EXHIBIT 10.3
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
AGREEMENT, dated as of October 1, 1998, 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, 2003.
3. Compensation.
A. The Company shall pay Xxxxx a base salary
of $275,000 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 participate in any pension,
profit sharing, life insurance, medical, dental, hospital, disability or other
benefit plans as may from time to time be available to officers of the Company.
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 will office space, secretary,
telephones and other office facilities appropriate to his duties.
X. Xxxxx shall be entitled to one month's vacation per annum.
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
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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 and Europe. 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.
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 of the Company or any successor by merger
or
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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.
Company Sales 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
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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.
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G. Payment of termination or severance payment shall not affect
the Company's obligations under any other agreement with Xxxxx.
8. Deferred Compensation.
A. 62,517 shares of the Company's 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.
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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.
Except for any deferred compensation agreement, retirement plan
or stock options previously granted, this Agreement contains the entire
agreement between the parties
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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:
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