Exhibit 10.1 


 


AGREE REALTY CORPORATION


70 East Long Lake Road


Bloomfield Hills, Michigan 48304


 


October 20, 2017


 


Mr. Clayton Thelen


 





		Re:	Letter Agreement of Employment for Clayton Thelen (“Employee”
or “You” or “Your”)



 


Dear Clayton:


 


This Letter Agreement (“Letter Agreement”)
sets forth the terms and conditions by which Agree Realty Corporation (“ADC” or the “Company”) retains
Your services.


 





	Position:	You will serve as the Chief Financial Officer and Secretary of the Company, reporting directly to Joel N. Agree, President and Chief Executive Officer of ADC.  ADC has its sole and exclusive discretion to change, extend or to curtail the precise services and duties You are to perform.
	 	 
	Best Efforts:	All duties rendered by You for and on behalf of ADC shall be of the highest professional standards.  You shall devote Your full time, energies and talents to the success of ADC.  You shall use Your best efforts to promote and shall during and after the expiration of this Letter Agreement, do nothing to reduce or injure the reputation of ADC.
	 	 
	Employment At-Will:	You agree to be an “at-will” employee and acknowledge that there is no guaranty that Your employment by ADC is for any period of time and that Your employment may be terminated for any reason whatsoever or for no reason and with or without cause. 
	 	 
	Expected Start Date:	You agree to commence employment at ADC on December 4, 2017 (the “Start Date”).  You shall not be entitled to any of the benefits or rights under this Letter Agreement, unless and until You commence employment with ADC on or before the Start Date.
	 	 
	Annual Base Salary:	$250,000.00 payable semi-monthly in accordance with ADC’s normal payroll practices and subject to all required withholdings and deductions.  The annual base salary may be adjusted in subsequent years as recommended by the Chief Executive Officer of ADC, subject to the Compensation Committee of the Board of Directors, provided that the annual base salary may not be less than $250,000.00 during Your employment.
	 	 
	Incentive Compensation:	For 2018, You will be eligible to receive cash and stock incentive compensation in amounts of up to 60% and 90% respectively, of Your annual base salary subject to the performance hurdles determined by the Company’s Board of Directors and in accordance with ADC’s existing programs for such awards, including ADC’s 2017 Executive Incentive Plan.  Incentive compensation amounts and performance hurdles for future years shall be determined by the Company in its sole discretion.  Any such incentive compensation will be paid at the same time that similar incentive compensation is paid to other ADC executives, which will be no later than March 15th of the year following the year to which the incentive compensation relates.  







 














     


     


    

  





	
        Equity Purchase

        
	Within thirty (30) days of the Start Date, You must purchase on the open market common shares of ADC valued at $50,000.
	 	 
	Restricted Stock Grant:	ADC will award You $200,000 worth of restricted stock of the Company upon the Start Date pursuant to a Restricted Stock Award Agreement containing standard terms and a 5-year cliff vesting schedule (i.e., vesting will occur on the 5-year anniversary of the Start Date).  The number of shares of ADC restricted stock to be granted will be based on the closing price of ADC shares on the Start Date.  
	 	 
	Relocation Benefits	
        ADC will reimburse You, or allow You to
        directly bill ADC, for (i) primary moving expenses including the packing, shipping and unpacking of Your household goods and the
        transport of family members to the Detroit Metro Area, and (ii) up to four months of temporary housing in the Detroit Metro Area.
        The aggregate relocation allowance will be the lower of (x) actual costs incurred and (y) $25,000.00.

         

        If You resign Your employment without Good
        Reason (as defined below) before the three-year anniversary of the Start Date, You will be required to repay 100% of the relocation
        expenses paid under this Section. To the fullest extent permitted by law, the repayment amount will be deducted from your final
        paycheck, and any remaining balance must be paid by You within thirty (30) days of your last date of employment.

	 	 
	Benefits:	You will be eligible to participate in such benefits, including health care, 401K, cellphone reimbursement, and other general benefits, as are generally made available to similarly situated executives of ADC.    
	 	 
	Paid Time Off:	You will be entitled to paid time off in accordance with the Company’s Paid Time Off policy. 







 






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	Severance:	
        You will not be eligible for any severance
        upon a termination of employment with the Company except as set forth herein.

         

        If Your employment is terminated without
        Cause (as defined below) due to or within one year following a Change in Control (as defined below), You will receive either (1)
        a cash amount equal to the sum of (i) 200% of Your current annual base salary, (ii) 200% of Your Annual Cash Incentive Award for
        the previous fiscal year and (iii) any Long-Term Incentive Compensation for the year in which the termination occurs will be considered
        earned at the target level and immediately vested, or (2) in the event Your employment is terminated due to a Change in Control
        which occurs during the first fiscal year of employment, a cash amount equal to the sum of (i) 200% of Your current annual base
        salary plus $200,000, (ii) 200% of Your projected Threshold Annual Cash Incentive Award, and (iii) Your Threshold Long-Term Incentive
        Compensation will be considered as earned at the target level and immediately vested. The values for items (1) (i) and (ii) and
        (2) (i) and (ii) shall be automatically adjusted down from 200% to 100% after the two-year anniversary of the Start Date. “Change
        in Control” shall have the same meaning as set forth in the ADC’s 2014 Omnibus Incentive Plan. Notwithstanding the
        foregoing, there shall be no Change in Control severance in the event You are retained by a successor organization for one year
        substantially on the same terms as set forth herein.

         

        If Your employment is terminated by ADC
        for Cause, You will not be entitled to any severance payments, and You will forfeit any unvested securities of ADC.

         

        If Your employment is terminated by the
        Company without Cause or by You with Good Reason, You will (i) receive a severance amount equal to 100% of Your annual base salary,
        (ii) be deemed to have vested in a pro rata portion of the restricted stock set forth above, based on the number of completed years
        of service based on the Start Date, and (ii) be released from Your post-employment non-competition covenant set forth below.

         

        If Your employment is terminated by the
        Company for Cause before the third anniversary of the Start Date, Your non-competition restriction set forth below will be limited
        to restrict You only from working as a Chief Financial Officer (or in a similar capacity) for any triple net publicly-traded REIT
        for a one (1) year period from Your last date of employment.

         

        Subject to the 6-month delay in payment
        that may be required to comply with Section 409A, any severance payments shall be payable in equal semi-monthly installments over
        the twelve (12) month period following Your termination in accordance with ADC’s normal payroll practices, on its standard
        payroll dates, and subject to all required withholdings and deductions. All of the foregoing severance entitlements shall be conditioned
        on (i) Your delivery, within thirty (30) days after Your last date of employment, of a signed and irrevocable release agreement
        in a form prepared by ADC and (ii) Your strict compliance with Your post-employment obligations. The severance payments will commence
        on first payroll date occurring more than 60 days after the termination of Your employment, with the first payment covering the
        time period from the termination date through the payment date.

	 	 
	Cause:	For purposes of this Letter Agreement, “Cause” shall mean the occurrence of one or more of the following, as determined by ADC: (a) Your failure or refusal to observe or perform any term, covenant or provision of this Letter Agreement or any reasonably assigned duties requested by ADC; (b) a breach Your fiduciary duty to Agree; (c) You being under investigation for committing, charged with, and/or convicted of a felony or any other crime which might cause clients to question the business practices or reputation of ADC; (d) Your commission of any act of theft, embezzlement, fraud, dishonesty or disloyalty with respect to ADC; (e) Your use or alcohol in an unprofessional fashion, non-prescribed narcotics or contraband during working hours or on ADC premises; (f) Your engaging in insubordination or otherwise disruptive actions; or (g) Your inability to perform his assigned job duties in an effective manner or to ADC’s reasonable satisfaction.
	 	 
	Good Reason	For purposes of this Letter Agreement, “Good Reason” shall mean, without Your consent, (i) a material and adverse change in Your title or (ii) a material reduction in Your base salary; provided that, prior to terminating employment for Good Reason, You must provide written notice to ADC within thirty (30) days after the initial existence of the condition constituting Good Reason and provide ADC a period of thirty (30) days to remedy such condition; and provided further that if ADC fails to cure such condition, You must resign Your employment within thirty (30) days following ADC’s failure to remedy the condition constituting Good Reason.




 






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        Confidentiality and Restrictive Covenant Obligations:

         
	(a)  Confidential Information.  The relationship with ADC will be one of trust and confidence and there will be available to You certain confidential and proprietary business and financial information, related trade secrets and proprietary information of ADC which includes, but may not be limited to, the records and information of ADC dealing with income, investments, investment or development opportunities, customer or tenant lists, rent rolls, project lists, investor lists, investor identities, investment returns, business strategies, business methods, business practices, services, financial information, leasing information, access codes, business strategies, all information contained in or on the computer hard drives and/or servers of ADC, customer or tenant contact information including telephone numbers, addresses and e-mail information, business methods, marketing methods, and other items relative thereto (herein collectively and individually referred to as the “Confidential Information”).  The Confidential Information is an extremely valuable and important asset of ADC and the unauthorized use of the Confidential Information would cause irreparable economic and business injury to ADC.  You shall hold the Confidential Information in strict confidence and in trust for ADC and, except in the good faith performance of Your job duties for ADC, shall not disclose, use or otherwise communicate, provide or reveal in any manner whatsoever any of the Confidential Information to any person or entity without the prior written consent of ADC.  Upon termination of employment, You shall return to ADC, without demand from ADC, any Confidential Information disclosed or provided to You, including, but not limited to, all originals, copies, reproductions, notes, facsimiles, samples, models and products thereof, whether, the same is in digital or document form.  The return of the Confidential Information shall also include but not be limited to the return of all the following items to ADC immediately upon the termination of employment: automobile, keys, calculators, tapes, clipboards, computers, computer programs, documents, customer and tenant lists, addresses, telephone numbers, computer discs, notebooks, drawings, manuals, and such or all other recorded, written or printed materials and supplies relating to research or business of the ADC.  The Confidential Information, regardless of form, is, and shall always remain, the sole and exclusive property of ADC.
	 	 
	 	(b)  Employees.  During the term of Your employment with ADC and for a period of two (2) years following the termination of Your employment (“Period”), You shall not, directly, indirectly for Your own benefit or for the benefit of any other person, firm or business organization Solicit for purposes of employment or association any employee or agent of ADC, or induce any employee or agent of ADC to terminate such employment or association for purposes of becoming employed or associated elsewhere, or hire or otherwise engage any employee or agent of ADC as an employee of a business with whom You may be affiliated or permit such hiring to the extent You have the authority to prevent same, or otherwise interfere with the relationship between ADC and its employees and agents.  For purposes of this Letter Agreement, an employee or agent shall mean an individual employed or retained by ADC during the term of this Letter Agreement and/or who terminates such association with ADC within a period of six (6) months either prior to or after Your termination hereunder.  For purposes of this Letter Agreement, the phrase “Solicit” shall mean any contact, communication, dialogue or undertaking whether the same is initiated by You or by an investor, business prospect, referral source or employee of ADC.
	 	 



 






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        (c) Business Prospects. During the
        Period, You shall not, directly, indirectly, for Your own benefit or for the benefit of any other person, firm or business organizations,
        Solicit for purposes of transacting business, any business prospect of ADC or induce any business prospect of ADC to terminate
        such association with ADC for proposes of transacting business elsewhere or becoming associated elsewhere or otherwise attempting
        to divert any business prospect from ADC, except where, (i) any firm or business organization for which You are subsequently employed,
        has an existing verifiable business relationship with such business prospect; and (ii) transacting business with such business
        prospect has no adverse effect on ADC; and (iii) You are not engaged in providing services or support to such business prospect
        during the Period. You shall prevent such solicitation to the extent You have authority to prevent same and shall otherwise not
        interfere with the relationship between ADC and its business prospects. For purposes of this Letter Agreement, the term “business
        prospects” shall mean any individual and/or business entity with whom ADC has undertaken to transact business or whom has
        been targeted for purposes of transacting business. For the avoidance of doubt, the term “business prospects” shall
        not include third parties engaged in providing loans and investment capital.

         

        (d) Non-Competition. You shall not,
        directly, indirectly, for Your own benefit or for the benefit of any other person, firm or business organizations, engage in the
        following activities: (i) for the three-year period from the Start Date, work in any capacity for any other Real Estate Investment
        Trust (“REIT”); and (ii) if Your employment ends more than three years after the Start Date, act as a Chief Financial
        Officer (or in a similar capacity) for any triple net publicly-traded REIT during Your employment and for a period of one (1) year
        thereafter.



 









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        (e) Conduct. You shall not, directly,
        indirectly, for Your own benefit or for the benefit of any other person, firm or business organizations,

         

        (i)    
        Advice. You shall during the term of Your employment with ADC and at all times after the termination of the relationship
        by either party with or without advance notice or Cause, remain available to advise and at all times after the termination of the
        relationship by either party with or without advance notice or Cause, You shall remain available to advise ADC in areas which include,
        but are not limited to assisting ADC with customer or business matters in which You were involved and advise ADC as to the status
        of various matters and follow up requirements related to tasks performed by You.

         

        (ii)  
        No Disparagement. You shall not during the term of Your employment with ADC and at all times after the termination
        of the relationship by either party with or without advance notice or Cause, communicate, orally or in writing, or by any other
        matter whatsoever to any third party, any claim, remark, allegation, statement, opinion, innuendo, or information of any kind or
        nature whatsoever, the effect or intention of which is to cause embarrassment, damage or injury to the reputation or standing in
        the local, state, national, or international community of ADC, its officers, directors, shareholders, members or employees, whether
        any such communication is or may be true or founded in facts.

         

        (iii) Systems.
        You acknowledge and agree that You have no expectation of privacy with respect to ADCs telecommunications, networking, or information
        processing systems, (including, without limitation, stored company files, email messages, text messages, and voice messages) and
        that Your activities and any files or messages or use of any of those systems may be monitored and or intercepted at any time without
        notice and You consent to such monitoring and interception. You further agree that any property situated on ADC’s premises
        and owned by ADC, including, disks, and other storage media, filing cabinets and other work areas is subject to inspection by ADC
        without notice.

         

        (f) Interpretation. If the provisions
        of this Letter Agreement are deemed overly restrictive, the court having jurisdiction may alter such provisions to provide for
        the maximum protection of ADC which is deemed reasonable under State law. Notwithstanding the foregoing, You acknowledge that all
        of the provisions hereof are reasonable, and waive any defense on such basis. You further acknowledge and agree that the obligations
        set forth in this Section are independent of the other obligations of this Letter Agreement, such that they will remain in effect
        notwithstanding any claim of a prior breach of this Letter Agreement or any other agreement or obligation.

         

        (g) Limitations. Nothing in this
        Letter Agreement shall prohibit You from participating, testifying, or assisting in any investigation, hearing, whistleblower proceeding
        or other proceeding before any federal, state, or local government agency or pursuant to a lawfully issued subpoena, nor does anything
        herein preclude, prohibit, or otherwise limit, in any way, Your rights and abilities to contact, communicate with, report matters
        to, or otherwise participate in any whistleblower program administered by any such agencies. Further, You acknowledge that under
        the Defend Trade Secrets Act of 2016, 18 U.S.C. § 1836(B), an individual shall not be held criminally or civilly liable under
        any federal or state trade secret law for the disclosure of a trade secret that is (i) made in confidence to a federal, state,
        or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law;
        or (ii) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual
        who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to
        the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document
        containing the trade secret under seal; and does not disclose the trade secret, except pursuant to court order.








 






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	Modification:	Provided such modifications are uniformly applied to similarly situated ADC executives, ADC has the right to and may unilaterally modify the terms and conditions of employment including, by way of illustration and not limitation, job descriptions, rules and regulations, benefit packages and compensation as it deems appropriate in its sole and exclusive discretion.  All benefits packages, salary and incentive compensation awards shall be subject, on an annual basis, to the approval of the Compensation Committee of ADC.
	 	 
	Arbitration:	Except for as set forth below, the parties shall arbitrate any and all disputes relative to the employment relationship and/or termination from ADC that otherwise would be resolved by judicial or administrative proceeding or are in any way related to any alleged wrongful acts on the part of ADC or its employees, officers and/or directors, whether such disputes are based on alleged statutory violations or otherwise (i.e., age, race, gender, religion or any other form of protected class discrimination or harassment), contractual breaches or otherwise, exclusively through the Procedures and Policies of the American Arbitration Association, unless other procedures are agreed upon in writing between the parties.  Venue for any such hearings shall be Oakland County, Michigan.  All substantive rights provided under any applicable statute and/or law, the right to representation by counsel, an opportunity for reasonable discovery, a neutral arbitrator, a fair arbitral hearing, and a written arbitral award containing findings of facts and conclusions of law shall be available in the arbitration.  You shall not disclose or announce to third parties, except Your attorneys and retained professionals, that the proceedings are taking place and You shall keep the nature and substance of the proceedings confidential and not disclose the same to third parties. The determination of the arbitrator shall be binding and final upon all parties.  The award of the arbitrator may be filed with the Clerk of the Circuit Court for the County of Oakland, Michigan, and judgment may be rendered by the Court upon the arbitration award and execution may be issued upon the judgment.  The cost for arbitration shall be split equally between ADC and You.
	 	 
	Limitations:	Any arbitration or judicial proceeding arising out of a dispute relative to Your employment, shall not be brought by You unless the same is commenced within the applicable statute of limitations or One Hundred Eighty (180) days following the incident giving rise to such dispute, whichever is shorter.  If You fail to commence such a proceeding within such period, any rights You may have to prosecute such a claim shall be extinguished and terminated.  In the event a court of competent jurisdiction determines this provision is overly restrictive, then the court having jurisdiction may alter such provision to that deemed reasonable under State law.
	 	 
	Enforcement:	Those portions of this Letter Agreement that, by their nature, survive the termination of this Letter Agreement shall remain enforceable and survive the expiration or termination of the employment relationship and shall not be deemed merged or extinguished by any act absent the specific written intention of the parties to do so.  The undertakings contained herein relate to matters which are of a special, unique and extraordinary importance to ADC and, that without such covenants, ADC would be unwilling to employ You.  A violation of any of the terms hereof would cause irreparable injury to ADC, the amount of which may be impossible to estimate or determine and which may not be compensated adequately.  Notwithstanding the arbitration provision set for herein, ADC may, at its sole option and in its exclusive discretion, file an action in court seeking all available equitable and monetary remedies in the event of a breach or threatened breach of Your Confidentiality and Restrictive Covenant Obligations.  In any action for injunctive relief or a restraining order, ADC shall not be obligated to post a bond or any security as a condition to obtain the issuance of a restraining order, injunction or other equitable relief.  







 






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	Attorney Fees:	In the event that ADC should bring any action or claim arising out of this Letter Agreement against You, or You bring any action or claim against ADC, the prevailing party shall be entitled to any and all costs incurred in enforcing the terms of this Letter Agreement, including actual attorney fees, court costs, arbitrator costs and fees and all other costs associated with such action.
	 	 
	Section 409A:	This Letter Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) or an exemption thereunder, and shall be construed and administered in accordance with Section 409A.  Notwithstanding any other provisions of this Letter Agreement, payments provided under this Letter Agreement may only be made upon an event, and in a manner, that complies with Section 409A or an applicable exemption.  Any payment under this Letter Agreement that may be excluded from Section 409A shall be excluded from Section 409A to the maximum extent possible.  For purposes of Section 409A, each installment payment provided under this Letter Agreement shall be treated as a separate payment.  Any payment to be made under this Letter Agreement upon termination of employment shall only be made upon a “separation from service” under Section 409A.  Notwithstanding the foregoing, ADC makes no representations that the payments and benefits provided under this Letter Agreement are exempt from or comply with Section 409A and in no event shall ADC be liable for any portion of any taxes, penalties, interest or other expenses that may be incurred by You on account of non-compliance with Section 409A.  All reimbursements provided under this Letter Agreement shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements are subject to Section 409A, including, where applicable, the requirements that (i)  the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (ii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (iii) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit. Notwithstanding any other payment date or schedule provided in this Letter Agreement to the contrary, if on the date of your separation from service You are a “specified employee” (within the meaning of Section 409A and the regulations thereunder), to the extent required under Section 409A any payment subject to Section 409A that is owing to You on account of and within six months after Your separation from service shall instead be made on the date which is the earlier of (i) the first Company payroll date after the six month anniversary of the date of Your separation from service or (ii) the first Company payroll date after Your death (the “Delay Period”); upon expiration of the Delay Period, all payments so delayed shall be paid to You in a lump sum, and all remaining payments due hereunder shall be paid to you on the normal payment dates set forth in this Letter Agreement.
	 	 
	Section 280G	If any payment or benefit (including payments and benefits pursuant to this Agreement) You would receive in connection with a Change in Control from the Company or otherwise (the “Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this paragraph, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Company shall pay only a part of the Payment so that You receive the largest payment possible without the imposition of the Excise Tax.  If a reduced Payment is made, You shall have no rights to any additional payments and/or benefits constituting the Payment.  Any reduction in payments as a result of this provision shall be made in the reverse chronological order in which such payments would otherwise be due.
	 	 













	Entire Agreement:	This Letter Agreement represents the entire agreement between You and ADC and supersedes and cancels any prior or contemporaneous arrangements, understandings or agreements, whether written or oral, by and between You and ADC relative to the subject matter hereof.  Any amendments hereto shall be in writing and executed by both parties.  In the event of a conflict between this Letter Agreement and any other agreement or plan including the agreement and plan attached hereto, this Letter Agreement shall govern and control.
	 	 
	Governing Law:	This Letter Agreement shall be governed by and construed in accordance with the laws of the United States of America and the State of Michigan.  Without limiting the applicability of the Arbitration provisions contained herein, exclusive venue and jurisdiction for resolution of all disputes shall lie with the state and/or federal courts having jurisdiction over Oakland County, Michigan, and the parties irrevocably submit to the personal jurisdiction of such courts.







 






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Clayton, if You agree with the terms and
conditions contained herein, please sign and return a copy of this Letter Agreement to the undersigned.


 





	 	Very truly yours,	 
	 	 	 	 
	 	AGREE REALTY CORPORATION	 
	 	 	 
	 	 	 
	 	By: 	/s/ Joey Agree 	 
	 	 	Joey Agree	 
	 	 	Its: Chief Executive Officer	 
	 	 	 	 







 





	AGREED TO AND ACCEPTED BY:
	 	 
	CLAYTON THELEN	 
	 	 
	 	 
	/s/ Clayton Thelen 	
	(Employee Signature)	 
	 	 
	Date: October 20, 2017	 









 






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