Document:

jpmorganchasenote.htm

                                                                                                                                                                                    EXHIBIT
      10.2

    

    
 

    PROMISSORY
      NOTE

    

    

    $7,000,000                                                                                                                            July
      31, 2007

    

    For
      value received, the undersigned
      unconditionally promises to pay to the order of JPMORGAN CHASE BANK, N.A.
      (hereinafter the "Bank") at its offices at  277 Park Avenue, New York
      , New York 10172-0003, or to such other address as the Bank may notify the
      undersigned in writing, the principal sum of Seven Million Dollars ($7,000,000)
      (the "Note Amount") or, if less, such unpaid principal amount of each loan
      (a
      "Loan") (as recorded on the grid attached hereto or on any additional pages
      thereof) made by the Bank to the undersigned and outstanding under this note
      on
      July 31, 2008 (the "Maturity Date").

    

    The
      undersigned promises to pay
      interest on the unpaid balance of the principal amount of each such Loan from
      and including the date of such Loan to the last day of the Interest Period
      thereof at either (i) a floating rate per annum equal to the Prime Rate (a
      "Prime Loan"); (ii) a fixed rate per annum equal to the Adjusted LIBO Rate
      applicable to such Loan plus 0.625% (a "Eurodollar Loan"); or (iii) a fixed
      rate
      per annum equal to the Money Market Rate applicable to such Loan (a "Money
      Market Loan").  Any principal not paid when due shall bear interest
      from and including the date due until paid in full at a rate per annum equal
      to
      the Default Rate. Interest shall be payable on the relevant Interest Payment
      Date and shall be calculated on the basis of a year of 360 days for the actual
      number of days elapsed.  Any extension of time for the payment of the
      principal of this note resulting from the due date falling on a non-Banking
      Day
      shall be included in the computation of interest.

    

    Anything
      in this note to the contrary
      notwithstanding, no Loans shall be made hereunder, no letters of credit shall
      be
      issued by the Bank for the account of the undersigned ("Letters of
      Credit") and no drafts shall be drawn by the undersigned and accepted by the
      Bank ("Acceptances") if, as a result thereof, the aggregate unpaid
      principal balance of all Loans made by the Bank to the undersigned hereunder
      plus the aggregate undrawn face amount of all Letters of Credit, the aggregate
      unreimbursed amount of all drafts drawn under Letters of Credit and the
      aggregate outstanding face amount of Acceptances would exceed the Note Amount
      or
      Reduced Note Amount as applicable for the relevant period.

    

    The
      date, amount, rate of interest and
      maturity date of each Loan and payment(s) (if any) of principal, the Loan(s)
      to
      which such payment(s) will be applied (which shall be at the discretion of
      the
      Bank) and the outstanding principal balance of Loans shall be recorded by the
      Bank on its books and records (which may be electronic in nature) and at any
      time and from time to time may be, and shall be prior to any transfer and
      delivery of this note, entered by the Bank on the schedule attached or any
      continuation of the schedule attached hereto by the Bank (at the discretion
      of
      the Bank, any such entries may aggregate Loans (and payments thereon) with
      the
      same interest rate and tenor and, if made on a given date, may show only the
      Loans outstanding on such date).  Any such entries shall be conclusive
      in the absence of manifest error.  The failure by the Bank to make any
      or all such entries shall not relieve the undersigned from its obligation to
      pay
      any and all amounts due hereunder.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.           DEFINITIONS.  The
      terms listed below shall be defined as follows:

    

    "Adjusted
      LIBO Rate" means the LIBO
      Rate for such Loan divided by one minus the Reserve Requirement.

    

    "Banking
      Day" means any day on which
      commercial banks are not authorized or required to close in New York City and
      whenever such day relates to a Eurodollar Loan or notice with respect to any
      Eurodollar Loan, a day on which dealings in U.S. dollar deposits are also
      carried out in the London interbank market.

    

    "Code"
      means the Uniform Commercial
      Code of the State of New York.

    

    "Default
      Rate" means, in respect of any
      amount not paid when demanded, a rate per annum during the period commencing
      on
      the date of demand until such amount is paid in full equal to: (a) if a Prime
      Loan, a floating rate of 2% above the rate of interest thereon; (b) if a
      Eurodollar Loan or Money Market Loan, a fixed rate of 2% above the rate of
      interest in effect thereon at the time of demand until the last day of the
      Interest Period thereof and, thereafter, a floating rate of 2% above the rate
      of
      interest for a Prime Loan.

    

    "Event
      of Default" means each of the
      events stated in Section 7.

    

    "Facility
      Documents" means this note or
      any document executed by the undersigned or by any Third Party granting security
      or support for this note and all other agreements, instruments or other
      documents executed by the undersigned or a Third Party or otherwise executed
      in
      connection with this note, whether by guaranty, subordination, grant of a
      security interest or any other credit support, or which is contained in any
      certificate, document, opinion, financial or other statement furnished at the
      time under or in connection with any Facility Document.

    

    "Interest
      Payment Date" means (a) with
      respect to any Prime Loan, the last day of each month, or (b) with respect
      to any Eurodollar Loan or Money Market Loan, the last day of the Interest Period
      applicable to which such Loan is a part and, in the case of a Eurodollar Loan
      or
      a Money Market Loan with an Interest Period of more than three months' duration,
      each day prior to the last day of such Interest Period that occurs at intervals
      of three months' duration after the first day of such Interest
      Period.

    

    "Interest
      Period" means (a) with
      respect to any Eurodollar Loan, the period commencing on the date of such Loan
      and ending on the numerically corresponding day in the calendar month that
      is
      one, two, three or six months thereafter, as the undersigned may elect or (b)
      with respect to any Money Market Loan, the period commencing on the date of
      such
      Loan and ending on the last day of the period for which such Loan is offered,
      as
      recorded by the Bank on the grid hereto; provided, that (i) if any
      Interest Period would end on a day other than a Business Day, such Interest
      Period shall be extended to the next succeeding Business Day unless, in the
      case
      of a Eurodollar Loan only, such next succeeding Business Day would fall in
      the
      next calendar month, in which case such Interest Period shall end on the next
      preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar
      Loan that commences on the last Business Day of a calendar month (or on a day
      for which there is no numerically corresponding day in the last calendar month
      of such Interest Period) shall end on the last Business Day of the last calendar
      month of such Interest Period.  For purposes hereof, the date of a
      Loan initially shall be the date on which such Loan is made and, in the case
      of
      the continuation of a Loan, thereafter shall be the effective date of the most
      recent conversion or continuation of such Loan.

    

    "Liabilities"
      means all obligations and
      liabilities of the undersigned to the Bank or its affiliates of whatever nature,
      including payment of this note, whether now existing or hereafter incurred
      or
      acquired, whether matured or unmatured, liquidated or unliquidated, direct
      or
      indirect, absolute or contingent, primary or secondary, sole, joint, several
      or
      joint and several, secured or unsecured.

    

    "LIBO
      Rate" means, with respect to any
      Eurodollar Loan for any Interest Period, the rate quoted by the principal London
      branch of the Bank at approximately 11:00 a.m. London time two (2) Business
      Days' prior to the first day of such Interest Period for the offering to leading
      banks in the London interbank market of dollar deposits in immediately available
      funds, for a period and in an amount, comparable to such Interest Period and
      the
      principal amount of such Eurodollar Loan, as it appears on Page 3756 of the
      Moneyline Telerate Markets.

    

    "Money
      Market Rate" means, if offered,
      a rate of interest per year as offered by the Bank from time to time on any
      single commercial borrowing during the period offered on such
      Loan.  The Money Market Rate of interest available for any subsequent
      borrowings may differ since Money Market Rates may fluctuate on a daily
      basis.

    

    "Prime
      Rate" means that floating rate
      of interest from time to time announced publicly by the Bank in New York, New
      York as its prime rate.  The Prime Rate shall be automatically
      adjusted on the date of any change thereto.

    

    "Regulation
      D" means Regulation D of
      the Board of Governors of the Federal Reserve System.

    

    "Regulatory
      Change" means any change
      after the date of this note in United States federal, state or municipal laws
      or
      any foreign laws or regulations (including Regulation D) or the adoption or
      making after such date of any interpretations, directives or requests applying
      to a class of banks, including the Bank, of or under any United States federal,
      state or municipal laws or any foreign laws or regulations (whether or not
      having the force of law) by any court or governmental or monetary authority
      charged with the interpretation or administration thereof.

    

    "Reserve
      Requirement" means, for any
      Eurodollar Loan, the average maximum rate at which reserves (including any
      marginal, supplemental or emergency reserves) are required to be maintained
      during the term of such Loan under Regulation D by member banks of the Federal
      Reserve System in New York City with deposits exceeding one billion U.S.
      dollars, or as otherwise established by the Board of Governors of the Federal
      Reserve System and any other banking authority to which the Bank is subject,
      against "Eurocurrency liabilities" (as such term is used in Regulation
      D).  Without limiting the effect of the foregoing, the Reserve
      Requirement shall reflect any other reserves required to be maintained by such
      member banks by reason of any Regulatory Change against (x) any category of
      liabilities which includes deposits by reference to which the LIBO Rate is
      to be
      determined or (y) any category of extensions of credit or other assets which
      include Eurodollar Loans.  The Reserve Requirement shall be adjusted
      automatically on and as of the effective date of any change in any reserve
      percentage.

    

    "Third
      Party" means any third party who
      supports or is liable with respect to this note due to the execution of any
      document granting support or security for this note, whether by guaranty,
      subordination, grant of security or any other credit support.

    

    2.           BORROWINGS
      AND PREPAYMENTS.  The undersigned shall give the Bank notice of each
      borrowing request by 12:00 noon, New York City time three (3) Banking Days
      prior
      to each requested borrowing of a Eurodollar Loan and by 12:00 noon New York
      City
      time on the date of each requested borrowing of a Prime Loan or a Money Market
      Loan; provided that no Eurodollar Loan shall be in a minimum amount equal to
      less than $100,000.  The undersigned shall have the right to make
      prepayments of principal at any time or from time to time; provided
      that:  (a) the undersigned shall give the Bank irrevocable notice of
      each prepayment by 12:00 noon New York City time three (3) Banking Days prior
      to
      prepayment of a Eurodollar Loan, one (1) Banking Day prior to prepayment of
      a
      Money Market Loan and by 12:00 noon New York City time on the date of prepayment
      of a Prime Loan; (b) Eurodollar Loans and Money Market Loans may be prepaid
      prior to the last day of the Interest Period thereof only if accompanied by
      payment of the additional payments calculated in accordance with paragraph
      5
      below; and (c) all prepayments shall be in a minimum
      amount equal to the lesser of $100,000 or the unpaid
      principal amount of this note. If the undersigned fails to notify the Bank,
      in
      accordance with the terms hereof, prior to the maturity date of any Eurodollar
      Loan or Money Market Loan to continue such Loan as a Eurodollar Loan or Money
      Market Loan, such Loan shall be converted to a Prime Loan on its maturity
      date.

    

    3.           ADDITIONAL
      COSTS.  (a) If as a result of any Regulatory Change which (i) changes
      the basis of taxation of any amounts payable to the Bank under this note (other
      than taxes imposed on the overall net income of the Bank or the lending office
      by the jurisdictions in which the principal office of the Bank or the lending
      office are located) or (ii) imposes or modifies any reserve, special deposit,
      deposit insurance or assessments, minimum capital, capital ratios or similar
      requirements relating to any extension of credit or other assets of, or any
      deposits with or other liabilities of the Bank, or (iii) imposes any other
      condition affecting this note, the Bank determines (which determination shall
      be
      conclusive absent manifest error) that the cost to it of making or maintaining
      a
      Eurodollar Loan or a Money Market Loan is increased or any amount received
      or
      receivable by the Bank under this note is reduced, then the undersigned will
      pay
      to the Bank on demand an additional amount that the Bank determines will
      compensate it for the increased cost or reduction in amount.

    

    (b)           Without
      limiting the effect of the foregoing provisions of this Section 3 (but without
      duplication), the undersigned shall pay to the Bank from time to time on request
      such amounts as the Bank may determine to be necessary to compensate the Bank
      for any costs which it determines are attributable to the maintenance by it
      or
      any of its affiliates pursuant to any law or regulation of any jurisdiction
      or
      any interpretation, directive or request (whether or not having the force of
      law
      and whether in effect on the date of this note or thereafter) of any court
      or
      governmental or monetary authority of capital in respect of the Loans hereunder
      (such compensation to include, without limitation, an amount equal to any
      reduction in return on assets or equity of the Bank to a level below that which
      it could have achieved but for such law, regulation, interpretation, directive
      or request).

    

    4.           UNAVAILABILITY,
      INADEQUACY OR ILLEGALITY OF LIBO RATE.  Anything herein to the
      contrary notwithstanding, if the Bank reasonably determines (which determination
      shall be conclusive) that:

    

    (a)           quotations
      of interest rates for the relevant deposits referred to in the definition of
      LIBO Rate are not being provided in the relevant amounts or for the relevant
      maturities for purposes of determining the rate of interest for a Eurodollar
      Loan; or

    

    (b)           the
      definition of LIBO Rate does not adequately cover the cost to the Bank of making
      or maintaining a Eurodollar Loan; or

    

    (c)           as
      a result of any Regulatory Change (or any change in the interpretation thereof)
      adopted after the date hereof, the principal office of the Bank or the lending
      office is subject to any taxes, reserves, limitations, or other charges,
      requirements or restrictions on any claims of such office on non-United States
      residents (including, without limitation, claims on non-United States offices
      or
      affiliates of the Bank) or in respect of the excess above a specified level
      of
      such claims; or

    

    (d)           it
      is unlawful for the Bank or the lending office to maintain any Eurodollar Loan
      at the LIBO Rate;

    

    THEN,
      the
      Bank shall give the undersigned prompt notice thereof, and so long as such
      condition remains in effect, any existing Eurodollar Loan shall bear interest
      as
      a Prime Loan and the Bank shall make no Eurodollar Loans.

     

        5.           BREAK
      FUNDING PAYMENTS.  In the event of (a) the payment of any principal of
      any Eurodollar Loan or Money Market Loan other than on the last day of an
      Interest Period applicable thereto (including as a result of an Event of
      Default), (b) the conversion of any Eurodollar Loan or Money Market Loan other
      than on the last day of the Interest Period applicable thereto, or (c) the
      failure to borrow, convert, continue on the date specified in any notice
      delivered pursuant hereto, then, in any such event, the undersigned shall
      compensate the Bank for the loss, cost and expense attributable to such
      event.  In the case of a Eurodollar Loan or Money Market Loan, such
      loss, cost or expense to the Bank shall be deemed to include an amount
      determined by the Bank to be the excess, if any, of (i) the amount of interest
      which would have accrued on the principal amount of such Eurodollar Loan or
      Money Market Loan had such event not occurred, at the Adjusted LIBO Rate that
      would have been applicable to such Eurodollar Loan or the Money Market Rate
      that
      would have been applicable to such Money Market Loan, as the case may be, for
      the period from the date of such event to the last day of the then current
      Interest Period therefor (or, in the case of a failure to borrow, convert or
      continue, for the period that would have been the Interest Period for such
      Eurodollar Loan or Money Market Loan), over (ii) the amount of interest which
      would accrue on such principal amount for such period at the interest rate
      which
      the Bank would bid were it to bid, at the commencement of such period, for
      dollar deposits of a comparable amount and period from other banks in the
      eurodollar market.  A certificate of the Bank setting forth any amount
      or amounts that the Bank is entitled to receive pursuant to this Section shall
      be delivered to the Bank and shall be conclusive absent manifest
      error.  The undersigned shall pay the Bank the amount shown as due on
      any such certificate within 10 days after receipt thereof.

    

    6.           BANK’S
      RIGHT OF SETOFF.  The Bank retains all rights of setoff that it may
      have under applicable law or contract, including, without limitation, at its
      option, to setoff  balances (general or special, time or demand,
      provisional or final) held by it for the account of the undersigned at any
      of
      Bank’s offices, in dollars or in any other currency, against any amount payable
      under this Note which is not paid when due (regardless of whether such balances
      are then due to the undersigned).

    

    7.           EVENTS
      OF DEFAULT.  If any of the following events of default shall occur
      with respect to any of the undersigned or any Third Party:

    

    (a)           the
      undersigned shall fail to pay any principal, interest or any other amount
      payable under this note, or any other Liability, as and when due and payable;
      or

    

    (b)           the
      undersigned or any Third Party shall fail to perform or observe any covenant
      or
      agreement contained in any Facility Document, and such failure shall continue
      for 30 consecutive days; or

    

    (c)           the
      undersigned or any Third Party shall fail to pay when due any indebtedness
      in
      excess of $5,000,000 or more (including but not limited to indebtedness for
      borrowed money) or if any such indebtedness shall become due and payable, or
      be
      capable of being due and payable at the option of the holder thereof, prior
      to
      the scheduled maturity thereof; or

    

    (d)           the
      undersigned or any Third Party:  (i) shall generally not, or be unable
      to, or shall admit in writing its inability to, pay its debts as such debts
      become due; (ii) shall make an assignment for the benefit of creditors; (iii)
      shall commence any proceeding or file a petition seeking relief under any
      bankruptcy, insolvency, reorganization, receivership, dissolution, liquidation
      or other similar Federal, state or foreign law or seeking the appointment of
      a
      receiver, trustee, custodian, conservator or similar official for all or a
      substantial part of its property or (iv) shall have any such proceeding
      commenced or petition filed against it and the same shall remain undismissed
      for
      a period of 30 days or shall consent or acquiesce thereto; or

    

    (e)           the
      undersigned or any Third Party shall merge or consolidate with or into, or
      convert into, any other legal entity; or

    

    (f)           any
      Facility Document shall at any time and for any reason cease to be in full
      force
      and effect or shall be declared null and void, or the undersigned or any
      relevant Third Party shall deny or contest any further liability or obligation
      thereunder or the validity or enforceability thereof or of any lien or security
      interest created thereby; or

    

    (g)           any
      lien, mortgage, pledge, security interest or other encumbrance of any kind
      shall
      be created or imposed upon any property or asset of the undersigned or any
      Third
      Party without the Bank's written consent thereto, except as permitted pursuant
      to Section 8.3 of the Credit Agreement dated as of December 15, 2005 among
      the
      undersigned (as Borrower), the Lenders signatory thereto and the Bank (as
      Administrative Agent, Swingline Bank and Issuing Agent); or

    

    (h)           any
      action or proceeding before any court or governmental agency or authority which
      involves forfeiture of any property or assets of the undersigned or a Third
      Party shall have been commenced or if any such forfeiture or other seizure
      or
      assumption of custody or control over such assets by any court or governmental
      agency or authority shall occur; or

    

    (i)           one
      or more verdicts, judgments, decrees or orders for the payment of money in
      excess of $5,000,000 in the aggregate shall be rendered against the undersigned
      and shall continue in effect for a period of 60 consecutive days without being
      vacated, or stayed pending appeal (or the satisfaction or bonding of any such
      verdict, judgment, decree or order shall, in the Bank's reasonable judgment,
      constitute a material adverse change), any proceedings to execute any such
      verdict, judgment, decree or order shall be commenced, or if any attachment,
      distraint, levy or other restraint shall be placed upon any property or assets
      of the undersigned or any Third Party;

    

    THEN,
      in
      any such case, the unpaid principal amount of this note, together with accrued
      interest and all other Liabilities, shall immediately become due and payable
      without any notice or other action by the Bank. The undersigned waive(s)
      presentment, notice of dishonor, protest and any other notice or formality
      with
      respect to this note.  All rights and remedies provided in this note
      or otherwise available to the Bank shall be cumulative and not exclusive and
      each may be exercised by the Bank from time to time and as often as may be
      necessary.

    

    8.           ENFORCEMENT.  The
      Bank may, upon the occurrence and continuation of an Event of Default, proceed
      to enforce payment of the same and exercise any of or all the rights and
      remedies afforded the Bank by the Code or otherwise possessed by the
      Bank.  Any requirement of the Code for reasonable notice to the
      undersigned shall be deemed to have been complied with if such notice is mailed,
      postage prepaid, to the undersigned and such other persons entitled to notice,
      at the addresses shown on the records of the Bank at least four (4) Business
      Days prior to the time of sale, disposition or other event requiring notice
      under the Code.

    

    9.           TRANSFER.  Upon
      any transfer of this note, the undersigned hereby waiving notice of any such
      transfer, the Bank may deliver the Assets With Bank or any part thereof to
      the
      transferee who shall thereupon become vested with all the rights herein or
      under
      applicable law given to the Bank with respect thereto and the Bank shall
      thereafter forever be relieved and fully discharged from any liability or
      responsibility in the matter; but the Bank shall retain all rights hereby given
      to it with respect to any Liabilities and Assets With Bank not so
      transferred.  No modification or waiver of any of the provisions of
      this note shall be effective unless in writing, signed by the Bank, and only
      to
      the extent therein set forth; nor shall any such waiver be applicable except
      in
      the specific instance for which given.  This agreement sets forth the
      entire understanding of the parties, and the undersigned acknowledges that
      no
      oral or other agreements, conditions, promises, understandings, representations
      or warranties exist in regard to the obligations hereunder, except those
      specifically set forth herein.

    

    10.           JURISDICTION
      AND WAIVER.  The undersigned hereby irrevocably consents to the in
      personam jurisdiction of the federal and/or state courts located within the
      State of New York over controversies arising from or relating to this note
      or
      the Liabilities and irrevocably waives trial by jury and the
      right to interpose any counterclaim or offset of any nature in any such
      litigation.  The undersigned further irrevocably waives presentment,
      demand, protest, notice of dishonor and all other notices or demands of any
      kind
      in connection with this note or any Liabilities.

    

    11.           MISCELLANEOUS.  Each
      reference herein to the Bank shall be deemed to include its successors,
      endorsees, and assigns, in whose favor the provisions hereof shall also
      inure.  Each reference herein to the undersigned shall be deemed to
      include the successors and assigns of the undersigned, all of whom shall be
      bound by the provisions hereof.

    

    The
      undersigned agrees to pay to the
      Bank, as soon as incurred, all costs and reasonable and documented expenses
      incidental to the care, preservation, processing, sale or collection of or
      realization upon any of or all the Assets With Bank or incurred in connection
      with the enforcement or collection of this note, or in any way relating to
      the
      rights of the Bank hereunder, including reasonable outside counsel fees and
      expenses.  Each and every right and remedy hereby granted to the Bank
      or allowed to it by law shall be cumulative and not exclusive and each may
      be
      exercised by the Bank from time to time and as often as may be
      necessary.  The undersigned shall have the sole responsibility for
      notifying the Bank in writing that the undersigned wishes to take advantage
      of
      any redemption, conversion or other similar right with respect to any of the
      Assets With Bank.  The Bank may release any party (including any
      partner of any undersigned) without notice to any of the undersigned, whether
      as
      co-makers, endorsers, guarantors, sureties, assigns or otherwise, without
      affecting the liability of any of the undersigned hereof or any partner of
      any
      undersigned hereof.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    12.           GOVERNING
      LAW.  This note shall be governed by and construed in accordance with
      the laws of the State of New York and, as to interest rates, applicable Federal
      law.

    

    MOVADO
      GROUP,
      INC.

     

    By:
      /s/ Eugene J.
      Karpovich

                                                Name:
      Eugene
      J. KArpovich

    Title:
      SVP, CFO

    

    Address
      for
      notices:           650
      From Road

    Paramus,
      New Jersey 07652

    Attn:
      Eugene J.
      Karpovich,

                                                             
      Senior Vice President &

              Chief
      Financial Officer

    Telecopier:
      201-267-8240

    Telephone:
      201-267-8004

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    GRID

    

    LOANS                                                                PAYMENTS

    

    
      	
              Date

              Made

            	
              Amount

            	
              Rate

            	
              Maturity

              Date

            	 	
              Date
                Made

            	
              Principal

            	
              Interest

            	 	
              Balance
                Due

              On
                Principal

            	 	
              LN
                Clerk

              Initialsform8k_10-1.htm

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXBIBIT
      10.1

    

    EMPLOYMENT
      AGREEMENT

    

    AGREEMENT,
      effective as of October 1, 2007, between KENNETH M. DARBY (hereinafter called
      "Darby") and VICON INDUSTRIES, INC., a New York corporation, having its
      principal place of business at 89 Arkay Drive, Hauppauge, New
      York  11788 (hereinafter called the "Company").

     

    WHEREAS,
      Darby has previously been employed by the Company, and

     

    WHEREAS,
      the Company and Darby mutually desire to assure the continuation of Darby's
      services to the Company,

     

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants
      herein set forth, the parties covenant and agree as follows:

     

        1.   Employment.  The
      Company shall employ Darby as its Chief Executive Officer (CEO) throughout
      the
      term of this Agreement, and Darby accepts such employment.

     

                2.
       Term.  The term of this Agreement shall commence as of
      the date of this Agreement and expire on September 30, 2008.

     

        3.  Compensation.

     

            A.  
The
      Company shall pay Darby a base salary of
      $400,000 per annum.  Darby’s salary shall be paid to him through the
      end of the term even if he should relinquish the CEO title and no longer have
      the responsibilities as CEO.

     

             B.   
      Darby's base salary shall be payable monthly or bi-weekly.

     

            C.   
      Darby shall also be entitled to fully paid family
      medical, dental, and hospital coverage utilizing doctors and hospitals of his
      choosing and continuation of Darby’s individual long term disability
      insurance.

     

            D.  
The
      Company may only terminate this Agreement for
      reasons of “Gross Misconduct”.  “Gross Misconduct” shall mean(a) a
      wilful, substantial and unjustifiable refusal to substantially perform the
      duties and services required by this Agreement; (b) fraud, misappropriation
      or
      embezzlement involving the Company or its assets; or (c) conviction of a felony
      involving moral turpitude.

     

        4.    Extent
      and Places of Services; Vacation

     

            A.   Darby
      shall establish the strategic vision, operating policy and direct, supervise
      and
      oversee the operations of the Company.  He shall advise and report to
      the Board of Directors.  Darby shall also assume and perform such
      additional reasonable responsibilities and duties as the Board of Directors
      and
      he may from time to time agree upon.

     

    B.   
Darby
      shall devote his full
      time, attention,  and
      energies to the business of the Company.

     

    C.   
Darby
      shall not be required to
      perform his services
      outside the Hauppauge, New York area or such other area on Long Island, New
      York
      as shall contain the location of the Company's headquarters.

     

                   D.    
      The Company shall provide Darby with office space, secretary, telephones and
      other office facilities appropriate to his duties.

     

                   E.     
      Darby shall be entitled to five (5) weeks paid vacation per
      annum.  Darby shall not be entitled to any payment of unused vacation
      or sick time at the conclusion of this Agreement.

     

    5.  
Covenant
      not to Compete. 
Darby agrees that during the
      term
      of this Agreement and for a period of five years thereafter unless the Company
      shall breach this agreement, he shall not directly or indirectly anywhere in
      the
      world engage in, or
      enter
      the employment of or render any services to any other entity engaged in, any
      business of a similar nature to or in competition with the Company's business
      of
      designing, manufacturing and selling CCTV security equipment and protection
      devices anywhere in the United States, Europe and Asia.  Darby further
      acknowledges that the services to be rendered under this Agreement by him are
      special, unique, and of extraordinary character and that a material breach
      by
      him of this section will cause the Company to suffer irreparable damage; and
      Darby agrees that in addition to any other remedy, this section shall be
      enforceable by negative or affirmative preliminary or permanent injunction
      in
      any Court of competent jurisdiction.

     

              6.   Termination
      Payment on Change of Control.

     

                   A.   
      Notwithstanding any other provision of this Agreement, if a "Change of Control"
      occurs Darby, at his option, may elect to terminate his obligations under this
      Agreement and to receive a lump sum termination payment, without reduction
      for
      any offset or mitigation, in an amount equal to the balance owing under this
      Agreement.

     

    B.   
      A "Change of Control" shall be deemed to have occurred if any entity shall
      directly or indirectly acquire a beneficial ownership of 50% or more of the
      outstanding shares of capital stock of the Company or any other event meeting
      the definition of “Change of Control” under IRS Section 409A.

     

                   C.    
      Darby's option to elect to terminate his obligations and to receive a lump
      sum
      termination payment may be exercised only by written notice delivered to the
      Company within 30 days following the date on which Darby receives actual notice
      of Change of Control.

     

                   D.    
      The lump sum payment shall be made within 30 days of the Company's receipt
      of
      Darby's notice of election.

     

    7.  Death
      or Disability.  The Company may terminate this Agreement, if
      during the term of this Agreement Darby becomes so disabled for a period of
      six
      months that he is substantially unable to perform his duties under this
      Agreement throughout such period. In addition, this Agreement shall
      automatically terminate upon Darby’s death.  Such termination shall
      not release the Company from liability to Darby for compensation earned to
      the
      date of the termination under this section.

     

    8.  Arbitration.  Any
      controversy or claim arising out of, or relating to this Agreement, or the
      breach thereof, shall be settled by arbitration in the City of New York in
      accordance with the rules of the American Arbitration Association then in
      effect, and judgement upon the award rendered be entered and enforced in any
      court having jurisdiction thereof.

     

    9.   Miscellaneous.

     

    A.    This
      agreement may not be waived, changed, modified or discharged orally, but only
      by
      agreement in writing, signed by the party against whom enforcement of any
      waiver, change, modification, or discharge is sought.

     

    B.    This
      Agreement shall be governed by the laws of New York applicable to contracts
      between New York residents and made and to be entirely performed in New
      York.

     

    C.   
       If any part of this Agreement is held to be unenforceable by any court of
      competent jurisdiction, the remaining provisions of this Agreement shall
      continue in full force and effect.

     

    D.   
      This agreement shal inure to the benfit of, and be binding upon, the
      Company, its successor, and assigns.

     

    E.    
      This Agreement is intended to supersede, on its effective date, an Employment
      Agreement dated October 1, 2006 between the Company and Darby.

     

     IN
      WITNESS WHEREOF, the parties hereto have duly executed this
      Agreement.

     

     

                                                                                                                                                                                                                                                                                 
      VICON INDUSTRIES, INC.

     

                                                                                                                                                                        
/s/
      Kenneth M.
      Darby                                                 
                By/s/
      Peter F. Neumann 

                                                                                                                                                                         Kenneth
      M.
      Darby                                                                           
Peter F. Neumann

                                                                                                                                                                                                                                                                                       Chairman

                                                                                                                                                                                                                                                                                       Compensation
      Committee

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