Document:

Exhibit

Exhibit 10.1

 

SEPARATION AGREEMENT AND GENERAL RELEASE
NOTICE: YOU SHOULD THOROUGHLY REVIEW AND UNDERSTAND THE TERMS, CONDITIONS, AND EFFECT OF THIS SEPARATION AGREEMENT AND GENERAL RELEASE. YOU ARE ADVISED TO CONSULT WITH AN ATTORNEY BEFORE SIGNING IT.
The parties to this Separation Agreement and General Release (hereinafter “Agreement”) are Fibrocell Science, Inc. (the “Company”) and Michael F. Marino (“Executive”) (collectively, “Parties”).
WHEREAS, Executive tendered his resignation as Senior Vice President, General Counsel and Corporate Secretary of the Company, effective as of January 25, 2017 (the “Termination Date”); and
WHEREAS, the Company and Executive desire to set forth their agreement concerning the terms and conditions of the cessation of employment of Executive, including the precise nature and amount of compensation to be provided to Executive and any other rights and obligations of the Company and Executive following Executive’s resignation;
NOW, THEREFORE, in consideration of the respective promises set forth herein, which the Parties acknowledge are adequate consideration for the promises made herein, and subject to the conditions described herein, the Parties acknowledge and agree as follows:
1.    Termination Date: Executive’s employment with the Company will end on the Termination Date.  The Company shall pay any and all of Executive’s compensation due and owing as of the Termination Date, including Executive’s accrued but unused vacation for fiscal year 2017 (2 days), in accordance with Company’s usual compensation and payroll practices.  Executive shall be entitled to reimbursement of all reasonable unreimbursed business expenses incurred as of the Termination Date in accordance with Company’s expense reimbursement policy.  Except as specifically provided by this Agreement, the Company shall have no other obligations or liabilities to Executive following the Termination Date.
2.    Resignation: Executive hereby acknowledges and agrees that Executive resigned from all positions held by Executive as an officer of the Company and each of its direct and indirect subsidiaries, effective as of the Termination Date. 
3.    Special Payment: In consideration of the execution of this Agreement by Executive and not revoking the same and of Executive’s performance of his obligations under this Agreement, and conditioned on his compliance with its terms and conditions, the Company shall pay Executive the total amount of One Hundred Ten Thousand Eight Hundred Fifty Two dollars ($110,852) (the “Special Payment Amount”).  The Company shall pay the Special Payment Amount to Executive, less applicable withholdings and deductions, on the Company’s next regular payday following the expiration of the Revocation Period (defined herein).  Executive acknowledges that the Special Payment Amount includes ten (10) days of accrued but unused vacation for fiscal year 2016 for which Executive would not otherwise be entitled to payment.  The treatment of any outstanding stock options held by Executive on the Termination Date shall be determined in accordance with the terms of the Company’s 2009 Equity Incentive Plan and the applicable award agreements.
4.    Release: Executive, for himself, his attorney, heirs, executors and assigns, does hereby fully and forever release and discharge the Company and its past, current and future subsidiaries and affiliates, as well as their predecessors, successors, assigns, and all of their past, current and former directors, officers, partners, agents, employees, attorneys, and administrators (collectively, the “Company Released Parties”) from all suits, causes of action, and/or claims, demands or entitlements of any nature whatsoever, whether known, unknown, or unforeseen, which Executive has or may have against any of them arising out of or in connection with his employment by the Company, the Employment Agreement between the Company and Executive, dated June 1, 2015 (the “Employment Agreement”), the termination of Executive’s employment with the Company, or any event, transaction, or matter 

occurring or existing on or before the date of Executive’s signing of this Agreement related to the Company, except that Executive is not releasing (i) any claims under Section 8 of the Employment Agreement including, without, limitation, Executive’s continuing rights to indemnification and coverage under the Company’s current and future director and officer insurance policies to the same extent as the directors and officers of the Company are covered under such policies, which rights survive the Executive’s termination of employment, (ii) any other right to indemnification or officer liability insurance coverage or employed lawyer insurance coverage or other insurance coverage that Executive may have under the Company’s certificate of incorporation, bylaws or otherwise, (iii) any claims relating to any rights Executive may have pursuant to stock option awards granted to Executive by the Company (collectively, the “Stock Option Awards”) that vested before the Termination Date, or (iv) any claims arising after the date of his signing this Agreement. Executive shall not file or otherwise institute any claim, demand or lawsuit seeking damages or other relief and not to otherwise assert any claims, demands or entitlements that are released herein. Executive further hereby irrevocably and unconditionally waives any and all rights to recover any relief or damages concerning the claims, demands or entitlements that are released herein. Executive represents and warrants that Executive has not previously filed or joined in any such claims, demands or entitlements against the Company or the other persons or entities released herein and that Executive will indemnify and hold them harmless from all liabilities, claims, demands, costs, expenses and/or attorney’s fees incurred as a result of any such claims, demands or lawsuits.
This Agreement specifically includes, but is not limited to, all claims of breach of contract, employment discrimination (including any claims coming within the scope of Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Equal Pay Act, the Americans with Disabilities Act, and the Family and Medical Leave Act, all as amended, or any other applicable federal, state, or local law), claims under the Worker Adjustment and Retraining Notification Act, claims under the Sarbanes-Oxley Act of 2002, including the Corporate and Criminal Fraud Accountability Act, claims under the Employee Retirement Income Security Act, as amended, claims under the Fair Labor Standards Act, as amended (or any other applicable federal, state or local statute relating to payment of wages), claims for wrongful discharge in violation of public policy, claims under the Employment Discrimination Bureau (EDB) - Pennsylvania, the Pennsylvania Family Leave Act, the Pennsylvania Workers’ Compensation Act, the Pennsylvania State Wage and Hour Law, the Pennsylvania Law on Equal Pay, the Pennsylvania Political Activities of Employees Law, the Pennsylvania Lie Detector Testing Law, the Pennsylvania Tobacco Use Law, the Pennsylvania Genetic Testing Law, the State of Pennsylvania Labor Relations Act, the Pennsylvania Human Rights Law, and the Pennsylvania Labor Law, claims for discrimination in violation of the Pennsylvania Human Relations Act, claims for breach of express or implied contract, wage orders, claims concerning recruitment, hiring, termination, salary rate, severance pay, wages or benefits due, sick leave, holiday pay, vacation pay, life insurance, group medical insurance, any other fringe benefits, worker’s compensation, termination, employment status, libel, slander, defamation, intentional or negligent misrepresentation and/or infliction of emotional distress, together with any and all tort, contract, or other claims which might have been asserted by Executive or on his behalf in any suit, charge of discrimination, or claim against the Company or the persons or entities released herein.
Executive acknowledges that different or additional facts may be discovered in addition to what he now knows or believes to be true with respect to the matters released in this Agreement, and this Agreement shall be and remain in effect in all respects as a complete and final release of the matters released, notwithstanding any different or additional facts.
However, notwithstanding the foregoing, nothing in this Agreement shall be construed to waive any right that is not subject to waiver by private agreement, including, without limitation, any claims arising under state unemployment insurance or workers compensation laws.  Executive understands that rights or claims under the Age Discrimination in Employment Act that may arise after Executive executes this Agreement are not waived.  Likewise, nothing in this Agreement shall be construed to prohibit Executive from filing a charge with or participating in any investigation or proceeding conducted by the EEOC, NLRB, or any comparable state or local agency.  Notwithstanding the foregoing, Executive agrees to waive his right to recover individual relief in any charge, complaint, or lawsuit filed by him or anyone on his behalf.

5.    Non-admission of Liability or Wrongdoing: The Parties understand and agree that the execution of this Agreement does not constitute an admission by any party of any liability or wrongdoing on the part of that party.
6.    Restricted Information: Executive shall not disclose to anyone outside of the Company, or use for his own benefit or the benefit of anyone other than the Company, any nonpublic information regarding the Company’s business, including but not limited to: (a) customer information, such as the Company’s customer list and other nonpublic information regarding the Company’s customers, such as customer contact information; contract terms; customer files; information regarding customer history, needs and preferences; and information designated by customers to be kept confidential; (b) financial information, such as sales plans and forecasts; sales and earnings figures; cost and profitability information; and pricing; (c) corporate strategies, marketing and other strategic plans; (d) technical and product information, such as sources of supply; manufacturing methods; product development plans; product testing plans, protocols, data and results; and intellectual property; and (e) personnel files and information (collectively, the “Restricted Information”). Restricted Information does not include any information that is, or becomes, in the public domain through no disclosure or other action (whether direct or indirect) by Executive. The obligations in this Section 6 with respect to a particular piece of Restricted Information shall remain in effect until that piece of information enters the public domain through no breach of contract or duty by Executive.  Pursuant to 18 USC § 1833(b), Executive agrees and understands that an individual may not be held liable under any criminal or civil federal or state trade secret law for disclosure of a trade secret: (i) made in confidence to a government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  Additionally, an individual suing an entity for retaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and the individual does not disclose the trade secret except pursuant to court order.  Nothing in this Agreement is intended to conflict with 18 USC § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 USC § 1833(b).
7.    Non-Disparagement: Executive shall not make any written or oral statement that may defame, disparage or cast in a negative light so as to do harm to the personal or professional reputation of (a) the Company and its subsidiaries and affiliates, (b) their employees, officers, directors or trustees or (c) the services and/or products being developed or provided by the Company or its subsidiaries or affiliates.  The Company, including its Director of Human Resources, Section 16 officers and members of its Board of Directors shall not make any written or oral statement that may defame, disparage or cast in a negative light so as to do harm to the personal or professional reputation of the Executive.  
8.    Cooperation: Executive shall cooperate with the Company and its subsidiaries or affiliates in connection with any pending or future investigation, litigation, proceeding or other matter which may be filed against or by the Company or its subsidiaries or affiliates with any agency, court, or other tribunal and concerning or relating to any matter falling within Executive’s knowledge or former area of responsibility. Executive shall provide reasonable assistance and completely truthful testimony in such matters as needed. The Company shall compensate the Executive for services performed by Executive pursuant to this Section 8 at $250 per hour and will reimburse Executive for all reasonable associated out of pocket expenses incurred at the request of the Company.
9.    Return of Property; Deductions: Promptly after the Termination Date, Executive shall return the original and all copies of Company property, including but not limited to any and all Restricted Information and all documents, files, manuals, forms, records, contact information or lists, financial information, drawings, plans, hardware, software, access codes, keys, credit cards, and any and all other physical, intellectual, or personal property of the Company or its subsidiaries or affiliates. Executive hereby authorizes the Company to deduct as an offset from the above-referenced Special Payment Amount the value of any Company property not returned or returned in a damaged condition as well as any monies paid by the Company on Executive’s behalf, unless prohibited by applicable law.  Executive further represents that he has not retained any non-public information about the Company or its affiliates or subsidiaries on any personal computer or portable data storage device or in any other manner.

10.    Breach: In the event that Executive or the Company breaches or threatens to breach any provision of this Agreement, Executive or the Company, as applicable, shall be entitled to seek any and all equitable and legal relief provided by law, specifically including immediate and permanent injunctive relief.  Executive and the Company hereby waive any claim that the other Party has as an adequate remedy at law. In addition, and to the extent not prohibited by law, Executive and the Company, as applicable, shall be entitled to an award of all costs and attorneys’ fees incurred by him or it in any successful effort to enforce the terms of this Agreement. The foregoing relief shall not be construed to limit or otherwise restrict either Party’s ability to pursue any other remedy provided by law, including the recovery of any actual, compensatory or punitive damages.
11.    Communication with Government Agencies: Notwithstanding anything to the contrary herein, Executive understands that nothing in this Agreement restricts or prohibits Executive from initiating communications directly with, responding to any inquiries from, providing testimony before, providing confidential information to, reporting possible violations of law or regulation to, or from filing a claim or assisting with an investigation directly with a self-regulatory authority or a government agency or entity (collectively, “Government Agencies”), or from making other disclosures that are protected under the whistleblower provisions of state or federal law or regulation, and Executive does not need the Company’s prior authorization to engage in such conduct.  This Agreement does not limit Executive’s right to receive an award for information provided to Government Agencies.
12.    Section 409A: This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) or an exemption thereunder and shall be construed and administered in accordance with Section 409A.  Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption.  Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible.  Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A and any payments to be made under this Agreement that are subject to Section 409A and that are payable to a “specified employee” on account of “separation from service” (other than amounts exempt from Section 409A) during the first six (6) months after the date of Executive’s “separation from service,” shall be paid on the first day of the seventh month beginning after the date of Executive’s “separation from service” (or upon Executive’s death, if earlier).  Notwithstanding the foregoing, the Company makes no representations that the payments provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Executive on account of non-compliance with Section 409A.
13.    Arbitration of Disputes: Any dispute, controversy or claim arising out of or related to Executive’s employment with the Company, this Agreement or any breach of this Agreement shall be submitted to and decided by binding arbitration in the County of Chester, Pennsylvania. Arbitration shall be administered exclusively by the American Arbitration Association and shall be conducted consistent with the rules, regulations and requirements thereof as well as any requirements imposed by state law.  Any arbitral award determination shall be final and binding upon the parties.
14.    Acknowledgements by Executive: In signing this Agreement, Executive acknowledges:
		
	(1)
	That he has not suffered any job-related wrongs or injuries, such as any type of discrimination, for which he might still be entitled to compensation or relief in the future.  Except as otherwise set forth herein, he has been paid all wages, compensation and benefits, and other amounts that the Company or any Company Released Party should have paid him in the past.

		
	 (2)
	That he is not aware of any unlawful conduct by the Company or any of its directors, officers or employees.

		
	 (3)
	That he is intentionally releasing claims that he did not know that he might have and that, with hindsight, he might regret having released. He has not assigned or given away any of the claims he is releasing.

		
	(4)
	That he has read and understands this Agreement and that he has been advised to consult with an attorney about its meaning and effect and has done so.

		
	(5)
	That he is receiving monies or other consideration to which he is not otherwise entitled by signing the Agreement and that he is releasing all claims against the Company Released Parties, whether known or unknown, knowingly and voluntarily and without duress, coercion or undue influence of any kind.

15.    Knowing and Voluntary Execution: Executive states and represents that he has carefully read this Agreement and knows and understands the contents thereof, and that he has executed the same as his own free act and deed.  Executive also acknowledges that he has had the opportunity to ask questions about each and every provision of this Agreement and that he fully understands the effect of the provisions contained herein upon his legal rights.
16.    Executed Counterparts: This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
17.    Modification: No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by both Parties.
18.    Effect of Void Provision: If a Party successfully asserts that any provision in this Agreement is void or invalid, the rest of the Agreement shall remain valid and enforceable unless the other Party elects to cancel it. If this Agreement is cancelled by the Company or Executive successfully asserts that Sections 4, 5, 6, 7, 8, 9, 14, 15, 19 and 20 are void or invalid pursuant to the preceding sentence, then Executive will forfeit and/or repay any additional amounts which Executive received in exchange for signing it.
19.    Assignability: Executive’s obligations and agreements under this Agreement shall be binding on his heirs, executors, legal representatives and assigns and shall inure to the benefit of any successors and assigns of the Company.  The Company may, at any time, assign this Agreement or any of its rights or obligations arising hereunder (other than its payment obligations) to any party. The Company’s obligations and agreements under this Agreement shall be binding on its successors and assigns and shall inure to the benefit of Executive’s heirs, successors and assigns.
20.    Entire Agreement: This Agreement sets forth the entire agreement between the Parties hereto and supersedes and replaces any and all prior or contemporaneous representations or agreements, whether oral or written, relating to the subject matter herein (specifically excluding, however, post-termination obligations contained in the Employment Agreement and the Stock Option Awards).  Each Party acknowledges that when they decided to sign this Agreement, they were not relying on any representations that are not in this Agreement. The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the Parties.
21.    Governing Law: This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania, without regard to its conflicts of law provisions.  
YOU MAY NOT MAKE ANY CHANGES TO THE TERMS OF THIS AGREEMENT.  BEFORE SIGNING THIS AGREEMENT, READ IT CAREFULLY, AND THE COMPANY ADVISES THAT YOU DISCUSS IT WITH YOUR ATTORNEY AT YOUR OWN EXPENSE. TAKE AS MUCH TIME AS YOU NEED TO CONSIDER THIS AGREEMENT BEFORE DECIDING WHETHER TO SIGN IT, UP TO 21 DAYS FROM THE DATE YOU FIRST RECEIVED IT.  BY SIGNING IT YOU WILL BE WAIVING YOUR KNOWN AND UNKNOWN CLAIMS.

FEBRUARY 25, 2017 IS THE DEADLINE FOR YOU TO DELIVER A SIGNED COPY OF THIS AGREEMENT TO EDWARD RUSSELL, HUMAN RESOURCES.  IF YOU FAIL TO DO SO, YOU WILL NOT RECEIVE THE SPECIAL PAYMENT DESCRIBED IN IT.
YOU MAY REVOKE THIS AGREEMENT IF YOU REGRET HAVING SIGNED IT. TO DO SO, YOU MUST DELIVER A WRITTEN NOTICE OF REVOCATION TO EDWARD RUSSELL, HUMAN RESOURCES, BEFORE SEVEN 24-HOUR PERIODS EXPIRE FROM THE TIME YOU SIGNED IT (“REVOCATION PERIOD”).  IF YOU REVOKE THIS AGREEMENT, IT WILL NOT GO INTO EFFECT AND YOU WILL NOT RECEIVE THE SPECIAL PAYMENT DESCRIBED IN IT.  THE EFFECTIVE DATE OF THIS AGREEMENT IS THE EIGHTH DAY AFTER YOU SIGN WITHOUT REVOCATION.
[SIGNATURE PAGE TO FOLLOW]

AGREED:

	
			
	FIBROCELL SCIENCE, INC.
	 
	 

	/s/ John M. Maslowski
	 
	January 25, 2017

	Name:  John M. Maslowski
	 
	Date

	Title:    Chief Executive Officer
	 
	 

	
			
	EXECUTIVE
	 
	 

	/s/ Michael F. Marino
	 
	January 25, 2017

	Michael F. Marino
	 
	DateExhibit 10.1

 

SUBSCRIPTION ESCROW AGREEMENT

 

This Subscription
Escrow Agreement (the “Escrow Agreement”), dated as of the effective date (the “Effective Date”) set forth
on Schedule 1 attached hereto (“Schedule 1”), by and among the corporation identified on Schedule 1 (the “Issuer”),
the corporation identified on Schedule 1 (the “Depositor”) and Delaware Trust Company, as escrow agent hereunder (the
“Escrow Agent”).

 

WHEREAS, the Issuer will offer to
investors, pursuant to a registration statement on Form S-3, Registration Statement File No. 333-208784, as may be subsequently
amended, the subscription and sale of up to 2,594,082 Units, with each Unit consisting of one share of common stock, $0.0001 par
value (“Common Stock”), and one warrant to purchase up to one share of Common Stock, at a per Unit price of $4.00 (the
“Units”); and

 

WHEREAS, the Depositor has been
named as the placement agent in connection with the proposed offering of the Units.

 

NOW
THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree
as follows:

 

1.            Appointment.
The Issuer and Depositor hereby appoint the Escrow Agent as their escrow agent for the purposes set forth herein, and the Escrow
Agent hereby accepts such appointment under the terms and conditions set forth herein.

 

2.            Escrow
Fund. All funds received by the Depositor and the Issuer in connection with the sale of Units shall be deposited with the Escrow
Agent (the “Escrow Deposit”). The Escrow Agent shall, subject to the terms and conditions hereof, hold the Escrow Deposit
and any proceeds thereof (the “Escrow Fund”) as directed in Section 3.

 

3.            Investment
of Escrow Fund. During the term of this Escrow Agreement, the Escrow Fund shall be held in a non-interest bearing account by
the Escrow Agent as indicated on Schedule 1 or such other non-interest bearing investments as shall be directed in writing by the
Issuer and the Depositor and as shall be acceptable to the Escrow Agent. The Escrow Agent may earn compensation in the form of
short-term interest (“float”) on items like uncashed distribution checks (from the date issued until the date cashed),
funds that it is directed not to invest, deposits awaiting investment direction or received too late to be invested overnight in
previously directed investments.

 

4.            Disposition
and Termination. The Depositor and the Issuer agree to notify the Escrow Agent in writing of the closing date of the offering
(the “Offering Closing Date”), on or before January 31, 2017. There is no minimum subscription amount. The sale of
the Units is being made on a best efforts, no minimum amount basis. Upon receipt of such written notification the following procedure
will take place.

 

		(i)	If the Issuer receives subscriptions for the Units, and
the Issuer and the Depositor agree to a closing date, so long as the closing date is on or before the close of business on January
31, 2017, the Escrow Fund will be promptly paid to or credited to the accounts of, or otherwise transferred to, the Issuer and
the Depositor pursuant to the joint-instructions from the Issuer and the Depositor.

 

		(ii)	If the Issuer does not receive subscriptions for the Units
being sold, or if any subscription is not accepted by the Issuer, or the fundamental terms of the offering are changed, or the
offering is abandoned or terminated, the Escrow Agent shall be provided with suitable notice and a list containing the amount
received from each subscriber whose funds have been deposited with the Escrow Agent (with respect to each subscriber the “Subscriber
Investment Amount”) and the name, address and Taxpayer Identification Number (“TIN”) of each subscriber. The
aggregate of all Subscriber Investment Amounts shall not exceed the amount of the Escrow Fund. The Escrow Agent shall distribute
to each subscriber the appropriate Subscriber Investment Amount pursuant to joint written instructions of the Issuer and Depositor
within 10 days of receipt of the information described in this Section 4(ii).

 

     

     

    

 

Upon delivery of the Escrow Fund to the
Issuer or the subscribers as the case may be, by the Escrow Agent, this Escrow Agreement shall terminate, subject to the provisions
of Section 8.

 

5.            Escrow
Agent. The Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no duties shall be implied.
The Escrow Agent shall have no liability under and no duty to inquire as to the provisions of any agreement other than this Escrow
Agreement. The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice,
instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed or presented by the proper
party or parties. The Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any
such document. The Escrow Agent shall have no duty to solicit any payments which may be due it or the Escrow Fund. The Escrow Agent
shall not be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction
determines that the Escrow Agent’s gross negligence or willful misconduct was the primary cause of any loss to the Issuer or Depositor.
The Escrow Agent may execute any of its powers and perform any of its duties hereunder directly or through agents or attorneys
(and shall be liable only for the careful selection of any such agent or attorney) and may consult with counsel, accountants and
other skilled persons to be selected and retained by it. The Escrow Agent shall not be liable for anything done, suffered or omitted
in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons. In the
event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands
from any party hereto which, in its opinion, conflict with any of the provisions of this Escrow Agreement, it shall be entitled
to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be
directed otherwise in writing by all of the other parties hereto or by a final order or judgment of a court of competent jurisdiction.
Anything in this Escrow Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, indirect
or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has
been advised of the likelihood of such loss or damage and regardless of the form of action.

 

6.           Succession.
The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving 10 days advance notice in writing
of such resignation to the other parties hereto specifying a date when such resignation shall take effect. The Escrow Agent shall
have the right to withhold an amount equal to any amount due and owing to the Escrow Agent, plus any costs and expenses the Escrow
Agent shall reasonably believe may be incurred by the Escrow Agent in connection with the termination of the Escrow Agreement.
Any corporation or association into which the Escrow Agent may be merged or converted or with which it may be consolidated shall
be the Escrow Agent under this Escrow Agreement without further act.

 

7.            Fees.
The Issuer agrees to (i) pay the Escrow Agent upon execution of this Escrow Agreement and from time to time thereafter reasonable
compensation for the services to be rendered hereunder, which unless otherwise agreed in writing shall be as described in Schedule
1 attached hereto, and (ii) pay or reimburse the Escrow Agent upon request for all expenses, disbursements and advances, including
reasonable attorney’s fees and expenses, incurred or made by it in connection with the preparation, execution, performance, delivery,
modification and termination of this Escrow Agreement. Provided subscription funds are received and an Offering Closing Date is
established, upon such closing the Escrow Agent is authorized to deduct such fees from the Escrow Fund without prior authorization
from the Issuer or Depositor.

 

     

     

    

 

8.            Indemnity.
The Issuer and the Depositor shall jointly and severally indemnify, defend and save harmless the Escrow Agent and its directors,
officers, agents and employees (the “indemnitees”) from all loss, liability or expense (including the fees and expenses
of in house or outside counsel) arising out of or in connection with (i) the Escrow Agent’s execution and performance of this Escrow
Agreement, except in the case of any indemnitee to the extent that such loss, liability or expense is due to the gross negligence
or willful misconduct of the Escrow Agent, or (ii) its following any instructions or other directions from the Issuer or the Depositor,
except to the extent that its following any such instruction or direction is expressly forbidden by the terms hereof. The parties
hereto acknowledge that the foregoing indemnities shall survive the resignation or removal of the Escrow Agent or the termination
of this Escrow Agreement. The parties hereby grant the Escrow Agent a lien on, right of set-off against and security interest in
the Escrow Fund for the payment of any claim for indemnification, compensation, expenses and amounts due hereunder.

 

9.            TINs.
The Issuer and the Depositor represent that its correct Taxpayer Identification Number (“TIN”) assigned by the Internal
Revenue Service or any other taxing authority is set forth in Schedule 1. All interest or other income earned under the Escrow
Agreement, if any, shall be allocated to the Issuer and reported, to the extent required by law, by the Escrow Agent to the IRS
or any other taxing authority, as applicable, on IRS form 1099 or 1042S (or other appropriate form) as income earned from the Escrow
Fund by the Issuer whether or not said income has been distributed during the year.  Unless otherwise indicated in writing
by the parties hereto, no taxes or other withholdings are required to be made under applicable law or otherwise with respect to
any payment to be made by Escrow Agent. All documentation necessary to support a claim of exemption or reduction in such taxes
or other withholdings has been timely collected by Issuer and copies will be provided to Escrow Agent promptly upon a request therefor.
Unless otherwise agreed to in writing by Escrow Agent, all tax returns required to be filed with the IRS and any other taxing authority
as required by law with respect to payments made hereunder shall be timely filed and prepared by Issuer, including but not limited
to, any applicable reporting or withholding pursuant to the Foreign Account Tax Reporting Act (“FATCA”).  The parties
hereto acknowledge and agree that the Escrow Agent shall have no responsibility for the preparation and/or filing of any tax return
or any applicable FATCA reporting with respect to the Escrow Fund.  The Escrow Agent shall withhold any taxes it
deems appropriate, including but not limited to required withholding in the absence of proper tax documentation, and shall remit
such taxes to the appropriate authorities as it determines may be required by any law or regulation in effect at the time of the
distribution.

 

10.          Notices.
All communications hereunder shall be in writing and shall be deemed to be duly given and received:

 

(i)
upon delivery if delivered personally or upon confirmed transmittal if by facsimile or by other electronic means;

 

(ii)
on the next Business Day (as hereinafter defined) if sent by overnight courier; or

 

(iii)
four (4) Business Days after mailing if mailed by prepaid registered mail, return receipt requested, to the appropriate notice
address set forth on Schedule 1 or at such other address as any party hereto may have furnished to the other parties in writing
by registered mail, return receipt requested.

 

     

     

    

 

Notwithstanding the above, in the case
of communications delivered to the Escrow Agent pursuant to (ii) and (iii) of this Section 10, such communications shall be deemed
to have been given on the date received by the Escrow Agent. In the event that the Escrow Agent, in its sole discretion, shall
determine that an emergency exists, the Escrow Agent may use such other means of communication as the Escrow Agent deems appropriate.
“Business Day” shall mean any day other than a Saturday, Sunday or any other day on which the Escrow Agent located at
the notice address set forth on Schedule 1 is authorized or required by law or executive order to remain closed.

 

11.          Security
Procedures. In the event Escrow Fund transfer instructions are given (other than in writing at the time of execution of this
Escrow Agreement), whether in writing, by telecopier or otherwise, the Escrow Agent is authorized to seek confirmation of such
instructions by telephone call-back to the person or persons designated on schedule 2 hereto (“Schedule 2”), and the
Escrow Agent may rely upon the confirmation of anyone purporting to be the person or persons so designated. The persons and telephone
numbers for call-backs may be changed only in a writing actually received and acknowledged by the Escrow Agent. The Escrow Agent
and the beneficiary’s bank in any funds transfer may rely solely upon any account numbers or similar identifying numbers
provided by the Issuer or the Depositor to identify (i) the beneficiary, (ii) the beneficiary’s bank, or (iii) an intermediary
bank. The Escrow Agent may apply any of the escrowed funds for any payment order it executes using any such identifying number,
even where its use may result in a person other than the beneficiary being paid, or the transfer of funds to a bank other than
the beneficiary’s bank or an intermediary bank designated. The parties to this Escrow Agreement acknowledge that these security
procedures are commercially reasonable.

 

12.          Miscellaneous.
The provisions of this Escrow Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing
signed by all of the parties hereto. Neither this Escrow Agreement nor any right or interest hereunder may be assigned in whole
or in part by any party, except as provided in Section 6, without the prior consent of the other parties. This Escrow Agreement
shall be governed by and construed under the laws of the State of Delaware. Each party hereto irrevocably waives any objection
on the grounds of venue, forum non-conveniens or any similar grounds and irrevocably consents to service of process by mail or
in any other manner permitted by applicable law and consents to the jurisdiction of the courts located in the State of Delaware.
The parties further hereby waive any right to a trial by jury with respect to any lawsuit or judicial proceeding arising or relating
to this Escrow Agreement. No party to this Escrow Agreement is liable to any other party for losses due to, or if it is unable
to perform its obligations under the terms of this Escrow Agreement because of, acts of God, fire, floods, strikes, equipment or
transmission failure, or other causes reasonably beyond its control. This Escrow Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

     

     

    

 

IN WITNESS WHEREOF, the parties
hereto have executed this Escrow Agreement as of the date set forth in Schedule 1.

 

	 	Delaware Trust
Company as Escrow Agent	 
	 	 	 
	 	 	 
	 	By: 	/s/
Alan R. Halpern	 
	 	 	 	 
	 	 	 	 
	 	ClearSign
Combustion Corporation	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/
James N. Harmon	 
	 	 	Name:
James N. Harmon	 
	 	 	Its: Chief
Financial Officer	 
	 	 	 	 
	 	 	 	 
	 	MDB Capital
Group LLC	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Gary
Schuman	 
	 	 	Name: Gary
Schuman	 
	 	 	Its: CFO
& CCO	 

 

     

     

    

 

Schedule
1

 

	Effective Date:	 	December 7, 2016
	 	 	 
	Name of Issuer:	 	Clearsign Combustion Corporation
	Issuer Notice Address:	 	12870 Interurban Avenue South, Seattle, Washington 98168
	Issuer E-mail:	 	Jim Harmon <jim@clearsign.com>
	Issuer TIN:  	 	26-2056298
	 	 	 
	Name of Depositor:	 	MDB Capital Group LLC
	Depositor Notice Address:	 	2425 Cedar Springs Road, Dallas, Texas 75201
	Depositor E-mail:	 	d@mdb.com
	Depositor TIN:	 	 
	 	 	 
	Name of Escrow Agent:	 	Delaware Trust Company
	Escrow Agent Notice Address:	 	2711 Centerville Road, Suite 400
	 	 	Wilmington, DE 19808
	 	 	Attn: Escrow Administration
	 	 	E-mail: trust@delawaretrust.com
	 	 	Telephone: 866-291-6119
	 	 	Facsimile: 302-636-8666

 

Investment:

 

		 ̈	BlackRock Temp Fund Cash Management Shares (the “Share
Class”), an institutional money market mutual fund for which the Escrow Agent serves as shareholder servicing agent and/or
custodian or subcustodian. The parties hereto: (i) acknowledge Escrow Agent’s disclosure of the services the Escrow Agent
is providing to and the fees it receives from BlackRock; (ii) consent to the Escrow Agent’s receipt of these fees in return
for providing shareholder services for the Share Class; and (iii) acknowledge that the Escrow Agent has provided on or before
the date hereof a BlackRock Temp Fund Cash Management Shares prospectus which discloses, among other things, the various expenses
of the Share Class and the fees to be received by the Escrow Agent.

 

		 ̈	Such other investments as Issuer, Depositor and Escrow
Agent may from time to time mutually agree upon in a writing executed and delivered by the Issuer and the Depositor and accepted
by the Escrow Agent.

 

		x	The funds shall not be invested.

 

Escrow
Agent’s compensation: See Appended Schedule 3

 

     

     

    

 

Schedule
2

 

Telephone
Number(s) for Call-Backs and

Person(s)
Designated to Confirm Funds Transfer Instructions

 

	If to Issuer:	 	 
	 	 	 
	Name	 	Telephone Number
	 	 	 
	1.    Jim Harmon	 	(206) 669-0441
	 	 	 
	If to Depositor:	 	 
	 	 	 
	Name	 	Telephone Number
	 	 	 
	1.    Anthony DiGiandomenico	 	(310) 526-3015
	 	 	 
	2.    Gary Schuman	 	(310) 526-3006

 

Telephone call-backs may be made to each
Issuer and Depositor if joint instructions are required pursuant to this Escrow Agreement.

 

     

     

    

 

Schedule 3

 

Escrow
Agent Fees:

 

$1,000
 – set-up fee payable in advance of the closing of the transaction

 

$3,000
– annual administration fee covering up to 100 deposits, payable in advance of the closing of the transaction and upon each
subsequent annual anniversary date. There is an additional administration fee of $750.00 for each block of 50 deposits over the
initial 100 deposits.

 

TRANSACTION FEES:

 

Wire transfer of fund: $35.00/domestic wire
initiated; $75.00/international payment

Checks Cut: $10.00/check cut

1099 Preparation: $12.00/1099 prepared

1042-S Preparation: $50.00/per 1042-S

Returned Check: $30.00/returned item

 

An additional annual fee of 15 basis points
on the escrow account balance payable in advance may be charged for investments other than institutional money market funds with
which the Escrow Agent has established servicing arrangements. Out-of-pocket expenses, fees and disbursements and services of an
unanticipated or unexpected nature are not included in the above schedule.

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