Document:

Exhibit
10.1

 

EXECUTION
VERSION

 

WARRANT
EXCHANGE AGREEMENT

 

THIS
WARRANT EXCHANGE AGREEMENT (the “Agreement”) is dated this 19th day of August, 2021, by and between Digital
Ally, Inc., a Nevada corporation (the “Company”), and the warrant holders set forth on the signature pages to this
Agreement (each a “Holder” and collectively, the “Holders”).

 

WHEREAS,
pursuant to the terms of a Securities Purchase Agreement, dated January 27, 2021, each of the Holders was issued and holds a warrant,
in the form of Exhibit A annexed hereto, to purchase 7,150,000 shares of the Company’s common stock, par value $0.001 per
share (the “Common Stock”) (each an “Original Warrant” and collectively, the “Original
Warrants”), which Original Warrants and the shares of Common Stock exercisable thereunder were offered pursuant to the Company’s
prospectus supplement, dated January 27, 2021 (the “Prospectus Supplement”) to the prospectus dated July 2, 2020 (the
“Prospectus”) forming a part of the Company’s registration statement on Form S-3 (File No. 333-239419) filed
with the Securities and Exchange Commission (the “Commission”) and declared effective on July 2, 2020; and

 

WHEREAS,
each of the Holders and the Company have agreed to exchange (the “Exchange”) each Holder’s Original Warrant,
exercisable for 3,840,770 shares of Common Stock, for a new unregistered common stock purchase warrant of the Company (each an “Exchange
Warrant” and collectively the “Exchange Warrants”), in the form of Exhibit B annexed hereto, exercisable
for 3,840,770 shares of Common Stock;

 

WHEREAS,
the Exchange and the issuance of the Exchange Warrants pursuant thereto will be made in reliance on the provisions of Section 4(a)(2)
of the Securities Act of 1933, as amended (the “Securities Act”); and

 

WHEREAS,
upon the consummation of the transactions contemplated hereby, and as a result of the Exchange, the number of shares of Common Stock
available for exercise under each of the Original Warrants will be reduced to 3,309,230 shares of Common Stock, and the Company shall
cancel the physical documents evidencing the ownership of the Original Warrants and issue to each of the Holders, in place thereof, a
replacement registered warrant, in the form of Exhibit C annexed hereto (a “Replacement Original Warrant” and
collectively, the “Replacement Original Warrants”)), which shall be in the same form as the Original Warrants, but
shall each be exercisable for 3,309,230 shares of Common Stock;

 

NOW,
THEREFORE, in consideration of the terms and conditions contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and each of the Holders hereby agrees as follows:

 

Section
1. Exchange. Subject to and upon the terms and conditions set forth in this Agreement, each of the Holders agrees to surrender
to the Company its Original Warrant and, in exchange therefor, the Company shall issue to the Holder (i) an Exchange Warrant exercisable
for up to 3,840,770 shares of Common Stock and (ii) a Replacement Original Warrant exercisable for up to 3,309,230 shares of Common Stock.

 

    	 

    	 

    

 

1.1
Closing. On the Closing Date (as defined below), the Company will convey and deliver (or cause to be conveyed and delivered) the
Exchange Warrants and the Replacement Original Warrants to each of the Holders, and each Holder will surrender to the Company its Original
Warrant for cancellation. The closing of the Exchange shall occur as of the date hereof, or as soon thereafter as the parties hereto
may mutually agree in writing (the “Closing Date”), subject to the provisions of Section 4 and Section 5
herein.

 

1.2
Section 4(a)(2). Assuming the accuracy of the representations and warranties of each of the Company and each Holder set forth
in Sections 2 and 3 of this Agreement, the parties hereto acknowledge and agree that the purpose of such representations and warranties
is, among other things, to ensure that (i) the Exchange Warrants are being issued pursuant to an exemption from registration, pursuant
to Section 4(a)(2) of the Securities Act and compliance with the conditions of Rule 144(d)(3)(ii) promulgated under the Securities Act.

 

Section
2. Representations and Warranties of the Company. The Company represents and warrants to the Holder that:

 

2.1
Organization and Qualification. Except as set forth on Schedule 2.1, the Company is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite
power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company,
nor any of its subsidiaries is in violation or default of any of the provisions of its respective certificates or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and its subsidiaries is duly qualified to conduct business and
is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property
owned by such entity makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case
may be, could not have or reasonably be expected to result in a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company, taken as a whole (a “Material Adverse Effect”).

 

2.2
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement, the Exchange Warrants and each of the other transaction documents prepared in connection with the Exchange
(collectively, the “Transaction Documents”) and to otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Company’s board of directors or the Company’s shareholders in connection herewith
or therewith. This Agreement and each other Transaction Document to which the Company is a party has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and
binding obligation of the Company enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’
rights generally; (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies; and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

    	2 

    	 

    

 

2.3
Issuance of the Exchange Warrants. The issuance of the Exchange Warrants by the Company is duly authorized and, upon conveyance
in accordance with the terms hereof, the Exchange Warrants shall be validly issued, fully paid and non-assessable and free from all free
and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, rights, proxies,
equity or other adverse claim thereto (collectively, “Liens”) other than restrictions on transfer provided for in
the Transaction Documents. The shares of Common Stock issuable upon the exercise of the Exchange Warrants, when issued in accordance
with the terms of the Exchange Warrants and any other applicable Transaction Documents, will be validly issued, fully paid and non-assessable
shares of Common Stock, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction
Documents. Upon issuance and conveyance in accordance herewith, the conveyance by the Company of the Exchange Warrants is exempt from
the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act.

 

2.4
No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance of the Exchange Warrants (and upon the exercise of the Exchange Warrants), and the consummation by
it of the transactions contemplated hereby and thereby do not and will not conflict with or violate any provision of the Company’s
articles of incorporation, bylaws or other organizational or charter documents.

 

2.5
Acknowledgment Regarding the Exchange. The Company acknowledges and agrees that each of the Holders is acting solely in the capacity
of an arm’s length third party with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges
each of the Holders is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby, and any advice given by either of the Holders or any of its representatives or agents
in connection with this Agreement is merely incidental to the Exchange.

 

    	3 

    	 

    

 

2.6
No Commission; No Other Consideration. The Company has not paid or given, and has not agreed to pay or give, directly or indirectly,
any commission or other remuneration for soliciting the Exchange. Each of the Exchange Warrants is being conveyed exclusively for the
exchange of a portion of the Original Warrants and no other consideration has or will be paid for the Exchange Warrants.

 

2.7
Section 4(a)(2) Representations. Neither the Company nor any person acting on its behalf has engaged or will engage in any form
of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Exchange
Warrants any offer or sale of the Exchange Warrants. The Company has not, nor has any person acting on its behalf, directly or indirectly
made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the Exchange
and the issuance of the Exchange Warrants pursuant to this Agreement to be integrated with prior offerings by the Company for purposes
of the Securities Act which would prevent the Company from delivering the Exchange Warrants to the Holders pursuant to Section 4(a)(2)
of the Securities Act, nor will the Company take any action or steps that would cause the Exchange, issuance and delivery of the Exchange
Warrants to be integrated with other offerings to the effect that the delivery of the Exchange Warrants to the Holders would be seen
not to be exempt from registration pursuant to Section 4(a)(2) of the Securities Act. Assuming the accuracy of Holder’s representations
and warranties set forth in Section 3 hereof, no registration under the Securities Act is required for the issuance of the Exchange Warrants
hereunder.

 

2.8
No Third-Party Advisors. Other than legal counsel, the Company has not engaged any third parties to assist in the solicitation
with respect to the Exchange.

 

2.9
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act of 1934, as amended (the “Exchange Act”),
including pursuant to Section 13(a) or 15(d) of the Exchange Act, for the two years preceding the date hereof (or such shorter period
as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely
basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such
extension.

 

2.10
Filings, Consents and Approvals. Other than as set forth on Schedule 2.10 and any filings required to be made with the
Commission pursuant to the Exchange Act or any state securities commission in connection with the transactions contemplated under this
Agreement, the Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing
or registration with, any court or other federal, state, local or other governmental authority or any natural person, firm, partnership,
association, corporation, company, trust, business trust or other entity (each, a “Person”) in connection with the
execution, delivery and performance by the Company of the Transaction Documents.

 

    	4 

    	 

    

 

2.11
Capitalization. The capitalization of the Company is as set forth in the SEC Reports. No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.

 

2.12
Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has been
no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the
Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial
statements pursuant to U.S. generally accepted accounting principles or disclosed in filings made with the Commission, (iii) the Company
has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property
to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company
has not issued any equity securities to any officer, director or Affiliate (as defined below), except pursuant to existing Company stock
option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for
the issuance of the Exchange Warrants contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development
has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its subsidiaries or their respective
businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable
securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading
Day prior to the date that this representation is made, which for purposes of this Agreement, “Trading Day” shall
refer to any day on which the Nasdaq Capital Market is open for trading business. “Affiliate” means, with respect
to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person,
it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either
to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction
of the management and policies of such Person whether by contract or otherwise.

 

2.13
Litigation. Other than as set forth in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its properties before
or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of
any of the Transaction Documents or the Exchange Warrants or (ii) could, if there were an unfavorable decision, have or reasonably be
expected to result in a Material Adverse Effect.

 

    	5 

    	 

    

 

2.14
Compliance. Except as set forth in the SEC Reports, neither the Company nor any of its subsidiaries: (i) is in material default
under or in material violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would
result in a material default by the Company or any of its subsidiaries under), nor has the Company or any of its subsidiaries received
notice of a claim that it is in material default under or that it is in material violation of, any indenture, loan or credit agreement
or any other agreement or instrument set forth in the Company’s most recent Annual Report on Form 10-K to which it is a party or
by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in material violation
of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) to its knowledge, is or has been in
violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal,
state and local laws relating to environmental protection, occupational health and safety, product quality and safety and employment
and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

 

2.15
Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any of its subsidiaries
to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents.

 

2.16
No Integrated Offering. Assuming the accuracy of each of the Holder’s representations and warranties set forth in Section
2, neither the Company, nor any of its Affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under circumstances that would cause the Exchange to be integrated
with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities
under the Securities Act, or (ii) any applicable shareholder approval provisions of any trading markets or exchanges on which the shares
of Common Stock are listed, quoted or designated for trading on the date in question (each, a “Trading Market”).

 

Section
3. Representations and Warranties of each of the Holders. Each of the Holder’s, solely on behalf of itself, represents and
warrants to the Company that:

 

3.1
Ownership of the Original Warrant. Such Holder is the legal and beneficial owner of its Original Warrant. Such Holder paid for
its Original Warrant and has continuously held its Original Warrant since its purchase. Such Holder owns its Original Warrant outright
and free and clear of any Liens.

 

    	6 

    	 

    

 

3.2
No Public Sale or Distribution. Such Holder is acquiring the Exchange Warrant in the ordinary course of business for its own account
and not with a view toward, or for resale in connection with, the public sale or distribution thereof; provided, however, that by making
the representations herein, such Holder does not agree to hold the Exchange Warrant for any minimum or other specific term and reserves
the right to dispose of its Exchange Warrant at any time in accordance with an exemption from the registration requirements of the Securities
Act and applicable state securities laws. Except as contemplated herein, such Holder does not presently have any agreement or understanding,
directly or indirectly, with any person to distribute, or transfer any interest or grant participation rights in, its Original Warrant
or the Exchange Warrant.

 

3.3
Accredited Investor and Affiliate Status. Such Holder is an “accredited investor” as that term is defined in Rule
501 of Regulation D under the Securities Act. The Holder is not, and has not been, for a period of at least three months prior to the
date of this Agreement (a) an officer or director of the Company, (b) an “affiliate” of the Company (as defined in Rule 144)
or (c) a “beneficial owner” of more than ten percent (10%) of the shares of Common Stock (as defined for purposes of Rule
13d-3 of the Exchange Act).

 

3.4
Reliance on Exemptions. Such Holder understands that the Exchange is being made in reliance on specific exemptions from the registration
requirements of the United States federal and applicable state securities laws and that the Company is relying in part upon the truth
and accuracy of, and such Holder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings
of such Holder set forth herein in order to determine the availability of such exemptions and the eligibility of such Holder to complete
the Exchange and to acquire the Exchange Warrant.

 

3.5
Information. Such Holder has been furnished with all materials relating to the business, finances and operations of the Company
and materials relating to the Exchange which have been requested by such Holder. The Holder has been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Holder or its representatives
shall modify, amend or affect such Holder’s right to rely on the Company’s representations and warranties contained herein.
Such Holder acknowledges that all of the documents filed by the Company with the Commission under Sections 13(a), 14(a) or 15(d) of the
Exchange Act that have been posted on the Commission’s EDGAR site are available to such Holder, and such Holder has not relied
on any statement of the Company not contained in such documents in connection with such Holder’s decision to enter into this Agreement
and the Exchange.

 

    	7 

    	 

    

 

3.6
Risk. Such Holder understands that its investment in the Exchange Warrant involves a high degree of risk. Such Holder is able
to bear the risk of an investment in the Exchange Warrant including, without limitation, the risk of total loss of its investment. Such
Holder has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect
to the Exchange.

 

3.7
No Governmental Review. Such Holder understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement in connection with the Exchange or the fairness or suitability of the
investment in the Exchange Warrants nor have such authorities passed upon or endorsed the merits of the Exchange Warrants.

 

3.8
Organization; Authorization. Such Holder is duly organized, validly existing and in good standing under the laws of its jurisdiction
of incorporation and has the requisite organizational power and authority to enter into and perform its obligations under this Agreement.

 

3.9
Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of such Holder and
shall constitute the legal, valid and binding obligations of such Holder enforceable against such Holder in accordance with its terms.
The execution, delivery and performance of this Agreement by such Holder and the consummation by such Holder of the transactions contemplated
hereby (including, without limitation, the irrevocable surrender of its Original Warrant) will not result in a violation of the organizational
documents of such Holder.

 

3.10
Prior Investment Experience. Such Holder acknowledges that it has prior investment experience, including investment in securities
of the type being exchanged, including the Original Warrant and the Exchange Warrant, and has read all of the documents furnished or
made available by the Company to it and is able to evaluate the merits and risks of such an investment on its behalf, and that it recognizes
the highly speculative nature of this investment.

 

3.11
Tax Consequences. Such Holder acknowledges that the Company has made no representation regarding the potential or actual tax consequences
for such Holder which will result from entering into the Agreement and from consummation of the Exchange. Such Holder acknowledges that
it bears complete responsibility for obtaining adequate tax advice regarding the Agreement and the Exchange.

 

3.12
No Registration, Review or Approval. Such Holder understands that the Exchange Warrant is being issued and exchanged pursuant
to an exemption from registration under Section 4(a)(2) of the Securities Act.

 

    	8 

    	 

    

 

Section
4. Conditions Precedent to Obligations of the Company. The obligation of the Company to consummate the transactions contemplated
by this Agreement is subject to the satisfaction of each of the following conditions, provided that these conditions are for the Company’s
sole benefit and may be waived by the Company at any time in its sole discretion by providing the Holders with prior written notice thereof:

 

4.1
Delivery. Each of the Holders shall have delivered to the Company its Original Warrant.

 

4.2
No Prohibition. No order of any court, arbitrator, or governmental or regulatory authority shall be in effect which purports to
enjoin or restrain any of the transactions contemplated by this Agreement; and

 

4.3
Representations. The accuracy in all material respects when made and on the Closing Date of the representations and warranties
of each of the Holders contained herein (unless as of a specific date therein).

 

Section
5. Conditions Precedent to Obligations of the Holders. The obligation of each of the Holders to consummate the transactions contemplated
by this Agreement is subject to the satisfaction of each of the following conditions, provided that these conditions are for each Holder’s
sole benefit and may be waived by a Holder at any time in its sole discretion by providing the Company with prior written notice thereof:

 

5.1
No Prohibition. No order of any court, arbitrator, or governmental or regulatory authority shall be in effect which purports to
enjoin or restrain any of the transactions contemplated by this Agreement;

 

5.2
Representations. The representations and warranties of the Company (i) shall be true and correct in all material respects when
made and on the Closing Date (unless as of a specific date therein) for such representations and warranties contained herein that are
not qualified by “materiality” or “Material Adverse Effect” and (ii) shall be true and correct when made and
on the Closing Date (unless as of specific date therein) for such representations and warranties contained herein that are qualified
by “materiality” or “Material Adverse Effect”;

 

5.3       All
Obligations. All obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall
have been performed; and

 

5.3
No Suspension. From the date hereof to the Closing Date, trading in the shares of Common Stock shall not have been suspended by
the Commission or any Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported
by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York
State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable
judgment of a Holder makes it impracticable or inadvisable to consummate the Exchange and obtain the Exchange Warrants on the Closing
Date.

 

    	9 

    	 

    

 

Section
6. Other Agreements between the Parties.

 

6.1       Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the Exchange of the Original Warrants in a manner that would require the
registration under the Securities Act of the sale of the Exchange Warrants or that would be integrated with the offer of the Exchange
Warrants for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

6.2       Replacement
of Securities. If any certificate or instrument evidencing either of the Exchange Warrants is mutilated, lost, stolen or destroyed,
the Company shall convey or cause to be conveyed in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also
pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement securities.

 

6.3       Other
Agreements. The Company has not and will not, at any time while the Exchange Warrants are outstanding, enter into any agreements
or amendments, modifications or waivers of any agreements or enter into any side letters or other similar agreements with any other holder
of the Original Warrants or any Exchange Warrants that materially benefits such holder or any other party thereto, unless the Holder
has been offered the same benefits in connection with the Original Warrants and the Exchange Warrants held by the Holder.

 

Section
7. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be construed under the laws of the state of New York,
without regard to principles of conflicts of law or choice of law that would permit or require the application of the laws of another
jurisdiction. The Company and the Holders each hereby agrees that all actions or proceedings arising directly or indirectly from or in
connection with this Agreement shall be litigated only in the Supreme Court of the State of New York or the United States District Court
for the Southern District of New York located in New York County, New York. The Company and the Holders each consents to the exclusive
jurisdiction and venue of the foregoing courts and consents that any process or notice of motion or other application to either of said
courts or a judge thereof may be served inside or outside the State of New York or the Southern District of New York by generally recognized
overnight courier or certified or registered mail, return receipt requested, directed to such party at its or his address set forth below
(and service so made shall be deemed “personal service”) or by personal service or in such other manner as may be permissible
under the rules of said courts. THE COMPANY AND THE HOLDER EACH HEREBY WAIVES ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION
PURSUANT TO THIS AGREEMENT.

 

    	10 

    	 

    

 

Section
8. Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed by each party hereto and delivered to the other party
hereto; provided that a facsimile or electronic signature shall be considered due execution and shall be binding upon the signatory thereto
with the same force and effect as if the signature were an original, not a facsimile or electronic signature, as applicable.

 

Section
9. Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation
of, this Agreement.

 

Section
10. Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.

 

Section
11. No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties hereto
to express their mutual intent, and no rules of strict construction will be applied against any party hereto.

 

Section
12. Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersedes all other prior oral or written
agreements between the Holder, the Company, their respective Affiliates and Persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the other Transaction Documents referenced herein contain the entire understanding of the parties
hereto with respect to the matters covered herein and therein. No provision of this Agreement may be amended other than by an instrument
in writing signed by the Company and the Holders. No provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought.

 

Section
13. Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; (b) upon receipt,
when sent by facsimile or electronically (provided confirmation of transmission is mechanically or electronically generated and kept
on file by the sending party); or (c) one calendar day (excluding Saturdays, Sundays, and national banking holidays) after deposit with
an overnight courier service, in each case properly addressed to the party to receive the same.

 

    	11 

    	 

    

 

The
addresses and email addresses for such communications shall be:

 

If
to the Company:

 

Digital
Ally, Inc.

15612
College Blvd.

Lenexa,
KS 66219

Attn:
Stanton E. Ross, Chief Executive Officer

Email:
stan.ross@digitalallyinc.com

 

If
to the Holders:

 

refer
to the information set forth on each Holder’s signature page to this Agreement.

 

or
to such other address, email address and/or facsimile number and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five (5) days prior to the effectiveness of such change.

 

Section
14. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, including any purchaser of either of the Exchange Warrants.

 

Section
15. No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

Section
16. Survival of Representations. The representations and warranties of the Company and the Holder contained in Sections 2 and
3, respectively, will survive the closing of the transactions contemplated by this Agreement for a period of twelve (12) months after
the date of this Agreement.

 

    	12 

    	 

    

 

Section
17. Disclosure of Transaction. The Company shall, on or before 9:30 a.m., New York City time, on or prior to the first (1st)
business day after the date of this Agreement, file a Current Report on Form 8-K with the Commission describing the terms of the transactions
contemplated hereby in the form required by the Exchange Act and attaching the Transaction Documents, to the extent that they are required
to be filed under the Exchange Act, that have not previously been filed with the Commission by the Company (including, without limitation,
this Agreement) as exhibits to such filing (including all attachments, the “Form 8-K”). From and after the filing
of the Form 8-K, the Company shall have disclosed all material, non-public information (if any) provided up to such time to the Holder
by the Company or any of its subsidiaries or any of their respective officers, directors, employees or agents. In addition, effective
upon the filing of the Form 8-K, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any
agreement with respect to the transactions contemplated by the Transaction Documents or as otherwise disclosed in the Form 8-K, whether
written or oral, between the Company, any of its subsidiaries or any of their respective officers, directors, Affiliates, employees or
agents, on the one hand, and each of the Holders or any of their respective Affiliates, on the other hand, shall terminate. Neither the
Company, its subsidiaries nor either of the Holders shall issue any press releases or any other public statements with respect to the
transactions contemplated hereby; provided, however, the Company shall be entitled, without the prior approval of the Holders,
to make a press release or other public disclosure with respect to such transactions (i) in substantial conformity with the Form 8-K
and contemporaneously therewith or (ii) as is required by applicable law and regulations (provided that in the case of clause (i) the
Holders shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release).
Without the prior written consent of the Holders (which may be granted or withheld in the Holder’s sole discretion), except as
required by applicable law, the Company shall not (and shall cause each of its subsidiaries and Affiliates to not) disclose the name
of the Holders in any filing, announcement, release or otherwise.

 

Section
18. Further Assurances. Each party hereto shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party hereto may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

[Signature
Pages Follow]

 

    	13 

    	 

    

  

IN
WITNESS WHEREOF, the parties hereto have executed this Exchange Agreement as of the date first written above.

 

	DIGITAL ALLY, INC.	 
	 	 	 
	By:	 	 
	Name:
    	Stanton
    E. Ross	 
	Title:	Chief
    Executive Officer	 

 

[COMPANY
SIGNATURE PAGE TO DIGITAL ALLY, INC. WARRANT EXCHANGE AGREEMENT]

 

    	14 

    	 

    

 

IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.

 

Name
of Holder: ________________________________________________________

 

Signature
of Authorized Signatory of Holder: _________________________________

 

Name
of Authorized Signatory: _______________________________________________

 

Title
of Authorized Signatory: ________________________________________________

 

Email
Address of Authorized Signatory:_________________________________________

 

Facsimile
Number of Authorized Signatory: __________________________________________

 

Address
for Notice to Holder:

 

Address
for Delivery of Exchange Warrant (if not same as address for notice):

 

EIN
Number: ____________________

 

[HOLDER
SIGNATURE PAGE TO DIGITAL ALLY, INC. WARRANT EXCHANGE AGREEMENT]

 

    	15Exhibit
10.1 

 

SEPARATION
AGREEMENT AND GENERAL RELEASE

 

This
Separation Agreement and General Release (the “Agreement”) is being entered into between Edward J. Fred (“Employee”)
and Taronis Fuels, Inc. (the “Company”) in connection with the Employee’s voluntary resignation of employment
with the Company as of August 13, 2021 (the “Separation Date”) and to set out the terms and conditions of Employee’s
separation from the Company. Employee and the Company are referred to collectively as the “Parties.”

 

1. Resignation
of Employment. On June 16, 2021, Employee tendered his voluntary resignation from the Company (“Resignation Date”).
As of the Resignation Date, Employee was not authorized to perform any duties or services for or on behalf of the Company unless specifically
requested to do so in writing by the Company’s Chief Executive Office or Chief Financial Officer. As of July 11, 2021 (“Leave
Date”), Employee was on an unpaid leave of absence. As of the Separation Date, Employee’s employment with the Company
is terminated.

 

2. Severance
Benefits. In consideration for Employee’s execution of this Agreement and non-revocation of the same, and agreeing to abide
by the terms contained herein, the Company will:

 

a. Pay
to Employee, as severance, the amount of $343,750, which is equal to eleven (11) months’ of Employee’s base salary at the
rate in effect as of the Separation Date (“Severance”). The Company will withhold the appropriate federal, state and
local taxes, as determined by the Company, from all Severance paid under this Agreement. Severance will be paid to Employee beginning
on the next regular payday following the expiration of the Revocation Period set forth in Section 11 below, without revocation
by Employee, and continuing thereafter in equal installments in accordance with the Company’s regular payroll practices until fully
paid, provided, however, that the first payment made in accordance with this Section shall be an amount equal to the pay
Employee would have received from the Leave Date through the Separation Date had Employee not been on unpaid leave during that time.

 

b. Pay
to Employee, as a lump sum within seven (7) days following the Effective Date of this Agreement, the amount of $27,836.54, less applicable
deductions and withholdings, representing the value of approximately 19.3 days of accrued but unused vacation time at the rate of Employee’s
base salary in effect as of the Separation Date.

 

c. Provided
that Employee timely elects to continue Employee’s employer-sponsored health insurance benefits via the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA), pay Employee’s monthly premium for the Company–sponsored
medical and/or dental plan coverage, for a period of up to eleven (11) months following the Separation Date (“COBRA Premium
Payments”); provided, however, that the COBRA Premium Payments shall immediately cease prior to the end
of such eleven-month period in the event, and upon the date, that Employee becomes eligible for and obtains substantially equivalent
employer-offered health insurance coverage. Thereafter, Employee will be responsible for the full
COBRA premium to continue coverage. If Employee is not eligible for COBRA, becomes ineligible, or fails to make timely elections and
payments as required for coverage continuation under COBRA, Employee’s coverage will end. Notwithstanding the foregoing
and regardless of whether Employee signs this Agreement, Employee understands that he shall have the right to COBRA continuation coverage
as to any applicable benefits, which means that Employee will be entitled to buy continued health plan coverage under the normal COBRA
health care continuation rules and plan terms.

 

    	1 

     

    

 

3. Further
Acknowledgement. Employee acknowledges and agrees that Employee has been fully paid any and all compensation due and owing to Employee,
including all wages, salary, commissions, bonuses, options, shares, stock, incentive payments, equity interests, profit-sharing payments,
expense reimbursements, accrued but unused vacation pay, leave or other benefits. Employee further agrees that the Severance is not compensation
for Employee’s services rendered through Employee’s Separation Date, but rather constitutes consideration for the promises
contained in this Agreement, and is above and beyond any wages or salary or other sums to which Employee was entitled as a result of
Employee’s employment with the Company or under any contract or law.

 

4. General
Release. Except for any rights granted under this Agreement, Employee, for himself, and for his heirs, assigns, executors and administrators,
and also on behalf of TEE Enterprises, LLC (“TEE”), which Employee represents and warrants he has authority to bind for purposes
of this Agreement, hereby releases, remises and forever discharges the Company, its parents, subsidiaries, joint ventures, investors,
affiliates (including, but not limited to MagneGas Welding Supply, LLC, MagneGas IP, LLC, MagneGas Real Estate Holdings, LLC, and Taronis
Technologies, Inc.), divisions, predecessors, successors, assigns, and each of their respective directors, officers, partners, attorneys,
shareholders, administrators, employees, agents, representatives, employment benefit plans, plan administrators, fiduciaries, trustees,
insurers and re-insurers, and all of their predecessors, successors and assigns (collectively, the “Releasees”) of
and from all claims, causes of action, covenants, contracts, agreements, promises, damages, disputes, demands, and all other manner of
actions whatsoever, in law or in equity, that Employee ever had, may have had, now has, or that Employee’s heirs, assigns, executors
or administrators hereinafter can, shall or may have, whether known or unknown, asserted or unasserted, suspected or unsuspected, as
a result of or related to Employee’s employment with the Company, the termination of that employment, or any act or omission which
has occurred at any time up to and including the date of the execution of this Release (the “Released Claims”).

 

a. Released
Claims. The Released Claims released include, but are not limited to, any claims for monetary damages; any claims related to Employee’s
employment with the Company or the termination thereof; any claims to severance or similar benefits; any claims to expenses, attorneys’
fees or other indemnities; any claims to options or other interests in or securities of the Company, including but not limited to any
claims based on any actions or failures to act that occurred on or before the date of this Agreement; and any claims for other personal
remedies or damages sought in any legal proceeding or charge filed with any court or federal, state or local agency either by Employee
or by any person claiming to act on Employee’s behalf or in Employee’s interest. Employee understands that the Released Claims
may have arisen under different local, state and federal statutes, regulations, or common law doctrines. Employee hereby specifically,
but without limitation, agrees to release all Releasees from any and all claims under each of the following laws:

 

    	2 

     

    

 

i. Antidiscrimination
laws, such as Title VII of the Civil Rights Act of 1964, as amended, and Executive Order 11246 (which prohibit discrimination based
on race, color, national origin, religion, or sex); Section 1981 of the Civil Rights Act of 1866 (which prohibits discrimination based
on race or color); the Americans with Disabilities Act and Sections 503 and 504 of the Rehabilitation Act of 1973 (which prohibit discrimination
based upon disability); the Age Discrimination in Employment Act, as amended, 29 U.S.C. Section 621 et seq. (which prohibits discrimination
on the basis of age); the Equal Pay Act (which prohibits paying unequal pay for equal work on the basis of sex, race, or ethnicity);
the New York State Human Rights Law; the New York Labor Law (including but not limited to the New York State Worker Adjustment and Retraining
Notification Act, all provisions prohibiting discrimination and retaliation, and all provisions regulating wage and hour law); the New
York State Correction Law; the New York State Civil Rights Law; Section 125 of the New York Workers’ Compensation Law, the New
York City Human Rights Law; Arizona wage laws; Arizona equal pay laws; the Arizona Employment Protection Act; the Arizona Civil Rights
Act; the Arizona Occupational Health and Safety Act; Arizona right to work laws; Arizona employee drug testing laws; the Arizona Medical
Marijuana Act; Arizona genetic testing laws; the Arizona criminal code; or any other local, state or federal statute, regulation, common
law or decision concerning discrimination, harassment, or retaliation on these or any other grounds or otherwise governing the employment
relationship.

 

ii. Other
employment laws, such as the federal Worker Adjustment and Retraining Notification Act of 1988 and other similar state laws (known
as WARN laws, which require advance notice of certain workforce reductions); the Employee Retirement Income Security Act of 1974 (which,
among other things, protects employee benefits); the Fair Labor Standards Act of 1938 (which regulates wage and hour matters); the Family
and Medical Leave Act of 1993 (which requires employers to provide leaves of absence under certain circumstances); and any other local,
state, or federal statute, regulation, common law or decision concerning payment of wages, benefits, or termination of employment.

 

iii. Other
laws of general application, such as federal, state, or local laws enforcing express or implied employment agreements or other contracts
or covenants, or addressing breaches of such agreements, contracts or covenants; federal, state or local laws providing relief for alleged
wrongful discharge or termination, physical or personal injury emotional distress, fraud, intentional or negligent misrepresentation,
defamation, invasion of privacy, violation of public policy or similar claims; common law claims under any tort, contract or other theory
now or hereafter recognized, and any other federal, state, or local statute, regulation, common law doctrine, or decision regulating
or regarding employment. Included specifically in this Release are any and all claims that Employee and/or TEE might otherwise have pursuant
to:

 

A. That
certain Employment Agreement between Employee and the Company dated on or about January 5 and/or January 6, 2021, including as amended
by the First Amendment to Employment Agreement dated April 6, 2021 (together, the “Employment Agreement”), which Employee
and the Company represent, warrant and acknowledge is null, void and superseded in its entirety by this Agreement; and

 

B. That
certain Capital Markets Advisory Services Agreement between TEE and the Company dated June 9, 2020, including as amended on or about
February 25, 2021 (together, the “TEE Agreement”), and Employee represents and warrants that as of the Effective Date
of this Agreement, the TEE Agreement, and any other agreements or arrangements between TEE and the Company, are null, void and unenforceable.

 

    	3 

     

    

 

b. Participation
in Agency Proceedings. Nothing in this Agreement shall prevent Employee from filing a charge (including a challenge to the validity
of this Agreement) with the Equal Employment Opportunity Commission (the “EEOC”), the National Labor Relations Board
(the “NLRB”), or other similar federal, state or local agency, or from participating in any investigation or proceeding
conducted by the EEOC, the NLRB or similar federal, state or local agencies. However, by entering into this Agreement, Employee understands
and agrees that Employee is waiving any and all rights to recover any monetary relief or other personal relief as a result of any such
EEOC, NLRB or similar federal, state or local agency proceeding, including any subsequent legal action.

 

c. Claims
Not Released. The Released Claims do not include claims by Employee for: (1) unemployment insurance; (2) worker’s compensation
benefits; (3) state disability compensation; (4) previously vested benefits under any the Company-sponsored benefits plan; and (5) any
other rights that cannot by law be released by private agreement.

 

d. Employee
warrants that Employee has not previously filed or joined in any claims that are released in this Agreement and that Employee has not
given or sold any portion of any claims released herein to anyone else, and that Employee will indemnify and hold harmless the Company
and the Releasees from all liabilities, claims, demands, costs, expenses and/or attorneys’ fees incurred as a result of any such
prior assignment or transfer.

 

e. Acknowledgement
of Legal Effect of Release. BY SIGNING THIS AGREEMENT, EMPLOYEE UNDERSTANDS THAT EMPLOYEE IS WAIVING ALL RIGHTS EMPLOYEE MAY HAVE
HAD TO PURSUE OR BRING A LAWSUIT OR MAKE ANY LEGAL CLAIM AGAINST THE COMPANY OR THE RELEASEES, INCLUDING, BUT NOT LIMITED TO, CLAIMS
THAT IN ANY WAY ARISE FROM OR RELATE TO EMPLOYEE’S EMPLOYMENT OR THE TERMINATION OF THAT EMPLOYMENT, FOR ALL OF TIME UP TO AND
INCLUDING THE DATE OF THE EXECUTION OF THIS AGREEMENT. EMPLOYEE FURTHER UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EMPLOYEE IS PROMISING
NOT TO PURSUE OR BRING ANY SUCH LAWSUIT OR LEGAL CLAIM SEEKING MONETARY OR OTHER RELIEF.

 

5. Proprietary
and/or Confidential Information. Employee agrees that any sensitive, proprietary, or confidential information or data relating to
the Company or any of its affiliates or other Releasees as defined above, including, without limitation, trade secrets, processes, practices,
pricing information, billing histories, customer requirements, customer lists, customer contacts, employee lists, salary information,
personnel matters, financial data, operating results, plans, contractual relationships, projections for new business opportunities, new
or developing business for the Company, technological innovations in any stage of development, the Company’s financial data, long
range or short range plans, any confidential or proprietary information of others licensed to the Company, and all other data and information
of a competition-sensitive nature (collectively, “Confidential Information”), and all notes, records, software, drawings,
handbooks, manuals, policies, contracts, memoranda, sales files, or any other documents generated or compiled by any employee of the
Company reflecting such Confidential Information, that Employee acquired while an employee of the Company will not be disclosed or used
for Employee’s own purposes or in a manner detrimental to the Company’s interests.

 

    	4 

     

    

 

However,
please note that Employee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure
of the Company’s trade secrets that:

 

		(A)	Is
                                            made

 

		a.	In
                                            confidence to a federal, state or local government official, either directly or indirectly
                                            or to an attorney; and

 

		b.	Solely
                                            for the purpose of reporting or investigating a suspected violation of law; or

 

		(B)	Is
                                            made in a complaint or other document filed in a lawsuit or other proceeding, if such filing
                                            is made under seal.

 

Nothing
in this Agreement prohibits Employee from reporting possible violations of law to a governmental agency or self-regulatory organization,
cooperating with such agency, or taking other actions protected under federal or state whistleblower law (including receiving a whistleblower
award), in each case without prior notice to or authorization from the Company.

 

6. Return
of Information and Property. Employee agrees to return to the Company all property and equipment belonging to the Company and the
Releasees, including without limitation all computers including any laptop or cellular phone, hard drives, keys, passwords, and access
cards, the originals and all copies (regardless of medium) of all information, files, materials, documents or other property relating
to the business of the Company, the Releasees, or their affiliates, and Employee represents that all such information and items have
been returned to the Company. If Employee fails to return any such property, the Company shall be entitled to deduct from the Severance
an amount equal to the value of non-returned property.

 

7. Non-disparagement.
Employee agrees that neither Employee nor TEE will make to any person or entity any false, disparaging, or derogatory comments about
the Company, its business affairs, its employees, clients, contractors, agents, or any of the other Releasees. This prohibition does
not preclude Employee from providing truthful testimony if compelled by law. Employee will refer all reference requests regarding Employee’s
employment with the Company to the Company’s Human Resources department, who will disclose only Employee’s dates of employment
with the Company, last position held, and upon Employee’s written request, final salary, in response to such reference requests.
The Company agrees to direct Tobias Welo, Kevin Foti, Thomas Wetherald, Andrew McCormick, Sergey Andreevich Vasnetsov, Peter Molloy,
Wilbur Ross, Rick Steinseifer, Les Graff, Mary Pat Thompson, and Jakob Ogdahl not to make to any person or entity any false, disparaging,
or derogatory comments about Employee or TEE; provided, however, that nothing in this Agreement prohibits the Company or
any of its past, present or future officers, directors and employees from providing truthful information in connection with any government
investigation or as otherwise required by law, or in connection with a good faith effort to comply the Company’s legal or regulatory
requirements.

 

    	5 

     

    

 

8. Cooperation.
Employee shall cooperate with the Company in connection with any pending or future investigation by the Company or pending or future
investigations (including but not limited to any subpoenas or investigations conducted by the Securities Exchange Commission), litigation,
subpoena, proceeding or other matter which may be filed against or by the Company in or with any agency, court, or other tribunal and
concerning or relating to any matter falling within Employee’s knowledge or former area of responsibility (the “Matters”).
Employee shall provide reasonable assistance and completely truthful testimony in the Matters as needed, and the Company will reimburse
Employee for all reasonable associated out of pocket expenses incurred at the request of Employer. Without diminishing Employee’s
obligations to the Company in connection with this Paragraph 9, Employee specifically agrees to be interviewed, within 25 miles of his
residence or virtually, by the Company or its representatives on topics, without limitation other than that they be related to the Company’s
business, for a period of at least four (4) hours, no later than August 23, 2021.

 

9. General
Provisions. This Agreement contains the entire understanding and agreement between the Parties relating to the subject matter of
this Agreement, and supersedes any and all prior agreements or understandings between the Parties pertaining to the subject matter hereof,
including, without limitation, the Employment Agreement and the TEE Agreement, provided, however, that this Agreement does
not supersede the provisions contained in any agreements between the Employee and the Company not referenced in this Agreement that were
intended to continue after the termination of employment, including, but not limited to, intellectual property, and confidentiality provisions,
which shall remain in effect. No other promises or agreements shall be binding or shall modify this Agreement unless reduced to writing
and signed by the parties hereto or counsel for the parties. Employee has not relied upon any representation or statement outside this
Agreement with regard to the subject matter, basis or effect of this Agreement. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Arizona, excluding the choice of law rules thereof. Any judicial proceeding brought in connection
with this Agreement, including any action for injunctive, monetary, declaratory or other relief, shall be brought in a court of competent
jurisdiction in Maricopa County, Arizona, and, by execution and delivery of this Agreement, Employee (a) accepts, generally and unconditionally,
the exclusive jurisdiction of such courts and any related appellate courts, and irrevocably agrees to be bound by any final judgment
(after exhausting all appeals therefrom or after all time periods for such appeals have expired) rendered thereby in connection with
this Agreement; and (b) irrevocably waives any objection Employee may now or hereafter have as to the venue of any such suit, action
or proceeding brought in such a court or that such court is an inconvenient forum. The language of all parts of this Agreement will in
all cases be construed as a whole, according to the language’s fair meaning, and not strictly for or against any of the Parties.
This Agreement will be binding upon and inure to the benefit of the Parties and their respective representatives, successors and permitted
assigns. Neither the waiver by either Party of a breach of or default under any of the provisions of the Agreement, nor the failure of
such Party, on one or more occasions, to enforce any of the provisions of the Agreement or to exercise any right or privilege hereunder
will thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any provisions, rights
or privileges hereunder. The Parties agree to take or cause to be taken such further actions as may be necessary or as may be reasonably
requested in order to fully effectuate the purposes, terms, and conditions of this Agreement. This Agreement and the rights and obligations
of the Parties hereunder may not be assigned by Employee without the prior written consent of the Company, but may be assigned by the
Company or its successors and assigns without Employee’s permission or consent. If any one or more of the provisions of this Agreement,
or any part thereof, will be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder
of this Agreement will not in any way be affected or impaired thereby. This Agreement may be signed in one or more counterparts, each
of which will be deemed an original, and all of which together will constitute one instrument.

 

    	6 

     

    

 

10. No
Admission; Attorneys’ Fees. The Parties agree that nothing contained in this Agreement will constitute or be treated as an
admission of liability or wrongdoing by either of them. In any action to enforce the terms of this Agreement, the prevailing Party will
be entitled to recover its costs and expenses, including reasonable attorneys’ fees.

 

11. ADEA
Acknowledgment/Time Periods. With respect to the General Release in Section 4 of this Agreement, Employee agrees and understands
that by signing this Agreement, Employee is specifically releasing all claims under the Age Discrimination in Employment Act, as amended,
29 U.S.C. Section 621 et seq. Employee acknowledges that Employee has carefully read and understands this Agreement in its entirety,
and executes it voluntarily and without coercion.

 

a. Consideration
Period. Employee first received this Agreement on June 30, 2021. Employee is hereby advised to consult with a competent, independent
attorney of Employee’s choice, at Employee’s expense, regarding the legal effect of this Agreement before signing it. Employee
was provided with more than twenty-one (21) days from receipt of this Agreement to consider whether to execute it. Employee must execute
this Agreement on the Separation Date or it will be deemed null and void. Employee and the Company agree that any changes to this Agreement,
whether material or immaterial, do not restart the running of the 21-day review period.

 

b. Revocation
Period. Employee understands that Employee has seven (7) days following Employee’s execution of this Agreement to revoke in
writing his release of ADEA claims, and in the event of such revocation the Company shall have the option, in its sole discretion, to
deem the Agreement null and void in its entirety. If Employee wishes to revoke his release of ADEA claims after signing this Agreement,
Employee must provide written notice of Employee’s decision to revoke the Agreement to the Company, Attention: Eric Newell, ericnewell@taronisfuels.com,
by no later than 12:01 a.m. on the eighth (8th) calendar day after the date by which Employee has signed this Agreement (the
“Revocation Deadline”).

 

12. Non-Solicitation.
In addition to each Employee’s obligations under any proprietary information or similar agreement, the Employee and TEE shall not
for a period of one (1) year following the Separation Date, either on Employee’s own account or jointly with or as a manager, agent,
officer, employee, consultant, partner, joint venturer, owner or shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from the Company or any of the Releasees, any of their respective officers
or employees; provided, however, that a general advertisement to which an officer or employee of the Company or one of its affiliates
responds shall in no event be deemed to result in a breach of this Section. In addition, the Employee and TEE shall not, and shall use
reasonable efforts to ensure that the Employee’s attorneys, agents, or other representatives do not, disparage or otherwise interfere
in any way with the ability of the Company or Releasees to market its products or services, to retain existing customer relationships
or to obtain new customer relationships. Employee further understands and acknowledges that, because of Employee’s experience with
and relationship to the Company, Employee has had access to and learned about much or all of the Company’s Confidential Information
and trade secrets. Employee therefore agrees and covenants that Employee will not use the Confidential Information or trade secrets to
directly or indirectly interrupt, disturb or interfere with the relationships of the Company or any of its affiliates or other Releasees
with any customer, supplier, consultant, independent contractor or other business partner, or to compete unfairly with the Company or
any of its affiliates or other Releasees.

 

    	7 

     

    

 

13. Assignment
of Rights to Intellectual Property

 

a. Definitions.
For the purposes of this Section 13, “Intellectual Property” means any and all (1) patents, patent applications, patent
disclosures (including all divisions, renewals continuations, and continuations-in-part thereof, and all Letters Patent of the U.S. which
may be granted thereon and all reissues and extensions thereof, and all applications for Letters Patent which may be filed for inventions
embodied by the Patents in any country or countries foreign to the U.S., and all Letters Patent which may be granted for said inventions
embodied by the Patents in any country or countries foreign to the U.S. and all extensions, renewals and reissues thereof and all rights
of priority in any such country or countries based upon the filing of the Patents in the U.S. which are created by any law, treaty or
international convention, all of which shall be included in the term “Patent”), and inventions (whether patentable or not);
(2) trademarks, service marks, trade dress, trade names, logos, corporate names, Internet domain names, and registrations and applications
for the registration thereof together with all of the goodwill associated therewith; (3) works of authorship, copyrights and copyrightable
works (including computer programs and mask works) and registrations and applications thereof; (4) trade secrets, know-how and other
confidential information, including any formula, process, discovery, development, design, innovation, improvement, materials, documents
or other work product (including, without limitation, research, reports, software, databases, systems, applications, presentations, textual
works, content or audiovisual materials), algorithms, and other forms of intellectual property (in each case, whether or not patentable
or registrable under copyright, trademark, or other relevant statutes); (5) waivable or assignable rights of publicity, and waivable
or assignable moral rights; (6) unregistered and registered design rights and any applications for registration thereof; and (7) database
rights and all other forms of intellectual property, such as data. “Works” shall refer to all Intellectual Property made,
conceived, or first actually reduced to practice by the Employee, solely or jointly with others, during Employee’s employment by
the Company other than Intellectual Property that Employee develops both (i) entirely on Employee’s own time and (ii) without using
the equipment, supplies, facilities, confidential information or trade secret information of the Company, unless such Intellectual Property
relates at the time of conception or reduction to practice of the Intellectual Property (a) to the business of the Company, (b) to the
actual or demonstrably anticipated research or development of the Company or (c) results from any work performed by the Employee for
the Company.

 

b. Assignment
of Rights. Employee hereby acknowledges and agrees that all Works are hereby deemed “work made for hire” as defined in
17 U.S.C. § 101 for the Company and all copyrights therein automatically and immediately vest in the Company. If, for any reason,
any Works do not constitute “work made for hire,” Employee hereby assigns and agrees to assign to the Company (or, if otherwise
directed by the Company, its successors and assigns) Employee’s full right, title and interest in and to all Works, including but
not limited to (i) all of Employee’s right, title and interest in, to and under the Patents, (ii) the copyright rights in and to
such Works, (iii) the trademarks included among the Works, together with the goodwill of the business symbolized by such trademarks,
(iv) any applications and registrations for any of the foregoing, including the right to apply for, maintain, and renew the same, and
(iv) with all rights of action and claims for damages and benefits arising because of past infringement of said patent, trademark, and/or
copyright rights in such Works. To the extent that any of Employee’s pre-existing Intellectual Property is incorporated in or combined
with any Works or otherwise necessary for the use or exploitation of any Works, Employee hereby grants to the Company an irrevocable,
worldwide, perpetual, royalty-free, fully paid-up, non-exclusive license to use, publish, reproduce, perform, display, distribute, modify,
prepare derivative works based upon, make, have made, sell, offer to sell, import, and otherwise exploit such preexisting Intellectual
Property and derivative works thereof. The Company may assign, transfer, and sublicense (through multiple tiers) such rights to others
without Employee’s approval.

 

    	8 

     

    

 

c. Further
Assurances. Employee further agrees to execute any and all applications for domestic and foreign patents, copyrights or other proprietary
rights or related documents (including, as applicable, inventor declarations) and to do such other acts (including without limitation
the execution and delivery of instruments of further assurance or confirmation) requested by the Company to assign the Works, or any
portion thereof, to the Company and to permit the Company to enforce any and all rights in patents, copyrights, trademarks, trade secrets,
or other proprietary rights to the Works. In the event the Company is unable, after reasonable effort, to obtain Employee’s signature
on any such documents, Employee hereby irrevocably designates and appoints the Company as Employee’s agent and attorney-in-fact,
to act for and on Employee’s behalf solely to execute and file any such application or other document and do all other lawfully
permitted acts to further the prosecution and issuance of patents, copyrights, or other intellectual property protection related to the
Works with the same legal force and effect as if Employee had executed them. Employee agrees that this power of attorney is coupled with
an interest. Employee hereby authorizes and requests the Commissioner of Patents of the U.S., and any Official of any country or countries
foreign to the U.S., whose duty it is to issue patents on any applications of Employee submitted by or on behalf of the Company, to issue
all Letters Patent for said inventions to the Company, its successors and assigns, in accordance with the terms of this instrument.

 

d. Exception
to Assignments. Employee understands that Employee is not obligated to assign any Works that are not assignable under the law of
a state where Employee works. Employee will advise the Company promptly in writing of any Works that Employee believes are not assignable
under the law of a state where Employee works.

 

e. Retroactive
Effect. This Section 13, including the assignments, licenses, and waivers set forth in this Section 13: (a) will have retroactive
effect beginning on the earliest date that Employee performed any work or services for the Company or any of its Affiliates, whether
or not such date is prior to the date of this Agreement; and (b) will survive any expiration or termination of any employment or engagement
of Employee by the Company or any of its Affiliates.

 

f. Notice
of Immunity Under the Economic Espionage Act of 1996, as Amended by the Defend Trade Secrets Act of 2016. Notwithstanding any other
provision of this Agreement: (a) Employee will not be held criminally or civilly liable under any federal or state trade secret law for
any disclosure of a trade secret that is made: (i) in confidence to a federal, state, or local government official, either directly or
indirectly, or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law; or (ii) in a complaint
or other document that is filed under seal in a lawsuit or other proceeding; and (b) if Employee files a lawsuit for retaliation by the
Company for reporting a suspected violation of law, Employee may disclose the Company’s trade secrets to Employee’s attorney
and use the trade secret information in the court proceeding if Employee (i) files any document containing the trade secret under seal;
and (ii) does not disclose the trade secret, except pursuant to court order.

 

    	9 

     

    

 

14. Internal
Revenue Code Section 409A: The Parties intend to comply with the requirements of section 409A of the Internal Revenue Code of 1986,
as amended (“Section 409A”). All payments under this Agreement are intended to either be exempt from or comply with the requirements
of Section 409A. All payments made under this Agreement shall be strictly paid in accordance with the terms of this Agreement. The Parties
expressly understand that the provisions of this Agreement shall be construed and interpreted to avoid the imputation of any additional
tax, penalty or interest under Section 409A and to preserve (to the nearest extent reasonably possible) the intended benefits payable
to Employee hereunder. Each Severance Payment under this Agreement shall be treated as a separate payment of compensation for purposes
of Section 409A. Any reimbursements or in-kind benefits provided under this Agreement that are subject to Section 409A shall be made
or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement
is for expenses incurred during the period of time specified in the Agreement, (ii) the amount of expenses eligible for reimbursement,
or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made no later than the last day of the calendar
year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation
or exchange for another benefit. Notwithstanding anything in this Agreement to the contrary, the Company shall not make any deductions
for money or property that Employee owes to the Company, offset or otherwise reduce any sums that may be due or become payable to or
for the account of Employee with respect to any arrangements other than pursuant to the terms of this Agreement, from amounts that constitute
deferred compensation for purposes of Section 409A and except as required by law. Employee’s right to any deferred compensation,
as defined under Section 409A, shall not be subject to borrowing, anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors, to the extent necessary to avoid additional tax, penalties and/or interest under Section 409A.
Nothing herein, including the foregoing sentence, shall change the Company’s rights and/or remedies under the Agreement and/or
applicable law. In no event shall the Company be liable for any penalties, costs, damages, levies or taxes imposed on Employee pursuant
to Section 409A.

 

15. Severability.
In the event any provision of this Agreement is found unenforceable by a court of competent jurisdiction, that provision will be
deemed modified to the extent necessary to allow enforceability of the provision as so limited. Additionally, where permitted by law,
if any of the restrictions contained in this Agreement are determined by any court of competent jurisdiction to be unenforceable by reason
of their extending for too great a period of time, or being too extensive in any other respect, then the court or adjudicator shall interpret
and modify such restriction(s) to be effective for the maximum period of time for which it/they may be enforceable, and to the maximum
extent in all other respects as to which it/they may be enforceable. If such restrictions cannot be modified, they shall be severed.

 

16. Execution.
Employee understands and agrees that this Agreement shall be null and void and have no legal or binding effect whatsoever if: (1) Employee
signs but then timely revokes his ADEA release before the Revocation Deadline and the Company exercises its right to deem the entire
Agreement null and void or (2) the Agreement is not signed by Employee on the Separation Date.

 

[Signature
page follows.]

 

    	10 

     

    

 

By
signing below, Employee represents and warrants that EMPLOYEE has full legal capacity to enter into this Agreement, Employee has carefully
read and understands this Agreement in its entirety, has had a full opportunity to review this Agreement with an attorney of Employee’s
choosing, and has executed this Agreement voluntarily, without duress, coercion or undue influence.

 

IN
WITNESS WHEREOF, the undersigned, intending to be bound hereby, have agreed to the terms and conditions of this Agreement as of the date
first set forth below.

 

	 	EMPLOYEE:
	 	 	 
	 	By:
    	/s/ Edward J. Fred
	 	Name:
    	Edward
    J. Fred
	 	 	 
	 	Date:
    	August
    13, 2021
	 	 	 
	 	TARONIS
    FUELS, INC.
	 	 	 
	 	By:	/s/ Kevin C. Foti
	 	Name:	Kevin
    C. Foti
	 	Title:	President
    and CEO
	 	 	 
	 	Date:	August
    13, 2021

 

[Signature
page to Edward J. Fred Separation Agreement and General Release]

 

    	11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00332-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00332-of-00352.parquet"}]]