Exhibit 10.1

 

MANAGEMENT SERVICES AGREEMENT

 

 

 

This MANAGEMENT SERVICES AGREEMENT, dated as of December 24, 2014 (this
“Agreement”), is between GYRODYNE SPECIAL DISTRIBUTION, LLC, a New York limited
liability company (“GSD”), and GYRODYNE COMPANY OF AMERICA, INC., a New York
corporation (“Gyrodyne”).

 

WITNESSETH

 

WHEREAS, pursuant to the Amended and Restated Limited Liability Company
Operating Agreement of GSD effective as of December 30, 2013 (the “Operating
Agreement”), Gyrodyne has been designated as the Managing Member of GSD; and

 

WHEREAS, the Operating Agreement provides that Gyrodyne shall be entitled to
compensation at a market rate for its services and reimbursement of its costs
and expenses as Managing Member of GSD;

 

WHEREAS, GSD desires to avail itself of the knowledge, experience, sources of
information, advice, assistance and certain facilities available to Gyrodyne and
to have Gyrodyne undertake the duties and responsibilities hereinafter set forth
on behalf of GSD, all as provided herein; and

 

WHEREAS, Gyrodyne is willing to undertake to render such services, on the terms
and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the parties hereto agree as follows:

 

ARTICLE 1

Definitions

 

 

The following defined terms used in this Agreement shall have the meanings
specified below:

 

“Agreement” has the meaning set forth in the preamble, and such term shall
include any amendment or supplement hereto from time to time.

 

“Articles of Organization” means the articles of organization of GSD, as the
same may be amended from time to time.

 

 

 
 

--------------------------------------------------------------------------------

 

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute thereto. Reference to any provision of the Code shall mean
such provision as in effect from time to time, as the same may be amended, and
any successor provision thereto, as interpreted by any applicable regulations as
in effect from time to time.

 

“Construction Fee” means a fee or other remuneration for acting as general
contractor and/or construction manager to construct improvements, supervise and
coordinate projects or to provide major repairs or rehabilitation on a Property.

 

“Contract Purchase Price” means the total consideration paid by GSD for the
purchase of an Investment.

 

“Contract Sales Price” means the total consideration received by GSD for the
sale of an Investment.

 

“Cost of Assets” means the Contract Purchase Price of an asset plus Acquisition
Expenses, capital expenditures and other customarily capitalized costs, but
shall exclude Acquisition Fees associated with the acquisition of such asset.

 

“Development Fee” means a fee for the packaging of a Property, including
negotiating and approving plans, and undertaking to assist in obtaining zoning
and necessary variances and necessary financing for the Property, either
initially or at a later date.

 

“Distributions” means any distributions of money or other property by GSD to
Shareholders, including distributions that may constitute a return of capital
for U.S. federal income tax purposes.

 

“Financing Coordination Fee” shall have the meaning set forth in Section 8.7.

 

“GAAP” means accounting principles generally accepted in the United States as
currently in effect.

 

“G&A” shall mean general and administrative expenses in accordance with GAAP.

 

“GSD” has the meaning set forth at the head of this Agreement.

 

“Gyrodyne” has the meaning set forth at the head of this Agreement.

 

“Include,” “included,” “including” and “such as” are to be construed as if
followed by the phrase “without limitation.”

 

“Investment” or “Investments” means any investment or investments, directly or
indirectly, in Properties, Loans or other Permitted Investments.

 

“Joint Venture” means any joint venture, limited liability company or other
entity through which GSD directly or indirectly owns, in whole or in part, any
Investments.

 

 

 
 

--------------------------------------------------------------------------------

 

 

“Loans” means mortgage loans and other types of debt financing investments made
by GSD, either directly or indirectly, including through ownership interests in
a Joint Venture or other entity, and including mezzanine loans, bridge loans,
convertible mortgages, wraparound mortgage loans, construction mortgage loans,
loans on leasehold interests, and participations in such loans.

 

“Net Income” means, for any period, the total revenues of GSD applicable to such
period, less the total expenses applicable to such period excluding applicable
income taxes and additions to reserves for depreciation, bad debts or other
similar non-cash reserves; provided, however, that Net Income for purposes of
calculating total allowable Operating Expenses shall exclude the gain or loss
from the sale of GSD’s assets.

 

“Notice” has the meaning set forth in Section 15.1.

 

“Permitted Investments” means all investments (other than Properties and Loans)
in which GSD acquires an interest, either directly or indirectly, including
through ownership interests in a Joint Venture or other entity, pursuant to the
Articles of Incorporation, Bylaws and the investment objectives and policies
adopted by Gyrodyne from time to time, other than short-term investments
acquired for purposes of cash management.

 

“Persons” means any individual, corporation, firm, partnership, joint venture,
limited liability company, estate, trust, business association, organization,
governmental entity or other entity.

 

“Property” or “Properties” means any real property or properties transferred or
conveyed to GSD, either directly or indirectly, and/or any real property or
properties transferred or conveyed to a Joint Venture or partnership in which
GSD is, directly or indirectly, a co-venturer or partner.

 

“Property Manager” means an entity that has been retained to perform and carry
out at one or more of the Properties property management services, excluding
Persons retained or hired to perform facility management or other services or
tasks at a particular Property, the costs for which, for certain leases are
passed through, in part or in full, to and ultimately paid by the tenant at such
Property.

 

“Sale” or “Sales” means (i) any transaction or series of transactions whereby:
(A) GSD sells, grants, transfers, conveys, or relinquishes its direct or
indirect ownership of any Investment or portion thereof, including the transfer
of any Property that is the subject of a ground lease, and including any event
with respect to any Investment that gives rise to a significant amount of
insurance proceeds or condemnation awards; (B) GSD sells, grants, transfers,
conveys, or relinquishes its ownership of all or substantially all of the direct
or indirect interest of GSD in any Joint Venture or other entity in which it,
directly or indirectly, has an interest; or (C) any Joint Venture or other
entity (in which GSD, directly or indirectly, has an interest) sells, grants,
transfers, conveys, or relinquishes its direct or indirect ownership of any
Investment or portion thereof, including any event with respect to any
Investment that gives rise to insurance claims or condemnation awards, but (ii)
not including any transaction or series of transactions specified in clause (i)
(A), (i) (B), or (i) (C) above in which the proceeds of such transaction or
series of transactions are reinvested by GSD, directly or indirectly, in one or
more Investments within 180 days thereafter.

 

 

 
 

--------------------------------------------------------------------------------

 

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
or any successor statute thereto. Reference to any provision of the Securities
Act shall mean such provision as in effect from time to time, as the same may be
amended, and any successor provision thereto, as interpreted by any applicable
regulations as in effect from time to time.

 

“Shares” means the common shares of limited liability company interests of GSD.

 

“Shareholders” means the holders of record of the Shares as maintained on the
books and records of GSD or its transfer agent.

 

“Termination” means the termination of this Agreement in accordance with Article
12 hereof.

 

“Termination Date” means the date of termination of the Agreement determined in
accordance with Article 12 hereof.

 

 

ARTICLE 2

 

Appointment

 

 

2.1.     Gyrodyne shall perform the services set forth herein on the terms and
subject to the conditions set forth in this Agreement.

 

 

 
 

--------------------------------------------------------------------------------

 

 

ARTICLE 3

 

Duties of Gyrodyne

 

 

3.1.     Gyrodyne is responsible for managing, operating, directing and
supervising the operations and administration of GSD and its assets and shall
perform the following duties:

 

 

(A)

Acquisition and Disposition Services. Gyrodyne shall or, subject to
reimbursement pursuant to Article 8, shall retain other Persons to (but shall
remain responsible to GSD),:

 

(i)     Serve as GSD’s investment and financial advisor and provide relevant
market research and economic and statistical data in connection with the
Properties, investment objectives and policies;

 

(ii)     Subject to the investment objectives and policies of GSD: (a) locate,
analyze and select potential Investments; (b) acquire, originate and dispose of
Investments on behalf of GSD (including through Joint Ventures); (c) arrange for
financing and refinancing and make other changes in the asset or capital
structure of investments in Investments; (d) select Joint Venture partners and
structure corresponding agreements; and (e) enter into leases, service contracts
and other agreements for Investments;

 

(iii)     Perform due diligence on prospective investments and create due
diligence reports summarizing the results of such work;

 

(iv)     Prepare reports regarding prospective investments that include
recommendations and supporting documentation necessary to evaluate the proposed
investments;

 

(v)     Obtain reports, where appropriate, concerning the value of the
Properties;

 

(vi)     Deliver to, or maintain on behalf of GSD, copies of all appraisals
obtained in connection with the Properties; and

 

(vii)     Negotiate and execute approved investments and other transactions,
including acquisitions of Investments.

 

 

(B)

Asset Management Services. Gyrodyne shall or, subject to reimbursement pursuant
to Article 8, shall retain other Persons to (but shall remain responsible to
GSD):

 

(i)     Investigate, select and, on behalf of GSD, engage and conduct business
with (including enter contracts with) and supervise the performance of such
Persons as Gyrodyne deems necessary to the proper performance of its obligations
as set forth in this Agreement, including consultants, accountants, lenders,
technical advisors, attorneys, brokers, underwriters, corporate fiduciaries,
escrow agents, depositaries, custodians, agents for collection, insurers,
insurance agents, banks, builders, developers, property owners, security
investment advisors, mortgagors, the registrar and the transfer agent,
construction companies, Property Managers and any and all Persons acting in any
other capacity deemed by Gyrodyne necessary or desirable for the performance of
any of the foregoing services;

 

(ii)     Monitor applicable markets and obtain reports where appropriate,
concerning the value of the Properties;

 

 

 
 

--------------------------------------------------------------------------------

 

 

(iii)     Monitor and evaluate the performance of each of the Properties and
GSD’s overall portfolio of Properties and perform and supervise the various
management and operational functions related to the Properties;

 

(iv)     Formulate and oversee the implementation of strategies for the
administration, promotion, management, operation, maintenance, investment,
improvement, financing and refinancing, marketing, leasing and disposition of
Investments on an overall portfolio basis;

 

(v)     Formulate and oversee the implementation of GSD’s financial policies;

 

(vi)     In Gyrodyne’s discretion, engage a Property Manager for each of the
Properties;

 

(vii)     Coordinate and manage relationships between GSD and any co-venturers
or partners; and

 

(viii)     Negotiate and service GSD’s debt facilities and other financings and
negotiate on behalf of GSD with banks or other lenders for debt facilities to be
made to GSD and its subsidiaries; provided, however, that any fees and costs
payable to third parties incurred by Gyrodyne in connection with the foregoing
shall be the responsibility of GSD.

 

 

(C)

Accounting and Other Administrative Services. Gyrodyne shall or, subject to
reimbursement pursuant to Article 8, shall retain other Persons to (but shall
remain responsible to GSD):

 

(i)     Provide the management of GSD and perform and supervise the various
administrative functions reasonably necessary for the management of GSD;

 

(ii)     From time to time, make reports on Gyrodyne’s performance of services
to GSD under this Agreement;

 

(iii)     Make reports each quarter of the investments that have been made by
other programs sponsored by Gyrodyne, as well as any investments that have been
made by Gyrodyne directly;

 

(iv)     Provide or arrange for any administrative services and items, legal and
other services, office space, office furnishings, personnel and other overhead
items necessary and incidental to GSD’s business and operations;

 

(v)     Provide financial and operational planning services;

 

(vi)     Maintain accounting and other record-keeping functions and investment
levels, including information concerning the activities of GSD as shall be
required to prepare and to file all periodic financial reports, tax returns and
any other information required to be filed with the SEC, the Internal Revenue
Service and any other regulatory agency;

 

 

 
 

--------------------------------------------------------------------------------

 

 

(vii)     Maintain and preserve all appropriate books and records of GSD;

 

(viii)     Provide and or manage tax and compliance services and coordinate with
appropriate third parties, including GSD’s independent auditors, tax accountants
and other consultants, on related tax matters;

 

(ix)     Provide GSD with all necessary cash management services;

 

(x)     Maintain on behalf of GSD copies of all appraisals obtained in
connection with Investments;

 

(xi)     Coordinate with the transfer agent the dividend process and payments to
Shareholders;

 

(xii)     Obtain adequate insurance coverage based upon risk management
determinations;

 

(xiii)     Evaluate various liquidity events when appropriate;

 

(xiv)     Provide updates related to the overall regulatory environment
affecting GSD, as well as managing compliance with such matters, including
compliance with the Sarbanes-Oxley Act of 2002;

 

(xv)     Subject to the terms of the Articles of Organization and Operating
Agreement, maintain governance structure and appropriate policies and procedures
related thereto;

 

(xvi)     Perform all applicable reporting, record keeping, internal controls
and similar matters in a manner to allow GSD to comply with applicable law; and

 

(xvii)     Do all things necessary to assure its ability to render the services
described in this Agreement.

 

 

(D)

Property Management Services. Gyrodyne shall or, subject to reimbursement
pursuant to Article 8, shall retain other Persons to (but shall remain
responsible to GSD):

 

(i)     Collect the rents, additional rents and other income due and to become
due from the Properties;

 

(ii)     Institute, in the name of GSD, any and all legal actions or proceedings
for the collection of rent and other income from the Properties, or the ousting
or dispossessing of tenants or other persons therefrom, and such expense may
include the engaging of counsel for any such matters;

 

 

 
 

--------------------------------------------------------------------------------

 

 

(iii)     Make or cause to be made such repairs and/or alterations to the
Properties as may be advisable or necessary, and purchase and pay for such
supplies as may be advisable or necessary. Gyrodyne shall allow GSD any rebate
or discount which Gyrodyne shall obtain;

 

(iv)     Enter into supervise and pay all contracts for rubbish removal,
exterminating services, septic tank services, security service, snow removal and
sanding, nightly office cleaning, cleaning and policing of common areas and
exteriors, window cleaning, HVAC services, plumbing services, electrical
services, general maintenance and repairs, lawn care and landscaping and
elevator maintenance;

 

(v)     Handle all tenant complaints and service calls under service guarantees:

 

(vi)     Administer the payment of all building payroll, if any, maintenance and
service costs, interest and amortization on mortgages, taxes, assessments, water
charges, utility charges, premiums on insurance, accounting, accounting services
and fees and all other building expenses for the Properties;

 

(vii)     Maintain all building records and rent records, maintain receipts and
disbursement records and building payroll records and prepare cash flow
statements;

 

(viii)     Conduct all tenant relations and service all tenant complaints;

 

(ix)     Retain the original of all invoices, contractors’ and subcontractors’
requests for payment, tenant leases, employment contracts, service contracts,
commission agreements, correspondence and other documents and instruments
relating to the Properties or its operation and management by Gyrodyne
hereunder;

 

(x)     Prepare each of the following budgets: (1) at least thirty (30) days
prior to the start of each calendar year, during the term hereof, an annual
operating budget, setting forth Gyrodyne’s forecast of gross income, operating
expenses, capital costs and expenses and net income for the Properties for such
calendar year; and (2), promptly after the end of each calendar month, during
the term of this Agreement, a statement setting forth a monthly reconciliation
of the actual operations of the Properties for such calendar month, with the
annual Budget thereof; and

 

(xi)     Use its best efforts in leasing vacant space, and in keeping the
Properties rented to desirable tenants, and, when deemed appropriate by
Gyrodyne, enlist the services of independent real estate brokers.

 

 

(E)

Shareholder Services. Gyrodyne shall or, subject to reimbursement pursuant to
Article 8, shall retain other Persons to (but shall remain responsible to GSD):

 

(i)     Manage services for and communications with Shareholders, including
answering phone calls, preparing and sending written and electronic reports and
other communications;

 

 

 
 

--------------------------------------------------------------------------------

 

 

(ii)     Oversee the performance of the transfer agent and registrar;

 

(iii)     Establish technology infrastructure to assist in providing Shareholder
support and service; and

 

(iv)     Perform the various subscription processing services reasonably
necessary for the admission of new Shareholders.

 

3.2.     Other Services. Except as provided in Article 7, Gyrodyne shall perform
any other services reasonably requested by GSD (with the consent of a majority
of the Independent Directors).

 

ARTICLE 4

Authority of Gyrodyne

 

4.1.     General. All rights and powers to manage and control the business and
affairs of GSD shall be vested in Gyrodyne. Gyrodyne shall have the power to
delegate all or any part of its rights and powers to manage and control the
business and affairs of GSD to such officers, employees, agents and
representatives of Gyrodyne or a third party as it may deem appropriate. Any
authority delegated by Gyrodyne to any other Person shall be subject to the
limitations on the rights and powers of Gyrodyne specifically set forth in this
Agreement, the Operating Agreement or the Articles of Organization.

 

4.2.     Powers of Gyrodyne. Subject to the express limitations set forth in
this Agreement, and to the right of Gyrodyne to delegate its responsibilities
pursuant to Section 4.1, the power to direct the management, operation and
policies of GSD shall be vested in Gyrodyne, which shall have the power by
itself and shall be authorized and empowered on behalf and in the name of GSD to
carry out any and all of the objectives and purposes of GSD and to perform all
acts and enter into and perform all contracts and other undertakings that it may
in its sole discretion deem necessary, advisable or incidental thereto to
perform its obligations under this Agreement.

 

ARTICLE 5

 

Bank Accounts

 

 

5.1.     Gyrodyne may establish and maintain one or more bank accounts in the
name of GSD and may collect and deposit into such account or accounts, and
disburse from any such account or accounts, any money on behalf of GSD. Gyrodyne
shall upon request render appropriate accountings of such collections and
payments to the independent auditors of GSD. To the extent GSD is utilizing the
working capital of Gyrodyne to support its operations, Gyrodyne is authorized to
deposit rents into Gyrodyne’s accounts and pay invoices out of Gyrodyne’s
accounts provided (a) that a reconciliation and allocation is made available to
the auditors and (b) that the Company satisfies the requirements respecting
separate records and financial statements under Article 6.

 

 

 
 

--------------------------------------------------------------------------------

 

 

ARTICLE 6

 

Records and Financial Statements

 

 

6.1.     Gyrodyne, in the conduct of its responsibilities to GSD, shall maintain
adequate and separate books and records for GSD’s operations in accordance with
GAAP, which shall be supported by sufficient documentation to ascertain that
such books and records are properly and accurately recorded. Such books and
records shall be the property of GSD and shall be available for inspection by
counsel, auditors and other authorized agents of GSD, at any time or from time
to time during normal business hours. Such books and records shall include all
information necessary to calculate and audit the fees or reimbursements paid
under this Agreement. Gyrodyne shall utilize procedures to attempt to ensure
such control over accounting and financial transactions as is reasonably
required to protect GSD’s assets from theft, error or fraudulent activity. All
financial statements that Gyrodyne delivers to GSD shall be prepared on an
accrual basis in accordance with GAAP, except for special financial reports that
by their nature require a deviation from GAAP. Gyrodyne shall liaise with GSD’s
independent auditors and shall provide such auditors with the reports and other
information that the auditors so request. GSD auditors are and will continue to
be independent from Gyrodyne’s management and the board of directors but, for
clarity, are and will continue to be the same audit firm and audit staff as
those servicing Gyrodyne.

 

 

ARTICLE 7

 

Limitation on Activities

 

 

7.1.     Notwithstanding any provision in this Agreement to the contrary,
Gyrodyne shall not take any action that, in its sole judgment made in good
faith, violate any law, rule, regulation or statement of policy of any
governmental body or agency having jurisdiction over GSD, its Shares or its
other securities.

 

 

ARTICLE 8

Reimbursement of Expenses and Fees

 

8.1.     General and Administrative. GSD will reimburse Gyrodyne for 85% of
Gyrodyne's G&A and pay a fee to Gyrodyne equal to 8.5% of such reimbursed
amount. Such fees include any material line items that are broken out for
financial statements separately from G&A (which for now are limited to corporate
development fees) due to their materiality which, if not for its materiality,
would be included in G&A.

 

 

 
 

--------------------------------------------------------------------------------

 

 

8.2.     Rental Expenses. GSD will reimburse Gyrodyne for all rental expenses,
whether value added (such as contractor and consultant expenses) or non-value
added (such as utilities and taxes) paid by Gyrodyne in respect of the
Contributed Properties.

 

8.3.     Value Added Rental Expense Fee. GSD will pay a fee to Gyrodyne equal to
8.5% of all value added rental expenses paid by Gyrodyne in respect of the
Contributed Properties, but no fee will be payable in respect of non-value added
rental expenses.

 

8.4.     Bonuses on Sales of Properties. GSD will reimburse 100% (without
mark-up) of any bonuses paid by Gyrodyne to its employees and directors and
related payroll taxes on account of any sales of the Properties.

 

8.5.     Interest on Gyrodyne Loans. Gyrodyne will be entitled to interest at
the rate of 5.0% per annum on any funds advanced by Gyrodyne pursuant to the
liquidity facility made available to GSD.

 

ARTICLE 9

Intentionally Omitted

 

ARTICLE 10

Relationship of Gyrodyne and GSD; Other Activities of Gyrodyne

 

10.1.     Relationship. GSD and Gyrodyne are not partners or joint venturers
with each other, and nothing in this Agreement shall be construed to make them
such partners or joint venturers. Nothing herein contained shall prevent
Gyrodyne from engaging in or earning fees from other activities, including the
rendering of advice to other Persons and the management of other programs
advised, sponsored or organized by Gyrodyne; nor shall this Agreement limit or
restrict the right of any manager, director, officer, member, partner, employee
or equity holder of Gyrodyne to engage in or earn fees from any other business
or to render services of any kind to any other Person. Gyrodyne may, with
respect to any investment in which GSD is a participant, also render advice and
service to each and every other participant therein, and earn fees for rendering
such advice and service. Specifically, it is contemplated that GSD may enter
into Joint Ventures or other similar co-investment arrangements with certain
Persons, and pursuant to the agreements governing such Joint Ventures or other
similar co-investment arrangements, Gyrodyne may be engaged to provide advice
and service to such Persons, in which case Gyrodyne may earn fees from such
persons for rendering such advice and service.

 

ARTICLE 11

Intentionally Omitted

 

 

 
 

--------------------------------------------------------------------------------

 

 

ARTICLE 12

Term and Termination of the Agreement

 

12.1.     Term. This Agreement shall remain in full force and effect for so long
as Gyrodyne is the Managing Member of GSD.

 

12.2.     Termination by Either Party. This Agreement shall terminate upon the
termination or resignation of Gyrodyne as Managing Member of GSD. In such case,
the provisions of Articles 1, 11, 12, 14 and 15 shall survive termination of
this Agreement. Notwithstanding anything else that may be to the contrary
herein, the expiration or earlier termination of this Agreement shall not
relieve a party for liability for any breach occurring prior to such expiration
or earlier termination.

 

12.3.     Payments to and Duties of Gyrodyne Upon Termination.

 

 

(A)

Amounts Owed. After the Termination Date, Gyrodyne shall be entitled to receive
from GSD within thirty (30) days after the effective date of such termination
all amounts then accrued and owing to Gyrodyne.

 

 

(B)

Gyrodyne’s Duties. Gyrodyne shall promptly upon termination of this Agreement:

 

(i)     pay over to GSD all money collected and held for the account of GSD
pursuant to this Agreement, after deducting any accrued compensation and
reimbursement for its expenses to which it is then entitled;

 

(ii)     render a full accounting, including a statement showing all payments
collected by it and a statement of all money held by it, covering the period
following the date of the last accounting;

 

(iii)     deliver all assets, including all Investments, and documents of GSD
then in the custody of Gyrodyne; and

 

(iv)     cooperate with GSD to provide an orderly management transition.

 

ARTICLE 13

 

Assignment

 

 

13.1.     This Agreement may not be assigned without the express written consent
of both parties hereto.

 

 

ARTICLE 14

Indemnification and Limitation of Liability

 

14.1.     Indemnification. Except as prohibited by the restrictions provided in
this Section 14.1, Section 14.2 and Section 14.3, GSD shall indemnify, defend
and hold harmless Gyrodyne, its officers, directors, equity holders, members,
partners, managers and employees (each, a “Gyrodyne Indemnified Party”, and,
collectively, the “Gyrodyne Indemnified Parties”), from all liability, claims,
damages or losses arising in the performance of their duties hereunder or under
any services agreement and related expenses, including reasonable attorneys’
fees, to the extent such liability, claims, damages or losses and related
expenses are not fully reimbursed by insurance. Any indemnification of the
Gyrodyne Indemnified Parties may be made only out of the net assets of GSD and
not from Shareholders. Notwithstanding the foregoing, GSD shall not indemnify
any Gyrodyne Indemnifed Party for any loss, liability or expense arising from or
out of an alleged violation of federal or state securities laws by such party
unless one or more of the following conditions are met: (i) there has been a
successful adjudication on the merits of each count involving alleged material
securities law violations as to the particular indemnitee; (ii) such claims have
been dismissed with prejudice on the merits by a court of competent jurisdiction
as to the particular indemnitee; or (iii) a court of competent jurisdiction
approves a settlement of the claims against a particular indemnitee and finds
that indemnification of the settlement and the related costs should be made, and
the court considering the request for indemnification has been advised of the
position of the SEC and of the published position of any state securities
regulatory authority in which securities of GSD were offered or sold as to
indemnification for violations of securities laws.

 

 

 
 

--------------------------------------------------------------------------------

 

 

14.2.     Limitation on Indemnification. Notwithstanding the foregoing, GSD
shall not provide for indemnification of a Gyrodyne Indemnified Party, unless
all of the following conditions are met:

 

 

(A)

The Gyrodyne Indemnified Party had acted in good faith and was so acting.

 

 

(B)

Such liability or loss was not the result of the gross negligence, bad faith or
willful misconduct by Gyrodyne Indemnified Party.

 

14.3.     Limitation on Payment of Expenses. GSD shall pay or reimburse
reasonable legal expenses and other costs incurred by the Gyrodyne Indemnified
Parties in advance of the final disposition of a proceeding. Such expenses shall
be paid with respect to a Gyrodyne Indemnified Party only if (in addition to any
procedures required by applicable law) all of the following are satisfied: (a)
the proceeding relates to acts or omissions with respect to the performance of
duties or services on behalf of GSD, (b) the legal proceeding was initiated by a
third party who is not a stockholder or, if by a stockholder acting in his or
her capacity as such, a court of competent jurisdiction approves such
advancement and (c) such Gyrodyne Indemnified Party undertakes to repay the
amount paid or reimbursed by GSD, together with the applicable legal rate of
interest thereon, if it is ultimately determined that such Person is not
entitled to indemnification.

 

ARTICLE 15

Miscellaneous

 

15.1.     Notices. Any notice, request, demand, approval, consent, waiver or
other communication required or permitted to be given hereunder or to be served
upon any of the parties hereto (each a “Notice”) shall be in writing and shall
be (a) delivered in person, (b) sent by facsimile transmission (with the
original thereof also contemporaneously given by another method specified in
this Section 15.1), (c) sent by a nationally-recognized overnight courier
service, or (d) sent by certified or registered mail (postage prepaid, return
receipt requested), to the address of such party set forth herein.

 

 

 
 

--------------------------------------------------------------------------------

 

 

 To GSD:

One Flowerfield

Suite 24

St. James, New York 11780

 

 

To Gyrodyne: 

One Flowerfield

Suite 24

St. James, New York 11780

 

Any party may at any time give Notice in writing to the other parties of a
change in its address for the purposes of this Section 15.1.

 

15.2.     Modification. This Agreement shall not be amended, supplemented,
changed, modified, terminated or discharged, in whole or in part, except by an
instrument in writing signed by GSD and Gyrodyne, or its successors or permitted
assigns.

 

15.3.     Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

15.4.     Third Party Beneficiary. The terms and provisions of this Agreement
are intended solely for the benefit of each party hereto and and their
respective successors and permitted assigns and, for purposes of Article 14,
each Gyrodyne Indemnified Party, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other Person;

 

15.5.     Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect, without regard to the principles of conflicts of laws thereof.

 

15.6.     Entire Agreement. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof.

 

15.7.     Waiver. Neither the failure nor any delay on the part of a party to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.

 

 

 
 

--------------------------------------------------------------------------------

 

 

15.8.     Gender. Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.

 

15.9.     Titles Not to Affect Interpretation. The titles of Articles and
Sections contained in this Agreement are for convenience only, and they neither
form a part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

15.10.     Counterparts. This Agreement may be executed with counterpart
signature pages or in any number of counterparts, each of which shall be deemed
to be an original as against any party whose signature appears thereon, and all
of which shall together constitute one and the same instrument. This Agreement
shall become binding when one or more counterpart signatures pages or
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as the signatories.

 

[The remainder of this page is intentionally left blank.

Signature page follows.]

 

 

 
 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.

 

 

 

GYRODYNE SPECIAL DISTRIBUTION, LLC

 

 

 

 

 

 

 

 

 

       

 

  By: /s/ Gary Fitlin
         Name: Gary Fitlin 
         Title: Treasurer

 

 

 

 

 

          GYRODYNE COMPANY OF AMERICA, INC.                             By: /s/
Frederick C. Braun III
Name: Frederick C. Braun III
Title: President and CEO