EXHIBIT 10.1
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
----------------------------------------------
AGREEMENT, dated as of October 1, 2002, 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, 2005.
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) a majority of
the members of the Board of Directors (excluding Messrs. Xxxxx and Sudo) 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" then Xxxxx, at his option, may elect to
receive a severance payment, without reduction for any offset or
mitigation, in an amount equal to (a) one-twelfth his annual base salary at
the time of such termination multiplied by (b) the number of full years of
his employment to the end of this Agreement by the Company up to a maximum
of 24 years, payable in either lump sum or extended payments as Xxxxx 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'x 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 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 elects to receive lump sum payment, such payment shall be made
within 30 days of the Company's receipt of Xxxxx'x 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 (a) Xxxxx dies or (b) 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. Such termination 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.
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxx X. Xxxxxxx
------------------------ --------------------
Xxxxxxx X. Xxxxx Xxxxx X. Xxxxxxx
Chairman
Compensation Committee
Date January 14, 2004
---------------------
