Merger Agreement (Notes)

9 Months Ended

Jun. 30, 2014

Merger Agreement [Line Items]

Business Combination Disclosure [Text Block]

Merger Agreement

On March 28, 2014, the Company entered into an agreement and plan of merger and reorganization (the “Merger Agreement”), pursuant to which its wholly owned subsidiary, VI Merger Sub, Inc., a California corporation (“Merger Sub”), will be merged with and into IQinVision, Inc., a California corporation (“IQinVision”), with IQinVision surviving as a wholly owned subsidiary of the Company (the “Merger”).

Pursuant to the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), 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 the Company’s common stock equal to the Outstanding Equity (as defined below) of the Company immediately prior to the Effective Time (the “Merger Consideration”). The Merger Agreement defines “Outstanding Equity” to mean, with respect to the Company, the total number of shares outstanding of the Company’s common stock then issued and outstanding, excluding outstanding options to purchase the Company’s common stock and any other securities convertible into the Company’s common stock. In addition, 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 the Company. 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 the Company’s common stock representing the number of IQinVision shares subject to such option or stock appreciation right multiplied by the Common Stock Per Share Merger Consideration, as such term is defined in the Merger Agreement. The exercise price of each option and the base value per share of the Company’s common stock for each stock appreciation right will be proportionately adjusted.

Following the consummation of the transactions contemplated by the Merger Agreement, the shareholders of the Company 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 the Company after the Merger.

Completion of the Merger is subject to a number of conditions, including, but not limited to (i) approval of the issuance of shares of the Company’s common stock in connection with the Merger by the Company’s shareholders and the adoption and approval of the Merger Agreement and the transactions contemplated thereby by IQinVision’s shareholders; (ii) approval for listing on the NYSE MKT LLC of such shares of the Company’s common stock; (iii) exercise of dissenters’ rights by no more than 10% of IQinVision’s shareholders; and (iv) other customary closing conditions. The Company cannot predict whether and when these other conditions will be satisfied.

As permitted by the Merger Agreement, on June 9, 2014, the Company declared a special cash dividend of $0.55 per share payable to the Company's shareholders of record as of the close of business on July 11, 2014. The dividend is conditioned upon, and will be payable within 15 days after, the closing of the proposed merger.

The Merger Agreement contains termination rights in favor of each of the Company and IQinVision in certain circumstances and further provides that, upon termination of the Merger Agreement under specified circumstances, either the Company or IQinVision may be required to pay the other party a termination fee of $750,000. In addition, either party may terminate the Merger Agreement if the Merger has not been completed by September 28, 2014 (the “Outside Termination Date”).

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 the 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.

The Company has filed a registration statement on Form S-4, as amended, which was declared effective on July 16, 2014 by the Securities and Exchange Commission, in connection with the IQinVision proposed merger. If approved by shareholders of both companies, the Merger is expected to close before the end of the fourth quarter of Vicon’s current fiscal year, which ends on September 30, 2014. The foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the more complete disclosure provided in the Company’s current report on Form 8-K filed with the SEC on March 31, 2014 and the Company’s registration statement on Form S-4, as amended, which was declared effective by the SEC on July 16, 2014.