UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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o Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
VICON INDUSTRIES, INC.
(Name
(Name of Registrant as Specified in its Charter)
(Name
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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VICON INDUSTRIES, INC.
89 Arkay Drive
Hauppauge, NY 11788
(631) 952-2288 (CCTV)
Notice of Annual Meeting of Shareholders
To Be Held on May 18, 2007
21, 2009
To the Shareholders of Vicon Industries, Inc.
Notice is hereby given that the Annual Meeting of Shareholders of Vicon Industries, Inc. (the "Company"), a New York corporation, will be held at the Company's corporate headquarters located at 89 Arkay Drive, Hauppauge, New York 11788, on May 18, 200721, 2009 at 10:00 a.m. local time for the following purposes, all of which are more completely described in the accompanying proxy statement:
1. To elect two directors for terms expiring in 2010;
2. To approve the 2007 Stock Incentive Plan covering 500,000 shares of Common
Stock;
3. To ratify the appointment of BDO Seidman, LLP, as the Company's independent
registered public accountants for the fiscal year ending September 30,
2007; and
4. To receive the reports of officers and to transact such other business as
may properly come before the meeting.
| 1. | To elect two directors for terms expiring in 2012; |
| 2. | To approve the 2009 Stock Incentive Plan covering 250,000 shares of Common Stock; |
| 3. | To ratify the appointment of BDO Seidman, LLP, as the Company’s independent registered public accountants for the fiscal year ending September 30, 2009; and |
| 4. | To receive the reports of officers and to transact such other business as may properly come before the meeting. |
Shareholders entitled to notice of and to vote at the Annual Meeting are shareholders of record at the close of business on April 5, 200710, 2009 fixed by action of the Board of Directors.
The Annual Report to Shareholders for the year ended September 30, 20062008 is included with this proxy statement. By Order ofThis proxy statement and the Board of Directors,
Hauppauge, New York Joan L. Wolf
April 20, 2007 Secretary
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2008 annual report are available on the Company’s website at www.vicon-cctv.com. From the Company’s home page, click on “Company”, then click on “Investor Relations”.
| By Order of the Board of Directors, |
| |
| Hauppauge, New York | Joan L. Wolf |
| April 15, 2009 | Secretary |
YOUR VOTE IS IMPORTANT
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You are urged to date, sign and promptly return your proxy so that your shares may be voted in accordance with your wishes and in order that the presence of a quorum may be assured. The prompt return of your signed proxy, regardless of the number of shares you hold, will aid the Company in reducing the expense of additional proxy solicitation. The giving of such proxy does not affect your right to vote in person in the event you attend the meeting.
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PROXY STATEMENT FOR 20072009 ANNUAL MEETING OF SHAREHOLDERS
SOLICITATION AND REVOCATION OF PROXY
The enclosed proxy, for use only at the Annual Meeting of Shareholders to be held on May 18, 200721, 2009 at 10:00 a.m., and any and all adjournments thereof, is solicited on behalf of the Board of Directors of Vicon Industries, Inc. (the "Company").
Any shareholder executing a proxy retains the right to revoke it by notice in writing to the Secretary of the Company at any time prior to its use. The cost of soliciting the proxy will be borne by the Company.
PURPOSES OF ANNUAL MEETING
The Annual Meeting has been called for the purposes of electing two directors whose terms of office expire in 2010;2012; approving the 20072009 Stock Incentive Plan; ratifying the appointment of independent registered public accountants; receiving the reports of officers; and transacting such other business as may properly come before the meeting.
The persons named in the enclosed proxy have been selected by the Board of Directors and will vote shares represented by valid proxies. They have indicated that, unless otherwise specified in the proxy, they intend to vote FOR the election of two directors whose termterms of office expire in 2010;2012; FOR the approval of the 20072009 Stock Incentive Plan; and FOR ratification of the appointment of independent registered public accountants.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next Annual Meeting of Shareholders must be received at the Company's principal executive office no later than November 1, 2007,2009, and must comply with all other legal requirements in order to be included in the Company's proxy statement and form of proxy for that meeting. Proposals of security holders not meeting the requirements of Rule 14a-8 of Regulation 14A must comply with the requirements set forth in the Company's Bylaws relating to business conducted at the Annual Meeting of Shareholders.
This proxy statement and the enclosed proxy card are being furnished to shareholders on or about April 20, 2007.
15, 2009.
VOTING SECURITIES
The Company has one class of capital stock, consisting of Common Stock, par value $.01 per share, of which each outstanding share entitles its holder to one vote. Cumulative voting is not provided under the Company's Certificate of Incorporation or Bylaws. Shareholders entitled to vote or to execute proxies are shareholders of record at the close of business on April 5, 2007.10, 2009. As of March 15, 2007,2009, there were 4,750,7454,604,350 shares outstanding.
The presence, in person or by proxy, of at least a majority of the total number of shares of Common Stock entitled to vote is necessary to constitute a quorum at the Annual Meeting. In the event that there are insufficient votes for a quorum or to approve any proposal at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit the further solicitation of proxies.
As to the election of directors, the proxy card being provided by the Board of Directors enables a shareholder to vote "FOR"“FOR” the election of the nominees proposed by the Board, or to "WITHHOLD"“WITHHOLD” authority to vote for the nominees being proposed. Directors are elected by a plurality of shares voted, without regard to either (i) broker non-votes, or (ii) proxies as to which authority to vote for one or more of the nominees being proposed is withheld.
As to proposals 2 and 3, a shareholder may (i) vote "FOR"“FOR” the proposal; (ii) vote "AGAINST"“AGAINST” the proposal; or (iii) "ABSTAIN"“ABSTAIN” with respect to the proposal. The adoption of the stock incentive planStock Incentive Plan and the ratification of independent registered public accountants shall each be determined by a majority of the votes cast affirmatively or negatively, without regard to broker non-votes or proxies marked "ABSTAIN"“ABSTAIN” as to the matter.
Proxies solicited hereby will be returned to the Board and will be tabulated by the inspector of election designated by the Board of Directors.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of the Company's Common Stock as of March 15, 20072009 by (i) those persons known by the Company to be beneficial owners of more than 5% of the Company'sCompany’s outstanding Common Stock; (ii) each current executive officer named in the Summary Compensation Table; (iii) each director; and (iv) all directors and executive officers as a group.
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned (1) of Class
- ------------------- ---------------------------- --------
CBC Co., Ltd.
and affiliates
2-15-13 Tsukishima,
Chuo-ku, Tokyo, Japan 104 543,715 11.0%
Dimensional Fund Advisors
1299 Ocean Avenue
Santa Monica, CA 90401 315,837 (9) 6.4%
Al Frank Asset Management, Inc.
32392 Coast Highway, Suite 260
Laguna Beach, CA 92651 268,274 (8) 5.4%
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C/O Vicon Industries, Inc.
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Kenneth M. Darby 319,373 6.4%
Arthur D. Roche 124,654 (3) 2.5%
John M. Badke 40,819 (2) *
Peter F. Neumann 37,072 (3) *
W. Gregory Robertson 31,900 (3) *
Christopher Wall 28,300 (4) *
Yigal Abiri 16,000 *
Bret McGowan 15,154 (5) *
Clifton H.W. Maloney 15,000 (6) *
Total all Executive Officers
and Directors as a group (12 persons) 719,913 (7) 14.5%
Name and Address of Beneficial Owner | | Number of Shares Beneficially Owned (1) | | | Percent of Class | |
| | | | | | | |
| CBC Co., Ltd. | | | | | | |
| and affiliates | | | | | | |
| 2-15-13 Tsukishima, | | | | | | |
| Chuo-ku, Tokyo, Japan 107 | | | 543,715 | | | | 11.3 | % |
| | | | | | | | | |
| Anita G. Zucker, | | | | | | | | |
| as Trustee of Jerry Zucker | | | | | | | | |
| Revocable Trust | | | | | | | | |
| c/o The Inter Tech Group, Inc. | | | | | | | | |
| 4838 Jenkins Avenue | | | | | | | | |
| North Charleston, SC 29405 | | | 395,000 | | | | 8.2 | % |
| | | | | | | | | |
| Dimensional Fund Advisors | | | | | | | | |
| 1299 Ocean Avenue | | | | | | | | |
| Santa Monica, CA 90401 | | | 387,608 | (2) | | | 8.1 | % |
| | | | | | | | | |
| Renaissance Technologies, Corp. | | | | | | | | |
| 800 Third Avenue | | | | | | | | |
| New York, NY 10022 | | | 352,600 | | | | 7.3 | % |
| | | | | | | | | |
| David Weiner | | | | | | | | |
| 3940 Laurel Canyon Blvd., Ste. 327 | | | | | | | | |
| Studio City, CA 91604 | | | 304,472 | (3) | | | 6.3 | % |
| | | | | | | | | |
| C/O Vicon Industries, Inc. | | | | | | | | |
| | | | | | | | | |
| Kenneth M. Darby | | | 338,502 | (4) | | | 7.0 | % |
| Arthur D. Roche | | | 74,654 | (5) | | | 1.6 | % |
| Peter A. Horn | | | 58,747 | (6) | | | 1.2 | % |
| John M. Badke | | | 54,319 | (7) | | | 1.1 | % |
| Peter F. Neumann | | | 37,072 | | | | * | |
| Christopher J. Wall | | | 34,027 | (8) | | | * | |
| W. Gregory Robertson | | | 31,900 | (9) | | | * | |
| Bret M. McGowan | | | 26,820 | (10) | | | * | |
| Clifton H.W. Maloney | | | 20,000 | (11) | | | * | |
| | | | | | | | | |
| Total all Executive Officers | | | | | | | | |
| and Directors as a group (12 persons) | | | 715,591 | (12) | | | 14.9 | % |
| | | | | | | | | |
* Less than 1%.
(1) Unless otherwise indicated, the Company believes that all persons named in the table have sole voting and investment control over the shares of stock owned.
(2) Includes currently exercisable options to purchase 27,500 shares.
(3) Includes currently exercisable options to purchase 20,000 shares.
(4) Includes currently exercisable options to purchase 16,000 shares.
(5) Includes currently exercisable options to purchase 15,154 shares.
(6) Includes currently exercisable options to purchase 15,000 shares.
(7) Includes currently exercisable options to purchase 160,654 shares.
(8) Al Frank Asset Management, Inc.Dimensional Fund Advisors had sole voting control over 177,822384,708 shares and investment control over 268,274 shares.
(9) Dimensional Fund Advisors had voting and investment control over 315,837
shares387,608 as investment advisor and manager for various mutual
funds and other clients. These shares are beneficially owned by such mutual funds or other clients.
(3) David Weiner had sole voting and investment control over 286,272 shares.
(4) Includes currently exercisable options to purchase 19,129 shares.
(5) Includes 15,000 shares held by Mr. Roche’s wife and currently exercisable options to purchase 3,000 shares.
(6) Includes currently exercisable options to purchase 12,050 shares.
(7) Includes currently exercisable options to purchase 22,500 shares.
(8) Includes currently exercisable options to purchase 17,500 shares.
(9) Includes currently exercisable options to purchase 10,000 shares.
(10) Includes currently exercisable options to purchase 15,820 shares.
(11) Includes currently exercisable options to purchase 20,000 shares.
(12) Includes currently exercisable options to purchase 136,049 shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company during the year ended September 30,
2006,2008 and certain written representations that no Form 5 is required, no person who, at any time during the year ended September 30,
20062008 was a director, officer or beneficial owner of more than 10 percent of any class of equity securities of the Company registered pursuant to Section 12 of the Exchange Act failed to file on a timely basis, as disclosed in the above forms, reports required by Section 16(a) of the Exchange Act during the year ended September 30,
2006.
EQUITY COMPENSATION PLAN INFORMATION
At September 30, 2006
Number of securities
remaining available for
Number of securities Weighted average future issuance under
to be issued upon exercise price equity compensation
exercise of out- of outstanding plans (excluding
standing options, options, warrants securities reflected
warrants and rights and rights in column (a))
Plan category (a) (b) (c)
Equity compensation
plans approved by
security holders 545,283 $3.28 73,933
Equity compensation
plans not approved
by security holders __ __ __
Total 545,283 $3.28 73,933
2008.
EQUITY COMPENSATION PLAN INFORMATION
| Plan Category | | Number of securities to be issued upon exercise of out- standing options, warrants and rights (a) | | | Weighted average exercise price of outstanding options, warrants and rights (b) | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |
| | | | | | | | | | |
| Equity compensation | | | | | | | | | |
| plans approved by | | | | | | | | | |
| security holders | | | 467,287 | | | | $3.98 | | | | 376,258 | |
| | | | | | | | | | | | | |
| Equity compensation | | | | | | | | | | | | |
| plans not approved | | | | | | | | | | | | |
| by security holders | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | |
| Total | | | 467,287 | | | | $3.98 | | | | 376,258 | |
Equity Compensation Grants Not Approved by Security Holders
Through September 30, 2006,2008 the Company had granted certain of its officers with deferred compensation benefits aggregating 103,89833,251 shares of common stock currently held by the Company in treasury. Such shares vest upon retirement except that
70,647 of such shares vested upon the expiration Mr. Darby's employment
agreement on September 30, 2006. Such shares were distributed to Mr. Darby in
November 2006.retirement. All shares vest earlier under certain occurrences including death, involuntary termination or a change in control of the Company.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF TWO DIRECTORS
The Board is comprised of five directors; two directors whose terms expires in 2010; two directors whose terms expire in 2008;2011 and one director whose term expires in 2009 and two directors to be elected for termsa term expiring in 2010.2012. One additional director is proposed for election to a term expiring in 2012, which will increase the Board membership to six directors. Directors serve for a term of three years or until their successors are elected and qualified. No person being nominated as a director is being proposed for election pursuant to any agreement or understanding between any person and the Company.
The nominees proposed for election to a term expiring in 20102012 at the Annual Meeting are Mr. Clifton H. W. MaloneyPeter F. Neumann and Mr. W. Gregory Robertson.Bernard F. Reynolds, who is a new nominee to the Board. In the event that either nominee isthese nominees are unable or declinesdecline to serve for any reason, the Board of Directors shall elect a replacement to fill the vacancy. The Board of Directors has no reason to believe that either person named will be unable or unwilling to serve.
Unless authority to vote for the nominees is withheld, it is intended that the shares represented by the enclosed proxy will be voted FOR the nominees named in the Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES NAMED IN THIS PROXY STATEMENT Information with Respect to Nominees and Continuing Directors
The following sets forth the name of the nominees and continuing directors, their ages, a brief description of their recent business experience, including present occupations and employment, certain directorships held by each and the year in which each became a director of the Company.
Nominees
| Nominees and | Director | | | |
| Principal Occupation | Since | | Age | |
| | | | | |
| Peter F. Neumann | | | | |
| Retired President | | | | |
| Flynn-Neumann Agency, Inc. | 1987 | | | 74 | |
| | | | | | |
| Bernard F. Reynolds | New Nominee | | | 67 | |
| Retired President | | | | | |
| Aon Consulting, | | | | | |
| Human Resources Outsourcing Group | | | | | |
| | | | | | |
Continuing Directors whose Term of Office Expires in 2010 | | | | | |
| Clifton H. W. Maloney | | | | | |
| President | | | | | |
| C.H.W. Maloney & Co., Inc. | 2004 | | | 71 | |
| | | | | | |
| W. Gregory Robertson | | | | | |
| Chairman | | | | | |
| TM Capital Corp. | 1991 | | | 65 | |
| | | | | | |
Continuing Director whose Term of Office Expires in 2011 | | | | | |
| Kenneth M. Darby | | | | | |
| Chairman and CEO | | | | | |
| Vicon Industries, Inc. | 1987 | | | 63 | |
| | | | | | |
| Arthur D. Roche | | | | | |
| Retired Executive Vice President | | | | | |
| Vicon Industries, Inc. | | | | | |
| Retired Partner | | | | | |
| Arthur Andersen & Co. | 1992 | | | 70 | |
| | | | | | |
Mr. Neumann has been retired since 1998 and Director
Principal Occupation Since Age
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Clifton H. W. Maloneyhad previously served as the President C. H. W. Maloney & Co.of the Flynn-Neumann Agency, Inc., Inc.an insurance brokerage firm. Mr. Neumann’s current term on the Board ends in May 2009.
Mr. Reynolds has been retired since 2004 69
W. Gregory Robertsonand had previously served as the President TM Capital Corp. 1991 63
Continuing Directors whose Term of Office ExpiresAon Consulting’s Human Resources Outsourcing Group. Prior to the merger of Aon Consulting Worldwide and ASI Solutions Incorporated in 2008
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Kenneth M. DarbyMay 2001, Mr. Reynolds served as the Chairman and CEO
Vicon Industries, Inc. 1987 61
Arthur D. Roche
RetiredChief Executive Vice President
Vicon Industries, Inc.
Retired Partner
Arthur Andersen & Co. 1992 68
Continuing Director whose TermOfficer of Office ExpiresASI, a company he founded in 2009
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Peter F. Neumann
Retired President
Flynn-Neumann Agency, Inc. 1987 72
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1978.
Mr. Maloney is the President of C.H.W. Maloney & Co., Inc., a private investment firm that he founded in 1981. From 1974 to 1984, he was a Vice President in investment banking at Goldman, Sachs & Co..Co. Mr. Maloney is a Director of Interpool, Inc., Chromium Industries, Inc. and The Wall Street Fund. Mr. Maloney'sMaloney’s current term on the Board ends in May 2007.
2010.
Mr. Robertson is the PresidentChairman of TM Capital Corporation, a financial services company which he founded in 1989. From 1985 to 1989, he was employed by Thompson McKinnon Securities Inc., as head of investment banking and public finance. Mr. Robertson'sRobertson’s current term on the Board ends in May 2007.
2010.
Mr. Darby has served as Chairman of the Board since April 1999, as Chief Executive Officer since April 1992 and as President since October 1991. Mr. Darby also served as Chief Operating Officer and as Executive Vice President, Vice President, Finance and Treasurer of the Company. He joined the Company in 1978 as Controller after more than nine years at Peat Marwick Mitchell & Co., a public accounting firm. Mr. Darby'sDarby’s current term on the Board ends in May 2008.
2011.
Mr. Roche has been retired since 1999 and had previously served as the Executive Vice President and co-participant in the Office of the President of the Company fromsince August 1993 until his retirement in
November 1999.1993. For the six months prior to that time, Mr. Roche provided consulting services to the Company. In October 1991, Mr. Roche retired as a partner of Arthur Andersen & Co., an international accounting firm which he joined in 1960. Mr. Roche'sRoche’s current term on the Board ends in May 2008.
Mr. Neumann is the retired President of Flynn-Neumann Agency, Inc., an
insurance brokerage firm. Mr. Neumann's current term on the Board ends in May
2009.
2011.
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
The Board of Directors has a number of committees including the Executive Committee, the Compensation Committee, the Audit Committee and the Nominating Committee. All independent directors are members of each of the Committees.
The Executive Committee is chaired by Mr. Darby and meets in special situations when the full Board cannot be convened. The Committee met twiceonce during the last fiscal year.
The Compensation Committee consists of Messrs. Neumann (Chairman), Maloney, Robertson and Roche, all of whom are non-employee directors. The function of the Compensation Committee is to establish and approve the appropriate compensation for Mr. Darby, recommend to the Board the award of stock options, and to review and approve the recommendations of the CEOMr. Darby with respect to the compensation of all other officers. The Committee met twicethree times during the last fiscal year.
The Audit Committee consists of Messrs. Roche (Chairman), Maloney, Neumann, and Robertson, each of whom is an "independent director"“independent director” as defined by American
Stock ExchangeNYSE Amex Listing Standards. The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its responsibility to oversee management'smanagement’s conduct of the Company'sCompany’s financial reporting process, including review of the financial reports and other financial information of the Company, the Company'sCompany’s system of internal accounting controls, the Company'sCompany’s compliance with legal and regulatory requirements and the qualifications, independence and performance of the Company'sCompany’s independent registered public accountants. The Audit Committee has sole authority to appoint, retain, compensate, evaluate and terminate the independent registered public accountants. The Board has determined that Mr. Roche is an "Audit“Audit Committee financial expert"expert” under the rules of the Securities and Exchange Commission. The Audit Committee will periodically review the Audit Committee Charter in light of new developments in applicable regulations and may make additional recommendations to the Board of Directors for further revision of the Audit Committee Charter to reflect evolving best practices. A copy of the Company'sCompany’s Charter is available on its website at HTTP://www.vicon-cctv.com. The Committee met fourfive times during the last fiscal year.
The Nominating Committee consists of Messrs. Roche (Chairman), Maloney, Neumann and Robertson. The primary function of the Nominating Committee is to recommend individuals qualified to serve as directors and on committees of the Board; to advise the Board with respect to Board composition, procedures and committees; and to evaluate the overall Board and Committee effectiveness. All director candidates, including those recommended by stockholders, are evaluated on the same basis. In its evaluation of director candidates, the Nominating Committee considers a variety of characteristics, including, but not limited to, core competencies, experience, independence, level of commitment, Board and company needs and considerations, and personal characteristics. The Nominating Committee may engage a third party to assist it in identifying potential director nominees. The Committee has generally identified nominees based upon recommendations from existing directors and will consider candidates recommended by stockholders if submitted to the Committee in writing and complying with shareholder proposal requirements outlined elsewhere in this proxy statement. The Board of Directors has determined that each member of the Nominating Committee meets the definition of an "independent director""independent director” as defined by American Stock ExchangeNYSE Amex Listing Standards. The Committee does not have a formal written charter and did not meet last fiscal year.
The Board of Directors has the responsibility for establishing broad corporate policies and for the overall performance of the Company. Outside members of the Board are kept informed of the Company's business through various reports and documents sent to them, as well as through operating and financial reports made at Board and committee meetings by Mr. Darby and other officers.
The Board of Directors held seventwenty meetings in the Company's 2006Company’s 2008 fiscal year, including all regularly scheduled and annual meetings. No Board member attended fewer than 75% of the aggregate of (1) the total number of meetings of the Board (held during the period for which he was a director) and (2) the total number of meetings held by all committees on which he served (during the periods that he served). The prior year annual meeting was attended by all of the current directors.
The non-employee directors are each compensated at the rate of $20,000$22,400 per year retainer and $1,200$1,600 per Committee meeting attended in person or by teleconference. The Chairman of the Audit Committee receives an additional annual retainer of $8,000. Employee directors are not compensated for Board or committee meetings. Directors may not stand for re-election after 70, except that any director may serve one additional three-year termterms after age 70 with the unanimous consent of the Board of Directors.
Certain Relationships and Related Transactions
The Company and CBC
Company,Co., Ltd. (CBC), a Japanese corporation which beneficially owns
11.0%11.3% of the outstanding shares of the Company, have been conducting business with each other
for approximately twenty-seven years.since 1979. During this period, CBC has served as a lender, a product supplier and
sourcing agent,
and a private label reseller of the
Company's products. CBC has also acted as
the Company's sourcing agent for the purchase of certain videoCompany’s products. In fiscal
2006,2008, the Company purchased approximately
$404,000$448,000 of products
and
components from or through CBC. CBC competes with the Company in various markets, principally in the sale of video products and systems. Sales of
allVicon products to CBC were
$205,000$53,000 in
2006.
2008.
All named directors other than Mr. Darby are independent directors in accordance with the NYSE Amex Company Guide.
Code of Ethics and Business Conduct
The Company has adopted a Code of Ethics and Business Conduct that applies to all its employees, including its chief executive officer, chief financial and accounting officer, controller, and any persons performing similar functions. Such Code of Ethics and Business Conduct is published on the Company'sCompany’s internet website at HTTP://www.vicon-cctv.com.
(www.vicon-cctv.com).
Ability of Stockholders to Communicate with the Board of Directors
Shareholders may contact the Board of Directors or a specified individual director by sending a written communication addressed to the Board of Directors or such individual director(s) in care of the Secretary of the Company at Vicon Industries, Inc., 89 Arkay Drive, Hauppauge, NY 11788. The Company'sCompany’s Corporate Secretary will relay all such communications to the Board of Directors, or individual members, as appropriate.
Report of the Audit Committee
The Audit Committee reviews the Company'sCompany’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal control.
In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management the audited consolidated financial statements as of and for the fiscal year ended September 30, 2006.2008. Additionally, the Committee has reviewed and discussed with management and the independent registered public accountants the Company'sCompany’s unaudited interim financial statements as of and for the end of each fiscal quarter. Such discussions occur prior to issuance of news releases reporting quarterly results.
The Committee has discussed with the independent registered public accountants the matters required to be discussed by the Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended of(AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Auditing StandardsPublic Company Accounting Oversight Board of the American Institute of Certified Public Accountants.
in Rule 3200T.
The Committee has received and reviewed the written disclosures and the letter from the independent registered public accountants required by Standard No. 1,
Independence Discussions with Audit Committees, as amended,applicable requirements of the Independence
StandardsPublic Company Accounting Oversight Board regarding the independent accountants’ communications with the audit committee concerning independence, and has discussed with the independent accountants their firm'sthe independent accountants’ independence.
Based on the reviews and discussions referred to above, the Committee recommends to the Board of Directors that the audited fiscal year-end financial statements referred to above be included in the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006.
2008.
Submitted by the Audit Committee,
Arthur D. Roche, Chairman Clifton H.W. Maloney
Peter F. Neumann W. Gregory Robertson
| Arthur D. Roche, Chairman | Clifton H.W. Maloney |
| Peter F. Neumann | W. Gregory Robertson |
OTHER OFFICERS OF THE COMPANY
In addition to Mr. Darby, the Company has six other officers. They are:
John M. Badke, age 47 Sr. Vice President, Finance and
Chief Financial Officer
Peter A. Horn, age 52 Vice President, Operations
Bret M. McGowan, age 41 Vice President, U.S. Sales and Marketing
Yacov A. Pshtissky, age 55 Vice President, Technology
and Development
Christopher J. Wall, age 53 Managing Director, Vicon Industries, Ltd.
Yigal Abiri, age 57 General Manager, Vicon Systems Ltd.
| John M. Badke, age 49 | Sr. Vice President, Finance and Chief Financial Officer |
| |
| Peter A. Horn, age 54 | Vice President, Operations |
| |
| Bret M. McGowan, age 43 | Vice President, U.S. Sales and Marketing |
| |
| Yacov A. Pshtissky, age 57 | Vice President, Technology and Development |
| |
| Christopher J. Wall, age 55 | Managing Director, Vicon Industries, Ltd. |
| |
| Yigal Abiri, age 59 | General Manager, Vicon Systems Ltd. |
| |
Mr. Badke has been Senior Vice President, Finance since May 2004 and Chief Financial Officer since December 1999. Previously, he was Vice President, Finance since October 1998 and served as Controller since joining the Company in 1992. Prior to joining the Company, Mr. Badke was the Controller for NEK Cable, Inc. and an audit manager with the international accounting firms of Arthur Andersen & Co. and Peat Marwick Main & Co.
Mr. Horn has been Vice President, Operations since June 1999. From 1995 to 1999, he was Vice President, Compliance and Quality Assurance. Prior to that time, he served as Vice President in various capacities since his promotion in May 1990.
Mr. McGowan has been Vice President, U.S. Sales and Marketing since April 2005. From 2001 to 2005, he served as Vice President, Marketing. Previously, he served as Director of Marketing since 1998 and as Marketing Manager since 1994. He joined the Company in 1993 as a Marketing Specialist.
Mr. Pshtissky has been Vice President, Technology and Development since May 1990. Mr. Pshtissky was Director of Electrical Product Development from March 1988 through April 1990.
Mr. Wall has been Managing Director, Vicon Industries Ltd., since February 1996. Previously, he served as its Financial Director since joining the Company in 1989. Prior to joining the Company, Mr. Wall held a variety of senior financial positions within Westland plc, a UK aerospace company.
Mr. Abiri has been General Manager, Vicon Systems Ltd. since becoming a member of management through acquisition of his company, QSR, Ltd., in August 1999. Previously, Mr. Abiri had been President of QSR, Ltd., a developer and manufacturer of remote video surveillance equipment.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy and Objectives of the Company’s Compensation Program
The following table sets forth allCompany’s compensation awardedprograms are intended to earned by,
or paidenable it to attract, motivate, reward and retain the management talent required to achieve corporate objectives, and thereby increase stockholder value. It is the Company’s policy to provide incentives to senior management to achieve both short-term and long-term objectives and to reward exceptional performance and contributions to the development of the business. To attain these objectives, the executive compensation program includes four key components:
Base Salary. Base salary for allthe Company’s executives is intended to provide competitive remuneration for services renderedprovided to the Company during 2006, 2005over a one-year period. Base salaries are set at levels designed to attract and 2004 byretain the Chief Executive Officer andmost appropriately qualified individuals for each of the key management level positions within the Company.
Cash Incentive Bonuses. The Company's most highly compensatedbonus programs are intended to reward executive officers whose totalfor the achievement of various annual salary and bonus exceeded $100,000 during any such
year.
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Other All
Annual Restricted Securities Other
Name and Compen- Stock Underlying LTIP Compen-
Principal Position Year Salary ($) Bonus ($) sation Award Options (#) Payouts sation
- ------------------ ---- ---------- ----------- ------ --------- ------------- ------- ------
Kenneth M. Darby 2006 $310,000 $ 75,000 (1) - - - - -
Chairman and Chief 2005 298,462 75,000 (1) - - - - -
Executive Officer 2004 310,000 75,000 (1) - - - - -
John M. Badke 2006 $171,923 $ 35,000 (1) - - 5,000 - -
Senior Vice President 2005 165,000 35,000 (1) - - 5,000 - -
and Chief Financial 2004 152,000 35,000 (1) - - - - -
Officer
Christopher J. Wall 2006 $171,000 $ 35,300 (2) - - 5,000 - -
Managing Director 2005 176,000 14,000 (2) - - 5,000 - -
Vicon Industries Ltd. 2004 148,000 113,000 (2) - - - - -
Bret M. McGowan 2006 $151,923 $ 32,601 (1) - - 5,000 - -
Vice President, U.S. 2005 132,917 20,831 (6) - - 5,000 - -
Sales and Marketing 2004 112,000 25,000 (1) - - - - -
Yigal Abiri 2006 $160,000 $ - - - - - $ -
General Manager 2005 160,000 - - - - - 90,000 (5)
Vicon Systems Ltd. 2004 160,000 10,725 (3) - - - - 66,946 (4)
(1) Represents discretionary cash bonusperformance goals approved by the Company’s Board of Directors upon
the recommendation of its Compensation Committee.
(2) Represents sales and profit related bonus based on financial results of
Vicon Industries, Ltd.
(3) Represents discretionary bonus.
(4) Represents $43,938 of severance pay paid intoDirectors. For fiscal 2008, a management insurance policy
and $23,008 paid as compensation for accrued vacation.
(5) Represents performance based compensation associated with the introductionbonus plan was established for certain of the Company's new digital video product line.
(6) Represents sales related commission.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Individual Grants Value at Assumed
----------------- Annual Rates of Stock
% of Total Price Appreciation
No. of Granted to Exercise for Option Term
Options Employees in Price Expiration --------------------
Name Granted Fiscal Year Per Share Date 5% 10%
- ----------------------- ------- -------------- ---------- ------------ -------- -------
John Badke 5,000 12.5% $3.17 12/10 $ 4,379 $9,677
Christopher Wall 5,000 12.5% $3.17 12/11 $ 5,391 $12,229
Bret McGowan 5,000 12.5% $3.17 12/11 $ 5,391 $12,229
Options granted in the year ended September 30, 2006 were issued under the
1996 Incentive Stock Option Plan, the 1999 Non-Qualified Stock Option Plan and
the 2002 Non-Qualified Stock Option Plan. Options issued under the 1996
Incentive Stock Option Plan are exercisable as follows: up to 30% on the grant
date, an additional 30% on the first anniversary of the grant date, and the
balance on the second anniversary of the grant date, except that no option is
exercisable after the expiration of five years from the date of grant. Options
issued under the 1999 and 2002 Non-Qualified Stock Option Plans are exercisable
as follows: up to 30% of the shares on the second anniversary of the grant date,
an additional 30% of the shares on the third anniversary of the grant date, and
the balance of the shares on the fourth anniversary of the grant date, except
that no option is exercisable after the expiration of six years from the date of
grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
At September 30, 2006
---------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-money
Options Options (2)
------- -----------
Shares
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized (1) Unexercisable Unexercisable
- --------------------- -------------- ------------ ------------- -------------
Kenneth M. Darby -0- -0- 64,545 / 35,455 $15,030/$9,470
John M. Badke -0- -0- 32,500 / 18,500 8,430/ 4,810
Christopher J. Wall -0- -0- 12,000 / 18,000 2,940/ 4,010
Bret M. McGowan -0- -0- 15,077 / 14,423 3,954/ 3,451
Yigal Abiri -0- -0- 26,000 / 4,000 7,600/ -0-
(1) Calculated based on the difference between the closing quoted market prices
per share at the dates of exercise and the exercise prices.
(2) Calculated based on the difference between the closing quoted market price
($3.29) and the exercise price.
Compensation Arrangements
On November 10, 2006, the Company entered into a new one-year employment
agreement withCompany’s executive officers, including among others Kenneth M. Darby, the Company's Chief Executive Officer, to
expire on September 30, 2007. The termsOfficer; John M. Badke, Chief Financial Officer; and Peter A. Horn, Vice President of Operations, whereby the participants would share a specified profit based bonus pool upon the achievement of a certain minimum annual pretax profit target as defined by the Company’s Board of Directors. Under such plan, Messrs. Darby, Badke and Horn earned bonuses of $218,000, $109,000 and $73,000, respectively, based upon the allocation of an aggregate bonus pool of nine percent (9%) of the new agreement provideCompany’s consolidated pretax profit for a
$15,000 increase in2008, after certain adjustments. In addition, performance based bonus plans were established for Christopher J. Wall, the Company’s European subsidiary Managing Director and Bret M. McGowan, Vice President, U.S. Sales and Marketing, for fiscal year 2008 whereby Mr. Darby's annual base salaryWall would earn an amount equal to $325,000 effective October
1, 2006. In conjunction with his new employment agreement, Mr. Darby entered
into a stock lock-up agreement whereby he agreed not to sell more than 100,000
shares (50,000 per year) of his Company stock holdings at the time of his
signing such agreement through September 30, 2008 without Board of Director
approval. Such lock-up agreement provisions terminate under certain conditions,
including Mr. Darby's death, disability, termination without causebetween 2% and a Company
change in control as defined. Mr. Darby's previous employment agreement, which
expired6% (based on September 30, 2006, entitled him to receive a $620,000 severance
benefit and deferred compensation in the form of 70,647 sharesachievement levels) of the Company's
Common Stockcombined pretax operating profits of the Company’s Europe based subsidiaries and Mr. McGowan will earn a specified commission upon its expiration. Such amounts wereachieving certain U.S. sales targets. Under such plans, Mr. Wall earned a bonus of $191,000 for fiscal 2008 and Mr. McGowan earned commissions of $75,000 during fiscal 2008. Equity-based Compensation. Equity-based compensation is designed to provide incentives to the Company’s executive officers to build shareholder value over the long term by Mr. Darby over his
many years of servicealigning their interests with the Company in varying capacities and were paid
subsequent to year end.
In addition, theinterest of shareholders. The Compensation Committee of the Board of Directors ("believes that equity-based compensation provides an incentive that focuses the Committee")executive's attention on managing the company from the perspective of an owner with an equity stake in the business. Among our executive officers, the number of shares of stock awarded or common stock subject to options granted to each individual generally depends upon the level of that officer's responsibility. The largest grants are generally awarded to the most senior officers who, in the view of the Compensation Committee, have the greatest potential impact on the Company’s profitability and growth. Previous grants of stock options or stock grants are reviewed in determining the size of any executive's award in a particular year. In March 2007, the Board of Directors adopted the Company’s 2007 Stock Incentive Plan, which was approved by the Company’s stockholders at its Annual Meeting of Stockholders held on May 18, 2007. Under such plan, a performance-based bonus plantotal of 500,000 shares of Common Stock were reserved for issuance and include the grant of stock options, restricted stock and other stock awards as determined by the Compensation Committee. The purpose of the Stock Incentive Plan is to attract and retain executive management by providing them with appropriate equity-based incentives and rewards for superior performance and to provide incentive to a broader range of employees. In fiscal 2008, the Compensation Committee awarded a total of 52,500 stock options to named executive officers, including 20,000 to Mr. Darby, for fiscal
year 2007, whereby he can earn10,000 to Mr. Badke, 10,000 to Mr. Wall, 7,500 to Mr. Horn and 5,000 to Mr. McGowan
Retirement, Health and Welfare Benefits and Other Perquisites. The Company’s executive officers are entitled to a minimumspecified retirement/severance benefit pursuant to employment agreements as detailed below.
In addition, the executive officers are entitled to participate in all of $175,000 for achievementthe Company’s employee benefit plans, including medical, dental, group life, disability, accidental death and dismemberment insurance and the Company’s sponsored 401(k) and mandated foreign Retirement Plans. Further, Mr. Wall receives a supplemental retirement benefit in the form of a certain minimumdefined contribution of five percent (5%) of his annual profit target as set by the Board. For fiscal year 2006,
the Committee approved a $75,000 discretionary bonus for Mr. Darby.salary. The Company also granted Mr. Darby 10,000 stock options atprovides its Chief Executive Officer with a country club membership and certain additional insurances not covered by primary insurance plans available to other employees and certain of the closing market price on
October 25, 2006.
On November 13, 2006,Company’s named executive officers are provided a leased car.
Employment Agreements
The Company has entered into employment agreements with its named executive officers that provide certain benefits upon termination of employment or change in control of the Company executed an amendment to the January 1,
2006without Board of Director approval. Under Mr. Darby’s employment agreement, with John M. Badke, the Company's Chief Financial
Officer,he is entitled to provide him with a $5,000 increase in annual base salary to $180,000
effective October 1, 2006 and includes provisions to comply with the
requirements of Section 409A of the Internal Revenue Code. The agreement, which
expires on December 31, 2007, provides Mr. Badkereceive a lump sum payment equal to the balance owing under his agreement in the amountevent of a change in control of the Company under any condition. All the other agreements provide the named executive officer with a payment of three times histheir average annual compensation for the previous five yearsyear period if there is a change in control of the Company without Board of Director approval, as defined. Such payment can be taken in a present value lump sum or equal installments over a three year period. The agreementagreements also providesprovide the named executive officers other than Mr. BadkeDarby with certain severance/retirement benefits upon certain occurrences including termination of employment without cause as defined, termination of employment due to the Company’s breach of specified employment conditions (good reason termination), death, disability or retirement at a specified age. Such severance/retirement benefit provisions survive the expiration of the agreements and include a fixed stated benefit of $350,000 payable under certain occurrences. In
addition, a performance based bonus plan for fiscal year 2007 was adopted for Mr. Badke, whereby he will receive a bonus equal to 3% of a certain minimum
annual profit target as set by the Committee. For the fiscal year 2006, the
Committee approved a $35,000 discretionary bonus$200,000 (100,000 Pounds Sterling) for Mr. Badke. The Company also
grantedWall, $316,000 for Mr. Horn and $290,000 for Mr. McGowan. In addition, Messrs. Badke 15,000 stock options atand Horn each receive an additional deferred compensation benefit upon such employment termination occurrences in the closing market price on October
25, 2006.
form of 6,561 and 9,759 shares, respectively, of the Company’s common stock.
On
November 1, 2006,August 11, 2008, the Company entered into a
newone-year employment agreement with
Christopher J. Wall, Managing Director of Vicon Industries Ltd. (Europe),Kenneth M. Darby, the Company’s Chief Executive Officer, to expire on September 30,
2007.2009. The
terms of the new agreement
provides Mr. Wall with a
$5,000 increase in annual base salary to approximately $185,000 (97,850 Pounds
Sterling) and provides a performance based bonus planprovide for
fiscal year 2007
whereby he will receive an amount equal to between 2% and 6% (based on
achievement levels) of the pretax operating profit (as defined) of Vicon
Industries Ltd. For fiscal year 2006, Mr. Wall received a bonus of approximately
$35,300 based upon his achievement of certain sales and profit targets. The new
agreement also provides Mr. Wall a severance/retirement benefit of approximately
$190,000 (100,000 Pounds Sterling) under certain occurrences. The Company also
granted Mr. Wall 5,000 stock options at the closing market price on October 25,
2006.
On August 7, 2006, the Company entered into an employment agreement with
Mr. Bret M. McGowan, the Company's Vice President of U.S. Sales and Marketing,
providing him an annual base salary of $155,000. The$400,000. In the event the agreement which expiresis terminated prior to its expiration for reasons other than cause as defined, Mr. Darby is entitled to receive all remaining salary owed him through its expiration.Mr. Horn is subject to an employment agreement that expired on December 31, 2008 and provides for an annual base salary of $168,000. Mr. Wall had a one year employment agreement that expired on September 30, 2007, provides Mr. McGowan a lump sum payment in the amount of
three times his average annual2008, which was subsequently renewed to expire on September 30, 2009.
2008 Summary Compensation Table
The following table sets forth all compensation for the previous five years if there
is a change in controlfiscal year ended September 30, 2008 awarded to or earned by the Company’s Chief Executive Officer, Chief Financial Officer and by each of our other named executive officers whose total compensation exceeded $100,000 during such period.
Name and Principal Position | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Option Awards ($)(1) | | | Non-Equity Incentive Plan Compensation ($)(3) | | | Nonqualified Deferred Compensation Earnings ($) | | | All Other Compensation ($)(2) | | | Total ($) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Kenneth M. Darby | 2008 | | $ | 400,000 | | | | - | | | | - | | | $ | 9,792 | (1) | | $ | 218,182 | (2) | | | - | | | $ | 23,693 | (4) | | $ | 651,667 | |
| Chairman and Chief Executive Officer | 2007 | | $ | 325,000 | | | | - | | | | - | | | $ | 27,495 | (1) | | $ | 346,711 | (3) | | $ | 852,429 | (5) | | $ | 22,324 | (4) | | $ | 1,573,959 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| John M. Badke | 2008 | | $ | 190,000 | | | | - | | | | - | | | $ | 12,336 | (1) | | $ | 109,091 | (2) | | | - | | | $ | 7,927 | (6) | | $ | 319,354 | |
| Senior Vice President and Chief Financial Officer | 2007 | | $ | 180,000 | | | | - | | | | - | | | $ | 17,252 | (1) | | $ | 173,355 | (3) | | | - | | | $ | 7,152 | (6) | | $ | 377,759 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Christopher J. Wall | 2008 | | $ | 203,013 | | | | - | | | | - | | | $ | 9,180 | (1) | | $ | 190,891 | (8) | | | - | | | $ | 31,022 | (7) | | $ | 434,106 | |
| Managing Director Vicon Industries, Ltd. | 2007 | | $ | 200,000 | | | | - | | | | - | | | $ | 11,263 | (1) | | $ | 188,490 | (8) | | | - | | | $ | 25,014 | (7) | | $ | 424,767 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Peter A. Horn | 2008 | | $ | 168,000 | | | | - | | | | - | | | $ | 7,834 | (1) | | $ | 72,727 | (2) | | | - | | | $ | 6,909 | (6) | | $ | 255,470 | |
| Vice President, Operations | 2007 | | $ | 163,000 | | | | - | | | | - | | | $ | 8,375 | (1) | | $ | 115,570 | (3) | | | - | | | $ | 7,244 | (6) | | $ | 294,189 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Bret M. McGowan | 2008 | | $ | 180,000 | | | | - | | | | - | | | $ | 12,091 | (1) | | $ | 74,803 | (9) | | | - | | | $ | 6,000 | (6) | | $ | 272,894 | |
| Vice President, U.S. Sales and Marketing | 2007 | | $ | 170,000 | | | | - | | | | - | | | $ | 12,856 | (1) | | $ | 60,641 | (9) | | | - | | | $ | 6,000 | (6) | | $ | 249,497 | |
| (1) | Represents the compensation costs recognized for financial statement reporting purposes for the fair value of stock options in accordance with Statement of Financial Accounting Standards No. 123R. (See “Note 1” under the caption “Accounting for Stock-Based Compensation” to the accompanying financial statements.) |
| (2) | Represents cash awards under the Company’s 2008 performance based bonus plan. These amounts were earned in fiscal 2008 and paid in fiscal 2009. |
| (3) | Represents cash awards under the Company’s 2007 performance based bonus plan. These amounts were earned in fiscal 2007 and paid in fiscal 2008. |
| (4) | All other compensation represents: (a) automobile expense of $12,894 and $11,857 for fiscal 2008 and 2007, respectively, (b) country club membership of $8,589 and $8,257 for fiscal 2008 and 2007, respectively, and (c) long-term disability insurance of $2,210 paid by the Company for Mr. Darby in both fiscal 2008 and 2007. |
| (5) | Represents the distribution of a $620,000 severance/retirement benefit and 70,647 shares of the Company’s common stock with a market value of $232,429 upon the expiration of Mr. Darby’s previous employment agreement on September 30, 2006. Such amounts were earned by Mr. Darby over his thirty years of service with the Company and charged to expense over prior year periods. |
| (6) | Represents automobile expense paid by the Company. |
| (7) | All other compensation represents: (a) automobile expense of $16,929 and $15,380 for fiscal 2008 and 2007, respectively, and (b) supplemental retirement contributions of $14,093 and $9,634 for fiscal 2008 and 2007, respectively. |
| (8) | Represents cash award under Mr. Wall’s performance based bonus plan. |
| (9) | Represents sales commissions earned. |
Outstanding Equity Awards at Fiscal 2008 Year-End
The following table sets forth information with respect to the outstanding equity awards of the named executive officers as of September 30, 2008.
Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | Option Expiration Date |
| | | | | | | | | | | | | | |
| Kenneth M. Darby | | | 16,129 | (1) | | | - | | | | - | | | $ | 3.95 | | 08/12/09 |
| Chairman and Chief | | | - | | | | 10,000 | (1) | | | - | | | $ | 3.59 | | 10/25/12 |
| Executive Officer | | | - | | | | 20,000 | (3) | | | - | | | $ | 4.79 | | 05/22/18 |
| | | | | | | | | | | | | | | | | | |
| John M. Badke | | | 10,000 | (1) | | | - | | | | - | | | $ | 3.95 | | 08/12/09 |
| Senior Vice President | | | 3,000 | (1) | | | 2,000 | (1) | | | - | | | $ | 3.00 | | 05/27/11 |
| and Chief Financial Officer | | | 5,000 | (2) | | | - | | | | - | | | $ | 3.17 | | 12/09/10 |
| | | | - | | | | 15,000 | (1) | | | - | | | $ | 3.59 | | 10/25/12 |
| | | | - | | | | 10,000 | (3) | | | - | | | $ | 4.79 | | 05/22/18 |
| | | | | | | | | | | | | | | | | | |
| Christopher J. Wall | | | 10,000 | (1) | | | - | | | | - | | | $ | 2.80 | | 11/04/08 |
| Managing Director | | | 10,000 | (1) | | | - | | | | - | | | $ | 3.95 | | 08/12/09 |
| Vicon Industries, Ltd. | | | 3,000 | (1) | | | 2,000 | (1) | | | - | | | $ | 3.00 | | 05/27/11 |
| | | | 1,500 | (1) | | | 3,500 | (1) | | | - | | | $ | 3.17 | | 12/09/11 |
| | | | - | | | | 5,000 | (1) | | | - | | | $ | 3.59 | | 10/25/12 |
| | | | - | | | | 10,000 | (3) | | | - | | | $ | 4.79 | | 05/22/18 |
| | | | | | | | | | | | | | | | | | |
| Peter A. Horn | | | 5,000 | (1) | | | - | | | | - | | | $ | 3.95 | | 08/12/09 |
| Vice President, Operations | | | 3,000 | (1) | | | 2,000 | (1) | | | - | | | $ | 3.00 | | 05/27/11 |
| | | | 1,500 | (1) | | | 3,500 | (1) | | | - | | | $ | 3.17 | | 12/09/11 |
| | | | - | | | | 3,500 | (1) | | | - | | | $ | 3.59 | | 10/25/12 |
| | | | - | | | | 7,500 | (3) | | | - | | | $ | 4.79 | | 05/22/18 |
| | | | | | | | | | | | | | | | | | |
| Bret M. McGowan | | | 7,500 | (1) | | | - | | | | - | | | $ | 2.80 | | 11/04/08 |
| Vice President | | | 5,000 | (1) | | | - | | | | - | | | $ | 3.95 | | 08/12/09 |
| U.S. Sales and Marketing | | | 3,000 | (1) | | | 2,000 | (1) | | | - | | | $ | 3.00 | | 05/27/11 |
| | | | 1,924 | (2) | | | - | | | | - | | | $ | 3.17 | | 12/09/10 |
| | | | 923 | (1) | | | 2,153 | (1) | | | - | | | $ | 3.17 | | 12/09/11 |
| | | | - | | | | 13,500 | (1) | | | - | | | $ | 3.59 | | 10/25/12 |
| | | | - | | | | 5,000 | (3) | | | - | | | $ | 4.79 | | 05/22/18 |
| (1) | Options vest over a four year period at 30% of the shares on the first anniversary of the grant date, 30% of the shares on the second anniversary of the grant date and the remaining 40% of the shares on the third anniversary of the grant date. Options expire after the sixth anniversary of the grant date. |
| (2) | Options vest over a three year period at 30% of the shares on the grant date, 30% of the shares on the first anniversary of the grant date and the remaining 40% of the shares on the second anniversary of the grant date. Options expire after the fifth anniversary of the grant date. |
| (3) | Options vest over a five year period in five equal annual installments beginning on the first anniversary of the grant date. Options expire after the tenth anniversary of the grant date. |
Fiscal 2008 Directors' Compensation
The table below summarizes the compensation paid by the Company without Board of Director approval as
defined. The agreement also provides Mr. McGowan a severance/retirement benefit
of $290,000 payable under certain occurrences. Effective October 1, 2006, Mr.
McGowan's annual base salary was increased to $170,000.
In addition, a performance based bonus plannon-employee directors for fiscal year 2007 was
established for Mr. McGowan whereby he earns variable compensation upon
achieving certain U.S. sales targets. For the fiscal year 2006, the Committee
approved a $30,000 discretionary bonus for Mr. McGowan. The Company also granted
Mr. McGowan 13,500 stock options at the closing market price on October 25,
2006.
ended September 30, 2008.
| Name | | Fees Earned or Paid in Cash ($)(1) | | | Stock Awards ($) | | | Option Awards ($)(2)(3) | | | All Other Compensation ($) | | | Total ($) | |
| | | | | | | | | | | | | | | | |
| Clifton H.W. Maloney | | $ | 40,400 | | | | - | | | $ | 4,940 | (2) | | | - | | | $ | 45,340 | |
| | | | | | | | | | | | | | | | | | | | | |
| Peter F. Neumann | | $ | 41,600 | | | | - | | | $ | 2,152 | (2) | | | - | | | $ | 43,752 | |
| | | | | | | | | | | | | | | | | | | | | |
| W. Gregory Robertson | | $ | 29,600 | | | | - | | | $ | 4,305 | (2) | | | - | | | $ | 33,905 | |
| | | | | | | | | | | | | | | | | | | | | |
| Arthur D. Roche | | $ | 49,600 | | | | - | | | $ | 4,305 | (2) | | | - | | | $ | 53,905 | |
| | | | | | | | | | | | | | | | | | | | | |
| (1) | Directors who are not employees of the Company received an annual fee of $20,000 for regular Board meetings and $1,200 per committee meeting attended in person or by teleconference. The Chairman of the Audit Committee also received an additional retainer of $8,000. |
| (2) | Represents the compensation costs recognized for financial statement reporting purposes in fiscal 2008 for the fair value of stock options in accordance with Statement of Financial Accounting Standards No. 123R. (See “Note 1” under the caption “Accounting for Stock-Based Compensation” to the accompanying financial statements.) |
| (3) | On May 22, 2008, Mr. Neumann was granted 3,500 options and Messrs. Maloney, Roche and Robertson were each granted 7,000 options to purchase common stock at the opening market price of $4.79 per share. As of September 30, 2008, Messrs. Maloney, Neumann, Robertson and Roche held 27,000, 3,500, 25,575 and 10,000 stock options, respectively. |
Report of the Compensation Committee
The Compensation Committee'sCommittee’s compensation policies applicable to the Company'sCompany’s officers for 20062008 were to pay a competitive market price for the services of such officers, taking into account the overall performance and financial capabilities of the Company and the officer's individual level of performance.
Mr. Darby makes recommendations to the Compensation Committee as to the base salary and incentive compensation of all officers other than himself. The Committee reviews these recommendations with Mr. Darby and, after such review, determines compensation. In the case of Mr. Darby, the Compensation Committee makes its determination after direct negotiation with him. For each officer, the committee'sCommittee's determinations are based on its conclusions concerning each officer's performance and comparable compensation levels for similarly situated officers at comparable companies. The overall level of performance of the Company is taken into account but is not specifically related to the base salary of these officers. Also, the Company has established an incentive compensation planplans for certain officers, which providesprovide for a specified bonus upon the Company'sCompany’s achievement of certain annual sales and/or profitability targets.
The Compensation Committee grants options to officers to link compensation to the performance of the Company. Options are exercisable in the future at the fair market value at the time of grant, so that an officer granted an option is rewarded by the increase in the price of the Company'sCompany’s stock. The committeeCommittee grants options to officers based on significant contributions of such officer to the performance of the Company. In addition, in determining Mr. Darby'sDarby’s salary and bonus for service as Chief Executive Officer, the committeeCommittee considers the responsibility assumed by him in formulating, implementing and managing the operational and strategic objectives of the Company.
The Compensation Committee has reviewed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with the Company’s management. Based on such review and discussion, the Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2008.
Submitted by the Compensation Committee,
Peter F. Neumann, Chairman Clifton H.W. Maloney
W. Gregory Robertson Arthur D. Roche
| Peter F. Neumann, Chairman | Clifton H.W. Maloney |
| W. Gregory Robertson | Arthur D. Roche |
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors consists of Messrs. Maloney, Neumann, Robertson and Roche, none of whom has ever been an officer of the Company except for Mr. Roche, who served as Executive Vice President from August 1993 until his retirement in November 1999.
STOCK PERFORMANCE GRAPH
This graph compares the return of $100 invested in the Company's stock on
October 1, 2001, with the return on the same investment in the AMEX U.S. Market
Index and the AMEX Technology Index.
(The following table was represented by a chart in the printed material)
Vicon AMEX U.S. AMEX Technology
Date Industries, Inc. Market Index Index
10/01/01 100 100 100
10/01/02 91 88 62
10/01/03 122 113 89
10/01/04 138 131 102
10/01/05 91 155 104
10/01/06 97 168 113
PROPOSAL 2. APPROVALAPROVAL OF THE 20072009 STOCK INCENTIVE PLAN
On March 23, 2007,February 5, 2009, the Board of Directors adopted the Company's 20072009 Stock Incentive Plan (the "Incentive Plan"), under which 500,000250,000 shares of Common Stock were reserved for issuance. The purpose of the Incentive Plan is to promote the long-term financial success of the Company by enhancing the ability of the Company to attract, retain and reward individuals who can and do contribute to such success and to further align the interests of the Company's key personnel with its stockholders. The Company is seeking stockholdershareholder approval of the Incentive Plan in order to comply with the requirements of Sections 162(m) and 422 of the Internal Revenue Code and the requirements of the American
Stock Exchange.
NYSE Amex Company Guide.
The following summary of the Incentive Plan is qualified in its entirety by express reference to the text of the Incentive Plan, a copy of which has been filed with the Securities and Exchange Commission as an Exhibit to this Proxy Statement. Under the Incentive Plan, stock options may be granted which are qualified as "Incentive Stock Options" within the meaning of Section 422 of the Code ("ISO") and which are Non-Qualified (collectively and individually referred to herein as "Options"). In addition,
restricted shares of Common Stock
("Restricted
Stock") and other Common Stock-based awards may be granted (collectively or individually, "Awards"). The maximum number of shares of Common Stock issuable upon the exercise of ISO grants is 250,000 and under Restricted Stock awards is
100,000.
250,000.
ELIGIBILITY
Officers, key employees and directors of the Company and its subsidiaries are eligible to receive Awards under and participate in the Incentive Plan, except that only employees of the Company and its subsidiaries may receive Incentive Stock Option Awards. No eligible individual may receive Awards under the Incentive Plan with respect to more than 100,000 shares of Common Stock in any one year.
ADMINISTRATION
The Incentive Plan is administered by the Compensation Committee of the Board of Directors (the "Board"“Board”) or such other Committee of the Board appointed by the Board of Directors from among its members (hereafter called the "Committee"). The Committee, in its sole discretion, determines which individuals may participate in the Incentive Plan and the type, extent and terms of the Awards to be granted. In addition, the Committee interprets the Incentive Plan and makes all other determinations with respect to the administration of the Incentive Plan.
AWARDS
The Incentive Plan allows for the discretionary grant of Options
Restricted Stock and other stock-based Awards. The terms and conditions of Awards granted under the Incentive Plan are set forth in agreements between the Company and the individuals receiving such Awards.
OPTIONS. The Committee may grant Options to any eligible person, except that grants to non-employee directors must be made by the Board. The exercise price of the Options will not be less than the fair market value of the Common Stock on the date of grant. Options will vest and become exercisable within such period or periods (not to exceed 10 years) as determined by the Committee and set forth in the Stock Option Agreement. Unless otherwise set forth in the Stock Option Agreement, all exercisable Options expire on the earliest of (i) ten years after grant, (ii) three months after (A) retirement, except for any Board member Option Awards which may be extended to five business daysyears after retirement, (B) termination of employment or service with the Company, for any reason other than death or retirement (except
that in the case of an Incentive Stock Option, if the employment terminates
because of permanent and total disability, the period shall be one year instead
of five business days), (iii) three months after the retirement of the optionee,
(iv) twelve months after the death of the optionee while still employed, or (v) the expiration date set forth in the Stock Option Agreement. Unless otherwise set forth in the Stock Option Agreement, Options will vest and become exercisable only during the period of employment or service with the Company and its subsidiaries such that upon such termination of employment or service, the unvested portion of any outstanding Option will expire. Options that have become exercisable may be exercised by delivery of written notice of exercise to the Company accompanied by full payment of the Option exercise price and any applicable withholding. The Option exercise price may be paid in the form of (i) cash, (ii) bank check, (iii) shares of Common Stock valued at the fair market value at the time of exercise (iv) through an approved brokered exercise, (v)(iv) any combination of these methods of payment.
REPRICING PERMITTED. The Committee may permit the voluntary surrender of all or any portion of any Nonqualified Stock Option issued to be conditioned upon the granting to the Holder of a new Option for the same or a different number of shares as the Option
surrendered or require such voluntary surrender as a condition precedent to a grant of a new Option to such Participant. Such new Option shall be exercisable at an Option Price, during an Option Period, and in accordance with the terms or conditions specified by the Committee at the time the new Option is granted.
RESTRICTED STOCK. The Committee may grant shares of Restricted Stock to
eligible persons and may establish terms, conditions and restrictions applicable
thereto, except that grants to non-employee directors must be made by the Board.
Shares of Restricted Stock will be subject to restrictions on
transferability set forth in the Award agreement and will be subject to
forfeiture as set forth below. To the extent such shares are forfeited, all
rights of the holder will terminate.
The restricted period for Restricted Stock will commence on the date of
grant and will expire from time to time as to that part of the Restricted Stock
Award indicated in a schedule established by the Committee and set forth in the
respective Award Agreement. The Committee, in its sole discretion, may remove
any or all restrictions on the Restricted Stock whenever it determines that such
action is appropriate.
In the event the recipient of such Award resigns or is discharged from
employment or service with the Company or a subsidiary, the non-vested portion
of the Award will be completely forfeited. If the recipient of such an Award
dies, the non-vested portion of the Award will be prorated for service during
the restricted period and distributed to the recipient's beneficiary as soon as
practicable following death.
OTHER STOCK AWARDS. The Committee may grant any other stock or stock-related Awards to any eligible participant under the Incentive Plan that the Committee deems appropriate, including, but not limited to, stock appreciation rights, limited stock appreciation rights, phantom stock Awards and Common Stock bonuses, except that grants to non-employee directors must be made by the Board. Any such Award will have such terms and conditions as the Committee, in its sole discretion, so determines.
ADJUSTMENTS FOR RECAPITALIZATION OF THE COMPANY AND OTHER CIRCUMSTANCES.
Awards granted under the Incentive Plan and any agreements evidencing such Awards, the maximum number of shares of Common Stock subject to all such Awards under the Incentive Plan, the number of shares of Common Stock subject to outstanding Awards and the maximum number of shares of Common Stock with respect to which any one person may be granted Awards during any year may be subject to adjustment or substitution, as determined by the Committee in its sole discretion, as to the number, price or kind of a share of Common Stock or other consideration subject to such Awards or as otherwise determined by the Committee to be equitable (i) in the event of changes in the outstanding Common Stock or in the capital structure of the Company by reason of stock dividends, stock splits, reverse stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the date of grant of any such Award or (ii) in the event of any change in applicable laws or any change in circumstances which results in or would result in any substantial dilution or enlargement of the rights granted to, or available for, participants in the Incentive Plan, or which otherwise warrants equitable adjustment because it interferes with the intended operation of the Incentive Plan. The Company shall give each participant notice of an adjustment under the Incentive Plan and, upon notice, such adjustment
shall be conclusive and binding for all purposes. In addition, in certain merger situations or upon the sale of all or substantially all of the assets of the Company or the liquidation of the Company, the Committee may, in its sole discretion, cancel any or all outstanding Awards and pay to the holders the value of the Awards in cash.
EFFECT OF CHANGE IN CONTROL
In the event of a Change in Control (as defined below), notwithstanding any vesting schedule provided for in the Incentive Plan or by the Committee with respect to an Award of Options, such Options shall become immediately exercisable with respect to 100 percent of the shares subject to such Option,
and the restricted period for Restricted Stock shall expire immediately with
respect to 100 percent of the shares of Restricted Stock subject to
restrictions.Option.
In the event of a Change in Control, all other Awards shall become fully vested and or payable to the fullest extent of any Award or portion thereof that has not then expired and any restrictions with respect thereto shall expire. The Committee has full authority and discretion to interpret and implement such accelerated vesting.
"Change in Control" will, unless the applicable Award agreement states otherwise, be deemed to occur if (i) any "person" (as that term is used in Sections 13 and 14(d)(2) of the Exchange Act) is or becomes the beneficial owner (as that term is used in Section 13(d) of the Exchange Act), directly or indirectly, of 50% or more of either the outstanding shares of Common Stock or the combined voting power of the Company's then outstanding voting securities entitled to vote generally, or (ii) during any period of two consecutive years, individuals who constitute the Board of Directors at the beginning of such period cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by the Company's stockholders of each new director was approved by a vote of at least three-quarters of the directors then still in office who were directors at the beginning of the period or (iii) the Company undergoes a liquidation or dissolution or a sale of all or substantially all of its assets.
AMENDMENT AND TERMINATION
The Board of Directors may at any time terminate the Incentive Plan. With the express written consent of an individual participant (subject to any other allowable adjustments under the Incentive Plan to outstanding Awards without the consent of any participant), the Board may cancel or reduce or otherwise alter the outstanding Awards thereunder if, in its judgment, the tax, accounting, or other effects of the Incentive Plan or potential payouts thereunder would not be in the best interest of the Company. The Board may, at any time, or from time to time, amend or suspend and, if suspended, reinstate, the Incentive Plan in whole or in part, subject to any limitations set forth in the Incentive Plan; provided, however,PROVIDED, HOWEVER, that the Board may not, without stockholdershareholder approval, make any amendment to the Incentive Plan that would increase the maximum number of shares of Common Stock issued pursuant to Awards, except as provided under "Adjustments“Adjustments for Recapitalization of the Company and Other Circumstances"Circumstances”, extend the maximum Option period, extend the termination date of the Incentive Plan or change the class of persons eligible to receive Awards.
FEDERAL TAX CONSEQUENCES
The following is a brief discussion of the
federalFederal income tax consequences of transactions with respect to Options under the Incentive Plan
as in effect as of the date of this
summary. This discussion is not intended to be exhaustive and does not describe any state or local tax consequences.Under current federal income tax regulations, income generated from the sale of Incentive Stock Option shares of common stock exercised under the plan will be afforded capital gains treatment provided that the shares are held by the optionee for at least one year after the date of exercise and two years after the date of grant. No income tax deduction may be taken by the Company as a result of the grant, exercise or sale of Incentive Stock Option shares. However, should the shares be sold prior to the required holding periods, the Company will be afforded an income tax deduction equal to the amount by which the lesser of the selling price or fair market value at exercise exceeds the exercise price of such option shares. The resulting income will be treated as ordinary income to the optionee. An optionee will not be deemed to have received taxable income upon the grant or exercise of an incentive stock option. However, upon exercise of such options, any unrealized gain measured by the excess of the then fair market value over the cost basis in such exercised shares, is subject to inclusion in federal income tax alternative minimum tax computations.
Upon exercise of a Non-Qualified stock option, an optionee will be deemed to have received income in an amount equal to the amount by which the exercise price is exceeded by the fair market value of the Common Stock. The amount of any ordinary income deemed to have been received by an optionee upon the exercise of a non-qualified stock option will be a deductible expense of the Company for tax purposes.
Unless marked to the contrary, the shares represented by the enclosed proxy will be voted
FOR the approval of the 20072009 Stock Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL
OF THE 20072009 STOCK INCENTIVE PLAN.
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Board of Directors of the Company has appointed BDO Seidman, LLP as its independent registered public accountants for fiscal year ending September 30, 20072009 and further directed that management submit the Board'sBoard’s selection of public accountants to the shareholders at the Annual Meeting for ratification.
The following table details: the aggregate fee arrangements with BDO Seidman, LLP for professional services rendered for the audit of the Company'sCompany’s consolidated annual financial statements and review of the financial statements included in the Company'sCompany’s quarterly reports on Form 10-Q; the aggregate fees billed by BDO Seidman, LLP for audit related matters and; the aggregate fees billed by BDO Seidman, LLP for tax compliance, tax advice and tax planning during fiscal years ended September 30, 20062008 and 2005:
2006 2005
---- ----
Audit fees $171,000 $158,000
Audit related fees $ 4,000 $ -
Tax fees $ 39,000 $ 46,000
2007:
| | | 2008 | | | 2007 | |
| | | | | | | |
| Audit fees | | $ | 245,000 | | | $ | 250,000 | |
| Audit related fees | | $ | 5,000 | | | $ | 5,000 | |
| Tax fees | | $ | 42,000 | | | $ | 35,000 | |
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Registered Public Accountants
The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent registered public accountants.auditors. These services may include audit services, audit related services, tax services and other services. The Audit Committee has adopted a policy for the pre-approval of services provided by the independent registered public accountants.auditors. Under the policy, pre-approval generally is provided for an annual period and any pre-approval is detailed as to the particular service or category of services and is subject to a specific limit. In addition, the Audit Committee may also pre-approve particular services on a case-by-case basis, which must be accompanied by a detailed explanation for each proposed service. The Audit Committee may delegate pre-approval authority to one or more of its members. Such member must report any decisions to the Audit Committee at the next scheduled meeting.
The Audit Committee has considered whether the non-audit services provided by BDO Seidman, LLP were compatible with maintaining their independence.
BDO Seidman, LLP will have a representative at the Annual Meeting of Shareholders, who will have an opportunity to make a statement, if they should so desire.
Unless marked to the contrary, the shares represented by the enclosed proxy will be voted FOR the ratification of the appointment of BDO Seidman, LLP as the Company'sCompany’s independent registered public accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN, LLP AS THE COMPANY'SCOMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of this date, management is not aware of any matters to be presented for action at the Annual Meeting, other than those referred to in the Notice of Annual Meeting of Shareholders. However, the proxy form included with this proxy statement, if executed and returned, gives discretionary authority to management with respect to any other matters that may come before the meeting.
MISCELLANEOUS
Solicitation of proxies is being made by mail and may also be made in person or by telephone, fax or e-mail by officers, directors and regular employees of the Company.
The cost of the solicitation will be borne by the Company.
By Order of the Board of Directors,
Hauppauge, New York Joan L. Wolf
April 20, 2007 Secretary
EXHIBIT A
VICON INDUSTRIES, INC. 2007 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of the Plan is to provide a means through which the Company and
its Subsidiaries may attract able persons to become and remain directors and
employees of the Company and its Subsidiaries and to provide a means whereby
employees and directors of the Company and its Subsidiaries can acquire and
maintain Common Stock ownership, or be paid incentive compensation measured by
reference to the value of Common Stock, thereby strengthening their commitment
to the welfare of the Company and its Subsidiaries and promoting an identity of
interest between stockholders and these employees and directors.
So that the appropriate incentive can be provided, the Plan allows for the
grant of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock
Awards, and other Stock-based Awards, or any combination of the foregoing.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan.
(a) "Affiliate" of any individual or entity means an individual or
entity that is directly or indirectly through one or more intermediaries
controlled by or under common control with the individual or entity
specified.
(b) "Award" means, individually or collectively, any Incentive Stock
Option, Nonqualified Stock Option, Restricted Stock Award, or other
Stock-based Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" shall be deemed to occur if (i) any "person"
(as that term is used in Sections 13 and 14(d)(2) of the Exchange Act) is
or becomes the beneficial owner (as that term is used in Section 13(d) of
the Exchange Act), directly or indirectly, of 50% or more of either the
outstanding shares of Common Stock or the combined voting power of the
Company's then outstanding voting securities entitled to vote generally,
(ii) during any period of two consecutive years, individuals who constitute
the Board at the beginning of such period cease for any reason to
constitute at least a majority thereof, unless the election or the
nomination for election by the Company's stockholders of each new director
was approved by a vote of at least three-quarters of the directors then
still in office who were directors at the beginning of the period or (iii)
the Company undergoes a liquidation or dissolution or a sale of all or
substantially all of its assets.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include
any amendments or successor provisions to such section and any regulations
under such section.
(f) "Committee" means the Compensation Committee of the Board or such
other committee consisting of two or more Disinterested Persons appointed
by the Board to administer this Plan.
(g) "Common Stock" means shares of the Common Stock, par value $.01
per share, of the Company.
(h) "Company" means Vicon Industries, Inc., a New York corporation,
and it's Subsidiaries and Affiliates or any successor corporation.
(i) "Date of Grant" means the date on which the granting of an Award
is authorized or such other date as may be specified in such authorization.
(j) "Director Compensation" means compensation of one or more
directors for serving on the Board or any committee.
(k) "Disability", with respect to any particular Participant, means
disability as defined in such Participant's employment, consulting or other
relevant agreement with the Company or a Subsidiary or, in the absence of
any such agreement, disability as defined in the long-term disability plan
of the Company or a Subsidiary, as may be applicable to the Participant in
question, or, in the absence of such a plan, the complete and permanent
inability by reason of illness or accident to perform the duties of the
occupation at which the Participant was employed or served when such
disability commenced.
(l) "Disinterested Person" means a person who is (i) a "non-employee
director" within the meaning of Rule 16b-3 under the Exchange Act, or any
successor rule or regulation, and (ii) an "outside director" within the
meaning of Section 162(m) of the Code.
(m) "Eligible Person" means any (i) person regularly employed by the
Company or a Subsidiary; PROVIDED, HOWEVER, that no such employee covered
by a collective bargaining agreement shall be an Eligible Person unless and
to the extent that such eligibility is set forth in such collective
bargaining agreement or in an agreement or instrument relating thereto; or
(ii) director of the Company or a Subsidiary.
(n) "Exchange Act" means the Securities Exchange Act of 1934.
(o) "Fair Market Value" on a given date means the closing market price
of the Common Stock on the American Stock Exchange or any other exchange on
which the Common Stock is then listed on the date or, if there is no such
sale on that date, then on the last preceding date on which such a sale was
reported or in accordance with the Treasury Regulations applicable to
incentive stock options under Section 422 of the Code.
(p) "Holder" means a Participant who has been granted an Award.
(q) "Incentive Stock Option" means an Option granted by the Committee
to a Participant under the Plan which is designated by the Committee as an
Incentive Stock Option pursuant to Section 422 of the Code.
(r) "Nonqualified Stock Option" means an Option granted under the Plan
which is not designated as an Incentive Stock Option.
(s) "Option" means a stock option to purchase shares of Stock granted
under Section 7 of the Plan.
(t) "Option Period" means the period described in Section 7(c).
(u) "Option Price" means the exercise price set for an Option
described in Section 7(a).
(v) "Participant" means an Eligible Person who has been selected by
the Committee to participate in the Plan and to receive an Award.
(w) "Plan" means the Company's 2007 Stock Incentive Plan.
(x) "Restricted Period" means, with respect to any share of Restricted
Stock, the period of time determined by the Committee during which such Award is
subject to the restrictions set forth in Section 8.
(y) "Restricted Stock" means shares of Stock issued or transferred to a
Participant subject to forfeiture and the other restrictions set forth in
Section 8.
(z) "Restricted Stock Award" means an Award of Restricted Stock
granted under Section 8 of the Plan.
(aa) "Securities Act" means the Securities Act of 1933, as amended.
(bb) "Stock" means the Common Stock or such other authorized shares of
stock of the Company as from time to time may be authorized for use under
the Plan.
(cc) "Stock Option Agreement" means the agreement between the Company
and a Participant who has been granted an Option pursuant to Section 7
which defines the rights and obligations of the parties as required in
Section 7(d).
(dd) "Subsidiary" means any subsidiary of the Company as defined in
Section 424(f) of the Code.
3. EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL
The Plan was adopted by the Board on March 23, 2007 and becomes effective
upon shareholder approval.
The expiration date of the Plan, after which no Awards may be granted
hereunder, shall be March
| By Order of the Board of Directors, |
| |
| |
| Hauppauge, New York | Joan L. Wolf |
| April 15, 2009 | Secretary |
22 2017; PROVIDED, HOWEVER, that the administration
of the Plan shall continue in effect until all matters relating to the payment
of Awards previously granted have been settled.
4. ADMINISTRATION
The Committee shall administer the Plan. Unless otherwise determined by the
Board, each member of the Committee shall, at the time he takes any action with
respect to an Award under the Plan, be a Disinterested Person. The majority of
the members of the Committee shall constitute a quorum. The acts of a majority
of the members present at any meeting at which a quorum is present or acts
approved in writing by a majority of the Committee shall be deemed the acts of
the Committee.
Subject to the provisions of the Plan, the Committee shall have exclusive
power to:
(a) Select the Eligible Persons to participate in the Plan;
(b) Determine the nature and extent of the Awards to be made to each
Eligible Person;
(c) Determine the time or times when Awards will be made to Eligible
Persons;
(d) Determine the duration of each Option Period and Restricted
Period;
(e) Determine the terms and conditions to which Awards may be subject;
(f) Prescribe the form of Stock Option Agreement or other form or
forms evidencing Awards; and
(g) Cause records to be established in which there shall be entered,
from time to time as Awards are made to Participants, the date of each
Award, the number of Incentive Stock Options, Nonqualified Stock Options,
shares of Restricted Stock and other Stock-based Awards granted by the
Committee to each Participant, the expiration date, the Option Period and
the duration of any applicable Restricted Period.
The Committee shall have the authority to interpret the Plan and, subject
to the provisions of the Plan, to establish, adopt or revise such rules and
regulations and to make all such determinations relating to the Plan as it may
deem necessary or advisable for the administration of the Plan. The Committee's
interpretation of the Plan or any documents evidencing Awards granted pursuant
thereto and all decisions and determinations by the Committee with respect to
the Plan shall be final, binding and conclusive on all parties unless otherwise
determined by the Board.
5. GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN
The Committee may, from time to time, grant Awards of Options, Restricted
Stock and other Stock-based Awards to one or more Eligible Persons, except that
grants of Director Compensation must be made by the Board; PROVIDED, HOWEVER,
that:
(a) Subject to Section 11, the aggregate number of shares of Stock
reserved and available for issuance pursuant to Awards under the Plan is
500,000. Notwithstanding any other provision of this plan, in any event the
maximum aggregate number of shares which may be issued upon the exercise of
Incentive Stock Options is 250,000 and the maximum aggregate number
issuable as Restricted Stock is 100,000;
(b) Except as set forth in Section 5(d), such shares shall be deemed
to have been used in payment of Awards only to the extent they are actually
delivered and not where the Fair Market Value equivalent of such shares for
a Stock-based Award is paid in cash. In the event any Award shall be
surrendered, terminate, expire or be forfeited, the number of shares of
Stock no longer subject thereto shall thereupon be released and shall
thereafter be available for new Awards under the Plan;
(c) Stock delivered by the Company in settlement of Awards under the
Plan may be authorized and unissued Stock or Stock held in the treasury of
the Company or may be purchased on the open market or by private purchase.
Any such Stock may be restricted and legended; and
(d) No Participant may receive Awards under the Plan with respect to
more than 100,000 shares of Stock in any one year.
6. ELIGIBILITY
Participation shall be limited to Eligible Persons who have received
written notification from the Committee, or from a person designated by the
Committee, that they have been selected to participate in the Plan.
7. STOCK OPTION AWARDS
The Committee is authorized to grant one or more Incentive Stock Options or
Nonqualified Stock Options to any Eligible Person, except that grants of
Director Compensation must be made by the Board; PROVIDED, HOWEVER, that no
Incentive Stock Options shall be granted to any Eligible Person who is not an
employee of the Company or a Subsidiary. Each Option so granted shall be subject
to the following conditions, or to such other conditions as may be reflected in
the applicable Stock Option Agreement.
(a) OPTION PRICE. The exercise price ("Option Price") per share of
Stock for each Option shall not be less than the Fair Market Value of a
share of Stock at the time of Grant.
(b) MANNER OF EXERCISE AND FORM OF PAYMENT. Options which have become
exercisable may be exercised by delivery of written notice of exercise to
the Company in care of its Secretary at 89 Arkay Drive, Hauppauge, New York
11788 or at its then principal administrative office address. Said notice
shall specify the number of Shares for which the Option is being exercised
and shall be accompanied by payment of the aggregate Option Price. The
Option Price may be payable in the form of (i) cash in the form of
currency, wire transfer, bank check payable to the order of the Company or
other cash equivalent acceptable to the Company, (ii) the delivery to the
Company of issued and outstanding shares of Stock owned by the Option
Holder for at least six months, which have a Fair Market value at the time
of Option exercise that is equal to the aggregate Option Price, (iii) by
delivering to the Company (a) irrevocable instructions to deliver the stock
certificates representing the shares for which the Option is being
exercised to a brokerage house acceptable to the Company and (b) a copy of
irrevocable instructions to and confirmation from a brokerage house
acceptable to the Company to deliver to the Company within 48 hours of
receiving stock certificates an amount of sale or loan proceeds sufficient
to pay the aggregate Option Price, (iv) any combination of these methods of
payment. The Committee or Board may authorize the Chief Executive Officer,
Chief Financial Officer and or the Secretary of the Company to execute and
administrate the provisions of this paragraph.
(c) OPTION PERIOD AND EXPIRATION. Options shall vest and become
exercisable in such manner and on such date or dates determined by the
Committee and shall expire after such period, not to exceed ten years, as
may be determined by the Committee (the "Option Period"); PROVIDED,
HOWEVER, that notwithstanding any vesting dates set by the Committee, the
Committee may in its sole discretion accelerate the exercisability of any
Option, which acceleration shall not affect the terms and conditions of any
such Option other than with respect to exercisability. Unless otherwise
specifically determined by the Committee, the vesting of an Option shall
occur only while the Participant is employed or rendering services to the
Company or its Subsidiaries and all vesting shall cease upon a Holder's
termination of employment or services for any reason. If an Option is
exercisable in installments, such installments or portions thereof which
become exercisable shall remain exercisable until the Option expires.
Unless otherwise stated in the applicable Option Agreement, the Option
shall expire earlier than the end of the Option Period in the following
circumstances:
(i) In the event an Option Holder ceases to be an employee of the
Company or a Subsidiary or perform services for the Company or a
Subsidiary for any reason other than death or retirement, any vested
and exercisable Option held by such Holder at the time must be
exercised by the earlier of (a) the date that is five (5) business
days after the date on which the Holder ceases to be an employee or
perform services, except that in the case of an Incentive Stock
Option, if the Holder ceases employment because of permanent and total
disability within the meaning of Internal Revenue Code section
22(e)(3), the period shall be one year instead of five business days
or (b) the Option Period expiration date.
(ii) In the event an Option Holder ceases to be an employee of
the Company or a Subsidiary or perform services for the Company due to
retirement, any vested and exercisable Option held by such Holder at
the time must be exercised by the earlier of (a) the date that is
three months (90 days) after the date of retirement of the Holder or
(b) the option period expiration date.
(iii) In the event an Option Holder dies prior to the end of the
Option Period and while still in the employ or service of the Company
or a Subsidiary, any vested and exercisable Option held by such Holder
at the time must be exercised by the earlier of (a) the date that is
twelve months (365 days) after the date of death of the Holder or (b)
the option period expiration date. In such event, the Option shall
remain exercisable by the person or persons to whom the Holder's
rights under the Option pass by will or the applicable laws of descent
and distribution until its expiration, but only to the extent the
Option was vested and exercisable by the Holder at the time of death.
(d) STOCK OPTION AGREEMENT - OTHER TERMS AND CONDITIONS. Each Option
granted under the Plan shall be evidenced by a Stock Option Agreement,
which shall contain such provisions as may be determined by the Committee
and, except as may be specifically stated otherwise in such Stock Option
Agreement, which shall be subject to the following terms and conditions:
(i) Each Option issued pursuant to this Section 7 or portion
thereof that is exercisable shall be exercisable for the full amount
or for any part thereof.
(ii) Each share of Stock purchased through the exercise of an
Option issued pursuant to this Section 7 shall be paid for in full at
the time of the exercise. Each Option shall cease to be exercisable,
as to any share of Stock, when the Holder purchases the share or when
the Option expires or is forfeited.
(iii) Options issued pursuant to this Section 7 shall not be
transferable by the Holder except by will or the laws of descent and
distribution and shall be exercisable during the Holder's lifetime
only by him or her. Any purported transfer that violates this clause
(iii) shall be void.
(iv) Each Option issued pursuant to this Section 7 shall vest and
become exercisable by the Holder in accordance with the vesting
schedule established by the Committee and set forth in the Stock
Option Agreement.
(v) Each Stock Option Agreement may contain a provision that,
upon demand by the Committee for such a representation, the Holder or
a person or persons to whom the Holder's rights under the Option pass
by will or the applicable laws of descent and distribution pursuant to
Section 7(c)(iii) shall deliver to the Committee at the time of any
exercise of an Option issued pursuant to this Section 7 a written
representation that the shares to be acquired upon such exercise are
to be acquired for investment and not for resale or with a view to the
distribution thereof.
(vi) Each Incentive Stock Option Agreement shall contain a
provision requiring the Holder or a person or persons to whom the
Holder's rights under the Option pass by will or the applicable laws
of descent and distribution pursuant to Section 7(c)(iii) to notify
the Company in writing immediately after the Holder makes a
disqualifying disposition of any Stock acquired pursuant to the
exercise of such Incentive Stock Option. A disqualifying disposition
is any disposition (including any sale) of such Stock before the later
of (a) two years after the Date of Grant of the Incentive Stock Option
and (b) one year after the date the Holder acquired the Stock by
exercising the Incentive Stock Option.
(e) INCENTIVE STOCK OPTION GRANTS TO 10% STOCKHOLDERS. Notwithstanding
anything to the contrary in this Section 7, if an Incentive Stock Option is
granted to a Holder who owns stock representing more than 10% of the voting
power of all classes of stock of the Company or of a Subsidiary at the
time, the Option Period shall not exceed five years from the Date of Grant
of such Option and the Option Price shall be at least 110% of the Fair
Market Value (on the Date of Grant) of the Stock subject to the Option.
(f) $100,000 PER YEAR LIMITATION FOR INCENTIVE STOCK OPTIONS. To the
extent the aggregate Fair Market Value (determined as of the Date of Grant)
of Stock for which Incentive Stock Options are exercisable for the first
time by any Participant during any calendar year (under all plans of the
Company and its Subsidiaries) exceeds $100,000, such excess Incentive Stock
Options shall be treated as Nonqualified Stock Options.
(g) REPRICING PERMITTED. The Committee may permit the voluntary
surrender of all or any portion of any Nonqualified Stock Option issued
pursuant to this Section 7 to be conditioned upon the granting to the
Holder of a new Option for the same or a different number of shares as the
Option surrendered or require such voluntary surrender as a condition
precedent to a grant of a new Option to such Participant. Such new Option
shall be exercisable at an Option Price, during an Option Period, and in
accordance with any other terms or conditions specified by the Committee at
the time the new Option is granted, all determined in accordance with the
provisions of the Plan without regard to the Option Price, Option Period,
or any other terms and conditions of the Nonqualified Stock Option
surrendered.
8. RESTRICTED STOCK AWARDS
(a) AWARD OF RESTRICTED STOCK.
(i) The Committee shall have the authority to (1) grant, issue or
transfer Restricted Stock to Eligible Persons, except that grants of
Director Compensation must be made by the Board, and (2) establish
terms, conditions and restrictions applicable to such Restricted
Stock, including the Restricted Period, which may differ with respect
to each grantee, the time or times at which Restricted Stock shall be
granted or become vested and the number of shares to be covered by
each grant. Any grant or the vesting thereof may be further
conditioned upon the attainment of performance objectives established
by the Committee.
(ii) The Holder of a Restricted Stock Award shall execute and
deliver to the Company an Award agreement with respect to the
Restricted Stock setting forth the restrictions applicable to such
Restricted Stock. If the Committee determines that the Restricted
Stock shall be held in escrow, the Holder additionally shall execute
and deliver to the Company (i) an escrow agreement satisfactory to the
Committee and (ii) the appropriate blank stock powers with respect to
the Restricted Stock covered by such agreements.
(iii) Upon the Award of Restricted Stock, the Committee shall
cause a stock certificate registered in the name of the Holder to be
issued and, if it so determines, deposited together with the stock
powers with an escrow agent designated by the Committee. If an escrow
arrangement is used, the Committee shall cause the escrow agent to
issue to the Holder a receipt evidencing any stock certificate held by
it registered in the name of the Holder.
(b) RESTRICTIONS.
(i) Restricted Stock awarded to a Participant shall be subject to
the following restrictions until the expiration of the Restricted
Period, and to such other terms and conditions as may be set forth in
the applicable Award agreement: (1) the shares shall be subject to the
restrictions on transferability set forth in the Award agreement; (2)
the shares shall be subject to forfeiture to the extent provided in
Section 8(d) and the Award Agreement. During the Restricted Period,
the Holder shall not have any rights of ownership in the Restricted
Stock and shall not have any right to vote such shares.
(ii) The Committee shall have the authority to remove any or all
of the restrictions on the Restricted Stock whenever it may determine
that, by reason of changes in applicable laws or other changes in
circumstances arising after the date of the Restricted Stock Award,
such action is appropriate.
(c) RESTRICTED PERIOD. The Restricted Period of Restricted Stock shall
commence on the Date of Grant and shall expire from time to time as to that
part of the Restricted Stock indicated in a schedule established by the
Committee and set forth in a written Award agreement.
(d) FORFEITURE PROVISIONS. Except to the extent determined by the
Committee and reflected in the underlying Award agreement, in the event a
Holder terminates employment with the Company and all Subsidiaries during a
Restricted Period, that portion of the Award with respect to which
restrictions have not expired ("Non-Vested Portion") shall be treated as
follows:
(i) Upon the voluntary resignation of a Participant or discharge
by the Company or a Subsidiary, the Non-Vested Portion of the Award
shall be completely forfeited.
(ii) Upon death, the Non-Vested Portion of the Award shall be
prorated for service during the Restricted Period and shall be
distributed free of all restrictions to the Participant's beneficiary
as soon as practicable following death.
(e) DELIVERY OF RESTRICTED STOCK. Upon the expiration of the
Restricted Period with respect to any shares of Stock covered by a
Restricted Stock Award, the restrictions set forth in Section 8(b) and the
Award agreement shall be of no further force or effect with respect to
shares of Restricted Stock which have not then been forfeited. If an escrow
arrangement is used, upon such expiration, the Company shall deliver to the
Holder, or his beneficiary, without charge, the stock certificate
evidencing the shares of Restricted Stock which have not then been
forfeited and with respect to which the Restricted Period has expired (to
the nearest full share).
9. OTHER STOCK-BASED AWARDS
The Committee may grant any other stock or stock-related Awards to any
Eligible Person under this Plan that the Committee deems appropriate, including,
but not limited to, stock appreciation rights, limited stock appreciation
rights, phantom stock Awards and Stock bonuses except that any grants of
Director Compensation must be made by the Board. Any such benefits and any
related agreements shall contain such terms and conditions as the Committee
deems appropriate. Such Awards and agreements need not be identical. With
respect to any benefit under which shares of Stock are or may in the future be
issued for consideration other than prior services, the amount of such
consideration shall not be less than the amount (such as the par value of such
shares) required to be received by the Company in order to comply with
applicable state law.
10. GENERAL
(a) ADDITIONAL PROVISIONS OF AN AWARD. Awards under the Plan also may
be subject to such other provisions (whether or not applicable to the
benefit awarded to any other Participant) as the Committee determines
appropriate including, without limitation, provisions to assist the
Participant in financing the purchase of Stock upon the exercise of
Options, provisions for the forfeiture of or restrictions on resale or
other disposition of shares of Stock acquired under any Award, provisions
giving the Company the right to repurchase shares of Stock acquired under
any Award in the event the Participant elects to dispose of such shares,
and provisions to comply with Federal and state securities laws and Federal
and state tax withholding requirements. Any such provisions shall be
reflected in the applicable Award agreement.
(b) PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise specifically
provided in the Plan, no person shall be entitled to the privileges of
stock ownership in respect of shares of Stock which are subject to Awards
hereunder until such shares have been issued to that person.
(c) GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to all
applicable laws, rules and regulations, and to such approvals by
governmental agencies as may be required. Notwithstanding any terms or
conditions of any Award to the contrary, the Company shall be under no
obligation to offer to sell or to sell and shall be prohibited from
offering to sell or selling any shares of Stock pursuant to an Award unless
such shares have been properly registered for sale pursuant to the
Securities Act with the Securities and Exchange Commission or unless the
Company has received an opinion of counsel, satisfactory to the Company,
that such shares may be offered or sold without such registration pursuant
to an available exemption there from and the terms and conditions of such
exemption have been fully complied with. The Company shall be under no
obligation to register for sale under the Securities Act any of the shares
of Stock to be offered or sold under the Plan. If the shares of Stock
offered for sale or sold under the Plan are offered or sold pursuant to an
exemption from registration under the Securities Act, the Company may
restrict the transfer of such shares and may legend the Stock certificates
representing such shares in such manner as it deems advisable to ensure the
availability of any such exemption.
(d) TAX WITHHOLDING. Notwithstanding any other provision of the Plan,
the Company or a Subsidiary, as appropriate, shall have the right to deduct
from all Awards cash and/or Stock, valued at Fair Market Value on the date
of payment, in an amount necessary to satisfy all Federal, state and local
taxes as required by law to be withheld with respect to such Awards and, in
the case of Awards paid in Stock, the Holder or other person receiving such
Stock may be required to pay to the Company or a Subsidiary, as
appropriate, prior to delivery of such Stock, the amount of any such taxes,
if any, which the Company or Subsidiary is required to withhold with
respect to such Stock. Subject in particular cases to the disapproval of
the Committee, the Company may accept shares of Stock of equivalent Fair
Market Value in payment of such withholding tax obligations if the Holder
of the Award elects to make payment in such manner.
(e) CLAIM TO AWARDS AND EMPLOYMENT RIGHTS. No individual shall have
any claim or right to be granted an Award under the Plan or, having been
selected for the grant of an Award, to be selected for a grant of any other
Award. Neither the Plan nor any action taken hereunder shall be construed
as giving any individual any right to be retained in the employ or service
of the Company or a Subsidiary.
(f) PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS. If the Committee
shall find that any person to whom any amount is payable under the Plan is
unable to care for his affairs because of illness or accident, or is a
minor, or has died, then any payment due to such person or his estate
(unless a prior claim therefore has been made by a duly appointed legal
representative) may, if the Committee so directs the Company, be paid to
his spouse, child, relative, an institution maintaining or having custody
of such person, or any other person deemed by the Committee to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such
payment shall be a complete discharge of the liability of the Committee and
the Company.
(g) NO LIABILITY OF COMMITTEE MEMBERS. No member of the Committee
shall be personally liable by reason of any contract or other instrument
executed by such member or on his behalf in his capacity as a member of the
Committee nor for any mistake of judgment made in good faith, and the
Company shall indemnify and hold harmless to the maximum extent permitted
by governing law each member of the Committee and each other employee,
officer or director of the Company to whom any duty or power relating to
the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim) arising out of
any act or omission to act in connection with the Plan unless arising out
of such person's own fraud or willful bad faith; PROVIDED, HOWEVER, that
approval of the Board shall be required for the payment of any amount in
settlement of a claim against any such person. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or
any power that the Company may have to indemnify them or hold them
harmless.
(h) GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
principles of conflicts of law thereof.
(i) FUNDING. No provision of the Plan shall require the Company, for
the purpose of satisfying any obligations under the Plan, to purchase
assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets, nor shall the
Company maintain separate bank accounts, books, records or other evidence
of the existence of a segregated or separately maintained or administered
fund for such purposes. Holders shall have no rights under the Plan other
than as unsecured general creditors of the Company, except that insofar as
they may have become entitled to payment of additional compensation by
performance of services, they shall have the same rights as other employees
under general law.
(j) NONTRANSFERABILITY. A person's rights and interest under the Plan,
including amounts payable, may not be sold, assigned, donated, transferred
or otherwise disposed of, mortgaged, pledged or encumbered except, in the
event of a Holder's death, by will or the laws of descent and distribution.
(k) RELIANCE ON REPORTS. Each member of the Committee and each member
of the Board shall be fully justified in relying, acting or failing to act,
and shall not be liable for having so relied, acted or failed to act in
good faith, upon any report made by the independent public accountant of
the Company and its Subsidiaries and upon any other information furnished
in connection with the Plan by any person or persons other than himself.
(l) RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension,
retirement, profit sharing, group insurance or other benefit plan of the
Company or any Subsidiary except as otherwise specifically provided in such
other plan.
(m) EXPENSES. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries in such proportions as the Committee shall
determine.
(n) PRONOUNS. Masculine pronouns and other words of masculine gender
shall refer to both men and women.
(o) TITLES AND HEADINGS. The titles and headings of the sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
(p) TERMINATION OF EMPLOYMENT. For all purposes herein, a person who
transfers from employment or service with the Company to employment or
service with a Subsidiary or vice versa shall not be deemed to have
terminated employment or service with the Company or a Subsidiary.
11. ADJUSTMENTS FOR RECAPITALIZATION AND OTHER CIRCUMSTANCES
Awards granted under the Plan and any agreements evidencing such Awards,
the maximum number of shares of Stock subject to all Awards under the Plan, the
number of shares of Stock subject to outstanding Awards and the maximum number
of shares of Stock with respect to which any one person may be granted Awards
during any year may be subject to adjustment or substitution, as determined by
the Committee in its sole discretion, as to the number, price or kind of a share
of Stock or other consideration subject to such Awards or as otherwise
determined by the Committee to be equitable (i) in the event of changes in the
outstanding Stock or in the capital structure of the Company by reason of stock
dividends, stock splits, reverse stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges, or other
relevant changes in capitalization occurring after the Date of Grant of any such
Award or (ii) in the event of any change in applicable laws or any change in
circumstances which results in or would result in any substantial dilution or
enlargement of the rights granted to, or available for, Participants in the
Plan, or (iii) for any other reason which the Committee, in its sole discretion,
determines otherwise warrants equitable adjustment because it interferes with
the intended operation of the Plan. Any adjustment to Incentive Stock Options
under this Section 11 shall take into account that adjustments which constitute
a "modification" within the meaning of Section 424(h)(3) of the Code may have an
adverse tax impact on such Incentive Stock Options and the Committee may, in its
sole discretion, provide for a different adjustment or no adjustment in order to
preserve the tax effects of Incentive Stock Options. Unless otherwise determined
by the Committee, in its sole discretion, any adjustments or substitutions under
this Section 11 shall be made in a manner which does not adversely affect the
exemption provided pursuant to Rule 16b-3 under the Exchange Act. Further, with
respect to Awards intended to qualify as "performance-based compensation" under
Section 162(m) of the Code, such adjustments or substitutions shall, unless
otherwise determined by the Committee in its sole discretion, be made only to
the extent that the Committee determines that such adjustments or substitutions
may be made without a loss of deductibility for such Awards under Section 162(m)
of the Code. The Company shall give each Participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and binding for
all purposes.
12. EFFECT OF CHANGE IN CONTROL
Except to the extent reflected in a particular Award agreement:
(a) In the event of a Change in Control, notwithstanding any vesting
schedule with respect to an Award of Options or Restricted Stock, such
Option shall become immediately exercisable with respect to 100% of the
shares subject to such Option, and the Restricted Period shall expire
immediately with respect to 100% of such shares of Restricted Stock.
(b) In the event of a Change in Control, all other Awards shall become
fully vested and or payable to the fullest extent of any Award or portion
thereof that has not then expired and any restrictions with respect thereto
shall expire. The Committee shall have full authority and discretion to
interpret this Section 12 and to implement any course of action with
respect to any Award so as to satisfy the intent of this provision.
(c) The obligations of the Company under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all of the assets
and business of the Company.
13. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of this Plan by the Board nor the submission of this
Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable.
14. AMENDMENTS AND TERMINATION
The Board may at any time terminate the Plan. Subject to Section 11, with
the express written consent of an individual Participant, the Board may cancel
or reduce or otherwise alter outstanding Awards if, in its judgment, the tax,
accounting, or other effects of the Plan or potential payouts there under would
not be in the best interest of the Company. The Board may, at any time, or from
time to time, amend or suspend and, if suspended, reinstate, the Plan in whole
or in part; PROVIDED, HOWEVER, that without further stockholder approval neither
the Board shall make any amendment to the Plan which would:
(a) Increase the maximum number of shares of Stock which may be issued
pursuant to Awards, except as provided in Section 11;
(b) Extend the maximum Option Period;
(c) Extend the termination date of the Plan; or
(d) Change the class of persons eligible to receive Awards under the
Plan.
* * *
As adopted by the Board of Directors of Vicon Industries, Inc. as of March 23,
2007