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EXHIBIT
10.5
FORM OF INDEMNIFICATION
AGREEMENT
THIS
AGREEMENT is made and entered into, effective as of ___________,
2007, by and between, MONMOUTH REAL ESTATE INVESTMENT
CORPORATION, a Maryland corporation (the
“Corporation”), and ____________________,
(“Indemnitee”), a director and/or officer of the
Corporation.
WHEREAS,
it is essential to the Corporation to retain and attract as
directors and officers the most capable persons available;
and
WHEREAS,
the substantial increase in corporate litigation subjects directors
and officers of the Corporation to expensive litigation risks;
and
WHEREAS,
in recognition of Indemnitee’s need for protection against
personal liability in order to enhance Indemnitee’s continued
effective service to the Corporation, and in order to induce
Indemnitee to provide services to the Corporation as a director
and/or officer, the Corporation agrees to provide for the
indemnification of and the advancing of expenses to Indemnitee to
the fullest extent (whether partial or complete) permitted by
Maryland law and as set forth in this Agreement. It is the intent
of the Corporation to provide for indemnification as of the date
each indemnified party assumed his/her office and to continue so
long as Indemnitee shall be subject to any proceeding. Furthermore,
it is the intent of the Corporation to provide for the fullest
possible indemnification, notwithstanding any change of place of
business or change of state of incorporation.
NOW,
THEREFORE, in consideration of the above premises and the mutual
promises contained herein, the Corporation and Indemnitee hereby
agree as follows:
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1. |
Agreement to Serve. Indemnitee agrees to serve or
continue to serve as a director or officer of the Corporation for
so long as he is duly elected or appointed or until such time as he
tenders his resignation in writing. |
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2. |
Definitions. For purposes of this Agreement: |
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(a) |
Board: the Board of Directors of the
Corporation. |
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(b) |
Change in Control: shall be deemed to have occurred
if (i) any “person” (as such term is used in Sections
13(d) and 14(d) of the Securities and Exchange Act of 1934, as
amended (the “Act”)), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the
Corporation or a corporation owned directly or indirectly by the
stockholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation, is or
becomes the “Beneficial Owner” (as defined in Rule
13d-3 under the Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the total voting power
represented by the Corporation’s then outstanding Voting
Securities, or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board and any new director whose election by the Board or
nomination for election by the Corporation’s stockholders was
approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously
so approved cease for any reason to constitute a majority of the
Board, or (iii) the stockholders of the Corporation approve a
merger or consolidation of the Corporation with any other
corporation, other than a merger or consolidation that would result
in the Voting Securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power
represented by the Voting Securities of such surviving entity
outstanding immediately after such merger or consolidation, or (iv)
the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation (in one transaction or a series of
transactions) of all or substantially all of the
Corporation’s assets. |
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(c) |
Expenses: any expense, liability, or loss,
including attorney’s fees, judgments, fines, ERISA, excise
taxes and penalties, amounts paid or to be paid in settlement, any
interest, assessments, or other charges imposed thereon, and any
federal, state, local, or foreign taxes imposed as a result of the
actual or deemed receipt of any payments under this Agreement, paid
or incurred in connection with investigating, defending, being a
witness in, or participating in (including on appeal), or preparing
for any of the foregoing in, any Proceeding relating to any
Indemnifiable event. |
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(d) |
Indemnifiable Event: any event or occurrence that
takes place either prior to or after the execution of this
Agreement, related to the fact that Indemnitee is or was a director
or an officer of the Corporation, or while a director or officer is
or was serving at the request of the Corporation as a director,
officer, employee, trustee, agent, or fiduciary of another foreign
or domestic corporation that was a predecessor corporation of the
Corporation or of another enterprise at the request of such
predecessor corporation, or related to anything done or not done by
Indemnitee in any such capacity, whether or not the basis of the
Proceeding is alleged action in an official capacity while serving
as a director, officer, employee, or agent of the Corporation
described above. |
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(e) |
Independent Counsel: the person or body appointed
in connection with Section 4. |
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(f) |
Proceeding: (i) any threatened, pending, or
completed action, suit, or proceeding, whether brought by or in the
right of the Corporation or otherwise and whether civil, criminal,
administrative, investigative or other, in which Indemnitee may be
or may have been involved as a party or otherwise, by reason of the
fact that Indemnitee is or was a director or officer of the
Corporation, by reason of any action taken by him or of any
inaction on his part while acting in his capacity as such a
director or officer, or by reason of the fact that he is or was
serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise; or (ii) any inquiry, hearing,
or investigation, whether conducted by the Corporation or any other
party, that Indemnitee in good faith believes might lead to the
institution of any such action, suit, or proceeding; in each case
whether or not his is acting or serving in any such capacity at the
time any liability or expense is incurred for which indemnification
or reimbursement can be provided under this Agreement. |
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(g) |
Reviewing Party: the person or body appointed in
accordance with Section 4. |
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(h) |
Voting Securities: any securities of the
Corporation that vote generally in the election of officers. |
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3. |
Agreement to Indemnify. |
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(a) |
General Agreement. In the event the Indemnitee was,
is, or becomes a party to or witness or other participant in, a
Proceeding by reason of (or arising in part out of) an
Indemnifiable Event, the Corporation shall indemnify Indemnitee
from and against any and all Expenses to the fullest extent
permitted by law, as the same exists or may hereafter be amended or
interpreted (but in the case of any such amendment or
interpretation, only to the extent that such amendment or
interpretation permits the Corporation to provide broader
indemnification rights that were permitted prior thereto). |
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(b) |
Initiation of proceeding. Notwithstanding anything
in this Agreement to the contrary, Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection with
any Proceeding initiated by Indemnitee against the Corporation or
any director or officer of the Corporation unless (i) the
Corporation has joined in or the Board has consented to the
initiation of such Proceeding; (ii) the Proceeding is one to
enforce indemnification rights under Section 6; or (iii) the
Proceeding is instituted after a Change in Control and Independent
Counsel has approved its initiation. |
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(c) |
Expense Advances. If so requested by Indemnitee,
the Corporation shall advance (within ten business days of such
request) any and all Expenses to Indemnitee (an “Expense
Advance”); provided that, if an to the extent that the
Reviewing Party determines that Indemnitee would not be permitted
to be so indemnified under applicable law, the Corporation shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to
reimburse the Corporation) for all such amounts theretofore paid.
If Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, as provided in Section
5, any determination made by the Reviewing Party that Indemnitee
would not be permitted to be indemnified under applicable law shall
not be binding and Indemnitee shall not be required to reimburse
the Corporation for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights
of appeal therefrom have been exhausted or have lapsed).
Indemnitee’s obligation to reimburse the Corporation for
Expense Advances shall be unsecured and no interest shall be
charged thereon. |
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(d) |
Mandatory Indemnification. Notwithstanding any
other provision of the Agreement (other than Section 3(f) below),
to the extent that Indemnitee has been successful on the merits in
defense of any issue or matter therein, Indemnitee shall be
indemnified against all Expenses incurred in connection
therewith. |
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(e) |
Partial Indemnification. If Indemnitee is entitled
under any provision of this Agreement to indemnification by the
Corporation for some or a portion of Expense, but not, however, for
the total amount thereof, the Corporation shall nevertheless
indemnify Indemnitee for the portion thereof to which Indemnitee is
entitled. |
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(f) |
Prohibited Indemnification. No indemnification
pursuant to this Agreement shall be paid by the Corporation on
account of any Proceeding (i) in which Indemnitee’s act or
omission was material to the cause of action adjudicated and was
committed in bad faith or with deliberate dishonesty; or (ii) in
which the Indemnitee actually received an improper personal benefit
in money, property, or services. |
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