Item
1.01 Entry into a Material Definitive Agreement.
On
June 8, 2020, Digital Ally, Inc., a Nevada corporation (the “Company”), entered into an underwriting agreement (the
“Underwriting Agreement”) with Aegis Capital Corp., as representative (the “Representative”) of the underwriters
(the “Underwriters”). Pursuant to the terms of the Underwriting Agreement, the Underwriters will purchase from the
Company, and sell to investors, 2,235,581 shares (the “Firm Shares”) of the Company’s common stock, par value
$0.001 per share (the “Common Stock”), at a public offering price of $2.15 per share, less underwriting discounts
and commissions (the “Offering”).
The
Company has also granted the Underwriters a 45-day option to purchase up to an additional 213,953 shares of Common
Stock at the public offering price, less underwriting discounts and commissions, to cover over-allotments, if any (the “Option
Shares” and together with the Firm Shares, the “Shares”).
The
Offering is being registered and the Shares will be issued pursuant to the Company’s effective shelf registration
statement on Form S-3 (File No. 333-225227) (the “Registration Statement”), which was initially filed with the Securities
and Exchange Commission (the “SEC”) on May 25, 2018, and was declared effective on June 6, 2018, and the related base
prospectus included in the Registration Statement, as supplemented by the prospectus supplement dated June 8, 2020 (the “Prospectus
Supplement”). The legal opinion and consent of Sullivan and Worcester LLP addressing the validity of the Common Stock sold
in the Offering is filed as Exhibit 5.1 hereto and is incorporated into the Registration Statement.
The
Underwriting Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing,
indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as
amended, other obligations of the parties and termination provisions.
The
Underwriters will purchase the Firm Shares from the Company at a price of $1.9995 per share, representing a seven percent (7%)
discount from the public offering price. In addition, the Company agreed to pay the Underwriters all expenses relating to the
Offering, including “road show” expenses, diligence fees and the fees and expenses of the Underwriters’ legal
counsel not to exceed $30,000.
Under
the Underwriting Agreement, pursuant to a certain “lock-up” agreement and subject to certain exclusions as set forth
therein, the Company has agreed, without first obtaining the written consent of the Representative and subject to certain exceptions,
not to, for a period of 30 days from the date of the Underwriting Agreement, (1) offer, pledge, sell or otherwise transfer or
dispose of, directly or indirectly, any shares of capital stock of the Company, (2) file or caused to be filed any registration
statement with the SEC relating to the offering of any shares of the Company’s capital stock or any securities convertible
into or exercisable or exchangeable for shares of the Company’s capital stock (3) complete any offering of debt securities
of the Company, or (4) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of capital stock of the Company.
Provided that the Firm Shares are sold in accordance with the terms of the Underwriting Agreement, the Representative shall
have, for a period of 6 months after the date the Offering is completed, a right of participation to participate as an underwriter
and/or placement agent for up to fifty percent (50%) of any and all future public offerings during such 6-month period of
the Company or any subsidiary of the Company; provided, however, that this right will not apply to any offering conducted
in conjunction with a merger, business combination, strategic transaction or joint venture or similar-type transaction.
The
foregoing description of the terms of the Underwriting Agreement does not purport to be complete and is subject to, and qualified
in its entirety by reference to the Underwriting Agreement, which is filed as Exhibit 1.1 to this Current Report on Form 8-K,
and is incorporated herein by reference.