Document:

Exhibit 10.1

 

CONFIDENTIAL SEPARATION AGREEMENT

AND

GENERAL RELEASE

 

1.          SETTLEMENT
AND RELEASE

 

This SEPARATION AGREEMENT
AND GENERAL RELEASE (“Agreement”) is between Andrew U. Lee (“Employee” or “you”) and ClearSign
Combustion Corporation (“ClearSign” or “Employer”).

 

2.          RECITALS

 

a.           Employee
is an at-will employee of ClearSign.

 

b.        Employee
has decided to exercise his right to terminate Employee’s employment with ClearSign.

 

c.           To
avoid uncertainty, Employer and Employee desire to settle fully and finally resolve all matters between them arising out of or
related to Employee’s employment with, compensation during, and separation from Employer on the terms and conditions set
forth herein as of the date of this Agreement.

 

d.           This
Agreement effects the settlement of any disputes between the parties to this Agreement, and nothing contained herein should be
construed as an admission by Employer of any liability of any kind with respect thereto.

 

e.           Employer
and Employee expressly recognize that confidentiality of the terms of this Agreement is of the essence, and is a material part
of this Agreement.

 

3.          SEPARATION
FROM EMPLOYMENT

 

The effective date
of Employee’s termination of employment with the Employer is September 7, 2017 (the “Separation Date”).

 

4.          SEVERANCE
CONSIDERATION

 

a.           As
consideration for the release set forth herein, and provided that Employee does not revoke this Agreement within the revocation
period referred to at Section 5(b)(iii) herein, ClearSign waives its right to repurchase the 13,899 shares of common stock granted
to Employee on February 10, 2017 (the “Severance Consideration”). This waiver is a one-time waiver, is made for the
purpose of providing consideration for this Agreement, is limited to the matter expressly waived herein and should not be construed
as an indication that ClearSign, in the event Employee revokes this Agreement, would be willing to agree to any future waiver related
to the Severance Consideration. This waiver sets forth the entire agreement of ClearSign and Employee with respect to the waiver
and supersedes all prior agreements and understandings, oral or written, with respect to the waiver. This waiver may not be amended,
modified or supplemented, and no provision of this waiver may be waived, other than by a written instrument duly executed and delivered
by Employee and by a duly authorized officer of ClearSign. Employee’s revocation of this Agreement renders this waiver null
and void.

 

    	 	 	 

     

    

 

b.           No
other benefits will be made available to Employee after the Separation Date except as provided herein, or by applicable law.

 

c.           Employee
is solely responsible for the payment of, and therefore promises to pay, any taxes, penalties, or other costs assessed that are
associated with the Severance Consideration. The Released Parties, as defined in Section 5 herein, have no duty with respect to
such taxes, penalties or other costs.

 

d.           Employee
will also be paid his wages for the period through the Separation Date less applicable withholdings and deductions through ClearSign’s
ordinary semi-monthly payroll system.

 

e.        Employee
is reminded that his outstanding stock option agreements (the “Award Agreements”) are as summarized on Exhibit
A and that the Continuous Service provisions of the Award Agreements shall continue with the contemporaneous execution
of a consulting agreement between Employee and ClearSign (the “Consulting Agreement”). The right to purchase the common
stock of ClearSign pursuant to the Award Agreements will expire 3 months from the termination of the Consulting Agreement for any
reason, unless extended by other means. For the avoidance of doubt, nothing herein shall limit or modify Employee’s or ClearSign’s
respective rights and obligations under the Award Agreements detailed in Exhibit A, which shall each remain
in force unless any such Award Agreement expires or is terminated in accordance with its terms

 

5.          RELEASE
OF ALL CLAIMS

 

a.           CONSIDERATION
FOR RELEASE

 

Employee acknowledges
that Employee has received all compensation owed to Employee for Employee’s employment through and including August 31, 2017.

 

Both parties agree
that the monies and other benefits to be provided to Employee hereunder as outlined in Section 4 are in excess of compensation
to which Employee would otherwise be entitled. As such, it is agreed that such monies and benefits provide full and adequate consideration
for Employee’s various representations and releases contained herein.

 

b.           EMPLOYEE
RELEASE

 

i.        For
good and valuable consideration as described herein, the receipt and sufficiency of which are hereby acknowledged, Employee, individually
and on behalf of Employee’s representatives, heirs, successors and assigns, hereby releases and absolutely forever discharges
ClearSign, its predecessors, successors, parents, partners, subsidiaries, affiliates, agents, assigns, insurers, representatives,
officers, directors, principals, employees, shareholders, and attorneys, from the past, present and future (collectively, the “Released
Parties”), of and from any and all claims, demands, debts, liabilities, obligations, and causes of actions of every kind
and nature whatsoever, whether now known or unknown, suspected or unsuspected, which Employee may have or ever had, including without
limitation those arising from or relating to Employee’s employment with ClearSign, contracts with ClearSign, termination
of employment with ClearSign, or Employee’s efforts to find subsequent employment. This release includes, but is not limited
to, any claims, demands, causes of action, or liabilities arising under (a) Title VII of the Civil Rights Act of 1964 (race, color,
religion, maternity or pregnancy, sex and national origin discrimination); (b) 42 U.S.C. §1981 (race discrimination); (c)
29 U.S.C. §§621-634 (age discrimination); (d) 29 U.S.C. §206(d)(1) (equal pay); (e) Executive Order 11246 (race,
color, religion, sex and national original); (f) Executive Order 11141, (age discrimination); (g) Older Workers Benefit Protection
Act of 1990 (age discrimination); (h) §503 of the Rehabilitation Act of 1973 (disabilities discrimination); (i) the Civil
Rights Act of 1991 (discrimination), (j) the Age Discrimination in Employment Act of 1967 (“ADEA”); (k) the Family
and Medical Leave Act; (l) Washington State Law Against Discrimination, Revised Code of Washington section 49.60; (m) claims with
any division of the Washington State Department of Labor and Industries, (n) Washington Industrial Safety and Health Act; (o) Washington
Family Care Act; (p-o) Seattle Municipal Code, SMC 14.04.030-0,40 (discrimination) (q) any other federal, state or local laws or
regulations prohibiting employment discrimination, harassment or retaliation; and (r) any amendments or additions to any of the
federal, state or local laws or regulations mentioned above. This waiver and release also includes, but is not limited to, any
claims, demands, causes of action, or liabilities arising under or in relation to any oral or written representations or statements
or under any state, local or federal law regulating wages, hours, compensation or employment or any claim for wrongful discharge,
breach of contract, breach of the implied covenant of good faith and fair dealing, intentional or negligent infliction of emotional
distress, or defamation. For the avoidance of doubt, this release is not intended to modify or terminate surviving contractual
and statutory rights and obligations, as specified in Sections 4(e) and 7 herein.

 

    	 	 	 

     

    

 

ii.        It
is understood and agreed that this Section 5(b) is intended to be a full and final release covering all known as well as all unknown
or unanticipated injuries, debts, claims or damages, of any kind, arising from acts, omissions or events prior to the Separation
Date. Employee waives any and all rights or benefits which Employee may now have under the terms of any statute or law that purports
to limit such a release.

 

iii.        Employee
acknowledges that Employee is knowingly and voluntarily waiving and releasing any rights Employee may have under the ADEA. Employee
also acknowledges that the Severance Consideration provided for in Section 4 herein is in addition to anything of value to which
Employee is otherwise entitled and constitutes sufficient consideration for the waiver and release herein. Employee further acknowledges
that Employee has been advised by this writing, as required by the Older Workers’ Benefit Protection Act, that: (a) Employee’s
waiver and release does not apply to any rights or claims that may arise after the execution of this Agreement; (b) Employee should
consult with an attorney prior to executing this Agreement; (c) Employee has twenty-one (21) days to consider this Agreement (although
Employee may by Employee’s own choice execute this Agreement earlier); (d) under the ADEA, Employee has seven (7) days following
the date of his execution of this Agreement by the parties to revoke the Agreement; and (e) this Agreement shall not be effective
until the date upon which such revocation period has expired. If Employee has not executed this Agreement and delivered his executed
signature page by hand delivery, fax or email of a PDF to ClearSign’s Chief Financial Officer and/or Chief Executive Officer
by the expiration of the twenty-one (21)-day consideration period referenced in this Section 5(b)(iii), the offer of the Severance
Consideration in this Agreement will expire, and Employee will have no right or claim to the Severance Consideration or any portion
of the Severance Consideration. Employee may revoke this Agreement only by giving ClearSign written notice of Employee’s
revocation of this Agreement, by email to the CEO, Steve Pirnat, and CFO, Brian Fike, at steve.pirnat@clearsign.com and brian.fike@clearsign.com
transmitted by the close of business on the seventh (7th) day following the date of Employee’s execution of this Agreement.

 

    	 	 	 

     

    

 

6.          NO
OTHER ACTIONS

 

Employee represents
that Employee has not filed, and will not file, any complaints, charges, or grievances against any or all of the Released Parties
with any city, county, state, or federal agency or court, whether or not arising out of or related to his or her employment with,
compensation during, and separation from ClearSign.

 

7.          TRADE
SECRETS, CONFIDENTIALITY, AND INDEMNIFICATION

 

Employee acknowledges
that Employee previously executed the Confidentiality and Proprietary Rights Agreement (the “Confidentiality Agreement”)
with ClearSign, attached hereto as Exhibit B, and that nothing herein shall limit Employee’s obligations
and/or ClearSign’s rights under the Confidentiality Agreement, which shall remain in force. Additionally, Employee agrees
to (a) keep confidential the terms of this Agreement, except upon order of any court, as required by law, or to the extent the
terms are made public by ClearSign, including through the attached Form 8-K attached as Exhibit C to be filed
with the Securities & Exchange Commission, and (b) comply with all terms of the Policy of Insider Trading attached as Exhibit
D and rules promulgated by the Securities Exchange Commission and NASDAQ as those rules would continue to apply to
Employee.

 

    	 	 	 

     

    

 

Employer and Employee
acknowledge that they previously executed the Indemnification Agreement, attached hereto as Exhibit E, and
that nothing herein shall limit Employer’s obligations and/or Employee’s rights under the Indemnification Agreement,
which shall remain in force.

 

8.          NON-DISPARAGEMENT

 

Employee agrees not
to disparage, directly or indirectly, ClearSign or any of the Released Parties.

 

9.          FULL
AND INDEPENDENT KNOWLEDGE

 

Employee represents
Employee has thoroughly read this Agreement, understands all its provisions, agrees to the terms, and is voluntarily entering into
this Agreement.

 

10.         ARBITRATION

 

This Agreement shall be interpreted according
to Washington law, in Seattle, Washington, without regard to its conflict of interest principles. Any claim or controversy arising
from this Agreement shall be resolved by arbitration before a single arbitrator of JAMS in accordance with its Comprehensive Arbitration
Rules and Procedures and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
The single arbitrator shall be selected by mutual agreement of Employee and ClearSign. If such agreement cannot be reached the
arbitrator shall be selected according to the procedures of the JAMS. The single arbitrator shall award the prevailing party all
arbitration costs, arbitrator fees, reasonable attorneys’ fees and costs incurred by the prevailing party in connection with
the arbitrated claims. The arbitrator shall have authority to issue any remedy or relief that a court of competent jurisdiction
could award, order or grant including, without limitation, a preliminary or permanent injunction. Notwithstanding the foregoing,
either party may, without inconsistency with this provision, apply to any court having jurisdiction for interim, provisional injunctive
or equitable relief until the arbitration award is rendered and the controversy otherwise is resolved.

 

11.         ATTORNEYS’
FEES

 

Each party shall bear
his, her or its own attorneys’ fees and costs, except as otherwise provided herein.

 

12.         NON-RELEASED
CLAIMS

 

This Agreement excludes, and you are not
waiving, (i) any right to file, testify or otherwise cooperate in the investigation of an administrative charge or complaint with
the Equal Employment Opportunity Commission, the National Labor Relations Board or other appropriate federal, state or local administrative
or law enforcement agency, although you are waiving any right to monetary recovery related to such a charge or administrative complaint;
(ii) any right to report conduct that is allegedly unlawful under federal securities laws to any government body or agency, including
the right to receive awards pursuant to Section 21F of the Securities Exchange Act; (iii) claims which cannot be waived by law,
such as claims for unemployment benefits; (iv) any indemnification rights you may have against ClearSign; and (v) any rights to
vested benefits, such as pension or retirement benefits.

 

    	 	 	 

     

    

 

13.         CONSTRUCTION
OF THIS AGREEMENT

 

a.           This
Agreement shall be binding upon the signatories and their respective heirs, administrators, representatives, executors, successors,
and assigns, and shall inure to the benefit of Released Parties, and each of them, and to their respective heirs, administrators,
representatives, executors, successors, and assigns, upon whom this Agreement shall also be binding.

 

b.           Should
any provision of this Agreement become legally unenforceable, no other provision of this Agreement shall be affected, and this
Agreement shall be construed as if the Agreement had never included the unenforceable provision.

 

c.        The
parties to this Agreement agree that any modification of this Agreement must be in writing, signed by Employee and ClearSign.

 

d.        OTHER
THAN THE CONFIDENTIALITY AGREEMENT AND THE INDEMNIFICATION AGREEMENT, THIS AGREEMENT SHALL BE, AND CONSTITUTE FULL, COMPLETE, UNCONDITIONAL,
AND IMMEDIATE SUBSTITUTION FOR ANY AND ALL RIGHTS, CLAIMS, DEMANDS, AND CAUSES OF ACTIONS WHATSOEVER, WHICH HERETOFORE EXISTED
OR MIGHT HAVE EXISTED ON BEHALF OF EMPLOYEE AGAINST ANY OR ALL OF THE RELEASED PARTIES AND THEIR RESPECTIVE SUCCESSORS, PREDECESSORS,
SUBSIDIARIES, AFFILIATES, PARENTS, SHAREHOLDERS, PARTNERS, EMPLOYEES, AGENTS, REPRESENTATIVES, OFFICERS, DIRECTORS, PRINCIPALS,
ASSIGNS, INSURERS AND ATTORNEYS. FURTHERMORE, OTHER THAN THE CONFIDENTIALITY AGREEMENT AND THE INDEMNIFICATION AGREEMENT, THIS
AGREEMENT IS THE ONLY, SOLE, ENTIRE, AND COMPLETE AGREEMENT OF THE PARTIES RELATING IN ANY WAY TO THE SUBJECT MATTER HEREOF. NO
STATEMENTS, PROMISES, OR REPRESENTATIONS HAVE BEEN MADE BY ANY PARTY TO ANY OTHER, OR RELIED UPON, AND NO CONSIDERATION HAS BEEN
OFFERED, PROMISED, EXPECTED, OR HELD OUT OTHER THAN AS MAY BE EXPRESSLY PROVIDED HEREIN.

 

e.           No
provision of this Agreement shall be modified or construed by any practice that is inconsistent with such provision, and failure
by any party to this Agreement to comply with any provision, or to require another party to comply with any provision, shall not
affect the rights of any party thereafter to comply or require the other to comply.

 

    	 	 	 

     

    

 

f.            This
Agreement may be executed and delivered in two or more counterparts, each of which, when so executed and delivered, shall be the
original, but such counterparts together shall constitute but one and the same instrument.

 

IN WITNESS WHEREOF,
the parties have executed this instrument on the dates indicated below in the County of King, State of Washington.

 

 

	ANDREW U. LEE	 	CLEARSIGN COMBUSTION
	 	 	CORPORATION
	 	 	 	 
	 	 	By:	 
	 	 	 	Stephen E. Pirnat
	Dated: September 7, 2017	 	Its: Chief Executive Officer
	 	 	Dated: September 7, 2017

 

    	 	 	 

     

    

 

Exhibit A

 

Outstanding Stock Option Agreements

are summarized as follows:

 

Lee

Stock Options at 8/31/17

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Original	 	Revised
	Option	 	Strike	 	 	 	 	 	Vested on	 	 	Date of	 	Vesting	 	Expiration	 	Expiration
	Award #	 	Price	 	 	Options	 	 	8/31/17	 	 	Award	 	Commencement	 	Date	 	Date (1)
	3	 	$	2.20	 	 	 	78,125	 	 	 	78,125	 	 	09/30/11	 	07/01/11	 	09/30/21	 	12/07/17
	10	 	$	4.88	 	 	 	29,730	 	 	 	29,730	 	 	01/17/13	 	01/01/13	 	12/31/22	 	12/07/17
	24	 	$	9.90	 	 	 	21,000	 	 	 	18,375	 	 	02/13/14	 	01/01/14	 	12/31/23	 	12/07/17
	43	 	$	5.21	 	 	 	12,000	 	 	 	6,750	 	 	04/01/15	 	04/01/15	 	03/31/25	 	12/07/17
	58	 	$	4.21	 	 	 	12,000	 	 	 	3,750	 	 	04/23/16	 	04/01/16	 	03/31/26	 	12/07/17
	75	 	$	3.80	 	 	 	12,000	 	 	 	750	 	 	06/23/17	 	04/01/17	 	03/31/27	 	12/07/17
	 	 	 	 	 	 	 	 	 	 	 	137,480	 	 	 	 	 	 	 	 	 

 

(1) - The Revised Expiration Date assumes that Mr. Lee
does not maintain Continuous Service as defined in each of the above referenced Stock Option Award Agreements. Mr. Lee's
Original Expiration Date would be maintained if he maintains his Continuous Service by becoming a consultant or director of
the Company.

 

    	 	 	 

     

    

 

Exhibit B

 

Confidentiality and Proprietary Rights Agreement

executed by Andrew U. Lee on June 27, 2012

 

    	 	 	 

     

    

 

Confidentiality
and Proprietary Rights Agreement

 

I, the undersigned
employee or consultant, enter into this Confidentiality and Proprietary Rights Agreement (Agreement) with ClearSign Combustion
Corporation (Company). This Agreement is effective immediately.

 

Company has researched,
compiled and developed certain proprietary data, including, but not limited to customer information, trade secrets, and other information
which is not generally disclosed by Company to the public. In the course of my employment or consulting relationship with Company,
I may acquire knowledge (both orally and in writing) relating to confidential affairs of Company and confidential, proprietary,
and trade secret information. In consideration of my employment or consulting relationship, and Company ‘s time, effort and
resources devoted to my training and briefing, and my access to Confidential Information (defined below) that will assist me in
performing my duties, I agree as follows:

 

Confidential Information.
“Confidential Information” is proprietary data that has been researched, compiled, developed and/or maintained by Company,
and which is not generally known within the industry. Confidential Information includes, but is not limited to, information, ideas,
knowledge, data, or know-how related to products, processes, software, designs, formulae, tests, research, business and/or marketing
plans and strategies, costs, profits, pricing, personnel and financial information, capitalization and other corporate data and
information, and information about or obtained from customers, authors, suppliers, consultants, licensees, or affiliates. Confidential
Information also includes information Company has received from third parties in confidence.

 

Use and Disclosure
Restrictions. I will not use or disclose Confidential Information, in any form, for any purpose, except in the course of and
for the purposes of my employment or consulting relationship with Company and in compliance with insider trading and information
laws, rules, and regulations.

 

Ownership of Information.
I will obtain no right, title or interest in the Confidential Information, or any related information or data. The Confidential
Information and related information shall remain the sole property of Company.

 

Return of Information.
I will return all Confidential Information, including all copies in any form, to Company immediately upon termination of my employment
or consulting relationship with Company, or earlier upon request of Company.

 

Return of Property.
In the course of my employment or consulting relationship with Company, I may be provided with equipment, supplies, keys, credits
cards, software, and other property for business use (collectively, “Company Property”). I will return all Company
Property immediately upon termination of my employment or consulting relationship with Company, or otherwise immediately on Company’s
request.

 

    	 	 	 

     

    

 

Assignment of Inventions.

 

“Inventions”
means ideas, improvements, designs, processes, formulas, techniques, authored works (whether software or other forms), and/or discoveries
related to the use of electric and/or magnetic fields in flames, furnaces, and combustion systems, including the Company’s
Electrodynamic Combustion ControlTM technology, whether or not reduced to writing, and whether or not patentable or copyrightable.

 

“Covered Work”
means Inventions conceived by me (alone or with others) or that are developed in whole or in part on Company time as an employee
or consultant, or in whole or in part using Company’s equipment, supplies, or facilities, or that depend for their effectiveness
on, or incorporate, Confidential Information. An Invention I conceive or develop on Company time is Covered Work whether or not
my activities occur (i) on or off the premises, (ii) before, during or after normal working hours, or (iii) within or without the
scope of work assigned to me.

 

Assignment.
I understand that Covered Work is work made for hire and, in any case, owned exclusively by Company. To the extent any such Covered
Work does not qualify as work made for hire, I hereby assign to Company all worldwide right, title and interest to all such Covered
Work, whenever made. I hereby waive any rights and claims I may have in any jurisdiction to any moral rights of “droit moral”
with respect to any Covered Work and confirm that Company has the right to make, have made, and own enhancements, derivative works,
and other modifications to Covered Work.

 

Reporting. I agree
to inform an officer of Company if I intend to incorporate into Company’s products or technology or otherwise use for Company’s
benefit any Invention I made that I believe is not a Covered Work. If I fail to inform an officer of Company prior to such use
of an Invention I made, I hereby grant to company a non-exclusive, unlimited, perpetual, irrevocable, worldwide, royalty-free right
and license to use such Invention in connection with Company’s business and in its sole discretion.

 

Exceptions. Except
as provided in section 3(d), this section 3 does not apply to any Invention I made that predates my employment or consulting relationship
with Company and which is identified on Exhibit A to this Agreement. This section 3 also does not apply to any invention for which
no equipment, supplies, facilities, or trade secret information of Company was used and which was developed entirely on my own
time, unless (i) the invention relates directly to the business of Company, or to Company’s actual or demonstrably anticipated
research or development, or (ii) the invention results from any work I performed for Company.

 

Cooperation. I
will reveal promptly all information relating to Inventions and Covered Work to an appropriate officer of the Company, including
apprising such officer of the status of the items described in Exhibit A. At Company’s expense, and for no additional compensation,
I will cooperate fully and promptly with Company and execute such documents as may be requested if Company desires to seek, document,
enhance, or defend Company’s ownership, copyright, patent, trademark, or other intellectual property protection relating
to any Covered Work, even after I no longer work for Company. I appoint Company (and its authorized agents) as my agent and attorney-in-fact
for the following limited purposes: to take any action to obtain patents, copyrights, or other kinds of legal protection in Covered
Works; to assign those rights to Company; and to protect those rights from infringement. This appointment and power of attorney
are irrevocable. Any action taken by Company under this power of attorney will have the same legal effect as if I did it myself.

 

    	 	 	 

     

    

 

No Violation of
Contract. My acceptance of an employment or consulting relationship with Company does not violate any contractual obligations
I owe to any third party. I will not use or disclose to Company confidential information or trade secrets of any third party without
that party’s consent. I acknowledge that Company wishes me to abide strictly by the terms of valid and enforceable obligations
I have to prior employers or clients, and that I am to inform an appropriate officer of the Company whenever I believe a task I
am to perform for the Company would put my ability to abide by those obligations at risk.

 

Employment.
If I am an employee, I will devote my full time and attention to the transaction of Company’s business while I am employed
by Company. Nothing in this Agreement creates an employment contract for a specific term or otherwise alters the at-will nature
of my employment with Company. Either party may terminate the employment relationship at any time, for any reason, with or without
prior notice.

 

Conflict of Interest.
While I am employed by or consulting for Company, I will not work, directly or indirectly, for any company which competes with
Company, nor will I solicit Company customers, potential customers or contacts for the purpose of selling products or services
for any person or entity other than Company.

 

Non-solicitation.
For one year after my employment or consulting relationship with Company terminates, regardless of the reason for termination,
I will not (a) directly solicit business from any person or entity which then is or was a Company customer, client or prospect
during the twelve (12) months prior to termination, (b) induce any such person or entity to cease or reduce their business relationship
with Company; (c) induce any person to leave the employment of Company; or (d) directly or indirectly hire or use the services
of any Company employee unless I obtain Company’s written consent. I will not aid others in doing anything I am prohibited
from doing myself under this paragraph, whether as an employee, officer, director, shareholder, partner, consultant or otherwise.
For purposes of this paragraph, the term “solicit” includes (i) responding to requests for proposals and invitations
for bids, (ii) initiating contacts with customers, clients, or prospects of Company for the purpose of advising them that I no
longer am employed by or consulting for Company and am available for work which is competitive with the services offered by Company,
and (iii) participating in joint ventures or acting as a consultant or subcontractor or employee of others who directly solicit
business prohibited by this Agreement. The term “Company employee” includes any then current employee of Company or
any person who has left the employ of Company within the then previous six (6) months. The terms “Company client” and
“Company customer” include any parent corporation, subsidiary corporation, affiliate corporation or partner or joint
venture of a client or customer. “Company prospect” means any person or entity to whom Company has submitted a bid
or proposal within the then immediately preceding six (6) months.

 

    	 	 	 

     

    

 

Noncompetition.
For one year following termination of my employment for any reason, I will not directly Compete (defined below) with Company anywhere
Company is doing or has plans to do business, nor will I engage in any other activity which would conflict with the Company’s
business, or interfere with my obligations to the Company. “Compete” means directly: (i) have any financial interest
in, (ii) join, operate, control or participate in, or be connected as an officer, employee, agent, independent contractor, partner,
principal or shareholder with (except as holder of not more than five percent (5%) of the outstanding stock of any class of a corporation,
the stock of which is actively publicly traded) or (iii) provide services in any capacity to those participating in the ownership,
management, operation or control of, and/or (iv) act as a consultant or subcontractor to, a Competitive Business (defined below).
“Competitive Business” means any corporation, proprietorship, association or other entity or person engaged in the
sale, production and/or development of products or the rendering of services of a kind similar to or competitive with that sold,
produced, developed or rendered by Company as of the date my employment or consulting relationship terminates. Currently, the Company
believes that it and its Electrodynamic Combustion ControlTM technology have no competitors.

 

Continuation of
Obligations. Except to the extent this Agreement provides otherwise, the restrictions of and my obligations under this Agreement
will continue after my employment or consulting relationship terminates, regardless of the reason for termination. Upon termination
of my employment or consulting relationship, I agree to execute and deliver to Company the Termination Certification in the form
attached as Exhibit B to this Agreement.

 

Consent to Injunction.
I acknowledge that Company would suffer irreparable harm for which monetary damages alone would not adequately compensate Company
if I breached this Agreement. For that reason, I agree Company shall be entitled to injunctive relief to enjoin any breach or threatened
breach of this Agreement, in addition to any other available remedies.

 

Governing Law and
Jurisdiction. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Washington, without
regard to conflict of law principles. The exclusive jurisdiction for any action to interpret or enforce this Agreement shall be
State of Washington.

 

Attorney Fees.
In the event of any suit, action or arbitration to interpret or enforce this Agreement, the prevailing party shall be entitled
to its attorney fees, costs, and out-of-pocket expenses, at trial and on appeal.

 

    	 	 	 

     

    

 

Waiver. Company’s
failure to demand strict performance of any provision of this Agreement shall not constitute a waiver of any provision, term, covenant,
or condition of this Agreement or the right to demand strict performance in the future.

 

Successors and Assigns.
This Agreement shall be binding upon my heirs, executors, administrators or other legal representatives and may be assigned and
enforced by Company, its successors and assigns. As used in this Agreement, the term “Company” shall include Company,
its subsidiaries, subdivisions, and affiliates.

 

Entire Agreement.
This Agreement and any confidentiality, nonsolicitation, and/or noncompetition agreement I entered into with Company or any predecessor
company acquired by or affiliated with Company, constitute the entire agreement of Company and me with respect to the subject matter
of this Agreement. Each of the rights, obligations and remedies provided for in these agreements shall be cumulative.

 

Severability and
Enforcement. The parties agree that any provision of this Agreement or its application that is held invalid shall be modified
as necessary to render it valid and enforceable. If any provision of this Agreement or its application is held invalid and cannot
be modified to render it valid and enforceable, the invalidity shall not affect other obligations, provisions, or applications
of this Agreement which can be given effect without the invalid provisions or applications.

 

Opportunity for
Review. I acknowledge that I have carefully read the foregoing Agreement, understand its contents, and signed it voluntarily.

 

	Print Name: 	Andrew U. Lee	 

 

Check one:

 

		þ	Employee

		 ̈	Consultant

  

	Signature 	/s/ Andrew U. Lee	 

 

	Date: 	06/27/2012	 

 

    	 	 	 

     

    

 

Exhibit C

 

Form 8-K

regarding separation of Andrew U. Lee

and entry into a material agreement

 

    	 	 	 

     

    

 

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event
reported): September 7, 2017

 

 

 

CLEARSIGN COMBUSTION CORPORATION

(Exact name of registrant as specified
in Charter) 

 

	Washington	 	001-35521	 	26-2056298
	(State or other jurisdiction of

incorporation or organization)	 	(Commission File No.)	 	(IRS Employee Identification No.)

 

12870 Interurban Avenue South

Seattle, Washington 98168

(Address of Principal Executive Offices)

 

206-673-4848

(Issuer Telephone number)

 

Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction
A.2 below).

 

		 ̈	Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)

 

		 ̈	Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR240.14a-12)

 

		 ̈	Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b)).

 

		 ̈	Pre-commencement communications pursuant to Rule 13e-(c)
under the Exchange Act (17 CFR 240.13(e)-4(c))

 

Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).

 

  Emerging
growth company  x

 

If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.  ̈

 

 

 

     

     

    

 

		Item 1.01	Entry into a Material Definitive Agreement.

 

The information included at Item 5.02 below
describing the Separation Agreement and General Release and the Consulting Agreement entered into by ClearSign Combustion Corporation
(the “Company”) and Andrew U. Lee is incorporated herein to the extent required by this Item 1.01.

 

		Item 5.02	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Effective on September 7, 2017 (the “Effective
Date”), Andrew U. Lee, the Company’s Senior Vice President of Business Development, retired from active employment.

 

In conjunction with his retirement, Mr.
Lee and the Company entered into a Separation Agreement and General Release. In exchange for the Company’s waiver of its
right to repurchase 13,899 shares of common stock granted to Mr. Lee on February 10, 2017, Mr. Lee released the Company from any
and all claims arising from or relating to his employment with the Company or the termination thereof, among other matters.

 

Mr. Lee and the Company also entered into
a Consulting Agreement on the Effective Date. Pursuant to the Consulting Agreement, Mr. Lee has agreed to provide services to the
Company, when and as needed, until August 31, 2018. Mr. Lee will be compensated at the rate of $200 per hour for the services provided.

 

The above descriptions of the Separation
Agreement and General Release and the Consulting Agreement are qualified in their entirety by the full text of those documents,
which are attached as exhibits to this Current Report and incorporated herein by reference.

 

		Item 9.01	Financial Statements and Exhibits.

 

	Exhibit No.	 	Description
	 	 	 
	Exhibit 10.1	 	Separation Agreement and General Release dated September 7, 2017
	Exhibit 10.2	 	Consulting Agreement dated September 7, 2017

 

SIGNATURE

 

Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto
duly authorized.

 

	Dated:  September 7, 2017	 	 
	 	 	 
	 	CLEARSIGN COMBUSTION CORPORATION
	 	 
	 	By:	/s/ Stephen E. Pirnat
	 	 	Stephen E. Pirnat
	 	 	Chairman and Chief Executive Officer

 

     

     

    

 

EXHIBIT INDEX

 

	Exhibit No.	 	Description
	 	 	 
	Exhibit 10.1	 	Separation Agreement and General Release dated September 7, 2017
	Exhibit 10.2	 	Consulting Agreement dated September 7, 2017

 

    	 	 	 

     

    

 

Exhibit
D

 

Statement of
ClearSign Combustion Corporation Policy

on

Insider Trading
and Compliance

acknowledged
by Andrew U. Lee on September 15, 2015

 

     

     

    

 

Statement
of

 

ClearSign
Combustion Corporation

Policy on

Insider Trading
and Compliance

 

It is the policy
of ClearSign Combustion Corporation (the “Company”) to comply fully, and to assist its directors, officers and other
employees in complying fully, with all federal and state securities laws applicable to transactions in the Company’s securities
or securities of its affiliates. In this regard, the Company depends upon the conduct and diligence of the directors, officers
and other employees of the Company and its affiliates, in both their professional and personal capacities, to ensure full compliance
with this policy. It is the personal obligation and responsibility of each such person to act in a manner consistent with the
following policy regarding compliance with the insider trading provisions of the federal securities laws.

 

It is the Company’s
policy that, except in the case of a transaction with the Company, no director, officer or other employee of the Company or its
affiliates, nor any affiliate of such person, may buy or sell any security issued by the Company or any of its affiliates, or
any option or similar right to buy or sell such a security, while in possession of material, nonpublic information regarding the
Company or its affiliates. In addition, every director, officer and other employee of the Company or its affiliates shall maintain
the confidentiality of material, nonpublic information that he or she may possess, shall not “tip” such information
to others who may trade and shall not give advice or make recommendations regarding investments in the Company or its affiliates.
No director, officer or other employee of the Company or its affiliates shall permit persons under his or her supervision, or
entities under his or her control, to act inconsistently with this policy. It is the further policy of the Company that no director,
officer or other employee, nor any affiliate of any such person, may, while in possession of material, nonpublic information about
another company, trade in the securities of such other company or disclose such information to any other person. The foregoing
prohibitions similarly apply to members of the household of the directors, officers and other employees, including the spouse,
each family member, and other members of the household.

 

The following
guidelines have been adopted for the purpose of implementing and monitoring the Company’s policy on insider trading:

 

1.       Trading
by Designated Individuals During Window Periods.  Officers and directors of the Company, members of their households and
affiliates of each of the foregoing1 (the “Designated Individuals”)
may, subject to compliance with the other restrictions herein, buy or sell the Company’s securities only during the periods
beginning on the second business day after the public release of the Company’s quarterly or annual financial results and
ending on the 45th calendar day after such release (the “window period”). The two-day waiting period before
the trading window opens is intended to allow the public to evaluate and absorb the Company’s disclosures.2

 

 

 

1
“Affiliate” is broadly defined in securities
laws as a person or entity that directly or indirectly through one or more intermediaries controls, is controlled by, or is under
common control with, another person or entity.  It includes, for example, (i) any corporation or entity (other than the Company)
of which you are an officer, director or partner or of which you are, directly or indirectly, the beneficial owner of 10% or more
of any class of equity securities; (ii) any trust or other estate in which you have a substantial beneficial interest or
as to which you serve as trustee or in a similar capacity; (iii) your spouse; (iv) any relative of your spouse or any
relative of yours who has the same home as you or who is a director or officer or key executive of the Company; and (v) any
partner, syndicate member or person with whom you have agreed to act in concert with respect to the acquisition, holding, voting
or disposition of shares of the Company’s securities.

 

2
                                         In certain circumstances, the window period restriction
                                         may be waived in individual cases at the discretion of the Company, after having requested
                                         and received advice from the Company’s legal counsel.

 

     

     

    

 

Notwithstanding
the foregoing prohibitions in this Statement of Policy, any Designated Individual may buy or sell the Company’s securities,
while in possession of material, nonpublic information about the Company or outside of the specified window periods, if any such
transaction is made pursuant to a written plan that has been approved in advance in writing by the Company’s legal counsel,
and that meets all of the requirements of Securities and Exchange Commission rules and regulations, including Rule 10b5-1 under
the Securities Exchange Act of 1934.

 

2.       No
Margin Purchases. Securities held in a margin account may be sold by the broker without the customer’s consent if
the customer fails to meet a margin call. Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold
in foreclosure if the borrower defaults on the loan. Because a margin sale or foreclosure sale may occur at a time when the customer
or borrower is aware of material nonpublic information or otherwise is not permitted to trade in the Company’s securities,
Designated Individuals and Insider Employees (as defined in paragraph 5 below) are prohibited from holding the Company’s
securities in a margin account or pledging the Company’s securities as collateral for a loan.

 

3.       No
Short Sales. Short selling is the act of borrowing securities to sell with the expectation of the price dropping and the
intent of buying the securities back at a lower price to replace the borrowed securities. Designated Individuals (whether or not
they are in possession of material nonpublic information) and Insider Employees are prohibited from selling short the Company’s
securities.

 

4.       Preclearance
of Trading by Designated Individuals. Designated Individuals must pre-clear with the Chief Financial Officer or the Company’s
legal counsel, all proposed trades in the Company’s securities, even during a permitted trading window. The Company will
be in a position to determine if there is material, nonpublic information which precludes the Designated Individual from trading,
even though the Company may be in a window period.

 

5.       Other
Persons With Access to Insider Information. Under special circumstances, certain employees who are not Designated Individuals
(“Insider Employees”) may gain access to material, nonpublic information.3
In such cases, the Company, in its discretion, may determine that such Insider Employees also need to pre-clear any proposed trades
with either the Company’s legal counsel or its designee prior to any trading in the Company’s securities. Such employees
will be notified and will be subject to the preclearance procedure for such period of time as the Company deems appropriate.

 

 

  

3
Due to our small size, all employees are considered to be Insider Employees. Therefore,
all employees must pre-clear with the Chief Financial Officer or the Company’s legal counsel, all proposed trades in the
Company’s securities, even during a permitted trading window.

 

     

     

    

 

6.       Persons
Involved in Negotiations. If the Company is in the process of negotiating a significant transaction or joint venture with
another company, Insider Employees, officers and directors are cautioned not to trade in the stock of that company if they are
in possession of material, nonpublic information concerning such company. If an employee, officer or director is not certain whether
it is permissible to trade in the stock of such company, the employee, officer or director should contact the Chief Financial
Officer or the Company’s legal counsel before making any trades.

 

7.       Non-disclosure
of material non-public information. If an employee, officer or director is in possession of material non-public information
concerning the Company, that individual shall maintain the confidentiality of that information and shall not “tip”
or in any way disclose such information to others who may trade. In maintaining the confidentiality of the information, the employee,
officer or director shall not, among other things, affirm or deny statements made by others, either directly or through electronic
means, if such affirmation or denial would result in the disclosure of material non-public information. If an employee, officer
or director is not certain whether information is material or non-public, the employee, officer or director should contact the
Chief Financial Officer or the Company’s legal counsel to determine if the information may be disclosed.

 

8.       Inadvertent
Disclosure of Material, Non-Public Information. If material, nonpublic information is inadvertently disclosed, no matter
what the circumstances, by any director, officer or employee of the Company or its affiliates, the person making or discovering
that disclosure should immediately report the facts to the Company’s legal counsel.

 

The following
procedures should be followed in handling inquiries regarding material, nonpublic information concerning the Company:

 

		A.	Referral to Designated Spokesperson.
                                         Generally, a designated spokesperson should deal with inquiries from the media,
                                         stock exchanges and others regarding rumors, unusual trading activity, acquisition or
                                         disposition activities and other material information. Accordingly, when an inquiry is
                                         received regarding information that may be material, it should be referred to the Chief
                                         Executive Officer and the Company’s designated spokesperson responsible for investor
                                         relations to speak on behalf of the Company.

 

		B.	Formulation of Response.
                                         The designated spokesperson generally should not comment until an appropriate
                                         response is formulated based on the existing facts and circumstances. The response should
                                         be formulated by parties who may reasonably be expected to know substantially all of
                                         the information on the subject within the Company’s possession.

 

		C.	Nature of Response.
                                         In many, if not most, instances involving rumors and other statements not generated by
                                         the Company or its employees or agents, the most effective response will be a simple
                                         statement that the Company’s policy is not to comment on matters of that nature.
                                         In all situations, care should be taken not to make affirmative statements where the
                                         facts may be unknown or in doubt.

 

Every director,
officer and other employee of the Company and any of its subsidiaries who is currently or may at any point in the future become
subject to the insider trading restrictions addressed and imposed by this policy shall be requested to certify that such person
has read this Statement of Company Policy.

 

*       *       *

 

As adopted by the Board of Directors
on August 25, 2015.

 

     

     

    

 

COMPLIANCE CERTIFICATE

 

I hereby certify that I have reviewed
and understand the Company’s Statement of Policy on Insider Trading and Compliance and that I will comply with it fully.

 

	Date:  	9/15/2015	 	 
	 	 	 	 
	 	 	 	/s/ Andrew
    U. Lee
	 	 	 	Signature
	 	 	 	 
	 	 	 	Andrew U.
    Lee
	 	 	 	Print Name

 

     

     

    

 

Exhibit
E

 

Indemnification
Agreement

executed by
ClearSign Combustion Corporation

and its Officer/Indemnitee,
Andrew U. Lee,

on March 7,
2012

 

     

     

    

 

CLEARSIGN
COMBUSTION CORPORATION

 

INDEMNIFICATION
AGREEMENT

 

THIS INDEMNIFICATION
AGREEMENT is entered into, effective as of March 7, 2012 by and between ClearSign Combustion Corporation, a Washington corporation
(the “Company”), and Andrew U. Lee (“Indemnitee”).

 

WHEREAS, it
is essential to the Company to retain and attract as directors and officers the most capable persons available;

 

WHEREAS, Indemnitee
is a director and/or officer of the Company; and

 

WHEREAS, in
recognition of Indemnitee’s need for substantial protection against personal liability in order to enhance Indemnitee’s
continued and effective service to the Company, and in order to induce Indemnitee to provide services to the Company as a director
and/or officer, the Company wishes to provide in this Agreement for the indemnification of and advance of expenses to Indemnitee
to the fullest extent (whether partial or complete) permitted by Washington state law and as set forth in this Agreement, and,
to the extent insurance is maintained, for the coverage of Indemnitee under the Company’s director and officer liability
insurance policies.

 

NOW, THEREFORE,
in consideration of the above premises and of Indemnitee’s continued service to the Company, and intending to be legally
bound hereby, the parties agree as follows:

 

		1.	Certain Definitions.

 

		(a)	“Board” means
                                         the board of directors of the Company.

 

		(b)	“Change in Control”
                                         shall be deemed to have occurred if (i) any “person” (as such term is used
                                         in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”)),
                                         other than a trustee or other fiduciary holding securities under an employee benefit
                                         plan of the Company or a corporation owned directly or indirectly by the shareholders
                                         of the Company in substantially the same proportions as their ownership of stock of the
                                         Company (collectively “excluded persons”), is or becomes the “Beneficial
                                         Owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of
                                         securities of the Company representing 30% or more of the total voting power represented
                                         by the Company’s then outstanding Voting Securities, or (ii) during any period
                                         of two consecutive years, individuals who at the beginning of such period constitute
                                         the Board and any new director whose election by the Board or nomination for election
                                         by the Company’s shareholders was approved by a vote of at least two-thirds (2/3)
                                         of the directors then still in office who either were directors at the beginning of the
                                         period or whose election or nomination for election was previously so approved, cease
                                         for any reason to constitute a majority of the Board, or (iii) a merger or consolidation
                                         in which the Company is not the surviving corporation (other than a merger or consolidation
                                         with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction,
                                         or other transaction in which there is no substantial change in the shareholders of the
                                         Company or their relative stock holdings), or (iv) a merger in which the Company is the
                                         surviving corporation but after which the shareholders of the Company immediately prior
                                         to such merger (other than any shareholder that merges, or which owns or controls another
                                         corporation that merges with the Company in such merger) cease to own their shares or
                                         other equity interest in the Company, or (v) in the event of a dissolution or liquidation
                                         of the Company, or (vi) the sale or disposition (in one transaction or a series of transactions)
                                         of all or substantially all of the Company’s assets, or (vii) the acquisition,
                                         sale, or transfer of more than 50% of the outstanding shares of the Company by tender
                                         offer or similar transaction.

 

     

     

    

 

		(c)	“Company” shall
                                         include, in addition to the Company named in this Agreement, any constituent corporation
                                         (including any constituent of a constituent) absorbed in a consolidation or merger with
                                         the Company, which constituent corporation, if its separate existence had continued,
                                         would have had power and authority to indemnify its directors, officers, employees or
                                         agents.  For purposes of this Agreement, references to “other enterprises”
                                         shall include employee benefit plans; and references to “serving at the request
                                         of the Company” shall include any service as a director, officer, employee or agent
                                         of the Company which imposes duties on, or involves services by, such director, officer,
                                         employee or agent with respect to an employee benefit plan or its participants or beneficiaries;
                                         and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
                                         to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee
                                         shall be deemed to have acted in a manner “not opposed to the best interests”
                                         of the Company as referred to in this Agreement.

 

		(d)	“Expenses”
                                         mean any expense, liability, or loss, including attorneys’ fees, judgments, fines,
                                         ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any interest,
                                         assessments, or other charges imposed thereon, and any federal, state, local, or foreign
                                         taxes imposed as a result of the actual or deemed receipt of any payments under this
                                         Agreement, paid or incurred in connection with investigating, defending, being a witness
                                         in, or participating in (including on appeal), or preparing for any of the foregoing
                                         in, any Proceeding relating to any Indemnifiable Event.

 

		(e)	“Indemnifiable Event”
                                         means any event or occurrence that takes place either prior to or after the effective
                                         date of this Agreement, relating to the fact that Indemnitee is or was a director or
                                         an officer of the Company, or while a director or officer is or was serving at the request
                                         of the Company as a director, officer, employee, trustee, agent, or fiduciary of another
                                         foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust,
                                         or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic
                                         corporation that was a predecessor corporation of the Company or of another enterprise
                                         at the request of such predecessor corporation, or related to anything done or not done
                                         by Indemnitee in any such capacity.

 

		(f)	“Independent Counsel”
                                         means the person or body appointed in connection with Section 3.

 

		(g)	“Potential Change in
                                         Control” shall be deemed to have occurred if (i) the Company enters into an
                                         agreement or arrangement, the consummation of which would result in the occurrence of
                                         a Change in Control, (ii) any person (including the Company) publicly announces an intention
                                         to take or to consider taking actions that, if consummated, would constitute a Change
                                         in Control, (iii) any person (other than an Excluded Person) who is or becomes the Beneficial
                                         Owner, directly or indirectly, of securities of the Company representing 10% or more
                                         of the combined voting power of the Company’s then outstanding Voting Securities,
                                         increases his beneficial ownership of such securities by 5% or more over the percentage
                                         so owned by such person on the date hereof, or (iv) the Board adopts a resolution to
                                         the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

 

		(h)	“Proceeding”
                                         means (i) any threatened, pending, or complete action, suit, or proceeding, whether civil,
                                         criminal, administrative, investigative, or other, or (ii) any inquiry, hearing, or investigation,
                                         whether conducted by the Company or any other party, that Indemnitee in good faith believes
                                         might lead to the institution of any such action, or proceeding.

 

     

     

    

 

		(i)	“Reviewing Party”
                                         means the person or body appointed in accordance with Section 3.

 

		(j)	“Voting Securities”
                                         means any securities of the Company that vote generally in the election of directors.

 

		2.	Agreement to Indemnify.

 

(a)       General
Agreement. In the event Indemnitee was, is, or becomes a party to or witness or other participant in, or is threatened to
be made a party to or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable
Event, the Company shall indemnify Indemnitee from and against any and all Expenses to the fullest extent permitted by law, as
the same exists or may hereafter be amended or interpreted (but in the case of any such amendment or interpretation, only to the
extent that such amendment or interpretation permits the Company to provide broader indemnification rights than were permitted
prior thereto).

 

(b)       Limitations
on Indemnification. Indemnification shall be provided to any Indemnitee to the fullest extent permitted by the Revised Code
of Washington (“RCW”). Accordingly, the RCW substantially provides the following limitations, which shall apply
to any indemnification provided under this Agreement:

 

		(1)	A corporation may not indemnify
a director unless approved in the specific case after a determination has been made that indemnification of the director is permissible
in the circumstances because the director has met the applicable Standard of Conduct (defined below).

 

		(2)	The determination shall be made:

 

(a)      by the board of directors by majority vote of a quorum consisting of directors not at the time parties to the Proceeding;

 

(b)      if a quorum cannot be obtained under (a) above, by majority vote of a committee duly designated by the Board, in which designation
directors who are parties may participate, consisting solely of two or more directors not at the time parties to the Proceeding;

 

(c)      by special legal counsel:

 

		(i)	selected by the Board or its committee
                                         in the manner prescribed in (a) or (b) of this subsection; or

 

		(ii)	if a quorum of the Board cannot
                                         be obtained under (a) of this subsection and a committee cannot be designated under (b)
                                         of this subsection, selected by majority vote of the full Board, in which selection directors
                                         who are parties may participate; or

 

(d)      by the shareholders, but shares owned by or voted under the control of directors who are at the time parties to the Proceeding
may not be voted on the determination.

 

An individual
shall be deemed to have met the “Standard of Conduct”, and the Company may indemnify an individual made a party
to a proceeding because the individual is or was a director and/or officer against liability incurred in the proceeding if:

 

(a)      the individual acted in good faith; and

 

(b)      the individual reasonably believed:

 

     

     

    

 

		(i)	in the case of conduct in the
                                         individual’s official capacity with the Company, that the individual’s conduct
                                         was in its best interests; and

 

		(ii)	in all other cases, that the
                                         individual’s conduct was at least not opposed to its best interests; and

 

(c)      in the case of any criminal proceeding, the individual had no reasonable cause to believe the individual’s conduct was unlawful.

 

Notwithstanding
the foregoing, the Company may not indemnify a director and/or officer:

 

(a)      in connection with a proceeding by or in the right of the Company in which the director was adjudged liable to the Company; or

 

(b)      in connection with any other proceeding charging improper personal benefit to the director, whether or not involving action in
the director’s official capacity, in which the director was adjudged liable on the basis that personal benefit was improperly
received by the director.

 

Indemnification
permitted under this Section in connection with a proceeding by or in the right of the Company is limited to reasonable expenses
incurred in connection with the proceeding.

 

(c)        Initiation
of Proceeding. Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Proceeding initiated by Indemnitee against the Company or any director or officer
of the Company unless (i) the Company has joined in or the Board has consented to the initiation of such Proceeding, (ii) the
Proceeding is one to enforce indemnification rights under Section 5, or (iii) the Proceeding is instituted after a Change in Control
and Independent Counsel has approved its initiation.

 

(d)        Expense
Advances. If so requested by Indemnitee, the Company shall advance (within ten business days of such request) any and all
Expenses to Indemnitee (an “Expense Advance”); provided that such request shall be accompanied by reasonable
evidence of the expenses incurred by Indemnitee and that, if and to the extent that the Reviewing Party determines that Indemnitee
would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees to reimburse the Company) for all such amounts theretofore paid. If Indemnitee has commenced legal proceedings
in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, as
provided in Section 4, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified
under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance
until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted
or have lapsed).

 

(e)        Mandatory
Indemnification. Notwithstanding any other provision of this Agreement (other than Section 2(f) below), to the extent that
Indemnitee has been successful on the merits in defense of any Proceeding relating in whole or in part to an Indemnifiable Event
or in defense of any issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.

 

(f)        Partial
Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some
or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee
for the portion thereof to which Indemnitee is entitled.

 

(g)        Other
Exceptions to Indemnification. No indemnification pursuant to this Agreement shall be paid by the Company on account of:

 

     

     

    

 

		(i)	any Proceeding in which judgment is
                                         rendered against Indemnitee for an accounting of profits made from the purchase or sale
                                         by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b)
                                         of the Act, as amended, or any similar statute;

 

		(ii)	any reimbursement
                                         of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation
                                         or of any profits realized by Indemnitee from the sale of securities of the Company,
                                         as required in each case under the Exchange Act (including any such reimbursements that
                                         arise from an accounting restatement of the Company pursuant to Section 304 of the
                                         Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment
                                         to the Company of profits arising from the purchase and sale by Indemnitee of securities
                                         in violation of Section 306 of the Sarbanes-Oxley Act); or

 

		(iii)	expenses
                                         or liabilities of any type whatsoever (including, but not limited to, judgments, fines,
                                         ERISA excise taxes or penalties, and amounts paid in settlement) which have been paid
                                         directly to Indemnitee by an insurance carrier under the D&O Liability Insurance
                                         (defined below) policy maintained by the Company.

 

(h)        Mutual
Acknowledgement. Both the Company and Indemnitee acknowledge that in certain instances
Federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers and employees under
this Agreement or otherwise.  Indemnitee understands and acknowledges that the Company may be required in the future to undertake
with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for
a determination of the Company’s right under public policy to indemnify Indemnitee.

 

3.      Reviewing
Party. Prior to any Change in Control, the Reviewing Party shall be any appropriate person or body consisting of a member
or members of the Board or any other person or body appointed by the Board who is not a party to the particular Proceeding with
respect to which Indemnitee is seeking indemnification; after a Change in Control, the Reviewing Party shall be the Independent
Counsel referred to below. With respect to all matters arising after a Change in Control (other than a Change in Control approved
by a majority of the directors on the Board who were directors immediately prior to such Change in Control) concerning the rights
of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or under applicable law or
the Company’s Amended and Restated Certificate of Incorporation or bylaws now or hereafter in effect relating to indemnification
for Indemnifiable Events, the Company shall seek legal advice only from Independent Counsel selected by Indemnitee and approved
by the Company and who has not otherwise performed services for the Company or the Indemnitee (other than in connection with indemnification
matters) within the last five years. The Independent Counsel shall not include any person who, under the applicable standards
of professional conduct then prevailing would have a conflict of interest in representing either the Company or Indemnitee in
an action to determine Indemnitee’s rights under this Agreement. Such counsel, among other things, shall render its written
opinion to the Company and Indemnitee as to whether and to what extent the Indemnitee should be permitted to be indemnified under
applicable law. The Company agrees to pay the reasonable fees of the Independent Counsel and to indemnify fully such counsel against
any and all expenses (including attorney’s fees), claims, liabilities, loss, and damages arising out of or relating to this
Agreement or the engagement of Independent Counsel pursuant hereto.

 

     

     

    

 

4.     Indemnification
Process and Appeal.

 

(a)        Suit
To Enforce Rights. Regardless of any action by the Reviewing Party, if Indemnitee has not received full indemnification within
60 days after making a request in accordance with Section 2(d), Indemnitee shall have the right to enforce its indemnification
rights under this Agreement by commencing litigation, in any appropriate court having subject matter jurisdiction thereof and
in which venue is proper, seeking an initial determination by the court or challenging any determination by the Reviewing Party
or any aspect thereof, provided, however, that such 60-day period shall be extended for reasonable time, not to exceed another
60 days, if the reviewing party in good faith requires additional time for the obtaining or evaluating of documentation and information
relating thereto. The Company hereby consents to service of process and to appear in any such proceeding. Any determination by
the Reviewing Party not challenged by the Indemnitee shall be binding on the Company and Indemnitee. The remedy provided for in
this Section 4 shall be in addition to any other remedies available to Indemnitee in law or equity.

 

(b)        Defense
to Indemnification, Burden of Proof, and Presumptions. It shall be a defense to any action brought by Indemnitee against the
Company to enforce this Agreement (other than an action brought to enforce a claim for Expenses incurred in defending a Proceeding
in advance of its final disposition where the required undertaking has been tendered to the Company) that is not permissible under
applicable law for the Company to indemnify Indemnitee for the amount claimed. In connection with any such action or any determination
by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proving such
a defense or determination shall be on the Company. Neither the failure of the Reviewing Party or the Company (including its Board,
independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action by Indemnitee
that indemnification of the claimant is proper under the circumstances because Indemnitee has met the Standard of Conduct set
forth herein and under applicable law, nor an actual determination by the Reviewing Party or Company (including its Board, independent
legal counsel, or its shareholders) that the Indemnitee had not met such applicable Standard of Conduct, shall be a defense to
the action or create a presumption that the Indemnitee has not met the applicable Standard of Conduct. For purposes of this Agreement,
the termination of any claim, action, suit, or proceeding, by judgment, order, settlement (whether with or without court approval),
conviction, or upon a plea of nolo contendere, or its equivalent shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted
by applicable law.

 

5.     Indemnification
for Expenses Incurred in Enforcing Rights. The Company shall indemnify Indemnitee against any and all Expenses and, if requested
by Indemnitee, shall (within ten business days of such request), advance such Expenses to Indemnitee, that are incurred by Indemnitee
in connection with any claim asserted against or covered action brought by Indemnitee for (i) indemnification of Expenses or Expense
Advances by the Company under this Agreement or any other agreement or under applicable law or the Company’s Amended and
Restated Certificate of Incorporation or bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events,
and or (ii) recovery under directors’ and officers’ liability insurance policies maintained by the Company, regardless
of whether Indemnitee ultimately is determined to be entitled to such indemnification, Expense Advances, or

insurance recovery, as the case
may be.

 

6.      Notification
and Defense of Proceeding.

 

(a)        Notice.
Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim in respect
thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof, but the omission
so to notify the Company will not relieve the Company from any liability that it may have to Indemnitee, except as provided in
Section 6(c).

 

(b)        Defense.
With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof, the Company shall be entitled
to participate in the Proceeding at its own expense and except as otherwise provided below, to the extent the Company so wishes,
it may assume the defense thereof with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee
of its election to assume the defense of any Proceeding, the Company shall not be liable to Indemnitee under this Agreement or
otherwise for any Expenses subsequently incurred by Indemnitee in connection with the defense of such Proceeding other than reasonable
costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ his or her own legal counsel
in such Proceeding, but all Expenses related thereto incurred after notice from the Company of its assumption of the defense shall
be at Indemnitee’s expense unless: (i) the employment of legal counsel by Indemnitee has been authorized by the Company,
(ii) Indemnitee has reasonably determined that there may be a conflict of interest between Indemnitee and the Company in the defense
of the Proceeding, (iii) after a Change in Control, the employment of counsel by Indemnitee has been approved by the Independent
Counsel, or (iv) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which
case all Expenses of the Proceeding shall be borne by the Company. The Company shall not be entitled to assume the defense of
any Proceeding brought by or on behalf of the Company or as to which Indemnitee shall have made the determination provided for
in (ii) above.

 

     

     

    

 

(c)        Settlement
of Claims. The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid
in settlement of any Proceeding effected without the Company’s written consent, provided, however, that if a Change in Control
has occurred, the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent
Counsel has approved the settlement. The Company shall not settle any Proceeding in any manner that would impose any penalty or
limitation on Indemnitee without Indemnitee’s written consent. The Company shall not be liable to indemnify the Indemnitee
under this Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity, at its
expense, to participate in the defense of such action; the Company’s liability hereunder shall not be excused if participation
in the Proceeding by the Company was barred by this Agreement.

 

7.     Non-Exclusivity.
The rights of Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company’s Amended
and Restated Certificate of Incorporation, bylaws, applicable law, or otherwise. To the extent that a change in applicable law
(whether by statute or judicial decision) permits greater indemnification by agreement than would be afforded currently under
the Company’s Amended and Restated Certificate of Incorporation, bylaws, applicable law, or this Agreement, it is the intent
of the parties that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change.

 

8.     Directors
and Officers Liability Insurance.

 

(a)      The Company shall obtain and maintain a policy or policies of insurance (“D&O Liability Insurance”) with
reputable insurance companies providing liability insurance for directors and officers of the Company in their capacities as such
(and for any capacity in which any director or officer of the Company serves any other person or entity at the request of the
Company), in respect of acts or omissions occurring while serving in such capacity, on terms with respect to coverage and amount
(including with respect to the payment of expenses) no less favorable than those of such policy in effect on the date hereof except
for any changes approved by the Board of Directors of the Company.

 

(b)      Indemnitee shall be covered by the Company’s D&O Liability Insurance policies as in effect from time to time in accordance
with the applicable terms to the maximum extent of the coverage available for any other director or officer under such policies.
The Company shall, promptly after receiving notice of a Proceeding as to which Indemnitee is a party or a participant (as a witness
or otherwise), give notice of such proceeding to the insurers under the Company’s D&O Liability Insurance policies in
accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable
actions to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance
with the terms of such policies. The failure or refusal of any such insurer to pay any such amount shall not affect or impair
the obligations of the Company under this Agreement.

 

(c)      Upon request by Indemnitee, the Company shall provide to Indemnitee copies of the D&O Liability Insurance policies as in effect
from time to time. The Company shall promptly notify Indemnitee of any material changes in such insurance coverage.

 

     

     

    

 

9.       Amendment
of this Agreement. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing
by both of the parties hereto. No waiver of any of the provisions of this Agreement shall operate as a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein,
no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.

 

10.      Subrogation.
In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.

 

11.      No Duplication
of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy, bylaw, or otherwise) of the amounts
otherwise indemnifiable hereunder.

 

12.      Binding
Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their
respective successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially
all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified
capacity pertaining to an Indemnifiable Event even though he or she may have ceased to serve in such capacity at the time of any
Proceeding.

 

13.      Severability.
If any provision (or portion thereof) of this Agreement shall be held by a court of competent jurisdiction to be invalid, void,
or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore,
to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement
containing any provision held to be invalid, void, or otherwise unenforceable, that is not itself invalid, void, or unenforceable)
shall be construed so as to give effect to the intent manifested by the provision held invalid, void, or unenforceable.

 

14.      Governing
Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Washington
applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws.

 

15.      Notices.
All notices, demands, and other communications required or permitted hereunder shall be made in writing and shall be deemed
to have been duly given if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered mail,
return receipt requested, and addressed to the Company at:

 

ClearSign Combustion Corporation

12870 Interurban Avenue
South

Seattle, Washington 98168

Fax: (206) 673-4848

Attn: Chief Executive Officer

 

Notice of change
of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be
deemed to have been received on the date of delivery or on the third business day after mailing.

 

     

     

    

 

16.      Entire
Agreement. Subject to the provisions of Section 2(a), this Agreement sets forth
the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments,
understandings and agreements relating to the subject matter hereof between the parties hereto.

 

17.      Retroactivity.
This Agreement shall be deemed to have been in effect during all periods that Indemnitee
was a director and/or officer of the Company, regardless of the date of this Agreement. 

 

18.      Counterparts.
This 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.

 

[Signature
Page Follows]

 

     

     

    

 

IN WITNESS
WHEREOF, the parties hereto have duly executed and delivered this Indemnification Agreement as of the day specified above.

 

	COMPANY:	 	 
	 	CLEARSIGN COMBUSTION CORPORATION
	 	 	 
	 	By:	/s/Richard F. Rutkowski
	 	 	Richard F. Rutkowski
	 	 	Chief Executive Officer
	 	 	 
	INDEMNITEE:	 	Andrew U. Lee
	 	 	Name of Indemnitee (print name)
	 	 	 
	 	 	/s/ Andrew U. Lee
	 	 	SignatureExhibit 10.2

 

CONSULTING AGREEMENT

 

This Consulting Agreement
(“Agreement”) is made as of the 7th day of September 2017, by and between Andrew U. Lee, whose address is
26029 SE 39th Way Issaquah, WA 98029 (the “CONSULTANT”), and ClearSign Combustion Corporation, whose address
is 12870 Interurban Avenue South, Seattle, Washington 98168 (the “COMPANY”), in reference to the following:

 

RECITALS

 

A.       The
CONSULTANT was the Senior Vice President, Business Development of the COMPANY from May 11, 2011 to September 7, 2017 and has substantial
experience and knowledge regarding the COMPANY’s sales and business development matters.

 

B.       The
COMPANY wishes to retain the CONSULTANT, and the CONSULTANT wishes to be retained by the COMPANY, to assist the COMPANY with the
transition of the CONSULTANT’s former duties and responsibilities as Senior Vice President, Business Development to the CONSULTANT’s
successor and to advise the COMPANY periodically on matters pertaining to business development, and as outlined below in AGREEMENT
2. and under Exhibit “A”, Duties of Consultant.

 

NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the COMPANY and the CONSULTANT agree as follows:

 

AGREEMENT

 

1.       Term.
Subject to Section 5 of this Agreement, the COMPANY retains the CONSULTANT and the CONSULTANT accepts this appointment with the
COMPANY for a period of twelve months, beginning on the date of this Agreement and ending on August 31, 2018 (the “Term”).

 

2.        Duties
of CONSULTANT. The CONSULTANT agrees to perform the consulting services (the “Services”) set forth on Exhibit
A to this Agreement and made a part of it. The CONSULTANT will determine the method, details and means of performing the Services.
The CONSULTANT agrees that, if and as requested by the Company, (i) during the first ninety (90) days of the Term , he will provide
no less than 20 hours of service and may be required to provide as many as 60 hours of service monthly (the “Monthly Required
Service”); (ii) following the first ninety (90) days of the Term, he shall make himself available as requested by the Company
as an advisor or to provide support in the business development matters for not more than 20 hours per month or as otherwise agreed
to by the parties.

 

3.       Compensation.
The COMPANY shall pay to the CONSULTANT fees as described on Exhibit A as compensation for the Services performed plus expenses
to be reimbursed at cost. Expenses as authorized by the COMPANY will also be reimbursed.

 

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4.       Nondisclosure.

 

4.1       Property
Belonging to COMPANY. The CONSULTANT acknowledges his prior execution of the Confidentiality and Proprietary Rights Agreement
dated June 27, 2012 attached as Exhibit B to this Agreement, and made a part of it, and agrees that it remains in full force
and effect.

 

4.2       Access
to Confidential Information. The CONSULTANT agrees that during the term of the business relationship between the CONSULTANT
and the COMPANY, the CONSULTANT will have access to and become acquainted with confidential proprietary information (“Confidential
Information”) which is owned by the COMPANY and is regularly used in the operation of the COMPANY’s business. The CONSULTANT
agrees that the term “Confidential Information” as used in this Agreement is to be broadly interpreted and includes
(i) information that has, or could have, commercial value for the business in which the COMPANY is engaged, or in which the COMPANY
may engage at a later time, and (ii) information that, if disclosed without authorization, could be detrimental to the economic
interests of the COMPANY. The CONSULTANT agrees that the term “Confidential Information” includes, without limitation,
any patent, patent application, copyright, trademark, trade name, service mark, service name, “know-how,” negative
“know-how,” trade secrets, customer and supplier identities, characteristics and terms of agreements, details of customer
or contracts, pricing policies, operational methods, marketing plans or strategies, product development techniques or plans, business
acquisition plans, science or technical information, ideas, discoveries, designs, computer programs (including source codes), financial
forecasts, unpublished financial information, budgets, processes, procedures, formulae, improvements or other proprietary or intellectual
property of the COMPANY, whether or not in written or tangible form, and whether or not registered, and including all memoranda,
notes, summaries, plans, reports, records, documents and other evidence thereof. The CONSULTANT acknowledges that all Confidential
Information, whether prepared by the CONSULTANT or otherwise acquired by the CONSULTANT in any other way, shall remain the exclusive
property of the COMPANY. The term “Confidential Information” does not include (i) any information known to the CONSULTANT
prior to disclosure by the COMPANY or its representatives, (ii) any information which becomes available to the CONSULTANT on a
non-confidential basis from a source other than the COMPANY who is not bound by a confidentiality agreement with, or any other
contractual, legal or fiduciary obligation of confidentiality to, the COMPANY or any related party with respect to such information
and (iii) any information which is or becomes generally available to the public other than as a result of a disclosure by the CONSULTANT
in breach of this Agreement. In the event that the CONSULTANT receives a request to disclose all or any part of the Confidential
Information under the terms of a valid and effective subpoena or order issued by a court of competent jurisdiction the CONSULTANT
agrees to immediately notify the COMPANY of the existence, terms and circumstances surrounding such a request. The COMPANY agrees
to assume, at its sole charge and expense, any costs that are the direct result of actions taken at the direction or request of
the COMPANY relating to such request (and, if any payments are made by the CONSULTANT, to promptly reimburse the CONSULTANT for
such payments), including any fees and disbursements to legal counsel that the CONSULTANT incurs.

 

4.3       No
Unfair Use by CONSULTANT. The CONSULTANT promises and agrees that the CONSULTANT (which shall include his employees, advisors,
consultants, contractors and affiliates) shall not misuse, misappropriate, or disclose in any way to any person or entity any of
the COMPANY’s Confidential Information, either directly or indirectly, nor will the CONSULTANT use the Confidential Information
in any way or at any time except as required in the course of the CONSULTANT’s business relationship with the COMPANY. The
CONSULTANT agrees that the sale or unauthorized use or disclosure of any of the COMPANY’s Confidential Information constitutes
unfair competition. The CONSULTANT promises and agrees not to engage in any unfair competition with the COMPANY and will take measures
that are appropriate to prevent his employees, contractors or affiliates from engaging in unfair competition with the COMPANY.

 

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4.4       Obligations
Survive Agreement. The CONSULTANT’s obligations under this Section 4 shall survive the expiration or termination of this
Agreement.

 

5.       Termination.

 

5.1       Termination
on Default. Should either party default in the performance of this Agreement or materially breach any of its provisions, the
non-breaching party may terminate this Agreement by giving written notification to the breaching party. Termination shall be effective
immediately on receipt of said notice. For purposes of this Section 5.1, material breaches of this Agreement shall include, but
not be limited to, (i) the failure by the COMPANY to pay the compensation set forth in Section 3 above; (ii) the willful breach
or habitual neglect by the CONSULTANT of the duties which he is required to perform under the terms of this Agreement; (iii) the
CONSULTANT’s commission of acts of dishonesty, fraud, or misrepresentation; (iv) the failure by the CONSULTANT to conform
to all laws and regulations governing the CONSULTANT’s duties under this Agreement; or (v) the commission by the CONSULTANT
of any act that tends to bring the COMPANY into public scandal or which will reflect unfavorably on the reputation of the COMPANY.

 

5.2       Automatic
Termination. This Agreement terminates automatically on the death or disability of the CONSULTANT, provided that as a result
of the disability the CONSULTANT is no longer able to perform the Services required by this Agreement for a period of at least
30 days.

 

5.3       Return
of COMPANY Property. Upon the termination or expiration of this Agreement, the CONSULTANT (which shall include his employees,
advisors, consultants, contractors and affiliates) shall immediately transfer to the COMPANY all files (including, but not limited
to, electronic files), records, documents, drawings, specifications, equipment and similar items in his possession or the possession
of CONSULTANT’s contractors relating to the business of the COMPANY or its Confidential Information (including the work product
of the CONSULTANT created pursuant to this Agreement).

 

6.       Status
of CONSULTANT. The CONSULTANT understands and agrees that neither he nor his employees are employees of the COMPANY and
that neither he nor his employees shall be entitled to receive employee benefits from the COMPANY, including, but not limited to,
sick leave, vacation, retirement or death benefits. The CONSULTANT shall be responsible for providing, at the CONSULTANT’s
expense and in the CONSULTANT’s name, disability, worker’s compensation or other insurance as well as licenses and
permits usual or necessary for conducting the Services hereunder. Furthermore, the CONSULTANT shall pay, when and as due, any and
all taxes incurred as a result of the CONSULTANT’s compensation hereunder, including estimated taxes, and shall provide the
COMPANY with proof of said payments, upon demand. The CONSULTANT hereby agrees to indemnify the COMPANY for any claims, losses,
costs, fees, liabilities, damages or injuries suffered by the COMPANY arising out of the CONSULTANT’s breach of this Section
6.

 

7.       Representations
by CONSULTANT . The CONSULTANT represents that the CONSULTANT has the qualifications and ability to perform the Services
in a professional manner, without the advice, control, or supervision of the COMPANY. The CONSULTANT also represents that he will
promptly provide an executed Form W-9 to the COMPANY.

 

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8.        Indemnification
of Consultant.  Except as otherwise specifically provided in this Agreement, all of the provisions of the
Indemnity Agreement dated March 7, 2012 (Exhibit C) shall continue in full force and effect regarding the Company and Consultant.

 

9.       Notices.
Unless otherwise specifically provided in this Agreement, all notices or other communications (collectively and severally called
“Notices”) required or permitted to be given under this Agreement, shall be in writing, and shall be given by: (A)
personal delivery (which form of Notice shall be deemed to have been given upon delivery), (B) by telegraph or by private airborne/overnight
delivery service (which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), or
(C) by electronic (including e-mail) or facsimile or telephonic transmission, provided the receiving party has a compatible device
or confirms receipt thereof (which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt).
Notices shall be addressed to the addresses set forth below, or to such other address as the receiving party shall have specified
most recently by like Notice, with a copy to the other party.

 

If to the COMPANY:

 

ClearSign Combustion Corporation

12870 Interurban Avenue South

Seattle, Washington 98168

Attn.: Chief Executive Officer

Facsimile No.: (206) 299-3553

E-Mail: steve.pirnat@clearsign.com

 

If to the CONSULTANT:

 

Andrew U. Lee

26029 SE 39th Way

Issaquah, WA 98029

E-Mail: andrewulee@gmail.com

 

10.     Choice
of Law and Venue. This Agreement shall be governed according to the laws of the state of Washington. Venue for any legal
or equitable action between the COMPANY and the CONSULTANT which relates to this Agreement shall be in the county of King in the
State of Washington.

 

11.      Entire
Agreement. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto
with respect to the Services to be rendered by the CONSULTANT to the COMPANY and contains all of the covenants and agreements between
the parties with respect to the Services to be rendered by the CONSULTANT to the COMPANY in any manner whatsoever. Each party to
this agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made
by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement, or
promise not contained in this Agreement shall be valid or binding on either party.

 

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12.       Amendment/Waiver.
Except as expressly provided otherwise herein, neither this Agreement nor any of the terms, provisions, obligations or rights contained
herein, may be amended, modified, supplemented, augmented, rescinded, discharged or terminated (other than by performance), except
by a written instrument or instruments signed by all of the parties to this Agreement. No waiver of any breach of any term, provision
or agreement contained herein, or of the performance of any act or obligation under this Agreement, or of any extension of time
for performance of any such act or obligation, or of any right granted under this Agreement, shall be effective and binding unless
such waiver shall be in a written instrument or instruments signed by each party claimed to have given or consented to such waiver
and each party affected by such waiver.

 

13.       Counterparts.
This Agreement may be executed manually or by facsimile signature in two or more counterparts, each of which shall be deemed an
original, and all of which together shall constitute but one and the same instrument.

 

14.       Arbitration/Equitable
Relief.  The parties hereby agree that all controversies, claims and matters of difference shall be resolved by binding
arbitration before JAMS located in Seattle, Washington according to the rules and practices of JAMS from time-to-time in force;
provided however that the parties hereto reserve their rights to seek and obtain injunctive or other equitable relief
from a court of competent jurisdiction, without waiving the right to compel such arbitration pursuant to this Section. The arbitrator
shall apply Washington law in rendering a decision. The CONSULTANT acknowledges that irreparable injury will result to the COMPANY
from the CONSULTANT’s violation of any of the terms of Section 4 (Nondisclosure) of this Agreement. The CONSULTANT expressly
agrees that the COMPANY shall be entitled, in addition to damages and any other remedies provided by law, to an injunction or other
equitable remedy respecting such violation or continued violation.

 

15.       Severability.
If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be determined
to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then and, in
that event: (A) the performance of the offending term or provision (but only to the extent its application is invalid, illegal
or unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision,
there shall be added a provision as similar in terms and amount to such excused provision as may be possible and be legal, valid
and enforceable, and (B) the remaining part of this Agreement (including the application of the offending term or provision to
persons or circumstances other than those as to which it is held invalid, illegal or unenforceable) shall not be affected thereby
and shall continue in full force and effect to the fullest extent provided by law.

 

16.       Preparation
of Agreement. It is acknowledged by each party that such party either had separate and independent advice of counsel or
the opportunity to avail itself or himself of same. In light of these facts it is acknowledged that no party shall be construed
to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against any party as the alleged
draftsman of this Agreement.

 

17.       No
Assignment of Rights or Delegation of Duties by CONSULTANT; COMPANY’s Right to Assign. The CONSULTANT’s rights
and benefits under this Agreement are personal to him and therefore no such right or benefit shall be subject to voluntary or involuntary
alienation, assignment or transfer. The COMPANY may assign its rights and delegate its obligations under this Agreement to any
other person or entity.

 

18.       Electronically
Transmitted Documents. If a copy or counterpart of this Agreement is originally executed and such copy or counterpart is
thereafter transmitted electronically by facsimile or similar device, such facsimile document shall for all purposes be treated
as if manually signed by the party whose facsimile signature appears.

 

[signatures appear on next page]

 

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WHEREFORE, the parties have executed
this Agreement on the date first written above.

 

	 	“CONSULTANT”
	 	 	 
	 	By:	 
	 	 	Andrew U. Lee
	 	 	 
	 	“COMPANY”
	 	 
	 	ClearSign Combustion Corporation
	 	 	 
	 	By:	 
	 	 	Stephen E. Pirnat
	 	 	Chairman & Chief Executive Officer

 

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EXHIBIT A

 

DUTIES
OF CONSULTANT

 

At the direction of
the Company’s President, Consultant shall 1) assist the Company with the transition of the Consultant’s former duties
and responsibilities to the successor Business Development executive and 2) advise the Company periodically on matters pertaining
to business development.  At the outset of this Agreement, it is anticipated the services of the Consultant shall include:

 

		·	Assistance as requested to the new Business Development executive including account coordination, business history, advice,
and contact communications.

		·	Assist as appropriate in opening, developing, and expanding European and Asian markets including preparing business plans,
market research, and participating in negotiations as requested for specific market opportunities.

		·	Assist in working with environmental regulators to establish Company technology as Best Available Control Technology. 

  

COMPENSATION OF CONSULTANT

 

CONSULTANT to be paid an hourly rate of $200.00 per hour payable
within thirty (30) days of presentation of an invoice detailing hours worked and expenses, if any.

 

Further, CONSULTANT will have the option to purchase the personal
computer he used while an employee for the fair market value as determined in the sole discretion of the COMPANY.

 

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EXHIBIT B

 

Confidentiality and Proprietary Rights Agreement

executed by Andrew U. Lee on June 27, 2012

 

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Confidentiality
and Proprietary Rights Agreement

 

I, the undersigned
employee or consultant, enter into this Confidentiality and Proprietary Rights Agreement (Agreement) with ClearSign
Combustion Corporation (Company). This Agreement is effective immediately.

 

Company has researched,
compiled and developed certain proprietary data, including, but not limited to customer information, trade secrets, and other information
which is not generally disclosed by Company to the public. In the course of my employment or consulting relationship with Company,
I may acquire knowledge (both orally and in writing) relating to confidential affairs of Company and confidential, proprietary,
and trade secret information. In consideration of my employment or consulting relationship, and Company ‘s time, effort and
resources devoted to my training and briefing, and my access to Confidential Information (defined below) that will assist me in
performing my duties, I agree as follows:

 

Confidential Information.
“Confidential Information” is proprietary data that has been researched, compiled, developed and/or maintained by Company,
and which is not generally known within the industry. Confidential Information includes, but is not limited to, information, ideas,
knowledge, data, or know-how related to products, processes, software, designs, formulae, tests, research, business and/or marketing
plans and strategies, costs, profits, pricing, personnel and financial information, capitalization and other corporate data and
information, and information about or obtained from customers, authors, suppliers, consultants, licensees, or affiliates. Confidential
Information also includes information Company has received from third parties in confidence.

 

Use and Disclosure
Restrictions. I will not use or disclose Confidential Information, in any form, for any purpose, except in the course of and
for the purposes of my employment or consulting relationship with Company and in compliance with insider trading and information
laws, rules, and regulations.

 

Ownership of Information.
I will obtain no right, title or interest in the Confidential Information, or any related information or data. The Confidential
Information and related information shall remain the sole property of Company.

 

Return of Information.
I will return all Confidential Information, including all copies in any form, to Company immediately upon termination of my employment
or consulting relationship with Company, or earlier upon request of Company.

 

Return of Property.
In the course of my employment or consulting relationship with Company, I may be provided with equipment, supplies, keys, credits
cards, software, and other property for business use (collectively, “Company Property”). I will return all Company
Property immediately upon termination of my employment or consulting relationship with Company, or otherwise immediately on Company’s
request.

 

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Assignment of Inventions.

 

“Inventions”
means ideas, improvements, designs, processes, formulas, techniques, authored works (whether software or other forms), and/or discoveries
related to the use of electric and/or magnetic fields in flames, furnaces, and combustion systems, including the Company’s
Electrodynamic Combustion ControlTM technology, whether or not reduced to writing, and whether or not patentable or copyrightable.

 

“Covered Work”
means Inventions conceived by me (alone or with others) or that are developed in whole or in part on Company time as an employee
or consultant, or in whole or in part using Company’s equipment, supplies, or facilities, or that depend for their effectiveness
on, or incorporate, Confidential Information. An Invention I conceive or develop on Company time is Covered Work whether or not
my activities occur (i) on or off the premises, (ii) before, during or after normal working hours, or (iii) within or without the
scope of work assigned to me.

 

Assignment. I
understand that Covered Work is work made for hire and, in any case, owned exclusively by Company. To the extent any such Covered
Work does not qualify as work made for hire, I hereby assign to Company all worldwide right, title and interest to all such Covered
Work, whenever made. I hereby waive any rights and claims I may have in any jurisdiction to any moral rights of “droit moral”
with respect to any Covered Work and confirm that Company has the right to make, have made, and own enhancements, derivative works,
and other modifications to Covered Work.

 

Reporting. I agree
to inform an officer of Company if I intend to incorporate into Company’s products or technology or otherwise use for Company’s
benefit any Invention I made that I believe is not a Covered Work. If I fail to inform an officer of Company prior to such use
of an Invention I made, I hereby grant to company a non-exclusive, unlimited, perpetual, irrevocable, worldwide, royalty-free right
and license to use such Invention in connection with Company’s business and in its sole discretion.

 

Exceptions. Except
as provided in section 3(d), this section 3 does not apply to any Invention I made that predates my employment or consulting relationship
with Company and which is identified on Exhibit A to this Agreement. This section 3 also does not apply to any invention for which
no equipment, supplies, facilities, or trade secret information of Company was used and which was developed entirely on my own
time, unless (i) the invention relates directly to the business of Company, or to Company’s actual or demonstrably anticipated
research or development, or (ii) the invention results from any work I performed for Company.

 

Cooperation. I
will reveal promptly all information relating to Inventions and Covered Work to an appropriate officer of the Company, including
apprising such officer of the status of the items described in Exhibit A. At Company’s expense, and for no additional compensation,
I will cooperate fully and promptly with Company and execute such documents as may be requested if Company desires to seek, document,
enhance, or defend Company’s ownership, copyright, patent, trademark, or other intellectual property protection relating
to any Covered Work, even after I no longer work for Company. I appoint Company (and its authorized agents) as my agent and attorney-in-fact
for the following limited purposes: to take any action to obtain patents, copyrights, or other kinds of legal protection in Covered
Works; to assign those rights to Company; and to protect those rights from infringement. This appointment and power of attorney
are irrevocable. Any action taken by Company under this power of attorney will have the same legal effect as if I did it myself.

 

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No Violation of
Contract. My acceptance of an employment or consulting relationship with Company does not violate any contractual obligations
I owe to any third party. I will not use or disclose to Company confidential information or trade secrets of any third party without
that party’s consent. I acknowledge that Company wishes me to abide strictly by the terms of valid and enforceable obligations
I have to prior employers or clients, and that I am to inform an appropriate officer of the Company whenever I believe a task I
am to perform for the Company would put my ability to abide by those obligations at risk.

 

Employment.
If I am an employee, I will devote my full time and attention to the transaction of Company’s business while I am employed
by Company. Nothing in this Agreement creates an employment contract for a specific term or otherwise alters the at-will nature
of my employment with Company. Either party may terminate the employment relationship at any time, for any reason, with or without
prior notice.

 

Conflict of Interest.
While I am employed by or consulting for Company, I will not work, directly or indirectly, for any company which competes with
Company, nor will I solicit Company customers, potential customers or contacts for the purpose of selling products or services
for any person or entity other than Company.

 

Non-solicitation.
For one year after my employment or consulting relationship with Company terminates, regardless of the reason for termination,
I will not (a) directly solicit business from any person or entity which then is or was a Company customer, client or prospect
during the twelve (12) months prior to termination, (b) induce any such person or entity to cease or reduce their business relationship
with Company; (c) induce any person to leave the employment of Company; or (d) directly or indirectly hire or use the services
of any Company employee unless I obtain Company’s written consent. I will not aid others in doing anything I am prohibited
from doing myself under this paragraph, whether as an employee, officer, director, shareholder, partner, consultant or otherwise.
For purposes of this paragraph, the term “solicit” includes (i) responding to requests for proposals and invitations
for bids, (ii) initiating contacts with customers, clients, or prospects of Company for the purpose of advising them that I no
longer am employed by or consulting for Company and am available for work which is competitive with the services offered by Company,
and (iii) participating in joint ventures or acting as a consultant or subcontractor or employee of others who directly solicit
business prohibited by this Agreement. The term “Company employee” includes any then current employee of Company or
any person who has left the employ of Company within the then previous six (6) months. The terms “Company client” and
“Company customer” include any parent corporation, subsidiary corporation, affiliate corporation or partner or joint
venture of a client or customer. “Company prospect” means any person or entity to whom Company has submitted a bid
or proposal within the then immediately preceding six (6) months.

 

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Noncompetition.
For one year following termination of my employment for any reason, I will not directly Compete (defined below) with Company anywhere
Company is doing or has plans to do business, nor will I engage in any other activity which would conflict with the Company’s
business, or interfere with my obligations to the Company. “Compete” means directly: (i) have any financial interest
in, (ii) join, operate, control or participate in, or be connected as an officer, employee, agent, independent contractor, partner,
principal or shareholder with (except as holder of not more than five percent (5%) of the outstanding stock of any class of a corporation,
the stock of which is actively publicly traded) or (iii) provide services in any capacity to those participating in the ownership,
management, operation or control of, and/or (iv) act as a consultant or subcontractor to, a Competitive Business (defined below).
“Competitive Business” means any corporation, proprietorship, association or other entity or person engaged in the
sale, production and/or development of products or the rendering of services of a kind similar to or competitive with that sold,
produced, developed or rendered by Company as of the date my employment or consulting relationship terminates. Currently, the Company
believes that it and its Electrodynamic Combustion ControlTM technology have no competitors.

 

Continuation of
Obligations. Except to the extent this Agreement provides otherwise, the restrictions of and my obligations under this Agreement
will continue after my employment or consulting relationship terminates, regardless of the reason for termination. Upon termination
of my employment or consulting relationship, I agree to execute and deliver to Company the Termination Certification in the form
attached as Exhibit B to this Agreement.

 

Consent to Injunction.
I acknowledge that Company would suffer irreparable harm for which monetary damages alone would not adequately compensate Company
if I breached this Agreement. For that reason, I agree Company shall be entitled to injunctive relief to enjoin any breach or threatened
breach of this Agreement, in addition to any other available remedies.

 

Governing Law and
Jurisdiction. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Washington, without
regard to conflict of law principles. The exclusive jurisdiction for any action to interpret or enforce this Agreement shall be
State of Washington.

 

Attorney Fees.
In the event of any suit, action or arbitration to interpret or enforce this Agreement, the prevailing party shall be entitled
to its attorney fees, costs, and out-of-pocket expenses, at trial and on appeal.

 

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Waiver. Company’s
failure to demand strict performance of any provision of this Agreement shall not constitute a waiver of any provision, term, covenant,
or condition of this Agreement or the right to demand strict performance in the future.

 

Successors and Assigns.
This Agreement shall be binding upon my heirs, executors, administrators or other legal representatives and may be assigned and
enforced by Company, its successors and assigns. As used in this Agreement, the term “Company” shall include Company,
its subsidiaries, subdivisions, and affiliates.

 

Entire Agreement.
This Agreement and any confidentiality, nonsolicitation, and/or noncompetition agreement I entered into with Company or any predecessor
company acquired by or affiliated with Company, constitute the entire agreement of Company and me with respect to the subject matter
of this Agreement. Each of the rights, obligations and remedies provided for in these agreements shall be cumulative.

 

Severability and
Enforcement. The parties agree that any provision of this Agreement or its application that is held invalid shall be modified
as necessary to render it valid and enforceable. If any provision of this Agreement or its application is held invalid and cannot
be modified to render it valid and enforceable, the invalidity shall not affect other obligations, provisions, or applications
of this Agreement which can be given effect without the invalid provisions or applications.

 

Opportunity for
Review. I acknowledge that I have carefully read the foregoing Agreement, understand its contents, and signed it voluntarily.

 

	Print Name:	Andrew U. Lee	 

 

Check one:

		þ	Employee

		 ̈	Consultant

 

	Signature	 /s/ Andrew U. Lee	 
	 	 	 
	Date:	 06/27/2012	 

 

    	Page 13 –	Consulting Agreement – Andrew Lee And Clearsign

     

    

  

EXHIBIT C

 

Indemnification Agreement

executed by ClearSign Combustion Corporation

and its Indemnitee, Andrew U. Lee,

on March 7, 2012

 

     

     

    

  

CLEARSIGN COMBUSTION CORPORATION

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT is entered
into, effective as of March 7, 2012 by and between ClearSign Combustion Corporation, a Washington corporation (the “Company”),
and Andrew U. Lee (“Indemnitee”).

 

WHEREAS, it is essential to the Company
to retain and attract as directors and officers the most capable persons available;

 

WHEREAS, Indemnitee is a director and/or
officer of the Company; and

 

WHEREAS, in recognition of Indemnitee’s
need for substantial protection against personal liability in order to enhance Indemnitee’s continued and effective service
to the Company, and in order to induce Indemnitee to provide services to the Company as a director and/or officer, the Company
wishes to provide in this Agreement for the indemnification of and advance of expenses to Indemnitee to the fullest extent (whether
partial or complete) permitted by Washington state law and as set forth in this Agreement, and, to the extent insurance is maintained,
for the coverage of Indemnitee under the Company’s director and officer liability insurance policies.

 

NOW, THEREFORE, in consideration of the
above premises and of Indemnitee’s continued service to the Company, and intending to be legally bound hereby, the parties
agree as follows:

 

		1.	Certain Definitions.

 

		(a)	“Board” means the board of directors
of the Company.

 

     

     

    

  

		(b)	“Change in Control” shall be deemed to have occurred if (i) any “person” (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”)), other than a trustee
or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly
by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company (collectively
“excluded persons”), is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Company representing 30% or more of the total voting power represented by
the Company’s then outstanding Voting Securities, or (ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by
the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease
for any reason to constitute a majority of the Board, or (iii) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change in the shareholders of the Company or their relative
stock holdings), or (iv) a merger in which the Company is the surviving corporation but after which the shareholders of the Company
immediately prior to such merger (other than any shareholder that merges, or which owns or controls another corporation that merges
with the Company in such merger) cease to own their shares or other equity interest in the Company, or (v) in the event of a dissolution
or liquidation of the Company, or (vi) the sale or disposition (in one transaction or a series of transactions) of all or substantially
all of the Company’s assets, or (vii) the acquisition, sale, or transfer of more than 50% of the outstanding shares of the
Company by tender offer or similar transaction.

 

		(c)	“Company” shall include, in addition to the Company named in this
Agreement, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger with
the Company, which constituent corporation, if its separate existence had continued, would have had power and authority to indemnify
its directors, officers, employees or agents.  For purposes of this Agreement, references to “other enterprises”
shall include employee benefit plans; and references to “serving at the request of the Company” shall include any service
as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan or its participants or beneficiaries; and if Indemnitee acted in good
faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee
benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests” of the
Company as referred to in this Agreement.

 

		(d)	“Expenses” mean any expense, liability, or loss, including attorneys’ fees, judgments, fines, ERISA
excise taxes and penalties, amounts paid or to be paid in settlement, any interest, assessments, or other charges imposed thereon,
and any federal, state, local, or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this
Agreement, paid or incurred in connection with investigating, defending, being a witness in, or participating in (including on
appeal), or preparing for any of the foregoing in, any Proceeding relating to any Indemnifiable Event.

 

		(e)	“Indemnifiable Event” means any event or occurrence that takes place either prior to or after the effective
date of this Agreement, relating to the fact that Indemnitee is or was a director or an officer of the Company, or while a director
or officer is or was serving at the request of the Company as a director, officer, employee, trustee, agent, or fiduciary of another
foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust, or other enterprise, or was a director,
officer, employee, or agent of a foreign or domestic corporation that was a predecessor corporation of the Company or of another
enterprise at the request of such predecessor corporation, or related to anything done or not done by Indemnitee in any such capacity.

 

     

     

    

  

		(f)	“Independent Counsel” means the person or body appointed in connection with Section 3.

 

		(g)	“Potential Change in Control” shall be deemed to have occurred if (i) the Company enters into an agreement
or arrangement, the consummation of which would result in the occurrence of a Change in Control, (ii) any person (including the
Company) publicly announces an intention to take or to consider taking actions that, if consummated, would constitute a Change
in Control, (iii) any person (other than an Excluded Person) who is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined voting power of the Company’s then outstanding Voting
Securities, increases his beneficial ownership of such securities by 5% or more over the percentage so owned by such person on
the date hereof, or (iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in
Control has occurred.

 

		(h)	“Proceeding” means (i) any threatened, pending, or complete action, suit, or proceeding, whether civil,
criminal, administrative, investigative, or other, or (ii) any inquiry, hearing, or investigation, whether conducted by the Company
or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, or proceeding.

 

		(i)	“Reviewing Party” means the person or body appointed in accordance with Section 3.

 

		(j)	“Voting Securities” means any securities of the Company that vote generally in the election of directors.

 

		2.	Agreement to Indemnify.

 

(a)       General
Agreement. In the event Indemnitee was, is, or becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event,
the Company shall indemnify Indemnitee from and against any and all Expenses to the fullest extent permitted by law, as the same
exists or may hereafter be amended or interpreted (but in the case of any such amendment or interpretation, only to the extent
that such amendment or interpretation permits the Company to provide broader indemnification rights than were permitted prior thereto).

 

(b)       Limitations
on Indemnification. Indemnification shall be provided to any Indemnitee to the fullest extent permitted by the Revised Code
of Washington (“RCW”). Accordingly, the RCW substantially provides the following limitations, which shall apply
to any indemnification provided under this Agreement:

 

     

     

    

  

		(1)	A corporation may not indemnify a director unless
approved in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances
because the director has met the applicable Standard of Conduct (defined below).

 

		(2)	The determination shall be made:

 

(a)    by the board of directors by
majority vote of a quorum consisting of directors not at the time parties to the Proceeding;

 

(b)    if a quorum cannot be obtained
under (a) above, by majority vote of a committee duly designated by the Board, in which designation directors who are parties may
participate, consisting solely of two or more directors not at the time parties to the Proceeding;

 

(c)    by special legal counsel:

 

		(i)	selected by the Board or its committee in the manner
prescribed in (a) or (b) of this subsection; or

 

		(ii)	if a quorum of the Board cannot be obtained under (a) of this subsection and a committee cannot be designated under (b) of
this subsection, selected by majority vote of the full Board, in which selection directors who are parties may participate; or

 

(d)   by the shareholders, but shares
owned by or voted under the control of directors who are at the time parties to the Proceeding may not be voted on the determination.

 

An individual shall be deemed to have met
the “Standard of Conduct”, and the Company may indemnify an individual made a party to a proceeding because
the individual is or was a director and/or officer against liability incurred in the proceeding if:

 

		(a)	the individual acted in good faith; and

 

		(b)	the individual reasonably believed:

 

		(i)	in the case of conduct in the individual’s official
capacity with the Company, that the individual’s conduct was in its best interests; and

 

		(ii)	in all other cases, that the individual’s conduct
was at least not opposed to its best interests; and

 

     

     

    

 

(c)    in the case of any criminal
proceeding, the individual had no reasonable cause to believe the individual’s conduct was unlawful.

 

Notwithstanding the foregoing, the Company
may not indemnify a director and/or officer:

 

(a)    in connection with a proceeding
by or in the right of the Company in which the director was adjudged liable to the Company; or

 

(b)   in connection with any other
proceeding charging improper personal benefit to the director, whether or not involving action in the director’s official
capacity, in which the director was adjudged liable on the basis that personal benefit was improperly received by the director.

 

Indemnification permitted under this Section
in connection with a proceeding by or in the right of the Company is limited to reasonable expenses incurred in connection with
the proceeding.

 

(c)        Initiation
of Proceeding. Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Proceeding initiated by Indemnitee against the Company or any director or officer
of the Company unless (i) the Company has joined in or the Board has consented to the initiation of such Proceeding, (ii) the Proceeding
is one to enforce indemnification rights under Section 5, or (iii) the Proceeding is instituted after a Change in Control and Independent
Counsel has approved its initiation.

 

(d)        Expense
Advances. If so requested by Indemnitee, the Company shall advance (within ten business days of such request) any and all Expenses
to Indemnitee (an “Expense Advance”); provided that such request shall be accompanied by reasonable evidence
of the expenses incurred by Indemnitee and that, if and to the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby
agrees to reimburse the Company) for all such amounts theretofore paid. If Indemnitee has commenced legal proceedings in a court
of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, as provided in
Section 4, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable
law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or have lapsed).

 

(e)        Mandatory
Indemnification. Notwithstanding any other provision of this Agreement (other than Section 2(f) below), to the extent that
Indemnitee has been successful on the merits in defense of any Proceeding relating in whole or in part to an Indemnifiable Event
or in defense of any issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.

 

     

     

    

 

(f)        Partial
Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some
or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled.

 

(g)        Other
Exceptions to Indemnification. No indemnification pursuant to this Agreement shall be paid by the Company on account of:

 

		(i)	any Proceeding in which judgment is rendered against Indemnitee
for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions
of Section 16(b) of the Act, as amended, or any similar statute;

 

		(ii)	any reimbursement
of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by
Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements
that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation
of Section 306 of the Sarbanes-Oxley Act); or

 

		(iii)	expenses or liabilities
of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) which have been paid directly to Indemnitee by an insurance carrier under the D&O Liability Insurance (defined
below) policy maintained by the Company.

 

(h)        Mutual
Acknowledgement. Both the Company and Indemnitee acknowledge that in certain instances
Federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers and employees under
this Agreement or otherwise.  Indemnitee understands and acknowledges that the Company may be required in the future to undertake
with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a
determination of the Company’s right under public policy to indemnify Indemnitee.

 

     

     

    

 

3.       Reviewing Party. Prior to any
Change in Control, the Reviewing Party shall be any appropriate person or body consisting of a member or members of the Board or
any other person or body appointed by the Board who is not a party to the particular Proceeding with respect to which Indemnitee
is seeking indemnification; after a Change in Control, the Reviewing Party shall be the Independent Counsel referred to below.
With respect to all matters arising after a Change in Control (other than a Change in Control approved by a majority of the directors
on the Board who were directors immediately prior to such Change in Control) concerning the rights of Indemnitee to indemnity payments
and Expense Advances under this Agreement or any other agreement or under applicable law or the Company’s Amended and Restated
Certificate of Incorporation or bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, the Company
shall seek legal advice only from Independent Counsel selected by Indemnitee and approved by the Company and who has not otherwise
performed services for the Company or the Indemnitee (other than in connection with indemnification matters) within the last five
years. The Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing
would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s
rights under this Agreement. Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as
to whether and to what extent the Indemnitee should be permitted to be indemnified under applicable law. The Company agrees to
pay the reasonable fees of the Independent Counsel and to indemnify fully such counsel against any and all expenses (including
attorney’s fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the engagement of
Independent Counsel pursuant hereto.

 

4.       Indemnification Process and Appeal.

 

(a)        Suit
To Enforce Rights. Regardless of any action by the Reviewing Party, if Indemnitee has not received full indemnification within
60 days after making a request in accordance with Section 2(d), Indemnitee shall have the right to enforce its indemnification
rights under this Agreement by commencing litigation, in any appropriate court having subject matter jurisdiction thereof and in
which venue is proper, seeking an initial determination by the court or challenging any determination by the Reviewing Party or
any aspect thereof, provided, however, that such 60-day period shall be extended for reasonable time, not to exceed another 60
days, if the reviewing party in good faith requires additional time for the obtaining or evaluating of documentation and information
relating thereto. The Company hereby consents to service of process and to appear in any such proceeding. Any determination by
the Reviewing Party not challenged by the Indemnitee shall be binding on the Company and Indemnitee. The remedy provided for in
this Section 4 shall be in addition to any other remedies available to Indemnitee in law or equity.

 

(b)        Defense
to Indemnification, Burden of Proof, and Presumptions. It shall be a defense to any action brought by Indemnitee against the
Company to enforce this Agreement (other than an action brought to enforce a claim for Expenses incurred in defending a Proceeding
in advance of its final disposition where the required undertaking has been tendered to the Company) that is not permissible under
applicable law for the Company to indemnify Indemnitee for the amount claimed. In connection with any such action or any determination
by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proving such
a defense or determination shall be on the Company. Neither the failure of the Reviewing Party or the Company (including its Board,
independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action by Indemnitee
that indemnification of the claimant is proper under the circumstances because Indemnitee has met the Standard of Conduct set forth
herein and under applicable law, nor an actual determination by the Reviewing Party or Company (including its Board, independent
legal counsel, or its shareholders) that the Indemnitee had not met such applicable Standard of Conduct, shall be a defense to
the action or create a presumption that the Indemnitee has not met the applicable Standard of Conduct. For purposes of this Agreement,
the termination of any claim, action, suit, or proceeding, by judgment, order, settlement (whether with or without court approval),
conviction, or upon a plea of nolo contendere, or its equivalent shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted
by applicable law.

 

     

     

    

 

5.        Indemnification for Expenses Incurred
in Enforcing Rights. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall
(within ten business days of such request), advance such Expenses to Indemnitee, that are incurred by Indemnitee in connection
with any claim asserted against or covered action brought by Indemnitee for (i) indemnification of Expenses or Expense Advances
by the Company under this Agreement or any other agreement or under applicable law or the Company’s Amended and Restated
Certificate of Incorporation or bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, and or
(ii) recovery under directors’ and officers’ liability insurance policies maintained by the Company, regardless of
whether Indemnitee ultimately is determined to be entitled to such indemnification, Expense Advances, or

insurance recovery, as the case may be.

 

6.       Notification and Defense of Proceeding.

 

(a)        Notice.
Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof
is to be made against the Company under this Agreement, notify the Company of the commencement thereof, but the omission so to
notify the Company will not relieve the Company from any liability that it may have to Indemnitee, except as provided in Section
6(c).

 

(b)        Defense.
With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof, the Company shall be entitled
to participate in the Proceeding at its own expense and except as otherwise provided below, to the extent the Company so wishes,
it may assume the defense thereof with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee
of its election to assume the defense of any Proceeding, the Company shall not be liable to Indemnitee under this Agreement or
otherwise for any Expenses subsequently incurred by Indemnitee in connection with the defense of such Proceeding other than reasonable
costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ his or her own legal counsel in
such Proceeding, but all Expenses related thereto incurred after notice from the Company of its assumption of the defense shall
be at Indemnitee’s expense unless: (i) the employment of legal counsel by Indemnitee has been authorized by the Company,
(ii) Indemnitee has reasonably determined that there may be a conflict of interest between Indemnitee and the Company in the defense
of the Proceeding, (iii) after a Change in Control, the employment of counsel by Indemnitee has been approved by the Independent
Counsel, or (iv) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which
case all Expenses of the Proceeding shall be borne by the Company. The Company shall not be entitled to assume the defense of any
Proceeding brought by or on behalf of the Company or as to which Indemnitee shall have made the determination provided for in (ii)
above.

 

     

     

    

 

(c)        Settlement
of Claims. The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid in
settlement of any Proceeding effected without the Company’s written consent, provided, however, that if a Change in Control
has occurred, the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel
has approved the settlement. The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation
on Indemnitee without Indemnitee’s written consent. The Company shall not be liable to indemnify the Indemnitee under this
Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity, at its expense, to
participate in the defense of such action; the Company’s liability hereunder shall not be excused if participation in the
Proceeding by the Company was barred by this Agreement.

 

7.        Non-Exclusivity. The rights of
Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company’s Amended and Restated
Certificate of Incorporation, bylaws, applicable law, or otherwise. To the extent that a change in applicable law (whether by statute
or judicial decision) permits greater indemnification by agreement than would be afforded currently under the Company’s Amended
and Restated Certificate of Incorporation, bylaws, applicable law, or this Agreement, it is the intent of the parties that Indemnitee
enjoy by this Agreement the greater benefits so afforded by such change.

 

8.       Directors and Officers Liability
Insurance.

 

(a)  The Company
shall obtain and maintain a policy or policies of insurance (“D&O Liability Insurance”) with reputable insurance
companies providing liability insurance for directors and officers of the Company in their capacities as such (and for any capacity
in which any director or officer of the Company serves any other person or entity at the request of the Company), in respect of
acts or omissions occurring while serving in such capacity, on terms with respect to coverage and amount (including with respect
to the payment of expenses) no less favorable than those of such policy in effect on the date hereof except for any changes approved
by the Board of Directors of the Company.

 

(b)  Indemnitee
shall be covered by the Company’s D&O Liability Insurance policies as in effect from time to time in accordance with
the applicable terms to the maximum extent of the coverage available for any other director or officer under such policies. The
Company shall, promptly after receiving notice of a Proceeding as to which Indemnitee is a party or a participant (as a witness
or otherwise), give notice of such proceeding to the insurers under the Company’s D&O Liability Insurance policies in
accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable
actions to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance
with the terms of such policies. The failure or refusal of any such insurer to pay any such amount shall not affect or impair the
obligations of the Company under this Agreement.

 

(c)  Upon
request by Indemnitee, the Company shall provide to Indemnitee copies of the D&O Liability Insurance policies as in effect
from time to time. The Company shall promptly notify Indemnitee of any material changes in such insurance coverage.

 

     

     

    

 

9.       Amendment of this Agreement.
No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall operate as a waiver of any other provisions hereof (whether
or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise
or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.

 

10.       Subrogation. In the event of
payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including
the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.

 

11.        No Duplication of Payments.
The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to
the extent Indemnitee has otherwise received payment (under any insurance policy, bylaw, or otherwise) of the amounts otherwise
indemnifiable hereunder.

 

12.        Binding Effect. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including
any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or
assets of the Company), assigns, spouses, heirs, and personal and legal representatives. The indemnification provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity pertaining
to an Indemnifiable Event even though he or she may have ceased to serve in such capacity at the time of any Proceeding.

 

13.        Severability. If any provision
(or portion thereof) of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable,
the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible,
the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to
be invalid, void, or otherwise unenforceable, that is not itself invalid, void, or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, void, or unenforceable.

 

14.        Governing Law. This Agreement
shall be governed by and construed and enforced in accordance with the laws of the State of Washington applicable to contracts
made and to be performed in such state without giving effect to the principles of conflicts of laws.

 

15.        Notices.
All notices, demands, and other communications required or permitted hereunder shall be made in writing and shall be deemed
to have been duly given if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered
mail, return receipt requested, and addressed to the Company at:

 

     

     

    

 

ClearSign Combustion Corporation

12870 Interurban Avenue South

Seattle, Washington 98168

Fax: (206) 673-4848

Attn: Chief Executive Officer

 

Notice of change of address shall be effective
only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received
on the date of delivery or on the third business day after mailing.

 

16.        Entire Agreement. Subject
to the provisions of Section 2(a), this Agreement sets forth the entire understanding between the parties hereto and supersedes
and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter
hereof between the parties hereto.

 

17.        Retroactivity. This
Agreement shall be deemed to have been in effect during all periods that Indemnitee was a director and/or officer of the Company,
regardless of the date of this Agreement. 

 

18.        Counterparts. This 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.

 

[Signature Page Follows]

 

     

     

    

 

IN WITNESS WHEREOF, the parties hereto
have duly executed and delivered this Indemnification Agreement as of the day specified above.

 

	COMPANY:	 	 	 
	 	 	CLEARSIGN COMBUSTION CORPORATION
	 	 	 	 
	 	 	By:	/s/Richard F. Rutkowski
	 	 	 	Richard F. Rutkowski
	 	 	 	Chief Executive Officer
	 	 	 	 
	INDEMNITEE:	 	 	Andrew U. Lee
	 	 	 	Name of Indemnitee (print name)
	 	 	 	 
	 	 	 	/s/ Andrew U. Lee
	 	 	 	Signature

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