UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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):
January 1, 2018
TRACK GROUP, INC.
(Exact name of Registrant as specified in its Charter)
Delaware
|
000-23153
|
87-0543981
|
(State
or other jurisdiction of incorporation)
|
(Commission File
No.)
|
(IRS
Employer Identification No.)
|
|
|
200 E.
5
th
Avenue, Suite 100, Naperville,
Illinois 60563
|
|
(Address of
principal executive offices)
|
|
|
|
(877)
260-2010
|
|
(Registrant’s
Telephone Number)
|
|
|
|
Not
Applicable
|
|
(Former name or
address, if changed since last report)
|
|
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 (see General Instruction A.2.
below):
☐
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))
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (17 CFR
230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17
CFR 240.12b-2)
☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act
☐
Item 1.01
Entry into a Material Definitive Agreement.
On January 3, 2017, Track Group, Inc. (the
“
Company
”) entered into an amendment to the
Employment Agreement by and between the Company and Peter K. Poli,
the Company’s Chief Financial Officer (the
“
Poli
Agreement
”). Under the
terms of the Poli Agreement, as amended (the
“
Poli
Amendment
”), effective
January 1, 2018, Mr. Poli’s employment was extended three
years, and shall automatically renew for successive one year
periods thereafter unless either party provides the other with
notice of its intent not to renew the Poli Agreement at least six
months prior to termination. In addition, the Poli Amendment
provides: (i) an increase in Mr. Poli’s base salary to
$250,000 per year; (ii) the issuance of 150,000 unregistered
restricted shares of the Company’s common stock, which shall
vest annually in increments of 50,000 beginning January 1, 2018;
(iii) in the event of a change of control, Mr. Poli shall be
entitled to a cash payment equal to one year’s salary, plus
all restricted stock, warrants and options previously issued to Mr.
Poli shall become immediately vested and exercisable; and (iv) for
purposes of any severance due Mr. Poli upon his involuntary
termination, any annual bonus due Mr. Poli shall be deemed to be
vested and earned.
The foregoing description of the Poli Amendment does not purport to
be complete, and is qualified in its entirety by reference to the
Poli Amendment, attached hereto as Exhibit 10.1, and incorporated
by reference herein.
Item 5.02
Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
Effective January 1, 2018, the Company’s
Board of Directors (the “
Board
”) promoted Derek Cassell, the
Company’s former President, to the role of Chief Executive
Officer (“
CEO
”). As a result of the appointment of Mr.
Cassell to the position of CEO, Mr. Cassell will no longer serve as
the Company’s President and Guy Dubois will no longer serve
as the Company’s CEO. Mr. Dubois will continue to serve as
the Chairman of the Board of the Company. A copy of the press
release announcing Mr. Cassell’s appointment is attached to
this Current Report on Form 8-K as Exhibit 99.1
Mr. Cassell, age 44, joined the Company in 2014 through the
acquisition of Emerge Monitoring. Mr. Cassell served as a
Divisional President for the Company from June 2014 until December
2016, and as the Company’s President from December 2016 until
his appointment as CEO. From September 2008 until June 2014, Mr.
Cassell served as an Executive Vice President of Emerge Monitoring,
which was part of the Bankers Surety Team. Mr. Cassell has over 20
years of experience providing correctional solutions to the
criminal justice industry. His previous positions include
Director of Operations for ADT Correctional Services, Director
of Customer Support for G4S Justice Services, and National Sales
and Marketing Manager for ElmoTech Inc. He holds a Criminal Justice
Degree from Henry Ford College in Dearborn Heights,
Michigan.
On January 4, 2018, in
connection with Mr. Cassell’s appointment, the Company
entered into an amendment to the Employment Agreement by and
between the Company and Mr. Cassell (the “
Cassell
Agreement
”). Under the
terms of the Cassell Agreement, as amended (the
“
Cassell
Amendment
”), effective
January 1, 2018, Mr. Cassell will be promoted from President to CEO
of the Company, a position which he shall hold until December 31,
2020, unless earlier terminated or extended. Should Mr. Cassell
elect to voluntarily terminate his employment with the Company, he
must provide written notice of his intent to do so at least 180
days prior to terminating his employment.
In addition, the Cassell Amendment provides: (i)
an increase in Mr. Cassell’s base salary to $275,000 per
year; (ii) a 50% increase in his annual bonus effective for bonus
plan year 2018 and thereafter; (iii) subject to Board approval, the
issuance of 300,000 unregistered restricted shares of the
Company’s common stock, which shall vest annually in
increments of 100,000 beginning January 1, 2018; (iv) in the event
of a change of control, Mr. Cassell shall be entitled to a cash
payment equal to one year’s salary, plus all restricted
stock, warrants and options previously issued to Mr. Cassell shall
become immediately vested and exercisable; and (v) for purposes of
any severance due Mr. Cassell upon his involuntary termination, any
annual bonus due Mr. Cassell shall be deemed to be vested and
earned.
Except as disclosed in this Current Report on Form 8-K,
Mr. Cassell has no direct or indirect material interest in any
transaction required to be disclosed pursuant to Item 404(a)
of Regulation S-K, has no arrangement or
understanding between him and any other person required to be
disclosed pursuant to Item 401(b) of Regulation S-K, and
has no family relationships required to be disclosed pursuant to
Item 401(d) of Regulation S-K.
The foregoing description of the Cassell Amendment does not purport
to be complete, and is qualified in its entirety by reference to
the Cassell Amendment, attached hereto as Exhibit 10.2, and
incorporated by reference herein.
Item 9.01
Financial Statements and Exhibits.
See
Exhibit Index.
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.
|
|
|
|
|
|
TRACK GROUP, INC.
|
|
|
|
|
Date:
January 5, 2018
|
|
By:
|
/s/ Peter K. Poli
|
|
|
|
Peter
K. Poli
|
|
|
|
Chief
Financial Officer
|
|
|
|
|
EXHIBIT INDEX
Exhibit No.
|
|
Description
|
|
|
|
|
|
Amendment
No. 1 to Peter K. Poli's Employment Agreement, dated January 3,
2018.
|
|
|
Amendment
No. 2 to Derek Cassell’s Employment Agreement, dated January
4, 2018
|
|
|
Press
Release, dated January 4, 2018
|
Exhibit 10.1
Amendment No. 1 to the Executive
Employment Agreement
Between Track Group, Inc. and Peter K. Poli
Dated December 12, 2016
THIS AMENDMENT NO. 1
to that certain Executive
Employment Agreement by and between Track Group, Inc. (the
"Company") and Peter K. Poli (the "Employee") is entered into as of
December 13, 2017.
WHEREAS,
the Company and the Employee
entered into that certain Executive Employment Agreement dated
December 12, 2016 (the "Employment Agreement"); and
WHEREAS,
the Board of Directors of the
Company has agreed to increase Employee’s base salary, to
provide Employee with Shares of Company common stock, and have
agreed to the other terms contained herein.
NOW, THEREFORE,
the parties agree to
amend the Employment Agreement effective January 1, 2018, as
follows:
1.
Paragraph 3A. shall be modified to change
the base salary to $250,000.00 per calendar year effective January
1, 2018.
2.
Paragraph 3 shall
be amended by adding the following provision:
“Employee
will be issued 150,000 unregistered restricted shares of Company
common stock (the “Shares”). The Shares shall bear an
applicable restrictive legend. The Shares shall vest as follows:
(i) 50,000 Shares shall vest on January 1, 2018, (ii) 50,000 Shares
shall vest on January 1, 2019 (iii) 50,000 Shares shall vest on
January 1, 2020. In the event of Employee's death or permanent
disability, all of the Shares shall immediately vest. Prior to the
transfer of any of the Shares during any period during which the
Shares are not registered by the Company under an effective
registration statement filed, pursuant to the Securities Act of
1933, as amended, Employee shall comply with all laws and
regulations for the transfer of restricted shares, as well as the
Company's trading policies and procedures as set forth in the
Corporate Governance Manual. The Company covenants that in the
event it proposes to file a registration statement to register
shares with the U.S. Securities and Exchange Commission ("SEC") and
the Shares would be eligible for registration on such registration
statement, the Company, with Employee's written consent, shall
include the Shares in such registration statement.
Subject to
paragraph 5, in the event Employee's employment with the Company is
terminated before all of the Shares are vested, Employee shall
forfeit any unvested Shares.
D.
Change of Control
. In the
event that, at any time during the Executive’s employment
under this Agreement, the Company experiences a Change of Control
(as hereinafter defined), the Executive shall be entitled to
receive a cash payment equal to twelve (12) months of
Executive’s Base Annual Salary (at the Executive’s
highest Base Annual Salary), plus all Restricted Stock, Warrant and
Options shall become one hundred percent (100%) vested and fully
exercisable and the Company shall have no repurchase
right.
For
purposes of this Agreement, a “Change of Control” shall
mean, and be deemed to have occurred upon: (i) a sale or transfer
of substantially all of the Common Stock of the Company in any
transaction or series of related transactions (other than sales in
the ordinary course of business); (ii) any merger, consolidation or
reorganization to which the Company is a party, except for a
merger, consolidation or reorganization in which the Company is the
surviving corporation and, after giving effect to such merger,
consolidation or reorganization, the holders of the Company’s
outstanding Common Stock (on a fully-diluted basis) immediately
prior to the merger, consolidation or reorganization, hold a
majority of the voting power of the Company after such merger,
consolidation or reorganization.”
3.
Paragraph 5A.
shall be deleted in its entirety and replaced with the
following:
“A.
Employment Term of Agreement. The “Employment Term” of
this Agreement shall commence on January 1, 2018 and shall continue
in effect for a period of thirty-six (36) months or until
terminated by one of the parties pursuant to the terms of this
Section 5. Following such thirty-six (36) month period (and each
twelve (12) month period thereafter), the Employment Term shall
automatically renew for successive twelve (12) month periods unless
either party hereto notifies the other party at least six (6)
months in advance of the applicable period of its intent to not
renew the Agreement.”
6.
Paragraph 5B. (II)
(ii) shall be modified to provide that for purposes of the
Severance Payment the Target Bonus shall be deemed to be vested and
earned.
IN WITNESS WHEREOF
,
each of the parties has executed this
Amendment No. 1 to the Executive Employment Agreement between Track
Group, Inc. and Peter K. Poli dated December 12, 2016, in the case
of the Company by its duly authorized Board Member, as of the day
and year first above written.
TRACK
GROUP, INC.
By:
/s/ Guy
Dubois
Guy
Dubois
Chairman of the
Board
|
EMPLOYEE
/s/ Peter K. Poli
Peter
K. Poli
|
Exhibit 10.2
Amendment No. 2 to the Executive
Employment Agreement
Between Track Group, Inc. and Derek Cassell
Dated December 1, 2016
THIS AMENDMENT NO. 2
to that certain Executive
Employment Agreement by and between Track Group, Inc. (the
"Company") and Derek Cassell (the "Executive") is entered into as
of December 13, 2017.
WHEREAS,
the Company and the Executive
entered into that certain Executive Employment Agreement dated
December 1, 2016 (the "Employment Agreement"); and
WHEREAS
, the Company and the Executive
entered into an Amendment to the Employment Agreement dated
February 13, 2017 (“Amendment 1”); and
WHEREAS,
the Board of Directors of the
Company has agreed to promote Executive, and Executive has agreed
to accept a promotion, from the position of President to Chief
Executive Officer effective January 1, 2018, and the parties have
agreed to increase Executive’s base salary, to increase his
Target Bonus from 50% to 100% effective for bonus plan year 2018
and thereafter, to provide Executive with additional Shares of
Company common stock, and have agreed to the other terms contained
herein.
NOW, THEREFORE,
the parties agree to
amend the Employment Agreement effective January 1, 2018, as
follows:
1.
The Employment Agreement and Exhibit B thereto shall be modified to
replace the word "President" with the words "Chief Executive
Officer" wherever the word "President" appears.
2.
Paragraph 2 shall be modified to read in full as
follows:
"During his
Employment Term as defined in Paragraph 5, Executive will perform
his duties faithfully and to the best of his ability and will
devote his full business efforts and time during normal working
hours to the Company. Executive will report to the Board of
Directors of the Company. Executive shall be responsible for duties
typical of the office, including but not limited to the
responsibilities set forth in the Track Group, Inc. Corporate
Governance Manual Position Description For Chief Executive Officer.
Furthermore, Executive shall perform such other duties and projects
as may be assigned by the Board of Directors of the Company that
are consistent with his position."
3.
Paragraph 3A. shall be modified to
change the base salary to $275,000.00 per calendar year effective
January 1, 2018.
4.
Paragraph 3 shall be modified to include the
following:
“ B. (i)
Subject to approval by the Board of Directors, Executive will be
issued 300,000 unregistered restricted shares of Company common
stock (the “Shares”). The Shares shall bear an
applicable restrictive legend. The Shares shall vest as follows:
(i) 100,000 Shares shall vest on January 1, 2018, (ii) 100,000
Shares shall vest on January 1, 2019 and (iii) 100,000 Shares shall
vest on January 1, 2020.”
“D.
Change of Control
. In the
event that, at any time during the Executive’s employment
under this Agreement, the Company experiences a Change of Control
(as hereinafter defined), the Executive shall be entitled to
receive a cash payment equal to twelve (12) months of
Executive’s Base Annual Salary (at the Executive’s
highest Base Annual Salary), plus all Restricted Stock, Warrant and
Options shall become one hundred percent (100%) vested and fully
exercisable and the Company shall have no repurchase
right.
For
purposes of this Agreement, a “Change of Control” shall
mean, and be deemed to have occurred upon: (i) a sale or transfer
of substantially all of the Common Stock of the Company in any
transaction or series of related transactions (other than sales in
the ordinary course of business); (ii) any merger, consolidation or
reorganization to which the Company is a party, except for a
merger, consolidation or reorganization in which the Company is the
surviving corporation and, after giving effect to such merger,
consolidation or reorganization, the holders of the Company’s
outstanding Common Stock (on a fully-diluted basis) immediately
prior to the merger, consolidation or reorganization, hold a
majority of the voting power of the Company after such merger,
consolidation or reorganization.
5
.
The last sentence of Paragraph 3B. as set forth in Amendment 1
shall be modified to add at the beginning the words: “Subject
to paragraph 5,”
6
.
Paragraph 5A. shall be deleted in its entirety and replaced with
the following:
“A.
Employment Term of Agreement. The Employment Term of this Agreement
shall commence on October 1, 2016 and shall continue in effect
until December 31, 2020 unless earlier terminated by either party
in accordance with the provisions of this Section 5, or extended by
mutual agreement of the parties.”
7
.
Paragraph 5B.(II)(ii) shall be modified to provide that for
purposes of the Severance Payment the Target Bonus shall be deemed
to be vested and earned.
8
.
The last sentence of Paragraph 6 shall be modified to read in full
as follows: “If Executive voluntarily terminates his
employment with the Company he shall provide written notice to the
Chairman of the Board of Directors at least one hundred twenty
(180) days prior to terminating such
employment.”
9
.
Paragraph 12 shall be modified to change notice to the Company from
"Attn: Chief Executive Officer" to "Attn: Chairman, Board of
Directors."
10
.
Exhibit "B" of the Employment Agreement titled "Executive Bonus
Formula" shall be modified to change the Target Bonus percentage
from 50% to 100% effective for bonus plan year 2018 and for each
bonus plan year thereafter.
IN WITNESS WHEREOF
,
each of the parties has executed this
Amendment No. 2 to the Executive Employment Agreement between Track
Group, Inc. and Derek Cassell dated December 1, 2016, in the case
of the Company by its duly authorized Board Member, as of the day
and year first above written.
TRACK
GROUP, INC.
By:
/s/ Guy
Dubois
Guy
Dubois
Chairman of the
Board
|
EXECUTIVE
/s/
Derek Cassell
Derek
Cassell
|
Exhibit
99.1
Track Group
Board Names Derek Cassell As Next CEO – Guy Dubois To Remain
Chairman, Effective January 1, 2018
NAPERVILLE, IL
—
January 4,
2018
— Track Group
today announced that its Board of Directors has appointed Derek
Cassell as Chief Executive Officer effective January 1, 2018. Guy
Dubois will remain Track Group’s
Chairman.
“This is the perfect time for Derek Cassell to become Track
Group’s next Chief Executive Officer. We've selected a
very strong leader at a time when Track Group is in a very strong
position,” said Track Group’s Chairman and CEO Guy
Dubois. “Derek is unique in his ability to translate vision
and strategy into world-class execution, bringing together teams
and ecosystems to drive results. He is a champion of the Track
Group culture and has an incredible ability to inspire, energize,
and connect with employees, partners, and customers. Derek’s
vision, strategy and execution track record is exactly what Track
Group needs as we enter our next chapter, which I am confident will
be even more impactful and exciting than our
last.”
Cassell joined Track Group in 2014 through the acquisition of
Emerge Monitoring and has moved quickly through the company’s
ranks. He most recently served as Track Group’s President,
leading the company to consistent revenue and margin growth. Prior
to Track Group, he was Executive Vice President of Emerge
Monitoring, which was part of the Bankers Surety Team. Cassell has
over 20 years experience providing correctional solutions to the
criminal justice industry including ADT Correctional Services, G4S
Justice Services and ElmoTech Inc.
“I joined Track Group 3 years ago because I wanted to be a
part of a company where I believed the possibilities were
limitless. Today, I am even more convinced that Track Group is that
company,” said Derek Cassell. “Guy Dubois’ vision
and leadership have built Track Group into one of the most
important companies in the industry; a company fiercely committed
to delivering for its customers, shareholders, partners, and
employees. The opportunity that lies ahead for Track Group is
enormous, and the ability to lead this next chapter is deeply
humbling and incredibly exhilarating. I am focused on
accelerating the innovation and execution that our customers need
from us. Their success will continue to drive us. At a time
when our industry is on the cusp of more disruption than
we’ve ever encountered, I couldn’t be more confident in
our ability to win, or more honored to lead this great
company.”
Track Group also announced that Guy Dubois, currently CEO and
Chairman of Track Group’s Board of Directors, would remain
Chairman. He will devote his time to supporting Cassell and Track
Group’s senior leadership team and continue to drive the
Company’s strategic vision.
About Track Group (
trackgrp.com)
Track Group, Inc. (OTCQX: TRCK), designs, manufactures, and markets
location tracking devices and develops and sells a variety of
related software, services, accessories, networking solutions, and
monitoring applications for the criminal justice market. The
Company’s products and services are designed to empower
professionals in security, law enforcement, corrections and
rehabilitation organizations worldwide with single-sourced offender
management solutions that integrate reliable intervention
technologies to support re-socialization and monitoring
initiatives.