ex1003.htm


     

    Exhibit
No. 10.3

    Amendment
to Pitsiokos Employment Agreement

     

    AMENDMENT
NUMBER 1

    TO
THE

    GYRODYNE
COMPANY OF AMERICA, INC.

    AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

    DATED JANUARY 23, 2003 FOR
PETER PITSIOKOS

    


    WHEREAS,
Peter Pitsiokos (the "Executive") executed an amended and restated Employment
Agreement (the "Agreement" or the "Employment Agreement") with Gyrodyne Company
of America, Inc. (the "Company") effective as of January 23, 2003;
and

     

    WHEREAS,
Section 409A of the Internal Revenue Code (the "Code") was enacted as part of
the American Jobs Creation Act of 2004 ("AJCA"); and

     

    WHEREAS,
Section 409A made several changes to nonqualified deferred compensation
arrangements, including employment agreements with severance provisions,
requiring amendments to be made to avoid adverse tax consequences to the
Executive; and

     

    WHEREAS,
the Company is willing to make
several changes to the Employment Agreement, as addressed in this Amendment
Number 1, to help the Executive avoid immediate taxation, a 20% excise tax, and
underpayment of interest penalties in the event that any payments or provisions
of the Employment Agreement do not comply with Section 409A of the Code;
and

     

    WHEREAS,
the parties acknowledge that the intent of this Amendment is not to change the
provisions of the Employment Agreement, except to the extent necessary to avoid
adverse tax consequences and/or to delay certain payments, due to the potential
status of the Executive as a "Specified Employee" under Section
409A.

     

    NOW,
THEREFORE, in consideration of the mutual provisions contained herein, the
parties agree to amend the Employment Agreement as follows:

     

    
      	
              1.

            	
              Specified
      Employee. The parties acknowledge that the Executive is currently a
      "Specified Employee" as defined under Section 5(b)
  below.

            


    

     

    
      	
              2.

            	
              Good
      Reason Termination. Section 3.1(E) provides that the Executive may
      terminate the Executive's employment for "Good Reason" at any time upon 10
      days written notice to the Company. Good Reason is defined to include a
      material change in the Executive's duties, the relocation of the Company's
      office outside of a 25 mile radius of its current offices, and the
      Company's breach of any material terms of this Agreement, including the
      Company’s obligation to provide indemnification and advancement of
      expenses.

            


    

    


    In order
to comply with the safe harbor "Good Reason" provisions contained in Final
Treasury Regulation Section 1.409A-l,

     

    the
Executive's Separation from Service shall be "treated" as an involuntary
termination if the following
"safe harbor" events occur to ensure that a Good Reason termination exists:

     

    
 

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
      	
            	
              a.

            	
              The
      Executive must provide notice of the existence of the Good Reason
      condition within a period not to exceed 30 days of its initial existence
      (in lieu of the prior 10 day
period).

            


    

     

    
      	
            	
              b.

            	
              The
      Company shall be provided a period of 30 days during which it may remedy
      the condition entitling the Executive to terminate employment for Good
      Reason.

            


    

     

    
      	
            	
              c.

            	
              The
      Executive must Separate from Service within a limited period of time, not
      to exceed 60 days following the reason for the Good Reason
      termination.

            


    

     

    
      	
            	
              d.

            	
              The
      amount, time and form of payment upon a voluntary separation from service
      for Good Reason shall be identical to the amount, time and form of payment
      upon an involuntary separation from
service.

            


    

    


    
      
        	
                3.

              	
                Change
      in Control.

              


      

    

     

    
      
        	
              	
                a.

              	
                Defined.
      Section 3.1(F)
      provides that in the event of a Change in Control, the Executive may
      terminate the Executive's employment upon 30 days prior written notice of
      termination delivered not later than 3 months following a Change in
      Control. The Change in Control window period is revised to 90 days within
      any Change in Control to comply with Section
  409A.

              


      

    

     

    A Change
in Control shall continue to be defined as provided in Section 3.1(F). A Change
in Control
shall also include the first to occur of any event described as either a change
in ownership or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company, as
defined under Section 409A of the Code.

     

    
      
        	
              	
                b.

              	
                Notice
      Provisions. Similar to a termination for Good Reason, the Executive
      must satisfy the provisions of Sections 2 and 3 of this Amendment in the
      event the Executive wishes to terminate the Executive's employment
      following a Change in
Control.

              


      

    

     

    
      
        	
                4.

              	
                Severance
      Benefits. Section 3.2 provides that if the Executive's employment
      is terminated without cause (except in the event of death or Disability)
      or if the Executive's employment is terminated by the Executive for Good
      Reason or following a Change in Control, certain severance benefits are
      provided. Based upon Section 409A, the new severance benefits shall be as
      follows:

              


      

    

     

    
      
        	
              	
                a.

              	
                The
      original Employment Agreement provides the Company would pay the
      Executive, on or before the date of termination, a lump sum payment equal
      to the sum of:

              


      

    

     

    
      
        	
              	
                i.

              	
                The
      Executive's base salary and accrued vacation pay through the Termination
      Date (i.e., a "Separation from Service");
and

              


      

    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	
            	
              ii.

            	
              3
      times the Executive's base salary.

            


    

     

    In order
to comply with Section 409A, severance benefits shall be paid in a single lump
sum cash payment, to the extent the benefits do not exceed the lesser of the
Executive's salary for the past 2 years or two times the Section 401(a)(17)
limitations, which amounts can be paid within the 6 month period during which
benefits may generally not be paid to Specified Employees. To the extent
benefits exceed such limitation (which is a maximum of $460,000 in 2008 and
$490,000 in 2009), the balance of any lump sum payments shall be paid after the
expiration of the 6 month period following a Separation from Service, in a
single lump sum payment on the 15th day
of the 7th month
following a Separation from Service, with interest equal to prime plus 2% for
the delay in making payments on the date of termination.

     

    
      
        	
              	
                b.

              	
                The
      Company previously agreed to continue to provide the Executive and his
      eligible spouse and dependents, for a period of 3 years, with the medical,
      hospitalization, dental and life insurance coverage in effect on the date
      of a termination. To the extent the Executive could not be provided such
      benefits, the Company is required to provide the economic equivalent of
      the benefits the Executive or the Executive's family would otherwise have
      been entitled to receive under such programs. However, such benefits were
      to be terminated on the date or dates the Executive becomes "eligible" to
      receive equivalent coverage or benefits under the plans and programs with
      a subsequent employer at an equivalent cost to the Executive (such
      coverage and benefits to be determined on a coverage-by-coverage, or
      benefit-by-benefit, basis). Section 409A permits certain welfare benefits
      to be paid following a Separation from Service, as long as such benefits
      are generally paid by the end of the second calendar year following a
      termination of employment. Based upon Section 409A, the Company agrees to
      provide medical, hospitalization and dental coverage as permitted under
      COBRA or New York State continuation coverage until the expiration of the
      period in which such benefits may be continued. Thereafter, all benefits
      shall be continued as required under the Employment Agreement, with any
      payments being made as of the first day of each month which shall be
      deemed to be the applicable "fixed payment date" to avoid any deferral of
      compensation.

              


      

       

      
        
          	
                	
                  c.

                	
                  The
      Company was required to reimburse. the Executive for business expenses
      incurred
      but not paid prior to a termination of employment, which shall remain
      unchanged.

                


        

         

        
          
            
              
                	
                      	
                        d.

                      	
                        Until
      the 3rd anniversary
      of the Termination Date, the Company was required to continue
      to provide the Executive with an automobile or travel allowance as an in
      effect
      prior to a termination of employment. This
      is neither a de minimus benefit nor
      a benefit anticipated to be extended
      following a
      Separation
      from Service under
      Section 409A. Accordingly,
      in lieu of the original promise, the Company agrees
      to provide the Executive with an amount equal to the monthly average
      cost

                      


              

            

          

        

      

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

    

    for
maintaining a car, which shall be a fixed amount determined at the time of
termination, which shall be paid as of the first day of the month following a
Separation from Service for a period of 3 years, as fixed payment dates, subject
to any delay in payments for Specified Employees, which delayed payment shall be
made as permitted under Section 4(a) above.

     

    
      	
            	
              e.

            	
              The
      Employment Agreement required the Company to provide or pay for the cost
      of office space and the salary for an administrative assistant, consistent
      with the office and administrative assistant provided prior to the
      termination for a period of1
      year. The payment for such benefits shall be made in a single lump
      sum cash payment within 30
      days after a Separation from Service to avoid any deferral of
      compensation under Section 409A of the Code, subject to any delay in
      payments for Specified Employees, which delayed payment shall be made as
      permitted under Section 4(a) above.

            


    

     

    
      	
            	
              f.

            	
              Notwithstanding
      any provisions to the contrary, any benefits payable upon a voluntary or
      involuntary termination of employment shall be payable at the same time,
      in the same manner, regardless of the reason for termination, including
      Good Reason termination.

            


    

    


    Notwithstanding
any provisions to the contrary, the Executive shall be entitled to any other
rights, compensation of benefits as may be due the Executive in accordance with
the terms and provisions of any other agreements, plans or programs of the
Company, other than any severance benefit programs, to the extent originally
required under the Employment Agreement.

     

    
      
        	
                5.

              	
                Definitions. Due to the changes
      enacted under Section 409A of the Code, the following new definitions are
      added to the Employment
Agreement:

              


      

    

     

    
      
        	
              	
                a.

              	
                "Separation
      from Service" or Termination of
      Employment means the Executive is no longer employed by Gyrodyne or any
      Related Entities within or outside of the United States on account of a
      termination of employment, retirement, Disability or death. Consistent
      with Treasury Regulation Section 1.409A-l, or any subsequent guidance
      under Section 409 A of the Code, no Separation from Service shall occur if
      the Executive continues to perform services as a consultant or an employee
      in accordance with the following
rules:

              


      

    

     

    
      
        	
              	
                i.

              	
                Leave
      of Absence.
      For purposes of Section 409A, the employment relationship is
      treated as continuing in effect while the Executive is on military leave,
      sick leave, or other bona fide leave of absence, as long as the period of
      leave does not exceed 6 months, or if longer, as long as the Executive's
      right to reemployment with the Employer provided either by statute or
      contract. Otherwise, after a 6 month leave of absence, the employment
      relationship if deemed
terminated.

              


      

    

    
       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      
        	
              	
                ii.

              	
                Part-Time
      Status. Whether or not a termination of employment occurs is
      determined based upon all facts and circumstances. However, in the event
      that services provided by the Executive are insignificant, a Separation
      from Service shall be deemed to have occurred. For purposes of Section
      409A, if the Executive is providing services to Gyrodyne or any Related
      Entities at a rate that is at least equal to 20% of the services rendered,
      on average, during the immediately preceding 3 full calendar years of
      employment (or such lesser period), and the annual compensation for such
      services is at least 20% of the average annual compensation earned during
      the final 3 full calendar years of employment (or such lesser period), no
      termination shall be deemed to have occurred since such services are not
      insignificant.

              


      

    

     

    
      
        	
              	
                iii.

              	
                Consulting
      Services. Where the Executive continues to provide services to
      Gyrodyne or any Related Entities in a capacity other than as an employee,
      a Separation from Service shall not be deemed to have occurred if the
      Executive is providing services at an annual rate that is 50% or more of
      the services rendered, on average, during the immediately preceding 3 full
      calendar years of employment (or such lesser period) and the annual
      remuneration for such services is 50% or more of the annual remuneration
      earned during the final 3 full calendar years of employment (or such
      lesser period).

              


      

    

     

    
      
        	
              	
                b.

              	
                "Specified
      Employee"
      means a Key Employee, as defined under Section 416 of the Code, who is
      employed by Gyrodyne or any Related Entities which has its stock publicly
      traded on an established securities market. The stock of Gyrodyne Company
      of America, Inc., is traded on the NASDAQ Exchange. For purposes of the
      Agreement, the "Specified Employee Identification Date" shall be each
      December 31, and the "Specified Employee Effective Date" shall also be
      December 31. Specified Employees shall be determined by the Compensation
      Committee on an annual basis for purposes of all nonqualified deferred
      compensation plans and any other programs in accordance with the
      provisions of Section 409A of the
Code.

              


      

    

     

    
      	
              6.

            	
              Indemnification.
      Section 8 of the Employment Agreement provides that the Company shall
      provide certain indemnification to the Executive in the event of a threat,
      suit or proceeding, whether civil, criminal, administrative or
      investigative (a "Proceeding"). Section 409A specifically permits the
      indemnification of executives, either directly or through the provision of
      insurance, without triggering any adverse tax consequences. Accordingly,
      this provision shall continue, to the extent not otherwise determined to
      result in adverse tax consequences on the Section
  409A.

            


    

     

    
      	
              7.

            	
              Advancement
      of Expenses. Section 8(E) provides that the Company shall pay
      certain expenses to the Executive, in advance, if requested by the
      Executive in connection with any proceedings. The Executive shall be
      entitled to advancement for expenses, subject
to

            


    

     

    
 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    any delay
in payments for Specified Employees, which delayed payment shall be made as
permitted under Section 4(a) above.

     

    
      	
              8.

            	
              Counsel
      Fees. Section
      8(G) provides that
      the Company shall pay any fees or expenses incurred by the Executive for
      any attorney, incurred in connection with any proceedings. Similar to the
      indemnification provisions above, the Company agrees to reimburse,
      consistent with provisions of the Employment Agreement, subject to any
      delay in payments for Specified Employees, which delayed payment shall be
      made as permitted under Section 4(a)
above.

            


    

     

    
      	
              9.

            	
              Legal
      Fees and
      Expenses. In addition to the legal fees and expenses incurred in
      connection with any proceedings, in the event of any disputes between the
      Company and the Executive, the Company agrees to reimburse the Executive
      for all legal fees and expenses reasonably incurred by the Executive, but
      only if the Executive is successful with respect to substantially all of
      the Executive's claims. The Company shall reimburse the Executive for such
      expenses, subject to any delay in payments for Specified Employees, which
      delayed payment shall be made as permitted under Section 4(a)
      above.

            


    

    


    
      	
              10.

            	
              Section
      409A Compliance.
      It is intended that the Employment Agreement shall comply with
      Section 409A of the Code (and any regulations and guidelines issued
      thereunder) to the extent the Agreement is subject thereto, and the
      Agreement shall be interpreted on a basis consistent with such intent. If
      any additional amendments are necessary for the Agreement to comply with
      Section 409A, the parties hereto shall negotiate in good faith to amend
      the Agreement in a manner that preserves the original intent of the
      parties to the extent reasonably possible. No action or failure to act,
      pursuant to this Section 10 shall subject the Company to any claim,
      liability, or expense, and the Company shall not have any obligation to
      indemnify or otherwise protect the Executive from the obligation to pay
      any taxes pursuant to Section 409A of the
Code.

            


    

     

    With
regard to any provision herein the provides for reimbursement of costs and
expenses or in-kind benefits, except as permitted by Section 409A of the Code:
(i) the right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit; (ii) the amount of expenses
eligible for reimbursement, or in-kind benefits, provided during any taxable
year shall not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other taxable year, provided that the foregoing
clause: (ii) shall not be violated without regard to expenses reimbursed under
any arrangement covered by Section 105(b) of the Code solely because such
expenses are subject to a limit related to the period the arrangement is in
effect; and (iii) such payments shall be made on or before the last day of the
Executive's taxable year following the taxable year in which the expense was
incurred.

     

    
      	
              11.

            	
              Specified
      Payment Date.
      To the extent that any payments are required hereinunder, such
      payments shall be deemed to be properly made as long as they are made
      within a period of 30 days following the date specified in this Agreement
      for payment.

            


    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
      	
              12.

            	
              Effective
      Date. This Amendment Number 1 shall be effective as of the last
      date it is executed by either party, as indicated
  below.

            


    

    


    IN
WITNESS WHEREOF, the Company and the Executive have caused this Amendment Number
1 to be executed as reflected below.


    


    


    
      
        	 
      	
                GYRODYNE
      COMPANY OF AMERICA, INC.

              
	 
      	 
      
	
                Date:
      12-31-08

              	
                BY:/s/ Ronald
    Macklin

              
	 
      	
                Ronald
      Macklin

              
	 
      	
                Chairman,
      Compensation Committee

              
	 
      	 
      
	
                Date:
      December 31, 2008

              	
                /s/
      Peter Pitsiokos

              
	 
      	
                Peter
      Pitsiokos

              


      

    

    
 

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