Exhibit 10.53






 


AMENDED
AND RESTATED PLEDGE AND SECURITY AGREEMENT


 


This
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT, dated as of August [__], 2014 (this “Agreement”),
is made by Digital Ally, Inc., a Nevada corporation (the “Company”), Digital Ally International, Inc.
(“DAII”), a Nevada corporation, MEDICAL DEVICES aLLY, LLC,
a Kansas limited liability company (“MDAL”) and each other Subsidiary of the Company, DAII and MDAL hereafter
becoming party hereto (together with the Company, DAII, and MDAL each a “Grantor” and, collectively, the “Grantors”),
in favor of Hudson Bay Master Fund Ltd., in its capacity as collateral agent (in such capacity, the “Collateral Agent”)
for the Buyers (as defined below).


 


W
I T N E S S E T H:


 


WHEREAS,
pursuant to the Securities Purchase Agreement, dated as of March 21, 2014 (as amended, restated or otherwise modified from time
to time, including all schedules thereto, the “Existing Securities Purchase Agreement”), among the Company
and each party listed as a “Buyer” on the Schedule of Buyers thereto (each an “Existing Buyer”,
and collectively, the “Existing Buyers”), the Company sold, and the Existing Buyers purchased, certain Notes
as defined therein (collectively, the “Existing Notes”);


 


WHEREAS,
in connection with the Existing Securities Purchase Agreement, the Company and DAII entered into the Pledge and Security Agreement,
dated as of March 21, 2014 (as amended, restated or otherwise modified prior to the date hereof, including all schedules thereto,
the “Existing Pledge and Security Agreement”) in favor of the Collateral Agent, in its capacity as collateral
agent for the Existing Buyers;


 


WHEREAS,
pursuant to the Securities Purchase Agreement, dated as of August [25], 2014 (as amended, restated or otherwise modified from
time to time, including all schedules thereto, the “Additional Securities Purchase Agreement”, and together
with the Existing Securities Purchase Agreement, collectively, the “Securities Purchase Agreements”), among
the Company and each party listed as a “Buyer” on the Schedule of Buyers attached thereto (each an “Additional
Buyer”, and collectively, the “Additional Buyers”, and together with the Existing Buyers, each a
“Buyer”, and collectively, the “Buyers”), the Company agreed to sell, and the Additional
Buyers agreed to purchase certain Notes as defined therein (collectively, the “Additional Notes”, and together
with the Existing Notes, collectively, the “Notes”);


 


WHEREAS,
it is a condition precedent to the Buyers consummating the transactions contemplated by the Additional Securities Purchase Agreement
and the other Transaction Documents (as defined in the Additional Securities Purchase Agreement) that the Grantors amend and restate
the Existing Pledge and Security Agreement pursuant to this Agreement;


 


WHEREAS,
the Grantors (i) are mutually dependent on each other in the conduct of their respective businesses as an integrated operation,
with the credit needed from time to time by one often being provided through financing obtained by the other Grantors and the
ability to obtain such financing being dependent on the successful operations of the Grantors and (ii) have mutually benefitted,
and will receive a mutual benefit, from the proceeds received by the Company in respect of the issuance of the Notes; and


 




    	 



    	 



    



 


WHEREAS,
each Grantor has determined that the execution, delivery and performance of this Agreement directly benefits, and are in the best
interest of the Company and such Grantor.


 


NOW,
THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities
Purchase Agreements, each Grantor agrees with the Collateral Agent, for the benefit of the Buyers, that the Existing Pledge and
Security Agreement is hereby amended and restated in its entirety to read as follows:


 


Section
1.Definitions.


 


(a)Reference
is hereby made to the Securities Purchase Agreements and the Notes for a statement of the terms thereof. All terms used in this
Agreement and the recitals hereto which are defined in the Securities Purchase Agreements, the Notes or in Articles 8 or 9 of
the Uniform Commercial Code (the “Code”) as in effect from time to time in the State of New York, and which
are not otherwise defined herein shall have the same meanings herein as set forth therein; provided that terms used herein
which are defined in the Code as in effect in the State of New York on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute except as the Collateral Agent may otherwise determine. 


 


(b)The
following terms shall have the respective meanings provided for in the Code: “Accounts”, “Cash Proceeds”,
“Chattel Paper”, “Commercial Tort Claim”, “Commodity Account”, “Commodity Contracts”,
“Deposit Account”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”,
“Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit
Rights”, “Noncash Proceeds”, “Payment Intangibles”, “Proceeds”, “Promissory Notes”,
“Security”, “Record”, “Security Account”, “Software”, and “Supporting Obligations”.


 


(c)As
used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable
equally to both the singular and plural forms of such terms:


 


“Collateral”
shall have the meaning set forth in Section 2 hereof.


 


“Copyright
Licenses” means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee
or licensor and providing for the grant of any right to use or sell any works covered by any copyright (including, without limitation,
all Copyright Licenses set forth in Schedule II hereto).


 


“Copyrights”
means all domestic and foreign copyrights, whether registered or not, including, without limitation, all copyright rights throughout
the universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original
works of authorship fixed in any tangible medium of expression, acquired or used by any Grantor (including, without limitation,
all copyrights described in Schedule II hereto), all applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States Copyright Office or in any similar office or agency
of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations
in part and extensions or renewals thereof.


 




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“Event
of Default” means (i) any defined event of default under any one or more of the Transaction Documents, in each
instance, after giving effect to any notice, grace, or cure periods provided for in the applicable Transaction Document, (ii)
the failure by the Company to pay any amounts when due under the Notes or any other Transaction Document, or (iii) the breach
of any representation, warranty or covenant by any Grantor under this Agreement.


 


“Existing
Issuer” has the meaning specified therefor in the definition of the term “Pledged Shares”.


 


“GAAP”
shall have the meaning set forth in Section 4(c) hereof.


 


“Guaranty”
means the Amended and Restated Guaranty, dated as of the date hereof, by DAII in favor of the Buyers and the Collateral Agent.


 


“Insolvency
Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code (Chapter
11 of Title 11 of the United States Code) or under any other bankruptcy or insolvency law, assignments for the benefit of creditors,
formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement,
or other similar relief.


 


“Intellectual
Property” means the Copyrights, Trademarks and Patents.


 


“Licenses”
means the Copyright Licenses, the Trademark Licenses and the Patent Licenses.


 


“Lien”
means any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security
or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement,
any capitalized lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security.


 


“Obligations”
shall have the meaning set forth in Section 3 hereof.


 


“Patent
Licenses” means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee
or licensor and providing for the grant of any right to manufacture, use or sell any invention covered by any Patent (including,
without limitation, all Patent Licenses set forth in Schedule II hereto).


 


“Patents”
means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets,
ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity
and other general intangibles of like nature, of any Grantor, now existing or hereafter acquired (including, without limitation,
all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas,
concepts, methods, techniques, processes, proprietary information, technology, know-how and formulae described in Schedule
II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations
and recordings in the United States Patent and Trademark Office, or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions
or renewals thereof.


 




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“Permitted
Liens” shall have the meaning set forth in the Notes.


 


“Pledged
Debt” means the indebtedness described in Schedule VII hereto and all indebtedness from time to time owned or
acquired by a Grantor, the promissory notes and other Instruments evidencing any or all of such indebtedness, and all interest,
cash, Instruments, Investment Property, financial assets, securities, capital stock, other equity interests, stock options and
commodity contracts, notes, debentures, bonds, promissory notes or other evidences of indebtedness and all other property from
time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such indebtedness.


 


“Pledged
Interests” means, collectively, (a) the Pledged Debt, (b) the Pledged Shares and (c) all security entitlements in any
and all of the foregoing.


 


“Pledged
Issuer” has the meaning specified therefor in the definition of the term “Pledged Shares”.


 


“Pledged
Shares” means (a) the shares of capital stock or other equity interests described in Schedule VIII hereto (other
than the 83,758 common shares of Studio One Media, LLC owned by the Company as of the date hereof, unless and until such time
that the Collateral Agent has requested that such shares constitute Pledged Shares and be included as Collateral for all purposes
of this Agreement), whether or not evidenced or represented by any stock certificate, certificated security or other Instrument,
issued by the Persons described in such Schedule VIII (the “Existing Issuers” and each individually
as an “Existing Issuer”), (b) the shares of capital stock or other equity interests at any time and from time
to time acquired by a Grantor of any and all Persons now or hereafter existing (such Persons, together with the Existing Issuers,
being hereinafter referred to collectively as the “Pledged Issuers” and each individually as a “Pledged
Issuer”), whether or not evidenced or represented by any stock certificate, certificated security or other Instrument,
and (c) the certificates representing such shares of capital stock, all options and other rights, contractual or otherwise, in
respect thereof and all dividends, distributions, cash, Instruments, Investment Property, financial assets, securities, capital
stock, other equity interests, stock options and commodity contracts, notes, debentures, bonds, promissory notes or other evidences
of indebtedness and all other property (including, without limitation, any stock dividend and any distribution in connection with
a stock split) from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of
such capital stock.


 


“Trademark
Licenses” means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensor
or licensee and providing for the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized
by any such trademark licenses, contracts or agreements and the right to prepare for sale or lease and sell or lease any and all
Inventory now or hereafter owned by any Grantor and now or hereafter covered by such licenses (including, without limitation,
all Trademark Licenses described in Schedule II hereto).


 




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“Trademarks”
means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names,
d/b/a’s, Internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles
of like nature, now or hereafter owned, adopted, acquired or used by any Grantor (including, without limitation, all domestic
and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, Internet
domain names, trade styles, designs, logos and other source or business identifiers described in Schedule II hereto), all
applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings
in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or
any other country or any political subdivision thereof), and all reissues, extensions or renewals thereof, together with all goodwill
of the business symbolized by such marks and all customer lists, formulae and other Records of any Grantor relating to the distribution
of products and services in connection with which any of such marks are used.


 


Section
2.Grant of Security Interest. As collateral security
for all of the Obligations, each Grantor hereby pledges and assigns to the Collateral Agent for the benefit of the Buyers, and
grants to the Collateral Agent for the benefit of the Buyers a continuing security interest in, all personal property of such
Grantor, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and
description, tangible or intangible (collectively, the “Collateral”), including, without limitation, the following:


 


(a)all
Accounts;


 


(b)all
Chattel Paper (whether tangible or electronic);


 


(c)the
Commercial Tort Claims specified on Schedule VI hereto;


 


(d)all
Deposit Accounts (including, without limitation, all cash, and all other property from time to time deposited therein and the
monies and property in the possession or under the control of the Collateral Agent or a Buyer or any affiliate, representative,
agent or correspondent of the Collateral Agent or a Buyer; 


 


(e)all
Documents;


 


(f)all
Equipment;


 


(g)all
Fixtures;


 


(h)all
General Intangibles (including, without limitation, all Payment Intangibles);


 


(i)all
Goods;


 




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(j)all
Instruments (including, without limitation, Promissory Notes and each certificated Security);


 


(k)all
Inventory;


 


(l)all
Investment Property;


 


(m)all
Copyrights, Patents and Trademarks, and all Licenses;


 


(n)all
Letter-of-Credit Rights;


 


(o)all
Supporting Obligations;


 


(p)all
Pledged Interests;


 


(q)all
other tangible and intangible personal property of such Grantor (whether or not subject to the Code), including, without limitation,
all bank and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits,
income, benefits, substitutions and replacements of and to any of the property of such Grantor described in the preceding clauses
of this Section 2 (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and
warranties now or hereafter held by such Grantor in respect of any of the items listed above), and all books, correspondence,
files and other Records, including, without limitation, all tapes, desks, cards, Software, data and computer programs in the possession
or under the control of such Grantor or any other Person from time to time acting for such Grantor that at any time evidence or
contain information relating to any of the property described in the preceding clauses of this Section 2 or are otherwise
necessary or helpful in the collection or realization thereof; and


 


(r)all
Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral;


 


in
each case, howsoever such Grantor’s interest therein may arise or appear (whether by ownership, security interest, claim
or otherwise).


 


Section
3.Security for Obligations. The security interest created
hereby in the Collateral constitutes continuing collateral security for all of the following obligations, whether now existing
or hereafter incurred (collectively, the “Obligations”):


 


(a)the
prompt payment by each Grantor, as and when due and payable (by scheduled maturity, required prepayment, acceleration, demand
or otherwise), of all amounts from time to time owing by it in respect of the Securities Purchase Agreements, the Notes, the Guaranty
and the other Transaction Documents, including, without limitation, (i) all principal of and interest on the Notes (including,
without limitation, all interest that accrues after the commencement of any Insolvency Proceeding of any Grantor, whether or not
the payment of such interest is unenforceable or is not allowable due to the existence of such Insolvency Proceeding), (ii) all
amounts from time to time owing by such Grantor under the Guaranty, and (iii) all fees, commissions, expense reimbursements, indemnifications
and all other amounts due or to become due under any of the Transaction Documents; and


 




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(b)the
due performance and observance by each Grantor of all of its other obligations from time to time existing in respect of any of
the Transaction Documents for so long as the Notes are outstanding.


 


Section
4.Representations and Warranties. Each Grantor represents
and warrants as follows:


 


(a)Schedule
I hereto sets forth (i) the exact legal name of such Grantor, and (ii) the organizational identification number of such Grantor
or states that no such organizational identification number exists.


 


(b)There
is no pending or written notice threatening any action, suit, proceeding or claim affecting such Grantor before any governmental
authority or any arbitrator, or any order, judgment or award by any governmental authority or arbitrator, that may adversely affect
the grant by such Grantor, or the perfection, of the security interest purported to be created hereby in the Collateral, or the
exercise by the Collateral Agent of any of its rights or remedies hereunder.


 


(c)All
Federal, state and local tax returns and other reports required by applicable law to be filed by such Grantor have been filed,
or extensions have been obtained, and all taxes, assessments and other governmental charges imposed upon such Grantor or any property
of such Grantor (including, without limitation, all federal income and social security taxes on employees’ wages) and which
have become due and payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper
proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves have been set aside for the payment thereof in accordance with United States generally accepted accounting
principles consistently applied (“GAAP”). 


 


(d)All
Equipment, Fixtures, Goods and Inventory of such Grantor now existing are, and all Equipment, Fixtures, Goods and Inventory of
such Grantor hereafter existing will be, located and/or based at the addresses specified therefor in Schedule III hereto,
except that such Grantor will give the Collateral Agent not less than thirty (30) days’ prior written notice of any change
of the location of any such Collateral, other than to locations set forth on Schedule III and with respect to which the
Collateral Agent has filed financing statements and otherwise fully perfected its Liens thereon. Such Grantor’s chief place
of business and chief executive office, the place where such Grantor keeps its Records concerning Accounts and all originals of
all Chattel Paper are located at the addresses specified therefor in Schedule III hereto. None of the Accounts is evidenced
by Promissory Notes or other Instruments. Set forth in Schedule IV hereto is a complete and accurate list, as of the date
of this Agreement, of (i) each Promissory Note, Security and other Instrument owned by each Grantor and (ii) each Deposit Account,
Securities Account and Commodities Account of each Grantor, together with the name and address of each institution at which each
such Account is maintained, the account number for each such Account and a description of the purpose of each such Account. Set
forth in Schedule II hereto is a complete and correct list of each trade name used by each Grantor and the name of, and
each trade name used by, each person from which such Grantor has acquired any substantial part of the Collateral. 


 




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(e)Such
Grantor has delivered or made available to the Collateral Agent complete and correct copies of each License described in Schedule
II hereto, including all schedules and exhibits thereto, which represents all of the Licenses existing on the date of this
Agreement. Each such License sets forth the entire agreement and understanding of the parties thereto relating to the subject
matter thereof, and there are no other agreements, arrangements or understandings, written or oral, relating to the matters covered
thereby or the rights of such Grantor or any of its affiliates in respect thereof. Each material License now existing is, and
any material License entered into in the future will be, the legal, valid and binding obligation of the parties thereto, enforceable
against such parties in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, suretyship or other similar laws and equitable principles (regardless of whether enforcement
is sought in equity or in law). No default under any material License by any such party has occurred, nor does any defense, offset,
deduction or counterclaim exist thereunder in favor of any such party.


 


(f)Such
Grantor owns and controls, or otherwise possesses adequate rights to use, all Trademarks, Patents and Copyrights, which are the
only trademarks, patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights
of publicity necessary to conduct its business in substantially the same manner as conducted as of the date hereof. Schedule
II hereto sets forth a true and complete list of all registered copyrights, issued patents, Trademarks (including, without
limitation, any Internet domain names and the registrar of each such Internet domain name), and Licenses annually owned or used
by such Grantor as of the date hereof. To the best knowledge of each Grantor, all such Intellectual Property of such Grantor is
subsisting and in full force and effect, has not been adjudged invalid or unenforceable, is valid and enforceable and has not
been abandoned in whole or in part. Except as set forth in Schedule II, no such Intellectual Property is the subject of
any licensing or franchising agreement. Such Grantor has no knowledge of any conflict with the rights of others to any Intellectual
Property and, to the best knowledge of such Grantor, such Grantor is not now infringing or in conflict with any such rights of
others in any material respect, and to the best knowledge of such Grantor, no other Person is now infringing or in conflict in
any material respect with any such properties, assets and rights owned or used by such Grantor. Except as set forth in Schedule
II, such Grantor has not received any notice that it is violating or has violated the trademarks, patents, copyrights, inventions,
trade secrets, proprietary information and technology, know-how, formulae, rights of publicity or other intellectual property
rights of any third party.


 


(g)Such
Grantor is and will be at all times the sole and exclusive owner of, or otherwise has and will have adequate rights in, the Collateral
free and clear of any Liens, except for Permitted Liens on any Collateral. No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any recording or filing office except (i) such as may
have been filed in favor of the Collateral Agent relating to this Agreement, and (ii) such as may have been filed to perfect any
Permitted Liens.


 


(h)The
exercise by the Collateral Agent of any of its rights and remedies hereunder will not contravene any law or any contractual restriction
binding on or otherwise affecting such Grantor or any of its properties and will not result in or require the creation of any
Lien, upon or with respect to any of its properties.


 




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(i)No
authorization or approval or other action by, and no notice to or filing with, any governmental authority or other regulatory
body, or any other Person, is required for (i) the grant by such Grantor, or the perfection, of the security interest purported
to be created hereby in the Collateral, or (ii) the exercise by the Collateral Agent of any of its rights and remedies hereunder,
except (A) for the filing under the Uniform Commercial Code as in effect in the applicable jurisdiction of the financing statements,
all of which financing statements, have been duly filed and are in full force and effect, (B) with respect to the perfection of
the security interest created hereby in the Intellectual Property, for the recording of the appropriate Assignment for Security,
substantially in the form of Exhibit A hereto, as applicable, in the United States Patent and Trademark Office or the United
States Copyright Office, as applicable, and (C) with respect to the perfection of the security interest created hereby in foreign
Intellectual Property and Licenses, for registrations and filings in jurisdictions located outside of the United States and covering
rights in such jurisdictions relating to the Intellectual Property and Licenses.


 


(j)This
Agreement creates in favor of the Collateral Agent a legal, valid and enforceable security interest in the Collateral, as security
for the Obligations. The Collateral Agent’s having possession of all Instruments and cash constituting Collateral from time
to time, the recording of the appropriate Assignment for Security executed pursuant hereto in the United States Patent and Trademark
Office and the United States Copyright Office, as applicable, and the filing of the financing statements and the other filings
and recordings, as applicable, described in Schedule V hereto and, with respect to the Intellectual Property hereafter
existing and not covered by an appropriate Assignment for Security, the recording in the United States Patent and Trademark Office
or the United States Copyright Office, as applicable, of appropriate instruments of assignment, result in the perfection of such
security interests. Such security interests are, or in the case of Collateral in which such Grantor obtains rights after the date
hereof, will be, perfected, first priority security interests, subject only to Permitted Liens and the recording of such instruments
of assignment. Such recordings and filings and all other action necessary or desirable to perfect and protect such security interest
have been duly taken, except for the Collateral Agent’s having possession of Instruments and cash constituting Collateral
after the date hereof and the other filings and recordations described in Section 4(l) hereof.


 


(k)As
of the date hereof, such Grantor does not hold any Commercial Tort Claims nor is such Grantor aware of any such pending claims,
except for such claims described in Schedule VI.


 


(l)Each
of the Grantors (other than the Company) is a wholly-owned Subsidiary of the Company and are the only Subsidiaries of the Company,
as of the date hereof.


 




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Section
5.Covenants as to the Collateral. So long as any of the
Obligations shall remain outstanding, unless the Collateral Agent shall otherwise consent in writing:


 


(a)Further
Assurances. Each Grantor will at its expense, at any time and from time to time, promptly execute and deliver all further
instruments and documents and take all further action that the Collateral Agent may reasonably request in order to: (i) perfect
and protect the security interest purported to be created hereby; (ii) enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder in respect of the Collateral; or (iii) otherwise effect the purposes of this Agreement, including,
without limitation: (A) marking conspicuously all Chattel Paper and each License and, at the request of the Collateral Agent,
each of its Records pertaining to the Collateral with a legend, in form and substance satisfactory to the Collateral Agent, indicating
that such Chattel Paper, License or Collateral is subject to the security interest created hereby, (B) delivering and pledging
to the Collateral Agent hereunder each Promissory Note, Security, Chattel Paper or other Instrument, now or hereafter owned by
such Grantor, duly endorsed and accompanied by executed instruments of transfer or assignment, all in form and substance satisfactory
to the Collateral Agent, (C) executing and filing (to the extent, if any, that such Grantor’s signature is required thereon)
or authenticating the filing of, such financing or continuation statements, or amendments thereto, as may be necessary or desirable
or that the Collateral Agent may request in order to perfect and preserve the security interest purported to be created hereby,
(D) furnishing to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral in each case as the Collateral Agent may reasonably request, all in reasonable
detail, (E) if any Collateral shall be in the possession of a third party, notifying such Person of the Collateral Agent’s
security interest created hereby and obtaining a written acknowledgment from such Person that such Person holds possession of
the Collateral for the benefit of the Collateral Agent, which such written acknowledgement
shall be in form and substance satisfactory to the Collateral Agent, (F) if at any time after the date hereof, such Grantor acquires
or holds any Commercial Tort Claim, promptly notifying the Collateral Agent in a writing signed by such Grantor setting forth
a brief description of such Commercial Tort Claim and granting to the Collateral Agent a security interest therein and in the
proceeds thereof, which writing shall incorporate the provisions hereof and shall be in form and substance satisfactory to the
Collateral Agent, (G) if requested by the Collateral Agent, upon the acquisition after the date hereof by such Grantor of any
motor vehicle or other Equipment subject to a certificate of title or ownership (other than a Motor Vehicle or Equipment that
is subject to a purchase money security interest), causing the Collateral Agent to be listed as the lienholder on such certificate
of title or ownership and delivering evidence of the same to the Collateral Agent in accordance with the Securities Purchase Agreements;
and (H) taking all actions required by any earlier versions of the Uniform Commercial Code or by other law, as applicable, in
any relevant Uniform Commercial Code jurisdiction, or by other law as applicable in any foreign jurisdiction.


 


(b)Location
of Equipment and Inventory. Each Grantor will keep the Equipment and Inventory at the locations specified therefor in Section
4(d) hereof or, upon not less than thirty (30) days’ prior written notice to the Collateral Agent accompanied by a new
Schedule III hereto indicating each new location of the Equipment and Inventory, at such other locations in the United
States.


 


(c)Condition
of Equipment. Each Grantor will maintain or cause the Equipment (necessary or useful to its business) to be maintained and
preserved in good condition, repair and working order, ordinary wear and tear excepted, and will forthwith, or in the case of
any loss or damage to any material Equipment of such Grantor within a commercially reasonable time after the occurrence thereof,
make or cause to be made all repairs, replacements and other improvements in connection therewith which are necessary or desirable,
consistent with past practice, or which the Collateral Agent may reasonably request to such end. Such Grantor will promptly furnish
to the Collateral Agent a statement describing in reasonable detail any such loss or damage to any such Equipment.


 




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(d)Taxes,
Etc. Each Grantor agrees to pay promptly when due all property and other taxes, assessments and governmental charges or levies
imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory, except
to the extent the validity thereof is being contested in good faith by proper proceedings which stay the imposition of any penalty,
fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves in accordance with GAAP have been
set aside for the payment thereof.


 


(e)Insurance.


 


(i)Each
Grantor will, at its own expense, maintain insurance (including, without limitation, commercial general liability and property
insurance) with respect to the Equipment and Inventory in such amounts, against such risks, in such form and with responsible
and reputable insurance companies or associations as is required by any governmental authority having jurisdiction with respect
thereto or as is carried by such Grantor as of the date hereof and in any event, in amount, adequacy and scope reasonably satisfactory
to the Collateral Agent. Unless otherwise agreed to by the Collateral Agent, each such policy for liability insurance shall provide
for all losses to be paid on behalf of the Collateral Agent and such Grantor as their respective interests may appear, and each
policy for property damage insurance shall provide for all losses to be adjusted with, and paid directly to, the Collateral Agent.
Unless otherwise agreed to by the Collateral Agent, each such policy shall in addition (A) name the Collateral Agent as an additional
insured party thereunder (without any representation or warranty by or obligation upon the Collateral Agent) as their interests
may appear, (B) contain an agreement by the insurer that any loss thereunder shall be payable to the Collateral Agent on its own
account notwithstanding any action, inaction or breach of representation or warranty by such Grantor, (C) provide that there shall
be no recourse against the Collateral Agent for payment of premiums or other amounts with respect thereto, and (D) provide that
at least thirty (30) days’ prior written notice of cancellation, lapse, expiration or other adverse change shall be given
to the Collateral Agent by the insurer. Such Grantor will, if so requested by the Collateral Agent, deliver to the Collateral
Agent original or duplicate policies of such insurance and, as often as the Collateral Agent may reasonably request, a report
of a reputable insurance broker with respect to such insurance. Such Grantor will also, at the request of the Collateral Agent,
execute and deliver instruments of assignment of such insurance policies and cause the respective insurers to acknowledge notice
of such assignment.


 


(ii)Reimbursement
under any liability insurance maintained by a Grantor pursuant to this Section 5(e) may be paid directly to the Person
who shall have incurred liability covered by such insurance. In the case of any loss involving damage to Equipment or Inventory,
any proceeds of insurance maintained by a Grantor pursuant to this Section 5(e) shall be paid to the Collateral Agent (except
as to which paragraph (iii) of this Section 5(e) is not applicable), such Grantor will make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory, and any proceeds of insurance maintained by such Grantor pursuant to
this Section 5(e) shall be paid by the Collateral Agent to such Grantor as reimbursement for the costs of such repairs
or replacements.


 




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(iii)All
insurance payments in respect of such Equipment or Inventory shall be paid to the Collateral Agent and applied as specified in
Section 7(b) hereof.


 


(f)Provisions
Concerning the Accounts and the Licenses.


 


(i)Each
Grantor will (A) give the Collateral Agent at least thirty (30) days’ prior written notice of any change in such Grantor’s
name, identity or organizational structure, (B) maintain its jurisdiction of incorporation as set forth in Section 4(a)
hereto, (C) immediately notify the Collateral Agent upon obtaining an organizational identification number, if on the date hereof
such Grantor did not have such identification number, and (D) keep adequate records concerning the Accounts and Chattel Paper
and permit representatives of the Collateral Agent during normal business hours on reasonable notice to such Grantor, to inspect
and make abstracts from such Records and Chattel Paper.


 


(ii)Each
Grantor will, except as otherwise provided in this subsection (f), continue to collect, at its own expense, all amounts due or
to become due under the Accounts. In connection with such collections, such Grantor may (and, at the Collateral Agent’s
direction, will) take such action as such Grantor or the Collateral Agent may deem necessary or advisable to enforce collection
or performance of the Accounts; provided, however, that the Collateral Agent shall have the right at any time, upon
the occurrence and during the continuance of an Event of Default, to notify the account debtors or obligors under any Accounts
of the assignment of such Accounts to the Collateral Agent and to direct such account debtors or obligors to make payment of all
amounts due or to become due to such Grantor thereunder directly to the Collateral Agent or its designated agent and, upon such
notification and at the expense of such Grantor and to the extent permitted by law, to enforce collection of any such Accounts
and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might
have done. After receipt by a Grantor of a notice from the Collateral Agent that the Collateral Agent has notified, intends to
notify, or has enforced or intends to enforce a Grantor’s rights against the account debtors or obligors under any Accounts
as referred to in the proviso to the immediately preceding sentence, (A) all amounts and proceeds (including Instruments) received
by such Grantor in respect of the Accounts shall be received in trust for the benefit of the Collateral Agent hereunder, shall
be segregated from other funds of such Grantor and shall be forthwith paid over to the Collateral Agent in the same form as so
received (with any necessary endorsement) to be held as cash collateral and applied as specified in Section 7(b) hereof,
and (B) such Grantor will not adjust, settle or compromise the amount or payment of any Account or release wholly or partly any
account debtor or obligor thereof or allow any credit or discount thereon. In addition, upon the occurrence and during the continuance
of an Event of Default, the Collateral Agent may (in its sole and absolute discretion) direct any or all of the banks and financial
institutions with which such Grantor either maintains a Deposit Account or a lockbox or deposits the proceeds of any Accounts
to send immediately to the Collateral Agent by wire transfer (to such account as the Collateral Agent shall specify, or in such
other manner as the Collateral Agent shall direct) all or a portion of such securities, cash, investments and other items held
by such institution. Any such securities, cash, investments and other items so received by the Collateral Agent shall (in the
sole and absolute discretion of the Collateral Agent) be held as additional Collateral for the Obligations or distributed in accordance
with Section 7 hereof.


 




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(iii)Upon
the occurrence and during the continuance of any breach or default under any material License referred to in Schedule II
hereto by any party thereto other than a Grantor, the Grantor party thereto will, promptly after obtaining knowledge thereof,
give the Collateral Agent written notice of the nature and duration thereof, specifying what action, if any, it has taken and
proposes to take with respect thereto and thereafter will take reasonable steps to protect and preserve its rights and remedies
in respect of such breach or default, or will obtain or acquire an appropriate substitute License.


 


(iv)Each
Grantor will, at its expense, promptly deliver to the Collateral Agent a copy of each notice or other communication received by
it by which any other party to any material License referred to in Schedule II hereto purports to exercise any of its rights
or affect any of its obligations thereunder, together with a copy of any reply by such Grantor thereto.


 


(v)Each
Grantor will exercise promptly and diligently each and every right which it may have under each material License (other than any
right of termination) and will duly perform and observe in all respects all of its obligations under each material License and
will take all action reasonably necessary to maintain such Licenses in full force and effect. No Grantor will, without the prior
written consent of the Collateral Agent, cancel, terminate, amend or otherwise modify in any respect, or waive any provision of,
any material License referred to in Schedule II hereto.


 


(g)Transfers
and Other Liens.


 


(i)No
Grantor will sell, assign (by operation of law or otherwise), lease, license, exchange or otherwise transfer or dispose of any
of the Collateral, except (A) Inventory in the ordinary course of business and (B) worn-out or obsolete assets not necessary to
the business.


 


(ii)No
Grantor will create, suffer to exist or grant any Lien upon or with respect to any Collateral other than a Permitted Lien.


 




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(h)Intellectual
Property.


 


(i)If
applicable, each Grantor shall, upon the Collateral Agent’s written request, duly execute and deliver the applicable Assignment
for Security in the form attached hereto as Exhibit A. Each Grantor (either itself
or through licensees) will, and will cause each licensee thereof to, take all action necessary to maintain all of the Intellectual
Property in full force and effect, including, without limitation, using the proper statutory notices and markings and using the
Trademarks on each applicable trademark class of goods in order to so maintain the Trademarks in full force and free from any
claim of abandonment for non-use, and such Grantor will not (nor permit any licensee thereof to) do any act or knowingly omit
to do any act whereby any Intellectual Property may become invalidated; provided, however, that so long as no Event
of Default has occurred and is continuing, such Grantor shall not have an obligation to use or to maintain any Intellectual Property
(A) that relates solely to any product or work, that has been, or is in the process of being, discontinued, abandoned or terminated,
(B) that is being replaced with Intellectual Property substantially similar to the Intellectual Property that may be abandoned
or otherwise become invalid, so long as the failure to use or maintain such Intellectual Property does not materially adversely
affect the validity of such replacement Intellectual Property and so long as such replacement Intellectual Property is subject
to the Lien created by this Agreement or (C) that is substantially the same as another Intellectual Property that is in full force,
so long the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement
Intellectual Property and so long as such other Intellectual Property is subject to the Lien and security interest created by
this Agreement. Each Grantor will cause to be taken all necessary steps in any proceeding
before the United States Patent and Trademark Office and the United States Copyright Office or any similar office or agency in
any other country or political subdivision thereof to maintain each registration of the Intellectual Property (other than the
Intellectual Property described in the proviso to the immediately preceding sentence), including, without limitation, filing of
renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and payment
of maintenance fees, filing fees, taxes or other governmental fees in the ordinary course of business. If any Intellectual Property
(other than Intellectual Property described in the proviso to the first sentence of subsection (i) of this clause (h)) is infringed,
misappropriated, diluted or otherwise violated in any material respect by a third party, such Grantor shall (x) upon learning
of such infringement, misappropriation, dilution or other violation, promptly notify the Collateral Agent and (y) to the extent
such Grantor shall deem appropriate under the circumstances, promptly sue for infringement, misappropriation, dilution or other
violation, seek injunctive relief where appropriate and recover any and all damages for such infringement, misappropriation, dilution
or other violation, or take such other actions as such Grantor shall deem appropriate under the circumstances to protect such
Intellectual Property. Each Grantor shall furnish to the Collateral Agent from time
to time upon its request statements and schedules further identifying and describing the Intellectual Property and Licenses and
such other reports in connection with the Intellectual Property and Licenses as the Collateral Agent may reasonably request, all
in reasonable detail and promptly upon request of the Collateral Agent, following receipt by the Collateral Agent of any such
statements, schedules or reports, such Grantor shall modify this Agreement by amending Schedule II hereto, as the case
may be, to include any Intellectual Property and License, as the case may be, which becomes part of the Collateral under this
Agreement and shall execute and authenticate such documents and do such acts as shall be necessary or, in the judgment of the
Collateral Agent, desirable to subject such Intellectual Property and Licenses to the Lien and security interest created by this
Agreement. Notwithstanding anything herein to the contrary, upon the occurrence and during the continuance of an Event of Default,
such Grantor may not abandon or otherwise permit any Intellectual Property to become invalid without the prior written consent
of the Collateral Agent, and if any Intellectual Property is infringed, misappropriated, diluted or otherwise violated in any
material respect by a third party, such Grantor will take such action as the Collateral Agent shall deem appropriate under the
circumstances to protect such Intellectual Property.


 




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(ii)In
no event shall a Grantor, either itself or through any agent, employee, licensee or designee, file an application for the registration
of any Trademark or Copyright or the issuance of any Patent with the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, or in any similar office or agency of the United States or any country or any political subdivision
thereof unless it gives the Collateral Agent prior written notice thereof. Upon request of the Collateral Agent, each Grantor
shall execute, authenticate and deliver any and all assignments, agreements, instruments, documents and papers as the Collateral
Agent may reasonably request to evidence the Collateral Agent’s security interest hereunder in such Intellectual Property
and the General Intangibles of such Grantor relating thereto or represented thereby, and such Grantor hereby appoints the Collateral
Agent its attorney-in-fact to execute and/or authenticate and file all such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed, and such power (being coupled with an interest) shall be irrevocable until the complete
conversion of all of the Company’s obligations under the Notes to equity securities of the Company and/or indefeasible payment
in full in cash of all obligations under the Notes (together with any matured indemnification obligations as of the date of such
conversion and/or payment, but excluding any inchoate or unmatured contingent indemnification obligations).


 


(iii)Upon
the Collateral Agent’s request, each Grantor shall cause each domain registrar where any of such Grantor’s Internet
domain names are registered, whether as of the date of this Agreement or at any time hereafter, to execute and deliver to the
Collateral Agent a domain name control agreement, in form and substance reasonably satisfactory to the Collateral Agent, duly
executed by such Grantor and such domain registrar, or enter into other arrangements in form and substance satisfactory to the
Collateral Agent, pursuant to which such domain registrar shall irrevocably agree, inter alia, that it will comply
at any time with the instructions originated by the Collateral Agent to such domain registrar directing substitution of the Collateral
Agent or its designee as the registered owner of such Internet domain names, without further consent of such Grantor, which instructions
the Collateral Agent will not give to such domain registrar in the absence of a continuing Event of Default. 


 


(i)Deposit,
Commodities and Securities Accounts. Upon the Collateral Agent’s request and unless otherwise agreed by Agent, each
Grantor shall cause each bank and other financial institution with an account referred to in Schedule IV hereto to execute
and deliver to the Collateral Agent a control agreement, in form and substance reasonably satisfactory to the Collateral Agent,
duly executed by such Grantor and such bank or financial institution, or enter into other arrangements in form and substance satisfactory
to the Collateral Agent, pursuant to which such institution shall irrevocably agree, inter alia, that (i) it will
comply at any time with the instructions originated by the Collateral Agent to such bank or financial institution directing the
disposition of cash, Commodity Contracts, securities, Investment Property and other items from time to time credited to such account,
without further consent of such Grantor, which instructions the Collateral Agent will not give to such bank or other financial
institution in the absence of a continuing Event of Default, (ii) all cash, Commodity Contracts, securities, Investment Property
and other items of such Grantor deposited with such institution shall be subject to a perfected, first priority security interest
in favor of the Collateral Agent, (iii) any right of set off, banker’s Lien or other similar Lien, security interest or
encumbrance shall be fully waived as against the Collateral Agent, and (iv) upon receipt of written notice from the Collateral
Agent during the continuance of an Event of Default, such bank or financial institution shall immediately send to the Collateral
Agent by wire transfer (to such account as the Collateral Agent shall specify, or in such other manner as the Collateral Agent
shall direct) all such cash, the value of any Commodity Contracts, securities, Investment Property and other items held by it.
Without the prior written consent of the Collateral Agent, such Grantor shall not make or maintain any Deposit Account, Commodity
Account or Securities Account except for the accounts set forth in Schedule IV hereto. The provisions of this Section
5(i) shall not apply to (i) Deposit Accounts for which the Collateral Agent is the depositary, (ii) Deposit Accounts specially
and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of a Grantor’s
salaried employees and (iii) Securities Accounts in which the fair market value of the securities held therein does not exceed
$20,000 at any time.


 




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(j)Motor
Vehicles.


 


(i)Upon
the Collateral Agent’s written request, each Grantor shall deliver to the Collateral Agent originals of the certificates
of title or ownership for all motor vehicles owned by it with the Collateral Agent listed as lienholder, for the benefit of the
Buyers.


 


(ii)Each
Grantor hereby appoints the Collateral Agent as its attorney-in-fact, effective the date hereof and terminating upon the termination
of this Agreement, for the purpose of (A) executing on behalf of such Grantor title or ownership applications for filing with
appropriate state agencies to enable motor vehicles now owned or hereafter acquired by such Grantor to be retitled and the Collateral
Agent listed as lienholder thereof, (B) filing such applications with such state agencies, and (C) executing such other documents
and instruments on behalf of, and taking such other action in the name of, such Grantor as the Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof (including, without limitation, for the purpose of creating in favor of the Collateral
Agent a perfected Lien on the motor vehicles and exercising the rights and remedies of the Collateral Agent hereunder). This appointment
as attorney-in-fact is coupled with an interest and is irrevocable until the complete conversion of all of the Company’s
obligations under the Notes to equity securities of the Company and/or indefeasible payment in full in cash of all obligations
under the Notes (together with any matured indemnification obligations as of the date of such conversion and/or payment, but excluding
any inchoate or unmatured contingent indemnification obligations).


 


(iii)Any
certificates of title or ownership delivered pursuant to the terms hereof shall be accompanied by odometer statements for each
motor vehicle covered thereby.


 


(iv)So
long as no Event of Default shall have occurred and be continuing, upon the request of such Grantor, the Collateral Agent shall
execute and deliver to such Grantor such instruments as such Grantor shall reasonably request to remove the notation of the Collateral
Agent as lienholder on any certificate of title for any motor vehicle; provided, however, that any such instruments
shall be delivered, and the release effective, only upon receipt by the Collateral Agent of a certificate from such Grantor stating
that such motor vehicle is to be sold or has suffered a casualty loss (with title thereto passing to the casualty insurance company
therefor in settlement of the claim for such loss) and the amount that such Grantor will receive as sale proceeds or insurance
proceeds. Any proceeds of such sale or casualty loss shall be paid to the Collateral Agent hereunder immediately upon receipt,
to be applied to the Obligations then outstanding.


 


(k)Control.
Each Grantor hereby agrees to take any or all action that may be necessary or desirable or that the Collateral Agent may request
in order for the Collateral Agent to obtain control in accordance with Sections 9-105 – 9-107 of the Code with respect to
the following Collateral: (i) Electronic Chattel Paper, (ii) Investment Property, (iii) Pledged Interests and (iv) Letter-of-Credit
Rights.


 




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(l)Inspection
and Reporting. Each Grantor shall permit the Collateral Agent, or any agent or representatives thereof or such professionals
or other Persons as the Collateral Agent may designate, not more than once a year in the absence of an Event of Default, (i) to
examine and make copies of and abstracts from such Grantor’s records and books of account, (ii) to visit and inspect its
properties, (iii) to verify materials, leases, Instruments, Accounts, Inventory and other assets of such Grantor from time to
time, (iii) to conduct audits, physical counts, appraisals and/or valuations, examinations at the locations of such Grantor. Each
Grantor shall also permit the Collateral Agent, or any agent or representatives thereof or such professionals or other Persons
as the Collateral Agent may designate to discuss such Grantor’s affairs, finances and accounts with any of its officers
subject to the execution by the Collateral Agent or its designee(s) of a mutually agreeable confidentiality agreement.


 


(m)Future
Subsidiaries. If any Grantor shall hereafter create or acquire any Subsidiary, simultaneously with the creation of acquisition
of such Subsidiary, such Grantor shall cause such Subsidiary to become a party to this Agreement as an additional “Grantor”
hereunder and to become a party to the Guaranty as an additional “Guarantor” thereunder, and to duly execute and/or
deliver such opinions of counsel and other documents, in form and substance acceptable to the Collateral Agent, as the Collateral
Agent shall reasonably request with respect thereto. 


 


Section
6.Additional Provisions Concerning the Collateral.


 


(a)Each
Grantor hereby (i) authorizes the Collateral Agent to file one or more Uniform Commercial Code financing or continuation statements,
and amendments thereto, relating to the Collateral (including, without limitation, financing statements describing the Collateral
as “all assets” or “all personal property” or words of similar effect) and (ii) ratifies such authorization
to the extent that the Collateral Agent has filed any such financing or continuation statements, or amendments thereto, prior
to the date hereof. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement where permitted by law.


 


(b)Each
Grantor hereby irrevocably appoints the Collateral Agent as its attorney-in-fact and proxy, with full authority in the place and
stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Collateral Agent’s discretion,
so long as an Event of Default shall have occurred and is continuing, to take any action and to execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of such Grantor
under Section 5 hereof), including, without limitation, (i) to obtain and adjust insurance required to be paid to the Collateral
Agent pursuant to Section 5(e) hereof, (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any Collateral, (iii) to receive, endorse, and collect any
drafts or other instruments, documents and chattel paper in connection with clause (i) or (ii) above, (iv) to file any claims
or take any action or institute any proceedings which the Collateral Agent may deem necessary or desirable for the collection
of any Collateral or otherwise to enforce the rights of the Collateral Agent and the Buyers with respect to any Collateral, and
(v) to execute assignments, licenses and other documents to enforce the rights of the Collateral Agent and the Buyers with respect
to any Collateral. This power is coupled with an interest and is irrevocable until the complete conversion of all of the Company’s
obligations under the Notes to equity securities of the Company and/or indefeasible payment in full in cash of all obligations
under the Notes (together with any matured indemnification obligations as of the date of such conversion and/or payment, but excluding
any inchoate or unmatured contingent indemnification obligations). 


 




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(c)For
the purpose of enabling the Collateral Agent to exercise rights and remedies hereunder, at such time as the Collateral Agent shall
be lawfully entitled to exercise such rights and remedies upon and during an Event of Default, and for no other purpose, each
Grantor hereby grants to the Collateral Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to such Grantor) to use, assign, license or sublicense any Intellectual Property now
owned or hereafter acquired by such Grantor, wherever the same may be located, including in such license reasonable access to
all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or
printout thereof. Notwithstanding anything contained herein to the contrary, but subject to the provisions of the Securities Purchase
Agreements that limit the right of such Grantor to dispose of its property and Section 5(h) hereof, so long as no Event
of Default shall have occurred and be continuing, such Grantor may exploit, use, enjoy, protect, license, sublicense, assign,
sell, dispose of or take other actions with respect to the Intellectual Property in the ordinary course of its business. In furtherance
of the foregoing, unless an Event of Default shall have occurred and be continuing, the Collateral Agent shall from time to time,
upon the request of a Grantor, execute and deliver any instruments, certificates or other documents, in the form so requested,
which such Grantor shall have certified are appropriate (in such Grantor’s judgment) to allow it to take any action permitted
above (including relinquishment of the license provided pursuant to this clause (c) as to any Intellectual Property). Further,
upon the complete conversion of all of the Company’s obligations under the Notes to equity securities of the Company and/or
indefeasible payment in full in cash of all obligations under the Notes (together with any matured indemnification obligations
as of the date of such conversion and/or payment, but excluding any inchoate or unmatured contingent indemnification obligations),
the Collateral Agent (subject to Section 10(e) hereof) shall release and reassign to such Grantor all of the Collateral
Agent’s right, title and interest in and to the Intellectual Property, and the Licenses, all without recourse, representation
or warranty whatsoever. The exercise of rights and remedies hereunder by the Collateral Agent shall not terminate the rights of
the holders of any licenses or sublicenses theretofore granted by such Grantor in accordance with the second sentence of this
clause (c). Each Grantor hereby releases the Collateral Agent from any claims, causes of action and demands at any time arising
out of or with respect to any actions taken or omitted to be taken by the Collateral Agent under the powers of attorney granted
herein other than actions taken or omitted to be taken through the Collateral Agent’s gross negligence or willful misconduct,
as determined by a final determination of a court of competent jurisdiction. 


 


(d)If
a Grantor fails to perform any agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such
agreement or obligation, in the name of such Grantor or the Collateral Agent, and the expenses of the Collateral Agent incurred
in connection therewith shall be payable by such Grantor pursuant to Section 8 hereof and shall be secured by the Collateral.


 




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(e)The
powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.


 


(f)Anything
herein to the contrary notwithstanding (i) each Grantor shall remain liable under the Licenses and otherwise with respect to any
of the Collateral to the extent set forth therein to perform all of its obligations thereunder to the same extent as if this Agreement
had not been executed, (ii) the exercise by the Collateral Agent of any of its rights hereunder shall not release such Grantor
from any of its obligations under the Licenses or otherwise in respect of the Collateral, and (iii) the Collateral Agent shall
not have any obligation or liability by reason of this Agreement under the Licenses or with respect to any of the other Collateral,
nor shall the Collateral Agent be obligated to perform any of the obligations or duties of such Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.


 


Section
7.Remedies Upon Event of Default. If any Event of Default
shall have occurred and be continuing:


 


(a)The
Collateral Agent may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein or
otherwise available to it, all of the rights and remedies of a secured party upon default under the Code (whether or not the Code
applies to the affected Collateral), and also may (i) take absolute control of the Collateral, including, without limitation,
transfer into the Collateral Agent’s name or into the name of its nominee or nominees (to the extent the Collateral Agent
has not theretofore done so) and thereafter receive, for the benefit of the Collateral Agent, all payments made thereon, give
all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright
owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of its respective Collateral as directed by the Collateral Agent and make it
available to the Collateral Agent at a place or places to be designated by the Collateral Agent that is reasonably convenient
to both parties, and the Collateral Agent may enter into and occupy any premises owned or leased by such Grantor where the Collateral
or any part thereof is located or assembled for a reasonable period in order to effectuate the Collateral Agent’s rights
and remedies hereunder or under law, without obligation to such Grantor in respect of such occupation, and (iii) without notice
except as specified below and without any obligation to prepare or process the Collateral for sale, (A) sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere,
for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Collateral Agent may
deem commercially reasonable and/or (B) lease, license or dispose of the Collateral or any part thereof upon such terms as the
Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale or any other disposition
of its respective Collateral shall be required by law, at least ten (10) days’ notice to such Grantor of the time and place
of any public sale or the time after which any private sale or other disposition of its respective Collateral is to be made shall
constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale or other disposition of any Collateral
regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place
to which it was so adjourned. Each Grantor hereby waives any claims against the Collateral Agent and the Buyers arising by reason
of the fact that the price at which its respective Collateral may have been sold at a private sale was less than the price which
might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Collateral Agent
accepts the first offer received and does not offer such Collateral to more than one offeree, and waives all rights that such
Grantor may have to require that all or any part of such Collateral be marshalled upon any sale (public or private) thereof. Each
Grantor hereby acknowledges that (i) any such sale of its respective Collateral by the Collateral Agent shall be made without
warranty, (ii) the Collateral Agent may specifically disclaim any warranties of title, possession, quiet enjoyment or the like,
and (iii) such actions set forth in clauses (i) and (ii) above shall not adversely affect the commercial reasonableness of any
such sale of Collateral. In addition to the foregoing, (1) upon written notice to any Grantor from the Collateral Agent, such
Grantor shall cease any use of the Intellectual Property or any trademark, patent or copyright similar thereto for any purpose
described in such notice; (2) the Collateral Agent may, at any time and from time to time, upon ten (10) days’ prior notice
to such Grantor, license, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any of the
Intellectual Property, throughout the universe for such term or terms, on such conditions, and in such manner, as the Collateral
Agent shall in its sole discretion determine to the extent consistent with any restrictions or conditions imposed upon such Grantor
with respect to such Intellectual Property by license or other contractual arrangement; and (2) the Collateral Agent may, at any
time, pursuant to the authority granted in Section 6 hereof (such authority being effective upon the occurrence and during
the continuance of an Event of Default), execute and deliver on behalf of such Grantor, one or more instruments of assignment
of the Intellectual Property (or any application or registration thereof), in form suitable for filing, recording or registration
in any country.


 




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(b)Any
cash held by the Collateral Agent as Collateral and all Cash Proceeds received by the Collateral Agent in respect of any sale
of or collection from, or other realization upon, all or any part of the Collateral may, in the discretion of the Collateral Agent,
be held by the Collateral Agent as collateral for, and/or then or at any time thereafter applied (after payment of any amounts
payable to the Collateral Agent pursuant to Section 8 hereof) in whole or in part by the Collateral Agent against, all
or any part of the Obligations in such order as the Collateral Agent shall elect, consistent with the provisions of the Securities
Purchase Agreements. Any surplus of such cash or Cash Proceeds held by the Collateral Agent and remaining after the complete conversion
of all of the Company’s obligations under the Notes to equity securities of the Company and/or indefeasible payment in full
in cash of all obligations under the Notes (together with any matured indemnification obligations as of the date of such conversion
and/or payment, but excluding any inchoate or unmatured contingent indemnification obligations) shall be paid over to whomsoever
shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.


 


(c)In
the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Collateral
Agent and the Buyers are legally entitled, each Grantor shall be liable for the deficiency, together with interest thereon at
the highest rate specified in any of the applicable Transaction Documents for interest on overdue principal thereof or such other
rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other
client charges of any attorneys employed by the Collateral Agent to collect such deficiency.


 




    	-20-



    	 



    


 


(d)Each
Grantor hereby acknowledges that if the Collateral Agent complies with any applicable state, provincial, or federal law requirements
in connection with a disposition of the Collateral, such compliance will not adversely affect the commercial reasonableness of
any sale or other disposition of the Collateral.


 


(e)The
Collateral Agent shall not be required to marshal any present or future collateral security (including, but not limited to, this
Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order, and all of the Collateral Agent’s rights hereunder and
in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights,
however existing or arising. To the extent that each Grantor lawfully may, such Grantor hereby agrees that it will not invoke
any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Collateral Agent’s
rights under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, such Grantor hereby irrevocably waives the benefits of all such laws.


 


Section
8.Indemnity and Expenses.


 


(a)Each
Grantor agrees, jointly and severally, to defend, protect, indemnify and hold the Collateral Agent and each of the Buyers, jointly
and severally, harmless from and against any and all claims, damages, losses, liabilities, obligations, penalties, fees, costs
and expenses (including, without limitation, reasonable legal fees, costs, expenses, and disbursements of such Person’s
counsel) to the extent that they arise out of or otherwise result from this Agreement (including, without limitation, enforcement
of this Agreement), except claims, losses or liabilities resulting solely and directly from such Person’s gross negligence
or willful misconduct, as determined by a final judgment of a court of competent jurisdiction.


 


(b)Each
Grantor agrees, jointly and severally, to, upon demand, pay to the Collateral Agent the amount of any and all costs and expenses,
including the reasonable fees, costs, expenses and disbursements of counsel for the Collateral Agent and of any experts and agents
(including, without limitation, any collateral trustee which may act as agent of the Collateral Agent), which the Collateral Agent
may incur in connection with (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver
or other modification or termination of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any Collateral, (iii) the exercise or enforcement of any of the rights of the Collateral Agent
hereunder, or (iv) the failure by any Grantor to perform or observe any of the provisions hereof.


 


Section
9.Notices, Etc. All notices and other communications
provided for hereunder shall be in writing and shall be mailed (by certified mail, postage prepaid and return receipt requested),
telecopied or delivered, if to a Grantor at its address specified below and if to the Collateral Agent to it, at its address specified
below; or as to any such Person, at such other address as shall be designated by such Person in a written notice to such other
Person complying as to delivery with the terms of this Section 9. All such notices and other communications shall be effective
(a) if sent by certified mail, return receipt requested, when received or five (5) days after deposited in the mails, whichever
occurs first, (b) if telecopied or sent by electronic mail, when transmitted (during normal business hours), or (c) if delivered,
upon delivery.


 




    	-21-



    	 



    


 


Section
10.Confirmation of Security Interest. Each Grantor hereby
confirms, ratifies and reaffirms that the Security Interest (as defined in the Existing Pledge and Security Agreement) granted
to the Collateral Agent pursuant to the Existing Pledge and Security Agreement, in all of its right, title, and interest in all
then existing and thereafter acquired or arising Collateral (as defined in the Existing Pledge and Security Agreement), in order
to secure prompt payment and performance of the Obligations (as defined in the Existing Pledge and Security Agreement), is continuing
and is and shall remain unimpaired and continue to constitute a first priority security interest (subject only to Permitted Liens)
under this Agreement in favor of the Collateral Agent as security for such Obligations, with the same force, effect and priority
in effect both immediately prior to and after entering into this Agreement, the Additional Securities Purchase Agreement, the
Additional Notes and the other Transaction Documents (as defined in the Additional Securities Purchase Agreement) entered into
on or as of the date hereof.


 


Section
11.Miscellaneous.


 


(a)No
amendment of any provision of this Agreement shall be effective unless it is in writing and signed by each Grantor and the Collateral
Agent, and no waiver of any provision of this Agreement, and no consent to any departure by a Grantor therefrom, shall be effective
unless it is in writing and signed by the Collateral Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.


 


(b)No
failure on the part of the Collateral Agent to exercise, and no delay in exercising, any right hereunder or under any of the other
Transaction Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The rights and remedies of the Collateral Agent or any Buyer
provided herein and in the other Transaction Documents are cumulative and are in addition to, and not exclusive of, any rights
or remedies provided by law. The rights of the Collateral Agent or any Buyer under any of the other Transaction Documents against
any party thereto are not conditional or contingent on any attempt by such Person to exercise any of its rights under any of the
other Transaction Documents against such party or against any other Person, including but not limited to, any Grantor.


 


(c)To
the extent permitted by applicable law, each Grantor hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Obligations and this Agreement and any requirement that the Collateral Agent exhaust any right or take
any action against any other Person or any Collateral. Each Grantor acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated herein and that the waiver set forth in this Section 10(c) is knowingly made
in contemplation of such benefits. The Grantors hereby waive any right to revoke this Agreement, and acknowledge that this Agreement
is continuing in nature and applies to all Obligations, whether existing now or in the future.


 




    	-22-



    	 



    


 


(d)No
Grantor may exercise any rights that it may now or hereafter acquire against any other Grantor that arise from the existence,
payment, performance or enforcement of any Grantor’s obligations under this Agreement, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or
remedy of the Collateral Agent against any Grantor or any Collateral, whether or not such claim, remedy or right arises in equity
or under contract, statute or common law, including, without limitation, the right to take or receive from any Grantor, directly
or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim,
remedy or right, unless and until the complete conversion of all of the Company’s obligations under the Notes to equity
securities of the Company and/or indefeasible payment in full in cash of all obligations under the Notes (together with any matured
indemnification obligations as of the date of such conversion and/or payment, but excluding any inchoate or unmatured contingent
indemnification obligations). If any amount shall be paid to a Grantor in violation of the immediately preceding sentence at any
time prior to the complete conversion of all of the Company’s obligations under the Notes to equity securities of the Company
and/or indefeasible payment in full in cash of all obligations under the Notes (together with any matured indemnification obligations
as of the date of such conversion and/or payment, but excluding any inchoate or unmatured contingent indemnification obligations),
such amount shall be held in trust for the benefit of the Collateral Agent and shall forthwith be paid to the Collateral Agent
to be credited and applied to the Obligations and all other amounts payable under the Transaction Documents, whether matured or
unmatured, in accordance with the terms of the Transaction Documents, or to be held as Collateral for any Obligations or other
amounts payable under the Transaction Documents thereafter arising.


 


(e)Any
provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting
the validity or enforceability of such provision in any other jurisdiction.


 


(f)This
Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until the
complete conversion of all of the Company’s obligations under the Notes to equity securities of the Company and/or indefeasible
payment in full in cash of all obligations under the Notes (together with any matured indemnification obligations as of the date
of such conversion and/or payment, but excluding any inchoate or unmatured contingent indemnification obligations), and (ii) be
binding on each Grantor and all other Persons who become bound as debtor to this Agreement in accordance with Section 9-203(d)
of the Code and shall inure, together with all rights and remedies of the Collateral Agent and the Buyers hereunder, to the benefit
of the Collateral Agent and the Buyers and their respective permitted successors, transferees and assigns. Without limiting the
generality of clause (ii) of the immediately preceding sentence, without notice to any Grantor, the Collateral Agent and the Buyers
may assign or otherwise transfer their rights and obligations under this Agreement and any of the other Transaction Documents,
to any other Person and such other Person shall thereupon become vested with all of the benefits in respect thereof granted to
the Collateral Agent and the Buyers herein or otherwise. Upon any such assignment or transfer, all references in this Agreement
to the Collateral Agent or any such Buyer shall mean the assignee of the Collateral Agent or such Buyer. None of the rights or
obligations of any Grantor hereunder may be assigned or otherwise transferred without the prior written consent of the Collateral
Agent, and any such assignment or transfer without the consent of the Collateral Agent shall be null and void.


 




    	-23-



    	 



    


 


(g)Upon
the complete conversion of all of the Company’s obligations under the Notes to equity securities of the Company and/or indefeasible
payment in full in cash of all obligations under the Notes (together with any matured indemnification obligations as of the date
of such conversion and/or payment, but excluding any inchoate or unmatured contingent indemnification obligations), (i) this Agreement
and the security interests created hereby shall terminate and all rights to the Collateral shall revert to the respective Grantor
that granted such security interests hereunder, and (ii) the Collateral Agent will, upon such Grantor’s request and at such
Grantor’s expense, (A) return to such Grantor such of the Collateral as shall not have been sold or otherwise disposed of
or applied pursuant to the terms hereof, and (B) execute and deliver to such Grantor such documents as such Grantor shall reasonably
request to evidence such termination, all without any representation, warranty or recourse whatsoever.


 


(h)THIS
AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED
BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION
OR NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.


 


(i)ANY
LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS OF
THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY THE COURT.


 


(j)EACH
GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) THE COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION
DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.


 




    	-24-



    	 



    


 


(k)Nothing
contained herein shall affect the right of the Collateral Agent to serve process in any other manner permitted by law or commence
legal proceedings or otherwise proceed against any Grantor or any property of such Grantor in any other jurisdiction.


 


(l)Each
Grantor irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding
referred to in this Section any special, exemplary, punitive or consequential damages.


 


(m)Section
headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other
purpose.


 


(n)This
Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which
shall be deemed to be an original, but all of which taken together constitute one in the same Agreement.


 


[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]


 




    	-25-



    	 



    


 


IN
WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized,
as of the date first above written.


 


	 	DIGITAL
    ALLY, INC., 

a Nevada corporation



 

	 	By:	
	 	Name: 	Stanton E. Ross
	 	Title:	Chairman, CEO & President



 

	 	Address for Notices:
	 	97015 Loiret Blvd.
	 	Lenexa, KS 66219
	 	 
	 	Facsimile: 9013-213-5762



 

	 	Digital Ally International,
    Inc., 

a Nevada corporation



 

	 	By:	
	 	Name:	Stanton E. Ross
	 	Title:	Chairman, CEO & President



 

	 	Address for Notices:
	 	97015 Loiret Blvd.
	 	Lenexa, KS 66219
	 	 
	 	Facsimile: 9013-213-5762



 

	 	MEDICAL DEVICES
    aLLY, LLC, 

a Kansas limited liability company



 

	 	By:	
	 	Name:	Stanton E. Ross
	 	Title:	Chairman, CEO & President



 

	 	Address for Notices:
	 	97015 Loiret Blvd.
	 	Lenexa, KS 66219
	 	 
	 	Facsimile: 9013-213-5762



 


AMENDED
AND RESTATED PLEDGE AND 

SECURITY AGREEMENT


 



    	 



    	 



    


 


ACCEPTED
BY:


 


Hudson
Bay Master Fund Ltd.,


as
Collateral Agent


 


	By:	 	 
	Name:	 	 
	Title: 	 	 
	Address:	 	 



 


AMENDED
AND RESTATED
PLEDGE
AND 

SECURITY
AGREEMENT


 



    	 



    	 



    


 


SCHEDULE
I



LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR JURISDICTION OF ORGANIZATION


 


	Legal
    Name:	 	State
    of Organization:	 	Type
    of Organization:	 	Organizational
    Identification Number:	 
	 	 	 	 	 	 	 	 
	Digital
    Ally, Inc.	 	Nevada	 	Corporation	 	NV20001502048	 
	 	 	 	 	 	 	 	 
	Digital
    Ally International, Inc.	 	Nevada	 	Corporation	 	NV20091423731	 
	 	 	 	 	 	 	 	 
	Medical
    Devices Ally, LLC	 	Kansas	 	Limited Liability Company	 	7825466	 



 



    	Sched. I-1



    	 



    


 


SCHEDULE
II





INTELLECTUAL
PROPERTY AND LICENSES; TRADE NAMES


 


	A.	COPYRIGHTS
	 	 
	 	None.
	 	 
	B.	PATENTS
	 	 
	 	See
Schedule II-A.
	 	 
	 	With
regard to Section 4(f)of this Agreement, the Company has the following disclosure:



 








		1.	On
                                         October 25, 2013, we filed a complaint in the United States District Court for the District
                                         of Kansas to eliminate threats by a competitor, Utility Associates, Inc. (“Utility”),
                                         of alleged patent infringement regarding U.S. Patent No. 6,831,556 (the “556 patent”).
                                         Specifically, the lawsuit seeks a declaration that our mobile video surveillance systems
                                         do not infringe any claim of the 556 patent. In addition, we have begun proceedings to
                                         invalidate the ‘556 patent through a request for inter partes review of
                                         the ‘556 patent at the United States Patent and Trademark Office. We became aware
                                         that Utility had recently mailed letters to current and prospective purchasers of our
                                         mobile video surveillance systems threatening that the use of such systems purchased
                                         from third parties not licensed to the ‘556 patent would create liability for them
                                         for patent infringement. We reject Utility’s assertion and will vigorously defend
                                         the right of end-users to purchase such systems from providers other than Utility. The
                                         United States District Court for the District of Kansas dismissed the lawsuit because
                                         it decided that Kansas was not the proper jurisdictional forum for the dispute. The court’s
                                         decision was not a ruling on the merits of the case. We have appealed the decision.
	 	 	 
		2.	On
                                         June 4, 2014 we filed an Unfair Competition lawsuit against Utility Associates, Inc.
                                         (“Utility”) in the United States District Court for the District of Kansas.
                                         In the lawsuit we contend that Utility has defamed us and illegally interfered with our
                                         contracts, customer relationships and business expectancies by falsely asserting to our
                                         customers and others that our products violate the ‘556 Patent, of which Utility
                                         claims to be the holder. Our suit also includes claims against Utility for tortious interference
                                         with contract and violation of the Kansas Uniform Trade Secrets Act (KUSTA), arising
                                         out of Utility’s employment of one of our employees, in violation of that employee’s
                                         Non-Competition and Confidentiality agreements with us. In addition to damages, we seek
                                         temporary, preliminary, and permanent injunctive relief, prohibiting Utility from, among
                                         other things, continuing to threaten or otherwise interfere with our customers. We have
                                         requested a hearing upon the Motion for Temporary Restraining Order and Preliminary Injunction,
                                         which we filed contemporaneously with our complaint against Utility.
	 	 	 
		3.	On
                                         June 13, 2014, Utility filed suit in the United States District Court for the Northern
                                         District of Georgia against us alleging infringement of the ‘556 patent.”
                                         The suit was served on us on June 20, 2014. In light of the lawsuit we filed against
                                         Utility noted above, we believe this suit should be dismissed and transferred to Kansas.
                                         As alleged in our first filed lawsuit, we believe the ‘556 patent is both invalid
                                         and not infringed. Further, proceedings seeking to invalidate the ‘556 patent already
                                         have begun at the United State Patent and Trademark Office where the Company. We believe
                                         that this suit is without merit and will vigorously defend the claims asserted against
                                         us. An adverse resolution of the foregoing litigation or patent proceedings could have
                                         a material adverse effect on our business, prospects, results of operations, financial
                                         condition, and liquidity.



 






    	Sched. II-2



    	 



    


 






	C.	TRADEMARKS
	 	 
	 	See
Schedule II-B.
	 	 
	D.	LICENSE
                                         AGREEMENTS



 


		1.	Development,
                                         Licensing and Manufacturing Agreement, dated as of July12, 2011, among Weldex Corporation,
                                         VisionBlue-Weldex and Digital Ally, Inc.
	 	 	 
		2.	Dragon
                                         Eye, LLC Supply Agreement, dated as of May 1, 2010, between DragonEye, Technology, LLC
                                         and Digital Ally, Inc.
	 	 	 
		3.	Amendment
                                         to Supply Agreement, dated as of January 31, 2012, between DragonEye, Technology, LLC
                                         and Digital Ally, Inc.
	 	 	 
		4.	With
                                         respect to the items described in #2 and #3 above we have the following updates. On June
                                         5, 2013, we filed a lawsuit in the District Court of Johnson County, Kansas against Dragoneye.
                                         We had entered into a supply and distribution agreement with Dragoneye on May 1, 2010
                                         under which we were granted the right to sell and distribute a proprietary law enforcement
                                         speed measurement device and derivatives to our customers under the trade name LaserAlly.
                                         The parties amended the agreement on January 31, 2012. In our complaint we allege that
                                         Dragoneye breached the contract because it failed to maintain as confidential information
                                         our customer list; it infringed on our trademarks, including LaserAlly and Digital Ally;
                                         it tortuously interfered with our existing contracts and business relationships with
                                         our dealers, distributors, customers and trading partners; and it engaged in unfair competition
                                         and the Kansas Uniform Trade Secrets Statutes. We amended the complaint to include claims
                                         regarding alleged material defects in the products supplied under the agreement. The
                                         parties have agreed in principle to resolve their claims and are negotiating a settlement
                                         agreement which will require us to pay all outstanding and unpaid invoices including
                                         interest at 10% through the date the settlement agreement is executed. Such amount was
                                         approximately $ 210,000 and was recorded in accounts payable and accrued liabilities
                                         at June 30, 2014. Dragoneye has agreed to cancel the remaining obligation to purchase
                                         LaserAlly’s and to accept responsibility for and to correct the defect in the products
                                         delivered at its cost.



 


	E.	OTHER
                                         PROPRIETARY RIGHTS
	 	 
	 	None.
	 	 
	F.	TRADE
                                         NAMES
	 	 
	 	None.
	 	 
	G.	NAME
                                         OF, AND EACH TRADE NAME USED BY, EACH PERSON FROM WHICH A GRANTOR HAS ACQUIRED ANY SUBSTANTIAL
                                         PART OF THE COLLATERAL WITHIN THE PRECEDING FIVE YEARS
	 	 
	 	None.



 


AMENDED
AND RESTATED PLEDGE AND

SECURITY AGREEMENT


 






    	 



    	 



    

 









SCHEDULE
II-A


 


PATENTS


 


[See
Attached]


 




    	Sched. II-A



    	 



    



 


SCHEDULE
II-B


 


TRADEMARKS


 


[See
Attached]


 






    	Sched. II-B



    	 



    



 









SCHEDULE
III


 


LOCATIONS


 


	Grantor:	 	Location:	 	Description:	 
	 	 	 	 	 	 
	Digital
    Ally, Inc.	 	9705
                                         Loiret Blvd.

        Lenexa,
        KS 66219
	 	Chief
    Executive Office	 
	 	 	 	 	 	 
	Digital
    Ally International, Inc.	 	9705
                                         Loiret Blvd.

        Lenexa,
        KS 66219
	 	Chief
    Executive Office	 
	 	 	 	 	 	 
	Medical
    Devices Ally, LLC	 	9705
                                         Loriet Blvd.

        Lenexa,
        KS 66219
	 	Chief
    Executive Office	 



  



    	Sched. III-1



    	 



    





 


SCHEDULE
IV



PROMISSORY NOTES, SECURITIES, DEPOSIT
ACCOUNTS, SECURITIES ACCOUNTS AND COMMODITIES ACCOUNTS


 


A.
Promissory Notes:


 


None.


 


B.
Securities and Other Instruments:


 


None.


 


C.
Deposit Accounts, Securities Accounts and Commodities Accounts:


 


	Grantor:	 	Name
    and Address of Institution Maintaining Account:	 	Account
    Number:	 	Type
    of Account:	 
	Digital
    Ally, Inc.	 	Citizens
                                         Bank

        and
        Trust

        7288
        NW 87th Terrace, Suite 300

        Kansas
        City, MO 64153
	 	8754888	 	Demand
    Deposit Account	 
	 	 	 	 	 	 	 	 
	Digital
    Ally, Inc.	 	Citizens
                                         Bank

        and
        Trust

        7288
        NW 87th Terrace, Suite 300

        Kansas
        City, MO 64153
	 	8754861	 	Zero
    Balance Account	 
	 	 	 	 	 	 	 	 
	Digital
    Ally, Inc.	 	TD
                                         Ameritrade, Inc.

        P.O.
        Box 2209

        Omaha,
        NE 68103-2209
	 	866-351458	 	Brokerage
    Account	 





 






    	Sched. IV-1



    	 



    

 


SCHEDULE
V


 


UCC-1
FINANCING STATEMENTS


 


	Name
    of Grantor:	 	Secretary
    of State:
	 	 	 
	Digital
    Ally, Inc.	 	Nevada
	 	 	 
	Digital
    Ally International, Inc.	 	Nevada
	 	 	 
	Medical
    Devices Ally, LLC	 	Kansas



 



    	Sched. V-1



    	 



    


 


SCHEDULE
VI


 


COMMERCIAL
TORT CLAIMS


 


None.


 




    	Sched. VI-1



    	 



    


 


SCHEDULE
VII



PLEDGED DEBT


 


None.


 




    	Sched. VII-1



    	 



    


 


SCHEDULE
VIII



PLEDGED SHARES


 


	Grantor:	 	Name of Pledged Issuer:	 	Number of Shares/Units:	 	 	Percentage of Outstanding Shares/Units:	 	 	Class:	 	Certificate Number:
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Digital Ally, Inc.	 	Digital Ally International, Inc.	 	 	10	 	 	 	100	%	 	Common Stock	 	001
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Digital Ally, Inc.	 	Studio One Media, LLC	 	 	83,758	 	 	 	100	%	 	Common Shares	 	Not Certificated
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Medical Devices Ally, LLC	 	Digital Ally, Inc.	 	 	1,000,000	 	 	 	100	%	 	Membership Interests	 	Not Certificated






 






    	Sched. VIII-1



    	 



    

 


EXHIBIT
A


 


ASSIGNMENT
FOR SECURITY



[TRADEMARKS] [PATENTS] [COPYRIGHTS]


 


WHEREAS,
______________________________ (the “Assignor”) [has adopted, used and is using, and holds all right,
title and interest in and to, the trademarks and service marks listed on the annexed Schedule 1A, which trademarks and
service marks are registered or applied for in the United States Patent and Trademark Office (the “Trademarks”)]
[holds all right, title and interest in the letter patents, design patents and utility patents listed on the annexed Schedule
1A, which patents are issued or applied for in the United States Patent and Trademark Office (the “Patents”)]
[holds all right, title and interest in the copyrights listed on the annexed Schedule 1A, which copyrights are registered
in the United States Copyright Office (the “Copyrights”)];


 


WHEREAS,
the Assignor has entered into an Amended and Restated Pledge and Security Agreement, dated as of August 25, 2014 (as amended,
restated or otherwise modified from time to time the “Security Agreement”), in favor of Hudson Bay Master
Fund Ltd., as collateral agent for certain buyers (the “Assignee”);


 


WHEREAS,
pursuant to the Security Agreement, the Assignor has assigned to the Assignee and granted to the Assignee for the benefit of the
Buyers (as defined in the Security Agreement) a continuing security interest in all right, title and interest of the Assignor
in, to and under the [Trademarks, together with, among other things, the good-will of the business symbolized by the Trademarks]
[Patents] [Copyrights] and the applications and registrations thereof, and all proceeds thereof, including, without limitation,
any and all causes of action which may exist by reason of infringement thereof and any and all damages arising from past, present
and future violations thereof (the “Collateral”), to secure the payment, performance and observance of the
“Obligations” (as defined in the Security Agreement);


 


NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Assignor does
hereby pledge, convey, sell, assign, transfer and set over unto the Assignee and grants to the Assignee for the benefit of the
Buyers a continuing security interest in the Collateral to secure the prompt payment, performance and for the benefit of the Buyers
observance of the Obligations.


 


The
Assignor does hereby further acknowledge and affirm that the rights and remedies of the Assignee with respect to the Collateral
are more fully set forth in the Security Agreement, the terms and provisions of which are hereby incorporated herein by reference
as if fully set forth herein.


 




    	Exh. A-1



    	 



    


 


IN
WITNESS WHEREOF, the Assignor has caused this Assignment for Security to be duly executed by its officer thereunto duly authorized
as of _____________, 20__.


 


	 	[GRANTOR]
	 	 	 






	 	By:	 
	 	Name:	 
	 	Title:
    	 



 



    	Exh. A-2



    	 



    



 


SCHEDULE
1A TO ASSIGNMENT FOR SECURITY


 





[Trademarks and Trademark Applications]


[Patent
and Patent Applications]


[Copyright
and Copyright Applications]


Owned by
______________________________




 






    	Exh. A-3