Document:

Exhibit 4.1

	
  

 
	
  

 
	
  

 
	
 SECOND SUPPLEMENTAL INDENTURE

 
	
  

 
	
 ST. JUDE MEDICAL, INC.

 
	
  

 
	
 AND

 
	
  

 
	
 U.S. BANK NATIONAL ASSOCIATION,

 
	
 AS TRUSTEE

 
	
  

 
	
 Second Supplemental Indenture

 
	
  

 
	
 Dated as of March 17, 2010

 
	
  

 
	
 Supplementing the Indenture

 
	
  

 
	
 Dated as of July 28, 2009

 
	
  

 
	
  

 

          SECOND SUPPLEMENTAL INDENTURE, dated as of
March 17, 2010 (this “Second Supplemental Indenture”), between St. Jude
Medical, Inc., a corporation duly organized and existing under the laws of
Minnesota (herein called the “Company”),
and U.S. Bank National Association, as Trustee (herein called “Trustee”);  

RECITALS: 

          WHEREAS,
the Company and the Trustee have heretofore executed and delivered an
Indenture, dated as of July 28, 2009 (the “Base
Indenture” and, together with the Second Supplemental Indenture, the
“Indenture”), providing for the
issuance from time to time of the Company’s debentures, notes or other
evidences of indebtedness (herein and therein called the “Securities”), to be issued in one or more
series as provided in the Base Indenture; 

          WHEREAS,
Section 12.1 of the Base Indenture permits the Company and the Trustee to enter
into an indenture supplemental to the Base Indenture to establish the form and
terms of any series of Securities; 

          WHEREAS,
Section 2.1 of the Base Indenture permits the form of Securities of any series
to be established in an indenture supplemental to the Base Indenture; 

          WHEREAS,
Section 3.1 of the Base Indenture permits certain terms of any series of
Securities to be established pursuant to an indenture supplemental to the Base
Indenture; 

          WHEREAS,
pursuant to Sections 2.1 and 3.1 of the Base Indenture, the Company desires to
provide for the establishment of a new series of Securities under the Base
Indenture, the form and substance of such Securities and the terms, provisions
and conditions thereof to be set forth as provided in the Base Indenture and
this Second Supplemental Indenture; and 

          WHEREAS,
all things necessary to make this Second Supplemental Indenture a valid
agreement of the Company, in accordance with its terms, have been done. 

          NOW,
THEREFORE, for and in consideration of the foregoing and the purchase of the
Securities of the new series established by this Second Supplemental Indenture
by the holders thereof (the “Holders”),
it is mutually agreed, for the equal and proportionate benefit of all such
Holders, as follows: 

ARTICLE 1

DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION

          Section 1.01 Relation to Base Indenture. This Second Supplemental Indenture
constitutes a part of the Base Indenture (the provisions of which, as modified
by this Second Supplemental Indenture, shall apply to the Notes (as defined in
Section 2.01)) in respect of the Notes but shall not modify, amend or otherwise
affect the Base Indenture insofar as it relates to any other series of
Securities or modify, amend or otherwise affect in any manner the terms and
conditions of the Securities of any other series. 

1

          Section 1.02 Definitions. For all purposes of this Second
Supplemental Indenture, the capitalized terms used herein (i) which are defined
in this Section 1.02 have the respective meanings assigned hereto in this
Section 1.02 and (ii) which are defined in the Base Indenture (and which are not
defined in this Section 1.02) have the respective meanings assigned thereto in
the Base Indenture. For all purposes of this Second Supplemental Indenture:  

                    (a)          Unless
the context otherwise requires, any reference to an Article or Section refers
to an Article or Section, as the case may be, of this Second Supplemental
Indenture; 

                    (b)          The
words “herein,” “hereof” and “hereunder” and words of similar import refer to
this Second Supplemental Indenture as a whole and not to any particular
Article, Section or other subdivision; 

                    (c)          Headings
are for convenience of reference only and do not affect interpretations; and 

                    (d)          The
terms defined in this Section 1.02(d) have the meanings assigned to them in
this Section and include the plural as well as the singular: 

                    “Interest Payment Date” has the meaning set
forth in Section 2.01(d). 

                    “Interest Period” has the meaning set forth
in Section 2.01(d). 

                    “Maturity Date” has the meaning set forth in
Section 2.01(c). 

                    “Notes” has the meaning set forth in Section
2.01(a). 

ARTICLE 2

GENERAL TERMS AND CONDITIONS OF THE NOTES

          Section 2.01 Terms of Notes. Pursuant to Sections 2.1 and 3.1 of the
Base Indenture, there is hereby established a new series of Securities, the
terms of which shall be as follows: 

                    (a)          Designation.
There is hereby authorized and established a new series of Securities under the
Base Indenture, known and designated as the “2.200% Senior Notes due 2013” (the
“Notes”) of the Company. This
series of Notes is unlimited in aggregate principal amount. The initial
aggregate principal amount of the Notes to be issued under this Second
Supplemental Indenture shall be $450,000,000. Any additional amounts of the
Notes to be issued shall be set forth in a Company Order. 

                    (b)          Form
and Denominations. The Notes will be issued only in fully registered form,
and the authorized denominations of the Notes shall be $1,000 principal amount
and any integral multiple of $1,000 in excess thereof. The Notes will initially
be issued in the form of one or more Global Securities substantially in the
form of Exhibit A attached hereto, with such modifications thereto as may be
approved by the authorized officer executing the 

2

same. The Notes will be denominated in U.S. dollars and payments of
principal, premium, if any, and interest will be made in U.S. dollars. 

                    (c)          Maturity
Date. The Stated Maturity of principal for the Notes shall be payable in
full on September 15, 2013 (the “Maturity
Date’’). 

                    (d)          Interest.
Interest payable on any Interest Payment Date (as defined below), the Maturity
Date, or if applicable, the Redemption Date (as determined in accordance with
Section 4.2 of the Base Indenture) shall be the amount accrued from, and
including, the immediately preceding Interest Payment Date in respect of which
interest has been paid or duly provided for (or from and including the original
issue date of March 17, 2010, if no interest has been paid or duly provided for
with respect to the Notes) to but excluding such Interest Payment Date,
Maturity Date or, if applicable, Redemption Date, as the case may be (each, an
“Interest Period”). The Notes will
bear interest at the rate of 2.200% per year from the original issue date
thereof to the respective Maturity Date. Interest on the Notes shall be payable
semi-annually in arrears on March 15 and September 15 of each year, beginning
on September 15, 2010 (each such date, an “Interest
Payment Date”). The amount of interest payable for any semi-annual
Interest Period will be computed on the basis of a 360-day year consisting of
twelve 30-day months. In the event any Interest Payment Date on or before the
Maturity Date falls on a day that is not a Business Day, the interest payment
due on that date will be postponed to the next day that is a Business Day and
no interest shall accrue as a result of such postponement. 

          In the
event the Maturity Date or a Redemption Date for any Note falls on a day that
is not a Business Day, then the related payments of principal, premium, if any,
and interest may be made on the next succeeding date that is a Business Day
(and no additional interest will accumulate on the amount payable for the
period from and after the Maturity Date for such Note). Interest due on the
Maturity Date or a Redemption Date (in each case, whether or not an Interest
Payment Date) will be paid to the Person to whom principal of such Notes is
payable. 

                    (e)          Sinking
Fund; Holder Repurchase Right. The Notes shall not be subject to any
sinking fund or analogous provision or be redeemable at the option of the
Holders. 

                    (f)          Forms.
The Notes shall be substantially in the form of Exhibit A attached hereto, with
such modifications thereto as may be approved by the authorized officer
executing the same. 

                    (g)          Appointment
of Agent. The Trustee will initially be the Registrar and Paying Agent with
respect to the Notes. 

                    (h)          Defeasance.
Until the applicable Maturity Date, the Notes will be subject to Sections 11.2
and 11.3 of the Base Indenture. 

                    (i)          Further
Issues. The Company may from time to time, without the consent of the
Holders of Notes, issue additional Notes. Any such additional Notes will have
the same ranking, interest rate, maturity date and other terms as the Notes.
Any such additional Notes, together with the Notes herein provided for, will
constitute a single series of Securities under the Indenture. 

3

ARTICLE 3

EVENTS OF DEFAULT

          Section
3.01. Events of Default. Pursuant to Section
3.1 of the Base Indenture, the term “Event of Default” with respect to the
Notes shall include, in addition to those otherwise set forth in Section 7.1 of
the Base Indenture, the following: the occurrence with respect to any Debt of
the Company in an aggregate principal amount of $75,000,000 or more of (a) an
event of default that results in such Debt becoming due and payable prior to
its scheduled maturity (after giving effect to any applicable grace period) or
(b) the failure to make any payment when due (including any applicable grace
period) which results in the acceleration of the maturity of such Debt, in each
case without such acceleration having been rescinded, annulled or otherwise
cured. 

ARTICLE 4

REDEMPTION OF THE NOTES

          Section
4.01 Optional
Redemption by Company. The Notes may be redeemed at the option
of the Company on the terms and conditions set forth in the form of Note as set
forth as Exhibit A. 

ARTICLE 5

CHANGE OF CONTROL

          Section
5.01 Offer to Purchase Upon Change of Control Triggering Event.
Upon the occurrence of a Change of Control Triggering Event (as defined in the
form of Note set forth as Exhibit A), and unless the Company has exercised its
option to redeem the Notes pursuant to Section 4.01, the Company shall be
required to make an offer to each Holder of the Notes to repurchase all or any
part (equal to $1,000 or an integral multiple of $1,000 in excess thereof) of
that Holder’s Notes on the terms and conditions set forth in the form of Note
set forth as Exhibit A. 

ARTICLE 6

MISCELLANEOUS

          Section
6.01 Relationship to Existing Base Indenture. This Second Supplemental Indenture is a
supplemental indenture within the meaning of the Base Indenture. The Base
Indenture, as supplemented and amended by this Second Supplemental Indenture,
is in all respects ratified, confirmed and approved and, with respect to the
Notes, the Base Indenture, as supplemented and amended by this Second
Supplemental Indenture, shall be read, taken and construed as one and the same
instrument. 

          Section 6.02 Modification of The Existing Base
Indenture. Except
as expressly modified by this Second Supplemental Indenture, the provisions of the
Base Indenture shall govern the terms and conditions of the Notes. 

4

          Section
6.03 Governing Law. This Second Supplemental Indenture shall be governed by
and construed in accordance with the laws of the State of New York. 

          Section
6.04 Counterparts. This Second Supplemental Indenture may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument. 

          Section 6.05 Trustee Makes No Representation. The recitals contained herein are made
by the Company and not by the Trustee, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no representation
as to the validity or sufficiency of this Second Supplemental Indenture (except
for its execution thereof and its certificates of authentication of the Notes).

          Section
6.06 Separability. In case any provision in the
Base Indenture, this Second Supplemental Indenture or the Notes shall for any
reason be held to be invalid, illegal or unenforceable, the validity, legality
or enforceability of the remaining provisions shall not in any way be affected
or impaired thereby. 

5

          IN
WITNESS WHEREOF, the parties hereto have caused this
Second Supplemental Indenture to be duly executed and attested all as of the
day and year first above written. 

Dated: March 17, 2010 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ST. JUDE
 MEDICAL, INC.,

 as Issuer

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 	
  

 	
 /s/ John C.
 Heinmiller

 
	
  

 	
  

 	
 Name:

 	
  

 	
 John C.
 Heinmiller

 
	
  

 	
  

 	
 Title:

 	
  

 	
 Executive
 Vice President and Chief

 
	
  

 	
  

 	
  

 	
  

 	
 Financial
 Officer

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 U.S. BANK
 NATIONAL ASSOCIATION,

 as Trustee

 
	
  

 	
  

 
	
  

 	
 By:

 	
  

 	
  

 	
 /s/ Richard
 Prokosch

 
	
  

 	
  

 	
 Name:

 	
  

 	
 Richard
 Prokosch

 
	
  

 	
  

 	
 Title:

 	
  

 	
 Vice
 President

 

EXHIBIT A 

[Form of Senior Notes]

          THIS
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF THE
DEPOSITARY WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE OR ANY AGENT
THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES. THIS SECURITY
MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO
TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. 

          UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

ST. JUDE MEDICAL, INC.

	
  

 	
  

 
	
 No. ___

 	
 CUSIP NO. ________ 

 
	
  

 	
 $__________________

 

          Interest.
St. Jude Medical, Inc., a corporation duly incorporated and subsisting under
the laws of the State of Minnesota (herein called the “Company”, which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of
______________ Dollars ($              ), as revised by the Schedule of Increases or
Decreases in Global Security attached hereto, on _________ and to pay interest
thereon from _________ or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually on _______ and
_______ in each year, commencing ___________, at the rate of ___% per annum,
until the principal hereof is paid or made available for payment. 

          Method
of Payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the __________ or
_________ (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable 

A-1

to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture. 

          Payment of
the principal of (and premium, if any) and interest on this Security will be
made at the office or agency of the Trustee maintained for that purpose in New
York, New York, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts. 

          Reference
is hereby made to the further provisions of this Security set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place. 

          Authentication.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose. 

A-2

          IN
WITNESS WHEREOF, the Company has caused this instrument
to be duly executed under its corporate seal. 

	
  

 	
  

 	
  

 
	
 Dated:

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 ST. JUDE
 MEDICAL, INC.

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
  

 
	
  

 	
  

 	
 Name: 

 
	
  

 	
  

 	
 Title:

 

A-3

[FORM OF CERTIFICATION OF AUTHENTICATION]

CERTIFICATE OF AUTHENTICATION

          This is one
of the Securities of the series designated therein referred to in the
within-mentioned Indenture. 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 U.S. BANK NATIONAL ASSOCIATION,

 	
  

 
	
  

 	
 as Trustee

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
  

  

 	
  

 
	
  

 	
  

 	
 Authorized Signatory

 	
  

 

A-4

[Form of Reverse of Note]

          Indenture.
This Security is one of a duly authorized issue of securities of the Company
(herein called the “Securities”),
issued and to be issued in one or more series under an Indenture, dated as of
July 28, 2009 (herein called the “Base
Indenture”, which term shall have the meaning assigned to it in such
instrument), as supplemented by a Second Supplemental Indenture dated as of
[_________], 2010 (herein called the “Second Supplemental Indenture”, and
together with the Base Indenture, the “Indenture”),
between the Company and U.S. Bank National Association, as Trustee (herein
called the “Trustee”, which term
includes any successor trustee under the Indenture), and reference is hereby made
to the Indenture for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof, initially limited in aggregate principal amount
to $[450,000,000].
The Company may at any time issue additional securities under the Indenture in
unlimited amounts having the same terms as the Securities. 

          Optional
Redemption. The Securities of this series are subject
to redemption at the Company’s option, at any time and from time to time, in
whole or in part, upon not less than 30 nor more than 60 days’ notice mailed
to each Holder of Securities to be redeemed at his address as it appears in the
records of the Registrar, on any date prior to their Stated Maturity at a
Redemption Price equal to the greater of (i) 100% of the principal amount of
such Securities to be redeemed, plus accrued and unpaid interest thereon to the
Redemption Date or (ii) as determined by an Independent Investment Banker (as
defined below), the sum of the present values of the remaining scheduled
payments of principal and interest thereon (not including any portion of such
payments of interest accrued as of the Redemption Date) discounted to the
Redemption Date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate (as defined below), plus 15 basis
points, plus accrued and unpaid interest thereon to the Redemption Date;
provided that unless the Company defaults in payment of the Redemption Price,
on or after the Redemption Date, interest will cease to accrue on the
Securities or portions thereof called for redemption. 

          For
purposes of determining the optional redemption price, the following
definitions are applicable:

          “Treasury Rate” means, with respect to any
Redemption Date, the rate per annum equal to the semi-annual equivalent yield
to maturity of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such Redemption Date. The
semi-annual equivalent yield to maturity of the Comparable Treasury Issue will
be computed as of the third business day immediately preceding the Redemption
Date. 

          “Comparable Treasury Issue” means the United
States Treasury security or securities selected by the Independent Investment
Banker as having a maturity comparable to the remaining term of the Securities
to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
Securities. 

A-5

          “Comparable Treasury Price” means, with
respect to any Redemption Date, (1) the average of the Reference Treasury
Dealer Quotations for such Redemption Date, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or (2) if the Independent
Investment Banker obtains fewer than four Reference Treasury Dealer Quotations,
the average of all Reference Treasury Dealer Quotations so received. 

          “Independent Investment Banker” means the
Reference Treasury Dealer appointed by the Company. 

          “Reference Treasury Dealer” means Banc of
America Securities LLC and a Primary Treasury Dealer (as defined herein)
selected by Wells Fargo Securities, LLC, their successors and two other
nationally recognized investment banking firms; provided, however,
that, if the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a “Primary Treasury
Dealer”), the Company shall substitute therefor another nationally
recognized investment banking firm that is a Primary Treasury Dealer. 

          “Reference Treasury Dealer Quotations”
means, with respect to each Reference Treasury Dealer and any Redemption Date,
the average, as determined by the Independent Investment Banker, of the bid and
asked prices for the Comparable Treasury Issue for the Securities (expressed in
each case as a percentage of its principal amount) quoted in writing to the
Independent Investment Banker by such Reference Treasury Dealer at 3:30 p.m.,
New York City time, on the third Business Day preceding such Redemption Date. 

          In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof. 

          Change of
Control. If a Change of Control Triggering Event
occurs, unless the Company has exercised its right to redeem the Securities as
described above, it will be required to make an offer to repurchase all, or any
part (equal to $1,000 or an integral multiple thereof), of each Holder’s
Securities pursuant to the offer described below (the “Change of
Control Offer”) on the terms set forth herein. In the Change of
Control Offer, the Company will be required to offer payment in cash equal to [101]%
of the aggregate principal amount of Securities repurchased plus accrued and
unpaid interest, if any, on the Securities repurchased, to the date of purchase
(the “Change of Control Payment”). 

          Within 30
days following any Change of Control Triggering Event or, at the Company’s
option, prior to any Change of Control but after the public announcement of the
pending Change of Control, the Company will be required to mail a notice to
Holders of Securities describing the transaction or transactions that
constitute or may constitute the Change of Control Triggering Event and
offering to repurchase the Securities on the date specified in the notice, which
date will be no earlier than 30 days and no later than 60 days from the date
such notice is mailed (the “Change of Control Payment
Date”), pursuant to the procedures required herein and described in
such notice. The Company must comply with the requirements of Rule 14e-1 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any other
securities laws and regulations thereunder to the extent those laws and
regulations are applicable in connection with the repurchase of the Securities
as a result of a Change of Control Triggering 

A-6

Event. To the extent that the provisions of any securities laws or
regulations conflict with the Change of Control provisions herein, the Company
will be required to comply with the applicable securities laws and regulations
and will not be deemed to have breached its obligations under the Change of
Control provisions herein by virtue of such conflicts. 

          On the
Change of Control Payment Date, the Company will be required, to the extent
lawful, to: 

          (a) accept
for payment all Securities or portions of Securities properly tendered, and not
validly withdrawn, pursuant to the Change of Control Offer; 

          (b) deposit
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Securities or portions of Securities properly tendered and not
validly withdrawn; and 

          (c) deliver
or cause to be delivered to the Trustee the Securities properly accepted
together with an Officers’ Certificate stating the aggregate principal amount
of Securities or portions of Securities being purchased by the Company. 

          The Paying
Agent will be required to mail promptly to each Holder who properly tendered
Securities the purchase price for such Securities and the Trustee will be
required to authenticate and mail (or cause to be transferred by book entry)
promptly to each such Holder a new Security equal in principal amount to any
unpurchased portion of the Securities surrendered, if any; provided that each new Security will be in
a principal amount of $1,000 or an integral multiple thereof. 

          For
purposes of the foregoing discussion of a repurchase at the option of Holders,
the following definitions are applicable: 

          “Capital
Stock” means the capital stock of every class whether now or
hereafter authorized, regardless of whether such capital stock shall be limited
to a fixed sum or percentage with respect to the rights of the holders thereof
to participate in dividends and in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of such
corporation. 

          “Change of
Control” means the occurrence of any of the following:

          (a) the
direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or more series of
related transactions, of all or substantially all of the Company’s assets and
the assets of its Subsidiaries, taken as a whole, to any “person” (as that term
is used in Section 13(d)(3) of the Exchange Act), other than the Company or one
of its Subsidiaries;

          (b) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any “person” (as that term is used
in Section 13(d)(3) of the Exchange Act) other than the Company or one of its
Subsidiaries, becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of more than 50% of the Company’s
then outstanding Voting Stock or other Voting Stock into which the

A-7

Company’s Voting Stock is reclassified, consolidated, exchanged or
changed, measured by voting power rather than number of shares;

          (c) the
first day on which a majority of the Company’s members of its board of
directors are not Continuing Directors; or 

          (d) the
adoption of a plan relating to the Company’s liquidation or dissolution.

          Notwithstanding
the foregoing, a transaction will not be considered to be a Change of Control
if (a) the Company becomes a direct or indirect wholly-owned subsidiary of a
holding company and (b)(x) immediately following that transaction, the direct
or indirect holders of the Voting Stock of the holding company are
substantially the same as the holders of the Company’s Voting Stock immediately
prior to that transaction or (y) immediately following that transaction, no
person is the beneficial owner, directly or indirectly, of more than 50% of the
Voting Stock of such holding company. 

          “Change of
Control Triggering Event” means the occurrence of both a Change of
Control and a Rating Event. 

          “Continuing
Directors” means, as of any date of determination, any member of the
Company’s board of directors who (a) was a member of such board of directors on
March [____],
2010 or (b) was nominated for election, elected or appointed to such board of
directors with the approval of a majority of the Continuing Directors who were
members of such board of directors at the time of such nomination, election or
appointment (either by a specific vote or by approval of a proxy statement in
which such member was named as a nominee for election as a director).

          “Fitch”
means Fitch, Inc. and its successors. 

          “Investment
Grade” means a rating of Baa3 or better by Moody’s (or its
equivalent under any successor rating categories of Moody’s), a rating of BBB-
or better by S&P (or its equivalent under any successor rating categories
of S&P) and a rating of BBB- or better by Fitch (or its equivalent under
any successor rating categories of Fitch). 

          “Moody’s”
means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and
its successors. 

          “Rating
Agencies” means (a) each of Moody’s, S&P and Fitch; and (b) if
any of Moody’s, S&P or Fitch ceases to rate the Securities or fails to make
a rating of the Securities publicly available for reasons outside of the
Company’s control, a “nationally recognized statistical rating organization”
within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act that is
selected by the Company (as certified by a resolution of the Company’s board of
directors) as a replacement agency for Moody’s, S&P or Fitch, or each of
them, as the case may be.

          “Rating Event”
means, with respect to the Securities, the rating on the Securities is lowered
below Investment Grade by any two of the three Rating Agencies on any date
during the period commencing 60 days prior to the public notice of an
arrangement that could result in a

A-8

Change of Control until the end of the 60-day period following public
notice of the occurrence of the Change of Control (which 60-day period shall be
extended so long as the rating of the Securities is under publicly announced
consideration for possible downgrade by any of the Rating Agencies), provided that
a Rating Event otherwise arising by virtue of a particular reduction in, or
termination of, any rating shall not be deemed to have occurred with respect to
a particular Change of Control (and thus shall not be deemed a Rating Event for
purposes of the definition of Change of Control Triggering Event hereunder) if
the Rating Agency or Rating Agencies ceasing to rate the Securities or making
the reduction in rating to which this definition would otherwise apply do not
announce or publicly confirm or inform the Trustee in writing at its request
that the termination or reduction was the result, in whole or in part, of any
event or circumstance comprised of or arising as a result of, or in respect of,
the applicable Change of Control (whether or not the applicable Change of
Control shall have occurred at the time of the Rating Event).

          “S&P”
means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors. 

          “Voting Stock”
means, with respect to any specified person as of any date, the Capital Stock
of such person that is at the time entitled to vote generally in the election
of the board of directors of such person. 

          The
Indenture contains provisions for defeasance at any time of the entire indebtedness
of this Security or certain restrictive covenants and Events of Default with
respect to this Security, in each case upon compliance with certain conditions
set forth in the Indenture, which provisions apply to this Security. This
Security is not subject to repayment at the Holder’s option.

          No
reference herein to the Indenture and no provision of this Security or the
Indenture shall affect or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the respective due dates, place and rate, and in
the Currency herein prescribed.

          Default and
Remedies. If an Event of Default with respect to
Securities of this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the manner and
with the effect provided in the Indenture. 

          Amendment,
Modification and Waiver. The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the
Holders of the Securities of each series to be affected under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the time outstanding of each
series to be affected. The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of the Securities of each
series at the time outstanding, on behalf of the Holders of all Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and
of any Security issued upon the

A-9

registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.

          Denominations;
Transfer and Exchange. As provided in the Indenture
and subject to certain limitations therein set forth, the transfer of this
Security is registrable in the records of the Registrar, upon surrender of this
Security for registration of transfer at the office or agency of the Company in
any place where the principal of and any premium and interest on this Security
are payable, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Registrar duly executed
by, the Holder hereof or the Holder’s attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees. 

          The
Securities of this series are issuable only in registered form in denominations
of $1,000 and any integral multiple of $1,000 thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate principal amount of
Securities of this series and of like tenor of a different authorized denomination,
as requested by the Holder surrendering the same. 

          No service
charge shall be made to a Holder for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. 

          Persons
Deemed Owners. Prior to due presentment of this
Security for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name this Security
is registered as the owner hereof for all purposes, whether or not this
Security be overdue, and neither the Company, the Trustee nor any such agent
shall be affected by notice to the contrary. 

          Miscellaneous. The
Indenture and the Securities, including this Security, shall be governed by and
construed in accordance with the law of the State of New York. 

          All terms
used in this Security and not defined herein shall have the meanings assigned
to them in the Indenture.

          Pursuant to
a recommendation promulgated by the Committee on Uniform Security
Identification Procedures, the Company has caused “CUSIP” numbers to be printed
on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the correctness or accuracy of such CUSIP numbers
as printed on the Securities, and reliance may be placed only on the other
identification numbers printed hereon. 

          Unless the
certificate of authentication hereon has been executed by or on behalf of the
Trustee by manual signature, this Security shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.

A-10

ASSIGNMENT FORM

FOR VALUE RECEIVED, the undersigned hereby

sells, assigns and transfers unto

PLEASE INSERT SOCIAL

SECURITY OR OTHER IDENTIFYING

NUMBER OF ASSIGNEE 

________________________________

	
  

 
	
  

 
	
 (Please Print or Typewrite
 Name and Address, including Zip Code, of Assignee)

 
	
  

 
	
  

 
	
  

 
	
 the within Security of St.
 Jude Medical, Inc. and ________________ hereby does irrevocably constitute
 and appoint

 
	
  

 
	
  

 
	
 Attorney to transfer said
 Security on the books of the within-named Company with full power of
 substitution in the premises

 
	
  

 
	
  

 
	
 Dated: ______________________________________________________________________________________________

 
	
  

 
	
 Signature ____________________________________________________________________________________________

 
	
  

 
	
 NOTICE: The signature to
 this assignment must correspond with the name as it appears on the first page
 of the within Security in every particular, without alteration or enlargement
 or any change whatever.

 
	
  

 
	
 Signature

 Guaranteed: _________________________________________________________________________________________

 
	
  

 
	
 NOTICE: Signature(s) must
 be guaranteed by an “eligible guarantor
 institution” that is a member or participant in a “signature guarantee program” (e.g., the
 Securities Transfer Agents Medallion Program, the Stock Exchange Medallion
 Program and the New York Stock Exchange Medallion Program).

 

A-11

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL
SECURITY

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The following increases or decreases in this
Global Security have been made:

 
	
  

 	
  

 	
  

 
	
 Date of
Exchange

 	
  

 	
 Amount of
 increase in

 Principal Amount of

 this Global Security

 	
  

 	
 Amount of
 decrease

 in Principal Amount

 of this Global

 Security

 	
  

 	
 Principal
 Amount of

 this Global Security

 following such

 decrease or increase

 	
  

 	
 Signature of

 authorized signatory

 of Trustee 

 

A-12Exhibit 10.1
                                                                    ------------
                              EMPLOYMENT AGREEMENT

     This  Employment  Agreement  (the "Employment Agreement" or "Agreement") is
made  and entered into as of the 17th day of March, 2010 (the "Execution Date"),
by  and  between  N-Viro  International Corporation, a Delaware corporation (the
"Company"),  and  Timothy  R.  Kasmoch,  an  individual  ("Employee").N-Viro

     W  I  T  N  E  S  S  E  T  H:
     -  -  -  -  -  -  -  -  -  -

          WHEREAS,  the Company owns and licenses the N-Viro Process, a patented
technology  to treat and recycle wastewater sludge and other bio-organic wastes,
utilizing  certain  alkaline  and  mineral by-products produced by cement, lime,
electric  utilities  and  other  industries  (such activities, together with all
other  activities of the Company, as conducted at or prior to the termination of
this  Employment Agreement, and any future activities reasonably related thereto
that  are  contemplated  by  the  Company  at the termination of this Employment
Agreement  identified  in writing by the Company to Employee at the date of such
termination,  are  hereinafter  collectively  referred  to  as  the  "Business
Activities");

          WHEREAS,  the  Company  and  Employee  have agreed that Employee shall
perform the duties of President and Chief Executive Officer subject to the terms
and  conditions  set  forth  in  this  Employment  Agreement.

          NOW, THEREFORE, in consideration of the premises, the mutual promises,
covenants  and  conditions  herein  contained  and  for  other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties  hereto  intending  to  be  legally  bound  hereby  agree  as  follows:

          Section  1.     Employment.  During  the  Employment  Period  (as
                          ----------
hereinafter  defined),  the  Company  shall  employ Employee, and Employee shall
accept  employment  with  the  Company,  all  upon  the terms and subject to the
conditions  set  forth  in  this  Employment  Agreement.

          Section 2.     Capacity and Duties.  Employee shall be employed in the
                         -------------------
capacity  of President and Chief Executive Officer of the Company and shall have
such  other  duties,  responsibilities and authorities as are assigned to him by
the  Board  of Directors of the Company (the "Board") so long as such additional
duties, responsibilities and authorities are consistent with Employee's position
and  level of authority as President and Chief Executive Officer of the Company.
Employee  shall  report  directly  to  the Board of the Company.  Subject to the
control  and  general  directions  of  the  Board and except as otherwise herein
provided,  Employee  shall  devote all necessary business time, best efforts and
attention  to  promote  and  advance  the  business  of  the  Company  and  its
subsidiaries  and  affiliates  and  to perform diligently and faithfully all the
duties,  responsibilities  and  obligations  of  Employee to be performed by him
under  this  Employment  Agreement.  Employee's duties shall include the ongoing
management  and  oversight of the general business affairs and operations of the
Company  and  its  subsidiaries  and  affiliates  and  shall include, but not be
limited  to,  routine  operations, matters relating to research and development,
technical direction, national and international sales and/or licensing, national
policy  and  governmental  regulations and relations including those relating to
water  and the environment.  So long as Employee is employed by the Company, the
Company  shall  use  its  best  efforts to cause the Nominating Committee of the
Board  or  the  Board,  if  there  is  no  Nominating Committee of the Board, to
nominate Employee for reelection as a director of the Company upon expiration of
his  current  term  as  a director of the Company and, if so nominated, Employee
shall  consent  to  serve  as a director if elected.  It is expressly understood
that  Employee  also  is  and/or  may  become  engaged in other limited business
activities  not  involving  the Company.  Any such independent activity shall be
disclosed to the Audit Committee of the Company's Board in advance, and any such
other  business  activities  shall  not  unreasonably  interfere with Employee's
performance  of  his  obligations  under  this  Employment  Agreement.

     Section  3.     Term  of Employment.  The term of employment of Employee by
                     -------------------
the  Company  pursuant  to this Employment Agreement, which supersedes any prior
agreement between Company and Employee, shall be for the period (the "Employment
Period") commencing on February 26, 2010 (the "Commencement Date") and ending on
February  25,  2015  or  later  date  that  Employee's employment is extended in
accordance  with  the  provisions of this Employment Agreement (the "Termination
Date").  So  long  as  Employee  is in full compliance with all of the terms and
conditions  of this Employment Agreement, Employee is not in default under or in
breach  of  any  of the covenants, agreements, representations or warranties set
forth  in  this  Employment  Agreement  and neither Employee nor the Company has
delivered a Notice of Termination (as hereinafter defined) to the other at least
ninety  (90) days prior to expiration of the then-current Employment Period that
the  Employment Period shall not be extended, then this Employment Agreement and
the  Employment Period shall automatically be extended for additional successive
one  (1)  year  periods.

     Section  4.     Place  of  Employment.  Employee's  principal place of work
                     ---------------------
shall  be  deemed  to  be at the principal offices of the Company in the Toledo,
Ohio  area  or such other locations as may be reasonably designated by the Board
and  or  management;  provided,  however,  that  the  Board may not require that
Employee permanently relocate to a place that is more than 100 miles from Toledo
measured as the radius in any direction from the Toledo center.  The Company and
Employee  acknowledge that Employee's principal place of work is consistent with
the  extensive  national and international business travel which may be required
of  Employee  in connection with the performance of his duties, responsibilities
and  authorities  under  this  Agreement.

     Section  5.     Compensation.  During the Employment Period, subject to all
                     ------------
the  terms  and conditions of this Employment Agreement and, except as otherwise
provided  in  Sections  9  or  10,  as  the case may be, as compensation for all
services to be rendered by Employee under this Employment Agreement, the Company
shall  pay  to  or  provide  Employee  with  the  following:

          5.01     Base Salary.  The Company shall pay to Employee a base annual
                   -----------
salary  (the  "Base  Salary") at the rate of at least One Hundred Fifty Thousand
Dollars  ($150,000)  per  year,  payable at such intervals (at least monthly) as
salaries  are  paid  generally  to  other executive officers of the Company.  At
least  once  each year on or before each January 1 during the Employment Period,
Employee's  Base Salary shall be reviewed by the Board and, at the discretion of
the  Board,  may be increased to an amount determined in good faith based upon a
complete review of Employee's performance under this Employment Agreement during
the  prior  year  and the growth and profitability of the Company and Employee's
contributions  thereto,  which  review  shall  be  communicated  in  writing  to
Employee.

          5.02     Cash  Bonus.  At  the  sole  and  exclusive discretion of the
                   -----------
Board,  the  Company may pay to Employee an annual cash bonus (the "Cash Bonus")
in  an amount determined in good faith by the Board based upon a complete review
of  Employee's  performance  under  this Employment Agreement during the current
calendar  year  and  the  growth and profitability of the Company and Employee's
contribution  thereto.  Any  Cash  Bonus  payable  to  Employee pursuant to this
Section  5.02 shall be payable, if at all, on or before January 31, of each year
during  the Employment Period immediately following the prior calendar year then
ended,  based upon Employee's performance for the immediate prior calendar year.

          5.03  Option  Grant.  The  Company  hereby  grants  to  the  Employee
                -------------
ten-year  stock  options  to  purchase  Four  Hundred Seventy Thousand (470,000)
shares  of  its  common  stock  which  shall  vest  in equal installments on the
Execution  Date and on each successive anniversary of this Employment Agreement;
PROVIDED,  HOWEVER,  that  all remaining options shall vest immediately upon the
termination  with  cause  of this Employment Agreement by Employee under Section
10A  hereof.  The  exercise  price  of  these  options shall be the "fair market
value"  as  defined  in  the N-Viro International Corporation Second Amended and
Restated  Stock Option Plan for the options to purchase shares, and are intended
to  be  Incentive Stock Options or "ISOs" as further defined by the Company 2004
Plan.  Such  options  are  being granted under, and are otherwise subject to the
terms  and  conditions  of  the Company's 2004 Stock Option Plan as amended (the
"Company  2004 Plan").  The Employee acknowledges that the Company has delivered
a  copy  of  the  Company  2004  Plan  to  him.

     Section 6.     Adherence to Standards.  Employee shall institute and comply
                    ----------------------
with  the written policies, standards, rules and regulations of the Company from
time  to  time  established  for  all  executive  officers  of  the  Company.

     Section  7.     Review of Performance.  The Board shall periodically review
                     ---------------------
and  evaluate  the  performance of Employee under this Employment Agreement with
Employee.

     Section  8.     Expenses.  The  Company  shall  reimburse  Employee for all
                     --------
reasonable,  ordinary  and  necessary  expenses  (including, but not limited to,
automobile  and  other  business  travel  and  customer  entertainment expenses)
incurred  by him in connection with his employment hereunder; provided, however,
                                                              --------  -------
Employee  shall  render to the Company a complete and accurate accounting of all
such  expenses in accordance with the substantiation requirements of Section 274
of  the  Internal  Revenue Code of 1986, as amended (the "Code"), as a condition
precedent  to  such  reimbursement.  Employee  will  also follow all established
guidelines  relating  to  reimbursement of expenses as may be promulgated by the
Board.

     Section  9.     Termination  with  Cause  by  the  Company. This Employment
                     ------------------------------------------
Agreement  may  be terminated with Cause (as hereinafter defined) by the Company
provided  that the Company shall (i) give Employee the Notice of Termination and
(ii)  pay  Employee  his  annual base salary through the Termination Date at the
rate  in effect at the time the Notice of Termination is given plus any bonus or
incentive compensation which have been earned or have become payable pursuant to
the terms of this Employment Agreement or any compensation or benefit plan as of
the  Termination  Date, but which have not yet been paid.  In addition, Employee
shall  have  the  right  to  exercise  all  options that have vested through and
including  the  Termination  Date.

     Section  10.     Termination  without  Cause by the Company or by Employee.
                      ---------------------------------------------------------
This  Employment Agreement may be terminated by (i) the Company by reason of the
death  or  Disability  (as hereinafter defined) of Employee, (ii) the Company by
giving  Employee  the  Notice  of  Termination, (iii)  Employee after giving the
Company  the  Notice  of  Termination  at  least  thirty (30) days prior to such
termination.  In  the  event  of  termination of this Employment Agreement under
this  Section  10,  the  Company  shall pay Employee his Base Salary through the
Termination  Date at the rate in effect at the time the Notice of Termination is
given  plus  any  bonus  or  incentive compensation which are due or have become
payable  pursuant  to the terms of this Employment Agreement or any compensation
or  benefit  plan  as of the Termination Date, but which have not yet been paid.
In  addition,  Employee  shall  have the right to exercise all options that have
vested  through and including the Termination Date.  In the event of termination
of this Employment Agreement under this Section 10 by the Company (other than by
reason  of  the  death  or Disability of Employee) and such termination is on or
prior to the Termination Date that would be in effect if such employment had not
been  terminated  under  this  Section 10, the Company shall pay to Employee, in
addition  to  the  other benefits specifically provided for in this Section, his
Base  Salary  for  the  period  between  the  Termination  Date  and the natural
expiration  of  this  Employment  Agreement  or the expiration of any  extension
period  thereof  in  effect  as  of the Termination Date.  In addition, Employee
shall  have  the  right  to  exercise  all  options that have vested through and
including  the Termination Date.  This Section 10 shall not be interpreted so as
to  limit  any  benefits  to  which  Employee,  as  a terminated employee of the
Company,  or  his  family  may  be  entitled under the Company's life insurance,
medical,  hospitalization  or disability plans following the Termination Date or
under  applicable  law.

     Section 10A.     Termination  with Cause by Employee.Employee may elect, by
                      ------------------------------------
written  Notice  of  Termination  to  the  Company,  said Notice to be effective
immediately  upon  receipt by the Company, to terminate his employment hereunder
if:

          (1)     The Company sells all or substantially all of its assets;

          (2)     The Company merges or consolidates with, or undergoes a share
exchange or other form of recapitalization with another business entity in a
transaction immediately following which the holders of all of the outstanding
shares of the voting capital stock of the Company own less than a majority of
the outstanding shares of the voting capital stock of the resulting entity
(whether or not the resulting entity is the Company);

          (3)     More than Fifty (50%) percent of the outstanding shares of the
voting capital stock of the Company are acquired by a person or group (as such
terms are used in Section 13(d) of the Securities Exchange Act of 1934, as
amended), which person or group includes neither Employee nor the holders of the
majority of the outstanding shares of the voting capital stock of the Company on
the date hereof;

     (4)     The Company assigns to Employee duties which would require him, as
a practical matter, to permanently relocate to a place that is more than 100
miles from Toledo measured as the radius in any direction from the Toledo center
;

     (5)      The Employee is removed as a member of the Board of Directors and
other than by vote of the Company's stockholders at an annual or special meeting
of such stockholders; or

     (6)     The Company shall have engaged in a material breach of this
Agreement which for this purpose is defined as the occurrence of one or more of
the following events without Employee's prior written consent:

     (i) Employee is otherwise removed from the position(s) provided for in this
Agreement,  for  any  reason other than the legal termination of his employment;

     (ii)  Employee  is  assigned  any  duties  or  responsibilities  that  are
inconsistent,  in  any  significant  respect,  with  the  scope  of  duties  and
responsibilities  associated  with  Employee's  position;

     (iii)  Employee  suffers  a  reduction  in  the  authority,  duties  or
responsibilities  associated with his position, on the basis of which he makes a
determination in good faith that he can no longer carry out such position in the
manner  contemplated  at  the  time  this  Agreement  was  entered  into;

(iv)  Employee's  Base  Salary  is  decreased by the Company, or his benefits or
opportunities  under  any  employee  benefit or incentive plan or program of the
Company  or  any other material benefit specifically promised to Employee herein
is  or  are  materially  reduced  unless  such  benefit,  plan,  or program (but
excluding  Annual  Base  Salary)  is  reduced  or  eliminated  for  all eligible
employees  of  the  Company  on  an  equal  basis;

(v)  the Company fails to pay Employee any payments under any bonus or incentive
plans  when  such payments are due or issue shares to Employee upon his exercise
of  his  options  under  the  2004  Plan;

(vi) the Company fails to reimburse Employee for business expenses in accordance
with  the  Company's  policies,  procedures  or  practices;

(vii)  the  Company  fails  to  agree  to or actually indemnify Employee for his
actions  and/or  inactions,  as  either  an employee, director or officer of the
Company,  to  the  fullest  extent  permitted  by  applicable  law;

(viii) the Company fails to obtain a written agreement satisfactory to the
Executive from any successor or assignee of the Company to assume and perform
this Agreement;

(ix)  the  Company's  breach  or  failure  to perform any of the indemnification
obligations  described  in Section 13 of this Agreement including the failure to
reimburse  Employee  promptly  for  his  expenses  and  the  failure to maintain
directors'  and  officers'  liability  insurance;  or

(x)  the  Company  purports to terminate the Employee's employment for cause and
such  purported termination of employment is not effected in accordance with the
procedures  required by this Agreement, and for purposes of this Agreement, such
purported termination of employment shall be invalid and of no force and effect.

     If  the  Employee  elects to terminate his employment hereunder pursuant to
this  Section  10A,  (1)  the Company shall continue to pay to Employee his base
salary  as  provided  in  Section 5.01 hereof through the end of the Term or any
extensions thereof; (2) the Company shall pay to Employee the Bonus specified in
Section  5.02  hereof;  (3)  the  Company  shall continue to provide to Employee
through  the end of the Term the benefits provided at the Execution Date of this
Employment Agreement as amended or supplemented by the Board through the date of
termination;  and  (4) all of the options granted to Employee under Section 5.03
hereof  to  purchase  shares  of  the  common  stock  of  the Company shall vest
immediately.

          (7)  NoMitigation.In the event of the termination of this Agreement by
               -------------
the  Employee  as  a  result  of  a material breach by the Company of any of its
obligations  hereunder,  or  in  the  event of the termination of the Employee's
employment by the Company in breach of this Agreement, the Employee shall not be
required  to  seek  other employment in order to mitigate his damages hereunder.

     Section  11.     Definitions.  In addition to the words and terms elsewhere
                      -----------
defined  in  this Employment Agreement, certain capitalized words and terms used
in  this  Employment  Agreement  shall  have  the  meanings given to them by the
definitions  and  descriptions  in  this  Section  11  unless the context or use
indicates  another  or different meaning or intent, and such definition shall be
equally  applicable  to  both  the  singular  and  plural  forms  of  any of the
capitalized  words  and terms herein defined.  The following words and terms are
defined  terms  under  this  Employment  Agreement:

          11.01     " Disability" shall mean a physical or mental illness which,
in  the  judgment  of the Company after consultation with the licensed physician
attending  Employee,  impairs  Employee's  ability  to substantially perform his
duties under this Employment Agreement as an employee with or without reasonable
accommodation and as a result of which he shall have been absent from his duties
with  the  Company  on  a  full-time  basis  for  three  (3) consecutive months.

          11.02       A  termination  with  "Cause"  shall mean a termination of
this  Employment  Agreement  by  reason of (a) a good faith determination by the
Board  that  Employee  (i)  failed  to substantially perform his duties with the
Company  (other  than a failure resulting from his incapacity due to physical or
mental  illness)  after  a  written  demand for substantial performance has been
delivered  to  him by the Board, which demand specifically identifies the manner
in  which  the  Board believes he has not substantially performed his duties and
Employee  has  failed  to substantially perform as requested within a reasonable
time,  (ii)  has  engaged  in  conduct  the consequences of which are materially
adverse to the Company, monetarily or otherwise, (iii) is found guilty of fraud,
dishonesty  or  other acts of gross misconduct or misfeasance in the performance
of  his  duties  under  this  Employment  Agreement  by  a  court  of  competent
jurisdiction whose decision is final and non-appealable (provided, however, that
Employee's  Base  Salary  shall continue to be paid until such decision is final
and non-appealable), (iv) is found to be under the influence of illegal drugs or
other  similar  substance  while  performing  his  duties  under this Employment
Agreement  or  (v)  is convicted of a felony (provided, however, that Employee's
Base  Salary  shall  continue  to  be  paid  until  such conviction is final and
non-appealable).  No act, or failure to act, on Employee's part shall be grounds
for  termination with Cause unless he has acted or failed to act with an absence
of  good  faith or without a reasonable belief that his action or failure to act
was  in  or at least not opposed to the best interests of the Company.  Not less
than  ten  (10) business days before the Board's consideration and adoption of a
resolution  determining  that Employee engaged in conduct specified in the first
sentence  of  this  Section 11.02, Employee may, by written notice to the Board,
cause  the  matter  of  the  termination  of his employment by the Company to be
discussed  at  the next regularly scheduled meeting of the Board or at a special
meeting  of  the Board.  The Board shall give Employee sufficient written notice
of  its  intention  to  schedule  a meeting to discuss such termination so as to
permit  Employee  time to prepare for said meeting.   Employee shall be entitled
to  be  present  and to be represented by counsel at such meeting which shall be
conducted  according  to  a  procedure  deemed  equitable  by  a majority of the
directors  present.  If,  at  the  conclusion  of  such  meeting,  it  shall  be
determined  by  a  majority  of the entire membership of the Board (exclusive of
Employee)  that  Employee  engaged in conduct specified in the first sentence of
Section 11.02, then the Board shall deliver the resolution specified in the next
succeeding sentence. Notwithstanding the foregoing, Employee shall not be deemed
to have been terminated with Cause unless there shall have been delivered to him
a  copy  of a resolution duly adopted by the affirmative vote of not less than a
majority  of  the  entire  membership  of the Board (exclusive of Employee) at a
meeting  of  the  Board called at least in part for that purpose finding that in
the  good  faith opinion of the Board, Employee engaged in conduct in the manner
or  of  the type set forth above in the first sentence of this Section 11.02 and
specifying  the  particulars  thereof  in  detail.

          11.03       Notice  of Termination. "Notice of Termination" shall mean
                      ----------------------
a written notice which shall indicate the specific termination provision in this
Employment  Agreement  relied  upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of Employee's
employment  under  the  provision  so  indicated;  provided,  however,  no  such
                                                   --------   -------
purported  termination  shall  be  effective without such Notice of Termination;
provided  further,  however,  any  purported  termination  by  the Company or by
-----------------   -------
Employee  shall  be  communicated  by a Notice of Termination to the other party
hereto  in  accordance  with  Section  3  of  this  Employment  Agreement.

     Section  12.     Fees  and  Expenses.  The Company shall pay all legal fees
                      -------------------
and  related  expenses  (including  the  costs of experts, evidence and counsel)
incurred  by  Employee  as  a  result  of  a  contest or dispute over Employee's
termination  of  employment if such contest or dispute is resolved in Employee's
favor.

     Section  13.     Indemnification.  (a)  In  addition  to  any  rights  of
Employee  under  the  Company's  certificate  of  incorporation and by-laws, any
agreement,  or  any  applicable  State  law,  the  Company hereby agrees to hold
harmless  and  indemnify  Employee:

     (i)  Against  any  and  all expenses (including attorney's fees and costs),
judgments, fines and amounts paid in settlement actually and reasonable incurred
by Employee in connection with any threatened, pending or completed action, suit
or  proceeding,  whether  civil,  criminal,  administrative  or  investigative
(including  an action by or in the name of Company) to which Employee is, was or
at  any  time becomes a party, or is threatened to be made a party, by reason of
the  fact  that  Employee  is,  was  or at any time becomes a director, officer,
employee,  consultant,  or  agent of the Company, or is or was serving or at any
time  serves  at  the  request  of the Company as a Director, officer, employee,
consultant,  partner,  trustee  or  agent  regardless of his subsequent title or
position  at  another  corporation,  partnership,  joint venture, trust or other
enterprise;

     (ii)  Otherwise to the fullest extent as may be provided to Employee by the
Company  under  the  by-laws of the Company and Delaware General Corporation Law
("GCL").

(b)  No indemnity pursuant to this Section 13 shall be paid by Company:

     (i)   In respect to remuneration paid to Employee if it shall be determined
by  a  final  judgment  or other final adjudication which is non-appealable that
such  remuneration  was  in  violation  of  law;

(ii)   On  account  of  conduct  which  is finally adjudged to have been willful
misconduct  by  Employee;  and

     (iii)   In  a  final  decision by a Court having jurisdiction in the matter
shall  determine  that  such indemnification to Employee is not lawful, and such
decision  is  non-appealable.

(c)  All  agreements  and  obligations  of  the  Company  contained herein shall
continue during the period Employee is a director, employee, officer, consultant
or  agent  of  Company  (or is or was serving at the request of the Company as a
director,  officer,  employee,  partner,  consultant  or  agent  of  another
corporation,  partnership,  joint  venture, trust or other enterprise) and shall
continue  thereafter  so long as Employee shall be subject to any possible claim
or  threatened,  pending or completed action, suit or proceeding, whether civil,
criminal,  or  investigative, by reason of the fact that Employee was an officer
or  director  of  Company  or  serving in any other capacity referred to herein.

(d)  The Company shall not be liable to indemnify Employee under this Employment
Agreement  for  any  amounts  paid in settlement of any action or claim effected
without its written consent. The Company shall not settle any action or claim in
any  manner,  which  would  impose any penalty or limitation on Employee without
Employee's  written  consent or contain as part of the settlement any statement,
description  or  assertion  of  wrongdoing by Employee.  Neither the Company nor
Employee  will  unreasonably  withhold their consent to any proposed settlement.

(e)  The  Company will pay all Employee fees, costs and expenses incurred under,
or  related  to, Employee's indemnification under this Section 13, including all
legal  and  accounting bills, immediately upon the presentment of bills for such
expenses.  Employee  agrees  that  Employee  will  reimburse  Company  for  all
reasonable  expenses  paid by Company in defending any civil or criminal action,
suit  or proceeding against Employee in the event and only to the extent that it
shall  be ultimately determined without right of further appeal that Employee is
not  entitled  to  be  indemnified  by Company for such expenses. This Agreement
shall  not  affect  any  rights of Employee against Company, any insurer, or any
other  person  to  seek  indemnification  or  contribution.

(f)  If  Company  fails  to  pay  any  expenses  (including without limiting the
generality  of  the foregoing, legal fees and expenses incurred in defending any
action,  suit  or  proceeding),  Employee  shall  be  entitled to institute suit
against  Company to compel such payment and Company shall pay Employee all costs
and  legal  fees  incurred  in  enforcing  such  right  to  prompt  payment.

(g)  To  the  extent  allowable  under  Delaware  law,  the burden of proof with
respect  to  any  proceeding  or  determination  with  respect  to  Employee's
entitlement  to  indemnification  under  this  Employment  Agreement shall be on
Company.

(h)  If any provision of this Section 13 shall be determined as conflicting with
any  provision  of  (1)  Company's certificate of incorporation and by-laws, (2)
Delaware  law,  or (3) the provisions of any other agreement between the parties
as  to  indemnification,  and such other document or law would provide  Employee
with  greater rights to benefits of indemnification, then such other document or
law  shall  prevail;  it  being  the  intention of the parties hereto to provide
maximum  indemnification  to  Employee. Otherwise, unless prohibited by law, any
document or law which affords Employee with greater rights of indemnification by
Company  than  do  the  provisions  of  this  Employment  Agreement  shall  have
superiority  over  the  provisions  of  this  Employment  Agreement.

(i)  In  support  of its obligations hereunder, the Company agrees to maintain a
director's  and  officer's  liability  and other insurance policies covering the
Employee  and further agrees that these policies shall be maintained both during
and  after  the  end  of the Term of employment so as to provide as broad and as
complete  coverage as is reasonably available in relation both to the Employee's
position  during the Term of Employment and to any claims arising thereafter but
related  to  said  Term  of  Employment.

     Section  14.     Notices.  For  the  purposes of this Employment Agreement,
                      -------
notices  and  all  other communications provided for in the Employment Agreement
shall  be in writing and shall be deemed to have been duly given when personally
delivered  or sent by certified mail, return receipt requested, postage prepaid,
or  by  expedited  (overnight)  courier  with  established  national reputation,
shipping prepaid or billed to sender, in either case addressed to the respective
addresses  last  given  by each party to the other (provided that all notices to
the  Company  shall be directed to the attention of the Board with a copy to the
Secretary  of  the  Company)  or  to such other address as either party may have
furnished  to  the  other  in  writing  in accordance herewith.  All notices and
communication  shall  be  deemed  to  have been received on the date of delivery
thereof,  on  the third business day after the mailing thereof, or on the second
day  after deposit thereof with an expedited courier service, except that notice
of  change  of  address  shall  be  effective  only  upon  receipt.

     Section  15.     Life  Insurance.  The  Company  may, at any time after the
                      ---------------
execution  of  this Employment Agreement, apply for and procure as owner and for
its own benefit, life insurance on Employee, in such amounts and in such form or
forms  as  the  Company  may  determine.  Employee  shall, at the request of the
Company,  submit  to  such  medical  examinations,  supply such information, and
execute  such documents as may be required by the insurance company or companies
to  whom  the Company has applied for such insurance. Employee hereby represents
that  to  his  knowledge  he is in good physical and mental condition and is not
under  the  influence  of  illegal  drugs  or  similar  substance.

     Section  16.     Proprietary  Information  and  Inventions.  Employee
                      -----------------------------------------
understands  and  acknowledges  that:

          16.01     Trust.  Employee's  employment  creates  a  relationship  of
                    -----
confidence  and  trust  between Employee and the Company with respect to certain
information  applicable  to the business of the Company and its subsidiaries and
affiliates  (collectively,  the  "Group")  or  applicable to the business of any
licensee,  vendor  or  customer  of any of the Group, which may be made known to
Employee by the Group or by any licensee, vendor or customer of any of the Group
or  learned  by  Employee  during  the  Employment  Period.

          16.02     Proprietary  Information.  The  Group  possesses  and  will
                    ------------------------
continue  to possess information that has been created, discovered, or developed
by,  or  otherwise  become  known  to, the Group (including, without limitation,
information  created,  discovered, developed or made known to by Employee during
the  period  of  or  arising  out  of his employment by the Company) or in which
property rights have been or may be assigned or otherwise conveyed to the Group,
which  information  has  commercial  value in the business in which the Group is
engaged and is treated by the Group as confidential.  Except as otherwise herein
provided,  all such information is hereinafter called "Proprietary Information",
which  term,  as  used  herein, shall also include, but shall not be limited to,
data, functional specifications, computer programs, know-how, research, patents,
inventions,  discoveries,  processes,  procedures,  formulae,  technology,
improvements, developments, designs, marketing plans, strategies, forecasts, new
products,  unpublished  financial  statements,  budgets,  projections, licenses,
prices,  costs,  and  customer,  supplier  and  potential acquisition candidates
lists.  Notwithstanding  anything  contained in this Employment Agreement to the
contrary,  the  term "Proprietary Information" shall not include (i) information
which  is in the public domain, (ii) information which is published or otherwise
becomes  part  of  the  public  domain  through  no  fault  of  Employee,  (iii)
information  which  Employee can demonstrate was in Employee's possession at the
time  of disclosure and was not acquired by Employee directly or indirectly from
any  of  the  Group  on  a  confidential  basis,  (iv) information which becomes
available  to  Employee on a non-confidential basis from a source other than any
of  the  Group  and  which  source, to the best of Employee's knowledge, did not
acquire  the  information  on a confidential basis, (v) information belonging to
other  entities  including,  but  not  limited to, Tri-State Garden Supply d/b/a
Gardenscape  and/or  any  other  entity,  or  (vi)  information  required  to be
disclosed  by  any federal or state law, rule or regulation or by any applicable
judgment,  order  or  decree  or any court or governmental body or agency having
jurisdiction  in  the  premises.
All  Proprietary  Information  shall be the sole property of the Group and their
respective  assigns.  Employee  assigns  to  the Company any rights Employee may
have  or  acquire  in  such  Proprietary Information.  At all times, both during
Employee's  employment  by the Company and after its termination, Employee shall
keep in strictest confidence and trust all Proprietary Information, and Employee
shall  not  use  or  disclose  any  Proprietary  Information without the written
consent  of  the  Group,  except  as  may be necessary in the ordinary course of
performing  Employee's  duties  as an employee of the Company.   Notwithstanding
the foregoing, Employee agrees that all Proprietary Information shall be kept in
confidence  by  Employee  for  a  period  of  at least three (3) years after the
Termination  Date  of  this  Employment  Agreement.

     Section  17.     Inventions.  Any  and  all  inventions,  conceptions,
                      ----------
processes,  discoveries,  improvements, patent rights, letter patents, programs,
copyrights,  trademarks,  trade  names  and  applications  therefore relating to
technology  used by the Company to treat and recycle wastewater sludge and other
bio-organic  wastes, utilizing certain alkaline and mineral by-products produced
by  cement,  lime, electric utilities and other industries, in the United States
and  other  countries,  and any and all rights and interest in, to and under the
same,  that  are  conceived,  made, acquired, or possessed by Employee, alone or
with  other employees, during the term of this Employment Agreement shall become
the  exclusive  property  of  the  Company  and  shall  at all times and for all
purposes  be  regarded  as acquired and held by Employee in a fiduciary capacity
for  the sole benefit of the Company, and the Employee hereby assigns and agrees
to assign the same to the Company without further compensation.  Employee agrees
that,  upon  request,  he  will  promptly  make  all  disclosures,  execute  all
applications,  assignments  or other instruments and perform all acts whatsoever
necessary  or  desired by the Company to vest and confirm in it, its successors,
assigns  and nominees, fully and completely, all rights and interests created or
contemplated  by  this  Section.

     Section  18.     Surrender  of Documents. Employee shall, at the request of
                      -----------------------
the  Company,  promptly  surrender to the Company or its nominee any Proprietary
Information  or  document,  memorandum,  record,  letter  or  other paper in his
possession  or  under his control relating to the operation, business or affairs
of  the  Group.

     Section  19.     Prior  Employment  Agreements.  Employee  represents  and
                      -----------------------------
warrants  that  Employee's  performance  of  all  the  terms  of this Employment
Agreement  and  as an employee of the Company does not, and will not, breach any
agreement  to keep in confidence proprietary information acquired by Employee in
confidence  or in trust prior to Employee's employment by the Company.  Employee
has not entered into, and shall not enter into, any agreement, either written or
oral,  which  is  in  conflict  with this Employment Agreement or which would be
violated  by Employee entering into, or carrying out his obligations under, this
Employment  Agreement.

          Section  20.     Restrictive  Covenant.  Except  as  provided  herein
                           ---------------------
and/or  as  agreed  by  the  Board  of  the  Company,  Employee acknowledges and
recognizes  Employee's  possession  of  Proprietary  Information  and the highly
competitive nature of the business of the Group and, accordingly, agrees that in
consideration  of  the  covenants and conditions contained herein Employee shall
not,  during the Employment Period, (i) directly or indirectly engage in any new
Business Activities that do not involve the Company that relate to the treatment
of  biosolids,  whether  such  engagement  shall  be  as  an  employer, officer,
director,  owner,  employee,  consultant,  stockholder,  partner  or  other
participant,  (ii)  assist  others in engaging in any Business Activities in the
manner  described  in the foregoing clause (i), or (iii) induce employees of the
Company to terminate their employment with the Company or engage in any Business
Activities  in  the  world.  Employee  shall  not  for  a period of one (1) year
following  the  termination  of  this  Agreement, for any customer and/or active
potential customer of the Company that was such a customer or potential customer
as  of  the  date of termination, attempt to contact or solicit said customer or
potential  customer  to  provide like services and/or performance as had been or
was  proposed  to  be  provided  by  the  Company.

      Section  21     Remedies.  The  parties  hereto acknowledge and agree that
                      --------
the  a  remedy  at  law for a breach or a threatened breach of the provisions of
Sections  16,  17,  18  and 20 herein would be inadequate, and in recognition of
this  fact,  in  the  event  of  a  breach  or  threatened breach of any of such
provisions,  it is agreed that the parties shall be entitled to equitable relief
in  the form of specific performance, a temporary restraining order, a temporary
or  permanent  injunction  or  any  other  equitable  remedy  which  may then be
available,  without  posting bond or other security.  No remedy herein conferred
is  intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to any other remedy given hereunder
now  or  hereinafter  existing  at  law or in equity or by statute or otherwise.

     Section 22.     Successive Employment Notice.  In the event this Employment
                     ----------------------------
Agreement  is  terminated  by  Employee  pursuant to Section 10, within five (5)
business  days  after the Termination Date, Employee shall provide notice to the
Company of Employee's next intended employment.  If such employment is not known
by  Employee  at  such  date, Employee shall notify the Company immediately upon
determination  of  such  information.  Employee  shall  continue  to provide the
Company  with notice of Employee's place and nature of employment and any change
in place or nature of employment during the period ending one (1) year after the
Termination  Date.

     Section  23.     Successors.  This Employment Agreement shall be binding on
                      ----------
the  Company  and  any  successor  to  any of its businesses or assets.  Without
limiting  the  effect  of  the  prior  sentence,  the  Company shall require any
successor  or  assign  (whether  direct  or  indirect,  by  purchase,  merger,
consolidation  or  otherwise) to all or substantially all of the business and/or
assets  of  the Company to expressly assume and agree to perform this Employment
Agreement  in  the  same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place.  The
Company's failure to obtain said assumption shall be a breach of this Employment
Agreement  under  Section  10A  hereof.   As  used in this Employment Agreement,
"Company"  shall  mean  the Company as hereinbefore defined and any successor or
assign  to  its  business and/or assets as aforesaid which assumes and agrees to
perform  this  Employment  Agreement  or which is otherwise obligated under this
Agreement  by  the  first  sentence  of  this Section 23, by operation of law or
otherwise.

     Section  24.     Binding  Effect.  This Employment Agreement shall inure to
                      ---------------
the  benefit  of  and  be  enforceable  by  Employee's  personal  and  legal
representatives,  executors,  administrators,  successors,  heirs, distributees,
devisees  and legatees.  If Employee should die while any amounts would still be
payable  to  him hereunder if he had continued to live, all such amounts, unless
otherwise  provided  herein,  shall be paid in accordance with the terms of this
Employment  Agreement  to  Employee's  estate.

     Section  25.     Modification  and Waiver.  No provision of this Employment
                      ------------------------
Agreement may be modified, waived or discharged unless such waiver, modification
or  discharge is agreed to in writing and signed by Employee and such officer as
may  be  specifically designated by the Board.  No waiver by either party hereto
at  any time of any breach by the other party hereto of, or compliance with, any
condition  or  provision  of  this  Employment Agreement to be performed by such
other  party  shall  be  deemed  a waiver of similar or dissimilar provisions or
conditions  at  the  same  or  at  any  prior  or  subsequent  time.

     Section  26.     Headings.  Headings  used in this Employment Agreement are
                      --------
for  convenience  only  and  shall  not  be  used  to  interpret or construe its
provisions.

     Section  27.     Waiver  of  Breach.  The  waiver  of either the Company or
                      ------------------
Employee  of  a  breach  of any provision of this Employment Agreement shall not
operate  or  be  construed  as  a  waiver of any subsequent breach by either the
Company  or  Employee.  Any  such  waiver must be in writing signed by the party
against  whom  the  waiver  is  sought  to  be  enforced  or  asserted.

     Section  28.     Amendments.  No  amendments or variations of the terms and
                      ----------
conditions  of  this  Employment  Agreement shall be valid unless the same is in
writing  and  signed  by  all  of  the  parties  hereto.

     Section  29.     Severability.  The  invalidity  or unenforceability of any
                      ------------
provision  of  this Employment Agreement, whether in whole or in part, shall not
in  any  way  affect  the  validity and/or enforceability of any other provision
herein  contained.  Any  invalid  or  unenforceable  provision  shall  be deemed
severable  to  the  extent  of  any  such  invalidity  or  unenforceability.

     Section  30.     Governing  Law;  Arbitration.
                      ----------------------------
          (a)  Governing Law.   This Employment Agreement shall be construed and
               --------------
enforced  pursuant  to  the  laws  of  the  State  of  Ohio.

          (b)  Arbitration.(1)  Any  unresolved controversy or claim arising out
               ------------
of, in connection with, under or relating to this Employment Agreement, shall be
submitted  to  arbitration  (the  "Arbitration") before the American Arbitration
Association  ("AAA")  using the Commercial Arbitration Rules then in effect. The
Arbitration shall be conducted by one (1) arbitrator mutually agreed upon by the
parties.  The  arbitration  shall take place in Toledo, Ohio.  Judgment upon any
award  rendered  in  such  arbitration will be binding and may be entered in any
court  having  jurisdiction  thereof.  Both  parties  agree  and  consent to the
personal  jurisdiction  of  the  United  States  District Court for the Northern
District  of Ohio (located in Toledo), or the State Courts of the State of Ohio,
for all purposes relating to the arbitration including any equitable relief, and
the  entry  of  judgment  upon,  and  enforcement  of,  any  award.

          (b)(2)  There  shall  be  limited  discovery  prior to the Arbitration
hearing  as  follows:  (i)  exchange  of witness lists and copies of documentary
evidence  and  documents  relating  to  or  arising  out  of  the  issues  to be
arbitrated,  (ii)  depositions  of  all  party  witnesses  and  (iii) such other
depositions  as  may  be  allowed  by the arbitrator only upon a showing of good
cause.  Depositions  shall  be conducted in accordance with the Federal Rules of
Civil  Procedure.

          (b)(3)  A  court  reporter shall record all hearings, with such record
constituting  the official transcript of such proceedings.  The arbitrator shall
be  required  to  provide  in  writing to the parties the basis for the award or
order  of  such  arbitrator. The arbitrator shall have no power and authority to
award  punitive,  exemplary,  incidental  and  consequential  (including without
limitation  lost  profits) damages in favor of one party against the other party
in  the  Arbitration.  Each party shall bear its own legal costs and expenses in
connection  with  the  Arbitration; PROVIDED, HOWEVER, THAT the arbitrator shall
make an award of legal fees, and all other costs and expenses of the Arbitration
to  the  prevailing  party  as  part  of any Arbitration award including (i) the
filing  fees  for  the  Arbitration  and  (ii)  the  stenographic  costs  of
transcription.  The  arbitrator's  fees  shall  be  divided  equally between the
parties.

     Section 31.     Counterparts.  This Employment Agreement may be executed in
                     ------------
more  than  one  (1)  counterpart  and  each  counterpart shall be considered an
original.

     Section 32.      Survival.   The provisions of Sections 10, 10A, 12, 13, 16
                     ---------
and  30  herein  shall  survive termination of this Employment Agreement for any
reason.

     Section 33.     Sections.  Unless the context requires a different meaning,
                     --------
all  references  to  "Sections" in this Agreement shall mean the Section of this
Agreement.

     Section  34.     Publicity.  Press  releases  and other publicity materials
                      ---------
relating  to the transactions contemplated by this Employment Agreement shall be
released  by  the  parties  hereto only after review and with the consent of the
other  party;  provided,  however, that if legal counsel for the Company advises
               --------   -------
the  Company  that  disclosure  of  this  Employment Agreement is required under
applicable federal or state securities laws, then the Company shall be permitted
to  make  such  disclosure in the form recommended by such legal counsel without
the  prior  consent  of  Employee.

IN  WITNESS  WHEREOF,  this  Employment  Agreement has been duly executed by the
Company  and  Employee  as  of  the  date  first  above  written.

                              N-VIRO  INTERNATIONAL  CORPORATION
                              By   /s/  James  H.  Hartung
                                  ------------------------
                              Its        Chairman  of  the  Board
                                   ------------------------------

                                   /s/  Timothy  R.  Kasmoch
                                   -------------------------
                                   Timothy R. Kasmoch
<PAGE>

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