KEY EXECUTIVE RETENTION AGREEMENT

This Key Executive Retention Agreement (“Agreement”) is effective as of the latest date set forth on the signature page below, and is between Digital Ally, Inc ., a Nevada corporation (“Employer”), and Kenneth  L.  McCoy (“Executive”).

Whereas , Employer has employed Executive as an at-will Executive at Employer’s office located in Overland Park, Kansas prior to the date of this Agreement; and

Whereas , Employer recognizes that various third parties from time to time desire to alter Employer’s ownership, business strategies, management and operations, and Employer desires to retain Executive’s talents now and in the future without undue distraction.  Employer intends for this Agreement to be an incentive for Executive to continue employment with Employer.

Now, therefore , Employer and Executive agree as follows:

1.   Definitions .  The following capitalized terms used herein shall have the meanings set forth below.

(a)   “ Cause ” means (i) Executive has acted in bad faith and to the detriment of Employer; (ii) Executive has refused or failed to act in accordance with any specific lawful and material direction or order of his or her supervisor; (iii) Executive has exhibited, in regard to employment, unfitness or unavailability for service, misconduct, dishonesty, habitual neglect, incompetence, or has committed an act of embezzlement, fraud or theft with respect to the property of Employer; (iv) Executive has abused alcohol or drugs on the job or in a manner that affects Executive’s job performance; and/or (v) Executive has been found guilty of or has plead nolo contendere to the commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person. Prior to termination for Cause, Employer shall give Executive written notice of the reason for such potential termination and provide Executive a thirty (30) day period to cure such conduct or act or omission alleged to provide grounds for such termination.

(b)   “Change in Control ” means (i) one party alone, or acting with others, has acquired or gained control over more than fifty percent (50%) of the voting shares of Employer; or (ii)  Employer merges or consolidates with or into another entity or completes any other corporate reorganization, if more than fifty percent (50%) of the combined voting power of the surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not shareholders of Employer immediately prior to such merger, consolidation or other reorganization; or (iii) a majority of Employer’s Board of Directors is replaced and/or dismissed by the shareholders of Employer without the recommendation of or nomination by Employer’s current Board of Directors; or (iv) Employer’s Chief Executive Officer (the “CEO”) is replaced and/or dismissed by shareholders without the approval of Employer’s Board of Directors; or (v) Employer sells, transfers or otherwise disposes of all or substantially all of the consolidated assets of Employer and Employer does not own stock in the purchaser or purchasers having more than fifty percent (50%) of the votin