Amendment No. 5 to Retention Bonus Plan

1.

Bonus Pool. Section 2.8, regarding the definition of the "Bonus Pool," shall be amended in its entirety to read as follows:

2.8

“Bonus Pool” means the amount of funds that shall be transferred to a separate bookkeeping account held by the Company, to be allocated and paid to Employee Participants in accordance with Article V and a separate bookkeeping account for Board Participants, if any (or, to the extent applicable, former Participants in accordance with Article IV). The separate Bonus Pools shall remain assets of the Company and shall serve as a funding mechanism for the payments of amounts ultimately determined to be due to Employee and/or Board Participants under the Plan.

2.

Exclusion of Board Members. Members of the Board who currently participate in the Plan have agreed to waive all benefits under the Plan, which were not vested, and in lieu thereof to accept participation in a separate restricted stock award plan (the “RSA Plan”). Accordingly, participating Board members shall relinquish all rights to any benefits under the Retention Bonus Plan, subject to and conditioned upon approval of the RSA Plan by Shareholders and conversion of retention bonus payments into units of restricted stock on a basis acceptable to the Board at the 2023 Annual Meeting of the Company. The substitution of awards under the RSA Plan for benefits under the Retention Bonus Plan doesn’t result in any substitution of benefits under Section 409A of the Internal Revenue Code (the “Code”) since, as addressed below, the Retention Bonus Plan isn’t subject to Section 409A of the Code.

3.

Forfeiture of Benefits. Upon the approval of an acceptable RSA Plan, and conversion of rights under this Retention Bonus Plan to awards under the RSA Plan, and waiver of participation of Board members in this Plan, all allocations made to any Board members under Section 5.2 of the Plan, including benefits forfeited by previous participating Board members and subject to allocation under Section 5.5, shall be void and non-effective. Benefits forfeited by Board members shall not, with the consent of all Participants, be allocated to any Employee Participants in the Plan as might otherwise occur under Section 5.5 of the Plan, due to the lack of any remaining Board members participating in the Plan, but rather shall cease to be part of any Bonus Pool under the Plan.

If the RSA Plan isn’t approved, the benefits previously forfeited by any Board members under the Retention Bonus Plan shall nevertheless be forfeited and shall not be available for reallocation to either Board Participants or Employee Participants.

4.

Vesting. Article IV, Vesting, shall be amended in its entirety to read as follows:

“A Participant shall only be entitled to receive Bonus Payments pursuant to this Plan to the extent that he/she has been continuously employed by, or providing services for, the Company through both (i) the date of a Closing regarding any Property (as defined under the Plan), and (ii) the date of an irrevocable action by the Board providing for a cash distribution of the proceeds of a sale of a Property to be made to Shareholders of the Company. For purposes of clarity, after Board members no longer participate in the Plan, Board members shall decide when to distribute cash associated with the proceeds of a sale of a Property to Shareholders and, at such time as such Shareholder distributions occur, remaining Employee Participants in the Plan shall be entitled to a payment of benefits to the extent credited to the Bonus Pool as of such date (with the exception of the minimum distributions provided in Section 5.2 below for accumulated Bonus Pool proceeds equal or exceeding $500,000).

For the avoidance of doubt, any Participant who is granted any such discretionary Bonus Payment shall remain unvested in such amount until such time as the Board takes irrevocable action to provide for a cash distribution of the proceeds of a sale of a Property to Shareholders of the Company (or as determined under the $500,000 rule in Section 5.2), and any such bonus payments shall be required to be paid no later than the end of the calendar year in which the Board so acts (or, if later, within 2½ months after the date such irrevocable action is taken by the Board or the $500,000 threshold is attained), to ensure that the Retention Bonus Plan remains exempt from Section 409A of the Code.

In the event of death or Disability of a Participant, a voluntary termination following a substantial reduction in compensation (deemed to be an involuntary termination), assuming such a Participant has not engaged in conduct that would constitute Cause, such a Participant shall be entitled to a future benefit to be paid in accordance with the provisions of the Plan only if the following requirements are satisfied:

a.

A Property is sold within a period of 3 years following the date of a Participant’s separation from service with Gyrodyne or the Board for any of the above reasons, and if a liquidating distribution of the associated proceeds is declared; and

b.

The Property is sold with an Internal Rate of Return (“IRR”) equal to at least 4% of the value of the property as determined under the annual appraisals obtained effective as of each December 31 (the “Valuation Date”), and measured from the earlier of the December 31 Valuation Date preceding the date of death, or Disability, or the Participant’s separation from service or separation from the Board, up until a contract of sale is executed (but not yet closed).

Article IV, Vesting, shall also be amended to delete the last paragraph of Article IV, relating to the Aggregate Floor.”

5.

Section 5.1 of the Plan is amended in its entirety to read as follows:

“5.1

Funding of the Bonus Pool. Upon the Closing of each Property sale, funds shall be irrevocably transferred to a Bonus Pool account for the benefit of the Participants, as follows:

6.

Payment of Benefits. Section 5.2, Payment of Benefits shall be replaced in total with the following:

“After funds are transferred to the Bonus Pool under Section 5.1, Bonus Payments shall be paid to all Employee Participants, at the same time that liquidating distributions are being paid to Shareholders following the sale of properties, so long as such Employee Participants have remained in-service through the date a liquidating distribution is declared and the Board has taken action to declare distributions to Employee Participants, as provided in Article IV above, as further indicated in the revised Exhibit A. Any amounts payable to a Participant upon payment to the Company following a Closing, as an installment or earnout payment, shall similarly be paid within sixty (60) days after the receipt of the Company of such funds. Notwithstanding any provisions in the Plan to the contrary, whenever the cumulative amounts transferred to the Bonus Pool bookkeeping account for Employee Participants equals or exceed $500,000, there shall automatically be a payment of benefits to Employee Participants, whether or not a liquidating distribution is declared to be paid by the Board, and in the event all properties have been sold (other than properties that might be transferred without compensation), a final Bonus Pool payment shall be made, regardless of the amount in the Employee Bonus Pool. All payments shall be made in a lump sum cash payment, within sixty (60) days after the date the Employee Participants become entitled to payment hereunder, such as upon determination by the Board that liquidating distributions shall be made to Shareholders or when the aggregate amounts credited to the Employee Participant Bonus Pool hit the above trigger payment amounts.

For clarity, if the RSA Plan is not approved and Director Participants remain in the Plan, Bonus Payments shall be paid to Director Participants at the same time that liquidating distributions are being paid to Shareholders. All payments shall be made in a lump sum cash payment, within sixty (60) days after the date the Director Participants become entitled to payment.”

7.

Forfeiture of Payment. Section 5.4 of the Plan shall also be replaced in total, as follows:

“Except as provided in Article IV, if any Employee Participant terminates employment prior to the date that actual payments are declared under the Plan, such a Participant shall forfeit the payment of any bonus payments. Further, except as provided in Article IV, if any Director Participant terminates service prior to the date that actual payments are declared under the Plan, such a Participant shall forfeit the payment of any bonus payments. This forfeiture provision exists in recognition of the goals of the Plan, which is to retain all Participants until the sale of Properties occurs and liquidating cash distributions are paid to Shareholders of the Company.”

8.

Restriction on Bonus Payments. Section 5.6 that added an Aggregate Floor to the Plan shall be repealed.

9.

Void Provisions. To the extent any provisions of the Plan contradict the provisions of this Amendment Number 5, they shall be null and void.

10.

Revised Exhibit A. Participating members of the Board already have a “specific percentage” of the Retention Bonus Pool allocated to each Director on an individual basis until it becomes void upon approval of an acceptable RSA Plan. Attached is a revised Exhibit A providing for specific employee bonus percentages for Employee Participants that shall apply for any sales on or after September 6, 2023, subject to the Plan and this Amendment.

11.

No Approval of the RSA Plan. For the avoidance of doubt, in the event the RSA Plan isn’t approved by the Shareholders of the Company at the 2023 annual meeting, the Board members participating in the Retention Bonus Plan shall remain in the Retention Bonus Plan, with aggregation of Properties and with distributions only made when Shareholders receive distributions.

12.

Defined Terms. Capitalized terms not specifically defined in this Amendment Number 5 shall have the meanings set forth in the Plan.

13.

Remaining Provisions. The remaining provisions of the Plan shall continue in full force and effect, unless and until further modified in accordance with the terms of the Plan.

14.

Not Subject to Section 409A. Notwithstanding any provisions of the Plan or any Amendments to the contrary, no employees are vested in any benefits under the Retention Bonus Plan and, all benefits are generally paid upon vesting. Therefore, the Retention Bonus Plan continues to not be subject to Section 409A of the Code. Notwithstanding any provisions in the Plan to the contrary, in the event the Plan becomes subject to Section 409A, the Company shall be responsible for the payment of any excise taxes payable by any Participants in the Plan, with a gross up for any related taxes. Any such payment or gross up payment will be made by the Company at a time and in a manner as to cause such payment or gross up payment to qualify as paid at a specified time or on a fixed schedule of payments within the meaning of Treas. Reg. § 1.409A-3(i)(1)(iv)-(v).

Board Members/Employees

Bonus Pool Percentage

Board Members

0% (previously 65%)

Subtotal

0.00%

Employees

Gary Fitlin

  44.211% (previously 15.474%)

Peter Pitsiokos

  39.789% (previously 13.926%)

Officer Discretionary Amount

5.000% (previously 1.75%)

Patricia Lara

    2.143% (previously 0.75%)

Dawn Ibraham

    8.857% (previously 3.10%)

Subtotal

 100% (previously 35.000%)

Total

100.00%

Board Members/Employees

Bonus Pool Percentage¹

Board Members

Paul Lamb, Chairman

18.75%

Richard Smith

12.50%

Ronald Macklin

12.50%

Nader Salour

12.50%

Subtotal

56.25%

Employees

Gary Fitlin

19.3425%

Peter Pitsiokos

17.4075%

Patricia Lara

0.9375%

Dawn Ibraham

3.875%

Officer Discretionary Amount

2.1875%

Subtotal

43.75%

Total

100.00%

1.

The Board Pool does not get a 1% premium for selling any real estate on or before June 30, 2024, whereas the Employee Pool does.