Document:

Exhibit 10.1

 

MASTER AGREEMENT

 

by and between

 

INFINITY AUGMENTED REALITY INC.

 

- AND -

 

CREDIT STRATEGIES LLC

 

- AND -

 

PLATINUM PARTNERS VALUE ARBITRAGE FUND L.P.

 

- AND -

 

ALS CAPITAL VENTURES LLC

 

- AND -

 

CS MASTER HOLDINGS

 

- AND -

 

MOSHE ORATZ

 

- AND -

 

SBO TRUST U/A/D 4/13/10

 

- AND -

 

MJSYRL INC.

 

- AND -

 

SINGULARITEAM FUND LP

 

February 2, 2015

 

    	 

    	 

    

 

MASTER AGREEMENT

 

This Master Agreement (the “Master Agreement”),
dated as of February 2, 2015 is entered into

 

B E T W E E N :

 

Infinity Augmented Reality, Inc. (f/k/a Absolute
Life Solutions, Inc., the “Company”)

 

- and -

 

Platinum Partners Value Arbitrage Fund L.P.
(“Platinum Fund”, or an “Indemnitor”)

 

- and -

 

Credit Strategies LLC (“Credit Strategies”,
or an “Indemnitor”)

 

- and -

 

ALS Capital Ventures LLC, for itself and as
agent for each of its affiliates on behalf of whom it holds the Satisfaction Amount (“ALS”, or an “Indemnitor”)

 

- and -

 

CS Master Holdings LLC (“CS Master
Holdings”)

 

- and –

 

Moshe Oratz

 

- and –

 

Singulariteam Fund LP (f/k/a Genesis Angels
Fund, LP, “Singulariteam”)

 

- and -

 

SBO Trust U/A/D 4/13/10 (“SBO Trust”)

 

- and -

 

MJSYRL Inc. (“MJSYRL”)

 

(Each shall be referred to individually as
a “Party” and collectively as the “Parties”)

 

WHEREAS, the Company, ALS and the Platinum
Fund and certain of its affiliates (on behalf of whom it acted as agent) are parties to that certain Revolving Credit, Term Loan
and Security Agreement (the “Revolving Credit Agreement”), dated July 31, 2012 and that certain Loan Satisfaction
Agreement, dated November 15, 2012 (the “Loan Satisfaction Agreement”), pursuant to which ALS was designated
as the recipient of, and received from the Company, the Satisfaction Amount;

 

WHEREAS, ALS has agreed to formally
accept the assignment of all liabilities relating to the Life Settlement Business Liabilities (as defined below);

 

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WHEREAS, the Debentureholders (as defined
below) are parties to one or more various Securities Purchase Agreements (collectively the “Securities Purchase Agreements”)
entered into with the Company during the course of the Company's 2013, 2014 and 2015 fiscal years (including that certain Securities
Purchase Agreement by and between the Company, Credit Strategies and certain of its affiliates, dated April 23, 2013, that certain
Securities Purchase Agreement by and between the Company, Credit Strategies and certain of its affiliates and ALS, dated June
16, 2014, and that certain Securities Purchase Agreement by and between the Company, Credit Strategies and certain of its affiliates
and Singulariteam, dated March 26, 2014), pursuant to which such Debentureholders were issued (i) convertible debentures of the
Company convertible into shares of the Company's common stock, par value $0.00001 per share (the “Common Stock”)
with a term of five years and an interest rate of 1.20% per annum, payable semi-annually in cash or in kind (the “Debentures”)
and (ii) warrants to purchase the Company's Common Stock, exercisable for a period of five years at an initial exercise price
of $0.50 per share (the “Warrants”);

 

WHEREAS, the Parties hereto acknowledge
that the current outstanding securities of the Company and status of the Company as a public reporting company is deterring certain
private investors from investing in and providing necessary funding to the Company. The Parties hereto agree that it is in the
best interest of the Company to convert the company's Convertible Securities into Conversion Stock as set forth herein, and to
take such necessary actions which will allow the Company to cease functioning as a public reporting company in order to secure
such funding and to eliminate the costs associated with being a public reporting company are not justified by the benefits.

 

WHEREAS, the Parties hereto wish to
propose an arrangement involving, among other things (i) the assumption by the Indemnitors of all potential liabilities in connection
with the Company's prior activities in the life settlement business, (ii) the amendment of the terms of of all outstanding Debentures
and Warrants held by any of the Parties to provide that these securities are convertible for Converstion Stock and then converting
such securities into Conversion Stock in exchange for the Company reducing the exercise price of the Warrants to the par value
of the Common Stock, (iii) to approve and cause the Company effect a consolidation (reverse stock split) of the Company's outstanding
Securities (the “Reverse Stock Split”) whereby the number of record holders of Common Stock are reduced to
fewer than 300, with the exact consolidation ratio to be set within this range by the Company's board of directors (the “Board”)
immediately followed by a forward stock split of the Company's outstanding Common Stock, at the same exchange ratio (the "Forward
Split").; (iv) subject to and contingent upon the consummation
of the Reverse Stock Split, to approve and cause the Company to take all necessary actions to terminate the registration under
a “going dark” deregistration process (the “Deregistration”) of its Common Stock under Section
12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and suspend the Company's duty
to file periodic reports and other information with the Securities Exchange Commission (the “SEC”); (v) to
approve and cause the Company to issue to certain executive officers and employees of the Company and of the Company's wholly
owned Israeli subsidiary, Infinity Augmented Reality Israel Ltd. (the “Subsidiary”), 155,000,000 Restricted
Stock Units and/or options to purchase Common Stock; (vi) to approve and adopt a new Company equity incentive plan in order to
facilitate said grant of Restricted Stock Units and/or options to purchase Common Stock to such executive officers and employees
of the Company; (vii) to approve and cause the Company to effect an adjustment to the exercise price for the share options previously
granted to Israeli employees under appendix B to the Company's 2013 Equity Incentive Plan, in order to bring the exercise price
in line with the current market price of the Company’s Common Stock; and (viii) the amendment of the Company’s Articles
of Incorporation to provide for an increase of the Company's authorized share capital including the number of shares allocated
to Series A Preferred Stock and Series B Preferred Stock and for the issuance of Conversion Stock to the Debentureholders and
Warrantholders ((i) through (viii) collectively referred to as the “Arrangement Transactions”); (ix) to approve
the Company raising additional funds by way of entering into a subscription agreement with certain of the Parties and additional
third parties after the Deregistration, of up to US$5,000,000.

 

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NOW THEREFORE THIS AGREEMENT WITNESSES
THAT in consideration of the covenants and agreements herein contained and other good and valuable consideration (the receipt
and sufficiency of which are hereby acknowledged), the parties hereto covenant and agree as follows:

 

		1.	DEFINITIONS

 

		1.1.	“Convertible Securities”
                                         shall mean the Debentures and the Warrants. Convertible Securities shall not include
                                         any options or Restricted Stock Units issued or to be issued under the Company’s
                                         equity incentive plans or the Grants (as defined below).

 

		1.2.	“Series A Preferred
                                         Stock” shall mean Series A Preffered Stock which shall confer such rights and
                                         obligations on the holders thereof, as set forth in Sections 3.6 and 3.7 hereto.

 

		1.3.	“Conversion Stock”
                                         shall mean the Common Stock and the Series A Preferred Stock issued to the Debentureholders
                                         pursuant to the Conversion under Section 3.3 hereto.

 

		1.4.	“Debentureholders”
                                         shall mean the Parties holding Convertible Securities as listed on Schedule A
                                         hereto.

 

		1.5.	“Deemed Liquidation”
                                         shall mean a consolidation, merger or reorganization of the Company with or into, or
                                         a sale or acquisition of all or substantially all of the Company's assets or issued and
                                         outstanding share capital to or by, any other entity or person, excluding (i) any such
                                         sale or transfer to or acquisition by a wholly-owned subsidiary of the Company; and (ii)
                                         a transaction effected exclusively for the purpose of changing the domicile or structure
                                         of the Company.

 

		1.6.	“Fully-Diluted Basis”
                                         shall mean assuming (i) the exercise of all options, Convertible Securities and rights
                                         to acquire shares of Common Stock, and (ii) the conversion or exchange of all securities
                                         convertible into or exchangeable for capital shares of the Company, in each case whether
                                         or not then vested or exercisable.

 

		1.7.	“Insurance Payout”
                                         shall mean the Insurance Payout as defined in the Loan Satisfaction Agreement.

 

		1.8.	“Life Insurance Business”
                                         shall mean the former, discontinued, business of the Company, from 2010 through November
                                         15, 2012, as a specialty financial services company engaged in the purchase of life settlements.

 

		1.9.	“Losses” shall
                                         mean any losses, damages, bonds, dues, assessments, fines, interest, penalties, claims,
                                         taxes, fees, costs (including costs of investigation, defense and enforcement of this
                                         Master Agreement), diminution of value, lost profits, consequential damages, expenses
                                         or amounts paid in settlement (in each case, including attorneys’ and experts’
                                         fees and expenses), threatened or actual, and whether or not involving a third party
                                         claim.

 

		1.10.	“Restricted Stock Units”
                                         or “RSUs” shall mean Restricted Stock Units to be issued under the
                                         Company’s New Plan (as such term is defined below) to be approved by shareholders.

 

		1.11.	“Satisfaction Amount”
                                         shall mean the Satisfaction Amount as defined in the Loan Satisfaction Agreement.

 

		1.12.	“Schedule 14A”
                                         shall mean a Proxy Statement pursuant to Section 14(a) of the Exchange Act of 1934.

 

		1.13.	“Schedule 14C”
                                         shall mean an information statement pursuant to Section 14(c) of the Exchange Act.

 

		1.14.	“Schedule 13E-3”
                                         shall mean a transaction statement under section 13(e) of the Exchange Act and Rule 13e-3
                                         thereunder.

 

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		1.15.	“Securities”
                                         shall mean Common Stock, Series A Common Preferred Stock, Warrants, Debentures, Restricted
                                         Stock Units and options to purchase any of the forgoing.

 

		1.16.	“Subscription Agreement”
                                         shall have the meaning set forth in Section 6 hereto.

 

		1.17.	“Term Loan Lender(s)”
                                         shall have the meaning as ascribed to such term in the Loan Satisfaction Agreement and
                                         the Revolving Credit Agreement.

 

		2.	ASSUMPTION OF POTENTIAL
                                         LIABILITIES

 

		2.1.	The Indemnitors hereby acknowledge
                                         that it was the intention of each of the Indemnitors that, upon consummation of the transactions
                                         contemplated by the Loan Satisfaction Agreement, the Company would not have any liability
                                         whatsoever with respect to the Company’s former activities in the life settlement
                                         business including, but not limited to, any tax or tax expense arising at any time from
                                         the Insurance Payout or the Loan Satisfaction Agreement (collectively, “Life
                                         Settlement Business Liabilities”), which, until such consummation of the Loan
                                         Satisfaction Agreement, was the Company’s former line of business. To induce the
                                         Company to enter into and consummate the Loan Satisfaction Agreement, each of the Indemnitors
                                         had intended to assume any and all Life Settlement Business Liabilities and to indemnify
                                         and hold the Company and its directors and officers harmless from and against any and
                                         all Life Settlement Business Liabilities.

 

		2.2.	To reflect the Indemnitors’
                                         confirmation of their intentions to assume, any and all Life Settlement Business Liabilities
                                         and to indemnify the Company and its directors and officers from and against any Losses
                                         directly or indirectly relating to any and all Life Settlement Business Liabilities incurred
                                         or to be incurred by the Company, the Indemnitors hereby agree as follows:

 

		(a)	The Indemnitors, jointly and
                                         severally, hereby assume and agree to pay, perform and discharge all Life Settlement
                                         Business Liabilities.

 

		(b)	The Indemnitors, jointly and
                                         severally, hereby agree to indemnify and defend against, and to hold the Company and
                                         its directors and officers harmless from and against, and to pay and reimburse the Company
                                         for, any and all Losses incurred or sustained by, or imposed upon, the Company based
                                         upon, as a result of, arising out of or directly or indirectly relating to any and all
                                         Life Settlement Business Liabilities incurred or to be incurred by the Company.

 

		(c)	Each of the Indemnitors has
                                         received adequate consideration for such Indemnitor’s agreements provided herein.
                                         Such consideration includes, but is not necessarily limited to, the Company’s having
                                         entered into the Loan Satisfaction Agreement and consummating the transactions contemplated
                                         thereby.

 

		(d)	The Company may at any time
                                         give notice (a “Liability Notice”) to each Indemnitor who is a signatory
                                         named as such on the signature page of this Master Agreement (and such Liability Notice
                                         shall be deemed given to any other affiliate of Platinum Fund who is an Indemnitor but
                                         is not specifically named on such signature page) stating that the Company has incurred
                                         and/or paid and/or expects to be obligated to pay Life Settlement Business Liabilities.
                                         Such Liability Notice shall indicate the amount of the Life Settlement Business Liabilities,
                                         the period(s) to which such liabilities apply and the jurisdictions (e.g., federal, state
                                         or local) to which they apply. The Liability Notice will also include wire instructions
                                         to be used in making the payments due to the Company hereunder.

 

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		(e)	Each Indemnitor shall be obligated
                                         to pay the amount specified in the Liability Notice, in full within ten (10) business
                                         days from such Indemnitor’s receipt of a Liability Notice. The Indemnitors shall
                                         be entitled to determine among themselves what portion of the amount specified in the
                                         Liability Notice each will contribute, provided, however,
                                         that the obligation of each of the Indemnitors to the Company shall be joint and several,
                                         and therefore, the failure of any Indemnitor to timely contribute its share of the full
                                         amount due will not relieve any other Indemnitor of its obligation to contribute the
                                         full amount to the Company on a timely basis. If the Company does not receive the full
                                         amount due as specified in the Liability Notice, the Company may, at its sole discretion,
                                         proceed against any Indemnitor for the unpaid balance without having to proceed against
                                         any one or more other Indemnitor(s) or to exhaust any other remedies it may have with
                                         respect to any one or more other Indemnitor(s).

 

		(f)	With respect to amounts due
                                         to the Company under any Life Settlement Business Liabilities or otherwise hereunder,
                                         no Indemnitor shall be entitled to or exercise any right of set off against amounts,
                                         if any, due or claimed to be due from the Company to the Indemnitor or any other party.

 

		(g)	The Indemnitors hereby agree
                                         to indemnify the Company for all legal fees and expenses relating to the Life Settlement
                                         Business Liabilities and assume all liability relating to the litigation in the Supreme
                                         Court of the State of New York, index number 653646/2011, CMS Life Insurance Opportunity
                                         Fund, L.P., et al. v. the Company et. al. (the “Litigation”) including
                                         legal fees that have already been paid to the Company’s attorneys with regard to
                                         such matter. As of the date hereof, such legal fees amount to $60,000, which shall be
                                         wired to the Company within 10 days of the signature hereof.

 

		(h)	The Indemnitors agree that
                                         they will assist the Company in trying to become released from the Litigation, and any
                                         other litigation relating to the Life Settlement Business Liabilities and will take all
                                         reasonably necessary actions and file all reasonably necessary documents to assist the
                                         Company in extracting itself from all such proceedings.

 

		(i)	The Indemnitors each represent
                                         and warrant that:

 

		(i)	they have all requisite power
                                         and authority (corporate or other) to execute and deliver this Agreement and any other
                                         agreement and/or instrument the execution and delivery of which by the Company is contemplated
                                         hereby or which are ancillary hereto and to consummate the transactions contemplated
                                         hereby and thereby.

 

		(ii)	This Agreement, when executed
                                         and delivered by each of the Indemnitors, will constitute valid and legally binding obligation
                                         of such Indemnitor, legally enforceable against such Indemnitor in accordance with their
                                         respective terms subject to laws of general application relating to bankruptcy, insolvency
                                         and the relief of debtors and rules of law governing specific performance, injunctive
                                         relief or other equitable remedies.

 

		(j)	The indemnification of the
                                         Company of any loss related to the Life Settlement Business Liabilities shall not be
                                         assignable without the consent of the Company in its sole discretion.

 

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		3.	CONVERSION OF DEBENTURES;
                                         EXERCISE OF WARRANTS 

 

		3.1.	The Parties hereby acknowledge
                                         that the conversion and exercise of all outstanding Debentures and Warrants held by any
                                         of the Parties, into Conversion Stock, is a condition precedent to the Company entering
                                         into the Subscription Agreement and to the respective subscribing investors thereunder
                                         provided the necessary funding for the Company to continue operating and developing it
                                         business.

 

		3.2.	In order to incentivize each
                                         Party to convert exercise of all outstanding Debentures and Warrants held by each Party,
                                         the Company hereby agrees to reduce the exercise price of the Warrants to the par value
                                         of the Common Stock.

 

		3.3.	Following the execution of this
                                         Master Agreement and upon the amendment of the certificate of designation relating to
                                         the rights of the Series A Preferred Stock, all of the outstanding Debentures and Warrants,
                                         except for the Debentures and Warrants held by ALS, shall be automatically converted
                                         into Series A Preferred Stock and all outstanding Warrants shall be automatically exercised
                                         into Series A Preferred Stock against payment of the par value for such shares.Upon the
                                         execution of this Master Agreement, the Debentures held by ALS shall be automatically
                                         converted into Common Stock and the Warrants held by ALS shall be automatically exercised
                                         into Common Stock upon payment of the par value for such shares (collectively, the “Conversion”).

 

		3.4.	Schedule B hereto,
                                         contains a Capitalization Table which sets forth the number of Securities of the Company
                                         held by each Party prior to, and immediately following the consummation of the Arrangement
                                         Transactions and assuming the investment of the maximum amount under the Subscription
                                         Agreement (the “Capitalization Table”).

 

		3.5.	Each Party hereby confirms that
                                         following the issuance of Conversion Stock to each such Party pursuant to the Conversion
                                         as set forth herein, any and all amounts which it may have been entitled to receive from
                                         the Company shall be deemed repaid in full and neither the Debentures nor the Warrants
                                         shall confer any further rights on each such Party or obligations upon the Company, in
                                         all respects.

 

		3.6.	Each Debentureholder to the extent
                                         that such Debentureholder is a holder of any Debenture of the Company being converted
                                         and/or cancelled in consideration of the issuance hereunder of Conversion Stock to such
                                         Debentureholder, hereby agrees that the entire amount owed to such Debentureholder under
                                         such Debenture is being tendered to the Company in exchange for the applicable shares
                                         of Conversion Stock set forth on the Capitalization Table, and effective upon the Company’s
                                         and such Debentureholder execution and delivery of this Master Agreement, without any
                                         further action required by the Company or such Debentureholder, such note and all obligations
                                         set forth therein shall be immediately deemed repaid in full and terminated in their
                                         entirety, including, but not limited to, any security interest effected therein.

 

		3.7.	Series A Preferred Stock shall
                                         confer upon the holders thereof, all the rights and obligations granted to and imposed
                                         on the holders of Common Stock of the Company and the holders of Series A Preferred Stock
                                         shall vote together with the Common Stock on all matters brought before the stockholders
                                         of the Company as a single class.

 

		3.8.	The Series A Preferred Stock,
                                         or any part thereof, will be convertible on a one-to-one basis to the Company’s
                                         Common Stock, par value of $ 0.00001 each, subject to proportional adjustment for share
                                         splits, dividends or recapitalizations at the option of the holder of such Preferred
                                         A Stock. The Preferred A Stock will automatically convert on a one-to-one basis into
                                         Common Stock in the event of (a) the closing of a public offering of the Company’s
                                         shares netting at least US$20,000,000 (twenty million US dollars) to the Company ; or
                                         (b) the consent of the holders of a majority of the Preferred A Stock.

 

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		3.9.	Notwithstanding the aforementioned
                                         in Section 3.7 above, in the event of a Deemed Liquidation, the holders of Series A Preferred
                                         Stock shall be entitled to a liquidation preference of $6,634,256, plus interest of 1.2%
                                         per annum commencing from January 1, 2015, which shall be distributed pro rata among
                                         all Debentureholders other than ALS, in accordance with their pro rata holdings of Convertible
                                         Securities as set forth in Schedule A hereto, prior and in preference to any distribution
                                         of any available funds and assets of the Company to all other stockholders (the “Liquidation
                                         Preference”), provided, however, that in the event that
                                         the holders of Series A Preferred Stock would receive at least $6,634,256, plus any accrued
                                         interest at such date (before deduction or withholding of any tax) in any such Deemed
                                         Liquidation prior to calculating and applying the Liquidation Preference, then the holders
                                         of Series A Preferred Stock shall not receive the Liquidation Preference and this provision
                                         shall be null and void. For the avoidance of doubt, other than the Liquidation Preference
                                         the Series A Preferred Stock shall not entitle the holders thereof to any other preferential
                                         or special rights.

 

		3.10.	The Parties hereto will take
                                         all necessary actions to amend the Company's Amended and Restated Articles of Incorporation
                                         and/or By Laws, in order to approve an increase of the Company's authorized share capital
                                         of the Company to 1,000,000,000 shares of Common Stock and to increase the authorized
                                         share capital allotted to the Series A Preferred Stock and Series B Preferred Stock.

 

		4.	REVERSE/FORWARD STOCK
                                         SPLIT; DEREGISTRATION; SUSPENSION OF DUTY TO FILE WITH THE SEC

 

		4.1.	The Parties hereby acknowledge
                                         that despite the expectations that as a public reporting company, the Company will be
                                         able to leverage its public company equity to raise capital to help develop and grow
                                         its business and expand its operations, the Company has been unable to raise significant
                                         capital and has derived only minimal benefits from being a public reporting company.
                                         The low trading volume of the Common Stock and the Company's low market capitalization
                                         have reduced the traditional liquidity benefits of being a public reporting company to
                                         its stockholders. Additionally, the Common Stock has failed to attract any interest from
                                         institutional investors or market analysts, which could have created a more active and
                                         liquid market for the Common Stock.

 

		4.2.	In light of the aforementioned
                                         in Section 4.1 above and the fact that the Reverse Stock Split is expected to result
                                         in the elimination of expenses related to the Company's disclosure and reporting requirements
                                         under the Exchange Act and decrease the administrative expenses incurred by the Company
                                         in servicing a large number of record stockholders who own very small numbers of shares
                                         of the outstanding Common Stock, as holders of a majority of the Common Stock, the Parties
                                         hereby agree to approve and cause the Company to take all necessary actions and execute
                                         all forms and filings necessary for effecting the Reverse Stock Split at a ratio of not
                                         less than 1-for-101 and not more than 1-for-10,001 immediately followed by the Forward
                                         Stock Split of the Company's outstanding Common Stock, at any time after the execution
                                         of this Master Agreement, with the exact consolidation (and consequently, Forward Stock
                                         Split) ratio to be set within this range by the Company's Board, with primary purpose
                                         of reducing the number of record holders of the Company's Common Stock to fewer than
                                         300, so as to allow the Company to perform the Deregistration.

 

		4.3.	Subject to, contingent upon and
                                         immediately following the consummation of the Reverse Stock Split, as holders of a majority
                                         of the Common Stock, the Parties hereby agree to approve and cause the Company to take
                                         all necessary actions to effect the Deregistration (including but not limited to the
                                         filing of a Schedule 14C or Schedule 14A and Schedule 13E-3 with the SEC), whereby terminating
                                         the registration of the Company's Common Stock under Section 12(g) of the Exchange Act
                                         and suspending the Company's duty to file periodic reports and other information with
                                         the SEC.

 

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		5.	ISSUANCE OF RESTRICTED
                                         STOCK UNITS AND/OR OPTIONS TO EXECUTIVE OFFICERS AND EMPLOYEES; REPRICING OF EXERCISE
                                         PRICE FOR GRANTS TO ISRAELI EMPLOYEES UNDER 2013 PLAN 

 

		5.1.	The Parties hereby acknowledge
                                         that the business of the Company has varied since the execution of the Loan Satisfaction
                                         Agreement, and more specifically, over the course of the past fiscal year, and that the
                                         Company's success is dependent in large part upon its ability to develop its new product.
                                         In particular, the Parties hereby acknowledge that, due to the relatively early stage
                                         of the Company's new business, the Company's success is highly dependent on the abilities
                                         and continued service of certain of its and its Subsidiary's executive officers, to provide
                                         the necessary experience and background to develop the new product and that the loss
                                         of the services of such executive officers could impede the Company's ability to develop
                                         its augmented reality platform.

 

		5.2.	Therefore, as holders of a majority
                                         of the Common Stock, the Parties hereby agree to approve and to cause the Company and
                                         the Board to issue to certain executive officers and employees of the Company's and of
                                         the Subsidiary specified in Schedule C hereto, 155,000,000 shares of Restricted
                                         Stock Units and/or options to purchase Common Stock. The number of shares of Restricted
                                         Stock Units and/or options to be granted to each of such officers and employees shall
                                         be as set forth in Schedule C attached hereto (the “Grants”).

 

		5.3.	As holders of a majority of the
                                         Common Stock, the Parties hereby agree to approve and subject to the approval of the
                                         Board, to cause the Company to take all necessary actions to adopt a new equity incentive
                                         plan (the “New Plan”), which will include a sufficient number of shares
                                         subject to and reserved for issuance under such New Plan as shall be necessary in order
                                         to facilitate the Grants.

 

		5.4.	As holders of a majority of the
                                         Common Stock, the Parties hereby agree to approve and to cause the Company and the Board
                                         to effect an adjustment to the exercise price for the share options previously granted
                                         to Israeli employees under appendix B to the Company's 2013 Equity Incentive Plan, in
                                         order to bring the exercise price in line with the current market price of the Company’s
                                         Common Stock.

 

		6.	SUBSCRIPTION AGREEMENT

 

		6.1.	As holders of a majority of the
                                         Common Stock, the Parties hereby agree, subject to and conditioned upon the successful
                                         consummation of all Arrangement Transactions pursuant to this Master Agreement and the
                                         receipt of the approval of the Board, to approve the Company entering into a Subscription
                                         Agreement (the “Subscription Agreement”) with certain Parties hereto
                                         and/or certain third parties approved by the Board (the “Investors”),
                                         for the investment in the Company and the purchase of Common Stock of the Company for
                                         an aggregate purchase price of up to $5,000,000 (the “Investment Range”)
                                         at a pre-money valuation of no less than $6,000,000 (the “Valuation”).

 

		6.2.	As holders of a majority of the
                                         Common Stock, the Parties agree that the Board shall determine, and hereby authorize
                                         the Board to determine, at its sole discretion, the terms of the Subscription Agreement
                                         and the actual investment amount within such Investment Range, subject to the abovementioned
                                         Valuation.

 

		6.3.	Singulariteam hereby acknowledges
                                         that it has held discussions with the Company regarding leading the next investment round
                                         in the Company, provided, that the Company no longer be listed as a public reporting
                                         company, that the Conversion be performed and that the Indemnitors assume all Life Settlement
                                         Business Liabilities.

 

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		7.	STOCKHOLDER CONSENT;
                                         WAIVER; 

 

		7.1.	Each Party hereby irrevocably,
                                         unconditionally, completely and forever waives any and all rights, restrictions or limitations,
                                         title, interest, payment, claim or demand, including without limitation any pre-emptive
                                         rights, right of first refusal, co-sale rights, over-allotment rights, anti-dilution
                                         or capital adjustment rights, veto rights, appraisal rights, participation, or other
                                         rights that it may have by law, under the Company’s Certificate of Incorporation,
                                         the Securities Purchase Agreements, and/or under any agreement to which it is a party,
                                         with respect to or in connection with the Companies Securities, the Debentures and the
                                         Warrants and the conversion thereof, the Grants, the Subscription Agreement and the issuance
                                         of Common Stock or Series A Preferred Stock, the Arrangement Transactions and/or any
                                         other transaction contemplated thereunder or under this Master Agreement.

 

		7.2.	Each Party who hold, or will
                                         hold prior to the record date of such vote hereby approves and agrees to execute a written
                                         resolution by the stockholders, substantially in the form attached hereto as Schedule
                                         D, consenting to and approving the entering into execution and performance by
                                         the Company of all Arrangement Transactions and all other transactions and actions pursuant
                                         to this Master Agreement. The Parties acknowledge that they have each had a prior relationship
                                         with the Company and the matters in the resolution attached as Schedule D
                                         are part of the agreement made with the Company in order to finance its future activities.
                                         The agreements contained herein were made with the assumption that all of the Arrangement
                                         Transactions will take place. All Parties hereto forever wave any right to object to
                                         the Arrangement Transactions in any way or form.

 

		8.	MISCELLANEOUS

 

		8.1.	Headings. The headings
                                         of the Sections of this Agreement are for convenience of reference only and are not to
                                         be considered in construing this Agreement.

 

		8.2.	Notices. All notices or
                                         other communications hereunder shall be in writing and shall be given in person, by courier,
                                         by registered mail return receipt requested (registered international air mail if mailed
                                         internationally) or by facsimile or e-mail transmission with confirmed transmission thereof,
                                         addressed as set forth below, or such other address as a Party may designate to the other
                                         Parties in accordance with the aforesaid procedure:

 

	 	if to the
    Company:
	 	 	Infinity
    Augmented Reality, Inc. c/o Infinity Augmented Reality Israel Ltd.
	 	 	Mota Gur 9, PO Box 10230
    
	 	 	Petah Tikva, Israel
	 	 	Email: ortal@infinityar.com
	 	 	Fax: 972-72-228-8398
	 	 	Attn: Ortal Zanzury,
    CFO & Secretary
	 	 	 
	 	with a copy
    (which shall not constitute a notice) to:
	 	 	Pearl Cohen Zedek Latzer
    Baratz
	 	 	1 Azrieli Center, Round
    Tower, 18th Floor,
	 	 	Tel-Aviv 67021, Israel
	 	 	Email : BWaltuch@PearlCohen.com
	 	 	Fax: 972-(3)-607-3778
	 	 	Attn : Benjamin
    Waltuch, Adv.
	 	 	 
	 	If to any other Party:
	 	 	to the Party's address
    as set forth on Schedule E hereto.

 

All notices
and other communications delivered in person or by courier shall be deemed to have been delivered as of actual delivery thereof,
those given by facsimile or e-mail transmission shall be deemed delivered on the following business day after transmission with
confirmed transmission thereof, and all notices and other communications sent by registered mail (or air mail if the posting is
international) return receipt requested, on the date set forth on the return receipt.

 

    	10

    	 

    

 

		8.3.	Further Actions. At any
                                         time and from time to time, each Party agrees, without further consideration, to take
                                         such actions including the execution and delivery of further documents and voting its
                                         shares in the Company, as may be reasonably necessary to effectuate the purposes of this
                                         Agreement.

 

		8.4.	Expenses. Each Party shall
                                         bear its own costs and expenses related to the transactions contemplated hereby.

 

		8.5.	Entire Agreement; Amendment.
                                         This Agreement (together with the annex and schedules attached hereto), contains the
                                         entire understanding of the Parties with respect to its subject matter and supersedes
                                         all prior negotiations, discussions, commitments, representations, covenants and agreements
                                         and understandings, weather written or oral, between the Parties with respect to the
                                         subject matter hereof. This Agreement may not be amended, supplemented, discharged, terminated
                                         or altered except with the written consent of the Company and the Investors holding a
                                         majority of the Subscription Shares of the Company purchased under this Agreement, at
                                         the time of such change or amendment.

 

		8.6.	Successors and Assigns.
                                         Except as otherwise expressly limited herein, the provisions hereof shall inure to the
                                         benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators
                                         of the Parties hereto. None of the rights, privileges, or obligations set forth in, arising
                                         under, or created by this Agreement may be assigned without the prior consent in writing
                                         of each Party to this Agreement. The Life Settlement Business Liabilities shall not be
                                         assigned without the prior written consent of the Company.

 

		8.7.	Severability. In the event
                                         that any one or more of the provisions contained in this Agreement shall be declared
                                         invalid, void or unenforceable, the reminder of the provisions of this Agreement shall
                                         remain in full force and effect, and such invalid, void or unenforceable provision shall
                                         be interpreted in a manner which accomplishes, to the extent possible, the original purpose
                                         of such provision.

 

		8.8.	Delays or Omissions; Waiver.
                                         No delay or omission by any Party to exercise any right, power, or remedy accruing to
                                         either the Company or the Investors, upon any breach or default by another Party hereunder,
                                         shall impair any such right or remedy nor shall it be construed to be a waiver of any
                                         such breach or default, or any acquiescence therein or in any similar breach or default
                                         thereafter occurring. The observance of any term hereof may be only be expressly waived
                                         (either prospectively or retroactively and either generally or in a particular instance)
                                         in writing by the Party against which the waiver is sought and shall be effective only
                                         to the extent specifically set forth in such writing.

 

		8.9.	Taxes. Each of the Parties
                                         shall bear and pay the taxes and levies imposed on it (if any) under any law in relation
                                         with this Master Agreement and the transactions contemplated herein.

 

		8.10.	Governing Law and Jurisdiction.
                                         This Agreement shall be exclusively governed by and construed in accordance with the
                                         laws of the State of New York for contracts to be wholly performed in such state and
                                         without giving effect to the principles thereof regarding the conflict of laws. Each
                                         of the Parties consents to the exclusive jurisdiction of the federal courts whose districts
                                         encompass any part of the County of New York or the state courts of the State of New
                                         York sitting in the County of New York in connection with any dispute arising under this
                                         Supplement and hereby waives, to the maximum extent permitted by law, any objection,
                                         including any objection based on forum non conveniens, to the bringing of any such proceeding
                                         in such jurisdictions or to any claim that such venue of the suit, action or proceeding
                                         is improper. Nothing in this Section shall affect or limit any right to serve process
                                         in any other manner permitted by law.

 

    	11

    	 

    

 

		8.11.	WAIVER OF JURY TRIAL.
                                         EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY
                                         RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION HEREON OR ARISING
                                         OUT OF, UNDER OR IN CONNECTION WITH THIS SUPPLEMENT OR ANY COURSE OF CONDUCT, COURSE
                                         OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO.

 

		8.12.	Counterparts. This Agreement
                                         may be executed in any number of counterparts, each of which shall be deemed an original
                                         but all of which together shall constitute one and the same instrument. A Party may enter
                                         into this Agreement by signing any such counterpart and each counterpart may be signed
                                         and executed by the Parties and transmitted by facsimile or by electronic mail in PDF
                                         format and shall be as valid and effective as if executed as an original.

 

[the
remainder of this page was intentionally left blank]

 

    	12

    	 

    

 

Signature Page

 

Infinity Augmented Reality, Inc.- Master Agreement

 

IN WITNESS WHEREOF, this Agreement
has been duly executed as of the Effective Date:

 

	/s/ Motti Kushnir & Ortal Zanzuri

	 
	Infinity
    Augmented Reality, Inc.	 
	 	 
	By:
    Motti Kushnir	 
	Title:
    CEO	 
	By:
    Ortal Zanzuri	 
	Title:
    CFO	 
	 	 
	/s/
                                         David Steinberg

	 
	Platinum
    Partners Value Arbitrage Fund L.P.	 
	 	 
	By:
    David Steinberg	 
	 	 
	/s/
David Steinberg	 
	ALS
                                         Capital Ventures LLC

         

        On
        behalf of itself as agent for each of its affiliates on behalf of whom it holds the Satisfaction Amount
	 
	 	 
	By:
    David Steinberg	 
	Title:
    _____________	 
	 	 
	/s/ David
    Greenspan	 
	CS
    Master Holdings LLC	 
	 	 
	By:
    David Greenspan	 
	Title:
    ___________	 
	 	 
	/s/
    Moshe Oratz 	 
	MOSHE
                                         ORATZ

        
	 
	 	 
	/s/
    Yisroel Oratz 	 
	SBO
    Trust U/A/D 4/13/10	 
	 	 
	By:
    Yisroel Oratz	 
	Title:
    Trustee	 
	 	 
	/s/
    Moshe Oratz 	 
	MJSYRL
    Inc.	 
	 	 
	/s/ Moshe Hogeg & Kenges Rakishev 	 
	Singulariteam
    Fund LP	 
	 	 
	By:
    Moshe Hogeg 	 
	Title:
    Director and authorized Signatory	 
	By:
    Kenges Rakishev 	 
	Title:
    Director and authorized Signatory	 

 

 

13Exhibit 10.1

 

 

EMPLOYMENT
AGREEMENT

 

This EMPLOYMENT AGREEMENT (“Agreement”),
which is dated February 3, 2015 (the “Effective Date”), is made by and between ClearSign Combustion Corporation, located
at 12870 Interurban Avenue South, Seattle, Washington 98168 and hereinafter referred to as “Company”, and Stephen
E. Pirnat, whose address is __________, hereinafter referred to as “Executive.” The purpose of this Agreement is to
confirm the terms of the employment relationship between Company and Executive.

 

RECITALS

 

WHEREAS, Company wishes to retain
the services of Executive, and Executive wishes to render services to Company, as its President and Chief Executive Officer and,
until otherwise removed in order to separate the roles of President/Chief Executive Officer and Chairman, the Chairman of the
Board of Directors (for which position no additional compensation will be paid);

 

WHEREAS, Company and Executive wish
to set forth in this Agreement the duties and responsibilities that Executive has agreed to undertake on behalf of Company, and
the responsibilities that Company will owe to Executive.

 

THEREFORE, in consideration of the
foregoing and of the mutual promises contained in this Agreement, Company and Executive (who are sometimes individually referred
to as a “Party” and collectively referred to as the “Parties”) agree as follows:

 

AGREEMENT

 

		1.	TERM.

 

Company hereby employs Executive as Company’s
President and Chief Executive Officer pursuant to the terms of this Agreement and Executive hereby accepts employment with Company
pursuant to the terms of this Agreement. This Agreement is effective on the Effective Date and will continue until December 31,
2017 (the “Initial Term”). Before the expiration of the second year of the Initial Term, the Compensation Committee
will review Executive’s performance and, if Executive’s performance is satisfactory, the term of Executive’s
employment will be extended for an additional year (the “Extension”). During the third year of the Initial Term and
each one year Extension thereafter, the Compensation Committee will review Executive’s performance and, if it is satisfactory,
continue Executive’s employment for an additional one year Extension. In this Agreement, the word “Term” shall,
depending on the context used, refer to the Initial Term or to any subsequent Extension. Irrespective of the foregoing, this Agreement
may be terminated pursuant to Section 11 or Section 12 below.

 

    	 

    	 

    

 

		2.	GENERAL DUTIES.

 

(a) Service as President/Chief Executive
Officer. Executive shall devote his entire productive time, ability, and attention to Company’s business during
Executive’s employment, provided that Executive shall be permitted to serve on up to two boards of directors other than
that of the Company during Executive’s employment. Executive shall report to Company’s Board of Directors (the “Board”)
and agrees to keep the Board fully informed with regard to critical issues affecting the value and reputation of Company. Furthermore,
in his capacity as President and Chief Executive Officer, Executive shall be primarily responsible for the exercise of the powers
and the discharge of the duties of Company that are not reserved to the Board, and shall have the authority and control over all
personnel of Company (with the exception of the powers reserved to the Board pursuant to Section 4 of Company’s bylaws to
appoint and to terminate or remove executive officers or subordinate officers), shall be responsible for managing the overall
operations of Company, and shall act as the main point of communication between the Board and Company’s operations. Executive
shall do and perform all services, acts, or things necessary or advisable to discharge his duties under this Agreement, and such
other duties as are commonly performed by an employee of his rank in a publicly traded corporation or which may, from time to
time, be prescribed by Company through the Board. Executive agrees to cooperate with and work to the best of his ability with
Company’s management team, which includes the Board and the officers and other employees, to continually improve Company’s
reputation in its industry for quality products and performance.

 

(b)Service as a Director and Chairman of
the Board. For a limited time, which shall be determined by the Board, Executive will act as the Chairman of the Board
without additional compensation. Executive acknowledges that he may be removed as Chairman of the Board, in order to separate
the roles of President/Chief Executive Officer and Chairman. Executive further acknowledges that any removal from the office of
Chairman of the Board will not constitute a breach of this Agreement and will not entitle Executive to severance or any other
payment under this Agreement. Upon termination of Executive’s employment, Executive shall be deemed to have resigned as
a director unless otherwise provided by resolution of the Board acting by a majority of directors other than Executive.

 

		3.	NONSOLICITATION AND PROPRIETARY PROPERTY AND CONFIDENTIAL
INFORMATION PROVISIONS.

 

As a condition
of his employment with Company, Executive has executed an Employee Intellectual Property Assignment and Nondisclosure Agreement,
the terms of which are included by reference into this Agreement.

 

		4.	COMPLIANCE WITH SECURITIES LAWS.

 

Executive acknowledges that he is subject
to the provisions of Sections 10 and 16 of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder.
Executive acknowledges that Sections 10 and 16 and the rules and regulations promulgated thereunder may prohibit Executive from
selling or transferring his securities in Company. Executive agrees that he will comply with Company’s policies, as stated
from time to time, relating to selling or transferring Company’s securities.

 

    	 

    	 

    

 

		5.	COMPENSATION.

 

(a)Annual Salary. Company shall pay to
Executive an annual base salary in the amount of $350,000. The salary paid during Executive’s employment shall be referred
to in this Agreement as the “Annual Salary”. The Annual Salary shall be subject to any tax withholdings and/or employee
deductions that are applicable. The Annual Salary shall be paid to Executive in equal installments in accordance with the periodic
payroll practices of Company for its employees. The Annual Salary will be subject to review and increase at the sole discretion
of the Board no less frequently than annually.

 

(b)Bonus. At least annually, Executive and
the Compensation Committee of the Board of Directors shall meet to establish (i) performance standards and goals (“Standards
and Goals”) to be met by Executive and (ii) cash bonus targets based on the Standards and Goals that are achieved. The Standards
and Goals will support a cash bonus of 60% of Executive’s Annual Salary. Notwithstanding the previous sentence, the bonus
for the year of employment ending December 31, 2015 shall be a minimum of 30% of the Executive’s Annual Salary for 2015,
provided that Executive remains employed under this Agreement through such date and has not received a notice of termination by
the Company prior to such date. The Standards and Goals and the bonus targets shall be mutually agreed to by Executive and the
Compensation Committee. Nothing in this subsection (b) shall prevent Executive and the Compensation Committee from mutually agreeing
to alternatives to the computation of the bonus to be paid to Executive in accordance with this subsection (b) (the “Bonus”),
which may be implemented and paid to Executive in place of the Bonus described herein. The Bonus shall be subject to any applicable
tax withholdings and/or employee deductions.

 

(c)Cost of Living Adjustment.
Commencing as of January 1, 2016, and on each January 1st thereafter, the then effective Annual Salary shall be increased (but
not decreased) by an amount which shall reflect the increase, if any, in the cost of living during the previous 12 months by adding
to the Annual Salary an amount computed by multiplying the Annual Salary by the percentage by which the level of the Consumer
Price Index for the Seattle Metropolitan Area, as reported on January 1st of the new year by the Bureau of Labor Statistics of
the United States Department of Labor has increased over its level as of January 1st of the prior year.

 

(d)Participation In Employee Benefit Plans.
Executive shall have the same rights, privileges, benefits and opportunities to participate in any of Company’s employee
benefit plans which may now or hereafter be in effect on a general basis for executive officers or employees. During Executive’s
employment, the Company shall provide, at Company’s sole expense, medical health insurance (including dental) benefits for
Executive, his spouse and children, under the same policy or policies generally available to other executive officers of Company.
At the discretion of the Board, Company may also provide, at its sole expense (i) disability insurance which, in the event of
Executive’s disability, will replace no less than 60% of the Annual Salary being paid to Executive at the time the disability
occurred and (ii) life insurance in an amount to be agreed upon by the Board and Executive. Irrespective of the foregoing, Company
may change any benefits contractor, or discontinue any of the foregoing benefits without replacement, in its sole discretion,
and any such change or discontinuance will not be a breach of this Agreement. In the event Executive receives payments from the
disability insurer, Company shall have the right to offset such payments against the Annual Salary otherwise payable to Executive
during the period for which such payments are made.

 

    	 

    	 

    

 

		6.	EQUITY COMPENSATION.

 

(a)On the Effective
Date, Company shall issue to Executive an option for the purchase of 100,000 shares of Company’s common stock pursuant to
the ClearSign Combustion Corporation 2011 Equity Incentive Plan, as amended from time to time (the “Plan”). Such option
shall be an incentive stock option to the extent permitted under the Internal Revenue Code (the “Code”). The per share
exercise price of such option will be equal to the closing price of Company’s common stock on the grant date thereof and
the term of such option shall be 10 years. Such option will vest entirely on the first anniversary of the Effective Date (or,
alternatively, such option shall be immediately exercisable but the shares issuable upon exercise thereof shall be subject to
a Company repurchase right at the exercise price in the event Executive’s employment hereunder terminates, which repurchase
right shall lapse upon the first anniversary of the Effective Date).

 

(b)In addition to the
foregoing, in the event (1) Company’s shareholders duly approve an increase in the number of shares issuable under the Plan
or approve the adoption of a new equity incentive plan, or (2) the number of shares issuable under the Plan are sufficiently increased
by operation of Section 3.2(i) thereunder on or before the date of the next annual meeting of Company shareholders following the
Effective Date, then Company shall grant Executive an additional option to purchase at least 200,000 shares of common stock. Such
option shall be an incentive stock option to the extent permitted under the Code. The per share exercise price of such option
will be equal to the closing price of Company’s common stock on the grant date thereof and the term of such option shall
be 10 years. The right to purchase 100,000 shares of common stock will vest on the first anniversary of the grant date and the
right to purchase 100,000 shares of common stock will vest on the second anniversary of the grant date (or, alternatively, such
option shall be immediately exercisable but the shares issuable upon exercise thereof shall be subject to a Company repurchase
right at the exercise price in the event Executive’s employment hereunder terminates, which repurchase right shall lapse
as to 100,000 shares of common stock on the first anniversary of the grant date and as to 100,000 shares of common stock on the
second anniversary of the grant date). Executive acknowledges that the requisite shareholder approval described above may not
be obtained and that a sufficient increase in the number of Plan shares by operation of Section 3.2(i) of the Plan may not occur
on or before the date of the next annual meeting of shareholders. In such case, the number of option shares specified in this
Section 6(b) will be reduced as determined by the compensation committee of Company’s board of directors in its sole discretion,
provided that Company shall negotiate with Executive in good faith as to the provision of substitute consideration to Executive
to the extent reasonably practicable.

 

		7.	REIMBURSEMENT OF BUSINESS EXPENSES AND MOVING ALLOWANCE.

 

(a)Reimbursement of Business
Expenses. Company shall promptly reimburse Executive for all reasonable business expenses incurred by Executive in connection
with the business of Company. However, each such expenditure shall be reimbursable only if Executive furnishes to Company adequate
records and other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of each such expenditure as an income tax deduction.

 

    	 

    	 

    

 

(b)Relocation Allowance. Company shall
reimburse Executive for all reasonable relocation expenses actually and properly incurred by Executive’s move to Seattle,
Washington from Tulsa, Oklahoma. Such expenses shall include:

 

(i)Moving Expenses. All reasonably incurred
expenses to move Executive’s home furnishings and personal property to Seattle, Washington, such amount not to exceed $24,000.

 

(ii)Closing Costs. Customary closing costs in
connection with the sale of Executive’s home in Tulsa, Oklahoma, including realtor commissions, and excluding property repairs,
such total amount not to exceed $40,000.

 

(iii)Interim Living Expenses. For a period of
6 months, Company shall pay to Executive the sum of $6,300 per month toward living expenses incurred as a result of Executive’s
move to Seattle, Washington. Such expenses shall include, but not be limited to, accommodations at hotels, meal expenses, rent
for a personal residence, and any additional expenses agreed to by Company.

 

(iv)Income Tax Consequences. Payment and/or
provision of the relocation expenses shall be subject to any federal or state withholding as may be applicable.

 

		8.	PAID TIME OFF.

 

Executive
shall be entitled to four weeks of paid time off each year; provided, however, failure to use paid time off by the end
of the year in which it is earned will prevent the accumulation of additional paid time off in excess of four weeks.

 

		9.	INDEMNIFICATION OF LOSSES.

 

So long as Executive’s actions were
taken in good faith and in furtherance of Company’s business and within the scope of Executive’s duties and authority,
Company shall indemnify and hold Executive harmless to the full extent of the law from any and all claims, losses and expenses
sustained by Executive as a result of any action taken by him to discharge his duties under this Agreement and Company shall defend
Executive, at Company’s expense, in connection with any and all claims by stockholders or third parties.

 

		10.	PERSONAL CONDUCT.

 

Executive agrees promptly and faithfully
to comply with all present and future policies, requirements, directions, requests and rules and regulations of Company in connection
with Company’s business. Executive further agrees to conform to all laws and regulations and not at any time to commit any
act or become involved in any situation or occurrence tending to bring Company into public scandal, ridicule or which will reflect
unfavorably on the reputation of Company.

 

    	 

    	 

    

 

		11.	TERMINATION FOR CAUSE.

 

The Board may terminate Executive for cause immediately, without
notice, if Company reasonably concludes that Executive has committed fraud, theft, embezzlement, misappropriation of Company funds
or other property, or any felony. The Board may also terminate Executive for cause for any of the following:

 

(a)breach by Executive of any material provision of
this Agreement;

 

(b)violation by Executive of any statutory or common
law duty of loyalty to Company;

 

(c)a material violation by Executive of Company’s
employment policies; or

 

(d)commission of such acts of dishonesty, gross negligence,
or willful misconduct as would prevent the effective performance of Executive’s duties or which result in material harm
to Company or its business.

 

The Board may terminate this Agreement for cause by
giving written notice of termination to Executive, provided, however, if the Board declares Executive to be in default of this
Agreement under subsection (a) above because Executive fails to substantially perform his material duties and responsibilities
under this Agreement, the Board shall deliver a written demand for substantial performance of such duties and responsibilities
to Executive. Such demand must identify the manner in which the Board believes that Executive has not substantially performed
his duties, and Executive shall have a period of 30 days to correct the deficient performance. Upon termination for cause, the
obligations of Executive and Company under this Agreement shall immediately cease. Such termination shall be without prejudice
to any other remedy to which Company may be entitled either at law, in equity, or under this Agreement. If Executive’s employment
is terminated pursuant to this Section 11, Company shall pay to Executive (i) Executive’s accrued but unpaid Annual Salary
and the value of unused paid time off through the effective date of the termination; (ii) Executive’s accrued but unpaid
Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination. Executive shall not be entitled
to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants,
or as may be required by applicable law.

 

In the event of a termination of Executive’s
employment pursuant to this Section 11, the disposition of Executive’s options granted pursuant to Section 6 hereof shall
be governed by the applicable terms and conditions of the Plan and any award agreement executed in respect of such options.

 

 

		12.	TERMINATION WITHOUT CAUSE.

 

(a)Death. Executive’s employment
shall terminate upon the death of Executive. Upon such termination, the obligations of Executive and Company under this Agreement
shall immediately cease.

 

(b)Disability. The Board reserves the
right to terminate Executive’s employment upon 30 days written notice if, for a period of 90 days, Executive is prevented
from substantially discharging the essential functions of his position as President and Chief Executive Officer, with or without
reasonable accommodation, due to any physical or mental disability.

 

    	 

    	 

    

 

(c)Election By Executive. Executive’s
employment may be terminated at any time by Executive upon not less than 30 days written notice by Executive to the Board.

 

(d)Election By Company. Executive’s
employment may be terminated at any time by Company upon not less than 30 days written notice by the Board to Executive.

 

(e)Termination Due to a Change in Control.
Executive’s employment may be terminated upon a Change in Control. For purposes of this Agreement, the term “Change
in Control” shall mean the sale or disposition by Company to an unrelated third party of substantially all of its business
or assets, or the sale of the capital stock of Company in connection with the sale or transfer of a Controlling Interest in Company
to an unrelated third party, or the merger or consolidation of Company with another corporation as part of a sale or transfer
of a Controlling Interest in Company to an unrelated third party. For purposes of this definition, the term “Controlling
Interest” means the sale or transfer of Company’s securities representing greater than 50% of the voting power. It
will be presumed that a termination is a termination under this subsection (e) rather than a termination under subsection (d)
(Election by Company) if Executive’s employment is terminated during the period that begins when negotiations for the Change
in Control begin and ends on the six month anniversary of the closing of the Change in Control transaction and such termination
is not a termination for cause pursuant to Section 11 or a termination resulting from Executive’s death, disability, or
election pursuant to subsections (a), (b) or (c) of this Section 12.

 

If Executive’s employment is terminated pursuant
to subsections (a), (b), or (c) of this Section 12, Company shall pay to Executive (i) Executive’s accrued but unpaid Annual
Salary and the value of unused paid time off through the effective date of the termination; (ii) Executive’s accrued but
unpaid Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination. Executive shall not be
entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants,
or as may be required by applicable law.

 

If Executive’s
employment is terminated pursuant to subsection (d) of this Section 12, Company shall pay to Executive (i) Executive’s accrued
but unpaid Annual Salary and the value of unused paid time off through the effective date of the termination; (ii) Executive’s
accrued but unpaid Bonus, if any; (iii) business expenses incurred prior to the effective date of termination; and (iv) severance
consisting of the greater of (A) Executive's Annual Salary, less legal deductions, for a period of the remaining number of months
in the Initial Term of this Agreement; or (B) one-year's Annual Salary, less legal deductions. Company
may elect, in its sole discretion, to pay these salary payments in one lump sum or on regular pay days for the one year period
following termination of Executive’s employment. For a termination under subsection (d), Executive shall be entitled, at
Executive’s expense, to continue to participate in employee benefit plans described in Section 5(d) for a period of one
year following termination of Executive’s employment, to the extent provided in such plans for terminated participants,
or as may be required by applicable law. 

 

    	 

    	 

    

 

If Executive’s employment is terminated
pursuant to subsection (e) of this Section 12, Executive shall be entitled to receive (i) Executive’s accrued but unpaid
Annual Salary and the value of unused paid time off through the effective date of the termination; (ii) Executive’s accrued
but unpaid Bonus, if any; (iii) business expenses incurred prior to the effective date of termination; and (iv) an amount equal
to the Annual Salary for one year, less legal deductions. In addition, any equity award that was scheduled to vest (or which carries
a Company repurchase right scheduled to lapse) following the termination of Executive’s employment will vest or lapse (as
applicable) immediately upon the termination of Executive’s employment pursuant to subsection (e).

 

In the event of a termination of Executive’s
employment pursuant to subsections (a), (b), (c) and (d) above, the disposition of Executive’s options granted pursuant
to Section 6 hereof shall be governed by the applicable terms and conditions of the Plan and any award agreement executed in respect
of such options; provided, however, for a termination under Subsection (d), Executive shall be entitled to accelerated
vesting of all unvested options granted under Section 6 hereof (or, if applicable, Company’s repurchase right with respect
thereto shall lapse) as of the effective date of such termination.

 

With the exception of
the terms of this Section 12 and any obligations, duties and responsibilities Executive has under the Employee Intellectual
Property Assignment and Nondisclosure Agreement, upon termination of Executive’s employment
the obligations of Executive and Company under this Agreement shall immediately cease.

 

		13.	MISCELLANEOUS.

 

(a)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.

 

(b)Cooperation. Each Party agrees, without
further consideration, to cooperate and diligently perform any further acts, deeds and things and to execute and deliver any documents
that may from time to time be reasonably necessary or otherwise reasonably required to consummate, evidence, confirm and/or carry
out the intent and provisions of this Agreement, all without undue delay or expense.

 

(c)Interpretation.

 

(i)Entire Agreement/No Collateral Representations.
Each Party expressly acknowledges and agrees that this Agreement, including all exhibits attached hereto: (1) is the final, complete
and exclusive statement of the agreement of the Parties with respect to the subject matter hereof; (2) supersedes any prior or
contemporaneous agreements, promises, assurances, guarantees, representations, understandings, conduct, proposals, conditions,
commitments, acts, course of dealing, warranties, interpretations or terms of any kind, oral or written (collectively and severally,
the “Prior Agreements”), and that any such prior agreements are of no force or effect except as expressly set forth
herein; and (3) may not be varied, supplemented or contradicted by evidence of Prior Agreements, or by evidence of subsequent
oral agreements. Any agreement hereafter made shall be ineffective to modify, supplement or discharge the terms of this Agreement,
in whole or in part, unless such agreement is in writing and signed by the Party against whom enforcement of the modification
or supplement is sought.

 

    	 

    	 

    

 

(ii)Waiver. No breach of any agreement or provision
herein contained, or of any obligation under this Agreement, may be waived, nor shall any extension of time for performance of
any obligations or acts be deemed an extension of time for performance of any other obligations or acts contained herein, except
by written instrument signed by the Party to be charged or as otherwise expressly authorized herein. No waiver of any breach of
any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or a waiver
or relinquishment of any other agreement or provision or right or power herein contained.

 

(iii)Remedies Cumulative. The remedies of each
Party under this Agreement are cumulative and shall not exclude any other remedies to which such Party may be lawfully entitled.

 

(iv)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.

 

(v)No Third Party Beneficiary. Notwithstanding
anything else herein to the contrary, the parties specifically disavow any desire or intention to create any third party beneficiary
obligations, and specifically declare that no person or entity, other than as set forth in this Agreement, shall have any rights
hereunder or any right of enforcement hereof.

 

(vi)Headings; References; Incorporation; Gender.
The headings used in this Agreement are for convenience and reference purposes only, and shall not be used in construing or interpreting
the scope or intent of this Agreement or any provision hereof. References to this Agreement shall include all amendments or renewals
thereof. Any exhibit referenced in this Agreement shall be construed to be incorporated in this Agreement. As used in this Agreement,
each gender shall be deemed to include the other gender, including neutral genders or genders appropriate for entities, if applicable,
and the singular shall be deemed to include the plural, and vice versa, as the context requires.

 

(d)Enforcement.

 

(i)Applicable Law. This Agreement and the rights
and remedies of each Party arising out of or relating to this Agreement (including, without limitation, equitable remedies) shall
be solely governed by, interpreted under, and construed and enforced in accordance with the laws (without regard to the conflicts
of law principles thereof) of the State of Washington, as if this agreement were made, and as if its obligations are to be performed,
wholly within the State of Washington.

 

    	 

    	 

    

 

(ii)Consent to Jurisdiction and Venue. Any action
or proceeding arising out of or relating to this Agreement shall be filed in and heard and litigated solely before the state or
federal courts of Washington within King County.

 

(iii)Attorneys’ Fees. If court proceedings
are required to enforce any provision of this Agreement, the substantially prevailing or successful Party shall be entitled to
an award of the reasonable and necessary expenses of litigation, including reasonable attorneys’ fees.

 

(e)No Assignment of Rights or Delegation of Duties
by Executive. Executive’s rights and benefits under this Agreement are personal to him and therefore (i) no such
right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer; and (ii) Executive may not delegate
his duties or obligations hereunder.

 

(f)Notices. Unless otherwise specifically
provided in this Agreement, all notices, demands, requests, consents, approvals or other communications (collectively and severally
called “Notices”) required or permitted to be given hereunder, or which are given with respect to 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 private overnight delivery service (which forms of Notice shall be deemed to have been given upon confirmed
delivery by the delivery agency), or (C) by mailing in the United States mail by registered or certified mail, return receipt
requested, postage prepaid (which forms of Notice shall be deemed to have been given upon the 5th business day following the date
mailed). Notices shall be addressed to the address hereinabove set forth in the introductory paragraph of this Agreement, or to
such other address as the receiving Party shall have specified most recently by like Notice, with a copy to the other Parties
hereto. Any Notice given to the estate of a Party shall be sufficient if addressed to the party as provided in this subparagraph.

 

(g)Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same
instrument, binding on all parties hereto. Any signature page of this Agreement may be detached from any counterpart of this Agreement
and reattached to any other counterpart of this Agreement identical in form hereto by having attached to it one or more additional
signature pages.

 

(h)Execution by All Parties Required to be Binding;
Electronically Transmitted Documents. This Agreement shall not be construed to be an offer and shall have no force and
effect until this Agreement is fully executed by all Parties hereto. 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.

 

    	 

    	 

    

 

IN WITNESS WHEREOF, the parties
have executed this Agreement.

 

	 	Company:	 
	 	 	 	 
	 	CLEARSIGN COMBUSTION CORPORATION	 
	 	 	 	 
	 	By 	/s/ Lon E. Bell	 
	 	    	Lon E. Bell, Ph.D.	 
	 	Its: 	Chair of the Compensation Committee	 
	 	 	 	 
	 	Executive:	 
	 	 	 	 
	 	 	/s/ Stephen E. Pirnat	 
	 	 	Stephen E. Pirnat

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