001. Unless the
Company has been given written notice by February 20, 2001 of a shareholder
proposal to be presented at the 2001 Annual Meeting other than by means of
inclusion in the Company's proxy materials for the meeting, persons named in the
proxies solicited by the Board of Directors for the meeting may use their
discretionary voting authority to vote against the proposal.
BY THE ORDER OF THE BOARD OF
DIRECTORS
/s/: James K. McHugh
------------------------------------------------
James K. McHugh
Chief Financial Officer, Secretary and Treasurer
-11-
<PAGE> 16
N-VIRO INTERNATIONAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders
To Be Held May 11, 2000
Revoking all prior proxies, the undersigned, a stockholder of N-VIRO
INTERNATIONAL CORPORATION (the "Company"), hereby appoints J. Patrick Nicholson,
Terry J. Logan 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
11, 2000 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.
<TABLE>
<S> <C> <C>
1. Election of Class I FOR all nominees listed below WITHHOLD AUTHORITY
Directors (Except as marked to the contrary below) to vote for all nominees
listed below ?
</TABLE>
Nominees: Bobby B. Carroll, J. Patrick Nicholson and B.K. Wesley
Copeland
(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 Hausser + Taylor, 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 I 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_______________________________, 2000
------------------------------------------
Signature
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Signature (if held jointly)
PLEASE CHECK HERE IF YOU PLAN TO ATTEND
THE ANNUAL MEETING
