EXHIBIT
10.1


 


SECURITIES
PURCHASE AGREEMENT


 


This
Securities Purchase Agreement (this “Agreement”) is dated as of April 3, 2018, between Digital Ally, Inc., a Nevada
corporation (the “Company”), and the purchasers identified on the signature pages hereto (including each successors
and assigns, the “Purchaser” or in the aggregate, the “Purchasers”). 


 


WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933,
as amended (the “Securities Act”), and/or Rule 506 promulgated thereunder, the Company desires to issue and sell to
the Purchasers, and the Purchasers, desire to purchase from the Company, Securities of the Company as more fully described in
this Agreement.


 


NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows: 


 


ARTICLE
I. 


DEFINITIONS



 


1.1
Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise
defined herein have the meanings given to such terms in the Transaction Documents (as defined herein), and (b) the following terms
have the meanings set forth in this Section 1.1:


 


“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.6.


 


“Action”
shall have the meaning ascribed to such term in Section 3.1(j).


 


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act. 


 


“Board
of Directors” means the board of directors of the Company.


 


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any
day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.


 


“Closing
Date” means the Trading Day(s) on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchaser’s obligations to pay the
Subscription Amount as to the Closing and (ii) the Company’s obligations to deliver the Securities as to the Closing, in
each case, have been satisfied or waived.


 




    	1 



    	 



    

 


“Closing”
means closing of the purchase and sale of the Securities pursuant to Section 2.2.


 


“Commission”
means the United States Securities and Exchange Commission.


 


“Common
Stock” means the common stock of the Company, par value $0.001
per share, and any other class of securities into which such securities may hereafter be
reclassified or changed. 


 


“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock. 


 


“Conversion
Price” shall have the meaning ascribed to such term in the Notes.


 


“Conversion
Shares” shall have the meaning ascribed to such term in the Notes.


 


“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.


 


“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(q).


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 


 


“Exempt
Issuance” means the issuance of (a) shares
of Common Stock or options to employees, officers, directors, advisors or independent contractors of the Company pursuant to any
stock or option plan duly adopted for such purpose, (b) shares of Common Stock, warrants or options to advisors or independent
contractors of the Company for compensatory purposes, (c) securities upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date hereof, provided that such securities have not been amended since the date hereof to increase the number
of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (d) securities issuable
pursuant to any contractual anti-dilution obligations of the Company in effect as of the date hereof, provided that such obligations
have not been materially amended since the date of hereof, and (e) securities issued pursuant to acquisitions or any other strategic
transactions approved by the Board of Directors, provided that any such issuance shall not include a transaction in which the
Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing
in securities.


 


“Exercise
Price” shall have the meaning ascribed to such term in the Warrants.


 


“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.


 




    	2 



    	 



    

 





“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).


 


“Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred
in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to
be capitalized in accordance with GAAP.


 


“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).


 


“Intellectual
Property Security Agreement” means that certain Intellectual
Property Security Agreement required to be delivered pursuant to Section 2.3 of this Agreement, in the form attached hereto
as Exhibit C.


 


“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).


 


“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 


“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).


 


“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m). 


 


“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.


 


“Note”
means the Senior Secured Convertible Notes due, subject to the terms therein, Thirteen (13) months from the date of issuance,
issued by the Company to the Purchaser hereunder, in the form of Exhibit A attached hereto.


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 


 


“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.13(b). 


 


“Principal
Amount” means, as to the Purchaser, the amount set forth below the Purchaser’s signature block on the signature pages
hereto next to the heading “Principal Amount,” in United States Dollars, which shall equal the Purchaser’s Subscription
Amount. 


 




    	3 



    	 



    

 


“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened. 


 


“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.3(b).


 


“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b). 


 


“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.9.


 


“Registration
Rights Agreement” means the Registration
Rights provisions in Section 4.16.


 


“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).


 


“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Conversion Shares or Warrant Shares issuable upon conversion
or exercise in full of the Notes or Warrants, respectively (including Conversion Shares issuable as payment of interest on the
Notes), ignoring any conversion or exercise limits set forth therein, and assuming that the Conversion Price and Exercise Price
is at all times on and after the date of determination 100% of the then Conversion Price or Exercise Price on the Trading Day
immediately prior to the date of determination. 


 


“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.


 


“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule. 


 


“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).


 


“Securities”
means the Notes, the Warrants, the Conversion Shares, and the Warrant Shares. 


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 


 


“Security
Agreement” means the Security Agreement dated on or about the date hereof by and among the Company, the Subsidiaries of
the Company’s Subsidiaries, and the Purchaser as hereinafter amended and/or supplemented altogether with all exhibits, schedules
and annexes to such Security Agreement, pursuant to which all Liabilities and Indebtedness of the Company to the Purchaser under
the Transaction Documents are secured by the Collateral which security interest in the Collateral shall be perfected by the Lenders
UCC-1, filed with the Secretary of State of the State of Nevada, to the extent perfectable by the filing of a UCC 1 Financing
Statement, or if applicable, a UCC 3 Financing Statement Amendment and such other documents and instruments related thereto, which
Security Agreement is annexed hereto as Exhibit D.


 




    	4 



    	 



    

 


“Shell
Company” means an entity that fits within the definition of “shell company” under Section 12b-2 of the Exchange
Act and Rule 144.


 


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act. 


 


“Subscription
Amount” means, as to the Purchaser, the aggregate amount to be paid for the Notes purchased hereunder as specified below
the Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds. 


 


“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct
or indirect subsidiary of the Company formed or acquired after the date hereof. 


 


“Trading
Day” means a day on which the principal Trading Market is open for trading. 


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the
date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the Nasdaq Global Select Market; the
New York Stock Exchange; OTC Markets or the OTC Bulletin Board (or any successors to any of the foregoing). 


 


“Transaction
Documents” means this Agreement, the Notes, the Warrants, the Security Agreement, the Intellectual Property Security Agreement,
the Transfer Agent Instruction Letter, and all exhibits and schedules thereto and hereto and any other documents or agreements
executed in connection with the transactions contemplated hereunder. 


 


“Transfer
Agent” means Action Stock Transfer, the current transfer agent of the Company, with a mailing address of 2469 E. Fort Union
Blvd, Suite 214, Salt Lake City, Utah 84121 and a phone number of 801-274-1088, attention: Justeene Blankenship, and any successor
transfer agent of the Company. 


 


“Transfer
Agent Instruction Letter” means the letter from the Company to the Transfer Agent which instructs the Transfer Agent to
issue the Conversion Shares and the Warrant Shares pursuant to the Transaction Documents, in the form of Exhibit E attached
hereto.


 


“Warrants” means the
warrants to purchase 806,667
shares of Common Stock in the form attached as Exhibit B to this Agreement.


 




    	5 



    	 



    

 


ARTICLE
II. 


PURCHASE
AND SALE 


 


2.1 Purchase. On the Closing
Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery
of this Agreement by the parties hereto, the Purchasers will purchase, severally and not jointly, an aggregate of up to Five
Million, Five Hundred Thousand Dollars ($5,500,000) in Subscription Amount corresponding to an aggregate of up
to Six Million, Fifty Thousand and 00/100 Dollars ($6,050,000) in Principal Amount of Notes and the Warrants.
The purchase will be completed in a single tranche as provided herein.


 


2.2 Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially
concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and each Purchaser,
agrees to purchase, the Purchaser’s Closing Subscription Amount as set forth on the signature page hereto executed by the
Purchaser. At the Closing, the Purchaser shall deliver to the Company, via wire transfer to an account designated by the Company,
immediately available funds equal to the Purchaser’s Subscription Amount as set forth on the signature page hereto executed
by the Purchaser, and the Company shall deliver to the Purchaser its Note, as determined pursuant to Section 2.3(a), and the Company
and the Purchaser shall deliver the other items set forth in Section 2.3 deliverable at the Closing. Upon satisfaction of the covenants
and conditions set forth in Sections 2.3 and 2.4 for Closing, such Closing shall occur at the offices of Robinson
Brog Leinwand Greene Genovese & Gluck P.C. or such other location as the parties shall
mutually agree, and may by agreement be undertaken remotely by electronic exchange of Closing documentation.


 


2.3
Deliveries.


 


(a)
On or prior to the Closing Date (except as noted), the Company shall deliver or cause to be delivered to each Purchaser the following:


 


(i)
this Agreement duly executed by the Company;


 


(ii)
a Note with a Principal Amount equal to the amount
set forth opposite such Purchaser’s name in column (2) on the Schedule of Purchasers,
registered in the name of the Purchaser;


 


(iii)
such aggregate number of Warrants as is set forth
across from such Purchaser’s name in column (4) of the Schedule of Purchasers being purchased by such Purchaser at the Closing
pursuant to this Agreement.


 


(iv)
the Security Agreement, duly executed by the
Company;


 


(v)
the Intellectual Property Security Agreement, duly executed by the Company; and


 




    	6 



    	 



    

 


(vi)
the Transfer Agent Instruction Letter duly executed by the Company and the Transfer Agent.


 


(b)
On or prior to the Closing Date, the Purchaser shall deliver or cause to be delivered to the Company, as applicable, the following:


 


(i)
this Agreement duly executed by the Purchaser; 


 


(ii)
the Purchaser’s Subscription Amount as to the applicable Closing by wire transfer to the account specified in writing by
the Company;


 


(iii)
the Security Agreement, duly executed by the
Purchaser; and


 


(iv)
the Intellectual Property Security Agreement,
duly executed by the Purchaser.


 


2.4
Closing Conditions.


 


(a)
The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:


 


(i)
the accuracy in all material respects as at Closing Date of the representations and warranties of the Purchaser contained herein
(unless as of a specific date therein in which case they shall be accurate as of such date);


 


(ii)
all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have
been performed; and


 


(iii)
the delivery by the Purchaser of the items set forth in Section 2.3(b) of this Agreement.


 


(b)
The respective obligations of each Purchaser hereunder in connection with the Closing are subject to the following conditions
being met:


 


(i)
the accuracy in all material respects when made as to the Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein);


 


(ii)
all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been
performed;


 


(iii)
the delivery by the Company of the items set forth in Section 2.3(a) of this Agreement;


 




    	7 



    	 



    

 


(iv)
there is no existing Event of Default (as defined in the Notes) and no existing event which, with the passage of time or the giving
of notice, would constitute an Event of Default;


 


(v)
there is no breach of an obligations, covenants and agreements under the Transaction Documents and no existing event which, with
the passage of time or the giving of notice, would constitute a breach under the Transaction Documents;


 


(vi)
there shall have been no Material Adverse Effect with respect to the Company since the date hereof; 


 


(vii)
from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal 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 the Purchaser, and without regard to any factors unique to the Purchaser, makes it impracticable
or inadvisable to purchase the Securities at the Closing; 


 


(viii)
the Company does not meet the current public
information requirements under Rule 144 in respect of the Conversion Shares or Warrant Shares and any other shares of Common Stock
issuable under the Notes or the Warrants;


 


(ix)
the Company fails to file with the Commission
any required reports under Section 13 or 15(d) of the Exchange Act such that it is not in compliance with Rule 144(c)(1) (or Rule
144(i)(2), if applicable), including, without limitation, any reports that the Commission requires the Company to amend and/or
re-submit;


 


(ix)
any other conditions contained herein or the other Transaction Documents, including, without limitation those set forth in Section
2.3 herein.


 


 


ARTICLE
III. 


REPRESENTATIONS
AND WARRANTIES 


 


3.1
Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules
shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained
in the corresponding section of the Disclosure Schedules, the Company (which
for purposes of this Section means the Company and all of its Subsidiaries) hereby makes
the following representations and warranties to the Purchaser as of the Closing Date:


 




    	8 



    	 



    

 


(a)
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens,
and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other
references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.


 


(b)
Organization and Qualification. The Company and each of the Subsidiaries 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 Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the 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 it 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: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document; (ii) a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole; or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.


 


(c)
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate
the transactions contemplated by this Agreement and each of the other Transaction Documents and 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 Board of Directors or the Company’s stockholders
in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction
Document to which it 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
the Company 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.


 




    	9 



    	 



    




 


(d)
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 and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not, except as set forth on Schedule 3.1 (l): (i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents; (ii)
conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result
in the creation of any Lien (except Liens in favor of the Purchaser) upon any of the properties or assets of the Company or any
Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse
of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected; or (iii) subject to the Required Approvals, conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or
asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Material Adverse Effect.


 


(e)
Filings, Consents and Approvals. 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 other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Sections 4.3 and 4.14 of this Agreement; (ii) the notice and/or application(s) to each
applicable Trading Market for the issuance and sale of the Securities and the listing of the Conversion Shares or the Warrant
Shares for trading thereon in the time and manner required thereby; and (iii) the filing of Form D with the Commission and such
filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).


 


(f)
Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction Documents. The Conversion Shares and the Warrant Shares,
when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The
Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Conversion
Shares and Warrant Shares at least equal to 100% of the Required Minimum on the date hereof.


 




    	10 



    	 



    

 


(g)
Capitalization. The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g)
shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of
the date hereof. The Company has not issued capital stock since its most recently filed periodic report under the Exchange Act
except as set forth on Schedule 3.1(g), except the issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plans and except pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as
of the date of the most recently filed periodic report under the Exchange Act as set forth on Schedule 3.1(g). 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 as set forth on Schedule 3.1(g).
There are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to
subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company
or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents except as set
forth on Schedule 3.1(g). The issuance and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchaser) and will not
result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of
such securities except as set forth on Schedule 3.1(g). All of the outstanding
shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive
rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the
Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders’ agreements,
voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party
or, to the knowledge of the Company, between or among any of the Company’s stockholders.


 


(h)
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, including pursuant to Section 13(a) or 15(d)
thereof, for the two (2) 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”). As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not
misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of
the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects
the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit
adjustments. 


 




    	11 



    	 



    

 


(i)
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 and
except as set forth in Schedule 3.1(g), Schedule 3.1(l), and Schedule 3.1(i): (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 GAAP 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 stockholders 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, 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. 


 


(j)
Litigation. 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, any Subsidiary or any of their respective properties except as set
forth in Schedule 3.1(j), or against or affecting
the Company’s current or former officers or directors in their capacity as such, 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 Securities or (ii) could, if there were an unfavorable decision, have or reasonably be
expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary, nor any director or officer thereof,
is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws
or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or former director or officer of the Company that is
likely to lead to action that can reasonably be expected to result in a Material Adverse Effect. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.


 




    	12 



    	 



    

 


(k)
Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company
and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive
officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement
or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and
its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.


 


(l)
Compliance. Neither the Company nor any Subsidiary, except as set forth on Schedule 3.1(l): (i) is in default under or
in 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 default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is
in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument 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 violation of any judgment, decree or order of any court, arbitrator or other governmental authority; or (iii) 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 taxes, 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.


 




    	13 



    	 



    

 


(m)
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described
in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.


 


(n)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned
by them and good and marketable title in all personal property owned by them that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except as set forth in Schedule 3.1(n) and except for (i) Liens as
do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made
of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which
appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject
to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.


 


(o)
Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights as necessary or required for use in connection with their respective businesses as presently
conducted and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property
Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of,
the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned,
within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the
latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge
that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably
be expected to not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights except as disclosed
in Schedule 3.1(o). The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.


 


(p)
Transactions with Affiliates and Employees. Except as set forth on Schedule 3.1(p), none of the officers or directors
of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary
is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from providing for the borrowing of money from or lending of money to, or otherwise
requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which
any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered;
(ii) reimbursement for expenses incurred on behalf of the Company; and (iii) other employee benefits. 


 




    	14 



    	 



    

 


(q)
Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The
Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and
procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company
and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such
date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial
reporting (as such term is defined in the Exchange Act) that have materially affected, or is reasonably likely to materially affect,
the internal control over financial reporting of the Company and its Subsidiaries.


 


(r)
Certain Fees. Other than as set forth on Schedule 3.1(r), no brokerage or finder’s fees or commissions are
or will be payable by the Company or any 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. The Purchaser
shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees
of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.



 




    	15 



    	 



    

 


(s)
Private Placement. Assuming the accuracy of each Purchaser’s representations and warranties set forth in Section
3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser
as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the
Trading Market.


 


(t)
Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company shall conduct its business in a manner so that it will not become an “investment company”
subject to registration under the Investment Company Act of 1940, as amended.


 


(u)
Registration Rights. Other than as set forth on Schedule 3.1(u) and pursuant to this Agreement, no Person has any
right to cause the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiaries.


 


(v)
Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
terminating such registration. The Company has not, in the twelve (12) months preceding the date hereof, received notice from
any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.


 


(w)
Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s Articles of Incorporation (or similar charter
documents) or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of the Purchaser
and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation
as a result of the Company’s issuance of the Securities and the Purchaser’s ownership of the Securities.


 


(x)
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided the Purchaser or its agents
or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company
understands and confirms that the Purchaser will rely on the foregoing representation in effecting transactions in securities
of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its
Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
The press releases disseminated by the Company
during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made and when made, not misleading. The Company
acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2 hereof.


 




    	16 



    	 



    

 


(y)
No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section
3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or 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 this
offering of the Securities 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 Market on which any of the securities of the Company are listed or designated.


 


(z)
No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of
the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only
to the Purchaser and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.


 


(aa)
Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary,
any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity; (ii)
made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties
or campaigns from corporate funds; (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made
by any person acting on its behalf of which the Company is aware) which is in violation of law; or (iv) violated in any material
respect any provision of FCPA.


 


(bb)
Accountants. The Company’s accounting firm is set forth on Schedule 3.1(bb) of the Disclosure Schedules. To
the knowledge and belief of the Company, such accounting firm is a registered public accounting firm as required by the Exchange
Act.


 




    	17 



    	 



    

 


(cc)
No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction Documents.


 


(dd)
Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees that the Purchaser
is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and
any advice given by the Purchaser or any of their respective representatives or agents in connection with the Transaction Documents
and the transactions contemplated thereby is merely incidental to the Purchaser’s purchase of the Securities. The Company
further represents to the Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents
has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.


 


(ee)
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly
or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid
to the Company’s placement agent in connection with the placement of the Securities.


 


(ff)
Stock Option Plans. The Company has not knowingly granted, and there is no and has been no Company policy or practice to
knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other
public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.


 


(gg)
Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).


 


(hh)
U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.


 




    	18 



    	 



    

 


(ii)
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding
Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System
(the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly
or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or
more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.


 


(jj)
Reserved.


 


(kk)
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect, the Company (i) has made or filed all United States federal, state and local income and all foreign
income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes
for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any
such claim.


 


(ll)
Seniority. As of the Closing Date, except for the senior indebtedness as set forth in Schedule 3.1(n) intended to be paid
off as a Use of Proceeds of this contemplated transaction, no Indebtedness or other claim against the Company is senior to the
Notes in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness
secured by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital lease
obligations (which is senior only as to the property covered thereby).


 


(mm)
Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary
notwithstanding (except for Section 4.12 hereof), it is understood and acknowledged by the Company that: (i) the Purchaser has
not been asked by the Company to agree, nor has the Purchaser agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities
for any specified term; (ii) past or future open market or other transactions by the Purchaser, specifically including, without
limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) the Purchaser, and
counter-parties in “derivative” transactions to which the Purchaser is a party, directly or indirectly, may presently
have a “short” position in the Common Stock; and (iv) the Purchaser shall not be deemed to have any affiliation with
or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands
and acknowledges that (y) the Purchaser may engage in hedging activities at various times during the period that the Securities
are outstanding, including, without limitation, during the periods that the value of the Conversion Shares or Warrant Shares deliverable
with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing
stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted. The
Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.


 




    	19 



    	 



    

 


(nn)
Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.


 


(oo)
Subsidiary Rights. The Company has the unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or any
Subsidiary.


 


(pp)
Shell Company Status. The Company is not presently and except for fiscal
years 2000 to 2004, has not been an issuer identified as a “Shell Company” except as set forth in Schedule 3.1(pp).


 


(qq)
Full Disclosure. No representation or warranty by the Company in this Agreement and no statement contained in the Disclosure
Schedules to this Agreement or any certificate or other document furnished or to be furnished to the Purchasers pursuant to this
Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements
contained therein, in light of the circumstances in which they are made, not misleading.


 


3.2
Representations and Warranties of the Purchaser. Each Purchaser, for itself and for no other Purchaser, hereby represents
and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein
in which case they shall be accurate as of such date):


 


(a)
Organization; Authority. The Purchaser is either an individual or an entity duly incorporated or formed, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership,
limited liability
company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and
performance by the Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary
corporate, partnership, limited liability company or similar action, as applicable, on the part of the Purchaser. Each Transaction
Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, 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.


 




    	20 



    	 



    

 


(b)
Own Account. The Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in
violation of the Securities Act or any applicable state securities law, has no present intention
of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct
or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting the Purchaser’s
right to sell the Securities in compliance with applicable federal and state securities laws). The Purchaser is acquiring the
Securities hereunder in the ordinary course of its business.


 


(c)
Purchaser Status.
At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it converts
the Notes or exercise the Warrants it will be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7) or (a)(8) under the Securities Act.


 


(d)
Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the merits and
risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.


 


(e)
General Solicitation. The Purchaser is not purchasing the Securities as a result of any advertisement, article, notice
or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television
or radio or presented at any seminar or any other general solicitation or general advertisement.


 




    	21 



    	 



    

 


(f)
Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, the Purchaser
has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, executed
any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that
the Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting
forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of the Purchaser’s assets and the portfolio managers
have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of the Purchaser’s
assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager
that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this
Agreement, the Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction
(including the existence and terms of this transaction).


 


The
Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect the Purchaser’s
right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this
Agreement or the consummation of the transaction contemplated hereby. 


 


ARTICLE
IV. 


OTHER
AGREEMENTS OF THE PARTIES 


 


4.1
Transfer Restrictions.


 


(a)
The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser
or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to
the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, at the Company’s
sole expense in the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration
of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing
to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser under this Agreement.


 


(b)
The Purchaser agrees
to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:


 




    	22 



    	 



    

 


[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [CONVERTIBLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [CONVERSION]
OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH
A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER
LOAN SECURED BY SUCH SECURITIES. 


 


The
Company acknowledges and agrees that the Purchaser may from time to time pledge pursuant to a bona fide margin agreement with
a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions
of this Agreement and, if required under the terms of such arrangement,
the Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not
be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith. Further, no notice shall be required of such pledge. At the Company’s expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection
with a pledge or transfer of the Securities. 


 


(c)
Certificates evidencing the Conversion Shares or the Warrant Shares shall not contain any legend (including the legend set forth
in Section 4.1(b) hereof): (i) while a registration statement covering the resale of such security is effective under the Securities
Act; (ii) following any sale of such Conversion Shares or Warrant Shares pursuant to Rule 144; (iii) if such Conversion Shares
or the Warrant Shares are eligible for sale under Rule 144; or (iv) if such legend is not required under applicable requirements
of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The
Company shall upon request of a Purchaser and at the Company’s sole expense cause its counsel (or at the Purchaser’s
option, counsel selected by the Purchaser) to issue a legal opinion to the Transfer Agent promptly after any of the events described
in (i)-(iv) in the preceding sentence if required by the Transfer Agent to effect the removal of the legend hereunder (with a
copy to the applicable Purchaser and its broker). If all or any portion of any Note or Warrant
is converted or exercise, respectively, at a time when there is an effective registration statement to cover the resale of the
Conversion Shares or Warrant Shares, respectively, or if such Conversion Shares or Warrant Shares may be sold under Rule 144 or
if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the Commission) then such Conversion Shares or Warrant Shares shall be issued free of
all legends. The Company agrees that following such time as such legend is no longer required under this Section 4.1(c), it will,
no later than two (2) Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate
representing Conversion Shares or the Warrant Shares, as applicable, issued with a restrictive legend (such third (3rd)
Trading Day, the “Legend Removal Date”), instruct the Transfer Agent to deliver or cause to be delivered to the Purchaser
a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation
on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section
4. Certificates for the Conversion Shares or the Warrant Shares subject to legend removal hereunder shall be transmitted by the
Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company
System as directed by the Purchaser.


 




    	23 



    	 



    

 


(d)
In addition to the Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, $1,000 per Trading Day for each Trading Day after the Legend Removal Date
until such certificate is delivered without a legend. Nothing herein shall limit the Purchaser’s
right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required
by the Transaction Documents, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief. 


 


4.2
Acknowledgment of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the
outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges
that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Conversion Shares
or Warrant Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against the
Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the
Company.


 


4.3
Furnishing of Information; Public Information.


 


(a)
The Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to
timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed
by the Company after the date hereof pursuant to the Exchange Act even if the Company
is not then subject to the reporting requirements of the Exchange Act.


 




    	24 



    	 



    

 


(b)
At any time during the period commencing from the six (6)-month anniversary of the date hereof and ending at such time that all
of the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) (a “Public Information Failure”) then, in addition to the Purchaser’s other available
remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any
such delay in or reduction of its ability to sell the Securities, an amount in cash equal to two percent (2.0%) of the aggregate
Subscription Amount of the Purchaser’s Securities on the day of a Public Information Failure and on every thirtieth (30th)
day (pro-rated for periods totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information
Failure is cured and (b) such time that such public information is no longer required for the Purchaser to transfer the Conversion
Shares or Warrant Shares pursuant to Rule 144. The payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b)
are referred to herein as “Public Information Failure Payments.” Public Information Failure Payments shall be paid
on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and
(ii) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure Payments
is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information
Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein
shall limit the Purchaser’s right to pursue actual damages for the Public Information Failure, and the Purchaser shall have
the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief. 


 


4.4
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 offer or sale of the Securities in
a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated
with the offer or sale of the Securities 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. 


 


4.5
Conversion and Exercise Procedures. The form of Notice of Conversion or Notice of Exercise included in any Note or Warrant,
respectively, sets forth the totality of the procedures required of the Purchaser in order to convert such Note or exercise such
Warrant. Without limiting the preceding sentences, no ink-original Notice of Conversion or Notice of Exercise shall be required,
nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required in
order to convert the Notes or exercise the Warrants, respectively. No additional legal opinion, other information or Notice of
Exercise instructions shall be required of the Purchaser to convert such Note or exercise such Warrant, respectively. The Company
shall honor conversions of any Note or exercise of any Warrant, and shall deliver Conversion Shares or Warrant Shares, respectively,
in accordance with the terms, conditions and time periods set forth in the Transaction Documents.


 




    	25 



    	 



    

 


4.6
Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other
Person, that the Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue
of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchaser.


 


4.7
Material Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated
by the Transaction Documents, the Company covenants and agrees that neither it, nor any of
its subsidiaries, nor any other Person acting on its behalf, will provide the Purchaser
or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior
thereto such information is disclosed to the public, or the Purchaser shall have
entered into a written agreement with the Company regarding the confidentiality and use of such information. The Company understands
and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.


 


4.8
Use of Proceeds. The Company shall use the net proceeds as set forth in Schedule 4.8.


 


4.9
Indemnification of Purchaser. Subject to the provisions of this Section 4.9, the Company will indemnify and hold the Purchaser
and its directors, officers, managers, shareholders, members, partners, employees and agents (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls
the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, managers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each,
a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs
and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs
of investigation that any the Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action
instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of the Purchaser Party, with respect to any of the transactions contemplated by the Transaction
Documents (unless such action is based upon a breach of the Purchaser Party’s representations, warranties or covenants under
the Transaction Documents or any agreements or understandings the Purchaser Party may have with any such stockholder or any violations
by such Purchaser Party of state or federal securities laws or any conduct by the Purchaser Party which constitutes fraud, gross
negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, the Purchaser Party shall promptly notify the Company in writing, and the
Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser
Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of the Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the position of the Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will
not be liable to any Purchaser Party under this Agreement (x) for any settlement by a Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (y) to the extent, but only to the extent that
a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties,
covenants or agreements made by the Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification
required by this Section 4.9 shall be made by periodic payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or are incurred. The indemnification contained herein shall be in addition to any cause
of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject
to pursuant to law.


 




    	26 



    	 



    




 


4.10
Reservation and Listing of Securities.


 


(a)
The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction
Documents in such amount as may then be required to fulfill its obligations in full under the Transaction Documents.


 


(b)
If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less
than 100% of the Required Minimum on such date, then the Board of Directors shall use commercially
reasonable efforts to amend the Company’s Articles of Incorporation to increase the number of authorized but unissued shares
of Common Stock to at 100% of the Required Minimum at such time, as soon as possible and in any event not later than the 75th
day after such date.


 


(c)
The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such
Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required
Minimum on the date of such application; (ii) take all steps necessary to cause such shares of Common Stock to be approved for
listing or quotation on such Trading Market as soon as possible thereafter; (iii) provide to the Purchaser evidence of such listing
or quotation; and (iv) maintain the listing or quotation of such Common Stock on any date at least equal to the Required Minimum
on such date on such Trading Market or another Trading Market.


 


4.11
Subsequent Equity Sales.


 


(a)
For so long as any of the Notes remain outstanding,
the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its
Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction.
“Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities
that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock
either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading
prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities
or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance
of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the
business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an
equity line of credit, whereby the Company may issue securities at a future determined price.


 




    	27 



    	 



    

 


(b)
The Purchaser shall be entitled to obtain injunctive
relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages. Notwithstanding
the foregoing, this Section 4.11 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall
be an Exempt Issuance.


 


4.12
Certain Transactions and Confidentiality. The Purchaser covenants and agrees that neither it, nor any Affiliate acting
on its behalf or pursuant to any understanding with it will execute any Short Sales (as such term
is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging transaction, which establishes
a net short position with respect to the Company’s Common Stock) during the period commencing with the execution
of this Agreement and ending on the earlier Maturity Date (as defined in the Notes) of the Notes or the full repayment or conversion
of the Notes; provided that this provision shall not prohibit any sales made where a corresponding Notice of Conversion is tendered
to the Company and the shares received upon such conversion or exercise are used to close out such sale (a “Prohibited Short
Sale”); provided, further that this provision shall not operate to restrict a Purchaser’s trading under any prior
securities purchase agreement containing contractual rights that explicitly protects such trading in respect of the previously
issued securities. 


 


4.13
Right of First Refusal.


 


(a)
For so long as any of the Notes remain outstanding,
upon any issuance by the Company of Common Stock, Common Stock Equivalents or debt for cash consideration, Indebtedness or a combination
of units hereof (a “Subsequent Financing”), the Purchasers shall have the right to participate in up to an amount
of the Subsequent Financing equal to 35% of the Subsequent Financing (the “Participation Maximum”) on the same terms,
conditions and price provided for in the Subsequent Financing, which participation shall be pro rata to their respective subscription
amounts.


 


(b)
At least three (3) Trading Days prior to the
closing of the Subsequent Financing, the Company shall deliver to the Purchaser a written notice of its intention to effect a
Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask the Purchaser if it wants to review the details of
such financing (such additional notice, a “Subsequent Financing Notice”). Upon the request of the Purchaser, and only
upon a request by the Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later than one (1) Trading
Day after such request, deliver a Subsequent Financing Notice to the Purchaser. The Subsequent Financing Notice shall describe
in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder
and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet
or similar document relating thereto as an attachment.


 




    	28 



    	 



    

 


(c)
If a Purchaser desires to participate in such
Subsequent Financing, the Purchaser must provide written notice to the Company that the Purchaser is willing to participate in
the Subsequent Financing, the amount of the Purchaser’s participation, and representing and warranting that the Purchaser
has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice.


 


(d)
Each Purchaser shall have the right to purchase
its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata Portion” means the ratio of (x) the
Subscription Amount of Securities purchased on the Closing Date by a Purchaser participating under this Section 4.13 and (y) the
sum of the aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchaser participating under this
Section 4.13. If notifications by a Purchaser of their willingness to participate in the Subsequent Financing (or to cause their
designees to participate) is, in the aggregate, less than the total amount of its Pro Rata Portion, then the Company may affect
the remaining portion of such Subsequent Financing on the terms and with the other Purchasers set forth in the Subsequent
Financing Notice for any remaining amount.


 


(e)
The Company must provide the Purchaser with a
second Subsequent Financing Notice, and the Purchaser will again have the right of participation set forth above in this Section
4.13, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the
terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after the date of the initial Subsequent Financing
Notice.


 


(f)
The Company and the Purchaser agree that if the
Purchaser elects to participate in the Subsequent Financing, the transaction documents related to the Subsequent Financing shall
not include any term or provision whereby the Purchaser shall be required to agree to any restrictions on trading as to any of
the Securities purchased hereunder or be required to consent to any amendment to or termination of, or grant any waiver, release
or the like under or in connection with, this Agreement, without the prior written consent of the Purchaser.


 


(g)
Notwithstanding anything to the contrary in this
Section 4.13 and unless otherwise agreed to by the Purchaser, the Company shall either confirm in writing to the Purchaser that
the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose its intention to issue
the securities in the Subsequent Financing, in either case in such a manner such that the Purchaser will not be in possession
of any material, non-public information, by the tenth (10th) Trading Day following delivery of the Subsequent Financing
Notice. If by such tenth (10th) Trading Day, no public disclosure regarding a transaction with respect to the Subsequent
Financing has been made, and no notice regarding the abandonment of such transaction has been received by the Purchaser, such
transaction shall be deemed to have been abandoned and the Purchaser shall not be deemed to be in possession of any material,
non-public information with respect to the Company or any of its Subsidiaries.


 




    	29 



    	 



    

 


(h)
Notwithstanding the foregoing, this Section 4.13
shall not apply in respect of an Exempt Issuance.


 


4.14
Securities Laws Disclosure; Publicity.
The Company shall (a) by 9:30 a.m. (New York City time) on the Trading Day immediately following the date hereof, issue a press
release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including
the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act. From and after
the issuance of such press release, the Company represents to the Purchaser that it shall have publicly disclosed all material,
non-public information delivered to any of the Purchaser by the Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company
and the Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor the Purchaser shall issue any such press release nor otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of the Purchaser, or without the prior consent of
the Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed,
except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior
notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name
of the Purchaser, or include the name of the Purchaser in any filing with the Commission or any regulatory agency or Trading Market,
without the prior written consent of the Purchaser, except: (a) as required by federal securities law in connection with any registration
statement contemplated by this Agreement and (b) to the extent such disclosure is required by law or Trading Market regulations,
in which case the Company shall provide the Purchaser with prior notice of such disclosure permitted under this clause (b).


 


4.15
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of the Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchaser
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of the Purchaser.


 


4.16
Registration Rights. The Company hereby grants the following registration rights to the Holders:


 


(a)
At any time after the Closing Date, but not later than forty-five (45) days after the Closing Date, the Company shall prepare
and file with the Commission a Registration Statement under the Securities Act registering all Securities covered by the Transaction
Documents (the “Registrable Securities”).


 




    	30 



    	 



    







 


(b)
Registration Procedures. The Company will, as expeditiously as possible:


 


(i)
subject to the timelines provided in this Agreement, (x) prepare and file with the Commission a Registration Statement required
by Section 4.16(a) with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration
Statement to become and remain effective no later than ninety (90) days after the Closing Date for the period of the distribution
contemplated thereby, (y) promptly provide to the Holder copies of all filings and Commission letters of comment and notify the
Holder (by telecopier, by PDF and by e-mail addresses provided by the Holder) on or before the second (2nd) Business Day thereafter
that the Company receives notice that (A) the Commission has no comments or no further comments on the Registration Statement,
and (B) the Registration Statement has been declared effective.


 


(ii)
prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement effective until such Registration Statement has been
effective for a period of one (1) year, and comply with the provisions of the Securities Act with respect to the disposition of
all of the Registrable Securities covered by such Registration Statement in accordance with the Holder’s intended method
of disposition set forth in such Registration Statement for such period;


 


(iii)
furnish to the Holder, at the Company’s expense, such number of copies of the Registration Statement and the prospectus
included therein (including each preliminary prospectus) as such persons reasonably may request in order to facilitate the public
sale or the disposition of the Registrable Securities covered by such Registration Statement, or make them electronically available;


 


(iv)
as applicable, list or make available for quotation the Registrable Securities covered by such Registration Statement with any
securities exchange or quotation system on which the Common Stock of the Company is then listed or quoted;


 


(v)
notify the Holder within two (2) Business Days of the happening of any event of which the Company has knowledge as a result of
which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, or which becomes subject to a Commission, state or other governmental order suspending
the effectiveness of the Registration Statement covering any of the Registrable Securities; and


 




    	31 



    	 



    




 


(vi)
provide to the Holder copies of the Registration Statement and amendments thereto at least two (2) days prior to the filing thereof
with the Commission.


 


(c)
Expenses. All expenses incurred by the Company in complying with Section 4.16, including, without limitation, all registration
and filing fees, printing expenses (if required), fees and disbursements of Company counsel and independent public accountants
for the Company, fees and expenses (including reasonable counsel fees) incurred in connection with complying with state securities
or “blue sky” laws, fees of FINRA, and fees of transfer agents and registrars are herein called “Registration
Expenses.” All underwriting discounts, selling commissions and transfers applicable to the sale of Registrable Securities
are herein called “Selling Expenses.” The Company will pay all Registration Expenses in connection with any
Registration Statement described in Section 4.16. Selling Expenses in connection with each such Registration Statement shall be
borne by the Holder.





 


ARTICLE
V. 


 


MISCELLANEOUS



 





5.1
Termination. This Agreement may be terminated by the Purchaser, as to the Purchaser’s obligations hereunder only
and without any effect whatsoever on the obligations between the Company and the other Purchaser, by written notice to the other
parties, if the Closing has not been consummated on or before April 3, 2018; provided, however, that such termination will not
affect the right of any party to sue for any breach by any other party (or parties).


 


5.2
Fees and Expenses. Except as expressly
set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all transfer agent fees (including, without limitation, any
fees required for same-day processing of any instruction letter delivered by the Company and any Notice of Conversion or Notice
of Exercise delivered by the Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of the
Conversion Shares or Warrant Shares to the Purchaser.


 


5.3
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral
or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.


 


5.4
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall
be in writing and shall be deemed given and effective on the earliest of: (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 12:00 p.m.
(New York City time) on a Trading Day; (ii) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading
Day or later than 12:00 p.m. (New York City time) on any Trading Day; (iii) the second (2nd) Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier service; or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature
pages attached hereto.


 




    	32 



    	 



    

 


5.5
Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Company and Purchasers holding at least 50.1% in interest of the Notes
then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought, provided
that if any amendment, modification or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the
consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any proposed amendment
or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative to the
comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser,
Any amendment effected in accordance with accordance with this Section 5.5 shall be binding upon each Purchaser and holder of
Securities and the Company.


 


5.6
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed
to limit or affect any of the provisions hereof.


 


5.7
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written
consent of the Purchaser (other than by merger). The Purchaser may assign any or all of its rights under this Agreement to any
Person to whom the Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound,
with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchaser”.


 


5.8
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.9.


 




    	33 



    	 



    

 


5.9
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard
to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including
with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either
party shall commence an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to
the obligations of the Company under Section 4.9, the prevailing party in such action, suit or proceeding shall be reimbursed
by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.


 


5.10
Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.


 


5.11
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other
party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.


 


5.12
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any
of such that may be hereafter declared invalid, illegal, void or unenforceable.


 




    	34 



    	 



    

 


5.13
Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar
provisions of) any of the other Transaction Documents, whenever the Purchaser exercises a right, election, demand or option under
a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then
the Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, that in
the case of a rescission of a conversion or exercise of any Note or Warrant, respectively, the Purchaser shall be required to
return any shares of Common Stock subject to any such rescinded conversion notice concurrently with the return to the Purchaser
of the aggregate exercise price paid to the Company for such shares.


 


5.14
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued 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.


 


5.15
Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of
damages, the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agree
that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained
in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.


 


5.16
Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to any Transaction
Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other
Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.


 


5.17
Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now
or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by the Purchaser in
order to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in
any Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents
for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum
Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them,
when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents
exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date
thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess
of the Maximum Rate is paid by the Company to the Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by the Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company,
the manner of handling such excess to be at the Purchaser’s election.


 




    	35 



    	 



    

 


5.18
Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under
the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated
damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial
liquidated damages or other amounts are due and payable shall have been canceled.


 


5.19
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next
succeeding Business Day.


 


5.20
Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity
to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments
thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be
subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement.


 


5.21
WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,
THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.


 


[Signature
Pages Follow]


 




    	36 



    	 



    

 


 


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


 


	DIGITAL ALLY, INC. 	 	Address
    for Notice:
	 	 	 	9705
    Loiret Blvd.
	 	 	 	Lenexa,
    KS 66219
	 	 	 	 
	 	 	 	Fax:
    913-213-5762
	 	 	 	 
	 	 	 	 
	By:	 	 	 
	Name:	Stanton
    E. Ross	 	 
	Title:	CEO,
    President & Chairman	 	 


 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK 


SIGNATURE
PAGE FOR PURCHASER FOLLOWS] 





 






    	37 



    	 



    




 






[PURCHASER
SIGNATURE PAGES TO DIGITAL ALLY, INC. SECURITIES PURCHASE AGREEMENT] 


 


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 Purchaser:	 	 



 


	Signature
    of Authorized Signatory of Purchaser:	 
	 	 
	Name
    of Authorized Signatory: 	 
	Title
    of Authorized Signatory: 	 
	Email
    Address of Authorized Signatory: 	 
	Facsimile
    Number of Authorized Signatory:	 


 


	Address
    for Notice to Purchaser: 	 
	 	 
	 	 
	 	 
	 	 
	 	 


 


	Closing
    Principal Amount: 	$	 
	 	 	 
	Closing
    Subscription Amount: 	$	 


 


	EIN
    Number: 	 	 










 




    	38 



    	 



    

 


SCHEDULE
OF PURCHASERS


 





	(1)	 	(2)	 	(3)	 	(4)
	Buyer	 	Principal
    Amount of

    Convertible Notes	 	Purchase
    Price	 	Warrants
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 







 







    	39 



    	 



    

 





EXHIBIT
A


 


Form
of Senior Secured Convertible Note


 




    	40 



    	 



    

 


 


EXHIBIT
B


 


Form
of Common Stock Purchase Warrant


 




    	41 



    	 



    

 


 


EXHIBIT
C


 


Form
of Intellectual Property Security Agreement


 




    	42 



    	 



    

 


 


EXHIBIT
D


 


Form
of Security Agreement


 




    	43 



    	 



    

 


EXHIBIT
E


 


Form
of Transfer Agent Letter


 


April
3, 2018


Action
Stock Transfer


2469
E. Fort Union Blvd, Suite 214


Salt
Lake City, Utah 84121

Attn: Justeene Blankenship


 


Ladies
and Gentlemen:


 


Digital
Ally, Inc., a Nevada corporation (the “Company”), has issued to [_____] (the “Investor”) a Senior
Secured Convertible Promissory Note, dated April 3, 2018, in the principal amount of $6,050,000 (the “Note”)
and a Warrant to purchase 806,667 shares of Common Stock (the “Warrant”).


 


A
copy of each of the Note and the Warrant are attached hereto. You should familiarize yourself with your issuance and delivery
obligations, as Transfer Agent, contained therein. The shares to be issued are to be registered in the names of the registered
holder of the securities submitted for conversion or exercise or its designee.


 


You are hereby irrevocably
authorized and instructed to reserve shares of common stock (“Common Stock”) of the Company (initially, 3,226,667
shares) for issuance upon full conversion of the Note and/or full exercise of the Warrant, each in accordance with the terms
thereof. The amount of Common Stock so reserved may be increased, from time to time, by
written instructions. The Investor may provide written notice to you in order to increase the amount held in reserve, in
which you agree to accept and reserve, without any action on the part of the Company.


 


The
ability to convert the Note or exercise the Warrant in a timely manner is a material obligation of the Company pursuant to the
terms of each of the Note or the Warrant. Your firm is hereby irrevocably authorized and instructed to issue shares of Common
Stock of the Company (without any restrictive legend) to the Investor (from the reserve, but in the event there are insufficient
reserve shares of Common Stock to accommodate the Conversion Notice or Exercise Notice, as defined below, your firm and the Company
agree that the issuance of conversion shares should be completed using authorized but unissued shares of the Common Stock that
the Company has available) without any further action or confirmation by the Company: (A) upon your receipt from the Investor
of: (i) a notice of conversion (“Conversion Notice”) executed by the Investor or a notice of exercise (“Exercise
Notice”) executed by the Investor; and (ii) an opinion of counsel of the Investor or the Company, in form, substance
and scope customary for opinions of counsel in comparable transactions, to the effect that the shares of Common Stock of the Company
issued to the Investor pursuant to the Conversion Notice are not “restricted securities” as defined in Rule 144 and
should be issued to the Investor without any restrictive legend; and (B) the number of shares to be issued is less than 4.99%
of the total issued common stock of the Company (or if given 61 calendar days’ notice, 9.99% of the total issued common
stock).


 


The
Company hereby requests that your firm act immediately, without delay and without the need for any action or confirmation by the
Company with respect to the issuance of Common Stock pursuant to any Conversion Notices received from the Investor. The Company
also requires that as long as the Investor, or any of its affiliates, holds any securities issued by the Company, including but
not limited to Convertible Notes, Common Stock, or Warrants of the Company (the “Securities”), the transfer
agent must disclose, in written form, the shares authorized and outstanding, as well as the cost basis on any Common Stock issuance,
to the Investor as requested. So long as the Investor holds any Securities of the Company, it is required that the Company shall
receive written consent from the Investor should they enter into any other agreement with the transfer agent that shall require
establishing a share reserve not allocated to the Investor. As of the date above the current share authorized and outstanding
of the Company is as follows:


 





Shares
of Digital Ally, Inc. authorized: 25,000,000


 




    	44 



    	 



    

 


Shares
of Digital Ally, Inc. issued and outstanding: 7,087,999


 


The
Company shall indemnify you and your officers, directors, principals, partners, agents and representatives, and hold each of them
harmless from and against any and all loss, liability, damage, claim or expense (including the reasonable fees and disbursements
of its attorneys) incurred by or asserted against you or any of them arising out of or in connection with the instructions set
forth herein, the performance of your duties hereunder and otherwise in respect hereof, including the costs and expenses of defending
yourself or themselves against any claim or liability hereunder, except that the Company shall not be liable hereunder as to matters
in respect of which it is determined that you have acted with gross negligence or in bad faith. You shall have no liability to
the Company in respect to any action taken or any failure to act in respect of this if such action was taken or omitted to be
taken in good faith, and you shall be entitled to rely in this regard on the advice of counsel.


 


The
Board of Directors of the Company has approved the foregoing irrevocable instructions and does hereby extend the Company’s
irrevocable agreement to indemnify your firm for all loss, liability or expense in carrying out the authority and direction herein
contained on the terms herein set forth.


 


The
Company agrees that in the event that the Transfer Agent resigns as the Company’s transfer agent, the Company shall engage
a suitable replacement transfer agent that will agree to serve as transfer agent for the Company and be bound by the terms and
conditions of these Irrevocable Instructions within five (5) business days. The Company also agrees that in the event that the
Transfer Agent resigns from their position and there is a new designated Transfer Agent for the Company, the Investor will be
informed of such changes within two (2) days of the designation. The Transfer Agent agrees that notwithstanding anything contained
herein, the Transfer Agent shall not provide the share data file to any new Transfer Agent unless and until such Transfer Agent
agrees to be bound by the terms and conditions of these Irrevocable Instructions.


 


All
parties to this agreement agree and acknowledge that the Company holds the sole responsibility to pay any outstanding fees to
the Transfer Agent through the normal course of operations. The Investor understands and acknowledges that in the event that the
Company is delinquent in billing with Action Stock Transfer less than $5,000.00, Action Stock Transfer will honor conversion requests
with the additional payment of $200.00 per request. In the event that the Company is suspended with Action Stock Transfer due
to non-payment, with an account balance exceeding $5,000.00, the Investor would be required to bring the account balance current
for any transactions to take place by Action Stock Transfer.


 


The
Investor is intended to be and is a third-party beneficiary hereof, and no amendment or modification to the instructions set forth
herein may be made without the consent of the Investor.


 


By
signing below, each person executing this agreement certifies that they are duly authorized to execute this agreement on behalf
of the entity for which they are signing and to bind such party to all of the terms and conditions contained herein.


 


 


[Balance
of Page Intentionally Left Blank; Signatures on Next Page]


 




    	45 



    	 



    




 


		 	Very
    truly yours,
			
		 	Digital
    Ally, Inc.
		 	 
		 	 
		 	Name:
		 	Title:
		 	 
		 	 
	Acknowledged
    and Agreed:	 	 
		 	 
	Action
    Stock Transfer	 	 
		 	 
	 	 	 
	Name:	 	 
	Title:	 	 
	 	 	 
	[Investor]	 	 
		 	 
	 	 	 
	Name:	 	 
	Title:	 	 


 




    	46 



    	 



    

 


DISCLOSURE
SCHEDULES


(Security
Purchase Agreement)


 


The
following are the Disclosure Schedules (the “Disclosure Schedules”) referred to in that certain Securities
Purchase Agreement, dated as of April 3, 2018 (the “Agreement”), by and between Digital Ally, Inc., a Nevada
corporation (the “Company”), and the purchaser identified on the signature pages thereto (including its successors
and assigns, the “Purchaser”).


 




    	47