EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT        EXHIBIT 10.5


          AGREEMENT,  dated as of  October  1,  1997,  between  KENNETH M. DARBY
(hereinafter called "Darby") and VICON INDUSTRIES, INC., a New York corporation,
having its principal  place of business at 89 Arkay Drive,  Hauppauge,  New York
11788 (hereinafter called the "Company").
          WHEREAS, Darby has previously been employed by the
Company, and
          WHEREAS, the Company and Darby mutually desire to assure
the continuation of Darby's services to the Company,
          NOW,  THEREFORE,  in  consideration  of the  premises  and the  mutual
covenants herein set forth, the parties covenant and agree as follows:
          1.  Employment.  The Company shall employ Darby as its Chief Executive
Officer and President  throughout the term of this Agreement,  and Darby accepts
such employment.
          2. Term. The term of this  Agreement  shall commence as of the date of
this Agreement and end on September 30, 2002.
          3.      Compensation.
                 A. The Company  shall pay Darby a base  salary of $225,000  per
annum, subject to adjustment as provided in subsection B.
                  B. Prior to September 15 of each succeeding year, Darby's base
salary shall be reviewed by the Compensation Committee of the Board of Directors
and shall be fixed for the year  commencing  October 1 of such year by agreement
between  Darby and the Board of  Directors,  but in any event  shall not be less
than the






base salary for the one year period then ending.

                  C. Darby's base salary shall be payable monthly or bi-weekly.
               D. Darby shall also be entitled to  participate  in any  pension,
profit sharing, life insurance,  medical, dental, hospital,  disability or other
benefit plans as may from time to time be available to officers of the Company.
          4.   Extent and Places of Services;  Vacation A. Darby shall establish
               operating policy and
direct, supervise and oversee the operations of the Company. He shall advise and
report to the Board of  Directors.  Darby  shall also  assume and  perform  such
additional reasonable  responsibilities and duties as the Board of Directors and
he may from time to time agree upon.
                B. Darby shall devote his full time, attention,  and energies to
the business of the Company.
                C. Darby shall not be required to perform his  services  outside
the  Hauppauge,  New York area or such  other area on Long  Island,  New York as
shall contain the location of the Company's headquarters.
               D. The Company shall provide Darby will office space,  secretary,
telephones and other office facilities appropriate to his duties.
               E. Darby shall be entitled to one month's vacation per annum.
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            5.  Covenant  not to Compete.  Darby  agrees that during the term of
this Agreement and for a period of three years thereafter, he shall not directly
or  indirectly  within  the  United  States  or Europe  engage  in, or enter the
employment  of or render  any  services  to any other  entity  engaged  in,  any
business of a similar nature to or in competition with the Company's business of
designing,  manufacturing  and selling CCTV security  equipment  and  protection
devices  anywhere in the United States and Europe.  Darby  further  acknowledges
that the  services  to be  rendered  under this  Agreement  by him are  special,
unique, and of extraordinary character and that a material breach by him of this
section will cause the Company to suffer  irreparable  damage;  and Darby agrees
that in addition to any other  remedy,  this  section  shall be  enforceable  by
negative or  affirmative  preliminary  or permanent  injunction  in any Court of
competent jurisdiction.
          6.   Termination Payment on Change of Control.
               A.  Notwithstanding any provision of this Agreement,
if a "Change of Control"  occurs without the prior written  consent of the Board
of Directors, Darby, at his option, may elect to terminate his obligations under
this Agreement and to receive a termination  payment,  without reduction for any
offset or mitigation,  in an amount equal to three times his average annual base
salary for the five years preceding the Change of Control, in either lump sum or
extended payments over three years as Darby shall elect.

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               B. A "Change of Control"  shall be deemed to have occurred if (i)
any entity shall  directly or indirectly  acquire a beneficial  ownership of 20%
(or in the case of Chugai  Boyeki Co., Ltd. and its  affiliates  35%) or more of
the outstanding shares of capital stock of the Company or (ii) a majority of the
members of the Board of Directors  of the Company or any  successor by merger or
assignment of assets or otherwise,  shall be persons other than Directors on the
date of this Agreement.
               C. Darby's  option to elect to terminate his  obligations  and to
receive a  termination  payment  and to elect to receive a lump sum or  extended
payments may be exercised only by written notice delivered to the Company within
90 days  following the date on which Darby  receives  actual notice of Change of
Control.
               D. If Darby  elects to receive  lump sum  payment,  such  payment
shall be made  within 30 days of the  Company's  receipt  of  Darby's  notice of
election.
            7.    Severance Payment on Certain Terminations.
                 A.     If either (i) this Agreement expires, or (ii)
the Company terminates Darby's employment under this Agreement for reasons other
than "Gross  Misconduct",or  (iii) with the consent of the Board of  Directors a
Change of Control as defined in paragraph 6 B. shall occur,  or (iv) the Company
executes a "Company  Sale  Agreement"  then Darby,  at his option,  may elect to
receive a severance payment, without reduction for any offset or mitigation,

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in an amount equal to (a) one-twelfth his annual base salary at the time of such
termination  multiplied by (b) the number of full years of his employment to the
end of this  Agreement  by the  Company up to a maximum of 24 years,  payable in
either lump sum or extended payments as Darby shall elect.
               B.  "Company  Sales  Agreement"  means an  agreement to which the
Company  is a party that  contemplates  that more than half of the assets of the
Company  are  transferred  to another  entity or that upon  consummation  of the
transactions  contemplated by such agreement,  a Change of Control as defined in
paragraph 6 shall occur or have occurred.
               C. In the event of an election under paragraph 7, payment of such
severance  payment  shall  be in  lieu  of any  obligation  of the  Company  for
termination   payment  or  other  post-  termination   compensation  under  this
Agreement, if any.
                 D. "Gross Misconduct" shall mean (a) a wilful,  substantial and
unjustifiable  refusal to perform substantially the duties and services required
by this Agreement to be performed;  (b) fraud,  misappropriation or embezzlement
involving the Company or its assets;  or (c)  conviction  of a felony  involving
moral turpitude.
                 E. Darby's option to elect to receive  severance payment and to
elect to receive lump sum or extended  payments may be exercised only by written
notice  delivered to the Company within 90 days following the date on which this
Agreement expires or on

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which Darby  receives  actual  notice of the  existence  of any other  condition
referred to in paragraph 7A, except that, in the case of the Company's execution
of a Company Sale  Agreement,  Darby's option may be exercised at any time prior
to the closing under such agreement and such  termination  shall be effective as
of such closing.
               F. If Darby  elects to receive  lump sum  payment,  such  payment
shall be made within 30 days of the Company's  receipt of Darby's notice of such
election,  except that, in the case of the Company's execution of a Company Sale
Agreement,  the  payment  shall be made no later than the time of closing  under
such agreement.
               G. Payment of termination  or severance  payment shall not affect
the Company's obligations under any other agreement with Darby.
          8.   Deferred Compensation.
               A. 45,952 shares of the  Company's  stock now held by the Company
as treasury shares (the "Deferred  Compensation  Shares") shall be set aside and
held by the Company for future distribution to Darby under this paragraph.
                B.  As  deferred  compensation,  and in  addition  to all  other
compensation payable to Darby, the Deferred Compensation Shares shall become the
property  of Darby,  and the Company  shall  deliver  the  certificates  for the
Deferred Compensation Shares to Darby (or his executor or administrator), on the
Transfer  Date,  registered  in Darby's  name,  within 10 days  thereafter.  The
Transfer Date shall be the earliest of (i) the date of Darby's
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death; (ii) the date as of which Darby's employment by the Company involuntarily
terminates;  (iii) the date of execution of a Company Sale  Agreement as defined
in  paragraph  7; (iv) the  occurrence  of a Change of  Control  as  defined  in
paragraph 6; or (v)  expiration of this  Agreement  (including  any  replacement
agreement).
               C.  Notwithstanding any other provision of this paragraph,  Darby
shall  not be  entitled  to any  Deferred  Compensation  Shares  if the  Company
terminates this Agreement for Gross Misconduct as defined in paragraph 7.
               D. Prior to the  Transfer  Date,  Darby's  rights to the Deferred
Compensation  Shares shall not be transferrable and the Treasury Shares shall be
the property of the Company.
                E.  Darby  represents  that he will be  acquiring  the  Deferred
Compensation  Shares for investment only and without a view to the  distribution
thereof and that the Deferred  Compensation  Shares,  when delivered to him, may
constitute   restricted  stock  under  the  Securities  Act  of  1933,  and  the
regulations  thereunder,  and that the  certificates  therefor  shall  bear such
legend relating to this subparagraph as the Company shall reasonably require.
           9. Death or  Disability.  The Company may terminate this Agreement if
during  the term of this  Agreement  (a)  Darby  dies or (b)  Darby  becomes  so
disabled for a period of six months that he is  substantially  unable to perform
his duties under this  Agreement  for such period.  Such  termination  shall not
release the Company from any liability to Darby for compensation  earned, or for
termination or severance due in accordance with paragraph 7 herein.
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Agreement  termination under this paragraph shall not be deemed a termination of
employment for Gross Misconduct.
           10. Arbitration. Any controversy or claim arising out of, or relating
to this Agreement, or the breach thereof, shall be settled by arbitration in the
City of New York in accordance with the rules of the American  Arbitration  then
in effect,  and judgement upon the award rendered be entered and enforced in any
court having jurisdiction thereof.


          11.     Miscellaneous.
                 A. Except for any deferred compensation  agreement,  retirement
plan or stock options  previously  granted,  this Agreement  contains the entire
agreement between the parties and supersedes all prior agreements by the parties
relating to the term of Darby's employment by the Company,  however, it does not
restrict or limit such other benefits as the Board of Directors may determine to
provide or make available to Darby.
                 B. This  agreement  may not be  waived,  changed,  modified  or
discharged orally, but only by agreement in writing, signed by the party against
whom enforcement of any waiver, change, modification, or discharge is sought.
                 C. This  Agreement  shall be  governed  by the laws of New York
applicable to contracts  between New York  residents and made and to be entirely
performed in New York.
                 D. If any part of this Agreement is held to be unenforceable by
any court of competent jurisdiction,  the remaining provisions of this Agreement
shall continue in full force and
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effect.
                 E. This Agreement shall inure to the benefit of, and be binding
upon, the Company, its successor, and assigns.
          IN  WITNESS  WHEREOF,  the  parties  hereto  have duly  executed  this
Agreement.
                                          VICON INDUSTRIES, INC.


                                         By
Kenneth M. Darby                           Peter F. Neumann
                                           Chairman
                                           Compensation Committee
Date:


















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