Note 14: Commitments and Contingencies	12 Months Ended
Dec. 31, 2014
Notes
Note 14: Commitments and Contingencies	Note 14: Commitments and Contingencies *Employment Agreement - CEO* On January 9, 2015, we entered into an Employment Agreement (“CEO Agreement”) with Clinton E. Carnell Jr., our President and Chief Executive Officer (“CEO”). The CEO Agreement confirms the appointment as President and CEO, and service as a member of the Company’s Board of Directors, and sets the CEO’s annual base salary at $350,000, with a review at least annually by the Compensation Committee of the Board of Directors. The CEO Agreement provides for an annual bonus of $150,000 for the first year of employment, and a bonus of $150,000, or a pro rata portion thereof, for the second year of employment. If the Company completes and closes in fiscal year 2015 an equity offering that generates to the Company at least $5.0 million in net proceeds, then the Company will engage a compensation consulting firm to conduct a study of compensation of CEO’s in companies comparable to the Company, which study shall then be used to negotiate Mr. Carnell’s overall compensation after December 31, 2015. If the Company does not complete and close such an equity offering in 2015, then the Company shall engage a compensation consulting firm in 2016 to negotiate Mr. Carnell’s salary after December 31, 2016. The CEO Agreement also provides an award of a nonqualified stock option to purchase 1,400,000 shares of common stock at a price per share of $0.46, the closing price of the Company’s common stock on November 10, 2014, the date the option was granted. The options will vest at one-third each year on the anniversaries of the grant. Under the CEO Agreement the CEO is entitled to participate in all employee benefit plans, practices and programs maintained by the Company for its employees. Additional provisions of the CEO Agreement include indemnification for expenses associated with defending certain claims made against the CEO as a result of his position with the Company, and directors’ and officers’ liability insurance providing coverage during the term of the CEO Agreement and for a period of six years following the termination of the CEO Agreement. The CEO Agreement also provides that if he is terminated by the Company other than for cause, or if he resigns for good reason and complies with certain requirements, the Company is obligated to pay him an amount equal to his base salary (the “CEO Severance Payment”) and provide employee benefits for two years following termination. If the CEO Agreement is terminated for cause, he shall receive only the portion of his base salary that is due to him through the effective date of his termination. If the CEO Agreement is terminated by reason of his death, his estate shall receive his salary through the end of the month in which he died plus all employee benefits due to him through the end of such month. If a Change in Control (as defined in the CEO Agreement) occurs with respect to the Company, and during the six months immediately following the Change of Control, (i) the Company terminates him without cause; or (ii) he terminates his employment with good reason, then in addition to the CEO Severance Payment, all options or incentive awards granted to him will immediately vest and become exercisable for a period of 180 days following the termination. The CEO Agreement also contains a confidentiality agreement, and a one-year non-competition and non-solicitation agreement. The CEO Agreement contains a claw back provision that enables the Company to claw back any incentive-based compensation or other compensation from him if required by any law, government regulation, stock exchange listing requirement, or Company policy adopted as required by such law, government regulation, or stock exchange listing requirement. The Company’s former President and CEO, Mr. Harold R. Wolcott, relinquished his positions as President and CEO upon the Company’s hiring of its new President and CEO. Mr. Wolcott will continue to serve on the Company’s board of directors. On April 28, 2014, the Company entered into a letter agreement with Mr. Wolcott, pursuant to which Mr. Wolcott will receive severance benefits that supersede the severance benefits Mr. Wolcott was previously entitled to receive under his employment agreement. Pursuant to the letter agreement, upon Mr. Wolcott ceasing to serve as President and CEO of the Company for any reason (other than for cause), the Company will pay to Mr. Wolcott an amount equal to his current base salary, and the vesting of his equity awards will immediately vest and become exercisable. On November 10, 2014, the Company entered into a consulting agreement with Mr. Wolcott, who resigned as President and CEO effective November 10, 2014. *Employment Agreement – CFO* On September 16, 2014, the Company entered into an employment agreement (the “CFO Agreement”) with its Chief Financial Officer (“CFO”). The CFO Agreement provides that his base salary shall be $200,000, to be reviewed at least annually by the Compensation Committee of the Board of Directors. The CFO Agreement provides that the CFO is entitled to participate in any annual incentive bonus programs, employee benefit plans adopted or maintained by the Company, and the Company’s Stock Incentive Plan. Additional provisions of the CFO Agreement include indemnification for expenses associated with defending certain claims made against the CFO as a result of his position with the Company, and directors’ and officers’ liability insurance providing coverage during the term of the CFO Agreement and for a period of six years following the termination of the CFO Agreement. If the CFO is terminated by the Company other than for cause, or resigns for good reason, and complies with certain requirements, the Company is obligated to pay him an amount equal to his base salary (the “CFO Severance Payment”) and provide employee benefits for one year following termination. If the CFO Agreement is terminated for cause, he shall receive only the portion of his base salary that is due to him through the effective date of his termination. If the CFO Agreement is terminated by reason of his death, his estate shall receive his salary through the end of the month in which he died plus all employee benefits due to him through the end of such month. If a Change in Control (as defined in the CFO Agreement) occurs with respect to the Company, and during the six months immediately following the Change of Control, (i) the Company terminates him without cause; (ii) he terminates his employment with good reason; or (iii) he terminates the CFO Agreement but also agrees to continue serving as CFO for the longer of (a) six months and (b) until a new CFO is appointed, then in addition to the CFO Severance Payment, all options or incentive awards granted to him will immediately vest and become exercisable for a period of 180 days following the termination. The CFO Agreement also contains a confidentiality agreement, and a one-year non-competition and non-solicitation agreement. The CFO Agreement contains a claw back provision that enables the Company to claw back any incentive-based compensation or other compensation from him if required by any law, government regulation, stock exchange listing requirement, or Company policy adopted as required by such law, government regulation, or stock exchange listing requirement. *Employment Agreement – CTO* On December 19, 2014, the Company terminated, without cause, the employment of its Chief Technical Officer (“CTO”). Under the terms of an employment agreement dated November 2, 1988, the Company is obligated to provide severance pay for a one-year period, which pay includes an extension of all rights, privileges and benefits as an employee (including medical insurance). The one-year severance pay shall be equal to the CTO’s average annual salary for the 12-month period immediately prior to the termination. The terms of the employment agreement also require us to pay the CTO for accrued, unused vacation at the time of termination, and include a non-competition covenant prohibiting him from competing with us for one year following his termination. We may continue the non-competition period for up to four additional years by notifying the CTO in writing and by continuing the severance payments for the additional years during which the non-competition period is extended.

Note 14: Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Note 14: Commitments and Contingencies

Employment Agreement - CEO

On January 9, 2015, we entered into an Employment Agreement (“CEO Agreement”) with Clinton E. Carnell Jr., our President and Chief Executive Officer (“CEO”). The CEO Agreement confirms the appointment as President and CEO, and service as a member of the Company’s Board of Directors, and sets the CEO’s annual base salary at $350,000, with a review at least annually by the Compensation Committee of the Board of Directors. The CEO Agreement provides for an annual bonus of $150,000 for the first year of employment, and a bonus of $150,000, or a pro rata portion thereof, for the second year of employment. If the Company completes and closes in fiscal year 2015 an equity offering that generates to the Company at least $5.0 million in net proceeds, then the Company will engage a compensation consulting firm to conduct a study of compensation of CEO’s in companies comparable to the Company, which study shall then be used to negotiate Mr. Carnell’s overall compensation after December 31, 2015. If the Company does not complete and close such an equity offering in 2015, then the Company shall engage a compensation consulting firm in 2016 to negotiate Mr. Carnell’s salary after December 31, 2016. The CEO Agreement also provides an award of a nonqualified stock option to purchase 1,400,000 shares of common stock at a price per share of $0.46, the closing price of the Company’s common stock on November 10, 2014, the date the option was granted. The options will vest at one-third each year on the anniversaries of the grant. Under the CEO Agreement the CEO is entitled to participate in all employee benefit plans, practices and programs maintained by the Company for its employees. Additional provisions of the CEO Agreement include indemnification for expenses associated with defending certain claims made against the CEO as a result of his position with the Company, and directors’ and officers’ liability insurance providing coverage during the term of the CEO Agreement and for a period of six years following the termination of the CEO Agreement. The CEO Agreement also provides that if he is terminated by the Company other than for cause, or if he resigns for good reason and complies with certain requirements, the Company is obligated to pay him an amount equal to his base salary (the “CEO Severance Payment”) and provide employee benefits for two years following termination. If the CEO Agreement is terminated for cause, he shall receive only the portion of his base salary that is due to him through the effective date of his termination. If the CEO Agreement is terminated by reason of his death, his estate shall receive his salary through the end of the month in which he died plus all employee benefits due to him through the end of such month. If a Change in Control (as defined in the CEO Agreement) occurs with respect to the Company, and during the six months immediately following the Change of Control, (i) the Company terminates him without cause; or (ii) he terminates his employment with good reason, then in addition to the CEO Severance Payment, all options or incentive awards granted to him will immediately vest and become exercisable for a period of 180 days following the termination. The CEO Agreement also contains a confidentiality agreement, and a one-year non-competition and non-solicitation agreement. The CEO Agreement contains a claw back provision that enables the Company to claw back any incentive-based compensation or other compensation from him if required by any law, government regulation, stock exchange listing requirement, or Company policy adopted as required by such law, government regulation, or stock exchange listing requirement.

The Company’s former President and CEO, Mr. Harold R. Wolcott, relinquished his positions as President and CEO upon the Company’s hiring of its new President and CEO. Mr. Wolcott will continue to serve on the Company’s board of directors. On April 28, 2014, the Company entered into a letter agreement with Mr. Wolcott, pursuant to which Mr. Wolcott will receive severance benefits that supersede the severance benefits Mr. Wolcott was previously entitled to receive under his employment agreement. Pursuant to the letter agreement, upon Mr. Wolcott ceasing to serve as President and CEO of the Company for any reason (other than for cause), the Company will pay to Mr. Wolcott an amount equal to his current base salary, and the vesting of his equity awards will immediately vest and become exercisable. On November 10, 2014, the Company entered into a consulting agreement with Mr. Wolcott, who resigned as President and CEO effective November 10, 2014.

Employment Agreement – CFO

On September 16, 2014, the Company entered into an employment agreement (the “CFO Agreement”) with its Chief Financial Officer (“CFO”). The CFO Agreement provides that his base salary shall be $200,000, to be reviewed at least annually by the Compensation Committee of the Board of Directors. The CFO Agreement provides that the CFO is entitled to participate in any annual incentive bonus programs, employee benefit plans adopted or maintained by the Company, and the Company’s Stock Incentive Plan. Additional provisions of the CFO Agreement include indemnification for expenses associated with defending certain claims made against the CFO as a result of his position with the Company, and directors’ and officers’ liability insurance providing coverage during the term of the CFO Agreement and for a period of six years following the termination of the CFO Agreement. If the CFO is terminated by the Company other than for cause, or resigns for good reason, and complies with certain requirements, the Company is obligated to pay him an amount equal to his base salary (the “CFO Severance Payment”) and provide employee benefits for one year following termination. If the CFO Agreement is terminated for cause, he shall receive only the portion of his base salary that is due to him through the effective date of his termination. If the CFO Agreement is terminated by reason of his death, his estate shall receive his salary through the end of the month in which he died plus all employee benefits due to him through the end of such month. If a Change in Control (as defined in the CFO Agreement) occurs with respect to the Company, and during the six months immediately following the Change of Control, (i) the Company terminates him without cause; (ii) he terminates his employment with good reason; or (iii) he terminates the CFO Agreement but also agrees to continue serving as CFO for the longer of (a) six months and (b) until a new CFO is appointed, then in addition to the CFO Severance Payment, all options or incentive awards granted to him will immediately vest and become exercisable for a period of 180 days following the termination. The CFO Agreement also contains a confidentiality agreement, and a one-year non-competition and non-solicitation agreement. The CFO Agreement contains a claw back provision that enables the Company to claw back any incentive-based compensation or other compensation from him if required by any law, government regulation, stock exchange listing requirement, or Company policy adopted as required by such law, government regulation, or stock exchange listing requirement.

Employment Agreement – CTO

On December 19, 2014, the Company terminated, without cause, the employment of its Chief Technical Officer (“CTO”). Under the terms of an employment agreement dated November 2, 1988, the Company is obligated to provide severance pay for a one-year period, which pay includes an extension of all rights, privileges and benefits as an employee (including medical insurance). The one-year severance pay shall be equal to the CTO’s average annual salary for the 12-month period immediately prior to the termination. The terms of the employment agreement also require us to pay the CTO for accrued, unused vacation at the time of termination, and include a non-competition covenant prohibiting him from competing with us for one year following his termination. We may continue the non-competition period for up to four additional years by notifying the CTO in writing and by continuing the severance payments for the additional years during which the non-competition period is extended.

- Definition

The entire disclosure for commitments and contingencies.

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