EXHIBIT 10.1
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EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
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AGREEMENT, dated as of November 1, 2005, between XXXXXXX X. XXXXX
(hereinafter called "Xxxxx") and VICON INDUSTRIES, INC., a New York corporation,
having its principal place of business at 00 Xxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx
00000 (hereinafter called the "Company").
WHEREAS, Xxxxx has previously been employed by the Company, and
WHEREAS, the Company and Xxxxx mutually desire to assure the continuation
of Xxxxx'x services to the Company,
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, the parties covenant and agree as follows:
1. Employment. The Company shall employ Xxxxx as its Chief Executive
Officer and President throughout the term of this Agreement, and Xxxxx accepts
such employment.
2. Term. The term of this Agreement shall commence as of the date of this
Agreement and expire on September 30, 2006.
3. Compensation.
A. The Company shall pay Xxxxx a base salary of $310,000 per annum,
subject to adjustment as provided in subsection B.
B. Prior to September 15 of each succeeding year, Xxxxx'x base salary
shall be reviewed by the Compensation Committee of the Board of Directors
and shall be fixed for the year commencing October 1 of such year by
agreement between Xxxxx and the Board of Directors, but in any event shall
not be less than the base salary for the one year period then ending.
X. Xxxxx'x base salary shall be payable monthly or bi-weekly.
X. Xxxxx shall also be entitled to full fee for service family
medical, dental, and hospital coverage and long term disability insurance.
4. Extent and Places of Services; Vacation
X. Xxxxx shall establish operating policy and direct, supervise and
oversee the operations of the Company. He shall advise and report to the
Board of Directors. Xxxxx shall also assume and perform such additional
reasonable responsibilities and duties as the Board of Directors and he may
from time to time agree upon.
X. Xxxxx shall devote his full time, attention, and energies to the
business of the Company.
X. Xxxxx shall not be required to perform his services outside the
Hauppauge, New York area or such other area on Long Island, New York as
shall contain the location of the Company's headquarters.
D. The Company shall provide Xxxxx with office space, secretary,
telephones and other office facilities appropriate to his duties.
X. Xxxxx shall be entitled to one month's paid vacation per annum.
5. Covenant not to Compete. Xxxxx agrees that during the term of this
Agreement and for a period of five years thereafter unless the Company shall
breach this agreement, he shall not directly or indirectly anywhere in the world
engage in, or enter the employment of or render any services to any other entity
engaged in, any business of a similar nature to or in competition with the
Company's business of designing, manufacturing and selling CCTV security
equipment and protection devices anywhere in the United States, Europe and Asia.
Xxxxx further acknowledges that the services to be rendered under this Agreement
by him are special, unique, and of extraordinary character and that a material
breach by him of this section will cause the Company to suffer irreparable
damage; and Xxxxx agrees that in addition to any other remedy, this section
shall be enforceable by negative or affirmative preliminary or permanent
injunction in any Court of competent jurisdiction.
6. Termination Payment on Change of Control.
A. Notwithstanding any other provision of this Agreement, if a "Change
of Control" occurs without the prior written consent of the Board of
Directors, Xxxxx, at his option, may elect to terminate his obligations
under this Agreement and to receive a termination payment, without
reduction for any offset or mitigation, in an amount equal to three times
his average annual base salary for the five years preceding the Change of
Control, in either lump sum or extended payments over three years as Xxxxx
shall elect.
B. A "Change of Control" shall be deemed to have occurred if (i) any
entity shall directly or indirectly acquire a beneficial ownership of 20%
(or in the case of Chugai Boyeki Co., Ltd. and its affiliates 35%) or more
of the outstanding shares of capital stock of the Company or (ii) two or
more members of the Board of Directors of the Company or any successor by
merger or assignment of assets or otherwise, shall be persons other than
Directors on the date of this Agreement.
X. Xxxxx'x option to elect to terminate his obligations and to receive
a termination payment and to elect to receive a lump sum or extended
payments may be exercised only by written notice delivered to the Company
within 90 days following the date on which Xxxxx receives actual notice of
Change of Control.
D. If Xxxxx elects to receive lump sum payment, such payment shall be
made within 30 days of the Company's receipt of Xxxxx'x notice of election.
7. Severance Payment on Certain Terminations.
A. If either (i) this Agreement expires, or (ii) the Company
terminates Xxxxx'x employment under this Agreement for reasons other than
"Gross Misconduct",or (iii) with the consent of the Board of Directors a
Change of Control as defined in paragraph 6 B. shall occur, or (iv) the
Company executes a "Company Sale Agreement" or (v) Xxxxx dies, then Xxxxx
or (his executor or administrator), at their option, may elect to receive a
severance payment, without reduction for any offset or mitigation, in an
amount equal to $620,000 (two years annual base salary)payable in either
lump sum or extended payments as Xxxxx or (his executoror
administrator)shall elect.
B. "Company Sale Agreement" means an agreement to which the Company is
a party that contemplates that more than half of the assets of the Company
are transferred to another entity or that upon consummation of the
transactions contemplated by such agreement, a Change of Control as defined
in paragraph 6 shall occur or have occurred.
C. In the event of an election under paragraph 7, payment of such
severance payment shall be in lieu of any obligation of the Company for
termination payment or other post-termination compensation under this
Agreement, if any.
D. "Gross Misconduct" shall mean (a) a wilful, substantial and
unjustifiable refusal to perform substantially the duties and services
required by this Agreement to be performed; (b) fraud, misappropriation or
embezzlement involving the Company or its assets; or (c) conviction of a
felony involving moral turpitude.
X. Xxxxx or (his executor or administrator) option to elect to receive
a severance payment and to elect to receive lump sum or extended payments
may be exercised only by written notice delivered to the Company within 90
days following the date on which this Agreement expires; Xxxxx dies; or on
which Xxxxx receives actual notice of the existence of any other condition
referred to in paragraph 7A, except that, in the case of the Company's
execution of a Company Sale Agreement, Xxxxx'x option may be exercised at
any time prior to the closing under such agreement and such termination
shall be effective as of such closing.
F. If Xxxxx or(his executor or administrator) elects to receive a lump
sum payment, such payment shall be made within 30 days of the Company's
receipt of their notice of such election, except that, in the case of the
Company's execution of a Company Sale Agreement, the payment shall be made
no later than the time of closing under such agreement.
G. Payment of termination or severance payment shall not affect the
Company's obligations under any other agreement with Xxxxx.
8. Deferred Compensation.
A. 70,647 shares of the Company's common stock now held by the Company
as treasury shares (the "Deferred Compensation Shares") shall be set aside
and held by the Company for future distribution to Xxxxx under this
paragraph.
B. As deferred compensation, and in addition to all other compensation
payable to Xxxxx, the Deferred Compensation Shares shall become the
property of Xxxxx, and the Company shall deliver the certificates for the
Deferred Compensation Shares to Xxxxx (or his executor or administrator),
on the Transfer Date, registered in Xxxxx'x name, within 10 days
thereafter. The Transfer Date shall be the earliest of (i) the date of
Xxxxx'x death; (ii) the date as of which Xxxxx'x employment by the Company
involuntarily terminates; (iii) the date of execution of a Company Sale
Agreement as defined in paragraph 7; (iv) the occurrence of a Change of
Control as defined in paragraph 6; or (v) expiration of this Agreement
(including any replacement agreement).
C. Notwithstanding any other provision of this paragraph, Xxxxx shall
not be entitled to any Deferred Compensation Shares if the Company
terminates this Agreement for Gross Misconduct as defined in paragraph 7.
D. Prior to the Transfer Date, Xxxxx'x rights to the Deferred
Compensation Shares shall not be transferrable and the Treasury Shares
shall be the property of the Company.
X. Xxxxx represents that he will be acquiring the Deferred
Compensation Shares for investment only and without a view to the
distribution thereof and that the Deferred Compensation Shares, when
delivered to him, may constitute restricted stock under the Securities Act
of 1933, and the regulations thereunder, and that the certificates therefor
shall bear such legend relating to this subparagraph as the Company shall
reasonably require.
9. Death or Disability. The Company may terminate this Agreement if during
the term of this Agreement Xxxxx becomes so disabled for a period of six months
that he is substantially unable to perform his duties under this Agreement for
such period. In addition to this Agreement shall automatically terminate upon
Xxxxx'x death. Such terminations shall not release the Company from any
liability to Xxxxx for compensation earned, or for termination or severance due
in accordance with paragraph 7 herein. Agreement termination under this
paragraph shall not be deemed a termination of employment for Gross Misconduct.
10. Arbitration. Any controversy or claim arising out of, or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in the
City of New York in accordance with the rules of the American Arbitration then
in effect, and judgement upon the award rendered be entered and enforced in any
court having jurisdiction thereof.
11. Miscellaneous.
A. Except for any deferred compensation agreement, retirement plan or
stock options previously granted, this Agreement contains the entire
agreement between the parties and supersedes all prior agreements by the
parties relating to the term of Xxxxx'x employment by the Company, however,
it does not restrict or limit such other benefits as the Board of Directors
may determine to provide or make available to Xxxxx.
B. This agreement may not be waived, changed, modified or discharged
orally, but only by agreement in writing, signed by the party against whom
enforcement of any waiver, change, modification, or discharge is sought.
C. This Agreement shall be governed by the laws of New York applicable
to contracts between New York residents and made and to be entirely
performed in New York.
D. If any part of this Agreement is held to be unenforceable by any
court of competent jurisdiction, the remaining provisions of this Agreement
shall continue in full force and effect.
E. This Agreement shall inure to the benefit of, and be binding upon,
the Company, its successor, and assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement.
VICON INDUSTRIES, INC.
_____________________ By____________________
Xxxxxxx X. Xxxxx Xxxxx X. Xxxxxxx
Chairman
Compensation Committee
Date:________________
