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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-196386
131 Heartland Boulevard
Edgewood, New York 11717 33122 Valle Road
San Juan Capistrano, California 92675
July 17, 2014
PROPOSED MERGER — YOUR VOTE IS VERY IMPORTANT
To the Shareholders of Vicon Industries, Inc. and
the Shareholders of IQinVision, Inc.:
As previously announced, the boards of directors of Vicon Industries, Inc., referred to herein as Vicon, and
IQinVision, Inc., referred to herein as IQinVision, have each approved an Agreement and Plan of Merger and
Reorganization dated March 28, 2014 (“Merger Agreement”) by and among Vicon, IQinVision and VI Merger Sub,
Inc., a California corporation and wholly owned subsidiary of Vicon, referred to herein as Merger Sub, pursuant to
which Merger Sub will be merged with and into IQinVision, with IQinVision surviving as a wholly owned subsidiary
of Vicon (the “Merger”).
Vicon is soliciting proxies for use at its 2014 annual meeting of shareholders (the “Vicon annual meeting”)
to consider and vote to approve the issuance of shares of Vicon common stock in connection with the Merger. In
addition, because Vicon would ordinarily hold its annual meeting of shareholders in May, in order to avoid the expense
and inconvenience of holding two shareholder meetings in a short period of time, a single shareholder meeting will be
held to act on the matters customarily placed before shareholders at the annual meeting as well as the matters to be
placed before shareholders in connection with the Merger. Accordingly, this proxy statement/prospectus/consent
solicitation includes information related to all such matters.
IQinVision is soliciting written consents from its shareholders to consider and vote on a proposal to adopt and
approve the Merger Agreement and the transactions completed thereby.
Following the consummation of the transactions contemplated by the Merger Agreement, the shareholders of
Vicon immediately prior to the effective time of the Merger and the shareholders of IQinVision immediately prior to
the effective time of the Merger will each own approximately 50% of the outstanding shares of common stock of Vicon
after the Merger. Pursuant to the terms of the Merger Agreement, based on the number of shares of Vicon common
stock outstanding and the number of shares of IQinVision capital stock outstanding, as of the close of business on July
16, 2014, the last trading day before the date of this proxy statement/prospectus/consent solicitation, at the effective
time of the Merger, the issued and outstanding shares of capital stock of IQinVision will be converted into such total
number of shares of Vicon common stock equal to approximately 0.2525 for each share of common stock of IQinVision
and approximately 0.4013 for each share of common stock into which each share of preferred stock of IQinVision is
convertible, subject to adjustment.
Vicon’s common stock is listed on the NYSE MKT under the symbol “VII.” On July 16, 2014, the last trading
day before the date of this proxy statement/prospectus/consent solicitation, the closing price of the Vicon common
stock was $2.30 per share. IQinVision is a privately-held company and there is no public market for its securities.
This proxy statement/prospectus/consent solicitation provides you with detailed information concerning Vicon,
IQinVision and the Merger. It also contains important information about the other matters to be considered and voted
upon at the Vicon annual meeting. Please give all of the information contained in this proxy statement/prospectus/
consent solicitation your careful attention.
In particular, you should carefully consider the discussion in the section entitled “Risk Factors”
beginning on page 35 of this proxy statement/prospectus/consent solicitation.
Thank you for your cooperation and continued support.
Sincerely,
Kenneth M. Darby
Chairman of the Board of Directors
Chief Executive Officer
Vicon Industries, Inc.
Charles Chestnutt
Chief Executive Officer
IQinVision, Inc.
Neither the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of the shares to be issued under this proxy statement/prospectus/consent solicitation or passed upon
the adequacy or accuracy of this proxy statement/prospectus/consent solicitation. Any representation to the
contrary is a criminal offense.
This proxy statement/prospectus/consent solicitation is dated July 17, 2014 and was first mailed to shareholders
of Vicon and shareholders of IQinVision on or about July 21, 2014.
REFERENCES TO ADDITIONAL INFORMATION
Vicon has supplied all information contained in this proxy statement/prospectus/consent solicitation relating
to Vicon and IQinVision has supplied all information contained in this proxy statement/prospectus/consent solicitation
relating to IQinVision.
This proxy statement/prospectus/consent solicitation incorporates or refers to important business and financial
information about Vicon that is not included in or delivered with this proxy statement/prospectus/consent solicitation.
Such information is available without charge to shareholders of Vicon upon written request at the following address:
Vicon Industries, Inc., 131 Heartland Boulevard, Edgewood, New York 11717, c/o Corporate Secretary, or by telephone
(631) 952-2288. If you would like to request additional information from Vicon, please do so at least five business days
before the Vicon annual meeting (i.e., by August 21, 2014), in order to receive the information before the Vicon annual
meeting.
If you would like to request additional information from IQinVision, please send a request to: IQinVision,
Inc., 33122 Valle Road, San Juan Capistrano, CA 92675, c/o Corporate Secretary, or by telephone (949) 369-8100.
Please make your request at least five business days before you plan to deliver your written consent, which must be
delivered to IQinVision by August 27, 2014.
See the section entitled “WHERE YOU CAN FIND ADDITIONAL INFORMATION.”
Vicon Industries, Inc.
131 Heartland Boulevard
Edgewood, New York 11717
(631) 952-2288
NOTICE OF 2014 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 28, 2014
TO THE VICON SHAREHOLDERS:
We are pleased to invite you to attend the 2014 annual meeting of shareholders (the “Vicon annual meeting”)
of Vicon Industries, Inc. (“Vicon”), a New York corporation, which will be held at the principal executive offices of
Vicon, which are located at 131 Heartland Boulevard, Edgewood New York 11717, on August 28, 2014 at 10:00 a.m.,
Eastern Daylight Time, for the following purposes:
Proposal No. 1: To approve the issuance of shares of Vicon common stock (the “Merger Consideration”) to
shareholders of IQinVision, Inc., a California corporation (“IQinVision”), pursuant to the Agreement
and Plan of Merger and Reorganization dated March 28, 2014 (the “Merger Agreement”), by and
among Vicon, IQinVision, Inc., and VI Merger Sub, Inc., a California corporation and wholly owned
subsidiary of Vicon (“Merger Sub”), pursuant to which Merger Sub will be merged with and into
IQinVision, with IQinVision surviving as a wholly owned subsidiary of Vicon (the “Merger”). A
copy of the Merger Agreement is attached as Annex A to the accompanying proxy statement/
prospectus/consent solicitation.
Proposal No. 2: To approve the adjournment or postponement of the Vicon annual meeting, if necessary or appropriate,
to solicit additional proxies.
Proposal No. 3: To approve the election of two (2) directors of Vicon for a term of three years or until a successor is
duly elected and qualified, or until their earlier death, resignation or removal.
Proposal No. 4: To approve, on an advisory (non-binding) basis, the compensation of Vicon’s named executive officers
as disclosed in the Compensation Discussion and Analysis – Executive Compensation section of the
accompanying proxy statement/prospectus/consent solicitation.
Proposal No. 5: To approve the ratification of the appointment of BDO USA, LLP as Vicon’s independent registered
public accounting firm for the fiscal year ending September 30, 2014.
Vicon will not transact any other business at the Vicon annual meeting except such business as may properly
be brought before the Vicon annual meeting or any adjournment or postponement thereof.
The Vicon board of directors has fixed July 11, 2014 as the record date for determining which Vicon shareholders
have the right to receive notice of and to vote at the Vicon annual meeting or any adjournments or postponements
thereof. Only holders of record of shares of Vicon common stock at the close of business on the record date have the
right to receive notice of and to vote at the Vicon annual meeting. At the close of business on the record date, Vicon
had 4,522,335 shares of common stock outstanding and entitled to vote. The list of shareholders entitled to vote at the
Vicon annual meeting will be available for examination by any Vicon shareholder at Vicon’s offices at 131 Heartland
Boulevard, Edgewood, New York, 11717, for at least 10 calendar days prior to the date of the Vicon annual meeting.
Your vote is very important. Completion of the Merger is conditioned on, among other things, approval
of the issuance of shares of Vicon common stock to IQinVision shareholders pursuant to the Merger Agreement.
Whether or not you expect to attend the Vicon annual meeting in person, we urge you to complete, sign and
return the enclosed proxy card or otherwise provide your proxy and thus ensure that your shares will be
represented at the Vicon annual meeting if you are unable to attend.
You may revoke the proxy at any time before its exercise in the manner described in the accompanying proxy
statement/prospectus/consent solicitation. Any shareholder present at the Vicon annual meeting, including any
adjournment or postponement of the Vicon annual meeting, may revoke such shareholders proxy and vote personally
on the matters to be considered at the Vicon annual meeting. Executed proxies with no instructions indicated thereon
will be voted “FOR” Proposal Nos. 1, 2, 4 and 5 and “FOR” each of the director nominees set forth in Proposal No. 3
outlined above.
THE VICON BOARD OF DIRECTORS HAS DETERMINED THAT EACH OF THE PROPOSALS
OUTLINED ABOVE IS ADVISABLE TO AND IN THE BEST INTERESTS OF VICON AND ITS
SHAREHOLDERS. ACCORDINGLY, THE VICON BOARD OF DIRECTORS RECOMMENDS THAT
VICON SHAREHOLDERS VOTE “FOR” EACH SUCH PROPOSAL.
The enclosed proxy statement/prospectus/consent solicitation provides a detailed description of the Merger
and the Merger Agreement as well as a description of the issuance of shares of Vicon common stock to IQinVision
shareholders pursuant to the Merger. It also contains important information about the other matters to be considered
and voted upon at the Vicon annual meeting. We urge you to read this proxy statement/prospectus/consent solicitation,
including the attached annexes and any documents incorporated by reference, carefully and in their entirety. For a
discussion of certain risks associated with the Merger and its potential impact on Vicon and the Vicon
shareholders, see the section entitled “Risk Factors” beginning on page 35 of the proxy statement/prospectus/
consent solicitation.
BY ORDER OF THE BOARD OF DIRECTORS
Kenneth M. Darby
July 17, 2014
Edgewood, New York
Chairman of the Board of Directors
Chief Executive Officer
IQinVision, Inc.
33122 Valle Road
San Juan Capistrano, CA 92675
NOTICE OF SOLICITATION OF WRITTEN CONSENT
To the IQinVision Shareholders:
IQinVision, Inc., a California corporation (“IQinVision”), has entered into an Agreement and Plan of Merger
and Reorganization, dated March 28, 2014 (the “Merger Agreement”), by and among Vicon Industries, Inc., a New
York corporation (“Vicon”), VI Merger Sub, Inc., a California corporation and wholly owned subsidiary of Vicon
(“Merger Sub”) and IQinVision, a copy of which is attached as Annex A to this proxy statement/prospectus/consent
solicitation, pursuant to which Merger Sub would merge with and into IQinVision, with IQinVision surviving the merger
as a wholly owned subsidiary of Vicon, and pursuant to which Vicon would issue common stock to IQinVision’s
shareholders (the “Merger”).
This proxy statement/prospectus/consent solicitation is being delivered to you on behalf of IQinVision’s board
of directors to request that holders of IQinVision common stock and preferred stock as of July 15, 2014, or the record
date, execute and return written consents to approve the Merger, including the terms of the Merger Agreement and the
transactions contemplated thereby. At the close of business on the record date, IQinVision had 5,766,922 shares of
common stock and 7,162,103 shares of preferred stock outstanding and entitled to vote.
As a record holder of outstanding shares of IQinVision common stock or preferred stock on the record date,
you are urged to complete, date and sign the enclosed written consent and promptly return it to IQinVision. IQinVision’s
board of directors has set August 27, 2014 as the target final date for receipt of written consents. IQinVision reserves
the right to extend the final date for receipt of written consents without any prior notice to shareholders.
This proxy statement/prospectus/consent solicitation describes the Merger Agreement and the actions to be
taken in connection with the Merger and provides additional information about the parties involved and the effect of
the Merger on IQinVision’s shareholders. You are urged to carefully read the accompanying proxy statement/prospectus/
consent solicitation, including any Annexes thereto, before executing the written consent. In addition, please note that,
as an IQinVision shareholder, you are not being asked to vote upon or consent to any of the proposals to be considered
at the Vicon annual meeting as described elsewhere in the accompanying proxy statement/prospectus/consent
solicitation.
Written consents from the holders of (i) a majority of the outstanding shares of IQinVision common stock,
(ii) a majority of the outstanding shares of IQinVision preferred stock, voting together as a single class on an as-
converted-to-common stock basis, and (iii) a majority of the outstanding shares of each series of IQinVision preferred
stock, voting separately on an as-converted-to-common stock basis, each outstanding on the record date, are required
to approve the Merger, including the terms of the Merger Agreement and the transactions contemplated thereby.
For a summary of the dissenters’ rights that may be available to you, see the section entitled “The Merger
—Dissenters’ Rights of IQinVision Shareholders” beginning on page 85 of the accompanying proxy statement/
prospectus/consent solicitation. For a discussion of certain risks associated with the Merger and its potential
impact on IQinVision and the IQinVision shareholders, see the section entitled “Risk Factors” beginning on
page 35 of the accompanying proxy statement/prospectus/consent solicitation.
Regardless of the number of shares you own, it is important that you execute and return your written consent.
Please complete, date and sign the written consent furnished with the accompanying proxy statement/prospectus/consent
solicitation and return it promptly to IQinVision by one of the means described in “Solicitation of IQinVision Written
Consent—Submission of Consents” on page 52 of the accompanying proxy statement/prospectus/consent solicitation.
You may change or revoke your consent at any time before the consents of holders of a sufficient number of shares to
approve the Merger have been filed with IQinVision’s Corporate Secretary. Please take action immediately to ensure
that your written consent is received no later than August 27, 2014.
THE IQINVISION BOARD OF DIRECTORS HAS CAREFULLY CONSIDERED THE MERGER,
INCLUDING THE TERMS OF THE MERGER AGREEMENT, AND HAS DETERMINED THAT THE
MERGER IS FAIR TO, ADVISABLE AND IN THE BEST INTERESTS OF IQINVISION AND ITS
SHAREHOLDERS. ACCORDINGLY, THE IQINVISION BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT IQINVISION SHAREHOLDERS APPROVE THE MERGER, INCLUDING THE
TERMS OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
BY EXECUTING AND DELIVERING THE WRITTEN CONSENT FURNISHED WITH THIS PROXY
STATEMENT/PROSPECTUS/CONSENT SOLICITATION.
BY ORDER OF THE BOARD OF DIRECTORS
Charles Chestnutt
San Juan Capistrano, California
July 17, 2014
Chief Executive Officer
i
TABLE OF CONTENTS
Page
2
16
34
PART I – SUMMARY AND GENERAL INFORMATION 1
DEFINED TERMS 1
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE VICON ANNUAL MEETING AND THE
IQINVISION CONSENT SOLICITATION
SUMMARY 9
The Companies 9
The Merger 10
Conditions to Completion of the Merger 11
Termination of the Merger Agreement 12
Opinion of Vicon’s Financial Advisor 12
Opinion of IQinVision’s Financial Advisor 13
Voting and Lock-Up Agreements 13
Post-Closing Lock-Up Agreements 14
Special Cash Dividend 14
Board of Directors and Management of the Combined Company Following the Merger 14
Interests of Certain Persons in the Merger 14
Material U.S. Federal Income Tax Consequences 15
Accounting Treatment 15
Comparison of Shareholder Rights 15
Dissenters’ Rights of IQinVision Shareholders
Risks Associated with the Merger 16
Expected Timing of the Merger 16
SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION 17
Selected Condensed Consolidated Financial Data of Vicon 17
Selected Condensed Financial Data of IQinVision 18
Selected Unaudited Pro Forma Condensed Combined Financial Information 18
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS 25
MARKET PRICE DATA AND DIVIDEND INFORMATION 33
Vicon 33
IQinVision
RISK FACTORS 35
Risks Related to the Merger 35
Risks Mutually Applicable to Vicon’s and IQinVision’s Businesses 39
Risks Relating to Vicon 44
Risks Relating to IQinVision 45
ii
61
79
82
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 47
THE ANNUAL MEETING OF VICON SHAREHOLDERS 48
Date, Time and Place 48
Purpose of the Vicon Annual Meeting 48
Vicon Record Date; Shareholders Entitled to Vote 48
Quorum; Broker Non-Votes 49
Votes Required for Proposals 49
Voting of Proxies by Holders of Record 50
Voting by Beneficial Owners 51
Revocation of Proxies 51
Cost of Proxy Solicitation 51
SOLICITATION OF IQINVISION WRITTEN CONSENT 52
IQinVision Shareholder Action by Written Consent 52
Shares Entitled to Consent and Consent Required 52
Submission of Consents 52
Executing Consents; Revocation of Consents 53
Solicitation of Consents; Expense 53
Recommendation of the IQinVision Board 53
Voting and Other Agreement 53
THE MERGER AND THE COMBINED COMPANY 54
General 54
Background of the Merger 54
Reasons for the Merger 59
Vicon’s Reasons for the Merger; Recommendation of the Vicon Special Committee and the Vicon Board of
Directors
IQinVision’s Reasons for the Merger; Recommendation of the IQinVision Board of Directors 62
Opinion of TM Capital, Financial Advisor to Vicon 64
Opinion of Imperial Capital, Financial Advisor to IQinVision 71
Financial Projections
Interests of Certain Persons in the Merger 80
Effective Time of the Merger 81
Regulatory Filings and Approvals Required to Complete the Merger
Tax Treatment of the Merger 82
Material U.S. Federal Income Tax Consequences of the Merger 82
Accounting Treatment 85
Dissenters’ Rights of IQinVision Shareholders 85
THE MERGER AGREEMENT 88
General 88
iii
Effective Time of the Merger 88
Merger Consideration 88
Fractional Shares 90
Exchange of Stock Certificates 90
Indemnification Obligations 90
Directors and Executive Officers of Vicon following the Merger 90
Conditions to Completion of the Merger 91
No Solicitation 92
Shareholder Approval 93
Covenants; Conduct of Business Pending the Merger 93
Other Agreements 94
Termination 95
Termination Fee 96
Indemnification and Insurance of IQinVision Directors and Officers 97
Representations and Warranties 97
Amendment 98
VOTING AND OTHER AGREEMENTS 98
Voting and Lock-up Agreements 98
Vicon Post-Closing Lock-Up Agreements 99
IQINVISION’S BUSINESS 99
IQINVISION MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 101
MANAGEMENT OF THE COMBINED COMPANY 106
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF VICON 107
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF IQINVISION 109
DESCRIPTION OF VICON STOCK 110
COMPARISON OF RIGHTS OF HOLDERS OF VICON STOCK AND IQINVISION STOCK 111
VICON ANNUAL MEETING PROPOSALS 122
VICON PROPOSAL NO. 1: APPROVAL OF THE ISSUANCE OF VICON COMMON STOCK TO
IQINVISION SHAREHOLDERS IN CONNECTION WITH THE MERGER 122
Vote Required; Recommendation of Board of Directors 122
iv
VICON PROPOSAL NO. 2: APPROVAL OF ADJOURNMENT OR POSTPONEMENT OF THE VICON
ANNUAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES 123
Vote Required; Recommendation of Board of Directors 123
VICON PROPOSAL NO. 3: ELECTION OF DIRECTORS 124
Vote Required 124
Information with Respect to Nominees and Continuing Directors 124
Director Nominee Biographies 125
Continuing Director Biographies 125
The Role of the Vicon Board of Directors 126
Vicon Board of Directors Leadership Structure 126
Vicon Board of Directors Oversight of Risk 127
Vicon Board of Directors Composition 127
Meetings of the Vicon Board of Directors and Committees of the Board 127
Certain Relationships and Related Transactions 129
Code of Ethics and Business Conduct 129
Ability of Shareholders to Communicate with the Vicon Board of Directors 129
Report of the Audit Committee 129
OTHER OFFICERS OF VICON 130
EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS 131
Compensation Philosophy and Objectives of Our Compensation Program 131
Employment Agreements 132
VICON PROPOSAL NO. 4: APPROVAL, ON AN ADVISORY BASIS, OF EXECUTIVE
COMPENSATION 137
VICON PROPOSAL NO. 5: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS 138
OTHER MATTERS 140
OTHER INFORMATION 140
LEGAL MATTERS 140
EXPERTS 140
WHERE YOU CAN FIND ADDITIONAL INFORMATION 140
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE 141
v
ANNEXES
ANNEX A
ANNEX B
ANNEX C
ANNEX D
ANNEX E
ANNEX F
ANNEX G
ANNEX H
Merger Agreement A-1
Fairness Opinion of TM Capital B-1
Fairness Opinion of Imperial Capital C-1
Chapter 13 of the California General Corporation Law D-1
Form of Vicon Voting Agreements E-1
Form of IQinVision Voting Agreements F-1
Form of Post-Closing Lock-Up Agreement G-1
IQinVision unaudited condensed financial statements and related notes for the three-month
periods ended March 31, 2014 and 2013 and audited financial statements and related notes
for the years ended December 31, 2013 and 2012
H-1
1
PART I – SUMMARY AND GENERAL INFORMATION
DEFINED TERMS
CGCL California General Corporation Law
Code The Internal Revenue Code of 1986, as amended
Effective Time The time at which the articles of merger are filed with the Secretary of State of California
in connection with the Merger
Exchange Act Securities Exchange Act of 1934, as amended
IQinVision IQinVision, Inc., a California corporation
Merger The transaction whereby Merger Sub will be merged with and into IQinVision, with
IQinVision surviving as a wholly owned subsidiary of Vicon pursuant to the terms of the
Merger Agreement
Merger Agreement Agreement and Plan of Merger and Reorganization, dated as of March 28, 2014, as it may
be amended from time to time, by and among Vicon, IQinVision and Merger Sub
Merger Consideration A number of shares of Vicon common stock equal to the total number of shares of Vicon
common stock then issued and outstanding, excluding outstanding options to purchase Vicon
common stock, and any other securities convertible into Vicon common stock, on the terms
provided in the Merger Agreement and as further described below under the section entitled
“The Merger Agreement – The Merger Consideration,” immediately prior to the Effective
Time, which shall be issued to the holders of shares of IQinVision capital stock in accordance
with the Merger Agreement
Merger Sub VI Merger Sub, Inc., a California corporation and a wholly owned subsidiary of Vicon
NYBCL New York Business Corporation Law
SEC Securities and Exchange Commission
Securities Act Securities Act of 1933, as amended
Vicon* Vicon Industries, Inc., a New York corporation
Vicon annual meeting The 2014 annual meeting of shareholders of Vicon, to be held on August 28, 2014 at 10:00
a.m., Eastern Daylight Time, for the purposes described in this proxy statement/prospectus/
consent solicitation.
* In this proxy statement/prospectus/consent solicitation, references to “we,” “us” or “our” refer to Vicon.
2
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE VICON ANNUAL MEETING AND THE
IQINVISION CONSENT SOLICITATION
The following questions and answers are intended to briefly address potential questions that Vicon or IQinVision
shareholders may have about the Merger, including the terms of the Merger Agreement and the transactions
contemplated thereby, and the effect of the Merger on Vicon shareholders and IQinVision shareholders. They are also
intended to address questions that Vicon shareholders may have about the separate matters to be considered at the
Vicon annual meeting. This section, however, only provides summary information. Vicon shareholders and IQinVision
shareholders are urged to read carefully the remainder of this proxy statement/prospectus/consent solicitation, including
any Annexes hereto, because the information in this section may not provide all the information that could be important
to you when making a voting decision regarding the matters being considered by this proxy statement/prospectus/
consent solicitation. If you are a Vicon shareholder and have additional questions about the information provided in
this proxy statement/prospectus/consent solicitation, please refer to “Questions and Answers for Vicon Shareholders
- Who can help answer my questions?” below. If you are an IQinVision shareholder and have additional questions
about the information provided in this proxy statement/prospectus/consent solicitation, please refer to “Questions and
Answers for IQinVision Shareholders - Who can help answer my questions?” below.
Questions and Answers Regarding the Merger
Q: What is the transaction?
A: The transaction is the Merger of Merger Sub with and into IQinVision with IQinVision surviving the Merger as the
wholly owned subsidiary of Vicon. Following the consummation of the transactions contemplated by the Merger
Agreement, the shareholders of Vicon immediately prior to the Effective Time and the shareholders of IQinVision
immediately prior to the Effective Time will each own approximately 50% of the outstanding shares of common stock
of Vicon after the Merger.
Pursuant to the terms of the Merger Agreement, based on the number of shares of Vicon common stock outstanding
and the number of shares of IQinVision capital stock outstanding, as of the close of business on July 16, 2014, the last
trading day before the date of this proxy statement/prospectus/consent solicitation, at the Effective Time, the issued
and outstanding shares of capital stock of IQinVision will be converted into such total number of shares of Vicon
common stock equal to approximately 0.2525 for each share of common stock of IQinVision and approximately 0.4013
for each share of common stock into which each share of preferred stock of IQinVision is convertible, subject to
adjustment.
Q: Why am I receiving this proxy statement/prospectus/consent solicitation?
A: You are receiving this proxy statement/prospectus/consent solicitation because you are a shareholder of Vicon or a
shareholder of IQinVision. If you are a shareholder of Vicon, you are entitled to vote on each of the proposals being
considered at the Vicon annual meeting, including the issuance of the Merger Consideration. If you are a shareholder
of IQinVision, you are entitled to vote on the Merger by signing the IQinVision shareholder written consent. This
document serves as a proxy statement of Vicon used to solicit proxies for the Vicon annual meeting, as a consent
solicitation of IQinVision shareholders, and as a prospectus of Vicon used to offer shares of Vicon common stock to
IQinVision shareholders pursuant to the terms of the Merger Agreement. This document contains important information
about the Merger, including the terms of the Merger Agreement and the transactions contemplated thereby, and the
effect of the Merger on Vicon shareholders and IQinVision shareholders. It also contains important information about
the separate matters to be considered at the Vicon annual meeting. You are urged to carefully read this proxy statement/
prospectus/consent solicitation, including any Annexes hereto, before voting on any of the matters discussed herein.
Q: What is required to approve the Merger Agreement and consummate the Merger?
A: To consummate the Merger, Vicon shareholders must approve the issuance of the Merger Consideration, and
IQinVision shareholders must approve the Merger, including the terms of the Merger Agreement and the transactions
contemplated thereby.
3
The approval by the shareholders of Vicon of the issuance of the Merger Consideration requires the affirmative vote
of a majority of the votes cast at the Vicon annual meeting, assuming a quorum is present. The approval of the Merger,
including the terms of the Merger Agreement, by the shareholders of IQinVision requires the affirmative vote, through
the execution of the enclosed written consent, of the holders of (i) a majority of the outstanding shares of IQinVision
common stock, (ii) a majority of the outstanding shares of IQinVision preferred stock, voting together as a single class
on an as-converted to common stock basis, and (iii) a majority of the outstanding shares of each series of IQinVision
preferred stock, voting separately on an as-converted to common stock basis, in each case outstanding on the applicable
record date.
In addition to the requirement to obtain the requisite shareholder approvals, each of the other closing conditions set
forth in the Merger Agreement must be satisfied or waived. For a more complete description of the closing conditions
under the Merger Agreement, you are urged to read the section entitled “The Merger Agreement—Conditions to
Completion of the Merger” of this proxy statement/prospectus/consent solicitation.
Q: What will happen to Vicon and IQinVision if the Merger is not ultimately completed?
A: If the Merger is not completed, Vicon and IQinVision will continue to operate as separate companies and their
respective businesses and operations will continue as they currently are. The board of directors of each of Vicon and
IQinVision believe that the Merger will enable the combined company to compete more effectively and efficiently in
the increasingly competitive international security market.
Q: When do Vicon and IQinVision expect to complete the Merger?
A: Vicon and IQinVision are working to complete the Merger during the fourth quarter of Vicon’s 2014 fiscal year,
which ends on September 30, 2014, or as soon thereafter as reasonably possible. Vicon and IQinVision must first obtain
the necessary approvals, including, but not limited to, the approval of each company’s shareholders as described herein,
and satisfy the additional closing conditions described in the Merger Agreement. Neither Vicon nor IQinVision can
provide any assurances as to whether all the conditions to closing the Merger will be met nor can they predict the exact
timing of the closing of the Merger. It is possible that, regardless of whether the requisite shareholder approvals are
obtained, the Merger will not be completed.
Q: What are the material U.S. federal income tax consequences of the Merger?
A: The Merger is intended to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, or the Code. If the Merger qualifies as a reorganization, it is anticipated that
IQinVision shareholders will not recognize a gain or loss for U.S. federal income tax purposes upon the exchange of
shares of IQinVision capital stock for shares of Vicon common stock, except with respect to cash received in lieu of
fractional shares of Vicon common stock and except for IQinVision shareholders who exercise their dissenters’ rights
with respect to the Merger.
Tax matters are very complicated, and the tax consequences of the Merger to a particular shareholder will depend, in
part, on such shareholders individual circumstances. Accordingly, you are urged to consult your tax advisor for a full
understanding of the tax consequences of the Merger to you, including the applicability and effect of federal, state,
local and foreign income and other tax consequences. For more information, please see the section entitled “The Merger
and the Combined Company—Material U.S. Federal Income Tax Consequences of the Merger” of this proxy statement/
prospectus/consent solicitation.
Q: What risks should I consider in deciding whether to vote in favor of the proposals?
A: You should carefully review the section of this proxy statement/prospectus/consent solicitation entitled “Risk Factors”
beginning on page 35, which sets forth certain risks and uncertainties related to the Merger, risks and uncertainties to
which the combined company’s business will be subject, and risks and uncertainties to which each of Vicon and
IQinVision, as an independent company, is subject.
Q: Who is paying for this proxy solicitation and consent solicitation?
A: Vicon and IQinVision have jointly prepared this proxy statement/prospectus/consent solicitation and will each bear
their own costs associated with providing this proxy statement/prospectus/consent solicitation, including the
preparation, assembly, printing and mailing of this proxy statement/prospectus/consent solicitation, to their respective
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shareholders. Vicon may also reimburse brokerage houses and other custodians, nominees and fiduciaries for their costs
of forwarding the proxy statement/prospectus/consent solicitation materials to beneficial owners who hold their shares
in “street name” through such custodians, nominees or fiduciaries.
Questions and Answers for Vicon Shareholders
Q: What will I receive in the Merger?
A: Whether or not the Merger is completed, Vicon shareholders will retain the Vicon common stock that they currently
own. They will not receive any Merger Consideration, and they will not receive any additional shares of Vicon common
stock in the Merger. As part of the Merger, and pursuant to the terms of the Merger Agreement, on June 9, 2014, the
Vicon board of directors declared a special cash dividend of $0.55 per share payable to Vicon shareholders of record
as of July 11, 2014, payable within 15 days after the Effective Time, subject to the satisfaction of the closing conditions
set forth in the Merger Agreement. The special cash dividend will not be paid if the Merger is not completed.
Q: What is the difference between a shareholder of record and a beneficial owner of shares?
A: If your shares are registered directly in your name with Vicon’s transfer agent, Computershare, you are considered
a “shareholder of record” with respect to those shares. If this is the case, this proxy statement/prospectus/consent
solicitation has been sent or provided directly to you by Vicon.
If your shares are held in a brokerage account or by a bank or other nominee, you are considered the “beneficial owner”
of the shares held for you in “street name.” If this is the case, the proxy materials have been forwarded to you by your
broker, bank or other nominee, which is considered the shareholder of record with respect to these shares. As the
beneficial owner, you have the right to direct your broker, bank or other nominee how to vote your shares.
Q: What do I need to do now?
A: You are encouraged to carefully read and consider the information in this proxy statement/prospectus/consent
solicitation, including the Annexes hereto and the documents incorporated herein by reference. If you are the
shareholder of record of your shares of Vicon common stock, you may instruct the proxy holders how to vote your
shares by:
Logging onto the website http://www.envisionreports.com/VII and following the prompts using your
control number located on your proxy card to vote over the Internet anytime up to 1:00 a.m., Central
Daylight Time, on August 28, 2014 and following the instructions provided on that site;
Dialing 1-800-652-VOTE (8683) and listening for further directions to vote by telephone anytime up to
1:00 a.m., Central Daylight Time, on August 28, 2014 and following the instructions provided in the
recorded message; or
Signing and returning your proxy card in the postage-paid envelope provided.
If you are the beneficial owner of shares of Vicon common stock, you have the right to direct your broker, bank or
nominee on how to vote your shares. Your broker, bank or nominee has provided a voting instruction card for you to
use in directing the broker, bank or nominee regarding how to vote your shares. Please follow the instructions provided
by the nominee or contact the nominee directly if you need to receive a voting instruction card or have any questions
about voting your shares held in street name.
Vicon shareholders may also attend the Vicon annual meeting and vote in person. If you hold shares in street name and
wish to be able to vote in person at the Vicon annual meeting, you must obtain a “legal proxy” from your broker, bank
or other nominee and present it to the inspector of elections with your ballot at the Vicon annual meeting. Even if you
plan to attend the Vicon annual meeting in person, we recommend that you submit your proxy in advance of the meeting
as described above so that your vote will be counted if you later decide not to attend the meeting. Submitting your
proxy in advance of the Vicon annual meeting will not affect your right to vote in person should you decide to attend
the meeting.
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Q: What am I being asked to vote on?
A: Vicon shareholders are being asked to vote on the following proposals at the Vicon annual meeting:
Proposal No. 1 - Approval of the Issuance of the Merger Consideration: To approve the issuance of shares of
Vicon common stock to IQinVision shareholders to complete the Merger, pursuant to the terms of the Merger
Agreement;
Proposal No. 2 - Approval of Adjournment or Postponement of Meeting: To approve the adjournment or
postponement of the Vicon annual meeting, if necessary or appropriate, to solicit additional proxies;
Proposal No. 3 - Election of Directors: To approve the election of two (2) directors of Vicon for a term of
three years or until a successor is duly elected and qualified, or until their earlier death, resignation or removal;
and
Proposal No. 4 - Approval of the Compensation of Vicon’s Named Executive Officers: To approve, on an
advisory (non-binding) basis, the compensation of Vicon’s named executive officers as disclosed in the
Compensation Discussion and Analysis – Executive Compensation section; and
Proposal No. 5 - Approval of the Appointment of Vicon’s Independent Registered Public Accountants: To
approve the ratification of the appointment of BDO USA, LLP as Vicon’s independent registered public
accounting firm for the fiscal year ending September 30, 2014.
Q: Are there any other matters to be addressed at the Vicon annual meeting?
A: Vicon knows of no other matters to be brought before the Vicon annual meeting, but if other matters are properly
brought before the meeting, or at any adjournment or postponement thereof, the persons named in the proxy intend to
take such action as in their judgment is in the best interests of Vicon and its shareholders. The proxy holders, Kenneth
M. Darby and Arthur D. Roche are members of the Vicon board of directors.
Q: What vote of Vicon shareholders is required to approve each item?
A: Assuming a quorum is present at the Vicon annual meeting, the vote requirements for the various proposals are as
follows:
Proposal No. 1 - Approval of the Issuance of the Merger Consideration: Approval of the issuance of the Merger
Consideration to IQinVision shareholders requires the affirmative vote of a majority of the votes cast, in person
or by proxy, at the Vicon annual meeting.
Proposal No. 2 - Approval of Adjournment or Postponement of Meeting: Approval of the adjournment or
postponement of the Vicon annual meeting requires the affirmative vote of the holders of the majority of the
votes cast, in person or by proxy, at the Vicon annual meeting, whether or not a quorum is present.
Proposal No. 3 - Election of Directors: Each director must be elected by the affirmative vote of a plurality of
the votes cast with respect to such director by the shares represented, in person or by proxy, and entitled to
vote therefor at the Vicon annual meeting.
Proposal No. 4 - Approval of the Compensation of Vicon’s Named Executive Officers: Approval of the
compensation of Vicon’s named executive officers, on an advisory (non-binding) basis, requires the affirmative
vote of a majority of the total votes cast, in person or by proxy, at the Vicon annual meeting.
Proposal No. 5 - Approval of the Appointment of Vicon’s Independent Registered Public Accountants: Approval
of the appointment of BDO USA, LLP as Vicon’s independent registered public accountants requires the
affirmative vote of a majority of the votes cast, in person or by proxy, at the Vicon annual meeting.
Q: How many votes do I have?
A: You are entitled to one vote for each share of Vicon common stock you owned at the close of business on the record
date, provided that those shares are either held directly in your name as the shareholder of record or were held for you
as the beneficial owner through a nominee.
Q: How are abstentions and broker non-votes treated?
A: A Vicon shareholders abstention from voting will have the same effect as a vote “AGAINST” Proposal No. 1
(Approval of the Issuance of the Merger Consideration). A Vicon shareholders abstention from voting will have no
effect on Proposal No. 2 (Approval of Adjournment or Postponement of Meeting), Proposal No. 4 (Approval of the
Compensation of Vicon’s Named Executive Officers) or Proposal No. 5 (Approval of the Appointment of Vicon’s
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Independent Registered Public Accountants). Votes that are withheld for Proposal No. 3 (Election of Directors) will
not be included in the vote tally for the election of the directors.
Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting instructions to
the broker, bank or nominee holding the shares. “Broker non-votes” occur when a beneficial owner of shares held in
street name does not give instructions to the broker, bank or nominee holding the shares as to how to vote on matters
deemed “non-routine.” Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give
voting instructions to the broker, bank or nominee holding the shares. If the beneficial owner does not provide voting
instructions, the broker, bank or nominee can still vote the shares with respect to matters that are considered to be
“routine.”
Proposal No. 2 (Approval of Adjournment or Postponement of Meeting) and Proposal No. 5 (Approval of the
Appointment of Vicon’s Independent Registered Public Accountants) are considered to be “routine” matters; as such,
if you hold your shares in street name and do not give voting instructions to the broker, bank or nominee holding your
shares, your broker, bank or nominee can still vote the shares with respect to these two proposals. Proposal No. 1
(Approval of the Issuance of the Merger Consideration), Proposal No. 3 (Election of Directors) and Proposal No. 4
(Approval of the Compensation of Vicon’s Named Executive Officers) are considered to be “non-routine” matters; as
such, if you hold your shares in street name and do not give voting instructions to the broker, bank or nominee holding
your shares, your shares will not be voted with respect to these three proposals. This is what is referred to as a “broker
non-vote.” Broker non-votes will not count for purposes of determining the number of votes cast. To make sure your
vote is counted, you should instruct your broker, bank or other nominee as to how to vote your shares, following the
instructions contained in the voting instructions card that your nominee provides to you.
Q: What should I do if I receive more than one set of voting materials?
A: You may receive more than one notice or set of voting materials, including multiple copies of this proxy statement/
prospectus/consent solicitation and multiple proxy cards or voting instruction cards. For example, if you hold your
shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage
account in which you hold shares. In addition, if you are a shareholder of record and your shares are registered in more
than one name, you will receive more than one proxy card. If you receive more than one proxy card, please vote
promptly with respect to each proxy card that you receive to ensure that all of your shares are voted at the Vicon annual
meeting.
Q: What happens if I do not return a proxy card or otherwise provide proxy instructions?
A: If you are the holder of record of your shares, the failure to return your proxy card means that your shares will not
be counted for purposes of determining whether a quorum is present at the Vicon annual meeting and will not be counted
toward the vote for any of the proposals.
Executed proxies without instructions will be voted “FOR” the approval of the issuance of the Merger Consideration
and “FOR” each of the other proposals to be considered at the Vicon annual meeting.
Q: Can I change or revoke my vote after I return a proxy card or voting instruction card?
A: Yes, you may change your mind at any time before the vote is taken at the Vicon annual meeting.
If you are the holder of record of your shares, you may revoke or change a previously delivered proxy at any time
before the Vicon annual meeting by delivering another proxy with a later date, by voting again via the Internet or by
telephone, or by delivering written notice of revocation of your proxy to Vicon’s Corporate Secretary at Vicon’s principal
executive offices before the beginning of the Vicon annual meeting. You may also revoke your proxy by attending the
Vicon annual meeting and voting in person, although attendance at the Vicon annual meeting will not, in and of itself,
revoke a valid proxy that was previously delivered.
If you are the beneficial owner of your shares, you must contact your broker, bank or other nominee to revoke any prior
voting instructions. You also may revoke any prior voting instructions by voting in person at the Vicon annual meeting
if you obtain a legal proxy as described above.
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Q: Who can help answer my questions?
A: If you are a Vicon shareholder and have any questions about the Merger, the Vicon annual meeting, or how to submit
your proxy, or if you need additional copies of this proxy statement/prospectus/consent solicitation, the enclosed proxy
card, or voting instructions, you should contact Vicon’s proxy solicitor, Georgeson Inc. at (800) 261-1047, or Vicon
Industries, Inc. at (631) 952-2288.
Questions and Answers for IQinVision Shareholders
Q: What do IQinVision shareholders need to do now?
A: You should read this proxy statement/prospectus/consent solicitation carefully, including the Annexes hereto and
the documents incorporated herein by reference, and consider how the Merger affects you as an IQinVision shareholder.
IQinVision shareholders are being asked to sign and return the enclosed written consent. IQinVision is not asking
IQinVision shareholders for a proxy and IQinVision shareholders are not requested to send IQinVision a proxy. If you
hold shares of IQinVision common stock or preferred stock as of the record date and you wish to give your written
consent, you must complete the enclosed written consent, date and sign it, and promptly return it to IQinVision. Once
you have completed, dated and signed the written consent, you may deliver it to IQinVision by faxing it to IQinVision’s
legal counsel, Stradling Yocca Carlson & Rauth, P.C., Attention: Brandon Sanders, Esq. at (949) 823-5085, by emailing
a .pdf copy of it to bsanders@sycr.com, or by mailing it to Stradling Yocca Carlson & Rauth, P.C. at 660 Newport
Center Drive, Suite 1600, Newport Beach, California 92660, Attention: Brandon Sanders, Esq.
Q: What am I being asked to approve?
A: You are being asked to approve the Merger, including the terms of the Merger Agreement and the transactions
contemplated thereby. As an IQinVision shareholder, you are not being asked to vote upon or consent to any of the
proposals to be considered at the Vicon annual meeting as described elsewhere in this proxy statement/prospectus/
consent solicitation.
Q: What will IQinVision shareholders receive in the Merger?
A: Vicon has agreed to issue, and IQinVision shareholders will have the right to receive, for each share of IQinVision
common stock or preferred stock they hold, that number of shares of Vicon common stock determined pursuant to the
exchange ratio set forth in the Merger Agreement and described in this proxy statement/prospectus/consent solicitation
under the heading “The Merger Agreement—Merger Consideration.” If the Merger is consummated, each share of
IQinVision common stock and preferred stock, based on the number of shares of common stock into which the preferred
stock is convertible, will convert into the right to receive that number of shares of Vicon common stock equal to the
applicable exchange ratio. Based on Vicon’s and IQinVision’s outstanding securities as of July 16, 2014, the exchange
ratio for (i) the IQinVision common stock would have been 0.2525 and (ii) the IQinVision common stock into which
each share of preferred stock is convertible would have been 0.4013. Each outstanding share of IQinVision Series A
preferred stock is convertible into approximately 1.5203 shares of IQinVision common stock and each outstanding
share of IQinVision Series B, Series C and Series D preferred stock is convertible into one share of IQinVision common
stock. Upon completion of the Merger, current shareholders of Vicon are expected to own approximately 50% of the
combined company, and current shareholders of IQinVision are expected to own approximately 50% of the combined
company. The Merger will not result in the payment of any liquidation preferences of the IQinVision preferred stock.
Q: What options do I have with respect to the Merger Agreement proposal?
A: With respect to the shares of IQinVision common stock or preferred stock that you hold, you may execute a written
consent to approve the Merger, including the terms of the Merger Agreement and the transactions contemplated thereby
(which is equivalent to a vote for the Merger), or to you can choose not to execute the written consent (which is equivalent
to a vote against the Merger). If you fail to execute and return your written consent, it has the same effect as voting
against the Merger.
Q: How will the Merger affect stock options for and stock appreciation rights with respect to IQinVision
common stock?
A: Vicon will assume outstanding options to purchase and stock appreciation rights with respect to shares of IQinVision
common stock. The options and stock appreciation rights will become exercisable for shares of Vicon common stock
with substantially similar terms regarding exercisability, vesting schedule and other provisions, but with the number
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of shares and exercise price being appropriately adjusted to reflect the exchange ratio between Vicon common stock
and IQinVision common stock determined in accordance with the Merger Agreement.
Q: As an IQinVision shareholder, how does IQinVision’s Board of Directors recommend that I vote?
A: After careful consideration, IQinVision’s Board of Directors unanimously recommends that IQinVision’s
shareholders vote to adopt and approve the Merger, including the terms of the Merger Agreement and the transactions
contemplated thereby.
Q: Who is entitled to give a written consent?
A: IQinVision’s Board of Directors has set July 15, 2014 as the record date for determining holders of IQinVision
common stock or preferred stock entitled to execute and deliver this written consent with respect to this solicitation.
Holders of IQinVision common stock or preferred stock on the record date will be entitled to give a consent using the
written consent furnished with this proxy statement/prospectus/consent solicitation.
Q: Who is soliciting my written consent?
A: IQinVision’s Board of Directors is providing these consent solicitation materials to you. These materials also
constitute a prospectus with respect to the Vicon common stock issuable to IQinVision’s shareholders in the Merger.
Q: How can I return my IQinVision written consent?
A: If you hold shares of IQinVision common stock or preferred stock as of the record date and you wish to give your
written consent, you must complete the enclosed written consent, date and sign it, and promptly return it to IQinVision.
You may deliver it to IQinVision by faxing it to IQinVision’s legal counsel, Stradling Yocca Carlson & Rauth, P.C.,
Attention: Brandon Sanders, Esq., at (949) 823-5085, by emailing a .pdf copy of it to bsanders@sycr.com, or by mailing
it to Stradling Yocca Carlson & Rauth, P.C. at 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660,
Attention: Brandon Sanders, Esq. If you mail your written consent, please allow sufficient time for it to be delivered
in advance of the delivery deadline discussed below.
Q: What happens if I do not return my IQinVision written consent?
A: If you do not return your written consent, that will have the same effect as a vote against the Merger.
Q: Will my rights as a Vicon shareholder be different from my rights as an IQinVision shareholder?
A: Yes. Upon completion of the Merger, each shareholder of IQinVision will become a shareholder of Vicon. There
are important differences between the rights of shareholders of Vicon and shareholders of IQinVision. Please carefully
review the description of these differences in the section of this proxy statement/prospectus/consent solicitation entitled
“Comparison of Rights of Shareholders.”
Q: Are IQinVision shareholders entitled to dissenters’ rights?
A: Under California law, holders of IQinVision capital stock are entitled to dissenters’ rights in connection with the
Merger. If you do not wish to accept shares of Vicon common stock in the Merger and you do not approve the Merger
Agreement by the IQinVision shareholder action by written consent, you have the right under California law to seek
from IQinVision the “fair market value” of your shares in lieu of the Vicon common stock you would receive if the
Merger is completed. IQinVision refers you to the information under the heading “The Merger— Dissenters’ Rights
of IQinVision Shareholders” of this proxy statement/prospectus/consent solicitation and to the applicable California
statute attached as Annex D to this proxy statement/prospectus/consent solicitation for information on how to exercise
your dissenters’ rights. Failure to follow all of the steps required under California law will result in the loss of your
dissenters’ rights. In addition, if holders of more than ten percent (10%) of the outstanding shares of IQinVision, on
an as-converted-to-common stock basis, decide to exercise their dissenters’ rights, Vicon will have the right to terminate
the Merger Agreement.
Q: What is the deadline for returning my written consent?
A: The board of directors of IQinVision has set August 27, 2014 as the targeted final date for receipt of written consents.
IQinVision reserves the right to extend the final date for receipt of written consents beyond August 27, 2014 in the
event that consents adopting and approving the Merger, including the Merger Agreement and the transactions
contemplated thereby, have not been obtained by that date from holders of a sufficient number of shares of IQinVision
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common stock and preferred stock to satisfy the conditions to the Merger. Any such extension may be made without
notice to shareholders. When IQinVision has received written consents from shareholders sufficient to approve the
Merger, the consent solicitation will conclude.
Q: Can I change or revoke my written consent?
A: Yes, you may change or revoke your consent to the Merger at any time before the consents of a sufficient number
of shares to approve the Merger have been filed with IQinVision’s Corporate Secretary. If you wish to change or revoke
your consent before that time, you may do so by one of the means described in the section entitled “Solicitation of
IQinVision Written Consent—Submission of Consents” of this proxy statement/prospectus/consent solicitation, or
delivering a notice of revocation to IQinVision’s Corporate Secretary.
Q: Should I send in my stock certificates now?
A: No. If you are an IQinVision shareholder, assuming the Merger is completed, you will receive written instructions
from the exchange agent about how to exchange your stock certificates representing shares of IQinVision capital stock
for stock certificates representing shares of Vicon common stock.
Q: Who can help answer my questions?
A: If you are an IQinVision shareholder and have any questions about the Merger or how to submit your written consent,
or if you need additional copies of this proxy statement/prospectus/consent solicitation, you should contact Charles
Chestnutt at IQinVision at (949) 369-8100.
SUMMARY
The following summary highlights selected information from this proxy statement/prospectus/consent
solicitation and may not contain all of the information that is important to you. To better understand the Merger,
including the terms of the Merger Agreement and the transactions contemplated thereby, being considered at the Vicon
annual meeting and by written consent by the IQinVision shareholders, you should carefully read this entire proxy
statement/prospectus/consent solicitation, including the Merger Agreement attached as Annex A to this proxy statement/
prospectus/consent solicitation. For purposes of this proxy statement/prospectus/consent solicitation, the term “Merger
Agreement” will refer to the Merger Agreement, as the same may be amended. For the convenience of the reader,
certain capitalized terms used in this proxy statement/prospectus/consent solicitation have been consolidated in the
section entitled “Defined Terms.”
The Companies
Vicon Industries, Inc.
Vicon Industries, Inc., a New York corporation founded in 1967, is a global producer of video management
systems and system components for use in security, surveillance, safety and communication applications by a broad
range of end users. Vicon’s product line consists of various elements of a video system, including digital and network
video recorders (DVR & NVR), video encoders, decoders, servers and related video management software, data storage
units, HD, IP and analog fixed and robotic cameras, virtual and analogue matrix video switchers and controls, and
system peripherals. Such products are widely deployed in commercial/industrial, critical infrastructure, city
surveillance, education, gaming, corrections, government/law enforcement, healthcare, retail, and transportation
applications, among others.
Vicon’s common stock is traded on the NYSE MKT market under the symbol “VII.”
The principal executive offices of Vicon are located at 131 Heartland Boulevard, Edgewood, New York 11717,
and its telephone number is (631) 952-2288.
Additional information about Vicon is included in documents incorporated by reference into this proxy
statement/prospectus/consent solicitation. See the sections entitled “Where You Can Find Additional Information” and
“Incorporation of Certain Information by Reference.”
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IQinVision, Inc.
IQinVision, Inc., a California corporation, has been designing, manufacturing and marketing the IQeye line
of HD megapixel IP cameras since 1998. IQinVision’s products are widely deployed in banking/finance, city
surveillance, commercial/industrial, critical infrastructure, education, gaming, government/law enforcement,
healthcare, retail, and transportation applications, among others.
IQinVision is a privately-held corporation.
The principal executive offices of IQinVision are located at 33122 Valle Road, San Juan Capistrano, California
92675, and its telephone number is (949) 369-8100.
Additional information about IQinVision is included elsewhere in this proxy statement/prospectus/consent
solicitation. See the sections entitled “IQinVision’s Business” and “IQinVision Management’s Discussion and Analysis
of Financial Condition and Results of Operations.”
The Merger
A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus/consent solicitation.
Vicon and IQinVision encourage you to read the entire Merger Agreement carefully because it is the principal document
governing the Merger. For more information on the Merger Agreement, see the section entitled “The Merger Agreement.”
The Merger Agreement is included in this proxy statement/prospectus/consent solicitation to provide you with
information regarding its terms and is not intended to provide any factual information about Vicon or IQinVision. Such
information can be found elsewhere in this proxy statement/prospectus/consent solicitation and, in the case of Vicon,
in the other public filings Vicon makes with the SEC. See the sections entitled “Where You Can Find Additional
Information” and “Incorporation of Certain Information by Reference.”
The Merger Agreement contains representations and warranties by each of the parties to the Merger Agreement.
These representations and warranties have been made solely for the benefit of the other parties to the Merger Agreement
and:
may not be intended as statements of fact, but rather as a way of allocating the risk between the parties in
the event the statements therein prove to be inaccurate; and
may apply standards of materiality in a way that is different from what may be viewed as material by you
or other investors.
In addition, these representations and warranties were made as of the date of the Merger Agreement.
Information concerning the subject matter of the representations and warranties may have changed since the date of
the Merger Agreement, which subsequent information may or may not be fully reflected in the public disclosures of
Vicon. Accordingly, YOU SHOULD NOT RELY ON THE REPRESENTATIONS AND WARRANTIES AS
CURRENT CHARACTERIZATIONS OF FACTUAL INFORMATION ABOUT VICON OR IQINVISION, but
instead should read such representations and warranties together with the information provided elsewhere in this proxy
statement/prospectus/consent solicitation and in the documents incorporated by reference into this proxy statement/
prospectus/consent solicitation. See the sections entitled “Where You Can Find Additional Information” and
“Incorporation of Certain Information by Reference.”
Effects of the Merger (see page 88)
Subject to the terms and conditions of the Merger Agreement, at the Effective Time of the Merger, Merger
Sub, a wholly owned subsidiary of Vicon formed for the sole purpose of effecting the Merger, will be merged with and
into IQinVision. IQinVision will survive the Merger as a wholly owned subsidiary of Vicon. Following the
consummation of the transactions contemplated by the Merger Agreement, the shareholders of Vicon immediately prior
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to the Effective Time and the shareholders of IQinVision immediately prior to the Effective Time will each own
approximately 50% of the outstanding shares of common stock of Vicon after the Merger.
Merger Consideration (see page 88)
Pursuant to the terms of the Merger Agreement, based on 4,522,335 shares of Vicon common stock outstanding
and 12,929,025 shares of IQinVision capital stock outstanding (including 5,766,922 shares of common stock, 920,051
shares of Series A preferred stock, 3,295,428 shares of Series B preferred stock, 1,444,212 shares of Series C preferred
stock and 1,502,412 shares of Series D preferred stock), as of the close of business on July 16, 2014, the last trading
day before the date of this proxy statement/prospectus/consent solicitation, at the Effective Time of the Merger, the
issued and outstanding shares of capital stock of IQinVision will be converted into 4,522,335 outstanding shares of
Vicon common stock allocated among holders of IQinVision capital stock in accordance with a conversion formula of
approximately 0.2525 for each share of common stock of IQinVision and approximately 0.4013 for each share of
common stock into which each share of preferred stock of IQinVision is convertible, subject to adjustment for changes
in Vicon common stock and IQinVision capital stock prior to the Effective Time of the Merger. Each outstanding share
of IQinVision Series A preferred stock is convertible into approximately 1.5203 shares of IQinVision common stock
and each outstanding share of IQinVision Series B, Series C and Series D preferred stock is convertible into one share
of IQinVision common stock. The Merger will not result in the payment of any liquidation preferences of the IQinVision
preferred stock.
Treatment of IQinVision Options and Stock Appreciation Rights (see page 89)
In connection with the Merger, all outstanding IQinVision options and stock appreciation rights, as well as
IQinVision’s 2011 Stock Incentive Plan and 2001 Stock Incentive Plan, will be assumed by Vicon. Each option and
stock appreciation right of IQinVision assumed in the Merger will be converted into an option to purchase or stock
appreciation right with respect to, as applicable, a number of shares of Vicon’s common stock representing the number
of IQinVision shares subject to such option or stock appreciation right multiplied by approximately 0.2525. The exercise
price of each option and the base value per share of Vicon common stock for each stock appreciation right will be
increased proportionately.
Conditions to Completion of the Merger (see page 91)
Completion of the Merger is subject to a number of conditions, including, but not limited to:
the issuance of the Merger Consideration in connection with the Merger shall have been approved by
Vicon’s shareholders and the approval of the Merger, including the terms of the Merger Agreement and
the transactions contemplated thereby shall have been approved by IQinVision’s shareholders;
the registration statement on Form S-4, of which this proxy statement/prospectus/consent solicitation is
a part, shall have been declared effective by the SEC; and
the Merger Consideration to be issued in connection with the Merger shall have been authorized for listing
on the NYSE MKT.
In addition, the obligation of Vicon to complete the Merger is further subject to the satisfaction or waiver of
the following conditions:
the representations and warranties of IQinVision contained in the Merger Agreement shall have been true
and correct as of the date of the Merger Agreement and the Effective Time, except where the failure to
be true would not be reasonably expected to have a material adverse effect on IQinVision;
IQinVision shall have performed or complied in all material respects with all agreements and covenants
to be performed or complied with by it; and
holders of no more than ten percent (10%) of the outstanding shares of IQinVision capital stock shall
have exercised dissenters’ rights.
12
In addition, the obligation of IQinVision to complete the Merger is further subject to the satisfaction or waiver
of the following conditions:
the representations and warranties of Vicon contained in the Merger Agreement shall have been true and
correct as of the date of the Merger Agreement and the Effective Time, except where the failure to be true
would not be reasonably expected to have a material adverse effect on Vicon;
Vicon shall have performed or complied in all material respects with all agreements and covenants to be
performed or complied with by it; and
David W. Wright, W. Gregory Robertson and Bernard F. Reynolds, directors of Vicon, shall have submitted
irrevocable letters of resignation from the Vicon board of directors, effective at the Effective Time (such
irrevocable letters of resignation were submitted concurrently and in connection with the Merger
Agreement on March 28, 2014 and Mr. Wright has resigned from the Vicon board of directors effective
as of May 15, 2014).
Termination of the Merger Agreement (see page 95)
The Merger Agreement may be terminated at any time before the completion of the Merger by the mutual
consent of Vicon and IQinVision. Under certain circumstances specified in the Merger Agreement, the Merger
Agreement may be terminated:
by Vicon or IQinVision upon a breach of any representation, warranty, covenant or agreement set forth
in the Merger Agreement on the part of the other party which cannot be or has not been cured within a
30-day cure period;
by Vicon or IQinVision if any consent of any regulatory authority required for consummation of the
Merger and the transactions contemplated thereby are denied or if any law or order prohibits the Merger;
by Vicon or IQinVision if the Merger shall not have been approved by the Vicon shareholders at the Vicon
annual meeting or by written consent of the IQinVision shareholders;
by Vicon or IQinVision if the Merger has not been consummated by (i) September 28, 2014, provided
however, that if the SEC has not declared the registration statement effective by September 28, 2014, then
either party may extend the termination date by an additional 60 days;
by Vicon if (i) the board of directors of IQinVision shall have failed to recommend approval of the Merger;
(ii) the board of directors of IQinVision shall have authorized any acquisition proposal other than the
Merger; or (iii) IQinVision shall have breached the no solicitation provisions set forth in the Merger
Agreement;
by IQinVision if (i) the Vicon board of directors shall have failed to recommend approval of the Merger
Consideration; (ii) the Vicon board of directors shall have authorized any acquisition proposal other than
the Merger; or (iii) Vicon shall have breached the no solicitation provisions set forth in the Merger
Agreement; or
by Vicon or IQinVision if the board of directors of such party authorizes such party to accept a superior
proposal.
Opinion of Vicon’s Financial Advisor (see page 64)
TM Capital, financial advisor to Vicon, delivered its opinion to Vicon’s special committee of the board of
directors and to the Vicon board of directors that, as of March 28, 2014, and based upon and subject to the factors and
assumptions set forth therein, the total consideration to be paid by Vicon in connection with the Merger, including the
Merger Consideration, is fair to Vicon and its shareholders from a financial point of view.
The full text of the written opinion of TM Capital dated March 28, 2014, which sets forth assumptions made,
procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is
attached as Annex B to this proxy statement/prospectus/consent solicitation. TM Capital provided its opinion for the
information and assistance of Vicon’s special committee of the board of directors and the Vicon board of directors in
13
connection with their consideration of the Merger and the transactions contemplated thereby. TM Capital’s opinion is
not a recommendation as to how any holder of Vicon’s common stock should vote with respect to the proposal to
consider the issuance of the Merger Consideration in connection with the Merger or any other matter.
Opinion of IQinVision’s Financial Advisor (see page 71)
Imperial Capital, financial advisor to IQinVision, delivered its opinion to IQinVision’s board of directors that,
as of March 26, 2014, and based upon and subject to the factors and assumptions set forth therein, the Merger
Consideration to be paid to the shareholders of IQinVision in connection with the Merger is fair to the shareholders of
IQinVision from a financial point of view.
The full text of the written opinion of Imperial Capital dated March 26, 2014, which sets forth assumptions
made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion,
is attached as Annex C to this proxy statement/prospectus/consent solicitation. Imperial Capital provided its opinion
for the information and assistance of IQinVision’s board of directors in connection with its consideration of the Merger,
including the Merger Agreement and the transactions contemplated thereby. Imperial Capital’s opinion is not a
recommendation as to how any holder of IQinVision’s capital stock should vote with respect to the Merger.
Voting and Lock-Up Agreements (see page 98)
Concurrently and in connection with the execution of the Merger Agreement, IQinVision entered into voting
and lock-up agreements with Kenneth Darby, David W. Wright, Article 6 Marital Trust, Henry Partners, L.P., and
Matthew Partners, L.P., shareholders of Vicon holding an aggregate of approximately 28% of the outstanding shares
of Vicon common stock as of March 28, 2014, pursuant to which such shareholders agreed to vote their respective
shares of Vicon common stock (i) in favor of the issuance of the Merger Consideration pursuant to the Merger Agreement
and any actions required in furtherance thereof, (ii) against any proposal or transaction involving Vicon, the effect of
which proposal or transaction is to delay, impair, prevent or nullify the Merger or the transactions contemplated by the
Merger Agreement, and (iii) against any other action or agreement that would result in a breach in any material respect
of any covenant, representation or warranty of the Merger Agreement.
In addition, Vicon entered into a voting and lock-up agreements with certain of IQinVision’s shareholders
holding an aggregate of approximately 72% of the outstanding shares of IQinVision common stock and 54% of the
outstanding shares of IQinVision preferred stock, which includes 60% of the outstanding shares of IQinVision Series
A preferred stock, 76% of the outstanding shares of IQinVision Series B preferred stock, 42% of the outstanding shares
of IQinVision Series C preferred stock, and 9% of the outstanding shares of IQinVision Series D preferred stock, as of
March 28, 2014, pursuant to which such shareholders agreed to vote their respective shares of IQinVision capital stock
(i) in favor of the approval of the Merger, the Merger Agreement and any actions required in furtherance thereof, (ii)
against any other proposal or transaction involving IQinVision, the effect of which proposal or transaction would be
to delay, impair, prevent or nullify the Merger or the transactions contemplated by the Merger Agreement, and (iii)
against any other action or agreement that would result in a breach in any material respect of any covenant, representation
or warranty of the Merger Agreement.
The voting and lock-up agreements provide that the Vicon shareholders and the IQinVision shareholders, as
applicable, will not transfer any of their shares of Vicon common stock or IQinVision capital stock, respectively, prior
to the Effective Time or the termination of the Merger Agreement.
The voting and lock-up agreements will terminate upon, among other things, the earlier of the Effective Time
or termination of the Merger Agreement. As to the voting and lock-up agreement entered into by Mr. Wright, Henry
Partners, L.P., and Matthew Partners, L.P., the agreement will terminate earlier in the event Vicon enters into any
material amendment to the Merger Agreement without Mr. Wright’s approval and certain restrictions on transfer of
their shares of Vicon common stock will terminate no later than September 28, 2014. As to the voting and lock-up
agreement entered into by Werner Wolfen, the agreement will terminate early if IQinVision enters into any material
amendment to the Merger Agreement without the approval of Werner Wolfen.
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Post-Closing Lock-Up Agreements (see page 99)
Concurrently and in connection with the execution of the Merger Agreement, certain shareholders of
IQinVision and the continuing directors of Vicon following the Merger have entered into post-closing lock-up
agreements with Vicon. Pursuant to these agreements, each such person will be subject to lock-up restrictions on the
sale of Vicon common stock acquired in the Merger and/or owned by such person immediately prior to the Effective
Time, pursuant to which such person may not, subject to certain exceptions, sell any of such Vicon common stock for
a period of six months after the Effective Time. As to the continuing directors of Vicon, the post-closing lock-up
agreements will terminate earlier in the event the director stops serving as a director.
Special Cash Dividend (see page 93)
As permitted by the Merger Agreement, on June 9, 2014, the Vicon board of directors declared a special cash
dividend of $0.55 per share payable to Vicon shareholders of record as of July 11, 2014, payable within 15 days after
the Effective Time. The special cash dividend will not be paid if the Merger is not completed.
Board of Directors and Management of the Combined Company Following the Merger (see page 90)
Pursuant to the Merger Agreement, immediately following the Effective Time of the Merger, the board of
directors of the combined company will consist of three directors of Vicon immediately prior to the closing of the
Merger and three directors of IQinVision immediately prior to the closing of the Merger. In lieu of one such director,
either of Vicon or IQinVision may appoint one person not currently serving on such party’s board of directors to the
board of the combined company, subject to such person’s qualification as an independent director under applicable
NYSE MKT rules and approval by the other party. Vicon has also consented to the appointment of IQinVision’s chief
executive officer in lieu of one of IQinVision’s current directors. The fees and/or other remuneration to be provided
to the additional directors will be consistent with those provided to current non-employee directors of Vicon.
Concurrently and in connection with the execution of the Merger Agreement, W. Gregory Robertson and
Bernard F. Reynolds delivered to Vicon written resignations from the Vicon board of directors, which resignations are
in each case contingent and effective upon the completion of the Merger. David W. Wright also executed a written
resignation in connection with the execution of the Merger Agreement, which was to be contingent and effective upon
the completion of the Merger, however, on May 5, 2014 he delivered to Vicon a separate written resignation from the
Vicon board of directors effective as of May 15, 2014. The three directors of Vicon immediately prior to the Effective
Time who will serve on the board of directors of the combined company are Kenneth M. Darby, Julian A. Tiedemann
and Arthur D. Roche. The three directors appointed by IQinVision who will serve on the board of directors of the
combined company are Gioia Messinger, Charles Chestnutt and Joseph Budano.
Upon completion of the Merger, Kenneth M. Darby and John M. Badke will continue to serve as Vicon’s Chief
Executive Officer and Chief Financial Officer, respectively. Mr. Darby had previously announced his retirement, but
has agreed to serve until a replacement is named. IQinVision’s Chief Executive Officer, Charles Chestnutt, and Executive
Vice President, Robert Ledenko, will serve as Vicon’s Executive Vice President and Chief Operating Officer and Senior
Vice President of Sales & Marketing, respectively.
Interests of Certain Persons in the Merger (see page 80)
Vicon
In considering the recommendation of the Vicon board of directors with respect to the issuance of shares of
Vicon common stock to IQinVision shareholders in the Merger, you should be aware that some of Vicon’s directors
and executive officers may have interests in the Merger that are different from, or in addition to, those of Vicon
shareholders generally. For example, Kenneth M. Darby, Julian A. Tiedemann and Arthur D. Roche, current directors
of Vicon, will serve as directors of the combined company following the Effective Time (assuming the reelection of
Messrs. Darby and Roche under Proposal No. 3 at the Vicon annual meeting); the current executive officers of Vicon
will also retain their positions; and Gregory Robertson, one of Vicon’s directors, is the Chairman and holder of 10.32%
15
of the capital stock of TM Capital, Vicon’s financial advisor; however, Mr. Robertson abstained from the Vicon board
of directors’ vote with respect to the Merger. The Vicon board of directors was aware of these interests and considered
them, among other matters, in reaching its decision to approve the issuance of the Merger Consideration pursuant to
the Merger Agreement and to recommend that Vicon shareholders vote “FOR” the issuance of Vicon common stock
to IQinVision shareholders in the Merger.
IQinVision
In considering the recommendation of the IQinVision board of directors with respect to approving the Merger
Agreement and the Merger, IQinVision shareholders should be aware that some of IQinVision’s directors and executive
officers may have interests in the Merger that are different from, or in addition to, those of IQinVision shareholders
generally. For example, upon the Effective Time, Gioia Messinger, a director of IQinVision, and Mr. Chestnutt,
IQinVision’s Chief Executive Officer, will serve as directors of Vicon; Mr. Chestnutt will serve as Executive Vice
President and Chief Operating Officer of Vicon; Mr. Ledenko, IQinVision’s Executive Vice President, will serve as
Senior Vice President of Sales & Marketing; and IQinVision will pay Peter DeAngelis, one of its current directors, a
fee of $75,000 as consideration for termination of a consulting agreement between IQinVision and Mr. DeAngelis. In
connection with the employment of Messrs. Chestnutt and Ledenko upon the Effective Time, Vicon and each of Messrs.
Chestnutt and Ledenko have entered into employment agreements. The IQinVision board of directors was aware of
these interests and considered them, among other matters, in reaching its decision to approve the Merger, including the
Merger Agreement and the transactions contemplated thereby, and to recommend that IQinVision shareholders approve
the Merger Agreement and the Merger.
Material U.S. Federal Income Tax Consequences (see page 82)
The Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.
Tax matters are very complicated, and the tax consequences of the Merger to a particular shareholder
will depend, in part, on such shareholder’s circumstances. Accordingly, you are urged to consult your tax advisor
for a full understanding of the tax consequences of the Merger to you, including the applicability and effect of
federal, state, local and foreign income and other tax consequences.
Accounting Treatment (see page 85)
Vicon and IQinVision each prepare their respective financial statements in accordance with accounting
principles generally accepted in the United States of America, referred to as “GAAP.” The merger will be accounted
for using the acquisition method of accounting. Vicon will be treated as the acquirer for accounting purposes. This
determination was made by Vicon in accordance with applicable accounting guidance. In making this determination,
numerous factors were considered including, but not limited to, the relative ownership of the combined company by
the Vicon shareholders and former IQinVision shareholders, the composition of the management team and board of
directors of the combined company, the structure of the Merger in which IQinVision will become a wholly owned
subsidiary of Vicon, the location of the corporate offices of the combined company, and the continued listing of the
Vicon common stock on the NYSE MKT.
Comparison of Shareholder Rights (see page 111)
Upon consummation of the Merger, the holders of issued and outstanding IQinVision capital stock will be
entitled to receive Vicon common stock. The rights of the holders of Vicon common stock are generally governed by
Vicon’s Certificate of Incorporation, Vicon’s Bylaws and New York Business Corporation Law, while the rights of
holders of IQinVision capital stock are generally governed by IQinVision’s Articles of Incorporation, IQinVision’s
Bylaws and the General Corporation Law of the State of California. There are important differences between the rights
of the shareholders of Vicon and shareholders of IQinVision.
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Dissenters’ Rights of IQinVision Shareholders (see page 85)
If the Merger Agreement is approved by written consent of the IQinVision shareholders, holders of IQinVision
capital stock who did not approve the Merger Agreement may, by complying with Sections 1300 through 1313 of
CGCL, be entitled to dissenters’ rights as described herein and receive cash for the fair market value of their IQinVision
capital stock. For more information about dissenters’ rights, see Sections 1300 through 1313 of the CGCL, attached as
Annex D to this proxy statement/prospectus/consent solicitation, and the section entitled “Dissenters’ Rights of
IQinVision Shareholders” beginning on page 85.
Risks Associated with the Merger (see page 35)
Both Vicon and IQinVision are subject to various risks associated with their businesses and industries. In
addition, the Merger poses a number of risks to each company and its respective shareholders, including, but not limited
to, the following:
current Vicon shareholders and IQinVision shareholders will have a reduced ownership and voting interest
after the Merger;
any delay in completing the Merger may reduce or eliminate the benefits expected to be achieved
thereunder;
uncertainties associated with the Merger may cause a loss of management personnel and other key
employees;
IQinVision shareholders may receive consideration in the Merger that is greater than or less than the fair
market value of the IQinVision shares because the lack of a public market for IQinVision shares makes
it difficult to evaluate the fairness of the Merger;
the market price of Vicon’s common stock may decline or not appreciate as a result of the Merger;
certain provisions of the Merger Agreement may discourage third parties from submitting alternative
business proposals, including proposals that may be superior to the terms contemplated by the Merger
Agreement;
future results of the combined company may differ materially from the unaudited pro forma financial
statements and financial projections prepared by Vicon and IQinVision in connection with their discussions
concerning the Merger; and
Vicon and IQinVision may not be able to successfully integrate their operations.
These and other risks are discussed in greater detail under the section entitled “Risk Factors” beginning on
page 35. Vicon and IQinVision encourage you to read and consider all of these risks carefully.
Expected Timing of the Merger
Vicon and IQinVision currently expect the closing of the Merger to occur in the fourth quarter of Vicon’s 2014
fiscal year, which ends on September 30, 2014. However, the Merger is subject to the satisfaction or waiver of other
conditions as described in the Merger Agreement, and it is possible that factors outside the control of Vicon and
IQinVision could result in the Merger being completed at an earlier time, a later time or not at all.
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SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
The following tables present summary historical and unaudited pro forma condensed combined financial data
for Vicon and IQinVision.
Selected Condensed Consolidated Financial Data of Vicon
The following statement of operations data for the fiscal years ended September 30, 2013 and 2012 and the
balance sheet data as of September 30, 2013 and 2012 have been derived from the audited consolidated financial
statements of Vicon contained in its Annual Report on Form 10-K for the fiscal year ended September, 2013, which
statements are incorporated into this document by reference.
The statement of operations data for the six months ended March 31, 2014 and 2013, and the balance sheet
data as of March 31, 2014 have been derived from Vicon’s unaudited interim consolidated financial statements contained
in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014, which statements are incorporated
into this document by reference. The balance sheet data as of March 31, 2013 has been derived from Vicon’s unaudited
interim consolidated financial statements for such period, which statements have not been incorporated into this
document by reference. These financial statements are unaudited, but, in the opinion of Vicon’s management, contain
all adjustments necessary to present fairly Vicon’s financial position, results of operations and cash flows for the periods
indicated. Vicon’s historical results are not necessarily indicative of Vicon’s results to be expected for any future period.
You should read this selected historical financial data together with the financial statements that are
incorporated by reference into this proxy statement/prospectus/consent solicitation and their accompanying notes and
the Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vicon sections contained
in such reports, which sections are incorporated herein by reference.
Statement of Operations Data of Vicon:
Six Months Ended Year Ended
March 31,
2014 March 31,
2013 September 30,
2013 September 30,
2012
(in thousands, except per share data)
Net sales $ 15,146 $ 19,785 $ 39,846 $ 49,652
Gross profit 5,617 7,451 15,144 19,637
Operating loss (3,466) (1,914) (4,063) (1,388)
Net income (loss) (3,473) (1,874) 19 (1,380)
Net income (loss) per share:
Basic (.77) (.42) (.31)
Diluted (.77) (.42) (.31)
Balance Sheet Data of Vicon:
March 31, March 31, September 30, September 30,
2014 2013 2013 2012
(in thousands)
Cash and cash equivalents $ 6,654 $ 4,513 $ 8,282 $ 6,234
Total assets 25,061 27,806 30,306 31,335
Shareholders’ equity 18,214 19,431 21,525 21,188
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Selected Condensed Financial Data of IQinVision
The following statement of operations data for years ended December 31, 2013 and 2012 and the balance
sheet data as of December 31, 2013 and 2012 have been derived from the audited financial statements of IQinVision
that are attached as Annex H to this proxy statement/prospectus/consent solicitation.
The statement of operations data for the three months ended March 31, 2014 and 2013, and the balance sheet
data as of March 31, 2014 and 2013 have been derived from IQinVision’s unaudited financial statements. Such unaudited
financial statements are included in this proxy statement/prospectus/consent solicitation, except for the unaudited
financial statements from which the March 31, 2013 balance sheet data was derived. These financial statements are
unaudited, but, in the opinion of IQinVision’s management, contain all adjustments necessary to present fairly
IQinVision’s financial position, results of operations and cash flows for the periods indicated. IQinVision’s historical
results are not necessarily indicative of IQinVision’s results to be expected for any future period.
You should read this selected historical financial data together with the audited financial statements and their
accompanying notes that are attached as Annex H to this proxy statement.
Statement of Operations Data of IQinVision:
Three Months Ended Year Ended
March 31,
2014 March 31,
2013 December 31,
2013 December 31,
2012
(in thousands)
Net sales $ 3,168 $ 4,647 $ 19,009 $ 21,375
Gross profit 1,362 2,495 9,587 10,787
Operating income (loss) (1,039) 183 555 1,287
Net income (loss) (599) 88 570 769
Balance Sheet Data of IQinVision:
March 31, March 31, December 31, December 31,
2014 2013 2013 2012
(in thousands)
Cash and cash equivalents $ 2,975 $ 1,481 $ 3,082 $ 2,822
Total assets 11,561 12,226 12,654 13,238
Shareholders’ equity 9,614 9,662 10,187 9,477
Selected Unaudited Pro Forma Condensed Combined Financial Information
The following table presents selected unaudited pro forma combined financial information about the combined
company’s consolidated balance sheet and statements of operations, after giving effect to the Merger. The information
under “Statement of Operations Data” in the table below assumes the Merger had been consummated on October 1,
2012, the beginning of the earliest period presented. The information under “Balance Sheet Data” in the table below
assumes the Merger had been consummated on March 31, 2014. This unaudited pro forma combined financial
information was prepared using the acquisition method of accounting with Vicon considered the acquirer of IQinVision.
See the section entitled “Accounting Treatment.”
The unaudited pro forma combined financial information includes adjustments which are preliminary and
may be revised. There can be no assurance that such revisions will not result in material changes. The information
presented below should be read in conjunction with the historical financial statements and accompanying notes of
Vicon, which are incorporated herein by reference, and the historical financial statements and accompanying notes of
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IQinVision, which are attached hereto as Annex H, and with the unaudited pro forma condensed combined financial
statements of Vicon and IQinVision, including the related notes, appearing elsewhere in this document. See “Unaudited
Pro Forma Condensed Combined Financial Information.” The unaudited pro forma condensed combined financial data
is not necessarily indicative of results that actually would have occurred or that may occur in the future had the merger
been completed on the dates indicated.
Statement of Operations Data
(in thousands, except per share data)
Six Months
Ended
March 31,
2014
Year Ended
September 30,
2013
Revenue $ 22,951 $ 60,395
Gross profit 8,895 25,533
Operating loss (3,940) (2,919)
Net income (loss) (3,446) 870
Net income (loss) per share:
Basic $ (.38) $ .10
Diluted $ (.38) $ .10
Balance Sheet Data
(in thousands) March 31, 2014
Working capital $ 19,775
Total assets $ 39,679
Total shareholders’ equity $ 29,729
Comparative Historical and Unaudited Pro Forma Per Share Information
Presented below are Vicon’s historical per share data for the six months ended March 31, 2014 and the year
ended September 30, 2013; IQinVision’s historical unaudited per share data for the six months ended March 31, 2014
and year ended September 30, 2013; and Vicon’s unaudited pro forma combined per share data for the six months ended
March 31, 2014 and the year ended September 30, 2013, and IQinVision’s unaudited pro forma equivalent data for the
six months ended March 31, 2014 and the year ended September 30, 2013. The unaudited pro forma financial information
below includes adjustments which are preliminary and may be revised. There can be no assurance that such revisions
will not result in material changes. This information should be read together with the historical financial statements
and accompanying notes of Vicon, which are incorporated herein by reference, and the historical financial statements
and accompanying notes of IQinVision, which are attached hereto as Annex H, and with the unaudited pro forma
condensed combined financial data included under “Unaudited Pro Forma Condensed Combined Financial
Information.” The pro forma information is presented for illustrative purposes only and is not necessarily indicative of
the operating results or financial position that would have occurred if the Merger had been completed as of the beginning
of the periods presented or on the dates presented, nor is it necessarily indicative of the future operating results or
financial position of the combined company.
The historical book value per share is computed by dividing total stockholders’ equity by the number of shares
of common stock outstanding at the end of the period. The pro forma net income per share of the combined company
is computed by dividing the pro forma net income by the pro forma weighted average number of shares outstanding.
20
The pro forma book value per share of the combined company is computed by dividing total pro forma stockholders’
equity by the pro forma number of shares of common stock outstanding at the end of the period.
Six Months Ended
March 31, 2014 Year Ended
September 30, 2013
VICON HISTORICAL DATA
Historical diluted per common share
Net loss per share $ (.77) $
Book value per share (1) $ 4.04 $ n/m
Six Months Ended
March 31, 2014 Year Ended
September 30, 2013
IQINVISION HISTORICAL DATA
Historical diluted per common share
Net income (loss) per share $ (.15) $ .22
Book value per share (1) $ 2.13 $ n/m
Six Months Ended
March 31, 2014 Year Ended
September 30, 2013
PRO FORMA COMBINED DATA
Unaudited diluted pro forma per common share
Net income (loss) per share $ (.38) $ .10
Book value per share (1) $ 3.30 n/m
(1) Book value per share as of September 30, 2013 is not meaningful as purchase accounting adjustments were calculated as of
March 31, 2014.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following sets forth certain unaudited pro forma condensed combined financial information giving effect
to the Merger. The unaudited pro forma condensed combined financial information set forth below has been presented
for informational purposes only. The unaudited pro forma condensed combined financial information is not necessarily
indicative of what the combined company’s financial position or results of operations actually would have been had
the Merger been completed as of the dates indicated. In addition, the unaudited pro forma condensed combined financial
information does not purport to project the future financial position or operating results of the combined company.
There were no material transactions between Vicon and IQinVision reported in either company’s financial statements
during the periods presented in the unaudited pro forma condensed combined financial statements that would need to
be eliminated.
The unaudited pro forma condensed combined balance sheet assumes that the Merger took place on March 31,
2014 and combines Vicon’s and IQinVision’s March 31, 2014 balance sheets.
The unaudited pro forma condensed combined statement of operations for the fiscal year ended September
30, 2013 assumes that the Merger took place on October 1, 2012. Vicon’s audited consolidated statement of operations
for the fiscal year ended September 30, 2013 has been combined with IQinVision’s unaudited statement of operations
for the four fiscal quarters ended September 30, 2013. This unaudited methodology includes the first three quarters of
IQinVision’s fiscal year ended December 31, 2013 and the reported quarter of IQinVision’s fiscal year ended December
31, 2012.
21
The unaudited pro forma condensed combined statement of operations for the six months ended March 31,
2014 also assumes that the Merger took place on October 1, 2012. Vicon’s unaudited consolidated statement of operations
for the six months ended March 31, 2014 has been combined with IQinVision’s unaudited statement of operations for
the six months ended March 31, 2014.
The historical financial information has been adjusted in the unaudited pro forma condensed combined financial
statements to give effect to pro forma events that are (1) directly attributable to the Merger, (2) factually supportable,
and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results. The
unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying
notes to the unaudited pro forma condensed combined financial statements. In addition, the unaudited pro forma
condensed combined financial information was based on and should be read in conjunction with the following historical
financial statements and accompanying notes of Vicon and IQinVision for the applicable periods.
Separate historical financial statements of Vicon as of and for the year ended September 30, 2013 and the
related notes included in Vicon’s Annual Report on Form 10-K for the year ended September 30, 2013;
Separate historical financial statements of IQinVision as of and for the years ended December 31, 2013 and
2012 and related notes; and
Separate historical financial statements of Vicon as of and for the six months ended March 31, 2014 and the
related notes included in Vicon’s Quarterly Report on Form 10-Q for the period ended March 31, 2014.
The unaudited pro forma condensed combined financial information has been prepared using the acquisition
method of accounting under GAAP standards, which are subject to change and interpretation. Vicon has been treated
as the acquirer in the Merger for accounting purposes. The acquisition accounting is dependent upon certain valuations
and other studies that have not yet been completed to a stage where there is sufficient information for a definitive
measurement. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of
providing unaudited pro forma condensed combined financial information. Differences between these preliminary
estimates and the final acquisition accounting are likely to occur and these differences could have a material impact
on the accompanying unaudited pro forma condensed combined financial statements and the combined company’s
future results of operations and financial position. There also may be additional differences between the accounting
policies of Vicon and IQinVision that, when conformed, could have a material impact on the financial statements of
the combined company. At this time, Vicon is not aware of any accounting policy differences that would have a material
impact on the unaudited pro forma condensed combined financial information of the combined company that are not
reflected in the pro forma adjustments.
The unaudited pro forma combined financial information does not reflect any cost savings, operating synergies
or revenue enhancements that the combined company may achieve as a result of the Merger, the costs to combine the
operations of Vicon and IQinVision or the costs necessary to achieve any of the foregoing cost savings, operating
synergies and revenue enhancements. In addition, pursuant to the Merger Agreement, on June 9, 2014, the Vicon board
of directors declared a special cash dividend of $0.55 per share payable to Vicon shareholders of record as of July 11,
2014, payable within 15 days after the Effective Time, subject to satisfaction of the closing conditions set forth in the
Merger Agreement. No adjustment has been made in the pro forma financial statements to reflect this special cash
dividend.
22
Vicon Industries, Inc. and IQinVision, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended September 30, 2013
(in thousands, except per share data)
Historical Pro Forma
Adjustments Pro Forma
Combined
Vicon IQinVision
Net sales $ 39,846 $ 20,549 $ $ 60,395
Costs of sales 24,702 9,922 238 A34,862
Gross profit 15,144 10,627 (238) 25,533
Selling, general and administrative
expense 15,018 7,013 155 A22,186
Engineering and development expense 4,189 2,303 (226) A6,266
Total operating expenses 19,207 9,316 (71) 28,452
Operating income (loss) (4,063) 1,311 (167) (2,919)
Gain on the sale of building 3,498 3,498
Interest and other income 41 17 58
Income (loss) before income taxes (524) 1,328 (167) 637
Income tax expense (benefit) (543) 310 B(233)
Net income $ 19 $ 1,018 $ (167) $ 870
Net income (loss) per share
Basic $ — $ — $ .10 C
Diluted $ — $ — $ .10 C
Number of shares used in per share
calculations:
Basic 4,496 4,504 C9,000
Diluted 4,506 4,621 C9,127
See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are
an integral part of these statements. The pro forma adjustments are explained in Note 5—Adjustments to Unaudited
Pro Forma Condensed Combined Statements of Operations.
23
Vicon Industries, Inc. and IQinVision, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Six Months Ended March 31, 2014
(in thousands, except per share data)
Historical Pro Forma
Adjustments Pro Forma
Combined
Vicon IQinVision
Net sales $ 15,146 $ 7,805 $ $ 22,951
Cost of sales 9,529 4,408 119 A14,056
Gross profit 5,617 3,397 (119) 8,895
Selling, general and administrative
expense 6,449 2,960 77 A9,486
Engineering and development
expense 2,210 1,139 3,349
Merger related costs 424 462 (886) D
Total operating expenses 9,083 4,561 (809) 12,835
Operating loss (3,466) (1,164) 690 (3,940)
Interest and other income 9 60 69
Loss before income taxes (3,457) (1,104) 690 (3,871)
Income tax expense (benefit) 16 (441) B(425)
Net loss $ (3,473) $ (663) $ 690 $ (3,446)
Net income (loss) per share
Basic $ (.77) $ $ (.38) C
Diluted $ (.77) $ $ (.38) C
Number of shares used in per share
calculations:
Basic 4,504 4,504 C9,008
Diluted 4,504 4,504 C9,008
See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are
an integral part of these statements. The pro forma adjustments are explained in Note 5—Adjustments to Unaudited
Pro Forma Condensed Combined Statements of Operations.
24
Vicon Industries, Inc. and IQinVision, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
March 31, 2014
(in thousands)
Historical Pro Forma
Adjustments Pro Forma
Combined
Vicon IQinVision
ASSETS
Cash and cash equivalents $ 6,654 $ 2,975 $ $ 9,629
Marketable securities 117 117
Accounts receivable, net 4,139 2,112 6,251
Inventories 7,493 3,154 10,647
Deferred income taxes 1,409 (1,409) A
Prepaid expenses and other current
assets 868 235 1,103
Total current assets 19,271 9,885 (1,409) 27,747
Property, plant and equipment, net 4,848 334 5,182
Deferred income taxes 1,282 (1,282) A
Goodwill 1,958 B1,958
Intangible assets, net 3,790 C3,790
Other assets 942 60 1,002
Total assets $ 25,061 $ 11,561 $ 3,057 $ 39,679
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable $ 1,680 $ 839 $ $ 2,519
Accrued expenses and other current
liabilities 3,022 1,035 1,156 D5,213
Unearned revenue 240 240
Total current liabilities 4,942 1,874 1,156 7,972
Unearned revenue – non current 150 150
Other long-term liabilities 1,755 73 1,828
Total liabilities 6,847 1,947 1,156 9,950
Stockholders’ equity
Preferred stock 7,436 (7,436) E
Common stock 54 1,089 (1,044) E99
Additional paid-in capital 25,619 2,173 10,453 F38,245
Treasury stock (4,227) (4,227)
Accumulated other comprehensive loss (39) (39)
Accumulated deficit (3,193) (1,084) (72) G(4,349)
Total stockholders’ equity 18,214 9,614 1,901 29,729
Total liabilities & stockholders’
equity $ 25,061 $ 11,561 $ 3,057 $ 39,679
See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are
an integral part of these statements. The pro forma adjustments are explained in Note 6—Adjustments to Unaudited
Pro Forma Condensed Combined Balance Sheets.
25
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Description of Transaction
On March 28, 2014, Vicon entered into the Merger Agreement with IQinVision, under which Merger-Sub will
be merged with and into IQinVision with IQinVision surviving as a wholly owned subsidiary of Vicon.
As a result of the Merger, Vicon will issue common stock and equity-based awards, subject to certain exceptions,
to the holders of IQinVision capital stock as follows:
(i) all issued and outstanding shares of common and preferred stock of IQinVision (other than shares
owned by IQinVision and any subsidiaries of IQinVision, which will be cancelled and cease to exist)
will be converted into the right to receive such total number of outstanding shares of Vicon common
stock equal to the total number of outstanding shares of Vicon common stock immediately prior to
the Effective Time, with cash paid in lieu of fractional shares. Shares held by IQinVision shareholders
who vote against the Merger and are entitled to and who properly exercise a demand for dissenters’
rights under the CGCL, will have the right to receive the payment described under “The Merger
Agreement—Dissenters’ Rights of IQinVision Shareholders” below. Based on 4,522,335 shares of
Vicon common stock outstanding and 12,929,025 shares of IQinVision capital stock outstanding
(including 5,766,922 shares of common stock, 920,051 shares of Series A preferred stock, 3,295,428
shares of Series B preferred stock, 1,444,212 shares of Series C preferred stock and 1,502,412 shares
of Series D preferred stock), as of the close of business on July 16, 2014, the last trading day before
the date of this proxy statement/prospectus/consent solicitation, as of the Effective Time, the issued
and outstanding shares of common and preferred stock of IQinVision will be converted into such
total number of outstanding shares of Vicon common stock equal to approximately 0.2525 for each
share of IQinVision common stock and approximately 0.4013 for each share of common stock into
which each share of preferred stock of IQinVision is convertible, subject to adjustment for changes
in Vicon common stock and IQinVision capital stock through the Effective Time of the Merger and
adjustment for fractional shares of Vicon common stock pursuant to the Merger Agreement. Each
outstanding share of IQinVision Series A preferred stock is convertible into approximately 1.5203
shares of IQinVision common stock and each outstanding share of IQinVision Series B, Series C and
Series D preferred stock is convertible into one share of IQinVision common stock;
(ii) all outstanding options to purchase IQinVision common stock, as well as IQinVision’s 2011 Stock
Incentive Plan and 2001 Stock Incentive Plan, will be assumed by Vicon. Each option of IQinVision
assumed in the Merger will be converted into an option to purchase a number of shares of Vicon’s
common stock representing the number of IQinVision shares subject to such option multiplied by
approximately 0.2525. The exercise price of each option will be increased proportionately; and
(iii) all outstanding IQinVision stock appreciation rights will be assumed by Vicon. Each stock
appreciation right of IQinVision assumed in the Merger will be converted into a stock appreciation
right with respect to a number of shares of Vicon’s common stock representing the number of
IQinVision shares subject to such stock appreciation right multiplied by approximately 0.2525. The
base value per share of Vicon common stock for each stock appreciation right will be increased
proportionately.
Completion of the Merger is subject to certain closing conditions, including, but not limited to, approval of
the issuance of the Merger Consideration by Vicon shareholders, and approval of the Merger, including the terms of
the Merger Agreement and the transactions contemplated thereby, by the IQinVision shareholders, and other customary
conditions.
26
The Merger Agreement contains certain termination rights for both Vicon and IQinVision and further provides
that, Vicon or IQinVision, as applicable, may be required to pay a termination fee of $750,000, depending on the
termination event.
In addition, pursuant to the Merger Agreement, on June 9, 2014, the Vicon board of directors declared a special
cash dividend of $0.55 per share payable to Vicon shareholders of record as of July 11, 2014, payable within 15 days
after the Effective Time, subject to the satisfaction of the closing conditions set forth in the Merger Agreement. No
adjustment has been made in the pro forma financial statements to reflect this special dividend.
2. Basis of Presentation
The unaudited pro forma condensed combined financial information was prepared using the acquisition method
of accounting and was based on the historical financial statements of Vicon and IQinVision. For ease of reference, all
pro forma statements use Vicon’s period end dates and IQinVision’s reported information has been recast accordingly
to correspond to Vicon’s period end dates by adding IQinVision’s comparable quarterly periods as necessary.
The acquisition method of accounting is based on Accounting Standards Codification (ASC) Topic 805,
Business Combinations, which uses the fair value concepts defined in ASC Topic 820, Fair Value Measurements and
Disclosures.
ASC Topic 805 requires, among other things, that assets and liabilities acquired be recognized at their fair
values as of the acquisition date. Financial statements of Vicon issued after completion of the Merger will reflect such
fair values, measured as of the acquisition date, which may be different than the estimated fair values included in these
unaudited pro forma condensed combined financial statements. The financial statements of Vicon issued after the
completion of the Merger will not be retroactively restated to reflect the historical financial position or results of
operations of IQinVision. In addition, ASC Topic 805 establishes that the consideration transferred be measured at the
closing date of the Merger at the then-current market price, which will likely result in a purchase price that is different
from the amount assumed in these unaudited pro forma condensed combined financial statements.
ASC Topic 820, defines the term “fair value” and sets forth the valuation requirements for any asset or liability
measured at fair value, expands related disclosure requirements and specifies a hierarchy of valuation techniques based
on the nature of the inputs used to develop the fair value measures. Fair value is defined as “the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants
are assumed to be buyers and sellers unrelated to Vicon in the principal (or the most advantageous) market for the asset
or liability. Fair value measurements for an asset assume the highest and best use by these market participants. As a
result of these standards, Vicon may be required to record assets which are not intended to be used or sold and/or to
value assets at fair value measures that do not reflect Vicon’s intended use of those assets. Many of these fair value
measurements can be highly subjective and it is also possible that other professionals, applying reasonable judgment
to the same facts and circumstances, could develop and support a range of alternative estimated amounts.
Under ASC 805, acquisition-related transaction costs (such as advisory, legal, valuation, other professional
fees) are not included as a component of consideration transferred and are excluded from the unaudited pro forma
condensed combined statements of operations. Such costs will be expensed in the historical statements of operations
in the period incurred. Vicon expects to incur total acquisition-related transaction costs of approximately $1.1 million
and IQinVision expects to incur total acquisition-related transaction costs of approximately $1.2 million. As discussed
in Note 6(D), the liabilities related to these costs have been included in the unaudited pro forma condensed combined
balance sheet as of March 31, 2014.
27
3. Estimate of Consideration Expected to be Transferred
The following is a preliminary estimate of consideration expected to be transferred to effect the acquisition
of IQinVision:
(in thousands, except per share amounts) Conversion
Calculation Estimated
Fair Value
Estimated Vicon shares to be issued at closing as of May 15, 2014 4,503,885
Price per share price of Vicon common stock as of May 15, 2014 $ 2.71 $ 12,206
Estimated fair value of vested IQinVision equivalent Stock Options (1) 380
Estimated fair value of vested IQinVision equivalent Stock Appreciation Rights
(SAR)(2) 85
Estimated purchase price consideration (3) $ 12,671
(1) The fair value of the Vicon equivalent stock options as of May 15, 2014 was estimated using the
Black-Scholes valuation model utilizing the assumptions noted below as of May 15, 2014 and giving
effect to an assumed exchange ratio between Vicon common stock and IQinVision common stock
of 0.2515. The expected volatility of the Vicon stock price is based on the average historical volatility
over the expected term based on daily closing stock prices. The expected term of the option is based
on IQinVision historical employee stock option exercise behavior as well as the remaining contractual
exercise term. The stock price volatility and expected term are based on Vicon’s best estimates at this
time, both of which impact the fair value of the option calculated under the Black-Scholes
methodology and, ultimately, the total consideration that will be recorded at the Effective Time of
the Merger.
(2) The fair value of the Vicon equivalent stock appreciation rights as of May 15, 2014 was estimated
using the Black-Scholes valuation model utilizing the assumptions noted below as of May 15, 2014
and giving effect to an assumed exchange ratio between Vicon common stock and IQinVision common
stock of 0.2515. The expected volatility of the Vicon stock price is based on the average historical
volatility over the expected term based on daily closing stock prices. The expected term of the option
is based on IQinVision historical employee stock option exercise behavior as well as the remaining
contractual exercise term. The stock price volatility and expected term are based on Vicon’s best
estimates at this time, both of which impact the fair value of the option calculated under the Black-
Scholes methodology and, ultimately, the total consideration that will be recorded at the Effective
Time of the Merger.
Weighted average assumptions used for the valuation of Vicon stock options:
Expected volatility 53.53 %
Risk-free interest rate 0.63 %
Weighted average expected life (years) 2.55
Dividend yield 0 %
(3) The estimated consideration expected to be transferred reflected in these unaudited pro forma
condensed combined financial statements does not purport to represent what the actual consideration
transferred will be when the Merger is completed. In accordance with ASC Topic 805, the fair value
of equity securities issued as part of the consideration transferred will be measured on the closing
date of the Merger at the then-current market price. This requirement will likely result in a per share
equity component different from the $2.71 closing price of Vicon common stock on May 15, 2014
28
that is assumed in these unaudited pro forma condensed combined financial statements, and that
difference may be material. Vicon believes that an increase or decrease by as much as 25% in the
Vicon common stock price on the closing date of the Merger from the common stock price assumed
in these unaudited pro forma condensed combined financial statements is reasonably possible based
upon the recent history of Vicon common stock price. A change in the estimated fair value of Vicon’s
share price of 25% would increase or decrease the consideration paid as follows, with a corresponding
increase or decrease in the goodwill recorded in connection with the Merger.
Sensitivity of common stock price
% change in common stock price -25 % +25 %
Stock price $ 2.03 $ 3.39
Change in consideration transferred (in
thousands) $ (3,063) $ 3,063
(4) No adjustment has been made to reflect the special cash dividend that the Vicon board of directors
declared on June 9, 2014 to be payable to Vicon shareholders of record as of July 11, 2014, payable
within 15 days after the Effective Time, subject to the satisfaction of the closing conditions set forth
in the Merger Agreement.
4. Estimate of Assets to be Acquired and Liabilities to be Assumed
The following is a preliminary estimate of the assets to be acquired and the liabilities to be assumed by Vicon
in the Merger, reconciled to the estimate of consideration expected to be transferred:
(in thousands)
Net book value of assets acquired as of March 31, 2014 $ 9,614
Adjustments:
Identifiable intangible assets 3,790
Deferred taxes (2,691)
Goodwill 1,958
Total net assets acquired $ 12,671
The preliminary valuation of assets acquired and liabilities assumed performed for the purposes of these
unaudited pro forma condensed combined financial statements was primarily limited to the identification and valuation
of intangible assets, inventories and taxes. Vicon believes that the most significant and material portion of the purchase
price will be allocated to identifiable intangible assets. Vicon will continue to refine its identification and valuation of
assets to be acquired and the liabilities to be assumed as further information becomes available.
The following is a discussion of the adjustments made to IQinVision’s assets and liabilities in connection with
the preparation of these unaudited pro forma condensed combined financial statements:
Intangible assets: As of the Effective Time of the Merger, identifiable intangible assets are required to be
measured at fair value and these acquired assets could include assets that are not intended to be used or sold or that are
intended to be used in a manner other than their highest and best use. For purposes of these unaudited pro forma
condensed combined financial statements, it is assumed that all assets will be used in a manner that represents their
29
highest and best use. Based on internal assessments as well as discussions with IQinVision, Vicon identified the following
significant intangible assets: technology, trademarks and customer relationships.
For purposes of these unaudited pro forma condensed combined financial statements, the fair value of these
intangible assets has been determined primarily through the use of the “income approach,” which requires an estimate
or forecast of all the expected future cash flows through the use of either the multi-period excess earnings method or
the relief-from-royalty method.
For the purposes of these unaudited pro forma condensed combined financial statements, using currently
available information, the fair value of IQinVision’s technology, trademarks and customer relationships were estimated
by Vicon management to be as follows: technology—$2.4 million with a weighted average useful life of 10 years;
trademarks—$610,000 with a weighted average useful life of 15 years; and customer relationships—$800,000 with a
weighted average useful life of 7 years.
These preliminary estimates of fair value and weighted-average useful life will likely be different from the
final acquisition accounting, and the difference could have a material impact on the accompanying pro forma condensed
combined financial statements. The estimated intangible asset values and their useful lives could be impacted by a
variety of factors that may occur prior to the Effective Time of the Merger.
Deferred taxes: A full valuation allowance has been recognized against IQinVision’s deferred tax asset balances
due to the uncertainty of future realization upon combination with Vicon. Such valuation allowance was estimated
based upon a preliminary assessment of the combined company’s tax characteristics and possible future operating
results. Such assessments could be impacted by a variety of factors that may occur prior to the Effective Time of the
Merger and are subject to further review by Vicon’s management, which may result in material adjustments at the
Effective Time of the Merger—see Note 6 Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet,
item A for details regarding the adjustment to taxes.
Other Assets/Liabilities: Adjustments to IQinVision’s remaining assets and liabilities may also be necessary,
however, at this time, Vicon has limited knowledge as to the specific details and nature of those assets and liabilities
necessary in order to make adjustments to those values. Since the majority of the remaining assets and liabilities are
current assets and liabilities, Vicon believes that the current IQinVision book values for these assets represent reasonable
estimates of fair value or net realizable value, as applicable. Vicon does not anticipate that the actual adjustments for
these assets and liabilities on the closing date of the Merger will be materially different.
Goodwill: Goodwill is calculated as the difference between the acquisition date fair value of the consideration
expected to be transferred and the values assigned to the assets acquired and liabilities assumed. Goodwill is not
amortized but rather subject to an annual fair value impairment test.
30
5. Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations:
(A) Intangible Amortization—To eliminate the historical amortization related to IQinVision’s existing intangible
assets and reflect amortization of intangibles based on the preliminary estimated fair values and useful lives
of intangibles expected to be recorded as a result of the Merger. For estimated intangible asset values and the
estimated associated useful lives, see note (C) in Note 6—Adjustments to Unaudited Pro Forma Condensed
Combined Balance Sheet.
Fiscal Year Ended
September 30, 2013
Six Months
Ended
March 31, 2014
(in thousands)
Eliminate IQinVision historical amortization
Cost of goods sold $ — $ —
Selling, general and administrative — —
Engineering and development (226) —
$ (226) $
New intangible asset amortization
Cost of goods sold $ 238 $ 119
Selling, general and administrative 155 77
Engineering and development — —
$ 393 $ 196
Pro forma amortization adjustment
Cost of goods sold $ 238 $ 119
Selling, general and administrative 155 77
Engineering and development (226) —
$ 167 $ 196
(B) No income tax (benefit) adjustments were computed on the combined income (loss) before income taxes of
Vicon and IQinVision due to a multitude of reasons. Therefore, the effective tax rate of the combined company
could be significantly different (either higher or lower) depending on post-acquisition activities.
(C) The unaudited pro forma condensed combined basic and diluted earnings per share calculations are based on
the combined basic and diluted weighted-average shares, after giving effect to the exchange ratio. The historical
basic and diluted weighted average shares of IQinVision are assumed to be increased by the shares expected
to be issued by Vicon to effect the Merger as follows:
31
Basic Year Ended
September 30, 2013
Six Months
Ended
March 31, 2014
(in thousands)
Vicon historical weighted average shares outstanding 4,496 4,504
Additional common shares issued in the transaction 4,504 4,504
Basic Pro Forma weighted average shares outstanding 9,000 9,008
Diluted Year Ended
September 30, 2013 Six Months Ended
March 31, 2014
(in thousands)
Vicon historical weighted average shares outstanding 4,506 4,504
Additional common shares issued in the transaction 4,504 4,504
Stock options and SAR’s assumed (1) 117
Diluted Pro Forma weighted average shares outstanding 9,127 9,008
(1) Diluted shares for the six months ended March 31, 2014 do not include any effect resulting from assumed
conversion of IQinVision stock options and SAR’s as they would be anti-dilutive.
(D) Merger related costs recorded in the historical statements of operations have been reversed for pro forma
statement of operations purposes as they would not be expected to have a continuing impact beyond the period
presented.
The unaudited pro forma condensed combined financial statements do not reflect revenue synergies or cost
savings that may be achieved by the combined company nor any of the costs that may need to be incurred to achieve
such savings. Although Vicon management expects that cost savings will result from the Merger, there can be no
assurance that these cost savings will be achieved.
6. Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheets:
(A) Deferred Tax Assets and Liabilities—a full valuation allowance has been recognized against IQinVision’s
deferred tax asset balances due to the uncertainty of future realization upon combination with Vicon. Such
valuation allowance was estimated based upon a preliminary assessment of the combined company tax
characteristics and possible future operating results. Such assessments could be impacted by a variety of factors
that may occur prior to the Effective Time of the Merger and are subject to further review by Vicon’s
management, which may result in material adjustments at the Effective Time of the Merger.
(B) Goodwill—To record the preliminary estimate of goodwill for the acquisition of IQinVision. Reflects
adjustments to the following:
(in thousands)
Estimated transaction goodwill $ 1,958
(C) Intangible Assets—To record the preliminary fair values of IQinVision intangible assets acquired. These
estimated fair values and useful lives are considered preliminary and are subject to change at the closing date
of the transaction. Changes in fair value or useful lives of the acquired intangible assets may be material.
Determination of the estimated remaining useful lives of the individual categories of intangible assets was
based on the nature of the applicable intangible asset and the expected future cash flows to be derived from
32
the intangible asset. The acquired intangible assets are being amortized over the estimated useful life in
proportion to the economic benefits consumed using the straight-line method. Reflects adjustments to the
following:
(in thousands, except years)
Estimated
Average
Useful
Lives (years)
Estimated
Fair Value
March 31,
2014
Technology 10 $ 2,380
Trademarks 15 610
Customer relationships 7 800
Total $ 3,790
(D) Transaction Costs—Acquisition related transaction costs incurred by Vicon and IQinVision, including
investment banking, legal, accounting and advisory fees, and other external costs directly related to the Merger,
are not included as a component of purchase price, but will be expensed in the statements of operations of the
respective companies in the periods incurred. The pro forma balance sheet reflects an aggregate $2.3 million
of estimated acquisition related transaction costs, of which $570,000 and $576,000, respectively, were recorded
in Vicon and IQinVision’s historical financial statements as of March 31, 2014. However, any such costs
recorded in the historical statements of operations would be reversed for pro forma statement of operations
purposes as they would not be expected to have a continuing impact on periods presented. An accrual for
Vicon and IQinVision’s estimated transaction costs of $570,000 and $586,000, respectively, was included in
accrued liabilities in the condensed combined balance sheet.
(E) Preferred and Common Stock—To eliminate IQinVision preferred and common stock and reflect shares of
Vicon common stock expected to be issued upon completion of the Merger:
(in thousands)
Issuance of Vicon common stock for each share of IQinVision common stock at par of
0.01 $ 45
Eliminate IQinVision preferred and common stock (8,525)
Total $ (8,480)
(F) Additional Paid-in Capital—To reflect value in excess of par of Vicon common stock expected to be issued
upon completion of the Merger:
(in thousands)
Estimated fair value of Vicon shares to be issued $ 12,206
Par value of IQinVision shares recorded within common stock (45)
Estimated fair value of assumed stock options and SAR’s deemed purchase
consideration 465
Eliminate IQinVision Additional paid-in capital (2,173)
Total $ 10,453
(G) Accumulated Deficit—To eliminate IQinVision’s historical accumulated deficit and reflect the immediate
impact to Vicon’s retained earnings had the Merger occurred on March 31, 2014:
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(in thousands)
Eliminate IQinVision historical accumulated deficit $ 1,084
To record estimated non-recurring costs for remaining acquisition related transaction
costs (see note D above) (1,156)
Total $ (72)
MARKET PRICE DATA AND DIVIDEND INFORMATION
Vicon
Shares of Vicon common stock are listed for trading on the NYSE MKT (formerly NYSE Amex) under the
symbol “VII.” The following table sets forth the range of high and low closing sales prices per share of Vicon common
stock as reported on the NYSE MKT, for the fiscal quarters indicated.
Fiscal Quarter Vicon
Common Stock
2014 High Low
Third Quarter (ended 06/30/14) $3.25 $2.49
Second Quarter (ended 03/31/14) $4.22 $3.11
First Quarter (ended 12/31/13) $3.25 $2.58
2013
Fourth Quarter (ended 09/30/13) $2.78 $2.52
Third Quarter (ended 06/30/13) $3.39 $2.50
Second Quarter (ended 03/31/13) $2.95 $2.41
First Quarter (ended 12/31/12) $3.01 $2.35
2012
Fourth Quarter (ended 09/30/12) $3.25 $2.39
Third Quarter (ended 06/30/12) $3.37 $2.81
Second Quarter (ended 03/31/12) $3.65 $3.16
First Quarter (ended 12/31/11) $3.55 $3.10
On March 28, 2014, the last trading day prior to announcement of the signing of the Merger Agreement, and
on July 16, 2014, the last trading day prior to the date of this proxy statement/prospectus/consent solicitation, the last
sales prices reported on the NYSE MKT for Vicon common stock were $3.47 per share and $2.30 per share, respectively.
As of July 11, 2014, the record date for the Vicon annual meeting, there were 4,522,335 shares of Vicon common stock
outstanding and approximately 136 holders of record of Vicon common stock.
Vicon has not historically paid cash dividends on its common stock. It is the present policy of Vicon to retain
earnings to finance the growth and development of its business and other corporate purposes, and, therefore, Vicon
does not anticipate paying any cash dividends in the foreseeable future other than the payment of a special cash dividend
permitted by the Merger Agreement. As part of the Merger, on June 9, 2014, the Vicon board of directors declared a
special cash dividend of $0.55 per share payable to Vicon shareholders of record as of July 11, 2014, payable within
15 days after the Effective Time, subject to the satisfaction of the closing conditions set forth in the Merger Agreement.
The special cash dividend will not be paid if the Merger is not completed.
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IQinVision
IQinVision is a privately-held company and there is no established public trading market for its capital stock.
As of July 15, 2014, the record date for seeking IQinVision shareholder consent, there were 5,766,922 shares of
IQinVision common stock outstanding, 920,051 shares of IQinVision Series A preferred stock outstanding, 3,295,428
shares of IQinVision Series B preferred stock outstanding, 1,444,212 shares of IQinVision Series C preferred stock
outstanding and 1,502,412 shares of IQinVision Series D preferred stock outstanding, and there were 103 holders of
record of IQinVision capital stock.
IQinVision has never declared or paid any cash dividends on its capital stock nor does it intend to do so in the
foreseeable future.
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RISK FACTORS
In addition to the other information included and incorporated by reference in this proxy statement/prospectus/
consent solicitation, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-
Looking Statements,” Vicon shareholders and IQinVision shareholders should carefully consider the following risks
before deciding how to vote their shares of stock.
Risks Related to the Merger
Current Vicon shareholders and IQinVision shareholders will have a reduced ownership and voting interest
after the Merger.
Vicon will issue or reserve for issuance approximately 4,522,335 shares of Vicon common stock to IQinVision
shareholders in the Merger (including shares of Vicon common stock issuable in connection with outstanding IQinVision
equity awards). Following the consummation of the Merger, the shareholders of Vicon immediately prior to the Effective
Time and the shareholders of IQinVision immediately prior to the Effective Time will each own approximately 50%
of the outstanding shares of common stock of Vicon after the Merger.
Vicon shareholders and IQinVision shareholders currently have the right to vote for their respective directors
and on other matters affecting their respective companies. When the Merger occurs, each IQinVision shareholder who
receives shares of Vicon common stock will become a shareholder of Vicon with a percentage ownership of the combined
company that will be smaller than the shareholder’s percentage ownership of IQinVision prior to the Merger.
Correspondingly, each Vicon shareholder will remain a shareholder of Vicon with a percentage ownership of the
combined company that will be smaller than the shareholders percentage of Vicon prior to the Merger. As a result of
these reduced ownership percentages, Vicon shareholders will have less voting power in the combined company than
they now have with respect to Vicon, and former IQinVision shareholders will have less voting power in the combined
company than they now have with respect to IQinVision.
Any delay in completing the Merger may reduce or eliminate the benefits expected to be achieved thereunder.
The Merger is subject to a number of conditions beyond Vicon’s and IQinVision’s control that may prevent,
delay or otherwise materially adversely affect its completion. Neither Vicon nor IQinVision can predict whether and
when these other conditions will be satisfied. Any delay in completing the Merger could cause the combined company
not to realize some or all of the synergies that Vicon and IQinVision expect to achieve if the Merger is successfully
completed within its expected time frame. See the section entitled “The Merger Agreement—Conditions to Completion
of the Merger” of this proxy statement/prospectus/consent solicitation.
Uncertainties associated with the Merger may cause a loss of management personnel and other key
employees which could adversely affect the future business and operations of the combined company.
Vicon and IQinVision are dependent on the experience and industry knowledge of their officers and other key
employees to execute their business plans. The combined company’s success after the Merger will depend in part upon
its ability to retain key management personnel and other key employees. Current and prospective employees of Vicon
and IQinVision may experience uncertainty about their roles within the combined company following the Merger or
other concerns regarding the timing and completion of the Merger or the operations of the combined company, any of
which may have an adverse effect on the ability of the combined company to attract or retain key management and
other key personnel. Accordingly, no assurance can be given that the combined company will be able to attract or retain
key management personnel and other key employees of Vicon and IQinVision to the same extent that Vicon and
IQinVision have previously been able to attract or retain their own employees.
In addition, Kenneth M. Darby, Vicon’s Chairman and Chief Executive Officer previously notified Vicon of
his intention to retire, but has agreed to continue to serve as Chairman and Chief Executive Officer of Vicon until his
36
replacement is found. The combined company’s success after the Merger will depend in part upon its ability to obtain
a suitable replacement for Mr. Darby.
Because the lack of a public market for IQinVision’s outstanding shares makes it difficult to evaluate the
fairness of the Merger, IQinVision shareholders may receive consideration in the Merger that is greater than or less
than the fair market value of the IQinVision shares.
The outstanding capital stock of IQinVision is privately held and is not traded in any public market. The lack
of a public market makes it extremely difficult to determine the fair market value of IQinVision shares. Since the
percentage of Vicon’s equity to be issued to IQinVision shareholders was determined based on negotiations between
the parties, it is possible that the value of the Vicon common stock to be issued in connection with the Merger will be
greater than the fair market value of IQinVision shares. Alternatively, it is possible that the value of the shares of Vicon
common stock to be issued in connection with the Merger will be less than the fair market value of IQinVision shares.
While TM Capital, as financial advisor to Vicon, delivered an opinion to Vicon’s special committee of the
board of directors and to the Vicon board of directors that, as of March 28, 2014 and based upon and subject to the
factors and assumptions set forth therein, the total consideration to be paid by Vicon in connection with the Merger,
including the Merger Consideration, is fair to Vicon and its shareholders from a financial point of view, Vicon has not
obtained an updated opinion as of the date of this proxy statement/prospectus/consent solicitation from TM Capital.
Developments subsequent to the date of such opinion, including changes in the operations and prospects of Vicon or
IQinVision, general market and economic conditions and other factors that may be beyond the control of Vicon and
IQinVision, may affect TM Capital’s opinion.
The pendency of the Merger could have an adverse effect on the trading price of Vicon common stock and
the business, financial condition, results of operations or business prospects for Vicon, IQinVision and the combined
company.
While there have been no significant adverse effects to date, the pendency of the Merger could disrupt Vicon’s
and IQinVision’s businesses in the following ways, including:
third parties may seek to terminate or renegotiate their relationships with Vicon or IQinVision as a result
of the Merger, whether pursuant to the terms of their existing agreements with Vicon or IQinVision or
otherwise; and
the attention of Vicon and IQinVision management may be directed toward completion of the Merger and
related matters and may be diverted from the day-to-day business operations of their respective companies,
including from other opportunities that otherwise might be beneficial to Vicon and IQinVision.
Should they occur, either of these matters could adversely affect the trading price of Vicon common stock or
harm the financial condition, results of operations or business prospects of Vicon, IQinVision and the combined company.
The Merger Agreement contains provisions that could discourage a potential competing acquirer of either
Vicon or IQinVision.
The Merger Agreement contains no solicitation provisions that, subject to limited exceptions, restrict each of
Vicon’s and IQinVision’ ability to solicit, initiate, or knowingly encourage and facilitate competing third-party proposals
for the acquisition of their respective company’s stock or assets. Further, even if the Vicon board of directors or the
IQinVision board of directors withdraws or qualifies its recommendation with respect to the Merger, Vicon or IQinVision,
as the case may be, will still be required to submit each of their merger-related proposals to a vote by their shareholders,
unless the Merger Agreement is earlier terminated. In addition, the other party generally has an opportunity to offer to
modify the terms of the Merger in response to any competing acquisition proposals before the board of directors of the
company that has received a third-party proposal may withdraw or qualify its recommendation with respect to the
Merger. In addition, if either Vicon or IQinVision breaches the Merger Agreement’s covenant on non-solicitation, it
may be required to pay the other a termination fee of $750,000.
37
These provisions could discourage a potential third-party acquirer that might have an interest in acquiring all
or a significant portion of Vicon or IQinVision from considering or proposing that acquisition, even if it were prepared
to pay consideration with a higher per share cash or market value than the market value proposed to be received or
realized in the merger. These provisions might also result in a potential third-party acquirer proposing to pay a lower
price to the shareholders than it might otherwise have proposed to pay because of the added expense of the $750,000
termination fee that may become payable in certain circumstances. If the Merger Agreement is terminated and either
Vicon or IQinVision determines to seek another business combination, it may not be able to negotiate a transaction
with another party on terms comparable to, or better than, the terms of the Merger.
Future results of the combined company may differ materially from the unaudited pro forma financial
statements included in this document and the financial projections prepared by Vicon and IQinVision in connection
with the discussions concerning the Merger.
The pro forma financial statements contained in this proxy statement/prospectus/consent solicitation are
presented for illustrative purposes only, are based on various adjustments, assumptions and preliminary estimates and
may not be an indication of the combined company’s financial condition or results of operations following the Merger
for several reasons. See the section entitled “Unaudited Pro Forma Condensed Combined Consolidated Financial
Information.” The financial projections were prepared by management of Vicon and IQinVision for internal use. See
the section entitled “Financial Projections.” The actual financial condition and results of operations of the combined
company following the Merger may not be consistent with, or evident from, these pro forma financial statements or
the financial projections prepared by Vicon and IQinVision. In addition, the assumptions used in preparing the pro
forma financial information may not prove to be accurate, and other factors may affect the combined company’s financial
condition or results of operations following the Merger. Any potential decline in the combined company’s financial
condition or results of operations may cause significant variations in the stock price of the combined company.
The combined company may be unable to integrate the businesses of Vicon and IQinVision successfully
or realize the anticipated benefits of the Merger.
The Merger involves the combination of two companies that currently operate as independent companies. The
combined company will be required to devote significant management attention and resources to integrating the business
practices and operations of Vicon and IQinVision. Potential difficulties the combined company may encounter as part
of the integration process include the following:
the inability to successfully combine the businesses of Vicon and IQinVision in a manner that permits the
combined company to achieve the full revenue and cost synergies and other benefits anticipated to result
from the Merger;
complexities associated with managing the combined businesses, including difficulty addressing possible
differences in corporate cultures and management philosophies and the challenge of integrating complex
systems, technology, networks and other assets of each of the companies in a manner that minimizes any
adverse impact on customers, suppliers, employees and other constituencies;
potential unknown liabilities and unforeseen increased expenses or delays associated with the Merger;
the inability to cross-sell Vicon and IQinVision products; and
the inability to integrate Vicon technologies into the IQinVision products and vice versa.
The future results of the combined company will suffer if the combined company does not effectively manage
its expanded operations following the Merger.
Following the Merger, the size of the business of the combined company will increase significantly beyond
the current size of either Vicon’s or IQinVision’s business. The combined company’s future success depends, in part,
upon its ability to manage this expanded business, which will pose substantial challenges for management, including
challenges related to the management and monitoring of new operations and associated increased costs and complexity.
There can be no assurances that the combined company will be successful or that it will realize the expected operating
efficiencies, cost savings, revenue enhancements or other benefits currently anticipated from the Merger.
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The combined company is expected to incur substantial expenses related to the Merger and the integration
of Vicon and IQinVision.
The combined company is expected to incur substantial expenses in connection with the Merger and the
integration of Vicon and IQinVision. There are a large number of processes, policies, procedures, operations,
technologies and systems that must be integrated, including purchasing, accounting and finance, sales, payroll, pricing,
marketing and benefits. While Vicon and IQinVision have assumed that a certain level of expenses will be incurred,
there are many factors beyond their control that could affect the total amount or the timing of the integration expenses.
Moreover, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These expenses
could, particularly in the near term, exceed the savings that the combined company expects to achieve from the
elimination of duplicative expenses and the realization of economies of scale and cost savings. These integration
expenses likely will result in the combined company taking significant charges against earnings following the completion
of the Merger, and the amount and timing of such charges are uncertain at present.
Third parties may terminate or alter existing contracts with IQinVision.
IQinVision has contracts with suppliers, distributors, customers, licensors, licensees, lessors, and other business
partners that have “change of control” or similar clauses that allow the counterparty to terminate or change the terms
of their contract upon the closing of the transactions contemplated by the Merger Agreement. Vicon and IQinVision
may seek to obtain consent from these other parties, but if these third party consents cannot be obtained, or are obtained
on unfavorable terms, the combined company may lose the benefit of such contracts, including benefits that may be
material to the business of the combined company.
The rights of IQinVision shareholders holding Vicon common stock following the completion of the Merger
will be governed by New York law and differ from the rights of shareholders under California law.
Because Vicon is a New York corporation, the rights of holders of its stock are governed by the laws of the
State of New York and by Vicon’s Articles of Incorporation. These rights differ in certain ways from the rights of
IQinVision shareholders under California law and under IQinVision’s Articles of Incorporation, including but not limited
to those differences described in the section entitled “Comparison of Rights of Holders of Vicon Stock and IQinVision
Stock.”
Anticipation of the special dividend may cause upward pressure on or support of the price of Vicon common
stock as investors purchase or hold shares to collect the expected special cash dividend. The price of Vicon common
stock may decline on or after the record date or payment date of the dividend.
As part of the Merger, on June 9, 2014 the Vicon board of directors declared a special cash dividend of $0.55
per share payable to Vicon shareholders of record as of July 11, 2014, payable within 15 days after the Effective Time,
subject to the satisfaction of the closing conditions set forth in the Merger Agreement. Anticipation of the special
dividend may cause upward pressure on or support of the price of Vicon common stock as investors purchase or hold
shares to collect the declared special dividend. The price of Vicon common stock may decline on or after the record
date or payment date of the dividend because the shareholders’ equity of Vicon will decrease by the amount of the
distribution. Shares of Vicon stock commenced trading on a "due-bill" basis on July 9, 2014. Further, although the
special cash dividend was declared by the Vicon board of directors, it will only be paid if the Merger is consummated.
If the Merger does not qualify as a reorganization under Section 368(a) of the Code or is otherwise taxable
to U.S. holders of IQinVision capital stock, then such holders may be required to pay substantial U.S. Federal income
taxes.
Fox Rothschild LLP, tax counsel to Vicon, has rendered its opinion to the effect that the Merger will be treated
for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code. This
opinion is based on certain assumptions and representations as to factual matters made by IQinVision, Vicon and Vicon
on behalf of the Merger Sub, as well as certain covenants and undertakings by IQinVision, Vicon and Vicon on behalf
of the Merger Sub. If any of the assumptions, representations, covenants or undertakings is incorrect, incomplete, or
39
inaccurate, or is violated in any material respect, the validity of the conclusions reached by counsel in its opinion would
be jeopardized. Additionally, an opinion of counsel represents the counsel’s best legal judgment but is not binding on
the United States Internal Revenue Service, or IRS, or any court, so there can be no certainty that the IRS will not
challenge the conclusions set forth in the opinion or that a court will not sustain such a challenge. If the IRS or a court
determines that the Merger should not be treated as a reorganization, a holder of IQinVision capital stock would recognize
taxable gain or loss upon the exchange of IQinVision capital stock for Vicon common stock pursuant to the Merger.
See the section entitled “The Merger and the Combined Company Material U.S. Federal Income Tax Consequences
of the Merger.”
The combined company’s ability to utilize IQinVision’s or Vicon’s net operating loss and tax credit
carryforwards in the future may be subject to substantial limitations and may be further limited as a result of the
merger.
Under Section 382 of the Code, if a company undergoes an “ownership change” (generally defined as a greater
than 50 percent change (by value) in its equity ownership over a three-year period), the company’s ability to use its
pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may
be limited. Further, if the historic business of IQinVision or Vicon is not treated as being continued by the combined
entity for the two-year period beginning on the date of the merger (referred to as the “continuity of business
requirement”), the pre-transaction net operating loss carryforward deductions of IQinVision or Vicon (as the case may
be) may become substantially reduced or unavailable for use by the combined company. The Merger may result in an
“ownership change” of either IQinVision or Vicon. A corporation that experiences an ownership change will generally
be subject to an annual limitation on its use of pre-ownership change net operating loss carryforwards (and certain other
pre-change tax attributes) equal to, in general, the product of the long-term tax-exempt rate (as published by the IRS
for the month in which the ownership change occurs) and the value of the company's outstanding stock immediately
before the ownership change (subject to certain adjustments), increased by certain built-in gains held by the company
at the time of the ownership change that are recognized in the five-year period after the ownership period. Accordingly,
the combined company’s ability to utilize IQinVision’s or Vicon’s pre-Merger net operating loss and tax credit
carryforwards may be substantially limited. These limitations, in turn, could result in increased future tax payments
for the combined company, which could have a material adverse effect on the business, financial condition or results
of operations of the combined company.
Risks Mutually Applicable to Vicon’s and IQinVision’s Businesses
If Vicon and IQinVision fail to develop and introduce new or enhanced products on a timely basis, their
ability to attract and retain customers could be impaired and their competitive position could be harmed.
Vicon and IQinVision both operate in a dynamic environment characterized by rapidly changing technologies
and technological obsolescence. To compete successfully, Vicon and IQinVision each must design, develop, market
and sell enhanced products that provide increasingly higher levels of performance and functionality and that meet the
cost expectations of their customers. Vicon’s and IQinVision's existing or future products could be rendered obsolete
by the introduction of new products by their competitors; convergence of other markets with or into the video security
market; the market adoption of products based on new or alternative technologies; or the emergence of new industry
standards. In addition, the markets for Vicon’s and IQinVision’s products are characterized by frequent introduction of
next-generation and new products, short product life cycles, increasing demand for added functionality and significant
price competition. If Vicon and IQinVision or their customers are unable to manage product transitions in a timely and
cost-effective manner, their business and results of operations would suffer.
Vicon’s and IQinVision’s failure to anticipate or timely develop new or enhanced products in response to
technological shifts could result in decreased revenue. In particular, Vicon and IQinVision may experience difficulties
with product design, development of new software, manufacturing, marketing or qualification that could delay or
prevent their development, introduction or marketing of new or enhanced products. Moreover, it is possible that Vicon’s
and IQinVision’s customers may develop their own product or adopt a competitors solution for products that they
currently buy from them. If Vicon and IQinVision fail to introduce new or enhanced products that meet the needs of
40
their customers or penetrate new markets in a timely fashion, they will lose market share and their respective operating
results will be adversely affected.
Vicon and IQinVision may experience difficulties demonstrating the value to customers of newer, higher
priced and higher margin products if they believe existing products are adequate to meet end customer expectations.
As Vicon and IQinVision develop and introduce new products, they each face the risk that customers may not
value or be willing to bear the cost of incorporating these newer products into their solutions. Regardless of the improved
features or superior performance of the newer products, customers may be unwilling to adopt Vicon’s or IQinVision’s
new products due to design or pricing constraints. Owing to the extensive time and resources that Vicon and IQinVision
invest in developing new products, if they are unable to sell customers new generations of their products, their respective
revenue could decline and their respective business, financial condition, operating results and cash flows could be
negatively affected.
The loss of any of Vicon’s or IQinVision’s key personnel could seriously harm their respective businesses,
and their failure to attract or retain qualified management, engineering, sales and marketing talent could impair
their ability to grow their businesses.
Vicon and IQinVision both believe their future success will depend in large part upon their ability to attract,
retain and motivate highly skilled management, engineering and development teams, and sales and marketing personnel.
The loss of any key employees or the inability to attract, retain or motivate qualified personnel, including engineers
and sales and marketing personnel, could delay the development and introduction of, and harm their ability to sell, their
products and keep pace with changes in technology. Vicon and IQinVision believe that their future success is dependent
on the contributions of their management. The loss of the services of their key personnel could harm their respective
businesses, financial conditions and results of operations. For example, if any of these individuals were to leave
unexpectedly, Vicon and IQinVision could face substantial difficulty in hiring qualified successors and could experience
a loss in productivity during the search for any such successor and while any successor is integrated into their businesses
and operations.
Both Vicon’s and IQinVision’s key technical and engineering personnel represent a significant asset and serve
as the source of their respective technological and product innovations. Vicon and IQinVision may not be successful
in attracting, retaining and motivating sufficient numbers of technical and engineering personnel to support their
anticipated growth. The competition for qualified engineering personnel in Vicon’s and IQinVision’s industry is very
intense. If Vicon and IQinVision are unable to hire, train and retain qualified engineering personnel in a timely manner,
their ability to grow their respective business will be impaired. In addition, if Vicon and IQinVision are unable to retain
their existing engineering personnel, their ability to maintain or grow their respective revenue will be adversely affected.
Vicon and IQinVision both rely upon independent contract manufacturers and suppliers. The loss of any
of these manufacturers or suppliers may substantially disrupt Vicon’s and IQinVision’s ability to obtain orders and
fulfill sales of their respective products.
Vicon and IQinVision both rely principally upon independent contract manufacturers and suppliers to produce
and assemble their products and they expect to continue to rely on such entities in the future. The failure of Vicon and
IQinVision to successfully manage their relationships with these parties could adversely affect their ability to market
and sell their respective products.
Neither Vicon nor IQinVision currently have formal contractual agreements with any of these contract
manufacturers or suppliers. Any significant change in their relationships with these manufacturers or suppliers could
have a material adverse effect on their businesses, operating results and financial conditions. Vicon and IQinVision
make substantially all of their purchases from their contract manufacturers on a purchase order basis. Vicon’s and
IQinVision’s contract manufacturers are not otherwise required to manufacture their products for any specific period
or in any specific quantity. Relying on contract manufacturers to produce and assemble their products also presents
significant risks to Vicon and IQinVision, including the inability of these contract manufacturers to:
41
assure the quality of their products;
manage capacity during periods of volatile demand;
qualify appropriate component suppliers;
ensure adequate supplies of materials;
protect their intellectual property; and
deliver finished products at agreed upon prices and schedules.
While raw materials and components are generally available from a variety of sources, Vicon and IQinVision
and their respective contract manufacturers currently depend on a limited number of suppliers for several components
for their products. If the suppliers of these components or technology were to enter into exclusive relationships with
other providers of networking equipment or were to discontinue providing such components and technology to Vicon
and IQinVision and Vicon and IQinVision were unable to replace them cost effectively, or at all, Vicon’s and IQinVision’s
ability to provide their products would be impaired. Vicon and IQinVision and their respective contract manufacturers
generally rely on purchase orders rather than long-term contracts with these suppliers. As a result, even if available,
Vicon and IQinVision and their respective contract manufacturers may not be able to secure sufficient components at
reasonable prices or of acceptable quality to build their products in a timely manner. Therefore, Vicon and IQinVision
may be unable to meet customer demand for their products, which would have a material adverse effect on Vicon’s and
IQinVision’s respective businesses, operating results and financial conditions.
Vicon and IQinVision both rely on third-party vendors to supply software development tools to them for
the development of their new products, and they may be unable to obtain the tools necessary to develop or enhance
new or existing products.
Vicon and IQinVision both rely on third-party software development tools to assist them in the design,
simulation and verification of new products or product enhancements. To bring new products or product enhancements
to market in a timely manner, or at all, Vicon and IQinVision both need software development tools that are sophisticated
enough or technologically advanced enough to complete their design, simulations and verifications. In the future, the
design requirements necessary to meet consumer demands for more features and greater functionality from Vicon’s
and IQinVision’s products may exceed the capabilities of available software development tools. Unavailability of
software development tools may result in Vicon and IQinVision missing design cycles, either of which could result in
a loss of market share or negatively impact their respective operating results.
The failure by Vicon and IQinVision to adequately protect their intellectual property rights could impair
their ability to compete effectively or defend themselves from litigation, which could harm their respective businesses,
financial conditions and results of operations.
Vicon’s and IQinVision’s success depends, in part, on their ability to protect their intellectual property. Vicon
and IQinVision both rely primarily on patent, copyright, trademark and trade secret laws, as well as confidentiality and
non-disclosure agreements and other contractual protections, to protect their proprietary technologies and know-how,
all of which offer only limited protection. The steps Vicon and IQinVision have taken to protect their intellectual
property rights may not be adequate to prevent misappropriation of their proprietary information or infringement of
their intellectual property rights, and their ability to prevent such misappropriation or infringement is uncertain,
particularly in countries outside of the United States. As of December 31, 2013, IQinVision had one issued and allowed
patents in the United States and one pending and provisional patent applications in the United States. Even if the pending
patent applications are granted, the rights granted to IQinVision may not be meaningful or provide it with any commercial
advantage. For example, these patents could be opposed, contested, circumvented, designed around by IQinVision’s
competitors or be declared invalid or unenforceable in judicial or administrative proceedings. The failure of IQinVision’s
patents to adequately protect its technology might make it easier for its competitors to offer similar products or
technologies. Foreign patent protection is generally not as comprehensive as U.S. patent protection and may not protect
its intellectual property in some countries where its products are sold or may be sold in the future. Many U.S.-based
companies have encountered substantial intellectual property infringement in foreign countries, including countries
where Vicon and IQinVision sell products. Even if foreign patents are granted, effective enforcement in foreign countries
may not be available. For example, the legal environment relating to intellectual property protection in China is relatively
weak, often making it difficult to create and enforce such rights. IQinVision may not be able to effectively protect its
42
intellectual property rights in China or elsewhere. If such an impermissible use of our intellectual property or trade
secrets were to occur, our ability to sell our products at competitive prices may be adversely affected and our business,
financial condition, operating results and cash flows could be materially and adversely affected.
The legal standards relating to the validity, enforceability and scope of protection of intellectual property rights
are uncertain and evolving. Neither Vicon nor IQinVision can assure you that others will not develop or patent similar
or superior technologies, products or services, or that their patents, trademarks and other intellectual property will not
be challenged, invalidated or circumvented by others.
Unauthorized copying or other misappropriation of Vicon’s and IQinVision’s proprietary technologies could
enable third parties to benefit from their technologies without paying them for doing so, which could harm their
respective businesses. Monitoring unauthorized use of their intellectual property is difficult and costly. Although Vicon
and IQinVision are not aware of any unauthorized use of their intellectual property in the past, it is possible that
unauthorized use of their intellectual property may have occurred or may occur without their knowledge. Vicon and
IQinVision cannot assure you that the steps they have taken will prevent unauthorized use of their intellectual property.
Vicon’s and IQinVision’s failure to effectively protect their intellectual property could reduce the value of their
technology in licensing arrangements or in cross-licensing negotiations.
Vicon and IQinVision may in the future need to initiate infringement claims or litigation in order to try to
protect their intellectual property rights or defend infringement claims or litigation brought by other parties. Litigation,
whether they are a plaintiff or a defendant, can be expensive, time-consuming and may divert the efforts of our technical
staff and management, which could harm their businesses, whether or not such litigation results in a determination
favorable to them. Litigation also puts their patents and trademarks at risk of being invalidated or interpreted narrowly
and their patent and trademark applications at risk of not issuing. Additionally, any enforcement of their patents,
trademarks or other intellectual property may provoke third parties to assert counterclaims against them. If Vicon and
IQinVision are unable to protect their proprietary rights or if third parties independently develop or gain access to their
or similar technologies, their respective businesses, revenues, reputations and competitive positions could be harmed.
Failure to comply with the U.S. Foreign Corrupt Practices Act, or FCPA, and similar laws associated with
Vicon’s and IQinVision’s activities outside of the United States could subject them to penalties and other adverse
consequences.
Vicon and IQinVision face significant risks if they fail to comply with the FCPA and other anti-corruption
laws that prohibit improper payments or offers of payment to foreign governments and political parties by them for the
purpose of obtaining or retaining business. In many foreign countries, particularly in countries with developing
economies, it may be a local custom that businesses operating in such countries engage in business practices that are
prohibited by the FCPA or other applicable laws and regulations. Further, IQinVision is in the early stages of
implementing its FCPA compliance program and cannot assure you that all of its employees and agents, as well as those
companies to which it outsources certain of its business operations, will not take actions in violation of its policies and
applicable law, for which IQinVision may be ultimately held responsible. Any violation of the FCPA or other applicable
anti-corruption laws could result in severe criminal or civil sanctions and, in the case of the FCPA, suspension or
debarment from U.S. government contracting, which could have a material and adverse effect on Vicon’s and
IQinVision’s respective reputations, businesses, financial conditions, operating results and cash flows.
Vicon and IQinVision are subject to warranty and product liability claims and to product recalls.
From time to time, Vicon and IQinVision are subject to warranty claims that may require them to make
significant expenditures to defend these claims or pay damage awards. In the future, Vicon and IQinVision may also
be subject to product liability claims. In the event of a warranty claim, Vicon and IQinVision may also incur costs if
they compensate the affected customer. Vicon and IQinVision both maintain product liability insurance, but this
insurance is limited in amount and, in the case of IQinVision, is subject to significant deductibles. There is no guarantee
that Vicon’s and IQinVision’s insurance will be available or adequate to protect them against all claims. Vicon and
IQinVision also may incur costs and expenses relating to a recall of one of their customers’ products containing one of
their devices. The process of identifying a recalled product in consumer devices that have been widely distributed may
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be lengthy and require significant resources, and Vicon and IQinVision may incur significant replacement costs, contract
damage claims from their customers and reputational harm. Costs or payments made in connection with warranty and
product liability claims and product recalls could harm Vicon’s and IQinVision’s respective financial conditions and
results of operations.
If Vicon’s or IQinVision’s operations are interrupted, their respective businesses and reputations could
suffer.
Both Vicon’s and IQinVision’s operations and those of their manufacturers are vulnerable to interruption
caused by technical breakdowns, computer hardware and software malfunctions, software viruses, infrastructure
failures, fires, earthquakes, floods, power losses, telecommunications failures, terrorist attacks, wars, Internet failures
and other events beyond their control. Any disruption in Vicon’s and IQinVision’s services or operations could result
in a reduction in revenue or a claim for substantial damages against them, regardless of whether they are responsible
for that failure. In addition, IQinVision relies on its computer equipment, database storage facilities and other office
equipment, which are located primarily in the seismically active Southern California region. If Vicon and IQinVision
suffer a significant database or network facility outage, their businesses could experience disruption until they fully
implement their back-up systems.
While Vicon and IQinVision both intend to continue to invest in research and development, they may be
unable to make the substantial investments that are required to remain competitive in their businesses.
Both Vicon’s and IQinVision’s industry requires substantial investment in engineering/research and
development in order to bring to market new and enhanced products. Vicon’s engineering and development expense
was $4.2 million in 2013 and $5.2 million in 2012, or 11% of net sales. IQinVision’s research and development expense
was $2.3 million in 2013 and $2.6 million in 2012, or 12% of net sales. Both Vicon and IQinVision expect to continue
to increase their engineering/research and development expenditures as compared to prior periods as part of their
respective strategies of focusing on the development of innovative and sustainable products. The ongoing market shift
to higher megapixel IP cameras will continue to burden IQinVision’s development resources and increase ongoing
annual expense for product development. Vicon and IQinVision do not know whether they will have sufficient resources
to maintain the level of investment in engineering/research and development required to remain competitive. In addition,
neither Vicon nor IQinVision can assure you that the technologies which are the focus of their engineering/research
and development expenditures will become commercially successful or generate any revenue.
Vicon and IQinVision rely on third parties to provide services and technology necessary for the operation
of their businesses. Any failure of one or more of Vicon’s or IQinVision’s vendors, suppliers or licensors to provide
such services or technology could harm their businesses.
Vicon and IQinVision rely on third-party vendors to provide critical services, including, among other things,
services related to accounting, human resources, information technology and network monitoring that they cannot or
do not create or provide themselves. Vicon and IQinVision depend on these vendors to ensure that their corporate
infrastructure will consistently meet their business requirements. The ability of these third-party vendors to successfully
provide reliable and high-quality services is subject to technical and operational uncertainties that are beyond Vicon’s
and IQinVision’s control. While Vicon and IQinVision may be entitled to damages if their vendors fail to perform under
their agreements with them, Vicon’s and IQinVision’s agreements with these vendors limit the amount of damages they
may receive. In addition, Vicon and IQinVision do not know whether they will be able to collect on any award of
damages or that these damages would be sufficient to cover the actual costs they would incur as a result of any vendors
failure to perform under its agreement with them. Upon expiration or termination of any of Vicon’s and IQinVision’s
agreements with third-party vendors, Vicon and IQinVision may not be able to replace the services provided to Vicon
and IQinVision in a timely manner or on terms and conditions, including service levels and cost, that are favorable to
them, and a transition from one vendor to another vendor could subject them to operational delays and inefficiencies
until the transition is complete.
Additionally, Vicon and IQinVision incorporate third-party technology into some of their products, and they
may do so in future products. The operation of Vicon’s and IQinVision’s products could be impaired if errors occur in
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the third-party technology they use. It may be more difficult for Vicon and IQinVision to correct any errors in a timely
manner, if at all, because the development and maintenance of the technology is not within their control. Neither Vicon
nor IQinVision can assure you that these third parties will continue to make their technology, or improvements to the
technology, available to them, or that they will continue to support and maintain their technology. Further, due to the
limited number of vendors of some types of technology, it may be difficult to obtain new licenses or replace existing
technology. Any impairment of the technology of or Vicon’s or IQinVision’s relationship with these third parties could
harm their businesses.
Risks Relating to Vicon
Vicon shareholders and IQinVision shareholders should carefully consider the risks described in Part I, Item
1A in Vicon’s Annual Report on Form 10-K for the year ended September 30, 2013, filed with the SEC on December
30, 2013 and incorporated by reference into this proxy statement/prospectus/consent solicitation (See the section entitled
“Where You Can Find More Information” for the location of information incorporated by reference into this proxy
statement/prospectus/consent solicitation), as well as the following risks relating to Vicon before deciding how to vote
their shares of stock.
Vicon’s profitability may decline as its expands into new product areas.
Vicon’s engineering and development is directed principally at enhanced video system capability. In recent
years, the trend of product development and demand within the video security and surveillance market has been toward
enhanced software applications involving the compression, analysis, transmission, storage, manipulation, imaging and
display of digital video over IP networks. Since Vicon’s target market segment (enterprise applications) requires it to
keep pace with changes in technology, Vicon has focused its engineering efforts in these developing areas. Development
projects are chosen and prioritized based on competitor threats, Vicon’s analysis as to the needs of the marketplace,
anticipated technological advances and market research. As Vicon expands into new product areas, it may not be able
to compete effectively with existing market participants and may not be able to realize a positive return on the investment
it has made in these products or services. Entering these markets may result in increased product development costs
and its new products may have extended time to market relative to its current products. If Vicon’s introduction of a
new product is not successful or if Vicon encounters technical problems or it is not able to achieve the revenues or
margins it expects, Vicon’s operating results may be harmed and it may not recover its product development and
marketing expenditures.
A number of Vicon’s current or potential competitors have greater brand recognition, larger customer bases
and significantly greater financial, technical, sales, marketing and other resources than it does.
Many of Vicon’s principal competitors are larger companies whose financial resources and scope of operations
are substantially greater than Vicon’s. Such competitors include security divisions of the Bosch Group, Honeywell
International, Schneider Electric, Tyco International, Samsung Group and United Technologies, among others. Vicon
also competes with many video management system producers such as Avigilon Corporation, Exacq Technologies,
Genetec Inc. and Milestone Systems and for cameras with companies such as Axis Communications, Matsushita
(Panasonic), Mobotix Corp. and Sony Corporation, among others. Many additional companies, both domestic and
international, produce products that compete against one or more of Vicon’s product lines.
As Vicon moves into new markets for different types of equipment, Vicon’s brand may not be as well-known
as incumbents in those markets. Potential customers may prefer to purchase from their existing suppliers rather than a
new supplier, regardless of product performance or features. Vicon expects increased competition from other established
and emerging companies if its market continues to develop and expand. As Vicon enter new markets, it expects to face
competition from incumbent and new market participants.
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Vicon’s business is susceptible to risks associated with operations outside of the United States.
Vicon sells its products in Europe, the Middle East and Africa (EMEA) through its European based subsidiaries
and elsewhere outside the U.S. principally by direct export from its U.S. headquarters.
Export sales and sales from Vicon’s foreign subsidiaries amounted to $14.4 million and $18.0 million, or 36%
of consolidated net sales in fiscal years 2013 and 2012, respectively. Vicon’s principal foreign markets are the U.K.,
Europe, Middle East and the Pacific Rim, which together accounted for approximately 81% of international sales in
fiscal 2013. Vicon’s operations outside the United States subject it to risks that it has not generally faced in the United
States. These include:
the burdens of complying with a wide variety of U.S. laws applicable to export controls, foreign operations,
foreign laws and different legal standards;
fluctuations in currency exchange rates;
unexpected changes in foreign regulatory requirements;
counterfeiting of Vicon’s products or infringement on its intellectual property by third parties;
difficulties in managing the staffing of remote operations;
potentially adverse tax consequences, including the complexities of foreign value added tax systems,
restrictions on the repatriation of earnings and changes in tax rates;
dependence on distributors in various countries with different pricing policies and forecasting practices;
reduced or varied protection for intellectual property rights in some countries;
increased financial accounting and reporting burdens and complexity;
political, social and economic instability in some jurisdictions; and
terrorist attacks and security concerns in general.
If any of these risks were to come to fruition, it could negatively affect Vicon’s business outside the United States and,
consequently, Vicon’s operating results. Additionally, operating in markets outside the United States requires significant
management attention and financial resources. Vicon cannot be certain that the investment of resources to maintain
operations in other countries will produce desired levels of revenues or profitability.
Vicon’s stock price has been volatile and its shareholders’ investments could lose value.
All of the risk factors discussed in this section could affect Vicon’s stock price. The timing of announcements
in the public market regarding new products, product enhancements or technological advances by Vicon or its
competitors, and any announcements by Vicon or its competitors of acquisitions, major transactions, or management
changes could also affect Vicon’s stock price. Vicon’s stock price is subject to speculation in the press and the analyst
community, including with respect to changes in recommendations by financial analysts, changes in investors' or
analysts' valuation measures for Vicon’s stock, its credit ratings and market trends unrelated to its performance. Stock
sales by Vicon’s directors, officers, or other significant holders may also affect Vicon’s stock price. A significant drop
in Vicon’s stock price could also expose it to the risk of securities class actions lawsuits, which could result in substantial
costs and divert management's attention and resources, which could adversely affect Vicon’s business.
Risks Relating to IQinVision
IQinVision depends on a limited number of customers for a significant portion of its revenue. If IQinVision
fails to retain or expand its customer relationships, its revenue could decline.
IQinVision derives a significant portion of its revenue from a limited number of customers. IQinVision
anticipates that this customer concentration will continue for the foreseeable future. In the fiscal year ended December
31, 2013, sales to IQinVision’s five largest customers collectively accounted for approximately 42% of its revenue,
and sales to IQinVision’s 10 largest customers collectively accounted for approximately 56% of its revenue.
IQinVision believes that its operating results for the foreseeable future will continue to depend on sales to a
relatively small number of customers. In the future, these customers may decide not to purchase its products at all, may
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purchase fewer products than they did in the past or may alter their purchasing patterns. As substantially all of
IQinVision’s sales to date have been made on a purchase order basis, these customers may cancel, change or delay
product purchase commitments with little or no notice to IQinVision and without penalty and may make IQinVision’s
revenue volatile from period to period. Sales will vary from period to period depending on many factors including
seasonal and geographic trends in construction activities and the timing of deliveries due to changes in project schedules
and funding. The loss of a significant customer could happen at any time and without notice, and such loss would
likely harm IQinVision’s financial condition and results of operations.
To attract new customers or retain existing customers, IQinVision may have to offer these customers favorable
prices on its products. In that event, IQinVision’s average selling prices and gross margins would decline. The loss of
a key customer, a reduction in sales to any key customer or its inability to attract new customers could seriously impact
IQinVision’s revenue and harm its results of operations.
IQinVision expects competition to increase in the future, which could have an adverse effect on its revenue
and market share.
The network camera, IP camera and network video recording markets are highly competitive. IQinVision
competes in different target markets to various degrees on the basis of a number of competitive factors, including its
products’ performance, features, functionality, energy efficiency, size, customer support, reliability and price, as well
as on the basis of its reputation. IQinVision expects competition to increase and intensify as more and larger companies
enter its markets. Increased competition could result in price pressure, reduced profitability and loss of market share,
any of which could harm IQinVision’s business, revenue and operating results.
IQinVision’s competitors range from large, international companies offering a wide range of products to
smaller companies specializing in narrow markets. IQinVision’s primary competitors in the camera market include
Axis, Arecont, Samsung, Avigilon, Sony, Hikvision, Vivotek and Panasonic. IQinVision expects competition in its
current markets to increase in the future as existing competitors improve or expand their product offerings and as
potential new competitors enter these markets.
IQinVision’s ability to compete successfully depends on elements both within and outside of its control,
including industry and general economic trends. Many of IQinVision’s competitors are substantially larger, have greater
financial, technical, marketing, distribution, customer support and other resources, are more established than IQinVision
is and have significantly better brand recognition and broader product offerings, which may enable them to better
withstand adverse economic or market conditions in the future. IQinVision’s ability to compete will depend on a number
of factors, including:
its ability to anticipate market and technology trends and successfully develop products that meet market
needs;
its success in identifying and penetrating new markets, applications and customers;
its ability to understand the price points and performance metrics of competing products in the marketplace;
its products’ performance and cost-effectiveness relative to that of competing products;
its ability to develop and maintain relationships with key distributors;
its ability to protect our intellectual property;
its ability to expand international operations in a timely and cost-efficient manner;
its ability to deliver products in volume on a timely basis at competitive prices; and
its ability to recruit design and application engineers with expertise in video camera technology.
IQinVision’s competitors may also establish cooperative relationships among themselves or with third parties
or acquire companies that provide similar products to IQinVision. As a result, new competitors or alliances may emerge
that could acquire significant market share. Any of these factors, alone or in combination with others, could harm
IQinVision’s business and result in a loss of market share and an increase in pricing pressure.
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The use of open source software in IQinVision’s products, processes and technology may expose IQinVision
to additional risks and compromise its proprietary intellectual property.
IQinVision’s products, processes and technology sometimes utilize and incorporate software that is subject
to an open source license. Open source software is typically freely accessible, usable and modifiable. Certain open
source software licenses, such as the GNU General Public License, require a user who intends to distribute the open
source software as a component of the users software to disclose publicly part or all of the source code to the users
software. In addition, certain open source software licenses require the user of such software to make any derivative
works of the open source code available to others on terms unfavorable to IQinVision or at no cost. This can subject
previously proprietary software to open source license terms.
While IQinVision monitors the use of open source software in its products, processes and technology and try
to ensure that no open source software is used in such a way as to require it to disclose the source code to the related
product, processes or technology when it does not wish to do so, such use could inadvertently occur. Additionally, if a
third-party software provider has incorporated certain types of open source software into software IQinVision licenses
from such third-party for its products, processes or technology, IQinVision could, under certain circumstances, be
required to disclose the source code to its products, processes or technology. This could harm IQinVision’s intellectual
property position and its business, results of operations and financial condition.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus/consent solicitation contains “forward-looking statements” of Vicon within
the meaning of the Private Securities Litigation Reform Act of 1995, which is applicable to Vicon because Vicon is a
public company subject to the reporting requirements of the Exchange Act, but is not applicable to IQinVision because
IQinVision is not a public company and is not currently subject to the reporting requirements of the Exchange Act.
These forward-looking statements include:
Vicon’s and IQinVision’ expectations with respect to the potential synergies, costs and other anticipated
financial impacts of the Merger;
future financial and operating results of the combined company;
financial projections of Vicon and IQinVision;
the combined company’s plans, objectives, expectations and intentions with respect to future operations
and services;
approval of the Merger by shareholders;
the satisfaction of the closing conditions to the Merger;
the timing of the completion of the Merger; and
the assumptions underlying the foregoing.
Words such as “anticipates,” “believes,” “forecast,” “potential,” “contemplates,” “expects,” “intends,” “plans,”
“believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can” and similar expressions identify forward-
looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks
and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-
looking statements, including the following:
risks and uncertainties relating to Vicon’s and IQinVision’ expectations with respect to the potential
synergies, costs and other anticipated financial impacts of the Merger;
risks relating to future financial and operating results of the combined company following the Merger;
risks relating to the market price of Vicon’s common stock as a result of the Merger;
risks relating to the combined company’s plans, objectives, expectations and intentions with respect to
future operations and services following the merger;
risks relating to the combined company’s ability to attract and retain key personnel following the merger;
risks relating to the combined company’s relationships with customers, suppliers, and other third parties
following the merger;
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risks relating to approval of the proposed transaction by shareholders;
risks relating to the satisfaction of the closing conditions to the proposed transaction; and
risks relating to the timing of the completion of the proposed transaction.
Many of the important factors that will determine these results and values are beyond Vicon’s and IQinVision’s
ability to control or predict. You are cautioned not to put undue reliance on any forward-looking statements. Except
as otherwise required by law, Vicon and IQinVision do not assume any obligation to update any forward-looking
statements. In evaluating the Merger, you should carefully consider the discussion of risks and uncertainties in the
section entitled “Risk Factors” of this proxy statement/prospectus/consent solicitation.
THE ANNUAL MEETING OF VICON SHAREHOLDERS
Date, Time and Place
The annual meeting of Vicon shareholders will be held at the principal executive offices of Vicon, which are
located at 131 Heartland Boulevard, Edgewood, New York 11717, at 10:00 a.m., Eastern Daylight Time, on August
28, 2014. Vicon is sending this proxy statement/prospectus/consent solicitation to its shareholders in connection with
the solicitation of proxies by the Vicon board of directors for use at the Vicon annual meeting and any adjournments
or postponements of such meeting. This proxy statement/prospectus/consent solicitation is first being furnished to
shareholders of Vicon on or about July 21, 2014.
Purpose of the Vicon Annual Meeting
At the Vicon annual meeting, Vicon shareholders will be asked to consider and vote on the following proposals:
Proposal No. 1 - Approval of the Issuance of the Merger Consideration: To approve the issuance of the
Merger Consideration to shareholders of IQinVision pursuant to the Merger Agreement, pursuant to which
Merger Sub will be merged with and into IQinVision, with IQinVision surviving as a wholly owned
subsidiary of Vicon. A copy of the Merger Agreement is attached as Annex A to this proxy statement/
prospectus/consent solicitation.
Proposal No. 2 - Approval of Adjournment or Postponement of Meeting: To approve the adjournment or
postponement of the Vicon annual meeting, if necessary or appropriate, to solicit additional proxies.
Proposal No. 3 - Election of Directors: To approve the election of two (2) directors of Vicon for a term
of three years or until a successor is duly elected and qualified, or until their earlier death, resignation or
removal.
Proposal No. 4 - Approval of the Compensation of Vicon’s Named Executive Officers: To approve, on an
advisory (non-binding) basis, the compensation of Vicon’s named executive officers as disclosed in the
Compensation Discussion and Analysis Executive Compensation section of this proxy statement/
prospectus/consent solicitation.
Proposal No. 5 - Approval of the Appointment of Vicon’s Independent Registered Public Accountants: To
approve the ratification of the appointment of BDO USA, LLP as Vicon’s independent registered public
accounting firm for the fiscal year ending September 30, 2014.
Vicon will not transact any other business at the Vicon annual meeting except such business as may properly
be brought before the meeting (including compliance with the applicable notice provisions in Vicon’s Bylaws) or any
adjournment or postponement thereof.
Vicon Record Date; Shareholders Entitled to Vote
The Vicon board of directors has fixed the close of business on July 11, 2014 as the record date for the
determination of shareholders entitled to notice of, and to vote at, the Vicon annual meeting or any adjournments or
postponements thereof. Only holders of record of shares of Vicon common stock at the close of business on the record
date have the right to receive notice of and to vote at the Vicon annual meeting. At the close of business on the record
49
date, Vicon had 4,522,335 shares of common stock outstanding and entitled to vote. Each share of Vicon’s common
stock entitles its owner to one vote on each matter submitted to the shareholders.
Quorum; Broker Non-Votes
The presence, in person or by proxy, of a majority of the outstanding shares of Vicon’s common stock as of
the record date is necessary to constitute a quorum at the Vicon annual meeting.
Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting
instructions to the broker, bank or nominee holding the shares. If the beneficial owner does not provide voting
instructions, the broker, bank or nominee can still vote the shares with respect to matters that are considered to be
“routine,” but not with respect to “non-routine” matters. Proposal No. 2 (Approval of Adjournment or Postponement
of Meeting) and Proposal No. 5 (Approval of the Appointment of Vicon’s Independent Registered Public Accountants)
are considered to be “routine” matters. Proposal No. 1 (Approval of the Issuance of the Merger Consideration), Proposal
No. 3 (Election of Directors) and Proposal No. 4 (Approval of the Compensation of Vicon’s Named Executive Officers)
are considered to be “non-routine” matters; as such, if you hold your shares in street name and do not give voting
instructions to the broker, bank or nominee holding your shares, your shares will not be voted with respect to these
proposals. Broker non-votes will not count for purposes of determining the number of votes cast. However, broker
non-votes will be counted in determining whether a quorum exists at the Vicon annual meeting.
Votes Required for Proposals
Vote Required for Proposal No. 1: Issuance of the Merger Consideration
Proposal No. 1 to approve the issuance of the Merger Consideration pursuant to the Merger Agreement requires
the affirmative vote of a majority of the total votes cast at the Vicon annual meeting at which a quorum is present. You
may vote either “FOR” or “AGAINST” the proposal or “ABSTAIN” as to the proposal. Abstentions will have the same
effect as a vote “AGAINST” the proposal. Because this proposal is a non-routine matter, nominees do not have the
discretion to vote uninstructed shares held by beneficial owners. Accordingly, broker non-votes may result for this
proposal. Broker non-votes will not have any effect on the results of this vote.
THE VICON BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER AS DESCRIBED
IN THIS PROXY STATEMENT/PROSPECTUS/CONSENT SOLICITATION, IS ADVISABLE AND IN THE
BEST INTERESTS OF VICON AND ITS SHAREHOLDERS AND RECOMMENDS THAT VICON
SHAREHOLDERS VOTE “FOR” VICON PROPOSAL NO. 1.
Vote Required for Proposal No. 2: Adjournment or Postponement to Solicit Additional Proxies
Proposal No. 2 to approve the adjournment or postponement of the Vicon annual meeting, if necessary or
appropriate, to solicit additional proxies, requires approval by a majority of the total votes cast at the Vicon annual
meeting, whether or not a quorum is present. You may vote either “FOR” or “AGAINST” the proposal or “ABSTAIN”
as to the proposal. Abstentions will have no effect on the results of this vote. Because this proposal is a routine matter,
nominees have the discretion to vote uninstructed shares held by beneficial owners. Accordingly, broker non-votes
will not result for this proposal.
THE VICON BOARD OF DIRECTORS RECOMMENDS THAT VICON SHAREHOLDERS VOTE
“FOR” VICON PROPOSAL NO. 2 TO ADJOURN OR POSTPONE THE VICON ANNUAL MEETING, IF
NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES.
Vote Required for Proposal No. 3: Election of Two Directors of Vicon
The nominees for director who receive the most votes (also known as a “plurality” of the votes cast) will be
elected. You may vote “FOR” the election of the director nominees proposed by the Vicon board of directors or you
may “WITHHOLD” authority to vote for one or more of the director nominees being proposed. Because this proposal
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is a non-routine matter, nominees do not have the discretion to vote uninstructed shares held by beneficial owners.
Accordingly, broker non-votes may result for this proposal. However, because directors are elected by a plurality of
the votes cast, broker non-votes and shares marked “WITHHOLD” authority will not have any effect on the results of
this vote.
THE VICON BOARD OF DIRECTORS RECOMMENDS THAT VICON SHAREHOLDERS VOTE
“FOR” EACH OF THE DIRECTOR NOMINEES NAMED IN VICON PROPOSAL NO. 3.
Vote Required for Proposal No. 4: Non-Binding Advisory Vote on the Compensation for Named Executive Officers
Proposal No. 4 to approve, on a non-binding, advisory basis, the compensation of the named executive officers
of Vicon as described in the Compensation Discussion and Analysis – Executive Compensation section of this proxy
statement/prospectus/consent solicitation requires approval by a majority of the total votes cast at the Vicon annual
meeting at which a quorum is present. You may vote either “FOR” or “AGAINST” the proposal or “ABSTAIN” as to
the proposal. Abstentions will have no effect on the results of this vote. Because this proposal is a non-routine matter,
nominees do not have the discretion to vote uninstructed shares held by beneficial owners. Accordingly, broker non-
votes may result for this proposal. Broker non-votes will not have any effect on the results of this vote. Because this
vote is advisory, it will not be binding on the Vicon board of directors; however, the Vicon board of directors will review
the voting results and take them into consideration when making future decisions regarding executive compensation.
THE VICON BOARD OF DIRECTORS RECOMMENDS THAT VICON SHAREHOLDERS VOTE
“FOR” VICON PROPOSAL NO. 4 TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF
THE NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
Vote Required for Proposal No. 5: Ratify the Appointment of BDO USA, LLP as Vicon’s independent registered
public accountants
Proposal No. 5 to approve the ratification of the appointment of BDO USA, LLP as Vicon’s independent
registered public accountants requires a majority of the votes cast at a meeting of shareholders at which a quorum is
present. Your proxy enables you to vote “FOR” or “AGAINST” the ratification of the independent registered public
accountants or “ABSTAIN” with regard to such ratification. Abstentions will have no effect on the results of this vote.
Because this proposal is a routine matter, nominees have the discretion to vote uninstructed shares held by beneficial
owners. Accordingly, broker non-votes will not result for this proposal.
THE VICON BOARD OF DIRECTORS RECOMMENDS THAT VICON SHAREHOLDERS VOTE
“FOR” VICON PROPOSAL NO. 5 TO RATIFY THE APPOINTMENT OF BDO USA, LLP AS VICON’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS.
Voting of Proxies by Holders of Record
If you are the holder of record of Vicon common stock, a proxy card is enclosed for your use.
Vicon requests that you submit a proxy by:
Internet by logging onto the website http://www.envisionreports.com/VII and following the prompts
using your control number located on your proxy card to vote over the Internet anytime up to 1:00
a.m., Central Daylight Time, on August 28, 2014 and following the instructions provided on that site;
Dialing 1-800-652-VOTE (8683) and listening for further directions to vote by telephone anytime
up to 1:00 a.m., Central Daylight Time, on August 28, 2014 and following the instructions provided
in the recorded message; or
Signing and returning your proxy card in the postage-paid envelope provided.
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When the accompanying proxy is returned properly executed, the shares of Vicon common stock represented
by it will be voted at the Vicon annual meeting or any adjournment or postponement thereof in accordance with the
instructions contained in the proxy. If a proxy is returned without an indication as to how the shares of Vicon common
stock represented are to be voted with regard to a particular proposal, the Vicon common stock represented by the proxy
will be voted in accordance with the recommendation of the Vicon board of directors and, therefore, “FOR” proposals
1, 2, 3, 4 and 5.
At the date hereof, management has no knowledge of any business that will be presented for consideration at
the Vicon annual meeting and which would be required to be set forth in this proxy statement/prospectus/consent
solicitation or the related proxy card other than the matters described in this proxy statement/prospectus/consent
solicitation. If any other matter is properly presented at the Vicon annual meeting, it is intended that the persons named
in the enclosed form of proxy and acting thereunder will vote in accordance with their best judgment on such matter.
Voting by Beneficial Owners
If you are the beneficial owner of shares of Vicon common stock held in street name, you have the right to
direct your broker, bank or nominee on how to vote your shares. Your broker, bank or nominee has provided a voting
instruction card for you to use in directing the broker, bank or other nominee regarding how to vote your shares.
If your shares are held in street name and you wish to vote in person at the Vicon annual meeting, you will
need to obtain a legal proxy” from your broker, bank or other nominee and present it to the inspector of elections with
your ballot at the meeting.
Revocation of Proxies
If you are the holder of record of Vicon common stock, you can change your vote or revoke your proxy at any
time before your proxy is voted at the Vicon annual meeting. You can do this by:
timely delivering a new, valid proxy bearing a later date by submitting instructions through the Internet,
by telephone or by mail as described on the proxy card; or
attending the Vicon annual meeting and voting in person, which will automatically cancel any proxy
previously given, or you can revoke your proxy in person. Simply attending the Vicon annual meeting
without voting will not revoke any proxy that you have previously given or change your vote.
A holder of record may revoke a proxy by any of these methods, regardless of the method used to deliver the
shareholders previous proxy.
Please note that if you are the beneficial owner of shares held in street name through a broker, bank or other
nominee, you may change your vote by submitting new voting instructions to your nominee in accordance with its
established procedures. If you are the beneficial owner of shares and you decide to change your vote by attending the
Vicon annual meeting and voting in person, your vote in person at the Vicon annual meeting will not be effective unless
you have obtained and present an executed legal proxy issued in your name from the broker, bank or other nominee.
Cost of Proxy Solicitation
Vicon is soliciting proxies for the Vicon annual meeting and, in accordance with the terms of the Merger
Agreement, the cost of soliciting the Vicon shareholders will be borne by Vicon. In addition to solicitation by use of
mails, proxies may be solicited by Vicon directors, officers and employees and others, in person or by telephone or
other means of communication. These individuals will not be additionally compensated, but may be reimbursed for
out-of-pocket expenses associated with solicitation. Arrangements will also be made with custodians, nominees and
fiduciaries for forwarding of proxy solicitation material to beneficial owners of common stock held of record, and
Vicon may reimburse these individuals for their reasonable expenses. To help assure the presence in person or by proxy
of the largest number of shareholders possible, Vicon has engaged Georgeson Inc., a proxy solicitation firm, to solicit
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proxies on Vicon’s behalf. Vicon has agreed to pay Georgeson Inc. a minimum base proxy solicitation fee of $6,500
plus expenses.
SOLICITATION OF IQINVISION WRITTEN CONSENT
IQinVision Shareholder Action by Written Consent
IQinVision’s Board of Directors is providing this proxy statement/prospectus/consent solicitations to its
shareholders. IQinVision’s shareholders are being asked to execute and deliver the written consent furnished with this
proxy statement/prospectus/consent solicitation to approve the Merger, including the terms of the Merger Agreement
and the transactions contemplated thereby.
Shares Entitled to Consent and Consent Required
Only IQinVision shareholders of record at the close of business on July 15, 2014 will be entitled to execute
and deliver a written consent. On the record date, the outstanding securities of IQinVision eligible to consent with
respect to the Merger Agreement proposal consisted of 5,766,922 shares of IQinVision common stock and an aggregate
of 7,162,103 shares of IQinVision’s preferred stock, which includes 920,051 shares of Series A preferred stock, 3,295,428
shares of Series B preferred stock, 1,444,212 shares of Series C preferred stock and 1,502,412 shares of Series D
preferred stock.
Under IQinVision’s Fourth Amended and Restated Articles of Incorporation, each holder of IQinVision
common stock is entitled to one vote for each share of common stock held of record and each holder of IQinVision
preferred stock is entitled to one vote for each share of common stock into which such share of preferred stock held of
record is convertible. As of the record date, the outstanding shares of Series A Preferred Stock are convertible into
1,398,717 shares of common stock and the outstanding shares of Series B, Series C and Series D preferred stock are
each convertible into the number of shares of common stock equal to the number of shares of such preferred stock
outstanding.
Adoption and approval of the Merger, including the terms of the Merger Agreement and the transactions
contemplated thereby requires the approval by the holders of (i) a majority of the outstanding shares of IQinVision
common stock, (ii) a majority of the outstanding shares of IQinVision preferred stock, voting together as a single class
on an as-converted-to-common stock basis, and (iii) a majority of the outstanding shares of each series of IQinVision
preferred stock, voting separately on an as-converted-to-common stock basis. In addition, Vicon is not required to
complete the Merger if holders of more than 10% of the total shares of IQinVision common stock and preferred stock,
collectively, are dissenting shares pursuant to the California General Corporation Law, or the CGCL.
Submission of Consents
You may consent to the Merger with respect to your shares by completing and signing the written consent
furnished with this proxy statement/prospectus/consent solicitation and returning it to IQinVision on or before August
27, 2014, the date IQinVision has set as the targeted final date for receipt of written consents. IQinVision reserves the
right to extend the final date for receipt of written consents beyond August 27, 2014 in the event that consents adopting
and approving the Merger have not been obtained by that date from holders of a sufficient number of shares of IQinVision
common stock and preferred stock to satisfy the IQinVision shareholder approval conditions to the Merger. Any such
extension may be made without notice to shareholders. When IQinVision has received written consents from
shareholders sufficient to satisfy the approval requirements identified above, the consent solicitation will conclude.
If you hold shares of IQinVision common stock or preferred stock as of the record date and you wish to give
your written consent, you must complete the enclosed written consent, date and sign it, and promptly return it to
IQinVision. Once you have completed, dated and signed the written consent, you may deliver it to IQinVision by
faxing it to IQinVision’s legal counsel, Stradling Yocca Carlson & Rauth, P.C., Attention: Brandon Sanders, Esq., at
(949) 823-5085, by emailing a .pdf copy of it to bsanders@sycr.com, or by mailing it to Stradling Yocca Carlson &
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Rauth, P.C. at 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660, Attention: Brandon Sanders,
Esq.
Executing Consents; Revocation of Consents
With respect to the proposal to approve the Merger for which the shares of IQinVision common stock and
preferred stock that you hold allow you to give consent, you may execute a written consent to approve the Merger,
including the terms of the Merger Agreement and the transactions contemplated thereby (which is equivalent to a vote
for the Merger) or you can choose not to execute the written consent (which is equivalent to a vote against the Merger).
If you do not execute and return your written consent, it will have the same effect as a vote against the Merger
Your consent to the Merger may be changed or revoked at any time before the consents of a sufficient number
of shares to approve the Merger have been received by IQinVision’s legal counsel, Stradling Yocca Carlson & Rauth,
P.C., and filed with IQinVision’s Corporate Secretary. If you wish to change or revoke a previously delivered consent
before that time, you may do so by delivering a notice of revocation to IQinVision’s legal counsel, Stradling Yocca
Carlson & Rauth, P.C., by the method specified above.
Solicitation of Consents; Expense
The expense of preparing, printing and mailing these consent solicitation materials is being borne by
IQinVision. IQinVision’s officers and employees may solicit consents by telephone and personally, in addition to
solicitation by mail. These persons will receive their regular salaries but no special compensation for soliciting consents.
Recommendation of the IQinVision Board
IQinVision’s board of directors believes the Merger, including the Merger Consideration to be received by
IQinVision’s shareholders, is fair to, advisable and in the best interests of IQinVision and its shareholders. IQinVision’s
management and its board of directors, after careful study and evaluation of the economic, financial, legal and other
factors, also believe that the Merger could provide the combined company with increased opportunity for expansion
of its business, which in turn could benefit IQinVision’s shareholders who become shareholders of Vicon. See the
section entitled “The Merger—IQinVision Reasons for the Merger” of this proxy statement/prospectus/consent
solicitation.
THE IQINVISION BOARD OF DIRECTORS RECOMMENDS THAT IQINVISION
SHAREHOLDERS APPROVE THE MERGER, INCLUDING THE TERMS OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, BY EXECUTING AND
DELIVERING THE WRITTEN CONSENT FURNISHED WITH THIS PROXY STATEMENT/
PROSPECTUS/CONSENT SOLICITATION.
Voting and Other Agreement
Concurrently with and as a condition to Vicon and IQinVision entering into the Merger Agreement, on March
28, 2014, (i) certain shareholders, directors and officers of IQinVision who owned approximately 72% of the outstanding
shares of IQinVision common stock and 54% of the outstanding shares of IQinVision preferred stock on as-converted-
to-common stock basis, including 60% of the outstanding shares of Series A preferred stock, 76% of the outstanding
shares of Series B preferred stock, 42% of the outstanding shares of Series C preferred stock and 9% of the outstanding
shares of Series D preferred stock, entered into the IQinVision Voting and Lock-Up Agreement with Vicon whereby
they have agreed to vote their IQinVision shares in favor of adopting and approving the Merger Agreement and (ii)
certain shareholders, directors and officers of IQinVision, holding, in the aggregate, approximately 62% of the
outstanding shares IQinVision capital stock, on as-converted-to-common stock basis, entered into Post-Closing Lock
Up Agreements with Vicon whereby they have agreed to refrain from selling any of the Vicon common stock they
receive in the Merger for six months following the closing date of the Merger. For a more detailed discussion of these
agreements see the sections entitled “Voting and Other Agreements—Voting and Lock-Up Agreements” and “Voting
and Other Agreements—Post-Closing Lock-Up Agreements” of this proxy statement/prospectus/consent solicitation.
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THE MERGER AND THE COMBINED COMPANY
This section and the section entitled “The Merger Agreement” of this proxy statement/prospectus/consent
solicitation describe the material aspects of the Merger, including the Merger Agreement. While Vicon and IQinVision
believe that this description covers the material terms of the Merger and the Merger Agreement, it may not contain all
of the information that is important to you. You should read carefully this entire proxy statement/prospectus/consent
solicitation for a more complete understanding of the Merger and the Merger Agreement, including the Merger
Agreement attached as Annex A hereto.
General
Under the terms of the Merger Agreement, VI Merger Sub, a wholly owned subsidiary of Vicon, will be merged
with and into IQinVision, with IQinVision surviving as a wholly owned subsidiary of Vicon. At the Effective Time of
the Merger, the issued and outstanding shares of capital stock of IQinVision will, in the aggregate, be converted into
the right to receive an aggregate number of shares of Vicon common stock equal to the total number of shares of Vicon
common stock then issued and outstanding, excluding outstanding options to purchase Vicon common stock, and any
other securities convertible into Vicon common stock, on the terms provided in the Merger Agreement and as further
described below under the section entitled “The Merger Agreement—The Merger Consideration.”
Background of the Merger
The Vicon board of directors and Vicon’s management regularly review and assess Vicon’s business strategies
and objectives, and the Vicon board of directors regularly reviews and discusses Vicon’s performance, risks,
opportunities and strategy, all with the goal of enhancing shareholder value. Vicon’s board of directors and Vicon’s
management regularly review and evaluate pursuing various strategic alternatives as part of these ongoing efforts,
taking into account expected economic, competitive and other market conditions. Vicon’s management utilizes both
internal resources and external advisors in these activities.
In this regard, representatives of Vicon have had conversations from time to time with representatives of other
companies regarding certain strategic alternatives that involved Vicon acquiring, being acquired by, or merging with
other companies.
Likewise, as part of the ongoing evaluation of IQinVision’s business, IQinVision’s senior management and
IQinVision’s board of directors have historically reviewed, considered and assessed IQinVision’s operations, financial
performance and industry conditions as they may affect IQinVision’s long-term strategic goals and plans, including
the consideration of potential opportunities for business combinations, acquisitions and other financial and strategic
alternatives.
Accordingly, Vicon’s and IQinVision’s management had each become familiar with the other as a result of
their general knowledge of the video security industry, and believed that the other party’s product lines, sales channels
and positions in the marketplace would be complimentary to each other