EXHIBIT 10.1

 

MONMOUTH REAL ESTATE INVESTMENT CORPORATION
AMENDED AND RESTATED 2007 INCENTIVE AWARD PLAN

 

STOCK OPTION AGREEMENT

GRANT NOTICE

 

Monmouth Real Estate Investment Corporation (the “Company”), pursuant to its
Amended and Restated 2007 Incentive Award Plan, as amended from time to time
(the “Plan”), hereby grants to the participant set forth below (“Participant”),
an Option to purchase the number of shares of the Company’s Common Stock
(referred to herein as “Shares”) set forth below. This Option is subject to all
of the terms and conditions as set forth herein and in the Stock Option
Agreement attached hereto as Exhibit A (the “Stock Option Agreement”) and the
Plan, each of which is incorporated herein by reference. Unless otherwise
defined herein, the terms defined in the Plan shall have the same defined
meanings in this Stock Option Grant Notice and the Stock Option Agreement.

 

Participant: ___________________________________ Grant Date:
___________________________________ Vesting Commencement Date:
___________________________________ Exercise Price per Share:
$__________________________________ Total Exercise Price:
$__________________________________ Total Number of Shares Subject to Option:
__________________________________ Expiration Date:
___________________________________

 

Type of Option: [  ] Incentive Stock Option [  ] Non-Qualified Stock Option

 

Vesting Schedule:

 

By his or her signature and the Company’s signature below, Participant agrees to
be bound by the terms and conditions of the Plan, the Stock Option Agreement and
this Grant Notice. Participant has reviewed the Stock Option Agreement, the Plan
and this Grant Notice in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Grant Notice and fully understands all
provisions of this Grant Notice, the Stock Option Agreement and the Plan.
Participant hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator of the Plan upon any questions
arising under the Plan or the Option.

 

MONMOUTH REAL ESTATE INVESTMENT CORPORATION:

  PARTICIPANT:           By:   By: Name:   Name: Title:      

  

 

 

 

EXHIBIT A

 

TO STOCK OPTION AGREEMENT

 

Pursuant to the Stock Option Grant Notice (“Grant Notice”) to which this Stock
Option Agreement (this “Agreement”) is attached, Monmouth Real Estate Investment
Corporation (the “Company”) has granted to Participant an Option under the
Company’s Amended and Restated 2007 Incentive Award Plan, as amended from time
to time (the “Plan”), to purchase the number of Shares indicated in the Grant
Notice.

 

ARTICLE I

GENERAL

 

1.1       Defined Terms. Capitalized terms not specifically defined herein shall
have the meanings specified in the Plan and the Grant Notice.

 

1.2       Incorporation of Terms of Plan. The Option is subject to the terms and
conditions of the Plan which are incorporated herein by reference. In the event
of a conflict between the terms of the Agreement and the Plan, the terms of the
Plan shall control.

 

1.3       Grant of Option. In consideration of Participant’s past and/or
continued employment with or service to the Company or a parent or subsidiary
and for other good and valuable consideration, effective as of the grant date
set forth in the Grant Notice (the “Grant Date”), the Company irrevocably grants
to Participant an Option to purchase any part or all of an aggregate of the
number of Shares set forth in the Grant Notice, upon the terms and conditions
set forth in the Plan and this Agreement. Unless designated as a Non-Qualified
Stock Option in the Grant Notice, the Option shall be an Incentive Stock Option
to the maximum extent permitted by law.

 

1.4       Consideration to the Company. In consideration of the grant of the
Option by the Company, Participant agrees to render faithful and efficient
services to the Company and its Subsidiaries. Nothing in the Plan or this
Agreement shall confer upon Participant any right to continue in the employ or
service of the Company or any Subsidiary or shall interfere or restrict in any
way the rights of the Company and its Subsidiaries, which rights are hereby
expressly reserved, to discharge or terminate the services of Participant at any
time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in a written agreement between the Company and
Participant.

 

ARTICLE II

PERIOD OF EXERCISABILITY

 

2.1       Vesting; Commencement of Exercisability.

 

(a)       Subject to Sections 2.1(b) and 2.3, the Option shall become vested and
exercisable in such amounts and at such times as are set forth in the vesting
schedule in the Grant Notice (the “Vesting Schedule”).

 

(b)       Unless otherwise determined by the Administrator, and subject to
Section 6.5 of the Plan, any portion of the Option that has not become vested
and exercisable on or prior to the date of the Participant’s Termination of
Service shall be forfeited on the date of the Participant’s Termination of
Service and shall not thereafter become vested or exercisable.

 

 

 

 

2.2       Duration of Exercisability. The installments provided for in the
Vesting Schedule are cumulative. Each such installment which becomes vested and
exercisable pursuant to the Vesting Schedule shall remain vested and exercisable
until it becomes unexercisable under Section 2.3 or pursuant to the terms of the
Plan. Once the Option becomes unexercisable, it shall be forfeited immediately.

 

2.3       Expiration of Option. The Option may not be exercised to any extent by
anyone after the first to occur of the following events:

 

(a)       The Expiration Date set forth in the Grant Notice;

 

(b)       Except as the Administrator may otherwise approve, the expiration of
three months following the date of Participant’s Termination of Service, unless
such Termination of Service occurs by reason of Participant’s death, Disability
or Cause;

 

(c)       Except as the Administrator may otherwise approve, the expiration of
one year following the date of Participant’s Termination of Service by reason of
Participant’s death or Disability; or

 

(d)       The date of Participant’s Termination of Service for Cause. If
Participant is given notice by the Company of Participant’s Termination of
Service for Cause, and the effective date of such Termination of Service is
subsequent to the date of the delivery of such notice, the right to exercise the
Option shall be suspended from the time of the delivery of such notice until the
earlier of (i) such time as it is determined or otherwise agreed that
Participant’s status as a Service Provider shall not be terminated for Cause as
provided in such notice or (ii) the effective date of such Termination of
Service (in which case the right to exercise the Option shall, pursuant to this
Section, terminate immediately upon the effective date of such Termination of
Service).

 

Participant acknowledges that an Incentive Stock Option exercised more than
three months after Participant’s termination of status as an Employee, other
than by reason of death or Disability, will be taxed as a Non-Qualified Stock
Option.

 

2.4       Special Tax Consequences. If the Option is an Incentive Stock Option,
Participant acknowledges that, to the extent that the aggregate fair market
value (determined as of the time the Option is granted) of all Shares with
respect to which Incentive Stock Options, including the Option, are first
exercisable for the first time by Participant in any calendar year exceeds
$100,000 (or such other limitation as imposed by Section 422(d) of the Code),
the Option and such other options shall be treated as not qualifying under
Section 422 of the Code but rather shall be considered Non-Qualified Stock
Options. Participant further acknowledges that the rule set forth in the
preceding sentence shall be applied by taking Options and other “incentive stock
options” into account in the order in which they were granted.

 

ARTICLE III

EXERCISE OF OPTION

 

3.1       Person Eligible to Exercise. During the lifetime of Participant, only
Participant may exercise the Option or any portion thereof. After the death of
Participant, any exercisable portion of the Option may, prior to the time when
the Option becomes unexercisable under Section 2.3, be exercised by
Participant’s personal representative or by any person empowered to do so under
the deceased Participant’s will or under the then applicable laws of descent and
distribution.

 

 

 

 

3.2       Partial Exercise. Any exercisable portion of the Option or the entire
Option, if then wholly exercisable, may be exercised in whole or in part at any
time prior to the time when the Option or portion thereof becomes unexercisable
under Section 2.3.

 

3.3       Manner of Exercise. The Option, or any exercisable portion thereof,
may be exercised solely by delivery to the Company, or such other place as may
be determined by the Administrator, of all of the following prior to the time
when the Option or such portion thereof becomes unexercisable under Section 2.3:

 

(a)       An exercise notice in substantially in the form attached as Exhibit B
to the Grant Notice (or such other form as is prescribed by the Administrator)
(the “Exercise Notice”) in writing signed by Participant or any other person
then entitled to exercise the Option or portion thereof, stating that the Option
or portion thereof is thereby exercised, such notice complying with all
applicable rules established by the Administrator; and

 

(b)       Full payment for the Shares with respect to which the Option or
portion thereof is exercised in accordance with Section 3.4;

 

(c)       Full payment for any applicable withholding tax in in accordance with
Section 3.5; and

 

(d)       In the event the Option or portion thereof shall be exercised pursuant
to Section 3.1 by any person or persons other than Participant, appropriate
proof of the right of such person or persons to exercise the Option.

 

3.4       Method of Payment. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of Participant:

 

(a)       By cash or check made payable to the Company;

 

(b)       With the consent of the Administrator, surrender of shares of Common
Stock (including, without limitation, shares of Common Stock otherwise issuable
upon exercise of the Option) held for such period of time as may be required by
the Administrator in order to avoid adverse accounting consequences and having a
Fair Market Value on the date of delivery equal to the aggregate exercise price
of the Option or exercised portion thereof;

 

(c)       Through the delivery of a notice that Participant has placed a market
sell order with a broker acceptable to the Company with respect to shares of
Common Stock then issuable upon exercise of the Option, and that the broker has
been directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the Option exercise price; provided that payment of
such proceeds is then made to the Company at such time as may be required by the
Administrator, but in any event not later than the settlement of such sale; or

 

(d)       Any other form of legal consideration acceptable to the Administrator.

 

 

 

 

3.5       Tax Withholding. Notwithstanding any other provision of this
Agreement:

 

(a)       The Company and its Subsidiaries have the authority to deduct or
withhold, or require Participant to remit to the Company or the applicable
Subsidiary, an amount sufficient to satisfy any applicable federal, state, local
and foreign taxes (including the employee portion of any FICA obligation)
required by law to be withheld with respect to any taxable event arising
pursuant to this Agreement. The Company and its Subsidiaries may withhold or
Participant may make such payment in one or more of the forms specified below:

 

(i)       by cash or check made payable to the Company or the Subsidiary with
respect to which the withholding obligation arises;

 

(ii)        by the deduction of such amount from other compensation payable to
Participant;

 

(iii)        with respect to any withholding taxes arising in connection with
the exercise of the Option, with the consent of the Administrator, by requesting
that the Company withhold a net number of shares of Common Stock issuable upon
the exercise of the Option having a then current Fair Market Value not exceeding
the amount necessary to satisfy the withholding obligation of the Company and
its Subsidiaries based on the minimum applicable statutory withholding rates for
federal, state, local and foreign income tax and payroll tax purposes;

 

(iv)        with respect to any withholding taxes arising in connection with the
exercise of the Option, with the consent of the Administrator, by tendering to
the Company shares of Common Stock having a then current Fair Market Value not
exceeding the amount necessary to satisfy the withholding obligation of the
Company and its Subsidiaries based on the minimum applicable statutory
withholding rates for federal, state, local and foreign income tax and payroll
tax purposes;

 

(v)       with respect to any withholding taxes arising in connection with the
exercise of the Option, through the delivery of a notice that Participant has
placed a market sell order with a broker acceptable to the Company with respect
to shares of Common Stock then issuable to Participant pursuant to the Option,
and that the broker has been directed to pay a sufficient portion of the net
proceeds of the sale to the Company or the Subsidiary with respect to which the
withholding obligation arises in satisfaction of such withholding taxes;
provided that payment of such proceeds is then made to the Company or the
applicable Subsidiary at such time as may be required by the Administrator, but
in any event not later than the settlement of such sale; or

 

(vi)        in any combination of the foregoing.

 

(b)       With respect to any withholding taxes arising in connection with the
Option, in the event Participant fails to provide timely payment of all sums
required pursuant to Section 3.4(a), the Company shall have the right and
option, but not the obligation, to treat such failure as an election by
Participant to satisfy all or any portion of Participant’s required payment
obligation pursuant to Section 3.4(a)(ii) or Section 3.4(a)(iii) above, or any
combination of the foregoing as the Company may determine to be appropriate. The
Company shall not be obligated to deliver any certificate representing shares of
Common Stock issuable with respect to the exercise of the Option to, or to cause
any such shares of Common Stock to be held in book-entry form by, Participant or
his or her legal representative unless and until Participant or his or her legal
representative shall have paid or otherwise satisfied in full the amount of all
federal, state, local and foreign taxes applicable with respect to the taxable
income of Participant resulting from the exercise of the Option or any other
taxable event related to the Option.

 

 

 

 

(c)        In the event any tax withholding obligation arising in connection
with the Option will be satisfied under Section 3.4(a)(iii), then the Company
may elect to instruct any brokerage firm determined acceptable to the Company
for such purpose to sell on Participant’s behalf a whole number of shares from
those shares of Common Stock then issuable upon the exercise of the Option as
the Company determines to be appropriate to generate cash proceeds sufficient to
satisfy the tax withholding obligation and to remit the proceeds of such sale to
the Company or the Subsidiary with respect to which the withholding obligation
arises. Participant’s acceptance of this Award constitutes Participant’s
instruction and authorization to the Company and such brokerage firm to complete
the transactions described in this Section 3.4(c), including the transactions
described in the previous sentence, as applicable. The Company may refuse to
issue any shares of Common Stock to Participant until the foregoing tax
withholding obligations are satisfied, provided that no payment shall be delayed
under this Section 3.4(c) if such delay will result in a violation of Section
409A of the Code.

 

(d)        Participant is ultimately liable and responsible for all taxes owed
in connection with the Option, regardless of any action the Company or any
Subsidiary takes with respect to any tax withholding obligations that arise in
connection with the Option. Neither the Company nor any Subsidiary makes any
representation or undertaking regarding the treatment of any tax withholding in
connection with the awarding, vesting or exercise of the Option or the
subsequent sale of Common Stock. The Company and the Subsidiaries do not commit
and are under no obligation to structure the Option to reduce or eliminate
Participant’s tax liability.

 

ARTICLE IV

OTHER PROVISIONS

 

4.1       Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company at its principal executive offices
in care of the Secretary of the Company, and any notice to be given to
Participant shall be addressed to Participant at the most recent address for
Participant shown in the Company’s records. By a notice given pursuant to this
Section 4.1, either party may hereafter designate a different address for
notices to be given to that party. Any notice which is required to be given to
Participant shall, if Participant is then deceased, be given to the person
entitled to exercise his or her Option by written notice under this Section 4.1.
Any notice shall be deemed duly given when sent via email or when sent by
certified mail (return receipt requested) and deposited (with postage prepaid)
in a post office or branch post office regularly maintained by the United States
Postal Service.

 

4.2       Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

 

4.3       Governing Law; Severability. This Agreement and the Exercise Notice
shall be administered, interpreted and enforced under the laws of the State of
Maryland, without regard to the conflicts of law principles thereof. Should any
provision of this Agreement be determined by a court of law to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable.

 

4.4       Conformity to Securities Laws. Participant acknowledges that the Plan
is intended to conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, and state
securities laws and regulations. Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Option is granted and may be
exercised, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan and this
Agreement shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.

 

 

 

 

4.5       Successors and Assigns. The Company may assign any of its rights under
this Agreement and the Exercise Notice to single or multiple assignees, and this
Agreement shall inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth, this
Agreement shall be binding upon Participant and his or her heirs, executors,
administrators, successors and assigns.

 

4.6       Entire Agreement. The Plan and this Agreement (including all Exhibits
hereto) constitute the entire agreement of the parties and supersede in their
entirety all prior undertakings and agreements of the Company and Participant
with respect to the subject matter hereof.

 

* * * * *