United States

Securities and Exchange Commission

Washington, D.C. 20549

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549SCHEDULE 14A INFORMATION

SCHEDULE 14A INFORMATIONPROXY STATEMENT PURSUANT TO SECTION 14(A) OF

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act ofTHE SECURITIES EXCHANGE ACT OF 1934 (Amendment No.          )

Filed by the Registrant x

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Filed by a Party other than the Registrant ¨☐

Check the appropriate box:

(Name of Registrant as Specified In Its Charter)

MILL CITY VENTURES III, LTD.

(Name of Registrant As Specified In Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

MILL CITY VENTURES III, LTD.

328 Barry Avenue South #210

Wayzata, MN 55391December 15, 2022

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD DECEMBER 19, 2014Dear Shareholder:

TO THE SHAREHOLDERS OF MILL CITY VENTURES III, LTD.:

Please take notice that the annualYou are cordially invited to attend a special meeting of shareholders of Mill City Ventures III, Ltd. will, a Minnesota corporation (which we refer to as “we,” “us,” “our,” or the “Company”), to be held pursuant to due call by the Board of Directors of the company, at the company’s officeCompany’s principal offices at 328 Barry Avenue South, #210,1907 Wayzata MinnesotaBoulevard, Suite 205, Wayzata, MN 55391, at 9:8:00 a.m. local time, on Friday, January 20, 2023.

At the special meeting, you will be asked to consider and vote upon a proposal to approve our 2022 Stock Incentive Plan, and to transact such other business as may properly come before the meeting or at any adjournments thereof, for the purposecontinuation, postponement or adjournment thereof. The accompanying Notice of consideringSpecial Meeting of Shareholders and taking action on the following proposals:

PursuantProxy Statement describe these matters in more detail. We urge you to action of the Board of Directors, shareholders of record on November 10, 2014, will be entitled to notice of and vote at the meeting and any adjournments or postponements thereof.

Important Notice Regarding the Availability of Proxy Materials for the

Shareholder Meeting to be Held on December 19, 2014read this information carefully.

The Proxy Statement forBoard of Directors recommends a vote FOR the annualapproval of our 2022 Stock Incentive Plan.

Whether or not you attend the special meeting in person, and regardless of the company’s Annual Report on Form 10-K fornumber of shares of the fiscal year ended December 31, 2013,Company that you own, it is important that your shares be represented and Quarterly Report on Form 10-Q forvoted at the period ended September 30, 2014, are included with this notice and are available to you on the Internet. We encouragemeeting. Therefore, I urge you to review allvote your shares of the important information contained in the included materials before voting. To view the Proxy Statement oncommon stock via the Internet please visit https://materials.proxyvote.com/59982U.or by promptly marking, dating, signing, and returning the proxy card via mail or fax. Voting over the Internet, or by written proxy, will ensure that your shares are represented at the meeting.

By OrderOn behalf of the Board of Directors

Douglas M. Polinsky,Chief Executive Officer

December 1, 2014

PROXY STATEMENT

Mill City Ventures III, Ltd.

328 Barry Avenue South #210

Wayzata, MN 55391

Annual Meeting of Shareholders

to be held

December 19, 2014

VOTING BY PROXY AND REVOCATION OF PROXIES

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Mill City Ventures, III, Ltd., we thank you for use at the 2014 Annual Meeting of Shareholders to be held at the company’s executive office at 328 Barry Avenue South #210, Wayzata, Minnesota 55391, at 9:00 a.m. local time, for the purpose of considering and taking appropriate action with respect to the following:your participation.

MILL CITY VENTURES III, LTD.

1907 Wayzata Boulevard, Suite 205

Wayzata, MN 55301

(952) 479-1920

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON JANUARY 20, 2023

A special meeting of the shareholders of Mill City Ventures III, Ltd., a Minnesota corporation (which we refer to as “we,” “us,” “our,” or the “Company”), will be held on Friday, January 20, 2023, at 8:00 a.m. local time, at the principal offices of the Company located at 1907 Wayzata Boulevard, Suite 205, Wayzata, MN 55391. We will consider and act on the following items of business at the special meeting:

The approximate date on which this Proxy Statement accompanying this Notice describes these items of business in detail. Only shareholders of record at the close of business on December 15, 2022, are entitled to notice of, to attend, and to vote at, the accompanying proxy were first sentspecial meeting or given to shareholders was December 1, 2014.any continuation, postponement or adjournment thereof.

PROXIES AND VOTING

Registered shareholders mayTo ensure your representation at the special meeting, you are urged to vote in oneyour shares of three ways: by completing and returning the enclosed proxy card via regular mail, or by votingcommon stock via the Internet or by telephone. Specificpromptly marking, dating, signing, and returning the proxy card via mail or fax. Voting instructions for using these methods are set forthprinted on your proxy card and included in the enclosed proxy card. The Internet and telephone proceduresaccompanying Proxy Statement. Any stockholder attending the special meeting may vote in person even if he or she previously submitted a proxy. If your shares of common stock are designedheld by a bank, broker or other agent, please follow the instructions from your bank, broker or other agent to authenticate the shareholder’s identity and to allow shareholders to vote theirhave your shares and confirm that their instructions have been properly recorded.voted.

Minneapolis, MN

December 15, 2022

TABLE OF CONTENTS

APPENDIX A – 2022 STOCK INCENTIVE PLAN

PROXY CARD

MILL CITY VENTURES III, LTD.

1907 Wayzata Boulevard, Suite 205

Wayzata, MN 55301

(952) 479-1920

ThePROXY STATEMENT

FOR SPECIAL MEETING OF SHAREHOLDERS

To be held on January 20, 2023

INFORMATION ABOUT THE SPECIAL MEETING

General

Your proxy is solicited on behalf of the Board of Directors has set(which we refer to as our “Board”) of Mill City Ventures III, Ltd., a Minnesota corporation (which we refer to as “we,” “us,” “our,” or the “Company”), for use at a special meeting of shareholders to be held on Friday, January 20, 2023, at 8:00 a.m. local time, at the Company’s principal offices located at 1907 Wayzata Boulevard, Suite 205, Wayzata, MN 55391, or at any continuation, postponement or adjournment thereof, for the purposes discussed in this Proxy Statement and in the accompanying Notice of Special Meeting. Proxies are solicited to give all shareholders of record an opportunity to vote on matters properly presented at the special meeting.

We intend to mail this Proxy Statement, the proxy card and the Notice of Special Meeting on or about December 20, 2022, to all shareholders of record entitled to vote at the special meeting.

Who Can Vote, Outstanding Shares

Record holders of our common stock as of the close of business on November 10, 2014 as the “record date” for the annual meeting. Only holders of the company’s common stock as ofDecember 15, 2022, the record date or their duly appointed proxies,for the special meeting, are entitled to notice of and will be entitled to vote at the annual meeting or any adjournments thereof. Onon all matters to be voted upon. As of the record date, there were 12,161,939shares6,185,255 shares of companyour common stock issued and outstanding. Each such share entitles the holder thereofoutstanding, each entitled to one vote.

Voting of Shares

You may vote upon each matterby attending the special meeting and voting in person or you may vote by submitting a proxy. The method of voting by proxy differs for shares held as a record holder and shares held in “street name.”

If you hold your shares of common stock in street name, which means that your shares are held of record by a broker, bank or other nominee, you will receive the notice from your broker, bank or other nominee that includes instructions on how to be presentedvote your shares.

If you are a shareholder of record, you may vote your shares as follows:

YOUR VOTE IS VERY IMPORTANT. You should submit your proxy even if you plan to attend the special meeting. If you properly give your proxy and submit it to us in time to vote, one of the individuals named as your proxy will vote your shares as you have directed. Any shareholder attending the special meeting may vote in person even if he or she previously submitted a proxy.

All shares entitled to vote and represented by properly submitted proxies (including those submitted electronically and in writing) received before the polls are closed at the annualmeeting, and not revoked or superseded, will be voted at the meeting in accordance with the instructions indicated on those proxies. If no direction is indicated on a proxy, your shares will be voted FOR approval of our 2022 Stock Incentive Plan.  With respect to any other matter that properly comes before the meeting or any continuation, postponement or adjournment thereof, the proxyholders will vote as recommended by our Board, or if no recommendation is given, in their own discretion.

Revocation of Proxy

If you are a shareholder of record, you may revoke your proxy at any time before your proxy is voted at the special meeting by taking any of the following actions:

Written notices of revocation and other communications with respect to the revocation of Company proxies should be addressed to:

Mill City Ventures III, Ltd.

1907 Wayzata Boulevard, Suite 205

Wayzata, MN 55391

Attention: Corporate Secretary

If your shares are held in “street name,” you may change your vote by submitting new voting instructions to your broker, bank or other nominee. You must contact your broker, bank or other nominee to find out how to do so. See below regarding how to vote in person if your shares are held in street name.

Voting in Person

If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the meeting. APlease note, however, that if your shares are held in “street name,” which means your shares are held of record by a broker, bank or other nominee, and you wish to vote at the special meeting, you must bring to the special meeting a legal proxy from the record holder of the shares, which is the broker or other nominee, authorizing you to vote at the special meeting.

Shareholders who wish to attend the special meeting will be required to present verification of ownership of our common stock, such as a bank or brokerage firm account statement, and will be required to present a valid government-issued picture identification, such as a driver’s license or passport, to gain admittance to the meeting. No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the meeting.

Quorum and Votes Required

The inspector of elections appointed for the special meeting will tabulate votes cast by proxy or in person at the meeting. The inspector of elections will also determine whether a quorum consistingis present. In order to constitute a quorum for the conduct of business at the special meeting, a majority in voting power of all of the issued and outstanding shares of company common stock entitled to vote at the annualspecial meeting must be present in person or represented by proxy before action may be taken at the annual meeting.

Each proxy returned to us will be voted in accordance with the instructions indicated thereon. If a shareholder gives no direction, the shares will be voted as recommended by our Board of Directors. If any nominee for the Board of Directors should withdraw or otherwise become unavailable for reasons not presently known, the proxies Shares that would have otherwise been voted for such nominee will be voted for such substitute nominee as may be selected by the Board of Directors. If a shareholder abstainsabstain from voting on any matter, the abstentionproposal, or that are represented by broker non-votes (as discussed below), will be countedtreated as shares that are present and entitled to vote at the special meeting for purposes of determining whether a quorum is present at the meeting for the transaction of business as well as shares entitled to vote on that matter. On matters other than the election of directors, an action of the shareholders generally requires the affirmative vote of a majority of shares present in person or represented by proxy at the annual meeting and entitled to vote on the matter. Accordingly, an abstention on any matter other than the election of directors will have the same effect as a vote against that matter. present.

A broker non-vote occurs when a nomineebroker, bank or other agent holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because the nominee does not have discretionary voting power and has not received instructions from the beneficial owner. Broker non-votes onowner and does not have discretionary authority to vote the shares for certain non-routine matters. Shares represented by proxies that reflect a matter arebroker non-vote will be counted as present for purposes of establishingdetermining the presence of a quorum forquorum. The approval of our 2022 Stock Incentive Plan (Proposal 1), is considered a non-routine matter. Accordingly, any broker non-votes will not be counted as votes cast and will have no effect on the meeting, but are not consideredresult of the vote.

Approval of our 2022 Stock Incentive Plan. The affirmative vote of the holders of a majority of the votes cast and entitled to vote at the special meeting is required for the approval of our 2022 Stock Incentive Plan. In the event of any broker non-votes or abstentions in connection with this proposal, such broker non-votes and abstentions will be counted as not present and these shares will be deducted from the total shares of which a majority is required.

Other Business. We will also consider any other business that properly comes before the special meeting, or any adjournment or postponement thereof. As of the record date, we are not aware of any other matters to be submitted for consideration at the special meeting. If any other matters are properly brought before the meeting, the persons named on the enclosed proxy card will vote the shares as recommended by our Board, or if no recommendation is given, in their own discretion.

Solicitation of Proxies

Our Board is soliciting proxies for the special meeting from our shareholders. We will bear the entire cost of soliciting proxies from our shareholders. In addition to the solicitation of proxies by delivery of this Proxy Statement by mail, we will request that particular matter. Consequently, non-votes generallybrokers, banks and other nominees that hold shares of our common stock, which are beneficially owned by our stockholders, send proxies and proxy materials to those beneficial owners and secure those beneficial owners’ voting instructions. We will reimburse those record holders for their reasonable expenses. We do not intend to hire a proxy solicitor to assist in the solicitation of proxies. We may use several of our regular employees, who will not be specially compensated, to solicit proxies from our shareholders, either personally or by Internet, facsimile or special delivery letter.  We estimate our total costs and reimbursements described herein will not exceed $20,000.

Shareholder List

A list of shareholders eligible to vote at the special meeting will be available for inspection, for any purpose germane to the meeting, at the principal office of the Company during regular business hours for a period of no less than ten days prior to the meeting.

Forward-Looking Statements

This Proxy Statement contains “forward-looking statements” (as defined in the Private Securities Litigation Reform Act of 1995). These statements are based on our current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding actions to be taken by us. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements should be evaluated together with the many uncertainties that affect our business, particularly those mentioned in the risk factors in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K.

PROPOSAL NO. 1

AUTHORIZE AND APPROVE OUR 2022 STOCK INCENTIVE PLAN

Introduction

Rule 5635(c) of the Nasdaq Listing Rules requires shareholder approval for the establishment or material amendment of any equity compensation arrangement, with limited exceptions. We are seeking the approval of our shareholders in accordance with Rule 5635(c) of the Nasdaq Listing Rules for the establishment of our 2022 Stock Incentive Plan (the “Plan”). Our Board has approved the Plan and recommends the approval of the Plan by our shareholders.

Our Board believes that it is advisable to adopt the Plan in order to compensate employees, officers and directors upon whose judgment, initiative and effort we depend. Furthermore, the issuance of common shares and stock options to eligible participants under the Plan is designed to align the interests of such participants with those of our shareholders.

The Plan provides for the issuance of up to 900,000 shares of common stock, or approximately 14.5% of the 6,185,255 shares of common stock outstanding on December 15, 2022. The major features of the Plan are summarized below. This summary is qualified in its entirety by reference to the full text of the Plan, a copy of which is attached to this Proxy Statement as Appendix A.

Board Recommendation

OUR BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF OUR 2022 STOCK INCENTIVE PLAN

Interest of Certain Persons in Matters to Be Acted Upon

Coincident with our Board’s adoption of the Plan, the Compensation Committee of the Board granted our officers and directors non-statutory stock options to purchase an aggregate of up to 800,000 shares of our common stock, exercisable at $2.12 per share, which was the closing price per share of the Company’s common stock on the date of grant, November 23, 2022.  The options expire on November 22, 2032.

The options were granted under, and are subject to the terms and conditions of, the Plan.  Nevertheless, as required by the rules and guidelines of the Nasdaq Stock Market, the options may not be exercised until such time, if ever, as the 2022 Stock Incentive Plan is approved by the shareholders of the Company.  If the shareholders do not approve this proposal, both the Plan and these option grants will be null and void. Consequently, an approval by our shareholders of this proposal will function as an approval of these earlier granted options.

In particular, Messrs. Douglas M. Polinsky and Joseph A. Geraci each received non-statutory stock options for the purchase of up to 250,000 shares of common stock, and Messrs. Lyle A. Berman, Howard P. Liszt and Laurence S. Zipkin each received non-statutory stock options for the purchase of up to 100,000 shares of common stock.

The income tax consequences to the Company, and to the recipients, resulting from these grants, and from any future exercise of the options, are summarized below under “U.S. Income Tax Consequences - Non-Statutory Stock Options.”

Other than as a result of their right to participate in the 2012 Plan, no other person who is a director, officer or employee of the Company, or any of their associates, has any substantial interest in this proposal.

General Description

The Plan is intended to advance the interests of the company and our stockholders by enabling us to attract and retain qualified individuals through opportunities for equity participation, and to reward those individuals who contribute to the achievement of our economic objectives. The Plan allows us to award eligible recipients incentive awards, consisting of:

All of our employees and any subsidiary employees, including officers and directors who are also employees, as well as all of our non-employee directors and our non-employee consultants, advisors and other persons who provide services to us will be eligible to receive incentive awards under the Plan.

Shares that are issued under the Plan or that are subject to outstanding incentive awards reduce the number of shares remaining available under the Plan. Any shares subject to an incentive award that lapses, expires, is forfeited, terminates unexercised or unvested, or is settled or paid in cash or other consideration will automatically again become available for issuance under the Plan.

If the exercise price of any option or any associated tax withholding obligations are paid by a participant’s tender or attestation as to ownership of shares (as described below), or if tax withholding obligations are satisfied by the Company withholding shares otherwise issuable upon exercise of an option, then only the net number of shares issued will reduce the number of shares remaining available under the Plan.

In the event of any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, divestiture or extraordinary dividend (including a spin-off) or any other similar change in the corporate structure or shares of the Company, appropriate adjustment will be made to:

Administration

The Plan will be administered by our Compensation Committee, which we refer to hereinafter simply as “Committee.”

The Committee has the authority to determine all necessary or desirable provisions of incentive awards, including the eligible recipients who will be granted one or more incentive awards under the Plan, the nature and extent of the incentive awards to be made to each participant, the time or times when incentive awards will be granted, the duration of each incentive award, and payment or vesting restrictions and other conditions. The Committee has the authority to amend or modify the terms of outstanding incentive awards (including any “repricing” of options) so long as the amended or modified terms are permitted under the Plan and any affected participant has consented to the amendment or modification.

The Plan became effective on November 23, 2022 (subject to approval of our shareholders pursuant to this proposal) and, unless terminated earlier, the Plan will terminate at midnight on November 22, 2032. Incentive awards outstanding at the time the Plan is terminated may continue to be exercised, or become free of restriction, according to their terms. The Board may suspend or terminate the Plan or any portion of the Plan at any time, and may amend the Plan from time to time to conform incentive awards to any change in applicable laws or regulations or in any other respect that the board may deem to be in our best interests. Nevertheless, no amendments to the Plan will be effective without shareholder approval if such approval is required under Section 422 of the Internal Revenue Code or Nasdaq Listing Rules (or any other applicable laws, regulations or self-regulatory organization rules).

Termination, suspension or amendment of the Plan will not adversely affect any outstanding incentive award without the consent of the affected participant, except for adjustments in the event of changes in capitalization or a “change in control,” discussed below.

In general, no right or interest in any incentive award may be assigned or transferred by a participant, except by will or the laws of descent and distribution, or subjected to any lien or encumbrance. The Committee may, however, permit a participant to transfer of all or a portion of a non-statutory stock option, other than for value, to certain family members or related family trusts, foundations or partnerships. Any permitted transferee of a non-statutory stock option will remain subject to all the terms and conditions of the incentive award applicable to the participant.

Options

The exercise price of an incentive stock option may not be less than 100% of the fair market value of a share of our common stock on the option grant date (or 110% if the participant beneficially owns more than 10% of our outstanding stock). Under the Plan, “fair market value” means the average of the reported high and low sale prices of a share of our common stock during the regular daily trading session on the Nasdaq Stock Market.

In general, the Plan requires a participant to pay an option’s exercise price in cash. The Committee may, however, allow exercise payments to be made, in whole or in part, by delivery of a broker exercise notice (pursuant to which a broker or dealer is irrevocably instructed to sell enough shares or lend the optionee enough money to pay the exercise price and to remit such sums to the Company), by tender or attestation as to ownership of shares of common stock that have been held for the period of time necessary to avoid a charge to the Company’s earnings for financial reporting purposes and that are otherwise acceptable to the Committee, or by a combination of such methods. Any shares of common stock tendered or covered by an attestation will be valued at their fair market value on the exercise date.

The aggregate fair market value of shares of common stock with respect to which incentive stock options may become exercisable by a participant for the first time during any calendar year (and under all “incentive stock option” plans of the Company or any subsidiary) may not exceed $100,000. Any incentive stock options in excess of this amount will be treated as non-statutory stock options. Options may be exercised in whole or in installments, as determined by the Committee, and the Committee may impose conditions or restrictions to the exercisability of an option, including that the participant remain continuously employed by the Company or a subsidiary for a certain period. An option may not remain exercisable after 10 years from its date of grant (or five years from its date of grant if the participant beneficially owns more than 10% of our outstanding stock).

Restricted Stock Awards

A restricted stock award is an award of common stock vesting at such times and in such installments as may be determined by the Committee and that, until it vests, is subject to restrictions on transferability and the possibility of forfeiture. Restricted stock awards may be subject to any restrictions or vesting conditions that the Committee deems appropriate, including that the participant remain continuously employed by the Company or a subsidiary for a certain period.

Unless the Committee determines otherwise, any dividends (other than regular quarterly cash dividends) or distributions paid with respect to shares of common stock subject to the unvested portion of a restricted stock award will be subject to the same restrictions as the shares to which such dividends or distributions relate. Holders of restricted stock awards will have the same effectvoting rights as a negative vote on the matter.holders of unrestricted common stock.

Restricted Stock Units

A shareholder givingrestricted stock unit is an award that represents a proxypromise to issue to the participant shares of common stock once certain criteria specified in the award are satisfied. The criteria may revoke it at any time before it is exercised by (i) giving written notice of revocation to an executive officerbe that the participant remain employed until a specified date or dates or that various performance objectives are satisfied. No stock ownership rights are conferred upon the participant until the restricted stock unit awards are settled upon the satisfaction of the company, (ii) deliveringspecified criteria.

Performance Awards

The Plan permits the grant of performance-based stock and cash awards. The Committee may structure awards so that the stock or cash will be issued or paid only following the achievement of certain pre-established performance goals during a duly executed proxy bearing a later date, or (iii) votingdesignated performance period.  The Committee may establish performance goals in person at the annual meeting. A shareholder’s mere presence at the annual meeting does not, alone, revoke a proxy previously signed and delivered by that shareholder. Instead, that shareholder must announce any revocationits discretion.

Change in Control of the proxyCompany

In the event a “change in control” of the Company occurs, then, if approved by the Committee (either at the time of the annual meeting. Unless so revoked,grant of the incentive award or at any time thereafter):

The Committee may also determine that some or all participants holding outstanding options will receive shares representedor a cash payment equal to the excess of the fair market value of the option shares immediately prior to the effective date of the change in control over the exercise price per share of the options (or, in the event that there is no excess, that such options will be terminated).

For purposes of the Plan a “change in control” of the Company generally occurs if:

Effect of Termination of Employment or Other Service

If a participant ceases to be employed by (or provide services to) the Company and all subsidiaries, then all of the participant’s incentive awards will terminate as set forth below (unless modified by the Committee in its discretion as described below).

Upon termination due to death or disability, all outstanding options then held by the participant will, to the extent exercisable as of such termination, remain exercisable for a period of six months after such termination (but in no event after the expiration date of any such option), all restricted stock awards then held by the participant that have not vested as of such termination will be terminated and forfeited; and outstanding performance awards then held by the participant that have not vested as of such termination will be terminated and forfeited.

Upon termination for any reason other than death or disability (including retirement), all outstanding options will remain exercisable to the extent exercisable as of such termination for a period of three months thereafter (but in no event after the expiration date of any such option), and all unvested restricted stock awards and performance awards will be terminated. Nevertheless, if a participant’s termination is due to “cause,” as defined in the Plan, then all rights of the participant under the Plan and any award agreements will immediately terminate without notice of any kind.

In connection with a participant’s termination, the Committee may cause the participant’s options to become or continue to become exercisable and restricted stock awards and performance awards to vest, continue to vest, or become free of restrictions.

New Plan Benefits

The table below discloses the amounts that will be received by each proxyof the following under the Plan being acted upon, based on the option grants already made by the Committee, as disclosed throughout this Proxy Statement:

Consequently, an approval by our shareholders of this proposal will be voted atfunction and serve as an approval of these earlier granted options. Other than as disclosed in the annual meetingtable above, the grant of awards under the Plan is discretionary and at any adjournments thereof. No dissenters’ rightsneither the number of appraisal exist with respectshares subject to awards nor the types of awards under the Plan to any matter to be voted upon at the meeting.particular eligible recipient(s) or group(s) of eligible recipients is presently determinable.

NOTICE TO BENEFICIAL OWNERS OF SHARES HELD IN BROKER ACCOUNTSU.S. Income Tax Consequences

New York Stock Exchange Rule 452 prohibits NYSE member organizations from giving a proxyThe following description of the federal income tax consequences under the laws of the United States is based on current statutes, regulations and interpretations, all of which are subject to votechange, possibly with respectretroactive effect. The description does not include state or local income tax consequences. In addition, the description is not intended to address specific tax consequences applicable to an election of directors (Proposal One) without receiving voting instructions from a beneficial owner. Because NYSE Rule 452 applies to all brokers that are members of the NYSE, this prohibition applies to our annual meeting even though the company’s shares are not listed on the New Yorkindividual participant who receives an incentive award.

Incentive Stock Exchange. Therefore, brokersOptions. There will not be any federal income tax consequences to either the participant or the Company as a result of the grant of an incentive option under the Plan.

A participant’s exercise of an incentive option also will not result in any federal income tax consequences to the Company or the participant, except that (i) an amount equal to the excess of the fair market value of the shares acquired upon exercise of the incentive option, determined at the time of exercise, over the amount paid for the shares by the participant will be includable in the participant’s alternative minimum taxable income for purposes of the alternative minimum tax, and (ii) the participant may be subject to an additional excise tax if any amounts are treated as excess parachute payments (as discussed below). Special rules will apply if previously acquired shares of common stock are permitted to be tendered or attested to in payment of an option exercise price.

If a participant disposes of the shares acquired upon exercise of the incentive option, the federal income tax consequences will depend upon how long the participant held the shares. If the participant held the shares for at least two years after the date of grant and at least one year after the date of exercise (the “holding period requirements”), then the participant will recognize a long-term capital gain or loss. The amount of the long-term capital gain or loss will be equal to the difference between (i) the amount the participant realized on disposition of the shares, and (ii) the option price at which the participant acquired the shares. The Company is not entitled to voteany compensation expense deduction under these circumstances.

If the participant does not satisfy both of the above holding period requirements (a “disqualifying disposition”), then the participant will be required to report as ordinary income, in the year the participant disposes of the shares, the amount by which the lesser of (i) the fair market value of the shares at the annual meetingtime of exercise of the incentive option or (ii) the amount realized on the disposition of the shares, exceeds the option price for the shares. The Company will be entitled to a compensation expense deduction in an amount equal to the ordinary income includable in the taxable income of the participant. This compensation income may be subject to withholding. The remainder of the gain recognized on the disposition, if any, or any loss recognized on the disposition, will be treated as long-term or short-term capital gain or loss, depending on the holding period.

Non-Statutory Stock Options. Neither the participant nor the Company incurs any federal income tax consequences as a result of the grant of a non-statutory option. Upon exercise of a non-statutory option, a participant will recognize ordinary income, subject to withholding, on the date of exercise in an amount equal to the difference between (i) the fair market value of the shares purchased, determined on the date of exercise, and (ii) the consideration paid for the shares. The participant may be subject to an additional excise tax if any amounts are treated as excess parachute payments (see explanation below). Special rules will apply if previously acquired shares of common stock are permitted to be tendered in payment of an option exercise price.

At the time of a subsequent sale or disposition of any shares of common stock obtained upon exercise of a non-statutory option, any gain or loss will be a capital gain or loss. The capital gain or loss will be long-term or short-term capital gain or loss, depending on the holding period.

In general, the Company will be entitled to a compensation expense deduction in connection with the exercise of a non-statutory option for any amounts includable in the taxable income of the participant as ordinary income, provided the Company complies with any applicable withholding requirements.

Restricted Stock Awards. With respect to Proposal One without instructionsshares issued pursuant to a restricted stock award that are subject to a substantial risk of forfeiture, a participant may file an election under Section 83(b) of the Code within 30 days after the shares are transferred to include as ordinary income in the year of transfer an amount equal to the fair market value of the shares received on the date of transfer (determined as if the shares were not subject to any risk of forfeiture). The Company will receive a corresponding tax deduction, provided that proper withholding is made. If a Section 83(b) election is made, the participant will not recognize any additional income when the restrictions on the shares issued in connection with the stock award lapse. At the time any such shares are sold or disposed of, any gain or loss will be treated as long-term or short-term capital gain or loss, depending on the holding period from the date of receipt of the restricted stock award.

A participant who does not make a Section 83(b) election within 30 days of the transfer of a restricted stock award that is subject to a substantial risk of forfeiture will recognize ordinary income at the time of the lapse of the restrictions in an amount equal to the then fair market value of the shares, less any amount paid for the shares. The Company will receive a corresponding tax deduction, provided that proper withholding is made. At the time of a subsequent sale or disposition of any shares of common stock issued in connection with a restricted stock award as to which the restrictions have lapsed, any gain or loss will be treated as long- term or short-term capital gain or loss, depending on the holding period from the date the restrictions lapse.

Restricted Stock Units. At the time of settlement of a restricted stock unit award, when shares of common stock are transferred to the participant, the participant will recognize ordinary taxable income equal to the fair market value of the shares on the date of transfer. The Company will be entitled to a compensation expense deduction in the year of transfer of the shares in an amount equal to the amount recognized by the beneficial ownerparticipant as taxable income.

Performance Awards. The participant recognizes ordinary taxable income in the year in which a performance award is paid. The amount of taxable income is equal to the amount of cash paid to the participant or the fair market value of any shares of common stock transferred to the participant. The Company will be entitled to a compensation expense deduction in the year of transfer of the shares.AS A RESULT, BENEFICIAL OWNERS OF SHARES HELD IN BROKER ACCOUNTS ARE ADVISED THAT, IF THEY DO NOT TIMELY PROVIDE INSTRUCTIONS TO THEIR BROKER, THEIR SHARES WILL NOT BE VOTED IN CONNECTION WITH THE ELECTION OF DIRECTORS.shares in an amount equal to the amount recognized by the participant as taxable income.

Excise Tax on Parachute Payments. The Code imposes a 20% excise tax on the recipient of “excess parachute payments,” as defined in the Code, and denies tax deductibility to the Company on excess parachute payments. Generally, parachute payments are payments in the nature of compensation to employees of a company who are officers, shareholders, or highly compensated individuals, which payments are contingent upon a change in ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company. For example, acceleration of the exercisability of options or the vesting of restricted stock awards upon a change in control of the Company may constitute parachute payments, and in certain cases, “excess parachute payments.” Excess parachute payments are generally parachute payments equal to or exceeding the recipient’s average compensation from the Company over the preceding five years.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

We have one class of voting securities outstanding, common stock, $0.001 par value, of which 12,161,939 shares were issued and outstanding as of the close of business on the record date. Each share of common stock is entitled to one vote on all matters put to a vote of shareholders.

The following table sets forth certain information, as of November 13, 2014,30, 2022, with respect to any person (including any “group,” as that term is used in Section 13(d)(3) of the beneficial ownershipSecurities Exchange Act of each current director, each nominee for director, our named executive officers, each person1934, as amended) who is known to us to beneficially ownbe the beneficial owner of more than 5% or more of the outstandingany class of our voting securities, and as to those shares of our common stock,equity securities beneficially owned by each of our directors and the executive officers and all of our directors and executive officers as a group.  As of November 30, 2022, we had 6,185,255 shares of common stock outstanding.

Unless otherwise indicated in the table or its footnotes, the business address of each of the following persons or entities is 328 Barry Avenue S.1907 Wayzata Blvd., #210,Suite 205, Wayzata, Minnesota 55391, and each such person or entity has sole voting and investment power with respect to the shares of common stock set forth opposite their respective name.

Unless otherwise specified in the table below, such information, other than information with respect to our directors and executive officers, is based on a review of statements filed with the SEC pursuant to Sections 13 (d), 13 (f), and 13 (g) of the Securities Exchange Act with respect to our common stock.

The number of shares of common stock beneficially owned by each person is determined under the rules of the Commission and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which such person has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days after the date hereof, through the exercise of any stock option, warrant or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.

The following table lists, as at the date hereof, the number of shares of our common stock that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. 

* less than one percent

PROPOSAL ONE – ELECTION OF DIRECTORS

We currently have five directors serving on our board. Each of our current directors has been nominated for re-election at the annual meeting. If elected, each nominee has consented to serve as a director and to hold office until the next annual shareholders’ meeting, until his successor is elected and shall have qualified, or until his earlier death, resignation, removal or disqualification.

The following paragraphs provide information as of the date of this Proxy Statement about each nominee. The information presented includes information that each nominee has given us about his age, all positions he holds with the company, his principal occupation and business experience for the past five years, and the names of other publicly held companies of which he currently serves as a director or has served as a director during the past five years.

When considering whether directors and nominees have the experience, qualifications, attributes and skills to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of the our business and structure, the Board of Directors focuses primarily on the industry and transactional experience, and other background, in addition to any unique skills or attributes associated with a director. With regard to Messrs. Polinsky and Geraci, the Board of Directors considered their significant experience, expertise and background with regard to investing in general and the company in particular. With regard to Mr. Larson, the Board of Directors considered his background and experience with the public securities markets and his former employment and experience in operational and financial capacities, as both a Chief Executive and Chief Financial Officer. With regard to Mr. Liszt, the Board of Directors considered his experience on other boards of public companies, his past experience in the communications and advertising fields, and his organizational experience. With regard to Mr. Zipkin, the Board of Directors considered his knowledge, experience and skills in the finance, public securities and investment banking fields.

Of the directors presently serving on the board and the nominees, Messrs. Larson, Liszt and Zipkin are “independent” as that term is defined in Section 5205(a) of Nasdaq listing rules, and not “interested persons” as that term is defined in the Investment Company Act of 1940. Our company is not, however, subject to the Nasdaq listing rules because its common stock is not listed for trading on any Nasdaq market.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table summarizes information concerning the compensation awarded to, earned by, or paid to, our Chief Executive Officer (Principal Executive Officer) and our Chief Financial Officer (Principal Financial Officer) during fiscal years 2021 and 2020 (collectively, the “Named Executive Officers”).

* includes additional compensation of payment of health insurance premiums and 401(k) matching contributions under the employment retirement program.

Vote Required

Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the election of directors. The nominees receiving the highest number of affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the five nominees named above. If you do not vote for a particular nominee, or you withhold authority for one or all nominees, your vote will not count either “for” or “against” the nominee, although it will be counted for purposes of determining whether there is a quorum. If any director-nominee should withdraw or otherwise become unavailable for reasons not presently known, the proxies which would have otherwise been voted for that director nominee may be voted for a substitute director nominee selected by the our Board of Directors.

The Board of Directors recommends that you vote FOR the election of

each of the above-identified director-nominees.

PROPOSAL TWO –Ratification of

Appointment of Independent Registered Public Accounting Firm

Our Board of Directors and management are committed to the quality, integrity and transparency of the company’s financial reports. In accordance with the duties set forth in its written charter, the board’s Audit Committee has appointed Baker Tilly Virchow Krause, LLP as the company’s independent registered public accounting firm for the 2014 fiscal year. A representative of Baker Tilly Virchow Krause, LLP is expected to attend this year’s annual meeting and be available to respond to appropriate questions from shareholders, and will have the opportunity to make a statement if he or she desires to do so.

Fees Billed to Company by Its Independent Registered Public Accounting Firm

The following table presents aggregate fees billed by Baker Tilly Virchow Krause, LLP for professional audit services rendered during fiscal years 2013 and 2012:

The Audit Committee has reviewed the services provided by Baker Tilly Virchow Krause, LLP during fiscal year 2013 and 2014 and the fees billed for such services. After consideration, the Audit Committee has determined that the receipt of these fees by Baker Tilly Virchow Krause, LLP is compatible with the provision of independent audit services. The Audit Committee discussed these services and fees with Baker Tilly Virchow Krause, LLP and management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act of 2002, as well as the American Institute of Certified Public Accountants.

Pre-Approval Policy

Our Audit Committee or the entire Board of Directors endeavors to approve in advance all services provided by our independent registered public accounting firm. All engagements of our independent registered public accounting firm in years ended 2012 and 2013 were approved by the Audit Committee. The Audit Committee did not pre-approve the rendering of services during 2014, but approved such services in a December 2014 meeting held prior to the annual meeting of shareholders.

Vote Required

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to ratify the appointment of Baker Tilly Virchow Krause, LLP as the company’s independent registered public accounting firm for fiscal 2014. If the shareholders do not ratify the appointment of Baker Tilly Virchow Krause, LLP, the Audit Committee may reconsider its selection, but is not required to do so. Notwithstanding the proposed ratification of the appointment of Baker Tilly Virchow Krause, LLP by the shareholders, the Audit Committee, in its discretion, may direct the appointment of new independent auditors at any time during the year without notice to, or the consent of, the shareholders, if the Audit Committee determines that such a change would be in the best interests of the company and its shareholders.

The Board of Directors recommends that you vote FOR the ratification of Baker Tilly Virchow Krause, LLP

as the company’s independent registered public accounting firm for fiscal 2014.

PROPOSALTHREE – Approval of Amendment TO Bylaws

The Board of Directors is recommending an amendment to the company’s bylaws to ensure that the composition of the Board of Directors complies with certain requirements of the Investment Company Act of 1940. The proposed amendment provides that, subject to the exceptions set forth in Section 56(b) of the Investment Company Act of 1940, a majority of the directors comprising the Board of Directors must not be “interested persons” as that term is defined in the Investment Company Act of 1940. In this regard, Section 2(a)(19) of the Investment Company Act of 1940, in pertinent part, defines an “interested person” of our company as follows:

The Board of Directors believes that shareholders’ best interests are served by approving the proposed amendment to the bylaws. If adopted, the company does not anticipate that the newly adopted bylaw would have any impact on the Board of Directors as presently composed, and as proposed to be composed under Proposal One above.

The text of the proposed amendment, which is to be added as a new sentence to Section 4.1 of our bylaws, is set forth below:

“At all times during which the corporation shall have an effective election to be a “business development company” under Section 54 of the Investment Company Act of 1940, a majority of directors serving on the Board shall not be “interested persons” of the corporation, as such term is defined in the Investment Company Act of 1940, subject, however, to the permitted exceptions to the requirement under such Act that a majority of directors not be “interested persons” of the corporation (which exceptions are set forth in Section 56(b) of such Act).”

Section 56(b) of the Investment Company Act of 1940 presently contains the following requirements and exceptions:

“If, by reason of the death, disqualification, or bona fide resignation of any director or general partner, a business development company does not meet the requirements of subsection (a) of this section [that a majority of its directors be persons other than interested persons], or the requirements of section 15(f)(1) of this title with respect to directors, the operation of such provisions shall be suspended for a period of 90 days or for such longer period as the Commission may prescribe, upon its own motion or by order upon application, as not inconsistent with the protection of investors.”

Vote Required

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to approve the proposed amendment to the company’s bylaws. If approved, the amendment will be effective immediately.

The Board of Directors recommends that you vote FOR the proposed amendment to the bylaws.

PROPOSAL FOUR –Advisory Vote on Executive Compensation

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, our shareholders are entitled to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with applicable SEC rules. We refer to this advisory vote as the “say-on-pay” vote. This “say-on-pay” vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the compensation philosophy, policies and practices of our company described in this Proxy Statement.

Consistent with this right to give an advisory “say-on-pay” vote, we are asking shareholders to indicate their support at the annual meeting for the compensation of our named executive officers as described in this Proxy Statement by casting an advisory vote “FOR” the following resolution:

“RESOLVED, that the shareholders approve the compensation of the “named executive officers” of Mill City Ventures III, Ltd., as disclosed in the section entitled “Executive Compensation” in the Proxy Statement for such company’s 2014 annual meeting of shareholders pursuant to the SEC’s compensation disclosure rules.”

The compensation of our named executive officers is disclosed in the section entitled “Executive Compensation” below, including the tabular and narrative disclosures set forth in such section.

Vote Required

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to approve, on an advisory basis, the compensation of our named executive officers as described herein. Because the vote is advisory, it will not be binding on the company, our Board of Directors or the Compensation Committee. Nevertheless, the views expressed by our shareholders, whether through this vote or otherwise, are important to us and, accordingly, the Board of Directors and the Compensation Committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.

The Board recommends that you vote FOR the proposal to approve the compensation of our

named executive officers, as described in this Proxy Statement.

PROPOSAL FIVE –Advisory Vote on the

Frequency of Advisory Votes on Executive Compensation

The Dodd-Frank Act also enables our shareholders to indicate how frequently we should seek an advisory vote on the compensation of our named executive officers, as disclosed in accordance with the SEC’s compensation disclosure rules, such as Proposal Four. In particular, we are asking whether the advisory vote should occur every three years, every two years, or every year.

The optimal frequency of the advisory vote on executive compensation depends on a balancing of the benefits and burdens of more or less frequent votes. Some observers (not of our company in particular, but of the general requirement under the Dodd-Frank Act to obtain an advisory say-on-pay vote) have expressed a belief that less frequent votes are appropriate as they enable shareholders to focus on a company’s overall compensation program design, as opposed to short-term decisions, and provide sufficient time to evaluate how a company’s compensation programs drive longer-term performance and the creation of longer-term shareholder value. Many also believe that a less frequent voting cycle will give companies sufficient time to respond thoughtfully to shareholder views and to implement any necessary changes to executive compensation programs and allow shareholders to evaluate the results of these changes before the next shareholder advisory vote.

On the other hand, other observers believe more frequent shareholder votes are better since they provide shareholders with the opportunity to react promptly to emerging trends in compensation and to provide rapid feedback to companies with respect to their views on the effectiveness and appropriateness of their executive compensation programs. According to this view, more frequent feedback would provide our Board of Directors and Compensation Committee with the opportunity to evaluate individual compensation decisions each year in light of the shareholder feedback and to better incorporate current shareholder views into companies’ compensation programs.

At this time, our Board of Directors believes that the most appropriate outcome at this time is to have a shareholder advisory vote on compensation every three years, to best enable shareholders to evaluate the effect of our compensation on company performance and shareholder value.

You may cast your vote on your preferred voting frequency by choosing the option of three years, two years, one year, or abstain from voting when you vote on this proposal.

Vote Required

The option of three years, two years, or one year that receives the highest number of votes cast by shareholders will be the frequency for the advisory vote on executive compensation selected by shareholders. As with your vote on Proposal Four, your vote on this Proposal Five is advisory, and therefore not binding on the company, the Compensation Committee, or our Board of Directors, and the Board of Directors may decide that it is in the best interests of our shareholders and the company to hold an advisory vote on executive compensation more or less frequently than the option approved by our shareholders. However, our Board of Directors and our Compensation Committee value the opinions of our shareholders and we will take our shareholders’ preferences into account in making determinations regarding the frequency of the say-on-pay vote.

The Board of Directors recommends that shareholders vote for a frequency of “THREE YEARS”

for future advisory shareholders votes on executive compensation.

OTHER MATTERS

The Board of Directors is not aware of any matter to be presented for action at the annual meeting other than the proposals described above. Although the Board of Directors knows of no other matters to be presented at the annual meeting, all proxies returned to us will be voted on any such matter in accordance with the judgment of the proxy holders.

EXECUTIVE OFFICERS AND DIRECTORS

reflect our reverse stock split effective August 9, 2022.

Each of our current directors has been nominated for reelection at the annual meeting. We currently have five directors, three of whom—Messrs. Liszt, Larson and Zipkin—are “independent” as that term is defined in Section 5605(a) of the Nasdaq listing rules. None of our independent directors are “interested persons” as that term is defined in the Investment Company Act of 1940. We are not subject to Nasdaq listing rules, however, because our common stock is not listed for trading on a Nasdaq market. Based upon information requested from each such director concerning his background, employment and affiliations, our Board of Directors has affirmatively determined that none of the independent directors has a material business or professional relationship with the company, other than in his capacity as a director.

CORPORATE GOVERNANCE; BOARD LEADERSHIP STRUCTURE

Our business, property and affairs are managed under the direction of our Board of Directors. Members of our Board of Directors are kept informed of our business through discussions with our Chairman and Chief Executive Officer, Chief Financial Officer, our Chief Compliance Officer and any other officers and employees, and by reviewing materials provided to them and participating in meetings of our Board of Directors and its committees. Under our bylaws, directors serve for indefinite terms expiring upon the next annual meeting of our shareholders.

Our Board of Directors currently combines the role of Chairman of the Board of Directors with the role of Chief Executive Officer. Our Board of Directors believes this provides an efficient and effective leadership model for our company. Combining these roles fosters clear accountability, effective decision-making, and alignment on corporate strategy. Since 2006, Mr. Polinsky has served as both our Chairman and Chief Executive Officer. Mr. Polinsky is an “interested person” as that term is defined in the Investment Company Act of 1940.

During 2013, our Board of Directors held two full board meetings and acted by written consent on approximately 14 occasions. All of the directors attended both of the full board meetings. In addition, each committee of the Board of Directors acted by written consent during 2013. Each director makes a diligent effort to attend all board and committee meetings, as well as our annual meeting of shareholders. In furtherance of this effort and expectation, our board has adopted a Board Meeting Policy affirmatively encouraging directors to attend or participate in meetings of the board and applicable committees whenever possible, and requiring directors to cause the company to comply with the requirements under Section 32(a) of the Investment Company Act of 1940.

Board Oversight of Risk

While risk management is primarily the responsibility of our management team, our Board of Directors is responsible for oversight of the material risks faced by us at both the full board level and at the committee level. Our board’s Audit Committee has oversight responsibility not only for financial reporting with respect to our major financial exposures and the steps management has taken to monitor and control such exposures, but also for the effectiveness of management’s enterprise risk management process that monitors and manages key business risks facing our company. In addition, the other committees of our Board of Directors consider the risks within their areas of responsibility. For example, the board’s Compensation Committee considers the risks that may be implicated by our executive compensation program. Finally, management provides regular updates throughout the year to our Board of Directors regarding the management of the risks they oversee at each regular board meeting.

Board Committees

Our Board of Directors has established an Audit Committee, a Compensation Committee and a Valuation Committee. A brief description of each committee is included in this proxy statement and the charters of the Audit and Compensation Committees are available on the Investor Relations section of our website athttp://www.millcityventures3.com/investor-relations/.

Audit Committee

The members of the Audit Committee are Laurence S. Zipkin, Christopher M. Larson and Howard P. Liszt, each of whom is independent for purposes of the Securities Exchange Act of 1934 and not “interested persons” for purposes of the Investment Company Act of 1940. Mr. Zipkin currently serves as chair of the Audit Committee.

The Audit Committee (which must include a majority of the independent directors who are not “interested persons” serving on board in order to comply with applicable requirements under the Investment Company Act of 1940) is responsible for approving our independent accountants and submission to the shareholders for ratification, if any, reviewing with its independent accountants the plans and results of the audit engagement, approving professional services provided by its independent accountants, reviewing the independence of its independent accountants and reviewing the adequacy of its internal accounting controls. The Audit Committee is also responsible for discussing with management the company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the company’s risk assessment and risk management policies. The Board of Directors has determined that Mr. Zipkin is an “audit committee financial expert” within the meaning of the rules of the Securities and Exchange Commission. Mr. Zipkin’s relevant experience is detailed in his biography above. The board has determined that each of the Audit Committee members is able to read and understand fundamental financial statements and that at least one member of the Audit Committee has past employment experience in finance or accounting.

Compensation Committee

The members of the Compensation Committee are Messrs. Larson, Zipkin and Liszt, each of whom is independent for purposes of the Securities Exchange Act of 1934 and not “interested persons” for purposes of the 1940 Act. Mr. Zipkin currently serves as chair of the Compensation Committee. The Compensation Committee is responsible for approving our compensation arrangements with executive management, including bonus-related decisions and employment agreements with respect to such individuals. The committee has a Compensation Committee Charter, the purpose of which is to assist the committee and the board in fulfilling its oversight responsibilities related to our compensation and compensation structure, including equity compensation, if any, paid by us.

Our processes and procedures for consideration and determination of executive and director compensation include:

Valuation Committee

The members of the Valuation Committee are Messrs. Larson, Zipkin and Liszt, each of whom is independent for purposes of the Securities Exchange Act of 1934 and not “interested persons” for purposes of the Investment Company Act of 1940. Mr. Liszt currently serves as chair of the Valuation Committee. The Valuation Committee is responsible for approving the fair value of debt and equity securities comprising our investment portfolio, pursuant to our written valuation policy and related procedures.

Code of Ethics

On August 5, 2008, our Board of Directors adopted a Code of Ethics, which covers our principal executive and financial officers, or persons performing similar functions, as required by Sections 406 and 407 of the Sarbanes-Oxley Act of 2002. Our Code of Ethics is available at our website, www.millcityventures3.com, or without charge to any shareholder upon written request made to Mill City Ventures III, Ltd., Attention: Chief Executive Officer, 328 Barry Ave. S., Suite 210, Wayzata, MN 55391. We adopted a new Code of Ethics in March, 2013 in connection with our election to become a business development company. The new Code of Ethics was prepared in order to comply with the requirements applicable to business development companies under Section 17 of the Investment Company Act of 1940. In this regard, we have also implemented procedures designed to help foster compliance with the provisions of the new Code of Ethics.

Director Nomination Procedures

Our Board of Directors does not have a nominating committee. Nevertheless, each of our directors participates in our director-nomination process, except with respect to each of his or her own nomination. When considering whether directors and nominees have the experience, qualifications, attributes and skills to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of our business and structure, the Board of Directors focuses primarily on the industry and transactional experience, and other background, in addition to any unique skills or attributes associated with a particular director or nominee. We have not had any material changes to the procedures for shareholder nominations of candidates to serve on our Board of Directors during the fiscal year ended December 31, 2013.

Related-Party Transaction Policy

The Board of Directors has adopted a written Conflict of Interest and Related-Party Transaction Policy. That policy governs the approval of all related-party transactions, subject only to certain customary exceptions (e.g., compensation, certain charitable donations, transactions made available to all employees generally, etc.). The policy contains a minimum dollar threshold of $5,000.

The entire Board of Directors administers the policy and approves any related-party transactions, subject to conflicting or additional requirements under the Investment Company Act of 1940, our written Code of Ethics, or our other written policies and procedures. In general, after full disclosure of all material facts, review and discussion, the Board of Directors approves or disapproves related-party transactions by a vote of a majority of the directors who have no interest in such transaction, direct or indirect. Procedurally, no director is allowed to vote in any approval of a related-party transaction for which he is the related party, except that such a director may otherwise participate in a related discussion and shall provide to the Board of Directors all material information concerning the related-party transaction and the director’s interest therein. If a related-party transaction will be ongoing, the Board of Directors may establish guidelines for management to follow in its ongoing dealings with the related party.

Potential Conflicts of Interest

The Board of Directors has recently amended its Conflict of Interest and Related-Party Transaction Policy to require disclosure in the company’s periodic SEC filings of any potential conflicts of interest—e.g., investments by our management or our directors, directly or indirectly, in any of our portfolio companies—that are more thande minimis in nature or amount.

Communication with the Board

We believe that communications between our Board of Directors, our shareholders and other interested parties are an important part of our corporate governance process. Shareholders with questions about our company are encouraged to contact us. If shareholders believe that their questions have not been addressed, they may communicate with our Board of Directors by sending their communications to Mill City Ventures III, Ltd., Attention: Chief Executive Officer, 328 Barry Avenue South #210, Wayzata, MN 55391.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and beneficial owners of more than 10% of our common stock to file with the SEC certain reports regarding their ownership of common stock or any changes in such ownership. Based on our own review, we believe that each of the following persons made late filings with respect to events or transactions occurring during 2013, as follows: Joseph D. Hammer’s initial filing on Form 3 relating to his appointment to our Board of Directors was due on March 11, 2013, but not filed until May 9, 2013; and Neal Linnihan’s and Scott Zbikowski’s Form 3s relating to their respective acquisitions of our common stock in a private placement were due on March 18, 2013, but not filed until March 20, 2013.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the total compensation paid by us during our two most recent fiscal years ended December 31, 2013 and 2012 to those persons who served as our President or Chief Executive Officer and Chief Financial Officer during such periods (collectively, the “named executives”).

Employment Agreements with Executives

We have employment agreements with each of Messrs. Polinsky and Geraci. The material terms and conditions of employment agreements are summarized below.

Mr. Polinsky’s Employment Agreement

Mr. Polinsky is employed as our Chief Executive Officer and co-manager of the investment portfolio of the company for a three-year term expiring on March 25, 2016, and receives an annual base salary of $50,000, which may be increased by our board’s Compensation Committee on an annual basis. Mr. Polinsky is also eligible for an annual cash bonus at the conclusion of each fiscal year up to Mr. Polinsky’s base salary, as approved by the Compensation Committee. Mr. Polinsky will also receive an amount of our net income each fiscal year which, when aggregated with the foregoing base salary and annual bonuses, if any, paid with respect to such fiscal year, and any other perquisites or benefits paid to Mr. Polinsky during such fiscal year, together with all compensation (including any perquisites and benefits) paid to all other officers and employees of the company, equals 20% of our net income after taxes for such fiscal year (such amount being referred to as “Profit-Sharing Compensation”). Profit-Sharing Compensation is calculated based upon our completed audited financials for the applicable fiscal year and paid as soon as practicable following the completion of such audit. Our officers and employees eligible to receive any Profit-Sharing Compensation will, among themselves, determine the manner in which they will participate in such compensation. At this time Messrs. Polinsky and Geraci are the only two officers or employees of the company entitled to any Profit-Sharing Compensation. Mr. Polinsky will also be entitled to reimbursements for all reasonable and appropriate business expenses incurred in connection with the performance of his duties. In our employment agreement with Mr. Polinsky, we agreed that if the company should fail to qualify as a regulated investment company for any reason under the Internal Revenue Code, our net income for purposes of the Profit-Sharing Compensation will be calculated as if we were at all times qualified as a regulated investment company.

Upon termination of Mr. Polinsky’s employment agreement, Mr. Polinsky will be entitled to receive the foregoing compensation through the date of termination, and reimbursement for any expenses incurred by Mr. Polinsky through the date of such termination. If we terminate Mr. Polinsky’s employment agreement for cause, we may offset against such payments any damages sustained by us as a result of the conduct constituting such cause.

Mr. Polinsky is prohibited from disclosing our confidential information, and has agreed not to solicit any of our employees during the term of the employment agreement and for a period of 12 months thereafter. Mr. Polinsky’s agreement contains other customary terms and conditions.

Mr. Geraci’s Employment Agreement

Mr. Geraci is employed as our Chief Financial Officer and co-manager of our investment portfolio for a three-year term expiring on March 25, 2016. Mr. Geraci receives an annual base salary of $100,000, which may be increased by our board’s Compensation Committee on an annual basis. Mr. Geraci is also eligible for an annual cash bonus at the conclusion of each fiscal year up to Mr. Geraci’s base salary, as approved by the Compensation Committee. Mr. Geraci will also receive an amount of our net income each fiscal year which, when aggregated with the foregoing base salary and annual bonuses, if any, paid with respect to such fiscal year, and any other perquisites or benefits paid to Mr. Geraci during such fiscal year, together with all compensation (including any perquisites and benefits) paid to all of our other officers and employees, equals 20% of our net income after taxes for such fiscal year (such amount being referred to as the “Profit-Sharing Compensation”). Profit-Sharing Compensation is calculated based upon our completed audited financials for the applicable fiscal year and paid as soon as practicable following the completion of such audit. Our officers and employees eligible to receive any Profit-Sharing Compensation will, among themselves, determine the manner in which they will participate in such compensation. At this time Messrs. Polinsky and Geraci are the only two officers or employees entitled to any Profit-Sharing Compensation. Mr. Geraci will also be entitled to reimbursements for all reasonable and appropriate business expenses incurred in connection with the performance of his duties. In our employment agreement with Mr. Geraci, we agreed that if the company should fail to qualify as a regulated investment company for any reason under the Internal Revenue Code, our net income for purposes of the Profit-Sharing Compensation will be calculated as if we were at all times qualified as a regulated investment company.

Upon termination of Mr. Geraci’s employment agreement, Mr. Geraci shall be entitled to receive the foregoing compensation through the date of termination, and reimbursement for any expenses incurred by Mr. Geraci through the date of such termination. If we terminate Mr. Geraci’s employment agreement for cause, we may offset against such payments any damages sustained by us as a result of the conduct constituting such cause.

Mr. Geraci is prohibited from disclosing our confidential information, and agreed not to solicit any of our employees during the term of the employment agreement and for a period of 12 months thereafter. Mr. Geraci’s agreement contains other customary terms and conditions.

Outstanding Equity Awards at Fiscal Year EndYear-End

We had no outstanding options, warrants, unvested stock awards or equity incentive plan awards as of December 31, 20132021, held by any named executive. In addition, we have no options, warrants, unvested stock awards or equity incentive plan awards outstanding and held by any named executive asAs of the date of this filing.Proxy Statement, however, we have an aggregate of 28,889 shares of restricted stock issued in April 2022 to our directors and subject to forfeiture through January 24, 2023.  In addition, on November 23, 2022, and coincident with the Board’s adoption of the 2022 Stock Incentive Plan, the Board issued non-statutory stock options to our directors and officers in the aggregate amount of 800,000 shares of common stock.  By their terms, these options are not exercisable unless and until the 2022 Stock Incentive Plan is approved by our shareholders.

DIRECTOR COMPENSATIONDirector Compensation

In 2013,The following table sets forth director compensation for the year ended December 31, 2021:

Securities Authorized for Issuance Under Equity Compensation Plans

As of December 31, 2021, we paid a totalhad no outstanding options, warrants or other rights to purchase any equity securities of $33,400the Company under any equity compensation plan or “individual compensation arrangement,” as defined in director feesItem 201 of Regulation S-K.  As of the date of this Proxy Statement, however, our Board reserved 900,000 shares of common stock for issuance under the 2022 Stock Incentive Plan, subject to the approval of our shareholders at the special meeting to which this Proxy Statement relates.  Our common stock is listed for trading on the Nasdaq Capital Market, and therefore is subject to that stock exchange’s rules.  These rules require us to obtain the approval of our shareholders prior to adopting any equity compensation plans or modifying such plans, and prior to issuance any equity compensation to our independentofficers and directors noneoutside of whoman equity compensation plan that has been approved by our shareholders.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Our Board of Directors has adopted a policy to require our disclosure of instances in our periodic filings with the SEC. Our related-party transactions requiring disclosure under this policy are “interested persons”as follows:

OTHER MATTERS

Section 16(A) Beneficial Ownership Reporting Compliance

Rules adopted by the SEC under Section 16(a) of the Investment CompanySecurities Exchange Act of 1940. Presently, each1934, or the “Exchange Act,” require our officers and directors, and persons who own more than 10% of the issued and outstanding shares of our equity securities, to file reports of their ownership, and changes in ownership, of such director receives an annualized feesecurities with the SEC on Forms 3, 4 or 5, as appropriate. Such persons are required by the regulations of $20,000.

SHAREHOLDER PROPOSALSthe SEC to furnish us with copies of all forms they file pursuant to Section 16(a).

ABased solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to us during our most recent fiscal year, and any written representations provided to us, we believe that all of the officers, directors, and owners of more than 10% of the outstanding shares of our common stock complied with Section 16(a) of the Exchange Act for the year ended December 31, 2021, except as follows:  Messrs. Geraci and Lizst each reported a transaction on May 20, 2022 that occurred on April 11, 2022; and Messrs. Polinsky, Berman and Zipkin each reported a transaction on May 19, 2022 that occurred on April 11, 2022.  Mr. Polinsky reported a transaction on August 22, 2022 that occurred on August 18, 2022.

Shareholder Proposals and Director Nominations for 2023 Annual Meeting

Under SEC rules, a shareholder who intendswishing wishes to present a proposal at our 2015 annual meeting of shareholders pursuant to the SEC’s Rule 14a-8 must submit the proposal to us in writing at our address in Wayzata, Minnesota, and we must receive the proposal on or before 120 days prior to the date of our 2015 annual meeting, in order for the proposal to be considered for inclusion in our proxy statement for that meeting. We expect that the 2015our 2023 annual meeting willmust submit the proposal in writing to us, to the attention of our Corporate Secretary, at 1907 Wayzata Boulevard, Suite 205, Wayzata MN 55391, a reasonable amount of time prior to us printing and sending the related proxy materials. SEC rules set standards for the types of shareholder proposals and the information that must be held in June 2015, butprovided by the exactshareholder making the proposal or nomination.

We have not set a date time, and location of suchfor our 2023 annual meeting have yet to be determined. The submission of a proposal does not guarantee its inclusionat this time. Nevertheless, we shall inform our shareholders, in our proxy statementAnnual Report on Form 10-K or presentation at the 2015 annual meeting of shareholders.

Except as noted below, to be timely, proposals and nominations with respect to the 2015 annual meeting of shareholders must be delivered to us no later than 5:00 p.m., Central Time,our earliest quarterly report on the 120th day prior to the first anniversaryForm 10-Q, of the anticipated date of that meeting so as to facilitate the mailingsubmission of the notice for the preceding year’s annual meeting. If the date of the annual meeting has been changed by more than 30 calendar days from the first anniversary of the date of the preceding year’s annual meeting, shareholder proposals or director nominations mustin a manner consistent with SEC rules.

The chair of the 2023 annual meeting of shareholders may determine, if the facts warrant, that a matter has not been properly brought before the meeting and, therefore, may not be soconsidered at the meeting. In addition, the proxy solicited by the Board for the 2023 annual meeting will confer discretionary voting authority with respect to (i) any proposal presented by a shareholder at that meeting for which we have not been provided with timely notice and (ii) any proposal made in accordance with our bylaws, if the annual meeting proxy statement briefly describes the matter and how management’s proxy holders intend to vote on it, and if the shareholder does not comply with the requirements of Rule 14a-4(c)(2) promulgated under the Exchange Act.

Householding of Proxy Materials

The SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for shareholders and cost savings for companies.

A number of banks and brokers with account holders who are our shareholders may be householding our proxy materials. A single proxy statement will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your bank or broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no later than 5:00 p.m.longer wish to participate in householding and would prefer to receive a separate proxy statement, please notify your bank or broker, direct your written request to Mill City Ventures III, Ltd.., Central Time,1907 Wayzata Boulevard, Suite 205, Wayzata MN 55301, Attention:  Investor Relations, or contact us by telephone at (952) 479-1921. Shareholders who currently receive multiple copies of the proxy statement at their address and would like to request householding of their communications should contact their bank or broker.

Other Matters

We will also consider any other business that properly comes before the meeting, or any adjournment or postponement thereof. As of the record date, we are not aware of any other matters to be submitted for consideration at the meeting. If any other matters are properly brought before the meeting, the persons named on the laterenclosed proxy card will vote the shares they represent using their best judgment.

Information on our website, other than our Proxy Statement, Notice of Special Meeting and form of proxy, is not part of the 120th day prior to the date of such annual meeting or the tenth day following the day on which public announcement of the date of such meetingproxy soliciting materials and is first made.not incorporated herein by reference.

An additional copy of this Proxy Statement is available without charge upon written request to: Corporate Secretary, Mill City Ventures III, Ltd., 328 Barry Avenue South #210,1907 Wayzata MinnesotaBoulevard, Suite 205, Wayzata, MN 55391. We reserve

APPENDIX A

MILL CITY VENTURES III, LTD.

2022 STOCK INCENTIVE PLAN

1. Purpose of Plan

The purpose of this 2022 Stock Incentive Plan (the “Plan”) is to advance the rightinterests of Mill City Ventures III, Ltd. (“Company”) and its shareholders by enabling the Company and its Subsidiaries to reject, rule outattract and retain qualified individuals through opportunities for equity participation in the Company, and to reward those individuals who contribute to the Company’s achievement of order,its economic objectives.

2. Definitions

The following terms will have the meanings set forth below, unless the context clearly requires otherwise:

2.1. “Board” means the Company’s Board of Directors.

2.2. “Broker Exercise Notice” means a written notice pursuant to which a Participant, upon exercise of an Option, irrevocably instructs a broker or take other appropriate actiondealer to sell a sufficient number of shares or loan a sufficient amount of money to pay all or a portion of the exercise price of the Option and/or any related withholding tax obligations and remit such sums to the Company and directs the Company to deliver stock certificates to be issued upon such exercise directly to such broker or dealer or their nominee.

2.3. “Cause” means (i) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, in each case related to the Company or any Subsidiary, (ii) any unlawful or criminal activity of a serious nature, (iii) any intentional and deliberate breach of a duty or duties that, individually or in the aggregate, are material in relation to the Participant’s overall duties, (iv) any material breach of any confidentiality or noncompete agreement entered into with the Company or any Subsidiary, or (v) with respect to a particular Participant, any proposalother act or omission that does not comply with theseconstitutes “cause” as may be defined in any employment, consulting or similar agreement between such Participant and other applicable requirements.the Company or any Subsidiary.

2.4. “Change in Control” means an event described in Section 11.1 of the Plan.

2.5. “Code” means the Internal Revenue Code of 1986, as amended, including any succeeding laws in replacement thereof.

2.6. “Committee” means the Compensation Committee of the Board or its delegates who are administering the Plan, as provided in Section 3 below.

2.7. “Common Stock” means the common stock of the Company, or the number and kind of shares of stock or other securities into which such Common Stock may be changed in accordance with Section 4.3 of the Plan.

2.8. “Disability” means any medically determinable physical or mental impairment resulting in the service provider’s inability to perform the duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

2.9. “Effective Date” means November 23, 2022, but no Incentive Award under this plan shall be exercised or exercisable unless and until the Plan shall have been approved by the shareholders of the Company, which approval shall be within 12 months after the Effective Date, and in accordance with the requirements of Nasdaq Stock Market Rule 14a-4 promulgated under5635(c).

2.10. “Eligible Recipients” means all employees, officers and directors of the Company or any Subsidiary, and any person who has a contractual, business or professional relationship with the Company or any Subsidiary.

2.11. “Exchange Act” means the Securities Exchange Act of 1934, governsas amended.

2.12. “Fair Market Value” means, with respect to the useCommon Stock, as of discretionary proxy votingany date: (i) the mean between the reported high and low sale prices of the Common Stock at the end of the regular trading session if the Common Stock is listed, admitted to unlisted trading privileges, or reported on any national securities exchange or on the NASDAQ Stock Market on such date (or, if no shares were traded on such day, as of the next preceding day on which there was such a trade); or (ii) if the Common Stock is not so listed, admitted to unlisted trading privileges, or reported on any national exchange or on the NASDAQ Stock Market, the closing bid price as of such date at the end of the regular trading session, as reported by the OTC Bulletin Board, The OTC Market or other comparable service; or (iii) if the Common Stock is not so listed or reported, such price as the Committee determines in good faith in the exercise of its reasonable discretion.

2.13. “Incentive Award” means an Option, Restricted Stock Award, Restricted Stock Unit or Performance Award granted to an Eligible Recipient pursuant to the Plan.

2.14. “Incentive Stock Option” means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that qualifies as an “incentive stock option” within the meaning of Section 422 of the Code.

2.15. “Non-Statutory Stock Option” means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that does not qualify as an Incentive Stock Option.

2.16. “Option” means an Incentive Stock Option or a Non-Statutory Stock Option.

2.17. “Participant” means an Eligible Recipient who receives one or more Incentive Awards under the Plan.

2.18. “Performance Awards” means an award of Common Stock or cash granted to an Eligible Recipient pursuant to Section 8 of the Plan and with respect to which shares of Common Stock or cash will be transferred to the Eligible Recipient in accordance with the provisions of such Section 8 and any agreement evidencing a Performance Award.

2.19. “Performance Criteria” means the performance criteria that may be used by the Committee in granting Restricted Stock Awards or Performance Awards contingent upon achievement of such performance goals as the Committee may determine in its sole discretion. The Committee may select one criterion or multiple criteria for measuring performance, and the measurement may be based upon Company, Subsidiary or business unit performance, or the individual performance of the Eligible Recipient, either absolute or by relative comparison to other companies, other Eligible Recipients or any other external measure of the selected criteria.

2.20. “Performance Period” means, in respect of a Performance Award, a period of time established by the Committee within which the Performance Criteria relating to such Performance Award are to be achieved.

2.21. “Previously Acquired Shares” means shares of Common Stock that are already owned by the Participant or, with respect to any Incentive Award, that are to be issued upon the grant, exercise or vesting of such Incentive Award.

2.22. “Restricted Stock Award” means an award of Common Stock granted to an Eligible Recipient pursuant to Section 7 of the Plan that is subject to the restrictions on transferability and the risk of forfeiture imposed by the provisions of such Section 7.

2.23. “Restricted Stock Unit” means an award granted to an Eligible Recipient pursuant to Section 7 of the Plan that represents a contractual obligation on the part of the Company to transfer shares of Common Stock to the Eligible Participant upon the satisfaction of specified Performance Criteria and/or the completion of a specified period of employment with the Company and its Subsidiaries.

2.24. “Retirement” means normal or approved early termination of employment or service.

2.25. “Securities Act” means the Securities Act of 1933, as amended.

2.26. “Subsidiary” means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Committee.

3. Plan Administration

3.1. The Committee. The Plan will be administered by the Committee. So long as the Company has a class of its equity securities registered under Section 12 of the Exchange Act, the Committee administering the Plan will consist of the Compensation Committee of the Board or its delegate, which will consist solely of two or more members of the Board who are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act and who are considered “outside directors.” Such a committee, if established, will act by majority approval of the members, and a majority of the members of such a committee will constitute a quorum. To the extent consistent with applicable corporate law of the Company’s jurisdiction of incorporation, the Committee may delegate to any officers of the Company the duties, power and authority of the Committee under the Plan pursuant to such conditions or limitations as the Committee may establish; provided, however, that only the Committee may exercise such duties, power and authority with respect to a shareholder proposalEligible Recipients who are subject to Section 16 of the Exchange Act. The Committee may exercise its duties, power and authority under the Plan in its sole and absolute discretion without the consent of any Participant or other party, unless the Plan specifically provides otherwise. Each determination, interpretation or other action made or taken by the Committee pursuant to the provisions of the Plan will be conclusive and binding for all purposes and on all persons, and no member of the Committee will be liable for any action or determination made in good faith with respect to the Plan or any Incentive Award granted under the Plan.

3.2. Authority of the Committee.

(a) In accordance with and subject to the provisions of the Plan, the Committee will have the authority to determine all provisions of Incentive Awards as the Committee may deem necessary or desirable and as consistent with the terms of the Plan, including, without limitation, the following: (i) the Eligible Recipients to be selected as Participants; (ii) the nature and extent of the Incentive Awards to be made to each Participant (including the number of shares of Common Stock to be subject to each Incentive Award, any exercise price, the manner in which Incentive Awards will vest or become exercisable and whether Incentive Awards will be granted in tandem with other Incentive Awards) and the form of written agreement, if any, evidencing such Incentive Award; (iii) any Performance Criteria applicable to any Incentive Awards; (iv) the time or times when Incentive Awards will be granted and, where applicable, settled; (v) the duration of each Incentive Award; (vi) the restrictions and other conditions to which the payment or vesting of Incentive Awards may be subject. In addition, the Committee will have the authority under the Plan in its sole discretion to pay the economic value of any Incentive Award in the form of cash, Common Stock or any combination of both.

(b) The Committee will have the authority under the Plan to amend or modify the terms of any outstanding Incentive Award in any manner, including, without limitation, the authority to modify the number of shares or other terms and conditions of an Incentive Award, extend the term of an Incentive Award, accelerate the exercisability or vesting or otherwise terminate any restrictions relating to an Incentive Award other than an Incentive Award intended to qualify as “performance-based” compensation, accept the surrender of any outstanding Incentive Award, effect any repricing of previously granted “underwater” options or, to the extent not previously exercised or vested, authorize the grant of new Incentive Awards in substitution for surrendered Incentive Awards; provided, however that the shareholderamended or modified terms are permitted by the Plan as then in effect and that any Participant adversely affected by such amended or modified terms has consented to such amendment or modification. Notwithstanding the foregoing, no Incentive Award that is subject to the requirements and restrictions of Section 409A of the Code may be amended in a manner that would violate Section 409A of the Code.

(c) In the event of (i) any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, extraordinary dividend or divestiture (including a spin-off) or any other change in corporate structure or shares; (ii) any purchase, acquisition, sale, disposition or write-down of a significant amount of assets or a significant business; (iii) any change in accounting principles or practices, tax laws or other such laws or provisions affecting reported results; or (iv) any other similar change, in each case with respect to the Company or any other entity whose performance is relevant to the grant or vesting of an Incentive Award, the Committee (or, if the Company is not soughtthe surviving corporation in any such transaction, the board of directors of the surviving corporation) may, without the consent of any affected Participant, amend or modify the vesting criteria (including Performance Criteria) of any outstanding Incentive Award that is based in whole or in part on the financial performance of the Company (or any Subsidiary or division or other subunit thereof) or such other entity so as equitably to includereflect such event, with the desired result that the criteria for evaluating such financial performance of the Company or such other entity will be substantially the same (in the sole discretion of the Committee or the board of directors of the surviving corporation) following such event as prior to such event; provided, however, that the amended or modified terms are permitted by the Plan as then in oureffect.

4. Shares Available for Issuance

4.1. Maximum Number of Shares Available; Certain Restrictions on Awards. Subject to adjustment as provided in Section 4.3, the maximum number of shares of Common Stock that will be available for issuance under the Plan will be 900,000, and the maximum number of shares of Common Stock that will be available for issuance in connection with Incentive Stock Options is 900,000.

4.2. Accounting for Incentive Awards. Shares of Common Stock that are issued under the Plan or that are subject to outstanding Incentive Awards will be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under the Plan; provided, however, that shares subject to an Incentive Award that lapses, expires, is forfeited (including issued shares forfeited under a Restricted Stock Award) or for any reason is terminated unexercised or unvested or is settled or paid in cash or any form other than shares of Common Stock will automatically again become available for issuance under the Plan. To the extent that the exercise price of any Option or associated tax withholding obligations are paid by tender or attestation as to ownership of Previously Acquired Shares, or to the extent that such tax withholding obligations are satisfied by withholding of shares otherwise issuable upon exercise of the Option, only the number of shares of Common Stock issued net of the number of shares tendered, attested to or withheld will be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under the Plan.

4.3. Adjustments to Shares and Incentive Awards. In the event of any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares or any other change in the corporate structure or shares of the Company, the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) will make appropriate adjustment (which determination will be conclusive) as to the number and kind of securities or other property (including cash) available for issuance or payment under the Plan and, in order to prevent dilution or enlargement of the rights of Participants, the number and kind of securities or other property (including cash) subject to outstanding Incentive Awards and the exercise price of outstanding Options.

5. Participation

Participants in the Plan will be those Eligible Recipients who, in the judgment of the Committee, have contributed, are contributing or are expected to contribute to the achievement of economic objectives of the Company or its Subsidiaries. Eligible Recipients may be granted from time to time one or more Incentive Awards, singly or in combination or in tandem with other Incentive Awards, as may be determined by the Committee in its sole discretion. Incentive Awards will be deemed to be granted as of the date specified in the grant resolution of the Committee, which date will be the date of any related agreement with the Participant.

6. Options

6.1. Grant. An Eligible Recipient may be granted one or more Options under the Plan, and such Options will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. The Committee may designate whether an Option is to be considered an Incentive Stock Option or a Non-Statutory Stock Option. To the extent that any Incentive Stock Option granted under the Plan ceases for any reason to qualify as an “incentive stock option” for purposes of Section 422 of the Code, such Incentive Stock Option will continue to be outstanding for purposes of the Plan but will thereafter be deemed to be a Non-Statutory Stock Option.

6.2. Exercise Price. The per share price to be paid by a Participant upon exercise of an Option will be determined by the Committee in its discretion at the time of the Option grant; provided, however, that such price will not be less than 100% of the Fair Market Value of one share of Common Stock on the date of grant with respect to any Incentive Stock Option (110% of the Fair Market Value with respect to an Incentive Stock Option if, at the time such Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company).

6.3. Exercisability and Duration. An Option will become exercisable at such times and in such installments and upon such terms and conditions as may be determined by the Committee in its sole discretion at the time of grant (including without limitation (i) the achievement of one or more of the Performance Criteria and/or (ii) that the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period); provided, however, that if the Committee does not specify the expiration date of the Option, the expiration date shall be 10 years from the date on which the Option was granted. In no case may an Option be exercisable after 10 years from its date of grant (or five years from its date of grant in the case of an Incentive Stock Option if, at the time the Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company).

6.4. Payment of Exercise Price. The total purchase price of the shares to be purchased upon exercise of an Option will be paid entirely in cash (including check, bank draft or money order); provided, however, that the Committee, in its sole discretion and upon terms and conditions established by the Committee, may allow such payments to be made, in whole or in part, by tender of a Broker Exercise Notice, by tender, or attestation as to ownership, of Previously Acquired Shares that have been held for the period of time necessary to avoid a charge to the Company’s earnings for financial reporting purposes and that are otherwise acceptable to the Committee, or by a combination of such methods. For purposes of such payment, Previously Acquired Shares tendered or covered by an attestation will be valued at their Fair Market Value on the exercise date.

6.5. Manner of Exercise. An Option may be exercised by a Participant in whole or in part from time to time, subject to the conditions contained in the Plan and in the agreement evidencing such Option, by delivery in person, by electronic transmission or through the mail of written notice of exercise to the Company pursuant to the instructions set forth in the Incentive Award or, if none, to the Company’s principal office, attention Chief Financial Officer, and by paying in full the total exercise price for the shares of Common Stock to be purchased in accordance with Section 6.4 of the Plan.

7. Restricted Stock Awards and Restricted Stock Units

7.1. Grant. An Eligible Recipient may be granted one or more Restricted Stock Awards or Restricted Stock Units under the Plan, and such Restricted Stock Awards and Restricted Stock Units will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. The Committee may impose such restrictions or conditions, not inconsistent with the provisions of the Plan, to the vesting of such Restricted Stock Awards and Restricted Stock Units as it deems appropriate, including, without limitation, (i) the achievement of one or more of the Performance Criteria and/or (ii) that the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period.

7.2. Rights as a Shareholder; Transferability. Except as provided in Sections 7.1, 7.3, 7.4 and 12.3 of the Plan, a Participant will have all voting, dividend, liquidation and other rights with respect to shares of Common Stock issued to the Participant as a Restricted Stock Award or pursuant to a Restricted Stock Unit under this Section 7 upon the Participant becoming the holder of record of such shares as if such Participant were a holder of record of shares of contractually unrestricted Common Stock.

7.3. Dividends and Distributions. Unless the Committee determines otherwise in its sole discretion (either in the agreement evidencing the Restricted Stock Award at the time of grant or at any time after the grant of the Restricted Stock Award), any dividends or distributions paid with respect to shares of Common Stock subject to the unvested portion of a Restricted Stock Award will be subject to the same restrictions as the shares to which such dividends or distributions relate. The Committee will determine in its sole discretion whether any interest will be paid on such dividends or distributions. A Participant to whom Restricted Stock Units have been granted will have no rights to receive any dividends or distributions with respect to the shares of Common Stock underlying the Restricted Stock Units unless and until the Restricted Stock Units are settled and the Participant becomes the holder of record of any shares of Common Stock delivered in settlement of such Restricted Stock Units.

7.4. Enforcement of Restrictions. To enforce the restrictions referred to in this Section 7, the Committee may place a legend on the stock certificates referring to such restrictions and may require the Participant, until the restrictions have lapsed, to keep the stock certificates, together with duly endorsed stock powers, in the custody of the Company or its transfer agent, or to maintain evidence of stock ownership, together with duly endorsed stock powers, in a non-certificated book-entry stock account with the Company’s transfer agent.

8. Performance Awards

8.1. Grant. An Eligible Recipient may be granted one or more Performance Awards under the Plan, and such Performance Awards will be subject to such terms and conditions, if any, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. The Committee may impose such restrictions or conditions, not inconsistent with the provisions of the Plan, to the vesting of such Performance Awards as it deems appropriate, including, without limitation, (i) the achievement of one or more of the Performance Criteria and/or (ii) that the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period.

8.2 Performance Periods. The Performance Period with respect to each Performance Award will be such period of time commencing with the date of grant as is determined by the Committee on the date of grant.

8.3 Specification of Performance Criteria. Any grant of Performance Awards will specify Performance Criteria that, if achieved, will result in payment or early payment of the Award, and each grant may specify in respect of such specified Performance Criteria a minimum acceptable level of achievement and shall set forth a formula for determining the amount of the Performance Award that will be earned if performance is at or above the minimum level, but falls short of full achievement of the specified Performance Criteria. The grant of Performance Awards will specify that, before the Performance Awards will be earned and paid, the Compensation Committee of the Board must certify that the Performance Criteria have been satisfied.

8.4. Settlement – Time of Payment.

(a) At the time any Performance Award is granted, the agreement evidencing the Performance Award will specify the time at which the vested portion of the Performance Award will be settled. In no event may the time of payment be changed after the Performance Award is granted.

(b) The agreement may specify that settlement will be made upon vesting or the settlement will occur with respect to all vested Performance Awards as of a specified time.

(c) To the extent the agreement does not provide for the settlement of vested Performance Awards on or before the date that is two and one-half months after the end of the year in which the Performance Award (or the relevant portion thereof) vests, the agreement will provide for payment to occur: (a) upon the Eligible Recipient’s separation from service, death or disability; (b) upon a change in control of the Company; or (c) upon a specified date or pursuant to a specified schedule. In all cases in which payment is to be made in accordance with this Section 8.2(c), the times specified for payment will be interpreted and administered in accordance with the requirements of Section 409A of the Code and any applicable regulations or guidance issued in connection with that Code section.

8.5. Settlement – Form of Payment. Unless otherwise specified in the agreement evidencing the Performance Award, or some other written agreement between the Company and the Eligible Recipient, vested Performance Awards will be settled in cash or shares of Common Stock.

8.6. Rights as a Shareholder. A Participant holding a Performance Award shall have no rights as a holder of Common Stock unless and until the Performance Award is settled and shares of Common Stock are delivered to the Participant in such settlement.

8.7. Dividends and Distributions. Unless the Committee determines otherwise in its sole discretion (either in the agreement evidencing the Performance Award at the time of grant or at any time after the grant of the Performance Award), the Participant shall not be entitled to receive dividends or distributions with respect to the Shares subject to a Performance Award unless and until the Performance Award is settled and shares of Common Stock are delivered to the Participant in such settlement.

8.8. Unfunded and Unsecured Obligation of the Company. A Performance Award represents an unfunded and unsecured obligation of the Company to make payment to a Participant in accordance with the terms of this Plan or an award agreement. The Participant’s rights with respect to a Performance Award shall be those of an unsecured creditor of the Company.

9. Effect of Termination of Employment or Other Service

9.1. Termination Due to Death or Disability. In the event a Participant’s employment or other service with the Company and all Subsidiaries is terminated by reason of death or Disability:

(a) All outstanding Options then held by the Participant will, to the extent exercisable as of such termination, remain exercisable for a period of six months after such termination (but in no event after the expiration date of any such Option); and

(b) All Restricted Stock Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited; and

(c) All outstanding Performance Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited.

9.2. Termination Due to Retirement. Subject to Section 9.5, in the event a Participant’s employment or other service with the Company and all Subsidiaries is terminated by reason of Retirement:

(a) All outstanding Options then held by the Participant will, to the extent exercisable as of such termination, remain exercisable in full for a period of three months after such termination (but in no event after the expiration date of any such Option). Options not exercisable as of such Retirement will be forfeited and terminate; and

(b) All Restricted Stock Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited; and

(c) All outstanding Performance Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited.

9.3. Termination for Reasons Other than Death, Disability or Retirement. Subject to Section 9.5, in the event a Participant’s employment or other service is terminated with the Company and all Subsidiaries for any reason other than death, Disability or Retirement, or a Participant is in the employ of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company (unless the Participant continues in the employ of the Company or another Subsidiary):

(a) All outstanding Options then held by the Participant will, to the extent exercisable as of such termination, remain exercisable in full for a period of three months after such termination (but in no event after the expiration date of any such Option). Options not exercisable as of such termination will be forfeited and terminate; and

(b) All Restricted Stock Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited; and

(c) All outstanding Performance Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited.

9.4. Modification of Rights Upon Termination. Notwithstanding the other provisions of this Section 9, the Committee may, in its sole discretion (which may be exercised in connection with the grant or after the date of grant, including following such termination), determine that upon a Participant’s termination of employment or other service with the Company and all Subsidiaries, any Options (or any part thereof) then held by such Participant may become or continue to become exercisable and/or remain exercisable following such termination of employment or service, and Restricted Stock Awards and Performance Awards then held by such Participant may vest and/or continue to vest or become free of restrictions and conditions to issuance, as the case may be, following such termination of employment or service, in each case in the manner determined by the Committee.

9.5. Effects of Actions Constituting Cause. Notwithstanding anything in the Plan to the contrary, in the event that a Participant is determined by the Committee, acting in its sole discretion, to have committed any action which would constitute Cause as defined in Section 2.3, irrespective of whether such action or the Committee’s determination occurs before or after termination of such Participant’s employment or service with the Company or any Subsidiary, all rights of the Participant under the Plan and any agreements evidencing an Incentive Award then held by the Participant shall terminate and be forfeited without notice of any kind. The Company may defer the exercise of any Option or the vesting of any Restricted Stock Award or Performance Award for a period of up to 90 days in order for the Committee to make any determination as to the existence of Cause.

9.6. Determination of Termination of Employment or Other Service. Unless the Committee otherwise determines in its sole discretion, a Participant’s employment or other service will, for purposes of the Plan, be deemed to have terminated on the date recorded on the personnel or other records of the Company or the Subsidiary for which the Participant provides employment or service, as determined by the Committee in its sole discretion based upon such records.

10. Payment of Withholding Taxes

10.1. General Rules. The Company is entitled to (a) withhold and deduct from future wages of the Participant (or from other amounts that may be due and owing to the Participant from the Company or a Subsidiary), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and all federal, foreign, state and local withholding and employment-related tax requirements attributable to an Incentive Award, including, without limitation, the grant, exercise or vesting of, or payment of dividends with respect to, an Incentive Award or a disqualifying disposition of stock received upon exercise of an Incentive Stock Option, or (b) require the Participant promptly to remit the amount of such withholding to the Company before taking any action, including issuing any shares of Common Stock, with respect to an Incentive Award.

10.2. Special Rules. The Committee may, in its sole discretion and upon terms and conditions established by the Committee, permit or require a Participant to satisfy, in whole or in part, any withholding or employment-related tax obligation described in Section 10.1 of the Plan by electing to tender, or by attestation as to ownership of, Previously Acquired Shares that have been held for the period of time necessary to avoid a charge to the Company’s earnings for financial reporting purposes and that are otherwise acceptable to the Committee, by delivery of a Broker Exercise Notice or a combination of such methods. For purposes of satisfying a Participant’s withholding or employment-related tax obligation, Previously Acquired Shares tendered or covered by an attestation will be valued at their Fair Market Value.

11. Change in Control

11.1. A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs has occurred:

(a) the sale, lease, exchange or other transfer, directly or indirectly, of substantially all of the assets of the Company, whether in one single transaction or in a series of related transactions, to any Successor;

(b) the approval by the shareholders of the Company of any plan or proposal for the liquidation or dissolution of the Company;

(c) any Successor (as defined in Section 11.2), other than a Bona Fide Underwriter (as defined in Section 11.2 below), becomes after the effective date of the Plan the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of (i) 25% or more, but not 50% or more, of the combined voting power of the Company’s outstanding securities ordinarily having the right to vote at elections of directors, unless the transaction resulting in such ownership has been approved in advance by the Continuity Directors (as defined in Section 11.2 below), or (ii) more than 50% of the combined voting power of the Company’s outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the Continuity Directors);

(d) a merger or consolidation to which the Company is a party if the shareholders of the Company immediately prior to effective date of such merger or consolidation have “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act), immediately following the effective date of such merger or consolidation, of securities of the surviving corporation representing (i) 50% or more, but not more than 80%, of the combined voting power of the surviving corporation’s then outstanding securities ordinarily having the right to vote at elections of directors, unless such merger or consolidation has been approved in advance by the Continuity Directors, or (ii) less than 50% of the combined voting power of the surviving corporation’s then outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the Continuity Directors); or

(e) the Continuity Directors cease for any reason to constitute at least 50% or more of the Board.

11.2. Change in Control Definitions. For purposes of this Section 11:

(a) “Continuity Directors” of the Company will mean any individuals who are members of the Board on the effective date of the Plan and any individual who subsequently becomes a member of the Board whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the Continuity Directors (either by specific vote or by approval of the Company’s proxy statement. Rule 14a-4 providesstatement in which such individual is named as a nominee for director without objection to such nomination).

(b) “Bona Fide Underwriter” means an entity engaged in business as an underwriter of securities that acquires securities of the Company through such entity’s participation in good faith in a firm commitment underwriting until the expiration of 40 days after the date of such acquisition.

(c) “Successor” means any individual, corporation, partnership, group, association or other “person,” as such term is used in Section 13(d) or Section 14(d) of the Exchange Act, other than the Company, any “affiliate” (as defined below) or any benefit plan(s) sponsored by the Company or any affiliate that succeeds to, or has the practical ability to control (either immediately or solely with the passage of time), the Company’s business directly, by merger, consolidation or other form of business combination, or indirectly, by purchase of the Company’s outstanding securities ordinarily having the right to vote at the election of directors or all or substantially all of its assets or otherwise. For this purpose, an “affiliate” is (i) any corporation at least a majority of whose outstanding securities ordinarily having the right to vote at elections of directors is owned directly or indirectly by the Company; (ii) any other form of business entity in which the Company, by virtue of a direct or indirect ownership interest, has the right to elect a majority of the members of such entity’s governing body or (iii) any entity that at the time of the approval of this Plan owns in excess of 10% of the Company’s common stock and its affiliates.

11.3. Acceleration of Vesting. Without limiting the authority of the Committee under Sections 3.2 and 4.3, if a Change in Control of the Company occurs, then, if approved by the Committee in its sole discretion either in an agreement evidencing an Incentive Award at the time of grant or at any time after the grant of an Incentive Award: (a) outstanding Options that may become immediately exercisable in full and will remain exercisable in accordance with their terms; and (b) outstanding Restricted Stock Awards and Restricted Stock Units may become immediately fully vested and non-forfeitable; and (c) any conditions to the issuance of cash or shares of Common Stock pursuant to Performance Awards may lapse.

11.4. Cash Payment. If a Change in Control of the Company occurs, then the Committee, if approved by the Committee in its sole discretion either in an agreement evidencing an Incentive Award at the time of grant or at any time after the grant of an Incentive Award, and without the consent of any Participant affected thereby, may determine that:

(a) Some or all Participants holding outstanding Options will receive, with respect to some or all of the shares of Common Stock subject to such Options (“Option Shares”), either (i) as of the effective date of any such Change in Control, cash in an amount equal to the excess of the Fair Market Value of such Option Shares on the last business day prior to the effective date of such Change in Control over the exercise price per share of such Option Shares, (ii) immediately prior to such Change of Control, a number of shares of Common Stock having an aggregate Fair Market Value equal to the excess of the Fair Market Value of the Option Shares as of the last business day prior to the effective date of such Change in Control over the exercise price per share of such Option Shares; or (iii) any combination of cash or shares of Common Stock with the amount of each component to be determined by the Committee not inconsistent with the foregoing clauses (i) and (ii), as proportionally adjusted; and

(b) any Options which, as of the effective date of any such Change in Control, are “underwater” (as defined in Section 3.2(d)) shall terminate as of the effective date of any such Change in Control; and

(c) some or all Participants holding Performance Awards will receive, with respect to some or all of the shares of Common Stock subject to such Performance Awards that remain subject to issuance based upon the future achievement of Performance Criteria or other future event as of the effective date of any such Change in Control of the Company, cash in an amount equal the Fair Market Value of such shares immediately prior to the effective date of such Change in Control.

11.5. Limitation on Change in Control Payments. Notwithstanding anything in Section 11.3 or 11.4 to the contrary, if, with respect to a Participant, the acceleration of the exercisability of an Option as provided in Section 11.3 or the payment of cash or shares of Common Stock in exchange for all or part of an Option as provided in Section 11.4 (which acceleration or payment could be deemed a “payment” within the meaning of Section 280G(b)(2) of the Code), together with any other “payments” that such Participant has the right to receive from the Company or any corporation that is a member of an “affiliated group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Code) of which the Company is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the “payments” to such Participant pursuant to Section 11.3 or 11.4 will be reduced to the largest amount as will result in no portion of such “payments” being subject to the excise tax imposed by Section 4999 of the Code; provided, however, that if a proponentParticipant is subject to a separate agreement with the Company or a Subsidiary which specifically provides that payments attributable to one or more forms of a proposal failsemployee stock incentives or to notify us at least 45 days priorpayments made in lieu of employee stock incentives will not reduce any other payments under such agreement, even if it would constitute an excess parachute payment, or provides that the Participant will have the discretion to determine which payments will be reduced in order to avoid an excess parachute payment, then the monthlimitations of this Section 11.4 will, to that extent, not apply.

12. Rights of Eligible Recipients and day of mailingParticipants; Transferability

12.1. Employment or Service. Nothing in the Plan will interfere with or limit in any way the right of the prior year’s proxy statement, management proxiesCompany or any Subsidiary to terminate the employment or service of any Eligible Recipient or Participant at any time, nor confer upon any Eligible Recipient or Participant any right to continue in the employ or service of the Company or any Subsidiary.

12.2. Rights as a Shareholder. As a holder of Incentive Awards (other than Restricted Stock Awards), a Participant will have no rights as a shareholder unless and until such Incentive Awards are exercised for, or paid in the form of, shares of Common Stock and the Participant becomes the holder of record of such shares. Except as otherwise provided in the Plan, no adjustment will be allowed to use their discretionary voting authority when the proposal is raised at the meeting, without any discussion of the matter.

Due to the complexity of the respective rights of the shareholders and the company in this area, any shareholder desiring to propose such an action is advised to consult with hismade for dividends or her legal counseldistributions with respect to such rights. We suggest that anyIncentive Awards as to which there is a record date preceding the date the Participant becomes the holder of record of such proposal be submitted by certified mail, return-receipt requested.shares, except as the Committee may determine in its discretion.

12.3. Restrictions on Transfer.

SOLICITATION(a) Except pursuant to a testamentary instrument or the laws of descent and distribution or as otherwise expressly permitted by subsections (b) and (c) below, no right or interest of any Participant in an Incentive Award prior to the exercise (in the case of Options) or vesting (in the case of Restricted Stock Awards) or settlement (in the case of Restricted Stock Units or Performance Awards) of such Incentive Award will be assignable or transferable, or subjected to any lien, during the lifetime of the Participant, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise.

We(b) A Participant will bearbe entitled to designate a beneficiary to receive an Incentive Award upon such Participant’s death, and in the costevent of preparing, assemblingsuch Participant’s death, payment of any amounts due under the Plan will be made to, and mailingexercise of any Options (to the proxy, Proxy Statement, Quarterly Report, Annual Report and other material whichextent permitted pursuant to Section 9 of the Plan) may be sentmade by, such beneficiary. If a deceased Participant has failed to designate a beneficiary, or if a beneficiary designated by the Participant fails to survive the Participant, payment of any amounts due under the Plan will be made to, and exercise of any Options (to the extent permitted pursuant to Section 9 of the Plan) may be made by, the Participant’s legal representatives, heirs and legatees. If a deceased Participant has designated a beneficiary and such beneficiary survives the Participant but dies before complete payment of all amounts due under the Plan or exercise of all exercisable Options, then such payments will be made to, and the exercise of such Options may be made by, the legal representatives, heirs and legatees of the beneficiary.

(c) Upon a Participant’s request, the Committee may, in its sole discretion, permit a transfer of all or a portion of a Non-Statutory Stock Option, other than for value (i.e., a gift), to such Participant’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, any person sharing such Participant’s household (other than a tenant or employee), a trust in which any of the foregoing have more than 50% of the beneficial interests, a foundation in which any of the foregoing (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent of the voting interests. Any permitted transferee will remain subject to all the terms and conditions applicable to the shareholders in connection with this solicitation. Brokerage houses and other custodians, nominees and fiduciariesParticipant prior to the transfer. A permitted transfer may be requestedconditioned upon such requirements as the Committee may, in its sole discretion, determine, including, but not limited to forward soliciting materialexecution and/or delivery of appropriate acknowledgements, opinion of counsel, or other documents by the transferee.

12.4. Non-Exclusivity of the Plan. Nothing contained in the Plan is intended to modify or rescind any previously approved compensation plans or programs of the Company or create any limitations on the power or authority of the Board to adopt such additional or other compensation arrangements as the Board may deem necessary or desirable.

13. Securities Law and Other Restrictions

Notwithstanding any other provision of the Plan or any agreements entered into pursuant to the beneficial ownersPlan, the Company will not be required to issue any shares of stock,Common Stock under this Plan, and a Participant may not sell, assign, transfer or otherwise dispose of shares of Common Stock issued pursuant to Incentive Awards granted under the Plan, unless (a) there is in effect with respect to such shares a registration statement under the Securities Act and any applicable securities laws of a state or foreign jurisdiction or an exemption from such registration under the Securities Act and applicable state or foreign securities laws, and (b) there has been obtained any other consent, approval or permit from any other U.S. or foreign regulatory body which case theythe Committee, in its sole discretion, deems necessary or advisable. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on certificates representing shares of Common Stock, as may be reimburseddeemed necessary or advisable by us for their expensesthe Company in doing so. Proxies are being solicited primarily by mail. Nevertheless, our officersorder to comply with such securities law or other restrictions.

14. Plan Amendment, Modification and employees may solicit proxies personally, by telephone, by special letter, or via the Internet.Termination

The Board may suspend or terminate the Plan or any portion thereof at any time, and may amend the Plan from time to time in such respects as the Board may deem advisable in order that Incentive Awards under the Plan will conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of Directors does not intend to presentthe Company; provided, however, that no such amendments to the meeting any other matter not referredPlan will be effective without approval of the Company’s shareholders if shareholder approval of the amendment is then required pursuant to above and does not presently knowSection 422 of the Code or the rules of any mattersstock exchange or the NASDAQ Stock Market or similar regulatory body. No termination, suspension or amendment of the Plan may adversely affect any outstanding Incentive Award without the consent of the affected Participant; provided, however, that this sentence will not impair the right of the Committee to take whatever action it deems appropriate under Sections 3.2(c), 4.3 and 11.

15. Effective Date and Duration of the Plan

The Plan is effective as of the Effective Date. The Plan will terminate at midnight on November 22, 2032 and may be presentedterminated prior to such time by Board action. No Incentive Award will be granted after termination of the Plan. Incentive Awards outstanding upon termination of the Plan may continue to be exercised, or become free of restrictions, according to their terms.  If shareholder approval of this Plan shall not have been obtained on or prior to the meeting by others. If, however,12-month anniversary of the Effective Date, or if this Plan is submitted to a vote of shareholders and not approved, then this Plan and all Incentive Awards granted hereunder shall thereupon be null and void without any further action required on the part of the Committee or the Company.

16. General Provisions

16.1. Governing Law. Except to the extent expressly provided herein or in connection with other matters come beforeof corporate governance and authority (all of which shall be governed by the meeting, it is the intentlaws of the persons named inCompany’s jurisdiction of incorporation), the enclosed proxyvalidity, construction, interpretation, administration and effect of the Plan and any rules, regulations and actions relating to vote the proxyPlan will be governed by and construed exclusively in accordance with their best judgment.the laws of the State of Minnesota notwithstanding the conflicts-of-laws principles of any jurisdictions.

16.2. Successors and Assigns. The Plan will be binding upon and inure to the benefit of the successors and permitted assigns of the Company and the Participants.

* SPECIMEN PROXY CARD *

Please vote, sign, date and return promptly in the enclosed envelope

Special Meeting Proxy Card – Mill City Ventures III, Ltd.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 1.

1. To approve the Company’s 2022 Stock Incentive Plan

1. To transact such other business that may properly come before the special meeting

Note:  This proxy card must be signed exactly as the name appears hereon.  When shares are held jointly, each holder should sign.  When signing as an executor, administrator, attorney, trustee or guardian, please give full title as such.  If the signer is a corporation, please sign full corporate name by a duly authorized officer, giving full title as such.  If signer is a partnership, please sign in partnership name by an authorized person.

SPECIMEN

Special Meeting of Shareholders

January 20, 2023

Important Notice Regarding the Availability of Proxy Materials

for the Special Meeting of Shareholders

To Be Held on January 20, 2023

The Proxy Statement for the Special Meeting is available at http://millcityventures3.com/investors

MILL CITY VENTURES III, LTD.

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
Friday, December 19, 2014
9:00 a.m.

328 Barry Avenue S., #210

Wayzata, MN 55391

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned, a shareholder of Mill City Ventures III, Ltd.,revoking all prior proxies, hereby appoints Douglas M. Polinsky and Joseph A. Geraci, II, and each of them, as proxies, with full power of substitution, as proxy to represent and re-substitution, to vote on behalfall shares of the undersigned the numberCommon Stock of sharesMill City Ventures III, Ltd. (the “Company”), which the undersigned is thenwill be entitled to vote if personally present at the annualSpecial Meeting of the Shareholders of the Company to be held on January 20, 2023, at 8:00 a.m. local time at 1907 Wayzata Boulevard, Suite 205, Wayzata MN 55391. Each share of Common Stock is entitled to one vote. THE PROXIES ARE FURTHER AUTHORIZED TO VOTE, IN THEIR DISCRETION, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.

This proxy, when properly executed, will be voted as directed. If no direction is made, the proxy shall be voted FOR the approval of the Company’s 2022 Stock Incentive Plan, and, in the case of other matters that legally come before the meeting, as said proxies may deem advisable.

Please check here if you plan to attend the special meeting of shareholders of the companyon January 20, 2023, at 8:00 a.m. (local time).  ☐

(Continued and to be held at 328 Barry Avenue. S., Suite 210, Wayzata, MN 55391,signed on Friday, December 19, 2014, at 9:00 a.m., and at any and all adjournments thereof.

See reverse for voting instructions.

PROPOSALS: The Board of Directors recommends a voteFOR all nominees listed and FOR Proposals Two, Three and Four.

Note: the Board of Directors recommends you vote 3 YEARS on this proposalReverse Sides]

The undersigned hereby revokes all previous proxies relating to the shares covered hereby and acknowledges receipt of the Notice and Proxy Statement relating to the annual meeting of shareholders. When properly executed, this proxy will be voted on the proposal set forth herein as directed by the shareholder. The undersigned authorizes the proxies to vote in their discretion upon such other business as may properly come before the meeting.