Unassociated Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Form 8-K
 
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  March 30, 2009
 
 
DIGITAL ALLY, INC.
(Exact Name of Registrant as Specified in Charter)
 
         
Nevada
 
001-33899
 
20-0064269
(State or other Jurisdiction
of Incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
 
7311 W. 130th Street, Suite 170, Overland Park, KS 66213
(Address of Principal Executive Offices) (Zip Code)
 
(913) 814-7774
(Registrant’s telephone number, including area code)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 

Item 5.02        Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
 
 
Appointment of Certain Officers
 
Effective on March 30, 2009, the Company appointed Steven Phillips as the Vice President of Engineering, Robert Haler as the Chief Technology Officer and Edward Smith as Vice President of Operations of the Company.  The additions of Mr. Phillips and Mr. Smith to the Company’s management team will enable Mr. Haler, formerly the Company’s Executive Vice President – Product Development, to devote more time to the design and development of new product concepts.
 
A copy of the press release announcing the appointments of Messrs. Phillips, Haler and Smith is attached hereto as Exhibit 99.1.

 
Retention Agreements
 
On March 30, 2009, the Company entered into retention agreements with the following executive officers of the Company:  Steven Phillips and Edward Smith.
 
The retention agreements guarantee the executive officers specific payments and benefits upon a Change in Control of the Company.  The retention agreements also provide for specified severance benefits if, after a Change in Control of the Company occurs, the executive officer voluntarily terminates employment for “Good Reason” or is involuntarily terminated without “Cause.”
 
Under the retention agreements, a “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 the Company; or (ii) the Company 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 the Company immediately prior to such merger, consolidation or other reorganization; or (iii) a majority of the Company’s Board of Directors is replaced and/or dismissed by the shareholders of the Company without the recommendation of or nomination by the Company’s current Board of Directors; or (iv) the Company’s Chief Executive Officer (the “CEO”) is replaced and/or dismissed by shareholders without the approval of the Company’s Board of Directors; or (v) the Company sells, transfers or otherwise disposes of all or substantially all of the consolidated assets of the Company and the Company does not own stock in the purchaser or purchasers having more than fifty percent (50%) of the voting power of the entity owning all or substantially all of the consolidated assets of the Company after such purchase.
 
“Good Reason” means either (i) a material adverse change in the executive’s status as an executive or other key employee of the Company, including without limitation, a material adverse change in the executive’s position, authority, or aggregate duties or responsibilities; or (ii) any adverse change in the executive’s base salary, target bonus or benefits; or (iii) a request by the Company to materially change the executive’s geographic work location.
 
“Cause” means (i) the executive has acted in bad faith and to the detriment of the Company; (ii) the executive has refused or failed to act in accordance with any specific lawful and material direction or order of his or her supervisor; (iii) the 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 the Company; (iv) the executive has abused alcohol or drugs on the job or in a manner that affects the executive’s job performance; and/or (v) the 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, the Company shall give the executive written notice of the reason for such potential termination and provide the executive a thirty (30) day period to cure such conduct or act or omission alleged to provide grounds for such termination.
 
If any Change in Control occurs and the executive continues to be employed as of the completion of such Change in Control, upon completion of such Change in Control, as payment for the executive’s additional efforts during such Change in Control, the Company shall pay the executive a Change in Control benefit payment equal to three (3) months of the executive’s base salary at the rate in effect immediately prior to the Change in Control completion date, payable in a lump sum net of required tax withholdings.
 
If any Change in Control occurs, and if, during the one (1) year period following the Change in Control, the Company terminates the executive’s employment without Cause or the executive submits a resignation for Good Reason (the effective date of such termination or resignation, the “Termination Date”), then:
 
 (a) The Company shall pay the executive severance pay equal to twelve (12) months of the executive’s base salary at the higher of the rate in effect immediately prior to the Termination Date or the rate in effect immediately prior to the occurrence of the event or events constituting Good Reason, payable on the Termination Date in a lump sum net of required tax withholdings, plus all other amounts then payable by the Company to the executive less any amounts then due and owing from the executive to the Company;
 
(b) The Company shall provide continuation of the executive’s health benefits at the Company’s expense for eighteen (18) months following the Termination Date; and
 
(c) The executive’s outstanding employee stock options shall fully vest and be exercisable for a 90-day period following the Termination Date.
 
The executive is not entitled to the above severance benefits for a termination based on death or disability, resignation without Good Reason or termination for Cause.  Following the Termination Date, the Company shall also pay the executive all reimbursements for expenses in accordance with the Company’s policies, within ten (10) days of  submission of appropriate evidence thereof by the executive.
 
Copies of the forms of retention agreements for Messrs. Phillips and Smith are filed herewith as Exhibits 10.19 and 10.20, respectively, and are incorporated herein by reference.
 
 
Item 9.01
Financial Statements and Exhibits.
 
(d)           Exhibits.
 
10.19
 
Retention Agreement between Digital Ally, Inc. and Steven Phillips, dated as of March 30, 2009.
10.20
 
Retention Agreement between Digital Ally, Inc. and Edward Smith, dated as of March 30, 2009.
99.1
 
Text of press release entitled “Digital Ally Appoints New Vice Presidents of Engineering and Operations” dated March 30, 2009.


 

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
Date: March 31, 2009
 
 
Digital Ally, Inc.
 
By:  /s/ Stanton E. Ross
Name:  Stanton E. Ross
Title:  Chairman, President and Chief Executive Officer
 

EXHIBIT INDEX
 
Exhibit No.
Description

 
10.19
Key Executive Retention Agreement dated March30, 2009 between Digital Ally, Inc. and Steven Phillips
 
10.20
Key Executive Retention Agreement dated March 30, 2009 between Digital Ally, Inc. and Edward Smith
 
99.1
Text of press release entitled “Digital Ally Appoints New Vice Presidents of Engineering and Operations” dated March 30, 2009