Commitments and Contingencies:

Lease revenue commitment

The approximate future minimum revenues from rental property under the terms of all noncancellable tenant leases, assuming no new or renegotiated leases are executed for such premises, are as follows:

Twelve Months Ending September 30,	Amount
2017	$	1,862,000
2018		1,446,000
2019		1,031,000
2020		391,000
2021		344,000
Thereafter		956,000
Total	$	6,030,000

Other commitments and contingencies

As of September 30, 2016, other commitments and contingencies are summarized in the below table:

Management Employment agreements with bonus and severance commitment contingencies		600,000
Other employee severance commitment contingencies		77,100
Total	$	677,100

On May 4th, 2016, the Company’s wholly owned subsidiary Virginia Healthcare Center, LLC (“VHC”) closed on the sale of the Fairfax Medical Center. The purchase and sale agreement contains a master lease obligation by VHC (guaranteed by the Company) on approximately 3,852 square feet for an initial approximate $155,000 over a period of two years with payments made quarterly less any new leases or expansions signed by the buyer, which obligations will terminate if the financial obligation is satisfied through leases to one or more third party tenants. Under the master lease, VHC receives a credit for any new leases (other than renewals) and expansions from existing tenants. Based on such activity, the Company estimates the total obligation under the master lease will be reduced to approximately $67,000, the amount of which will be paid in quarterly installments over the period from August 3

2016 to May 4, 2018. In August, 2016, pursuant to the master lease, the Company paid the first quarterly installment of $16,878, leaving an estimated remaining balance of $50,593. For further discussion see Footnote 8.

Employment

Agreements and Compensation Arrangements

The Company has employment agreements with its Chief Executive Officer and Chief Financial Officer, each executed during the quarter ended June 30, 2013. Each of these agreements contains a bonus of $125,000 payable upon a change of control as defined in the agreements. In addition, each agreement provides for severance equivalent to the payment of the aforementioned bonus under the change in control provision, if not previously paid, plus 6 months of base salary.

The Company also has an employment agreement with its Chief Operating Officer executed on May 8, 2014 which provides for severance equivalent to 6 months of base salary.

The aggregate severance commitment contingency to other employees under the Company’s severance policy is approximately $77,100.

As of September 30, 2016, the Company’s aggregate commitment related to severance is approximately $677,100.

In May 2014, the board of directors approved a Retention Bonus Plan. The estimated aggregate bonus amount payable under this plan and included in the estimated liquidation and operating costs in excess of operating receipts in the statement of net assets in liquidation and the statement of changes in net assets in liquidation (excluding amounts paid through September 30, 2016) is approximately $235,000, of which approximately $153,000 and $82,000 is payable to directors and employees, respectively. Based on the terms of the Retention Bonus Plan, the Company has included estimated amounts based on the fair value of the remaining four buildings it owns in the Port Jefferson Professional Park. However, the Company has not included any bonuses on the sale of the Cortlandt Manor and Flowerfield properties. The change of zone and entitlements for such properties are under the control of the town for each related property and therefore under GAAP, the potential increase in the real estate fair value from the land development effort cannot be included in the Statement of Net Assets. As a result, the fair value being reported does not exceed the adjusted appraisals (adjusted appraisals are defined under the bonus plan as the appraisals dated November 2013 plus the estimated land development costs incurred since such appraisal.) See “Retention Bonus Plan” below for a description of the calculation of the bonus amounts. However, if the Company concludes in future periodic filings that the value of the real estate to the extent actual net proceeds from the ultimate disposition of the properties exceed the value of the real estate reported in the Statement of Net Assets as of September 30, 2016, and such net proceeds exceeds the minimum value required to pay bonuses under the retention bonus plan (whether due to appreciation of the underlying real estate and/or a reduction in estimated land development costs), then the Company will report the updated estimated real estate value and the estimated be required to pay bonuses related to on the value sale of the Cortlandt Manor and/or Flowerfield Properties in accordance with the provisions of the retention bonus plan.

Retention Bonus Plan

In May 2014, the board of directors approved a Retention Bonus Plan designed to recognize the nature and scope of the responsibilities related to the Company’s business plan, to reward and incent performance in connection therewith, to align the interests of directors, executives and employees with our shareholders and to retain such persons during the term of such plan. The Retention Bonus Plan provides for bonuses to directors and to officers and employees determined by the gross sales proceeds from the sale of each property and the date of sale.

The Retention Bonus Plan provides for a bonus pool funded with an amount equal to 5% of the specified appraised value of such properties (set forth in the Plan), so long as the gross selling price of a property is equal to or greater than 100% of its 2013 appraised value as designated in the bonus plan. The aggregate amount of the 2013 appraisals for the Company’s properties was utilized by the Company to help set the aggregate valuation of the real estate that was included in the non-cash dividend distributed on December 30, 2013. Additional funding of the bonus pool will occur on a property-by-property basis when the gross sales price of a property exceeds its appraised value as follows: 10% on the first 10% of appreciation, 15% on the next 10% of appreciation and 20% on appreciation greater than 20%. Furthermore, if a specified property is sold on or before a designated date specified in the Retention Bonus Plan, an additional amount equal to 2% of the gross selling price of such property also is funded into the bonus pool.

The bonus pool is distributable in the following proportions to the named participants in the bonus plan for so long as they are directors or employees of the Company: 15% for the Chairman, 50% for the directors other than the Chairman (10% for each of the other five directors) and 35% (the “Employee Pool”) for the Company’s executives and employees. Such share of the bonus pool is earned only upon the completion of the sale of a property at a gross selling price equal to or greater than its appraised value and is paid to the named beneficiaries of the Retention Bonus Plan or their designees within 60 days of the completion of such sale or, if later, within 60 days of receipt of any subsequent post-completion installment payment related to such sale. All allocations to individual beneficiaries of the Employee Pool shall be determined by the board of directors of the Company or its successor in consultation with its President.

On May 24, 2016, the board of directors amended its Retention Bonus Plan to provide that land development costs incurred on a property since the date of the 2013 appraisal will be added to the 2013 appraised value of the property (“Adjusted Appraised Value”) in calculating appreciation (gross sales price minus appraised value) for the purpose of determining the bonus pool. The foregoing change was approved in order to better align the interests of the participants in the Retention Bonus Plan with those of the shareholders. The amendment also provides that each of the ten buildings in the Port Jefferson Professional Park will be treated as a “property”, so that a participant’s right to bonus payment on the sale of a Port Jefferson building will vest on, and payments to the bonus pool may be made shortly following, the closing of the sale of that building. As originally adopted, all ten buildings in the Port Jefferson Professional Park were treated as one property, so that a participant departing prior to the sale of all ten buildings would forfeit bonus on all ten buildings. The reason for this original designation was that, at the time of adoption, the board of directors believed that Gyrodyne’s entire Port Jefferson property would be sold as one block, not as individual buildings. Subsequent to adoption, the Gyrodyne board came to believe that the sale of individual buildings would generate the greatest aggregate values and thus would be in the best interests of the Company and its shareholders.

The value of the real estate reported in the Statement of Net Assets as of September 30, 2016 does not include the appreciation that may result from the estimated land development costs. As a result, fair value as reported does not exceed the adjusted appraised value under the Retention Bonus Plan and accordingly the Company has not included any retention bonuses on the sale of the Cortlandt Manor or Flowerfield Properties in the estimated costs in excess of receipt. However, if the Company concludes in future periodic filings that the value of the real estate exceeds the minimum value required to pay bonuses under the retention bonus plan (whether due to appreciation of the underlying real estate and/or a reduction in estimated land development costs), then the Company will report the updated estimated real estate value and the estimated bonuses related to the value of the Cortlandt Manor and/or Flowerfield Properties in accordance with the provisions of the retention bonus plan.