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Soliciting Material Pursuant to §240.14a-12
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ClearSign
Combustion Corporation
(Name of Registrant as Specified in Its
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if Other Than the Registrant)
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PRELIMINARY
COPY—SUBJECT TO COMPLETION DATED NOVEMBER 19, 2018
CLEARSIGN COMBUSTION
CORPORATION
12870 Interurban
Avenue South
Seattle, Washington
98168
REQUEST REVOCATION
STATEMENT
BY
THE BOARD OF
DIRECTORS OF CLEARSIGN COMBUSTION CORPORATION
IN OPPOSITION
TO
A REQUEST SOLICITATION
BY ANTHONY DIGIANDOMENICO
November [___],
2018
PLEASE SIGN,
DATE AND MAIL THE ENCLOSED GOLD REQUEST REVOCATION CARD TODAY
This Request Revocation
Statement (“Request Revocation Statement”) is being sent by the current Board of Directors (the “Board”)
of ClearSign Combustion Corporation, a Washington corporation (“ClearSign,” the “Company,” “we,”
“us,” and “our,”), to the holders of outstanding shares of the Company’s common stock, par value
$0.0001 per share (the “Common Stock”), in connection with the Board’s opposition to the solicitation statement
(the “DiGiandomenico Request Solicitation”) made by Anthony DiGiandomenico. This Request Revocation Statement and the
enclosed
GOLD
Request Revocation Card are first being mailed to shareholders on or about November [___], 2018.
Mr.
DiGiandomenico is asking you to join him in demanding the Company hold a special meeting of its shareholders for the
purpose of removing our current directors and replacing them with a slate of nominees selected solely by him. In other
words, Mr. DiGiandomenico wants you to turn over control of the Board and the Company to him. The Board asks you to consider
whether Mr. DiGiandomenico, a holder of 0.42% of the Company’s Stock, should be able to take control of the Board with
his slate of five nominees, none of whom have yet been formally disclosed to you or to the Company.
Your
Board always welcomes constructive input from all shareholders, including from Mr. DiGiandomenico. This is particularly the case
recently with respect to our ongoing Board refreshment and management transition processes already well underway. Indeed, we recently
added Ms. Meline to the Board in February 2018 after she was recommended by Mr. DiGiandomenico to us. As part of our multiple attempts
to resolve our differences with Mr. DiGiandomenico through settlement, we also recently proposed to hold our annual shareholder
meeting earlier than usual in 2019 for shareholders to more expeditiously consider proper and valid proposals from him. We made
this constructive proposal to accommodate Mr. DiGiandomenico’s desire to have certain business brought before you as quickly
as possible, while sparing the Company and all shareholders the cost, distraction and duplication of having an annual and special
meeting with little time lapsing in between.
We
continue to welcome Mr. DiGiandomenico’s and the rest of our shareholders’ fundamental right to formally and informally
take part in the election of directors and other proposals that may properly and validly come before meetings of shareholders.
A special meeting, however, is, in our view and under the current circumstances, unnecessary and not in the best interests of the
Company and all shareholders for the reasons set forth in the section of this Request Revocation Statement titled “Reasons
to Reject Mr. DiGiandomenico’s Request.”
The Board urges
you to reject the request by Mr. DiGiandomenico to schedule a special meeting and to rely instead on the process provided by the
annual meeting of shareholders. Through this process, the independent Nominating and Corporate Governance Committee and the shareholder
nomination process, which is available to Mr. DiGiandomenico, work together to create a Board that meets the needs of the Company
and serves the best interests of
all
of our shareholders.
You may have
received a White Request Card from Mr. DiGiandomenico. Please note that you are
not
required to consent to calling a special
meeting, and you are not required to complete or deliver any request card to Mr. DiGiandomenico’s agent. We ask that you
do the following:
Take no action in response to the solicitation
by Mr. DiGiandomenico and do
not
sign any White Request Card sent to you by Mr. DiGiandomenico;
If you have signed Mr. DiGiandomenico’s White
Request Card, you may revoke that consent by signing, dating and immediately mailing a later dated GOLD Request Revocation Card,
which is enclosed; and
Even if you have not submitted a White Request
Card to Mr. DiGiandomenico’s agent, you may nevertheless communicate that you do not believe a special meeting is necessary
or express your opposition to calling a special meeting by signing, dating and mailing the accompanying GOLD Request Revocation
Card to us.
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YOUR BOARD HAS UNANIMOUSLY
DETERMINED THAT MR. DIGIANDOMENICO’S SOLICITATION IS NOT IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS
YOUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU
NOT
SIGN ANY WHITE REQUEST CARD
SENT TO YOU BY MR. DIGIANDOMENICO OR HIS AGENT
WHETHER OR NOT YOU
HAVE PREVIOUSLY EXECUTED THE WHITE REQUEST CARD, YOUR BOARD URGES YOU TO
SIGN, DATE AND DELIVER THE ENCLOSED
GOLD
REQUEST REVOCATION CARD
In accordance with
Washington law and the Company’s bylaws, the record date for determining the shareholders entitled to demand a special meeting
is the first date on which a signed written request is delivered to the Company. Mr. DiGiandomenico anticipates delivering a signed
written request to the Company’s principal place of business on [_______], 2018 (the “Record Date”). Only shareholders
of record as of the Record Date may execute, withhold or revoke requests with respect to the DiGiandomenico Request Solicitation.
As of the Record Date, there were [ ] shares of the Company’s Common Stock outstanding. Each share of the Company’s
Common Stock outstanding as of the Record Date will be entitled to one vote.
In order for the request to call a special
meeting to be effective, the Company must receive properly completed and unrevoked written requests signed by a sufficient number
of shareholders within 60 days of the Record Date. Therefore, Mr. DiGiandomenico will need to deliver properly completed and unrevoked
written requests to call the special meeting from holders of at least 10% of the shares of our Common Stock outstanding as of the
close of business on [__________], 2018.
THE COMPANY IS SEEKING ONLY A REVOCATION
OF WHITE REQUEST CARDS RELATING TO THE CALLING OF THE SPECIAL MEETING. THE COMPANY IS NOT CURRENTLY SEEKING YOUR PROXY WITH RESPECT
TO ANY MATTER.
If you have any
questions about giving your consent revocation or require assistance, please contact:
1407 Broadway
New York, New York
10018
Please Call Toll
Free: 800-322-2885
Email: proxy@mackenziepartners.com
TABLE OF CONTENTS
FORWARD-LOOKING
STATEMENTS
This Request Revocation
Statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Forward-looking statements are subject to risks, uncertainties and assumptions and are identified by words such as “expects,”
“estimates,” “projects,” “anticipates,” “believes,” “intends,” “plans,”
“may,” “pending,” “continues,” “should,” “could” and other similar
words. In particular, these include statements relating to future actions; prospective products, applications, customers, or technologies;
future performance or results of prospective products; future expenses; and future financial results. These forward-looking statements
are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience
and our present expectations or projections. All statements, other than statements of historical facts, included in this Request
Revocation Statement that address activities, events or developments that ClearSign expects, believes or anticipates will or may
occur in the future are forward-looking statements. These statements are based on assumptions made by ClearSign based on its experience,
perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate
in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond
ClearSign’s control. These risks include, but are not limited to, our limited operating history; our ability to successfully
develop and implement our technology; emerging competition and rapidly advancing technology in our industry that may outpace our
technology; change in government regulations that could substantially reduce, or even eliminate, the need for our technology; the
impact of competitive or alternative products, technologies and pricing; and our success at managing these risks.
These and other
risks are further described in ClearSign’s annual report on Form 10-K for the year ended December 31, 2017, subsequent quarterly
reports on Form 10-Q, and other reports filed with the Securities and Exchange Commission (the “SEC”), which can be
reviewed at http://www.sec.gov, or which can be received by contacting ClearSign at 12870 Interurban Avenue South, Seattle, Washington
98168, (206) 673-4848. Investors are cautioned that forward-looking statements are not guarantees of future performance and that
actual results or developments may differ materially from those projected in the forward-looking statements. Except as required
by law, ClearSign disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result
of new information, future events, or otherwise. ClearSign assumes no obligation to update any forward-looking statement as of
any future date.
DESCRIPTION
OF THE DIGIANDOMENICO REQUEST SOLICITATION
As set forth in
the DiGiandomenico Request Solicitation and related materials filed with the SEC, Mr. DiGiandomenico is soliciting your agreement
to join him in demanding a special meeting of the Company’s shareholders to vote on the following proposals (collectively,
the “DiGiandomenico Proposals”) to:
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(i)
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remove, without cause, the five current directors from the Board and any person nominated, appointed or elected to the Board to fill any vacancy or newly-created directorship prior to the time that any of the actions proposed to be taken by the DiGiandomenico Request Solicitation may become effective;
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(ii)
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consider five nominees (the “DiGiandomenico Nominees”)
as directors to replace the current Board to serve as directors on the Board until the 2019 annual meeting of shareholders and
until their respective successors are duly elected and qualified, in opposition to the Company’s director nominees;
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(iii)
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approve the repeal of each provision or amendment to
the Company’s articles of incorporation and by-laws since November 14, 2011, the last date that both the certificate of
incorporation and by-laws were filed publicly with the Securities and Exchange Commission, that is or has been adopted by the
Board (and not by the shareholders of the Company) subsequent to November 14, 2011;
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(iv)
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vote for the ratification of the appointment of Gumbiner Savett Inc. as the Company’s independent registered public accounting firm for the year ending December 31, 2018; and
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(v)
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transact such other business as may properly come before the special meeting.
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REASONS TO REJECT
MR. DIGIANDOMENICO’S REQUEST
Mr. DiGiandomenico
asks that you join him in calling for a special meeting of the Company’s shareholders to, among other things, remove the
five members of your duly elected (or in the case of Mr. Hoffman, appointed) Board and replace them with the DiGiandomenico Nominees.
As noted below,
there are several compelling reasons to refuse to join with Mr. DiGiandomenico in calling for a special meeting and to reject the
DiGiandomenico Proposals:
The Board
Appointed Two New Independent Directors in 2018 and Continues to Actively Recruit Highly
Qualified Candidates to Refresh the Board
Mr.
DiGiandomenico says in his solicitation that he has had discussions with management about changing or adding to the
directors and re-evaluating management. His solicitation goes on to say that he is seeking to call the special meeting to
give shareholders the opportunity to consider new directors to lead the Company. In fact, members of the Board informed
Mr. DiGiandomenico that the Board agrees that new members are vital to energizing the Company and that refreshing the
members of the Board is in the best interests of our shareholders. During 2018, we added two new directors (one of whom was
introduced to us by Mr. DiGiandomenico). Furthermore, the Board established a set of qualifications that it believes will add
depth to the experience of our current directors and is working both individually and with the National Association of
Corporate Directors on this recruiting effort.
We Believe
that the Undisclosed DiGiandomenico Nominees, if Elected at a Special Meeting, Will Represent the
Interests of a Minority of the
Company’s Shareholders
Mr.
DiGiandomenico wants to pick the directors for which you will vote without the benefit of understanding current developments at
the Company. Mr. DiGiandomenico wants to hold the special meeting to present his slate of directors, which we believe will include
himself, selected solely by him. We believe that the demand for a special meeting by Mr. DiGiandomenico is an attempt to disrupt
the Board’s announced orderly process for recruiting new directors. We do not believe that the addition of the DiGiandomenico
Nominees is in the best interests of the Company and its shareholders because these directors will be chosen solely by Mr. DiGiandomenico
without consideration of the many developments currently underway at the Company including C-Suite leadership changes. The Board
believes that it is not in the best interest of all shareholders to give a minority shareholder control over the Board and the
Company. However, if Mr. DiGiandomenico wishes to propose a slate of directors in opposition to the slate of directors proposed
by the Company, he may do so at an annual meeting. This will save the Company the time and expense required to hold both an annual
and a special meeting.
Furthermore,
we believe the Mr. DiGiandomenico Request Solicitation does not adequately address our serious concerns as it fails to disclose
the identity of the DiGiandomenico Nominees nor definitively state the proposals which shareholders will be asked to vote on at
the special meeting, stating: “Mr. DiGiandomenico, at the time of the solicitation of proxies for specific proposals, may
adjust the specifics of the Proposals to change the persons to be removed from the board of directors in the first instance and
add to or remove parts of some or all of the Proposals.” The Board believes it is inequitable for the Company’s shareholders
to be asked to provide “blank check” consent for Mr. DiGiandomenico to call a special meeting and the Board urges shareholders
to require Mr. DiGiandomenico to identify the DiGiandomenico Nominees and proposals for which shareholders will ultimately be asked
to vote on prior to asking for their consent to call such special meeting.
We Believe
a Special Meeting is a Costly, Distracting and Unnecessarily Duplicative Effort as the Board Has
Already Committed to Holding the
Company’s Annual Meeting on an Expedited Basis
Mr.
DiGiandomenico says in his solicitation that he believes that shareholders must act now, rather than wait for the annual meeting
to propose new directors. However, we indicated to Mr. DiGiandomenico that we will, to the extent we can complete our audited financial
statements and comply with the rules and regulations of the SEC, advance the date of the annual meeting of shareholders, which
we usually hold in May. After discussions with our auditors, we believe that, under the best of circumstances, the earliest date
on which we could hold a special meeting would be late February or early March 2019. The Board is amenable to advancing the annual
meeting in order to avoid the cost and distraction of a proxy contest and so that the special meeting need not be held. We believe
that limiting the expense and the drain on management’s time required to prepare for both a special meeting and an annual
meeting, which would be held within a few weeks of each other, is in the best interests of our shareholders.
The
special meeting and the annual meeting could be held within less than a month of each other. We believe this is not a good use
of the Company’s funds. While we cannot yet determine when a special meeting would be held because no demand has yet been
made, it is too late in the year to schedule the special meeting during 2018. We must comply with provisions of the Washington
Business Corporation Act, the rules of the Nasdaq Stock Market, our bylaws and the federal securities laws before we can hold a
special meeting or an annual meeting. Pursuant to the requirements of the Washington Business Corporation Act and the rules of
the Nasdaq Stock Market, we are required to hold an annual meeting of shareholders at least once each year. Given the preparations
necessary to hold a shareholders meeting, we do not believe that a special meeting could be held earlier than late February or
early March 2019. We told Mr. DiGiandomenico that we would agree to advance the date of the annual meeting. Mr. DiGiandomenico
continues to insist that we hold a special meeting. If we hold both a special meeting and an annual meeting, they will be held
within a close proximity in time. As a result, we will be required to pay the expenses related to both meetings, including legal
fees for review of both proxy statements, filing fees related to both proxy statements and printing and mailing costs related to
both proxy statements. If Mr. DiGiandomenico wishes to propose a slate of directors for election, he can do so in conjunction with
the annual meeting. This will save the Company the unnecessary expense related to preparing for both a special meeting and an annual
meeting. The funds used to prepare for a special meeting can be put to better use in the Company’s operations and delivering
value.
Finally,
Mr. DiGiandomenico wants to hold a special meeting to ask you to repeal amendments to our articles of incorporation and bylaws.
Aside from the fact that the automatic repeal of any duly adopted amendment to the articles of incorporation or the bylaws, irrespective
of its content, would have the effect of repealing one or more properly adopted amendments determined by the Board to be in the
best interests of the Company and its shareholders, this proposal can be voted on at the annual meeting. There is no need to call
a special meeting to take this action.
We Believe
Mr. DiGiandomenico is Misusing the Company’s Corporate Mechanics by Including an Auditor
Ratification Proposal Merely to
Obtain a Quorum at a Special Meeting
Our
shareholders ratified our choice of auditor at the 2018 annual meeting. Mr. DiGiandomenico is, we believe, looking for a way to
obtain a quorum for the special meeting, if it is held. One of the proposals to be voted on at the special meeting, if it is held,
is to ratify our choice of independent public accounting firm for the 2018 year. We believe this proposal is designed to further
Mr. DiGiandomenico’s plan to disrupt our Board’s orderly process to find new directors. By including this proposal,
which is a routine matter on which brokers may vote if shareholders do not, brokers would vote to affirm the choice of independent
public accounting firm, thereby increasing the likelihood that the special meeting will have a quorum to transact business. However,
brokers may not vote on a proposal made by a shareholder which is being opposed by management or is the subject of a counter-solicitation,
so including this proposal is meaningless. The Company’s shareholders present at the 2018 annual meeting approved the choice
of the same independent public accounting firm that Mr. DiGiandomenico intends to recommend by an overwhelming majority. There
is no need to call a special meeting to ratify the choice of independent public accounting firm a second time. As is customary,
we will ask our shareholders to ratify our choice of independent public accounting firm for 2019 at the annual meeting.
We Believe
Mr. DiGiandomenico’s Solicitation Might Violate the Company’s Agreements with clirSPV LLC and
Result in Sizable Change
of Control Payments
Mr.
Hoffman was appointed to the Board pursuant to a voting agreement, dated as of July 20, 2018, unanimously approved by the Board
(including a director recommended to the Board by Mr. DiGiandomenico) as partial consideration for clirSPV LLC’s $11.7 million
equity investment in the Company. We believe Mr. DiGiandomenico’s efforts to remove all of the members of the Board, including
Mr. Hoffman, might violate the Company’s agreements with clirSPV LLC. In addition, we believe Mr. DiGiandomenico’s
attempt to remove and replace the entirety of the Board may trigger certain change of control payments under the Company’s
material agreements with its employees and executive officers, including the automatic vesting of certain stock options held by
the Company’s executive officers to the detriment of the Company’s shareholders. We believe these occurrences pose
a material risk to the Company, which has not been addressed in the DiGiandomenico Request Solicitation.
YOUR BOARD URGES
SHAREHOLDERS TO REJECT MR. DIGIANDOMENICO’S REQUEST AND TO REVOKE ANY PREVIOUSLY SUBMITTED WHITE REQUEST CARD
PLEASE SIGN,
DATE AND MAIL
THE ENCLOSED
GOLD
REQUEST REVOCATION CARD TODAY
DO NOT DELAY. IN ORDER TO HELP ENSURE
THAT THE CURRENT BOARD IS ABLE TO ACT IN YOUR BEST INTERESTS AND IN THE BEST INTERESTS OF THE COMPANY. PLEASE SIGN, DATE AND DELIVER
THE ENCLOSED
GOLD
REQUEST REVOCATION CARD USING THE ENCLOSED PRE-PAID ENVELOPE AS PROMPTLY AS POSSIBLE WHETHER OR NOT YOU
HAVE SIGNED THE WHITE REQUEST CARD FROM MR. DIGIANDOMENICO.
BACKGROUND OF
MR. DIGIANDOMENICO’S REQUEST SOLICITATION
Following is
a chronology of material events leading up to Mr. DiGiandomenico’s request solicitation. Ms. Susanne Meline, Dr. Lon
Bell and Messrs. Pirnat, Isaacson and Hoffman are current members of our Board. Mr. Jeffrey Ott was a member of our Board until
his resignation on October 1, 2018. Mr. Hoffman
is the managing member of GPCLIRSPV LLC
that, in turn, is the managing member of clirSPV LLC, an owner of 5,213,543 shares of our Common Stock or approximately 19.5%
of the shares of Common Stock outstanding.
MDB Capital Group LLC (“MDB”)
has acted as both an underwriter and a placement agent for the Company since 2012. Mr. DiGiandomenico is a principal of MDB.
In exchange for its underwriting and placement agency services, we have paid to MDB approximately $2.7 million.
In February 2018, Mr.
DiGiandomenico, in conversations with the Company’s directors, suggested that the Board add persons with investment
experience to the Board and introduced the directors to Susanne Meline. Ms. Meline has been an investor in the
Company’s securities both prior and subsequent to its initial public offering. Ms. Meline brings small company
investment expertise to the Company. Mr. DiGiandomenico also expressed his hope that there would be further changes in the
Company’s governance, including refreshing the members of the Board and separating the positions of Chief Executive
Officer and Chairman.
On February 23, 2018, Mr. DiGiandomenico
purchased 112,733 shares of the Company’s Common Stock.
On September 21, 2018, Mr. DiGiandomenico
wrote an email to the members of the Board, Louis Basenese, the Company’s Vice President of Corporate Communications, and
Mr. DiGiandomenico’s legal counsel. In this email, Mr. DiGiandomenico indicated that he and other shareholders had lost faith
in the management of the Company. In the email, Mr. DiGiandomenico suggested that Jeffrey Ott and Scott Isaacson resign from the
Board and that the Board appoint Alex Tokman, Manuel Menendez and Mr. DiGiandomenico to the Board.
On September 27, 2018, ClearSign and Mr.
DiGiandomenico entered into a confidentiality agreement to enable the Company to share confidential information with Mr. DiGiandomenico.
On September 28, 2018, Mr. DiGiandomenico
initiated a telephone call with Dr. Lon Bell and Ms. Susanne Meline in which Mr. DiGiandomenico asked for the resignation of legacy
directors. Dr. Bell and Ms. Meline told Mr. DiGiandomenico that the Company’s management would reflect some changes in a
few days. Subsequently, Mr. Ott resigned from the Board for personal reasons and Mr. Pirnat announced his retirement as an executive
officer of the Company but would be continuing on as a director. This information was disclosed in a Current Report on Form 8-K
filed by the Company on October 1, 2018.
On September 28, 2018, Mr. DiGiandomenico
wrote an email to Ms. Meline, Mr. Hoffman and Dr. Bell and copied Mr. Tokman on the email. The email introduced Mr. Tokman. Mr.
DiGiandomenico asked the directors to make Mr. Tokman’s acquaintance.
On October 4, 2018, Dr. Bell sent an email
to Mr. DiGiandomenico indicating that he had spoken with Mr. Tokman on the telephone. He said that he would talk to others at the
Company about the role that Mr. Tokman might take in the Company.
On October 5, 2018, Mr. DiGiandomenico wrote
an email to Dr. Bell stating that the shareholders should decide on new directors at a special meeting called for that purpose.
On October 4, 2018, Dr. Bell forwarded Mr.
Tokman’s resume to Ms. Meline and suggested that she get in touch with Mr. Tokman. Ms. Meline contacted Mr. Tokman by email
on October 9, had a telephone call with him on October 11, forwarded his resume to Mr. Hoffman on that date, and on October 19
asked Mr. Tokman for permission to submit his resume to the National Association of Corporate Directors for consideration as part
of the search for new directors.
On October 23, 2018, Ms. Meline had
a telephone conversation with Mr. DiGiandomenico during which he reiterated his opinion that it was necessary for the Board
to undertake a complete evaluation of the Company’s strategy and that current Board members either did not have the
requisite experience in this area or time available for this endeavor. Mr. DiGiandomenico offered to serve on the Company’s
Board along with Mr. Tokman in order to assist with the process. Ms. Meline sent a follow up email to Mr. DiGiandomenico
stating that she would share his concerns with other Board members.
On or about October 24, 2018, Mr. Pirnat
spoke to Mr. DiGiandomenico by telephone. Mr. Pirnat asked Mr. DiGiandomenico what specific actions the Board would have to take
to avoid a call for a special meeting. Mr. DiGiandomenico said that Mr. Pirnat would have to immediately resign as the Chief Executive
Officer and that Mr. Isaacson would have to immediately resign as a director. Mr. Pirnat told Mr. DiGiandomenico that he believed
that the disorder and confusion resulting from his immediate resignation would not be in the best interests of the Company, its
shareholders, its customers and its employees. Mr. Pirnat also told him that Mr. Isaacson had been duly elected by the Company’s
shareholders in May, that he was a valued member of the Board, and that his resignation would be detrimental to the Company and
the shareholders.
On October 25, 2018, Mr. Hoffman wrote an
email to Mr. DiGiandomenico explaining that clirSPV LLC was a long-term investor and that his decisions as a director would have
“…little to do with the short term price of the stock and everything to do with the long term success of the [C]ompany.”
In response to Mr. Hoffman’s email,
on October 25, 2018, by email to Mr. Hoffman, which was copied to Ms. Meline and Dr. Bell, Mr. DiGiandomenico stated that his statement
soliciting shareholders to join him in requesting a special meeting would be filed on Monday, October 29.
On October 25, 2018, in response to Mr.
DiGiandomenico’s email, Mr. Hoffman stated that he wanted to avoid a proxy contest, stating, “It would be helpful to
get a clear understanding of what your ultimate goals are. If you would be good enough to enumerate them in a response email, then
perhaps we can find a middle ground to avoid an unproductive proxy fight.” In a second email sent to Mr. DiGiandomenico that
day, Mr. Hoffman stated “it would be helpful to have a framework for our discussion.”
On October 25, 2018, Mr. DiGiandomenico
responded to the email sent by Mr. Hoffman and copied Dr. Bell and Ms. Meline. In his email, Mr. DiGiandomenico suggested that
Dr. Bell conduct an evaluation of the Company and that Mr. Tokman serve as interim Chief Executive Officer. He also said he believed
he would have the support of the shareholders to hold the special meeting and effect the change he wanted, including putting Mr.
Tokman and himself on the Board.
On October 25, 2018, Ms. Meline met with
Mr. Tokman in person in Seattle and also spoke with two people who contacted her about their experiences in working with Mr. Tokman.
On October 26, 2018, Mr. Hoffman sent an
email to Mr. DiGiandomenico indicating that he had attempted to reach him by telephone but had been unsuccessful. The email stated
that Mr. Hoffman and the other directors had spoken and he believed that he had a solution to Mr. DiGiandomenico’s concerns
that would allow the two of them to work together. Mr. Hoffman ended the e-mail with the statement, “. . . after all, if
we go down the road of a proxy fight, not only would the [C]ompany waste precious resources, but from your perspective, even if
you were to win, such a victory would not take place until mid to late January.”
On October 26, 2018, Mr. Hoffman sent Mr.
DiGiandomenico a second email, indicating that he wanted to speak to Mr. DiGiandomenico about possibly becoming a director.
On October 28, 2018, Mr. DiGiandomenico
had a further telephone conversation with Mr. Hoffman. In that telephone conference, Mr. Hoffman offered Mr. DiGiandomenico a position
as a director of the Company and told him that the Board would agree to advancing the date of the annual meeting. Mr. Hoffman and
Mr. DiGiandomenico also discussed Mr. Tokman’s experience and the possibility of appointing him as Chief Executive Officer
or Chief Operating Officer. Mr. Hoffman also agreed to meet with Mr. Tokman when he was in Seattle, where he was planning to travel
on October 29, 2018. Mr. DiGiandomenico told Mr. Hoffman he wanted to think overnight about the offer to become a director and
the Board’s offer to advance the date of the annual meeting.
On October 31, 2018, Mr. Hoffman sent an
email to Alex Tokman, asking Mr. Tokman if they could meet while Mr. Hoffman was in Seattle, however, they could not find a mutual
time at which they could meet before Mr. Hoffman flew back to New Jersey.
On November 5, 2018, Mr. DiGiandomenico
sent an email to Mr. Hoffman, which was copied to Ms. Meline and Dr. Bell, asking him to get in touch with Mr. Tokman.
On November 6, 2018, Mr. Hoffman and Mr.
Tokman spoke by telephone for approximately 50 minutes. During that conversation, most of the conversation focused on the Company’s
business. Mr. Hoffman asked questions of Mr. Tokman relating to his background, but Mr. Tokman stated that he did not have any
experience in the Company’s vertical lines of business and did not provide Mr. Hoffman with substantive information that
would help in assessing Mr. Tokman’s candidacy as a director.
On November 6, 2018, Mr. DiGiandomenico
contacted Ms. Meline to let her know that he planned to file his solicitation statement at the end of the week unless the Company
announced substantial changes. As part of its quarterly earnings release, the Company announced on November 8, 2018
that
a search for Mr. Pirnat’s successor was underway with a nationally recognized search firm, but that Mr. Pirnat had agreed
to stay on as long as necessary to ensure a smooth transition for the Company and key customers. The press release went on to
say that the Board recognized the value of refreshing its membership and was actively working with the National Association of
Corporate Directors to find director candidates whose skills and personalities would complement the skills of the incoming Chief
Executive Officer and the Board's incumbent members. The press release also disclosed that the Board agreed to reduce the annual
compensation paid to non-employee directors and to change the compensation paid to non-employee directors from a cash-based to
an all-equity based compensation structure. Finally, the press release indicated that the Board had decided to accelerate the
scheduling of the Company's annual meeting to the earliest practical date in order to introduce the Company's shareholders to
the new Board members.
On November 9, 2018, Mr. DiGiandomenico
filed his preliminary solicitation statement on Schedule 14A.
QUESTIONS AND
ANSWERS ABOUT THIS REQUEST REVOCATION
Who is making this request revocation?
The Board of ClearSign
Combustion Corporation.
What are you asking shareholders
to do?
We are asking you
not
to sign Mr. DiGiandomenico’s White Request Card. If you have already signed and returned the White Request Card,
we are asking you to revoke your consent by signing, dating and mailing the enclosed
GOLD
Request Revocation Card immediately
in the envelope provided. Finally, even if you have not submitted a White Request Card, we urge you to submit a
GOLD
Request
Revocation Card today.
Who is Anthony DiGiandomenico?
Mr. DiGiandomenico
is a principal of MDB Capital Group LLC, which has acted as both an underwriter and a placement agent for the Company since
2012, and he is a holder of 0.42% of our outstanding shares of Common Stock since February 23, 2018.
What is a consent solicitation?
Under Washington
law and the Company’s organizational documents, shareholders may act without a meeting and without a vote to call a special
meeting of the shareholders if consents in writing setting forth the action to be taken are signed by the holders having not less
than at least 10% of the shares of our Common Stock outstanding as of the Record Date.
What does the Board recommend?
The Board
strongly believes that the solicitation being undertaken by Mr. DiGiandomenico is simply an attempt to disrupt our process
for recruiting new directors so that his directors selected solely by him can be installed. The Board strongly believes that
it is not in the best interests of all of the Company’s shareholders to allow a minority shareholder to take control of
the Company. Furthermore, asking that we hold a special meeting so close to the annual meeting is a distraction and a waste
of time and money. Your Board unanimously opposes the solicitation by Mr. DiGiandomenico and urges shareholders to reject the
request that you join with Mr. DiGiandomenico in demanding that the Company hold a special meeting. If you have already
returned the White Request Card to Mr. DiGiandomenico’s agent, you may revoke your consent by signing, dating and
mailing the enclosed
GOLD
Request Revocation Card in the envelope provided. Even if you have not returned the White
Request Card, we urge you to show your support of the process undertaken by our Board to recruit new directors and a new
Chief Executive Officer by submitting a
GOLD
Request Revocation Card in the envelope provided.
If I have already delivered a
White Request Card, is it too late for me to change my mind?
No. Until a demand
for a special meeting made by holders of at least 10% of the outstanding shares of our Common Stock is delivered to the Company
in accordance with Washington law and the Company’s bylaws, you have the right to revoke your request to hold a special meeting.
When will Mr. DiGiandomenico’s
request to hold a special meeting become effective?
In order for the
request to call a special meeting to be effective, the Company must receive properly completed and unrevoked written requests signed
by the holders of at least 10% of the Company’s Common Stock within 60 days of the Record Date, which is expected to be [___________],
2018, the date that Mr. DiGiandomenico anticipates delivering a signed written request to the Company’s principal place of
business.
What is the effect of delivering
a GOLD Request Revocation Card?
By signing and
dating the enclosed
GOLD
Request Revocation Card and mailing the card in the postage-paid envelope provided, you will revoke
any earlier dated White Request Card that you may have delivered to Mr. DiGiandomenico’s agent. Even if you have not submitted
Mr. DiGiandomenico’s White Request Card, we urge you to submit a
GOLD
Request Revocation Card. Submitting a
GOLD
Request Revocation Card will have no legal effect if you have not previously submitted Mr. DiGiandomenico’s White Request
Card, but it will allow us to keep track of the request process.
Who should I call if I have questions
about this solicitation?
Please call MacKenzie
Partners Inc. toll free at 1-800-322-2885 if you have questions about this solicitation.
THE SPECIAL
MEETING REQUEST PROCEDURE
For the special
meeting to be properly requested in accordance with Section 2, Subsection 2.2 of our bylaws and Section 23B.07.020 of the Revised
Code of Washington, written demands in favor of calling the special meeting must be executed and delivered to the Secretary of
the Company by holders representing at least 10% of the outstanding shares of our Common Stock. As a result, holders representing
2,666,098 shares of Common Stock will need to submit executed and unrevoked White Request Cards in order to request a special meeting.
Persons beneficially owning our Common Stock (but not holders of record), such as persons whose ownership of our Common Stock is
through a broker, bank, financial institution or other nominee holder, may wish to contact such broker, bank, financial institution
or other nominee holder and instruct such person to execute the
GOLD
Request Revocation Card on their behalf. Any failure
to submit a White Request Card will have the same effect as submitting a
GOLD
Request Revocation Card.
Additionally, even
if you have not already submitted a White Request Card, you may elect to execute and submit the
GOLD
Request Revocation
Card to communicate that you do not believe a special meeting is necessary or to express your opposition to a special meeting.
Effectiveness of White Request Cards
If White Request
Cards have been delivered from holders of our Common Stock representing less than 10% of the outstanding Common Stock, then the
Company is not obligated to call a special meeting.
In
accordance with Section 2, Subsection 2.5.3.3 of our bylaws, if a special meeting is duly requested by holders of our Common
Stock representing at least 10% of the outstanding Common Stock, the Company is required, within 30 days of the request, to
provide notice of a special meeting of shareholders to be held on a date and place as the Secretary may fix. Such notice must
be given not less than 10 nor more than 60 days before the special meeting is to be held. Taking no action with the
White Request Card will, in effect, be rejecting Mr. DiGiandomenico’s plan to demand a special meeting. Abstentions,
failures to consent and broker non-votes will have the same effect as withholding consent.
The Special Meeting
If Mr. DiGiandomenico
is successful in his efforts to solicit White Request Cards from the requisite shareholders and the Company is required to hold
a special meeting, the Company will advise its shareholders of its recommendation as to any matters to be considered at such special
meeting.
Effect of GOLD Request Revocation
Card
A shareholder may
revoke any previously signed White Request Card by signing, dating and returning to the Company a
GOLD
Request Revocation
Card. A White Request Card may also be revoked by delivery of a written revocation of your request to Mr. DiGiandomenico’s
agent. Shareholders are urged, however, to return all request revocations in the pre-paid envelope provided or by mail to MacKenzie
Partners, Inc., 1407 Broadway, 27
th
Floor, New York, New York 10018, Attn: Bob Marese. The Company requests that if
a revocation is instead delivered to Mr. DiGiandomenico’s agent, a copy of the revocation also be returned in the envelope
provided so that the Company will be aware of all revocations.
By signing and
delivering the
GOLD
Request Revocation Card, you will be deemed to have revoked any White Request Card for a special meeting.
Any
GOLD
Request Revocation Card may itself be revoked by marking, signing, dating and delivering a written revocation of your
GOLD
Request Revocation Card to the Company, or to MacKenzie Partners, Inc., 1407 Broadway, 27
th
Floor, New York, New York
10018, Attn: Bob Marese, or by delivering to Mr. DiGiandomenico’s agent a subsequently dated White Request Card.
The revocation
of any previously delivered White Request Card or
GOLD
Request Revocation Card must be signed and have a date subsequent
to the previously delivered White Request Card or
GOLD
Request Revocation Card. Only a later dated
GOLD
Request Revocation
Card can revoke a previously submitted White Request Card. The revocation is not required to state the number of shares of Common
Stock held unless you wish to revoke your White Request Card with respect to less than all shares of Common Stock as to which you
previously requested the special meeting, in which case you must state the number of shares of Common Stock to which your revocation
relates. In addition, if you have more than one account with respect to which you have delivered a White Request Card, the revocation
should identify the relevant account for which the White Request Card is being revoked.
If any Common Stock
that you owned on the Record Date was held for you in an account with a brokerage firm, bank nominee or other similar “street
name” holder, you are not entitled to sign a White Request Card with respect to such Common Stock directly, but rather must
give instructions to the brokerage firm, bank nominee or other “street name” holder to grant or revoke a White Request
Card for the Common Stock held in your name. Accordingly, you should follow the instructions on the
GOLD
Request Revocation
Card to make a request with respect to your Common Stock. Alternatively, you can contact the person responsible for your account
and direct him or her to execute the enclosed
GOLD
Request Revocation Card on your behalf. We urge you to confirm in writing
your instructions to the person responsible for your account and provide a copy of those instructions to the Company at 12870 Interurban
Avenues South, Seattle, Washington 98168 so that the Company will be aware of your instructions and can attempt to ensure that
your instructions are followed.
YOU HAVE THE
RIGHT TO REVOKE ANY WHITE REQUEST CARD YOU MAY HAVE PREVIOUSLY GIVEN TO MR. DIGIANDOMENICO OR HIS AGENT. TO DO SO, YOU NEED ONLY
SIGN, DATE AND RETURN IN THE ENCLOSED PRE-PAID ENVELOPE THE GOLD REQUEST REVOCATION CARD ACCOMPANYING THIS REQUEST REVOCATION STATEMENT.
You should carefully
review this Request Revocation Statement. YOUR TIMELY RESPONSE IS IMPORTANT. You may reject Mr. DiGiandomenico’s solicitation
by promptly completing, signing, dating and returning the enclosed
GOLD
Request Revocation Card in the pre-paid envelope
provided. Please be aware that if you sign a White Request Card, you will be deemed to have requested a special meeting in accordance
with Mr. DiGiandomenico’s solicitation statement.
Results of Solicitation
The Company intends
to notify shareholders by press release as to whether the requisite White Request Cards have been received for calling a special
meeting following the Company’s receipt of written notice and confirmation of such White Request Cards.
APPRAISAL RIGHTS
Holders of the
Company’s Common Stock do not have appraisal rights under Washington law in connection with Mr. DiGiandomenico’s solicitation
or this solicitation by the Company.
SOLICITATION
OF REQUEST REVOCATIONS
The cost of this
Request Revocation Statement will be borne by the Company. We expect that the total expenditures relating to the Company’s
consent revocation solicitation (other than salaries and wages of officers and employees) will be approximately $________, of which
approximately $________ has been incurred as of the date hereof. The Company’s outside counsel has retained MacKenzie Partners,
Inc. on behalf of the Company in connection with this Request Revocation Statement. The Company will pay MacKenzie Partners, Inc.
$125,000 for its services in this matter plus reimbursement of reasonable out-of-pocket expenses. MacKenzie Partners, Inc. expects
that approximately 25 of its employees will assist in the solicitation. The Company has agreed to indemnify MacKenzie Partners,
Inc. against certain liabilities and expenses, including certain liabilities under the federal securities laws. If a special meeting
is called, the Company’s outside counsel expects to continue to retain the services of MacKenzie Partners, Inc. on behalf
of the Company.
In addition to
solicitation by mail, directors, officers and other regular employees of the Company may, without additional compensation, solicit
request revocations in person, or by telephone, facsimile, email, internet, text messaging, or other forms of electronic communication.
Other than the persons described above, no general class of employee of the Company will be employed to solicit shareholders. However,
in the course of their regular duties, employees may be asked to perform clerical or ministerial tasks in furtherance of this solicitation.
The Company will reimburse brokerage houses, banks, custodians and other nominees and fiduciaries for out-of-pocket expenses incurred
in forwarding the Company’s Request Revocation Statement materials to, and obtaining instructions relating to such materials
from, beneficial owners of our Common Stock.
PARTICIPANTS
IN THE COMPANY’S SOLICITATION
Under applicable SEC regulations, each
of our directors and certain executive officers of the Company are deemed to be “participants” in this solicitation
of consent revocations. Please refer to the sections entitled “Security Ownership of Certain Beneficial Owners and Management”
and “Certain Information Regarding Participants in this Consent Revocation Solicitation” in Annex A for information
about our directors and certain of our executive officers who are deemed to be participants in the solicitation. Except as described
in this Request Revocation Statement, there are no agreements or understandings between the Company and any such participants relating
to future employment with the Company or any future transactions.
Except as set forth above, neither the
Company nor any person acting on its behalf has employed, retained or agreed to compensate any person to make solicitations or
recommendations to shareholders of the Company concerning the request revocation solicitation.
Security
Ownership Of Certain Beneficial Owners And Management
The table below
sets forth, as of November 13, 2018 (the “Computation Date”), information with respect to each of our directors, each
of our named executive officers, all of our directors and officers as a group and shareholders who were known to the Company to
be the beneficial owners of more than 5% of the outstanding Common Stock.
Beneficial ownership and percentage ownership
are determined in accordance with the rules of the SEC. Under these rules, beneficial ownership generally includes any shares
as to which the individual or entity has sole or shared voting power or investment power and includes any shares that an individual
or entity has the right to acquire ownership of on or before January 12, 2019, which is 60 days from the Computation Date. In
computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of our Common
Stock that could be issued upon the exercise of outstanding options and warrants that are exercisable on or before January 12,
2019 are considered to be outstanding. These shares, however, are not considered outstanding as of the Computation Date when computing
the percentage ownership of each other person.
To our knowledge,
except as indicated in the footnotes to the following table and subject to state community property laws where applicable, all
beneficial owners named in this table have sole voting and investment power with respect to all shares shown as beneficially owned
by them. Percentage of ownership is based on our shares of Common Stock outstanding as of the Computation Date.
Name and Address of Beneficial Owner (1)
|
|
Amount of Beneficial
Ownership
|
|
|
Percent of Class
|
|
Directors and Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen E. Pirnat, Chief Executive Officer and director
|
|
|
444,808
|
(3)
|
|
|
1.6
|
%
|
|
|
|
|
|
|
|
|
|
Roberto Ruiz, Ph.D., Chief Operating Officer
|
|
|
136,213
|
(4)
|
|
|
0.5
|
%
|
|
|
|
|
|
|
|
|
|
Donald W. Kendrick, Ph.D., Chief Technology Officer
|
|
|
114,457
|
(5)
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
Lon E. Bell, Ph.D., director
|
|
|
410,079
|
(6)
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
Scott Isaacson, director
|
|
|
109,421
|
(7)
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
Susanne Meline, director
|
|
|
47,038
|
(8)
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
Robert T. Hoffman Sr., Chairperson of the Board
|
|
|
5,812,616
|
(9)
|
|
|
21.8
|
%
|
|
|
|
|
|
|
|
|
|
All directors and officers as a group
|
|
|
7,086,882
|
(10)
|
|
|
26.5
|
%
|
|
|
|
|
|
|
|
|
|
5% Shareholder
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
clirSPV LLC
|
|
|
5,692,397
|
(11)
|
|
|
21.4
|
%
|
(1) The address of each officer and director is 12870 Interurban
Avenue South, Seattle, Washington 98168.
(2) Beneficial ownership is determined in accordance with Rule
13d-3 under the Securities Exchange Act of 1934, as amended, and is generally assigned to the person holding voting power and/or
investment power with respect to securities. With the exception of the securities beneficially owned by our officers and directors
and their affiliates, the ownership of the shares of Common Stock listed above were determined using public records.
(3) Includes options to purchase 322,500 shares of Common Stock
and warrants to purchase 8,361 shares of Common Stock which may be exercised on or before January 12, 2019. Excludes options to
purchase 7,500 shares of Common Stock, none of which will vest on or before January 12, 2019.
(4) Includes options to purchase 101,500 shares of Common Stock
and warrants to purchase 1,840 shares of Common Stock which may be exercised on or before January 12, 2019. Excludes options to
purchase 40,000 shares of Common Stock, none of which will vest on or before January 12, 2019.
(5) Includes options to purchase 55,624 shares of Common Stock
and warrants to purchase 4,000 shares of Common Stock which may be exercised on or before January 12, 2019. Excludes options to
purchase 49,376 shares of Common Stock, none of which will vest on or before January 12, 2019.
(6) Includes warrants to purchase 35,336 shares of Common Stock
which may be exercised on or before January 12, 2019.
(7) Includes warrants to purchase 8,242 shares of Common Stock
which may be exercised on or before January 12, 2019.
(8) Includes warrants to purchase 4,545 shares of Common Stock
which may be exercised on or before January 12, 2019.
(9) GPCLIRSPV LLC, the managing member of clirSPV LLC, has
voting and investment power over the Common Stock. Mr. Hoffman is the managing member of GPCLIRSPV LLC. GPCLIRSPV LLC and Mr.
Hoffman each disclaim beneficial ownership over the Common Stock. The total includes 110,519 shares of Common Stock held in
an IRA account and warrants to purchase 9,700 shares of Common Stock that may be exercised on or before January 12, 2019.
(10) Includes 12,250 shares beneficially held by the Company’s
interim Chief Financial Officer who is not a named executive officer.
(11) This amount represents 5,213,543 shares of issued and outstanding
Common Stock and 478,854 shares of Common Stock that clirSPV LLC has the right to purchase pursuant to the terms of the Stock Purchase
Agreement entered into on July 12, 2018. The right to purchase will expire on February 1, 2019. The address of clirSPV LLC is 119
Warren Avenue, Third Floor, Spring Lake, New Jersey 07762.
As of November
13, 2018, 26,660,980 shares of the Company’s Common Stock were outstanding.
DELIVERY OF
DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
The SEC has adopted
rules that permit companies and intermediaries (
e.g.
, brokers) to satisfy the delivery requirements for proxy statements
with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders.
This process, which is commonly referred to as “householding,” potentially means extra convenience for shareholders
and cost savings for the Company.
A single Request
Revocation Statement will be delivered to multiple shareholders sharing an address unless contrary instructions have been received
from one or more of the affected shareholders. Once you have received notice from your broker that it will be “householding”
communications to your address, “householding” will continue until you are notified otherwise or until you revoke your
consent to the practice. If, at any time, you no longer wish to participate in “householding” and would prefer to receive
a separate Request Revocation Statement, and, if applicable, other proxy materials please notify your broker or our Corporate Secretary
at 12870 Interurban Avenue South, Seattle, Washington 98168 or at (206) 673-4848. Shareholders who currently receive multiple copies
of the Request Revocation Statement and, if applicable, other proxy materials at their address and would like to request “householding”
of their communications should contact their broker.
SHAREHOLDER PROPOSALS FOR 2019 ANNUAL
MEETING
Shareholder proposals submitted to the Company
pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, for inclusion in the Company’s
proxy statement and form of proxy for the 2019 annual meeting of shareholders must be received by the Company no later than December
19, 2018, which is 120 calendar days before the one-year anniversary of the date on which the Company first mailed the proxy statement
for the 2018 annual shareholder meeting, and must comply with the requirements of the proxy rules promulgated by the SEC. Shareholder
proposals should be addressed to our Corporate Secretary at 12870 Interurban Avenue South, Seattle, Washington 98168.
Any shareholder wishing to nominate a director
at the Company’s 2019 annual meeting must notify the Company’s Secretary in writing on or before January 3, 2019 and
include in such notice the specific information required by the Company in its policy regarding shareholder candidates for nomination
as a director, which can be found on the Company’s website under the “Investors” tab.
Proposals or nominations from shareholders
received after these deadlines will not be considered timely for consideration at the 2019 annual meeting.
WHERE YOU CAN
FIND MORE INFORMATION
The Company is
required to file annual, quarterly and current reports and other information with the SEC. Our SEC filings are also available to
the public at the SEC’s website at
www.sec.gov
. You also may obtain free copies of the documents the Company
files with the SEC by going our website at
www.clearsign.com
. The information provided on our website is not part of this
Request Revocation Statement, and therefore is not incorporated by reference.
Shareholders are entitled to express their
views regarding the topics raised in this Request Revocation Statement or other matters directly to the Company through written
communications sent directly to the attention of the Board, any individual director or the non-employee directors as a group, by
written communications addressed in care of the Company’s Secretary, ClearSign Combustion Corporation, 12870 Interurban
Avenue South, Seattle, Washington 98168.
IMPORTANT
We urge you NOT
to return any White Request Card solicited from you by Mr. DiGiandomenico. If you have previously returned any White Request Card,
you have every right to revoke your consent. Simply complete, sign, date and mail the enclosed
GOLD
Request Revocation Card
in the postage-paid envelope provided, whether or not you previously returned the White Request Card.
If you have questions
or need assistance revoking any White Request Card you may have previously submitted, please contact:
1407 Broadway
New York, New York
10018
Please Call Toll
Free: 800-322-2885
Email: proxy@mackenziepartners.com
Regardless of the
number of shares of the Company’s Common Stock that you own, your views are very important. Thank you for your consideration.
ANNEX A
ADDITIONAL INFORMATION
REGARDING PARTICIPANTS IN THE SOLICITATION
Under applicable SEC rules and regulations, members of the Board,
the Board’s nominees, and certain officers and other employees of the Company are “participants” with respect
to the Company’s solicitation. The following sets forth certain information about such persons (the “Participants”).
Directors
The names and present principal occupation of our directors,
each a Participant, are set forth below. The business address for each of the Company’s directors is 12870 Interurban South,
Seattle, Washington 98168.
Name
|
|
Present
Principal Occupation
|
Steven E. Pirnat
|
|
Chairman & Chief Executive Officer, ClearSign Combustion Corporation
|
Lon E. Bell, Ph.D.
|
|
Director and Executive Officer, Ideal Power Inc.
|
Scott P. Isaacson
|
|
Consultant, Self-employed
|
Susanne L. Meline
|
|
General Counsel and Investment Analyst, Francis Capital Management
|
Robert Hoffman Sr.
|
|
Managing Member, clirSPV LLC
|
Officers and Employees
Executive officers and employees of the Company who are Participants
are Steven E. Pirnat, Roberto Ruiz, Ph.D., Donald Kendrick, Ph.D., Brian Fike and Stephen M. Sock. The business address for each
is 12870 Interurban South, Seattle, Washington 98168. Their present principal occupations are stated below:
Name
|
|
Present
Principal Occupation
|
Steven E. Pirnat
|
|
Chairman & Chief Executive Officer, ClearSign Combustion Corporation
|
Roberto Ruiz, Ph.D.
|
|
Chief Operating Officer, ClearSign Combustion Corporation
|
Donald Kendrick, Ph.D.
|
|
Chief Technology Officer, ClearSign Combustion Corporation
|
Brian G. Fike
|
|
Interim Chief Financial Officer, ClearSign Combustion Corporation
|
Stephen M. Sock
|
|
Senior VP of Business Development, ClearSign Combustion Corporation
|
Information Regarding Ownership of the Company’s Securities
by Participants
The number of the Company’s securities beneficially owned
by the Participants as of November 13, 2018 is set forth in the section entitled “Security Ownership of Certain Beneficial
Owners and Management” in this Request Revocation Statement.
Information Regarding Transactions in the Company’s
Securities by Participants
The following table sets forth information regarding purchases
and sales of the Company’s securities by the Participants within the past two years. No part of the purchase price or market
value of these securities is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such
securities.
Name
|
|
Date
|
|
Title of Security
|
|
Number of
Shares
|
|
|
Transaction
|
Lon E. Bell, Ph.D.
|
|
09/28/2018
|
|
Common Stock
|
|
|
6,757
|
|
|
Grant, Award or Other Acquisition
|
|
|
06/29/2018
|
|
Common Stock
|
|
|
13,514
|
|
|
Grant, Award or Other Acquisition
|
|
|
02/27/2018
|
|
Common Stock
|
|
|
111,000
|
|
|
Open Market Purchase
|
|
|
02/10/2017
|
|
Common Stock
|
|
|
27,778
|
|
|
Grant, Award or Other Acquisition
|
|
|
01/25/2017
|
|
Common Stock
|
|
|
35,336
|
|
|
Acquired Based on Subscription Rights
|
Brian G. Fike
|
|
04/12/2018
|
|
Common Stock
|
|
|
25,000
|
|
|
Grant, Award or Other Acquisition
|
|
|
02/27/2018
|
|
Common Stock
|
|
|
1,000
|
|
|
Open Market Purchase
|
|
|
06/23/2017
|
|
Common Stock
|
|
|
10,000
|
|
|
Grant, Award or Other Acquisition
|
Scott P. Isaacson
|
|
09/28/2018
|
|
Common Stock
|
|
|
6,757
|
|
|
Grant, Award or Other Acquisition
|
|
|
06/29/2018
|
|
Common Stock
|
|
|
13,514
|
|
|
Grant, Award or Other Acquisition
|
|
|
02/10/2017
|
|
Common Stock
|
|
|
27,778
|
|
|
Grant, Award or Other Acquisition
|
|
|
01/25/2017
|
|
Common Stock
|
|
|
8,242
|
|
|
Acquired Based on Subscription Rights
|
|
|
12/31/2016
|
|
Common Stock
|
|
|
3,676
|
|
|
Grant, Award or Other Acquisition
|
Robert Hoffman Sr.
|
|
12/01/2017
|
|
Common Stock
|
|
|
22,500
|
|
|
Open Market Purchase
|
|
|
11/30/2017
|
|
Common Stock
|
|
|
4,000
|
|
|
Open Market Purchase
|
|
|
11/29/2017
|
|
Common Stock
|
|
|
1,000
|
|
|
Open Market Purchase
|
|
|
11/29/2017
|
|
Warrants
|
|
|
2,000
|
|
|
Open Market Sale
|
|
|
11/27/2017
|
|
Common Stock
|
|
|
500
|
|
|
Open Market Purchase
|
|
|
10/26/2017
|
|
Common Stock
|
|
|
1,000
|
|
|
Open Market Purchase
|
|
|
10/25/2017
|
|
Common Stock
|
|
|
19
|
|
|
Open Market Purchase
|
|
|
10/23/2017
|
|
Common Stock
|
|
|
1,000
|
|
|
Open Market Purchase
|
|
|
10/20/2017
|
|
Common Stock
|
|
|
2,000
|
|
|
Open Market Purchase
|
|
|
08/15/2017
|
|
Common Stock
|
|
|
2,500
|
|
|
Open Market Purchase
|
|
|
07/31/2017
|
|
Warrants
|
|
|
2,500
|
|
|
Open Market Purchase
|
|
|
07/25/2017
|
|
Common Stock
|
|
|
1,584
|
|
|
Open Market Purchase
|
|
|
07/24/2017
|
|
Common Stock
|
|
|
530
|
|
|
Open Market Purchase
|
|
|
07/21/2017
|
|
Common Stock
|
|
|
435
|
|
|
Open Market Purchase
|
|
|
07/13/2017
|
|
Common Stock
|
|
|
18
|
|
|
Open Market Purchase
|
|
|
06/27/2017
|
|
Common Stock
|
|
|
433
|
|
|
Open Market Purchase
|
|
|
06/09/2017
|
|
Common Stock
|
|
|
3,000
|
|
|
Open Market Purchase
|
|
|
06/05/2017
|
|
Common Stock
|
|
|
5,000
|
|
|
Open Market Purchase
|
|
|
05/30/2017
|
|
Common Stock
|
|
|
2,000
|
|
|
Open Market Purchase
|
|
|
05/16/2017
|
|
Common Stock
|
|
|
1,800
|
|
|
Open Market Purchase
|
|
|
02/14/2017
|
|
Common Stock
|
|
|
600
|
|
|
Open Market Purchase
|
|
|
02/13/2017
|
|
Common Stock
|
|
|
400
|
|
|
Open Market Purchase
|
|
|
01/27/2017
|
|
Common Stock
|
|
|
9,200
|
|
|
Acquired in Connection with a Rights Offering
|
|
|
01/27/2017
|
|
Warrants
|
|
|
9,200
|
|
|
Acquired in Connection with a Rights Offering
|
|
|
01/27/2017
|
|
Common Stock
|
|
|
1,000
|
|
|
Open Market Purchase
|
|
|
01/24/2017
|
|
Common Stock
|
|
|
1,000
|
|
|
Open Market Purchase
|
|
|
01/11/2017
|
|
Common Stock
|
|
|
3,000
|
|
|
Open Market Purchase
|
|
|
12/13/2016
|
|
Common Stock
|
|
|
881
|
|
|
Open Market Purchase
|
|
|
12/12/2016
|
|
Common Stock
|
|
|
1,592
|
|
|
Open Market Purchase
|
|
|
12/09/2016
|
|
Common Stock
|
|
|
8,302
|
|
|
Open Market Purchase
|
|
|
12/08/2016
|
|
Common Stock
|
|
|
2,606
|
|
|
Open Market Purchase
|
|
|
12/05/2016
|
|
Common Stock
|
|
|
2,500
|
|
|
Open Market Purchase
|
Donald W. Kendrick
|
|
04/12/2018
|
|
Common Stock
|
|
|
30,000
|
|
|
Grant, Award or Other Acquisition
|
|
|
12/04/2017
|
|
Common Stock
|
|
|
5,000
|
|
|
Open Market Purchase
|
|
|
08/22/2017
|
|
Common Stock
|
|
|
5,000
|
|
|
Open Market Purchase
|
|
|
06/23/2017
|
|
Common Stock
|
|
|
25,000
|
|
|
Grant, Award or Other Acquisition
|
|
|
02/10/2017
|
|
Common Stock
|
|
|
20,833
|
|
|
Grant, Award or Other Acquisition
|
|
|
01/25/2017
|
|
Common Stock
|
|
|
1,400
|
|
|
Acquired Based on Subscription Rights
|
|
|
01/25/2017
|
|
Common Stock
|
|
|
2,600
|
|
|
Acquired Based on Subscription Rights
|
Susanne L. Meline
|
|
09/28/2018
|
|
Common Stock
|
|
|
6,757
|
|
|
Grant, Award or Other Acquisition
|
|
|
06/29/2018
|
|
Common Stock
|
|
|
13,514
|
|
|
Grant, Award or Other Acquisition
|
|
|
02/27/2018
|
|
Common Stock
|
|
|
22,222
|
|
|
Open Market Purchase
|
Steven E. Pirnat
|
|
02/27/2018
|
|
Common Stock
|
|
|
10,000
|
|
|
Open Market Purchase
|
|
|
08/21/2017
|
|
Common Stock
|
|
|
1,000
|
|
|
Open Market Purchase
|
|
|
02/10/2017
|
|
Common Stock
|
|
|
52,778
|
|
|
Grant, Award or Other Acquisition
|
|
|
01/25/2017
|
|
Common Stock
|
|
|
8,361
|
|
|
Acquired Based on Subscription Rights
|
Roberto Ruiz, Ph.D.
|
|
04/20/2018
|
|
Common Stock
|
|
|
20,000
|
|
|
Grant, Award or Other Acquisition
|
|
|
08/18/2017
|
|
Common Stock
|
|
|
1,000
|
|
|
Open Market Purchase
|
|
|
06/23/2017
|
|
Common Stock
|
|
|
10,000
|
|
|
Grant, Award or Other Acquisition
|
|
|
02/10/2017
|
|
Common Stock
|
|
|
20,833
|
|
|
Grant, Award or Other Acquisition
|
|
|
01/25/2017
|
|
Common Stock
|
|
|
1,080
|
|
|
Acquired Based on Subscription Rights
|
|
|
01/25/2017
|
|
Common Stock
|
|
|
760
|
|
|
Acquired Based on Subscription Rights
|
Miscellaneous Information Concerning Participants
Other than as set forth in this Annex A or elsewhere in this
Request Revocation Statement and based on the information provided by each Participant, none of the Participants or their associates
(i) beneficially owns (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, or
owns of record but not beneficially, any shares of Common Stock or other securities of the Company or any of its subsidiaries or
(ii) has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon in connection
with this solicitation. In addition, neither the Company nor any of the Participants listed above is now or has been within the
past year a party to any contract, arrangement or understanding with any person with respect to any of the Company’s securities,
including, but not limited to, joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees
of profit, division of losses or profits or the giving or withholding of proxies. No Participant has been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors) during the past ten years.
Other than as set forth in this Annex A or elsewhere in this
Request Revocation Statement and based on the information provided by each Participant, neither the Company nor any of the Participants
listed above or any of their associates have or will have (i) any arrangements or understandings with any person with respect to
any future employment by the Company or its affiliates or with respect to any future transactions to which the Company or any of
its affiliates will or may be a party or (ii) a direct or indirect material interest in any transaction or series of similar transactions
since the beginning of our last fiscal year or any currently proposed transactions, or series of similar transactions, to which
the Company or any of its subsidiaries was or is to be a party in which the amount involved exceeds $120,000.
PRELIMINARY
COPY—SUBJECT TO COMPLETION DATED NOVEMBER 19, 2018
GOLD REQUEST
REVOCATION CARD
REVOCATION OF
WRITTEN REQUEST
FOR A SPECIAL
MEETING OF SHAREHOLDERS
This revocation
of written request is solicited on behalf of ClearSign Combustion Corporation (the “Company”) by the Company’s
Board of Directors in opposition to the solicitation by Anthony DiGiandomenico, to call a special meeting of the shareholders of
the Company (“Shareholders”).
We urge you
to sign, date and return this GOLD Request Revocation Card.
The undersigned
Shareholder, acting with regard to all the Common Stock of the Company entitled to vote and held by the undersigned, hereby REVOKES
any previously executed White Request Card (a “White Request Card”) delivered to Anthony DiGiandomenico, requesting
the call of a special meeting of Shareholders described in Anthony DiGiandomenico’s solicitation statement, and hereby confirms
that the undersigned has the power to deliver a revocation of any White Request Card for the number of shares of Common Stock represented
hereby.
You may revoke
any previously executed White Request Card
regarding the solicitation by Anthony DiGiandomenico for the call of a special meeting
by signing, dating and returning this GOLD Request Revocation Card to the Company in the enclosed postage paid envelope or by mailing
to:
MacKenzie Partners,
Inc.
1407 Broadway, 27
th
Floor
New York, New York 10018
Attn: Bob Marese
Unless you specify
otherwise, by signing, dating and returning this GOLD Request Revocation Card, you will be deemed to have revoked any previously
submitted written request for a special meeting with respect to all of the shares of the Company’s Common Stock you own beneficially
and/or of record.
IN ORDER FOR
YOUR REVOCATION CARD TO BE VALID, IT MUST BE SIGNED AND DATED.
Dated
|
|
|
|
Signature
|
|
|
|
Signature (if held jointly)
|
|
|
|
Name and Title(s) (if applicable)
|
|
Number of Shares of Common Stock
|
|
Please sign
this GOLD Request Revocation Card exactly as your name appears above. If signing as an attorney, administrator, executor, guardian
or trustee, please give your title as such. If you are a corporation, this signature should be that of an authorized officer who
should state his or her title. If you are a partnership, sign in the partnership name by an authorized person. Signed GOLD Request
Revocation Cards will be deemed to revoke all previously given White Request Cards for the number of shares of Common Stock represented
by the above signed.
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