EXHIBIT
4.1


 





THIS
WARRANT HAS BEEN ACQUIRED FOR INVESTMENT. NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE
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, SOLD, PLEDGED OR OTHERWISE TRANSFERRED 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.


 


COMMON
STOCK PURCHASE WARRANT


 


DIGITAL
ALLY, INC.


 





	Warrant
    No.: 	Issue
    Date: July 31, 2018




Warrant
Shares: 465,712


 


This
COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for good and valuable consideration, the receipt
of which is hereby acknowledged, Brickell Key Investments LP, a Delaware limited partnership (the “Holder”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time or
times on or prior to the close of business on the five (5) year anniversary of the Issue Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Digital Ally, Inc., a Nevada corporation (the “Company”),
up to 465,712 shares of Common Stock (the “Warrant Shares”).


 


1.
Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings
set forth in this Section 1.


 


(a)
“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.


 


(b)
“Business Day” means any day that the Federal Reserve Bank of New York is open for business.


 


(c)
“Commission” means the United States Securities and Exchange Commission.


 




    	 	 	 



     


    

 


(d)
“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.


 


(e)
“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.


 


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


 


(g)
“Person” means an individual, corporation, limited liability company, partnership, association, joint venture,
trust, unincorporated organization, other entity or group (as defined in the Exchange Act).


 


(h)
“Rule 144” means Rule 144 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.


 


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


 


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


 


(k)
“Trading Market” means the principal market or exchange on which the Common Stock is listed or quoted for trading
on the date in question.


 


(l)
“Transfer Agent” means Action Stock Transfer, the current transfer agent of the Company and any successor transfer
agent of the Company.


 


2.
Exercise.


 


(a)
General. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times
on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate
by notice in writing to the Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile
copy of the Notice of Exercise Form annexed hereto (“Notice of Exercise”). Within three (3) Trading Days following
the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price (defined below) for the shares specified
in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the
Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case,
the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice
of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number
of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder
in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of
Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount
stated on the face hereof. Under no circumstances will the Company be required to net cash settle this Warrant upon its exercise.


 




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(b)
Optional Cashless Exercise. Notwithstanding anything contained herein to the contrary, if a registration statement covering
the Warrant Shares that are the subject of the Notice of Exercise (the “Unavailable Warrant Shares”) is not
available for the resale of such Unavailable Warrant Shares to the public, the registered holder may, in its sole discretion,
in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the aggregate
Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined
according to the following formula:


 


Net
Number = [(A x B) - (A x C)] / B


 


For
purposes of the foregoing formula:


 


A=
the total number of shares with respect to which the Warrant is then being exercised.


 


B=
the arithmetic average of the Closing Sale Prices of the shares of Common Stock for the five (5) consecutive Trading Days ending
on the date immediately preceding the date of the Notice of Exercise.


 


C=
the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.


 


(c)
Exercise Price. The exercise price per share of the Warrant Shares shall be (i) $2.60 or (ii) the closing market price
as quoted on the Trading Market on the day prior to the issuance date of this Common Stock Purchase Warrant noted above, whichever
is higher, subject to adjustment hereunder (the “Exercise Price”).


 




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(d)
Mechanics of Exercise.


 


(i)
Delivery of Certificates Upon Exercise. Shares of Common Stock purchased hereunder shall be transmitted by the Transfer
Agent to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company (“DTC”)
through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is then a participant in such
system and either (A) there is an effective registration statement permitting the resale of the Warrant Shares by the Holder or
(B) the Warrant Shares are eligible for resale without volume or manner of sale limitations pursuant to Rule 144, and otherwise
by physical delivery of a certificate to the address specified by the Holder in the Notice of Exercise by the date that is three
(3) Trading Days after the latest of (x) the delivery to the Company of the Notice of Exercise Form, (y) surrender of this Warrant
(if required) and (z) payment of (A) if this Warrant is exercised on a cash basis, the aggregate Exercise Price as set forth above
and (B) all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares
(such date, the “Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised on the
first date on which all of the foregoing have been delivered to the Company. The Warrant Shares shall be deemed to have been issued,
and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares
for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price and all taxes
required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid.


 


(ii)
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request
of a Holder and upon surrender of the certificate for this Warrant, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant
Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.


 


(iii)
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates
representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then, the Holder will have the
right to rescind such exercise.


 


(iv)
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. If (1) the Company fails to transmit to
the Holder (directly or through the Transfer Agent) a certificate or the certificates representing the Warrant Shares pursuant
to an exercise (or to credit the account of the Holder’s prime broker at DTC through a DWAC system transaction) on or before
the Warrant Share Delivery Date and (2) prior to the time such certificate is received by the registered holder (or such account
is credited through a DWAC system transaction), the registered holder, or any third party on behalf of the registered holder or
for the registered holder’s account, purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the registered holder of shares represented by such certificate (or such DWAC system transaction)
(a “Buy-In”), then the Company shall pay in cash to the registered holder (for costs incurred either directly
by such registered holder or on behalf of a third party) the amount by which the total purchase price paid for Common Stock as
a result of the Buy-In (including brokerage commissions, if any) exceeds the proceeds received by such registered holder as a
result of the sale to which such Buy-In relates. The registered holder shall provide the Company written notice indicating the
amounts payable to the registered holder in respect of the Buy-In.


 




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(v)
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.


 


(vi)
Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for
any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may
be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued
in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient
to reimburse it for any transfer tax incidental thereto.


 


(vii)
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.


 


(e)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not
have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect
to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s
Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of
shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of
shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially
owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any
other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.
Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged
by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of
the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall
be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination
of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and
of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic
or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a
more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.
Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder
or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’
prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation of this Section 2(e) or may waive the
application of this Section 2(e). Any such increase or decrease or waiver will not be effective until the 61st day
after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to
a successor holder of this Warrant.


 




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3.
Certain Adjustments.


 


(a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company
upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines
(including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by
reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares,
if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted
such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a)
shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend
or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.


 


(b)
Fundamental Transactions. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in
one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one
or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent
exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon
such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard
to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise
of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to
apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in
a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder
shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not
the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this
Warrant in accordance with the provisions of this Section 3(b) pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall,
at the option of the holder of this Warrant, deliver to the Holder in exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock
(but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value
of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably
satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity
shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this
Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such
Successor Entity had been named as the Company herein.


 




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(c)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as
of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.


 


(d)
Notice to Holder.


 


(i)
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the
Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment.


 


(ii)
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed
to the Holder at its last address as it shall appear upon the Warrant Register (defined below) of the Company, at least twenty
(20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer
or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common
Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding
the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current
Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such
notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.


 




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4.
Limitation on Sales of Warrant Shares. The Holder acknowledges that the Warrant Shares have not been registered under the
Securities Act, and agrees that it shall not sell, pledge, distribute, offer for sale, transfer or otherwise dispose of any Warrant
Shares, in the absence of (i) an effective registration statement under the Securities Act as to such Warrant Shares and registration
or qualification of such Warrant Shares under any applicable “blue sky” or state securities law then in effect or
(ii) an opinion of counsel, satisfactory to the Company, that such registration and qualification are not required. Without limiting
the generality of the foregoing, unless the resale of the Warrant Shares shall have been effectively registered under the Securities
Act, the Warrant Shares issued upon exercise of this Warrant shall be imprinted with a legend in substantially the following form:


 


This
security has been acquired for investment and has not been registered under the Securities Act of 1933, as amended (the “Securities
Act”), or applicable state securities laws. This security may not be sold, pledged or otherwise transferred in the absence
of such registration or pursuant to an exemption therefrom under the Securities Act and such laws, supported by an opinion of
counsel, reasonably satisfactory to the Company and its counsel, that such registration is not required.


 


5.
Transfer of Warrant.


 


(a)
Transfer. Subject to compliance with any applicable state and federal securities laws and the provisions of this Warrant,
this Warrant and all rights hereunder may be transferred, in whole or in part, by surrendering this Warrant at the principal office
of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached
hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making
of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants
in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder
for the purchase of Warrant Shares without having a new Warrant issued.


 


(b)
New Warrants. This Warrant may be divided upon presentation hereof at the aforesaid office of the Company, together with
a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent
or attorney. Subject to compliance with Section 5(a), as to any transfer which may be involved in such division, the Company shall
execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided in accordance with such notice.
All Warrants issued on transfers or exchanges shall be dated the initial issuance date set forth on the first page of this Warrant
and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.


 




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(c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose
(the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.


 


6.
[Reserved]


 


7.
Miscellaneous.


 


(a)
No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other
rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i).


 


(b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case
of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.


 


(c)
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.


 


(d)
Authorized Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized
and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates
for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable
action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable
law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).


 




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Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above
the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may
be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares
upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform
its obligations under this Warrant.


 


Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or
in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction thereof.


 


(e)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant 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 Warrant 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 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.


 


(f)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies.


 




    	 	10	 



     


    

 


(g)
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 5:30 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 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is
required to be given. Except as otherwise provided of in this Warrant, the address for such notices and communications shall be
as follows: if to (A) the Company, 9705 Loiret Boulevard, Lenexa, Kansas. 66219, Attention: Chief Financial Officer, and (B) the
Holder, Brickell Key Investments LP, 11 New Street, St. Peter Port, Guernsey GY1 2PF, Attention: Corporate Secretary, with copies
to Brickell Key Asset Management Limited, 11 New Street, St. Peter Port, Guernsey GY1 2PF, Attention: Corporate Secretary and
Brickell Key Asset Management, LLC, 18 Broad Street, Suite 201D, Charleston, SC 29401, Attention: William Yuen.


 


(h)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability
of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.


 


(i)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.


 


(j)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant
and shall be enforceable by the Holder.


 


(k)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company
and the Holder.


 


(l)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.


 


(m)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.


 


********************


 


[SIGNATURE
PAGE FOLLOWS]


 




    	 	11	 



     


    

 


IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first
above indicated.


 


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


 




    	 	12	 



     


    

 


NOTICE
OF EXERCISE


 


To:
Digital Ally, Inc.


 


(1)
The undersigned hereby elects to exercise Warrant No. (the “Warrant”) with respect to ____________ shares of
common stock of the Company (the “Warrant Shares”), pursuant to the terms of the Warrant, and tenders herewith
or will tender within the time period specified in the Warrant payment of the exercise price in full (or has elected below to
exercise the Warrant on a cashless basis), together with all applicable transfer taxes, if any. If the Warrant is being exercised
in full, the Warrant is attached hereto or will be delivered within the time period specified in the Warrant.


 


(2)
Payment of Exercise Price:


 


	 	[  ]
    	Payment
    shall take the form of lawful money of the United States in accordance with the terms of the Warrant.
	 	 	 
	 	[  ]
    	Payment
    shall take the form of a cashless exercise in accordance with the terms of the Warrant.


 


(3)
Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name
as is specified below:


 







 



 





The
Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:


 





 













 


 





 



 


 


 






 





[SIGNATURE
OF HOLDER]


 


Name of Holder: ___________________________________________________________________________________


  


Signature:________________________________________________________________________________________


  


Name
of Signatory (if entity): _________________________________________________________________________


  


Title of Signatory (if entity): __________________________________________________________________________


  


Date: ___________________________________________________________________________________________



 




    	 



     


    

 


ASSIGNMENT
FORM


 


(To
assign the foregoing warrant, execute this form and supply required information.


Do
not use this form to exercise the warrant.)


 


FOR
VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned
to:


 







 



 





whose
address is:


 







 



 


 







 



 


	 	Dated:
    ______________, _______
	 	 
	 	 
	 	Name
    of Holder
	 	 
	 	 
	 	Signature
	 	 
	 	 
	 	Name
    of Signatory (if entity)
	 	 
	 	
	 	Title
    of Signatory (if entity)
	 	 
	 	Address
    of Holder:
	 	 
	 	 
	 	 
	 	 


 


Signature
Guaranteed: ___________________________________________


 


NOTE:
The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration
or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those
acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.