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Employment Agreements. The BankEagle entered into an Employment Agreement, effective April 27, 2015, with Peter J. Johnson, its President and Chief Executive Officer. The Employment Agreement will continue in effect untilhas a three-year term and renews annually for an additional year on April 27 2018. Upon the anniversary date and with the approval ofunless the Board it will be extended for one additional year.of Directors acts to prevent renewal at least thirty days before April 27. The Employment Agreement provides for an annual base salary of $246,000 per year, which may be increased from time to time (but not reduced – currently $262,000)$300,000). Under the Employment Agreement, Mr. Johnson generally will be entitled to participate in all employee benefit plans including, but not limited to, retirement plans, profit-sharing plans, health-and-accident plans, medical coverage or any other employee benefit plan or arrangement made available by the Bank in the future to its senior executives and key management employees.

The Employment Agreement provides that if Mr. Johnson’sJohnson’s employment is terminated by the Bank for any reason other than for cause, or if Mr. Johnson terminates his employment due to either (i) a diminishingfor good reason within the meaning of his duties and responsibilities, (ii) a relocation of his place of employment by more than 50 miles, (iii) the liquidation or dissolution of the Bank, or (iv) any breach of the Agreement by the Bank,Internal Revenue Code Section 409A, he will be entitled to receive certain payments from the Bank. These payments will be a sum equal to the payments due to Mr. Johnsonhis base salary for the remaining term of the Employment Agreement, including base salary, bonuses, and any other cash or deferred compensation paid or to be paid (including the value of employer contributions that would have been made on his behalf over the remaining term of the agreement to any tax-qualified retirement plan), subject to certain restrictions.Agreement.

The Employment Agreement contains provisions requiring non-disclosure of confidential information regarding the business and activities of the Bank and contains provisions restricting Mr. Johnson’sJohnson’s ability to compete with the Bank for a one-year period after termination of his employment dueemployment.

The Employment Agreement provides that Mr. Johnson is entitled to any Eventcompensation if a change in control occurs during the term of Termination.the agreement. For purposes of the Employment Agreement, the term change in control is defined as it is defined in Internal Revenue Code Section 409A and implementing rules. Calculated as three times the executive’s salary and the executive’s cash bonus and cash incentive compensation, the lump-sum benefit is payable upon change in control. The agreement also promises continued health and dental insurance coverage for the remaining contract term and legal fee reimbursement if the Employment Agreement is challenged after a change in control.

Non-Contributory Profit Sharing Plan. Neither Eagle nor the Bank has a pension plan for employees. Instead, the Bank has established a non-contributory profit sharing plan for eligible employees who have completed one year of service with Opportunity Bank. The non-contributory plan enables Opportunity Bank to contribute up to 15% of qualified salaries each year. Last calendar year 4% was contributed. The percentage amount of the contribution is determined by the board of directors each year and is based primarily on profitability for the past year. For the year ended December 31, 2017,2019, the Board authorized profit sharing contributions to Mr. Johnson of $13,447,$17,084, to Ms. Clark of $8,213$12,370 and to Mr. Rensmon of $1,690 and total contribution expense was $564,734 for the year ended December 31, 2017.$8,644.

The Non-Contributory Profit Sharing Plan also allows employees to make contributions to a tax-qualified defined contribution savings plan or an employee owned 401(k) plan. Employees can contribute a portion of their salaries, (up(up to a maximum of $18,000$19,000 for 2017)2019 for employees under age 50. Those 50 and older may contribute up to $25,000), to a 401(k) plan. Eagle’s Board has the authority to match up to a maximum of 50% of an employee’s contribution provided that the matching amount does not exceed 2.0% of such employee compensation. For the year ended December 31, 2017,2019, the Bank contributed $5,400, $1,037$5,600, $4,421 and $3,793$3,490 to each of Messrs. Johnson’s and Rensmon’s and Ms. Clark’s 401(k) programs, respectively, and $206,163 in total expense to the 401(k) program for the year ended December 31, 2017.respectively.

Salary Continuation AgreementAgreements. Another benefit offered by the Bank is a program to increase overall retirement benefits for employees to levels which more closely approximate those in comparable businesses. The Bank consulted with independent compensation consultants and developed a plan to supplement retirement benefits. The plan Opportunity Bank adopted covers sixseven of its senior officers, including Messrs. Johnson and Rensmon and Ms. Clark, and fourfive senior vice presidents. Benefit levels were reviewed by the compensation committee in 20112018 and approved by the board and adjusted in fiscal year 2012.2018. New entrants have their plans reviewed by the compensation committee and approved by the full board of directors. This non-qualifiednonqualified retirement plan is designated the Opportunity Bank of Montana Salary Continuation Agreement (the “Salary Continuation Agreement”). Under the Salary Continuation Agreement, each officerparticipant receives a fixed retirement benefit based on his or her years of service with Opportunity Bank. The Bank maintains insurance policies whose proceeds will reimburse the Bank for the payment of benefits under this plan. ItThe annual retirement benefit is payable in monthly installments for the officer’s lifetime upon employment termination after attaining the normal retirement age of 65. The Salary Continuation Agreements also providesprovide for partial payments in the event of early retirement, death or disability. In Mr. Johnson’s case, if he retires at age 65,The reduced benefit amounts in the Salary Continuation Agreement provides for a lump sum paymentevent of $623,000,an executive’s early retirement, death, or an annual payment for life of $69,500. In Ms. Clark’s case, if she retires at age 65,disability are calculated based on the Salary Continuation Agreement provides for an annual payment for life of $9,500. Opportunity Bank has purchased life insurance contracts for each covered executive to fund the payments.liability accrual balance existing when employment termination occurs. Opportunity Bank of Montana recognizes expensesnonqualified deferred compensation expense to maintain the plan. For the year ended December 31, 2017,2019, nonqualified deferred compensation expense to maintain the total expenses were $271,836.plan was $544,426.

On October 11, 2018, the Bank entered into amendments with five senior officers including Mr. Johnson and Ms. Clark that increased the defined retirement benefit. The amendment to President and Chief Executive Officer Peter J. Johnson’s Salary Continuation Agreement increases the annual benefit to be received by Mr. Johnson upon attaining age 65 from $69,500 to $78,000. The amendment to the Salary Continuation Agreement with Laura F. Clark, Executive Vice President and Chief Financial Officer, increases the annual benefit to be received by Ms. Clark upon attaining age 65 from $9,500 to $11,000.

The Bank entered into a Salary Continuation Agreement with Patrick D. Rensmon, Senior Vice President/Chief Information Officer of the Bank that was effective as of October 1, 2018. The Salary Continuation Agreement with Mr. Rensmon provides for an annual payment for life of $14,000 after attaining the normal retirement age of 65.

Split-Dollar Benefit Plan. The Bank has entered into agreements with four insurance companies for the purpose of establishing a split-dollar benefit plan. The Bank purchased life insurance policies on 2324 officers of the Bank, including nineeight of the Bank’s executive officers. The plan provides for the officers to receive life insurance benefits ranging from $50,000 to $75,000, provided they meet the eligibility requirements of the plan. The remainder of the life insurance benefits accrues to the Bank.

Bonus Plan. The Bank also maintains a discretionary cash bonus program (“Bonus Program”) for all eligible employees. The Bonus Program is based on performance measures tied to the employee’s job description. For the Chief Executive Officer and the other executive officers, the majority of the performance measurement is tied to the after-tax net profitability of Opportunity Bank and also its efficiency ratio. These measures are included in all officer and employee performance measures, but to a lesser degree than the executive officer, and include job specific factors. The bank is linked specificallyusing recommendations from the analysis performed by Pearl Meyer and Partners, LLC to the Bank’s return on assets. In the case of non-officer employees,include these individual performance measures combined with bank wide financial metrics to set target bonus amounts are based on salary levels. Under the Bonus Program, the Bank’s return on assets for the period from January through October is usedofficers and employees, while also comparing them to determine the bonus levels of Bank officers. Officers’ bonuses are directly linked to Opportunity Bank’s return on assets. For example, if Opportunity Bank produces a return on assets of 0.90%, then each officer would receive a cash bonus of 9% of annual base salary. Executive officers’ bonuses are generally based on a formula of 1.25 times the Bank’s return on assets (using the above example of a return on assets of 0.90%, executive officer bonuses would be 11.25% of annual salary, or 1.25 times 9). The President and Chief Executive Officer’s bonus is generally based on a formula of 1.5 times the Bank’s return on assets.peer averages. The Board of Directors has discretionfinal authority in providing bonuses in amounts that differ from the formula.bonuses. During the year ended December 31, 2017,2019, Opportunity Bank paid total bonuses of $425,788.$637,235. For that period, Mr. Johnson’s bonus was $60,000,$82,320, Ms. Clark’s bonus was $30,000$37,570 and Mr. Rensmon’s was $15,975.$22,000.

Employee Stock Ownership Plan. In connection with its reorganization to the mutual holding company form of organization, the Bank established the ESOP for employees age 21 or older who have at least one year of credited service with the Bank. Additional shares were purchased in the second step stock offering completed April 5, 2010.

As of December 31, 2017,2019, the ESOP held 64,21130,978 shares of common stock that have not been allocated to Plan participants. These shares represent shares purchased by the ESOP in the second step stock offering. Shares of common stock purchased by the ESOP were funded by funds borrowed from Eagle. Shares purchased in the second step offering by the ESOP will be allocated to participants’ accounts over 12 years. As of December 31, 2017,2019, the Plan maintains 218,223215,867 shares that have been allocated to Plan participants. A total of 282,434246,845 shares are held in the Plan.

The ESOP is administered by the ESOP Committee of the Bank. The ESOP trustee must vote all allocated shares held by the ESOP in accordance with the instructions of participating employees. Unallocated shares will be voted by the ESOP trustee.

GAAP requires that any third party borrowing by the ESOP be reflected as a liability on Eagle’s statement of financial condition. Since the ESOP borrowed from Eagle, such obligation is eliminated in consolidation. However, the cost of unallocated shares is treated as a reduction of stockholders’ equity.

Contributions to the ESOP and shares released from the suspense account are allocated among ESOP participants on the basis of participants’ compensation as it relates to total participant compensation. Employees are fully vested upon completion of six years of service. Benefits may be payable upon retirement, early retirement, disability, death or separation from service.

The ESOP is subject to the requirements of ERISA and regulations of the IRS and the United States Department of Labor.

2011 Stock Incentive Plan. The 2011 Stock Incentive Plan, or Plan, was approved by the stockholders on October 20, 2011. The Plan was amended when approved by the stockholders on April 23, 2015 and April 20, 2017. Under the Plan, awards of Eagle’s common stock may be made to eligible directors, officers and employees. The maximum number of shares available to be awarded is 464,998. The Company is asking stockholders to approve an amendment to the 2011 Plan to increase the authorized shares and extend the termination date. See “Proposal 3- Approval of Amendment No. 3 to the 2011 Stock Incentive Plan.” Awards available under the Plan include stock options (which includes non-qualified stock options and incentive stock options) and restricted stock. Any shares delivered pursuant to an award may consist, in whole or in part, of authorized but unissued shares or of treasury shares. No stock options have been awarded to date under the Plan. Further, no more than 246,427 shares may be available for awards granted in the form of options. If any shares covered by an award granted under the Plan, or to which such an award relates, are forfeited, or if an award otherwise terminates without the delivery of shares or of other consideration, then the shares covered by such award, or to which such award relates, or the number of shares otherwise counted against the aggregate number of shares available under the Plan with respect to such award, to the extent of any such forfeiture or termination, will again be available for granting awards under the Plan.

The purposes of the Plan are to encourage directors, officers and employees of Eagle to acquire a proprietary interest in the growth and performance of the Company, to create an increased incentive to contribute to the Company’s future success and performance, thus enhancing the value of the Company for the benefit of its stockholders, and to enhance the ability of the Company and its affiliates to attract and retain highly qualified individuals upon whom, in large measure, the sustained progress, growth and profitability of the Company depends.

Outstanding Equity Awards at December 31, 20179

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Equity Compensation Plan Information

The following table provides information as of December 31, 2017,2019, about our common stock that may be issued upon the exercise of options, warrants, and rights and information regarding the number of securities available for future issuance under our current equity compensation plans, under which there are no outstanding options, warrants or rights.

Change of Control Agreements

Opportunity BankEagle entered into changeChange of control agreementsControl Agreements with Rachel R. Amdahl, Tracy A. Zepeda, Laura F. Clark, Chantelle Nash and Dale Field as of October 28, 2015 andin 2015. On December 21, 2017, Eagle entered into Change in Control Agreements with Mark A. O’Neill, and P. Darryl Rensmon as of December 21, 2017. The change of control agreements do not provide benefit payments if termination is for cause. The change of control agreements do, however, provide payments on a double trigger basis to each officer following both (x) a change of controlSenior Vice President/Chief Lending Officer of the Bank, and (y) either (a) an involuntary terminationPatrick D. Rensmon, Senior Vice President/Chief Information Officer of the officer byBank. The Change in Control Agreements provide a double trigger benefit equal to the Bank or its successor, or (b) a voluntary terminationsum of the officer’s employment without the officer’s consent, due to (i) a material change of his or her functions, duties or responsibilities, (ii) a reduction in the officer’sexecutive’s annual compensation, or (iii) a relocation of his or her place of employment by more than 50 miles without the officer’s consent. If one of these events occurs within four (4) months following a change of control of the Bank, the officer, or his or her beneficiary in the event of his or her death, would be paid a sum equal to his or her base pay plussalary and bonus for the most recently completed fiscal year. The benefits are payable if the executive’s employment is terminated without cause within two years after a change in control or if the executive resigns for good reason during the two years after a change in control. The Change in Control Agreements are for two years, renewing automatically for successive one-year periods unless Eagle provides written notice of nonrenewal 90 days before the contract anniversary date. The officer would also receive under the agreement benefit payments (less co-payment amounts) for continued life, medical, dental and disability insurance coverage substantially identical to coverage maintained by the Bank before employment termination. Continued insurance coverage benefits are payable for the 12-month period following termination or, if sooner, until otherlife, medical, dental and disability insurance coverage is obtained.obtained from another employer.

The change of control agreements have an initial two-year term and thereafter are required to be reviewed each year on the anniversary date of the agreement and may be extended at that time for an additional year. For purposes of both the employment agreement of Mr. Johnson and the change of control agreements of the officers, a change of control of the Bank means (i) a merger or consolidation where the Bank is not the consolidated or surviving bank, (ii) a transfer of all or substantially all of the assets of the Bank, (iii) voluntary or involuntary dissolution of the Bank; and (iv) a change of control as defined in the Change in Bank Control Act of 1978. A change of control would not take place for an internal reorganization such as a holding company formation or charter change. Assuming these agreements were in effect and all of the above namedabove-named officers had been terminated in connection with a change of control as of December 31, 2017,2019, the officers would receive aggregate severance payments of approximately $1,120,330$1,104,637 based upon their current level of salary and bonus, plus 12 months of benefits coverage.

PROPOSAL II2 - RATIFICATION OF APPOINTMENT

OF INDEPENDENT AUDITORS

On December 4, 2017, the firmAugust 16, 2018, the Board of Davis Kinard & Co., P.C. (“Davis Kinard”), Certified Public Accountants, who had been ratified as independent auditors for Eagle forDirectors approved the year ended December 31, 2017, resigned asrecommendation of the Company’s independent registered public accounting firm. Davis Kinard’s operations were acquired byAudit Committee that Eide Bailly LLP (“Eide Bailly”), and certain be dismissed as the independent registered public accounting firm of the professional staff and partners of Davis Kindard joinedCompany. The dismissal was effective after Eide Bailly either as employees or partnersprovided its reports on the consolidated financial statements for the fiscal year ended December 31, 2018 and the effectiveness of Eide Bailly and will continue to practice as members of Eide Bailly.the Company’s internal controls, which reports are included in the Company’s Form 10-K for the period ended December 31, 2018. Concurrent with the resignationdismissal of Davis Kinard,Eide Bailly, the Company, through and with the approval of itsthe Audit Committee engaged Eide Baillyand the Board of Directors, and following a comprehensive evaluation, decided to engage Moss Adams LLP (“Moss Adams”) as its independent registered public accounting firm.firm for the fiscal year ended December 31, 2019, subject to completion by Moss Adams of its standard client acceptance procedures and execution of an engagement letter.

Prior to deciding to engage Moss Adams, the Company did not consult with Moss Adams (1) regarding the application of accounting principles to a specific completed or contemplated transaction, or regarding the type of audit opinions that might be rendered by Moss Adams on the Company’s financial statements, and Moss Adams did not provide any written or oral advice that was an important factor considered by the Company in reaching a decision as to any such accounting, auditing or financial reporting issue, (2) on any matter that would have been the subject of a disagreement, as defined by Item 304(a)(1)(iv) of Regulation S-K, or (3) on any matter that would have been a reportable event, as defined by Item 304(a)(1)(v) of Regulation S-K.

The reports of Davis KinardEide Bailly regarding Eagle’sthe Company’s financial statements for the fiscal years ended December 31, 20162017 and 20152018 did not contain anyan adverse opinion or disclaimer of opinion and werewas not qualified or modified as to uncertainty, audit scope or accounting principles. During the years ended December 31, 20162017 and 2015, and during the period from December 31, 2016 through December 4, 2017, the date of resignation,2018, there were no disagreements with Davis KinardEide Bailly on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Davis Kinard,Eide Bailly, would have caused it to make reference to such disagreement in its reports.

Prior to engaging Eide Bailly, Eagle did not consult with Eide Bailly regarding the application of accounting principles to a specific completed or contemplated transaction or regarding the type of audit opinions that might be rendered by Eide Bailly on Eagle’s financial statements, and Eide Bailly did not provide any written or oral advice that was an important factor considered by Eagle in reaching a decision as to any such accounting, auditing or financial reporting issue.

The Board has determined to appoint Eide BaillyMoss Adams LLP (Moss Adams) to act as independent auditors for the fiscal year ending December 31, 2018.2020. Neither Eagle’s Bylaws nor other governing documents or law require stockholder ratification of the appointment of Eide BaillyMoss Adams as Eagle’s independent auditors. However, Eagle is submitting the appointment of Eide BaillyMoss Adams to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain that firm. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of different independent auditors at any time if they determine that such a change would be in the best interest of Eagle and its stockholders.

A representative of Eide BaillyMoss Adams will be present at the Annual Meeting, and will be given an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.

Audit Fees, Audit-Related Fees, Tax Fees, All Other Fees and Auditor Independence

For the year ended December 31, 2017,2019, Eagle incurred expenses related to services provided by its independent auditors Eide Bailly LLP (“Eide Bailly”),Moss Adams, of $80,500 and to Davis Kinard PC (“Davis Kinard”) of $22,500$228,350 for audit fees. These amounts relate to the annual audit of our consolidated financial statements included in our Annual Reports on Form 10-K, quarterly reviews of interim financial statements included in our Quarterly Reports on Form 10-Q, services normally provided by the independent registered public accounting firm in connection with statutory or regulatory filings or engagements for the indicated fiscal year, statutory audits of certain of our subsidiaries, and services related to filings under the Securities Act of 1933 and the Securities Exchange Act of 1934. Eagle incurred audit related expenses to Moss Adams related to the Big Muddy Bancorp, Inc. acquisition of $180,514 and $8,275 related to the Western Holding Company of Wolf Point acquisition. For the year ended December 31, 2018, Eagle incurred expenses related to services provided by its independent auditors Eide Bailly, of $144,250 for audit fees. Eagle incurred audit related expenses to Eide Bailly related to the TwinCo Inc. acquisition in the amount of $32,500$36,821 and to Davis Kinard of $76,125. Fees for services provided by Davis Kinard$7,282 related to the October 2017 stock offering were $24,968. For the year ended December 31, 2016 Eagle accrued $102,250 for audit fees.Big Muddy Bancorp, Inc. acquisition. Tax fees accrued for services provided by Eide BaillyMoss Adams were $12,000$14,000 in the year ended December 31, 20172019 and tax fees accrued for services provided by Davis Kinard were $3,375 and $11,000$18,000 in the yearsyear ended December 31, 2017 and 2016, respectively.2018, which was provided by Eide Bailly. The Audit Committee has concluded that the providing of non-audit services did not adversely impact the independence of Moss Adams or Eide Bailly or Davis Kinard.Bailly. The Audit Committee is not authorized to approve any non-audit service engagement where the provision of such service by the independent accountants is prohibited by applicable law, the regulations of the SEC or the Nasdaq Marketplace Rules. Pre-approval is not required if (a) the aggregate amount of all such non-audit services provided to Eagle constitutes not more than five percent of the total amount of revenues paid by Eagle to its independent auditors during the fiscal year in which the non-audit services are provided; (b) such services were not recognized by Eagle at the time of the engagement to be non-audit services; and (c) the non-audit services are promptly brought to the attention of the Audit Committee and approved by them, or by one or more of the members of the Committee to whom authority to grant such approval has been delegated, prior to completion of the audit. For the years ended December 31, 20172019 and December 31, 2016,2018, the Audit Committee of Eagle has pre-approved all fees paid to Moss Adams and Eide Bailly and Davis Kinard.Bailly.

Report of the Audit Committee

The following is the report of the Audit Committee with respect to the Company’sCompany’s audited consolidated financial statements for the year ended December 31, 2017.2019. The information contained in this report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation of this proxy statement by reference.

The primary role of the Audit Committee, as more fully described in its charter, is to assist the Board of Directors in its oversight of our corporate accounting and financial reporting process and to interact directly with and evaluate the performance of our independent auditors. Management is responsible for the preparation, presentation and integrity of our consolidated financial statements, accounting and financial reporting principles, internal controls and procedures designed to assure compliance with accounting standards, applicable laws and regulations. Our independent registered public accounting firm, Eide Bailly,Moss Adams, is responsible for performing an independent audit of the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board, or PCAOB. In the performance of its oversight function, the Audit Committee has taken the following actions:

Based upon these reviews and discussions, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in Eagle’sEagle’s Annual Report on Form 10-K for the year ended December 31, 2018,2019, to be filed with the SEC.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF EIDE BAILLYMOSS ADAMS LLPAS EAGLE’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 20120820 UNDER THIS PROPOSAL II2.

PROPOSAL 3 –APPROVAL OF AMENDMENT NO. 3 TO THE 2011 STOCK INCENTIVE PLAN

On February 20, 2020, our Board of Directors has adopted, subject to stockholder approval, Amendment No. 3 (the “2011 Plan Amendment”) to the Eagle Bancorp Montana, Inc. 2011 Stock Incentive Plan for Directors, Officers and Employees (the “2011 Plan”), to, among other things, (i) provide for an increase in the number of shares of Restricted Stock for issuance under the Plan from 218,571 shares to 293,571 shares and (ii) extend the expiration date of the Plan from November 1, 2021 to April 23, 2030. We are seeking stockholder approval for these changes.

The following is a summary of the material features of the 2011 Plan Amendment, which is qualified in its entirety by reference to the provisions of the 2011 Plan Amendment, attached hereto as Appendix A.

Purpose of the Proposed Amendment

The proposed 2011 Plan Amendment will increase the number of Restricted Shares that may be issued to Participants. This benefits our stockholders by providing the Company with the flexibility to design an award structure that is intended to align the long-term financial interests of Participants in the 2011 Plan with those of our stockholders.

Description of the Proposed Amendment

On February 20, 2020, the Board of Directors approved an amendment to the 2011 Plan to increase the aggregate number of shares of Restricted Shares issuable under the 2011 Plan from 218,571 shares to 293,571 shares. As of March 6, 2020, 20,560 shares of common stock remain available for issuance under the 2011 Plan. We expect this will be sufficient for the normal grants to be made to plan participants. We do not expect to have a sufficient number of shares available for grants under this plan in future years. If the 2011 Plan Amendment is approved by stockholders, 95,560 shares will be available for issuance under the 2011 Plan and the term of the 2011 Plan will be extended to April 23, 2030. If approved by the Company’s stockholders, the 2011 Plan Amendment will be effective on April 23, 2020, the date of the Annual Meeting.

Required Vote and Recommendation of the Board

In order to approve the 2011 Plan Amendment, the proposal must receive the affirmative vote of a majority of the outstanding shares of common stock entitled to vote and present in person or by proxy at the Annual Meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF AMENDMENT NO.3 TO THEEAGLE BANCORP MONTANA, INC. 2011 STOCK INCENTIVE PLAN FOR DIRECTORS, OFFICERS AND EMPLOYEES.

Proposal III4 – Advisory Vote on Named Executive Officer Compensation

Our Board of Directors proposes that stockholders provide advisory (non-binding) approval of the compensation of our named executive officers, as disclosed in this proxy statement in accordance with the SEC’sSEC’s rules (commonly known as “say-on-pay” proposal). We recognize the interest our stockholders have in the compensation of our executives, and we are providing this advisory proposal in recognition of that interest and as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 also known as “the Dodd-Frank Act.”

Our named executive officer compensation program is designed to attract, motivate, and retain our named executive officers, while ensuring alignment of their interests with stockholders’ interests. Our named executive officers are critical to our success, and our compensation program is designed to reward them for their service to the Company, the achievement of specific performance goals, and the realization of increased stockholder value. The Compensation Committee reviews the compensation programs for our named executive officers, at least annually, to ensure the fulfillment of our compensation philosophy and goals. The Compensation Committee and the Board believe that its policies and procedures are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement has supported and contributed to the Company’s recent and long-term success. At our 20172019 Annual Meeting of Stockholders, approximately 90.5%96.5% of the votes cast by our stockholders approved the compensation in the 20172019 proxy statement of our named executive officers.

Please read the summary compensation table and other related compensation tables and narratives, beginning on page 15,14, which provide detailed information on the compensation of our executive officers.

We are asking our stockholders to indicate their support for our named executive officer compensation as described in this proxy statement. Accordingly, we will ask our stockholders to vote “FOR” the following resolution at our Annual Meeting:

“RESOLVED, that the compensation paid to the named executive officers, as disclosed in the Company’s Proxy Statement for the 20182020 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Summary Compensation Table and the other related compensation tables and narrative disclosure, is hereby APPROVED.”

The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or our Board. However, we value the opinion of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.

The Board unanimously recommends a vote FOR the approval of the advisory resolution on the compensation of our named executive officers.

Proposal 5 – APPROVAL OF THE 2020 NON-EMPLOYEE DIRECTOR AWARD PLAN

On December 12, 2019, the Board of Directors adopted the 2020 Non-Employee Director Award Plan, subject to stockholder approval (the “New Director Plan”). The Company’s current Stock Incentive Plan (the “2011 Plan”) was adopted by shareholders in 2011. Non-employee directors are eligible to receive awards, and have received awards, under the 2011 Plan.

The purpose of the New Director Plan is to attract and retain highly-qualified non-employee directors, and provide an incentive that aligns the economic interests of directors with those of our stockholders. We believe that continuing to pay a portion of our non-employee director’s compensation in the form of restricted stock awards under the New Director Plan will support the creation of long-term value and business returns for our stockholders.

The Compensation Committee (the “Committee”) has reviewed the 2011 Plan to determine whether it remains a flexible and effective source of compensation for non-employee directors in terms of the number of shares of stock available for awards and in terms of its design, as well as whether it generally conforms with best practices in today’s business environment.

Based on its review, upon the recommendation of the Committee, the Board recommends that the Company adopt a new plan for non-employee directors to:

Accordingly, the Board approved, and recommends that the Company’s stockholders approve, the New Director Plan. Upon approval of the New Director Plan by the Company’s stockholders, newly elected non-employee directors will continue to be able to receive new awards under the terms of the 2011 Plan. Any outstanding awards previously granted under the 2011 Plan will continue in effect after approval of the New Director Plan and will not be deemed amended or modified by the adoption and approval of the New Director Plan. If the New Director Plan is not approved by the Company’s stockholders, non-employee directors will continue to receive awards under the 2011 Plan.

The material features of the New Director Plan are summarized below. The summary is qualified in its entirety by reference to the specific provisions of the Non-Employee Director Plan, the full text of which is set forth as Appendix B to this Proxy Statement.

Administration

The New Director Plan will be administered by the Committee. Subject to the express provisions of the New Director Plan, the Committee has the authority, in its discretion, to interpret the New Director Plan, establish rules and regulations for its operation, and determine the form and amount and other terms and conditions of such awards.

Eligibility and Limitation on Awards

Eligible participants in the New Director Plan are directors who, on the date such person is to receive a grant of restricted shares under the plan is not a current employee of the Company or any of the Company’s subsidiaries (“Outside Director”). Seven of our directors will be eligible to participate in the New Director Plan. Messrs. Johnson, Walsh and Ruddy are not eligible to participate in new Director Plan. The maximum awards that can be granted under the New Director Plan to a single participant in any calendar year are awards having a grant date fair value totaling $25,000.

Summary of Award Terms and Conditions

Awards under the New Director Plan may only include restricted shares of common stock.

Under the proposed New Director Plan, each Outside Director, every November 1^st beginning November 1, 2020, or, if November 1^st is not a business day, then on the first business day thereafter, will receive an annual grant of restricted stock having a Fair Market Value (as defined in the New Director Plan) on the date of grant (determined without regard to the restrictions applicable thereto) equal to $5,000.

The restricted shares granted to directors under the New Director Plan will be subject to restrictions prohibiting such restricted shares from being sold, transferred, assigned, pledged or otherwise encumbered or disposed of. The restrictions with respect to each award of restricted shares shall lapse on the one-year anniversary date of the grant of such award; provided, however, that the restrictions with respect to such restricted shares shall lapse immediately in the event that (i) the director is nominated for a new term as an Outside Director but is not elected by shareholders of the Company, or (ii) the director ceases to be a member of the Board due to death, disability or mandatory retirement (if any). The restrictions with respect to all of a director's restricted shares shall lapse immediately prior to a change in control (as defined in the New Director Plan) provided that the director is a member of the Board immediately prior to such change in control. Except as described above, if an Outside Director ceases to be a member of the Board before that one-year restriction period that lapses on the anniversary of the date of grant, the restricted shares so granted shall be forfeited and transferred back to the Company.

During the restriction period, a director will have the right to vote his or her restricted shares. At the end of the restriction period, the director will receive any cash dividends with respect to such restricted shares that were paid during the restriction period. All distributions, if any, received by a director with respect to restricted shares as a result of any stock split, stock distribution, combination of shares, or other similar transaction will be subject to the same restrictions as are applicable to the restricted shares to which such distributions relate.

Shares Subject to the New Plan

The number of shares of the Company’s common stock reserved for issuance, subject to stockholder approval, with respect to awards under the New Director Plan is thirteen thousand (13,000). Restricted shares that are forfeited will be available for future grants of restricted shares under the New Director Plan.

Anti-Dilution Protections

In the event of any change in corporate capitalization such as a stock split, reverse stock split, stock dividend, combination or reclassification of the common stock, or any other increase or decrease in the number of issued shares of common stock effected without receipt of consideration by the Company, such adjustment shall be made in the number and class of shares which are reserved and may be delivered under the New Director Plan, in the number and class of shares subject to outstanding awards, and in any award limits as may be determined to be appropriate and equitable by the Committee.

Amendment and Termination

The New Director Plan may be amended, altered, suspended or terminated by the Board, in its sole discretion, without stockholder approval, unless approval of a change is required by applicable law. Any amendments made without stockholder approval could increase the costs of the New Director Plan. A director’s consent would be required to revoke or alter an outstanding award in a manner unfavorable to such director.

Federal Income Tax Consequences

The federal income tax consequences of the issuance of awards under the New Director Plan are as described below. The following information is only a summary of the tax consequences of the awards, and participants should consult with their own tax advisors with respect to the tax consequences inherent in the ownership of the awards, and the ownership and disposition of any underlying securities.

A participant will not be taxed at the date of an award of restricted shares, but will be taxed at ordinary income rates on the fair market value of any restricted shares as of the date that the restrictions lapse, unless the participant, within 30 days after transfer of such restricted shares to the participant, elects under Section 83(b) of the Code to include in income the fair market value of the restricted shares as of the date of such transfer. The Company will be entitled to a corresponding deduction, subject to certain limits on the deductibility of compensation under the Code. Any disposition of shares after the restrictions lapse will be subject to the regular rules governing long-term and short-term capital gains and losses, with the basis for this purpose equal to the fair market value of the shares at the end of the restricted period (or on the date of the transfer of the restricted shares, if the participant elects to be taxed on the fair market value upon such transfer).

At the end of the restriction period, the participant shall have the right to receive any cash dividends, with respect to such restricted shares, that were paid during the restriction period (the “Accrued Dividends”). The Accrued Dividends will be taxable to the participant at ordinary income tax rates and will be deductible by the Company unless the participant has elected to be taxed on the fair market value of the restricted shares upon transfer pursuant to Section 83(b), in which case the Accrued Dividends will be taxable to the participant as dividends and will not be deductible by the Company. Dividends declared and paid to the participant following the restriction period will be taxable to the participant as dividends and will not be deductible by the Company.

Effective Date

The New Director Plan will be effective as of April 23, 2020, if approved by the stockholders of the Company. If not approved by the stockholders, no awards will be made under the New Director Plan and non-employee directors will continue to receive awards under the 2011 Plan subject to its existing terms and conditions.

Vote Required

Stockholders are requested in this Proposal 5 to approve the New Director Plan. 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 New Director Plan. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE 2020 NON-EMPLOYEE DIRECTOR AWARD PLAN.

Transactions with Certain Related Persons

The Bank has followed the policy of offering residential mortgage loans for the financing of personal residences and consumer loans to its officers, directors and employees. Loans are made in the ordinary course of business. Except for consumer loans to officers and employees, but not directors, with an interest rate one percent below the Bank prevailing rate, these loans are also made on substantially the same terms and conditions, including interest rate and collateral, as those of comparable transactions prevailing at the time with persons not related to the Bank. These loans do not include more than the normal risk of collectability or present other unfavorable features. As of December 31, 2017,2019, the aggregate principal balance of loans outstanding to all directors, executive officers and immediate family members of such individuals, and companies in which they are principals was approximately $1,485,000.$912,000. No executive officer has had a consumer loan outstanding in excess of $120,000 since July 1, 2008 and none are currently contemplated.

DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE16(a) REPORTS

Section 16(a) of the Securities Exchange Act requires Eagle’sEagle’s directors and executive officers, and persons who own more than ten percent of a registered class of Eagle’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of Eagle. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish Eagle with copies of all Section 16(a) forms they file.

To the knowledge of the Company and based upon a review of Forms 3 and 4 and amendments thereto furnished to Eagle pursuant to Rule 16a-3(e), the Company believes that, during the year ended December 31, 2017, no person who is2019, there was one instance of a Form 3 being filed late. The Form 3 for new director officer or beneficial owner of 10% of the common stock failed to fileCynthia A. Utterback was not filed on a timely basis, the reports required by Section 16(a) of the Securities Exchange Act. However, a Form 4 was filed late by Ms. Zepeda on February 13, 2018 for one transaction and Mr. Field on February 22, 2018 for one transaction.basis.

OTHER BUSINESS

As of the date of this Proxy Statement, the Board of Directors of Eagle knows of no other matters than those described herein to be brought before the Annual Meeting other than procedural matters incident to the conduct of the Annual Meeting. If further business is properly presented, the proxy holders will vote proxies, as determined by a majority of the Board of Directors.

HOUSEHOLDING

Company stockholdersstockholders who share an address may receive only one copy of this proxy statement and the Annual Report from their bank, broker or other nominee, unless contrary instructions are received. We will deliver promptly a separate copy of this proxy statement and Annual Report to any stockholder who resides at a shared address and to which a single copy of the documents was delivered, if the stockholder makes a request by contacting our Corporate Secretary at P.O. Box 4999, Helena, Montana 59604, or by telephone at (406) 442-3080. If you wish to receive separate copies of this proxy statement and the Annual Report in the future, or if you are receiving multiple copies and would like to receive a single copy for your household, you should contact your broker, bank or other nominee.

STOCKHOLDER PROPOSALS AND NOMINATIONS

Any stockholder proposal intended for inclusion in Eagle’s Proxy Statement and form of proxy related to Eagle’s April 20192021 Annual Meeting of stockholders must be received by Eagle by November 19, 2018,18, 2020, pursuant to the proxy solicitation regulations of the Securities and Exchange Commission. Nothing in this paragraph shall be deemed to require Eagle to include in its Proxy Statement and form of proxy any stockholder proposal which does not meet the requirements of the Securities and Exchange Commission in effect at that time.

Eagle’sEagle’s bylaws provide that in order for a stockholder to make nominations for the election of directors, a stockholder must deliver notice in writing of such nominations to the Secretary (1) not later than 60 days in advance of the first anniversary of the previous year’s annual meeting if such meeting is to be held on a day which is within 30 days of the anniversary of the previous year’s annual meeting; and (2) with respect to any other annual meeting of stockholders, not later than the close of business on the seventh day following the date of public announcement of such meeting. If the stockholder does not also comply with the requirements of Rule 14a-4(c) under the Exchange Act, Eagle may exercise discretionary voting authority under proxies it solicits to vote in accordance with its best judgment on any such stockholder proposal. The notice of nominations for election of directors must set forth certain information regarding each nominee for election as a director, including such person’s written consent to being named as a nominee and to serving as a director, if elected, and certain information regarding the stockholder giving such notice.

If a determination is made that an additional candidate is needed for the board, the Nominating Committee will consider candidates properly submitted by Eagle’sEagle’s stockholders. Stockholders can submit the names of qualified candidates for director by writing to the Corporate Secretary at Eagle Bancorp Montana, Inc., P.O. Box 4999, Helena, Montana 59604. The Corporate Secretary must receive a submission not later than 60 days in advance of the first anniversary of the previous year’s annual meeting if such meeting is to be held on a day which is within 30 days of the anniversary of the previous year’s annual meeting. A stockholder’s submission must be in writing and include the following information:

In addition, the stockholder making such nomination shall promptly provide any other information reasonably requested by Eagle. Stockholder submissions that are received and that meet the criteria outlined above will be forwarded to the Chair of the Nominating Committee for further review and consideration.

Whether or not you intend to be present at the Annual Meeting, you are urged to return your proxy card promptly. If you are then present at the Annual Meeting and wish to vote your shares in person, your original proxy may be revoked by voting at the Annual Meeting. However, if you are a stockholder whose shares are not registered in your own name, you will need appropriate documentation from your recordholderrecord holder to vote personally at the Annual Meeting.

APPENDIX A

AMENDMENT NO. 3TO THE

2011 STOCK INCENTIVE PLAN FOR DIRECTORS,

OFFICERS AND EMPLOYEES

This amendment shall be effective upon the approval of both the Board of Directors and Shareholders of Eagle Bancorp, Montana, Inc.

The Eagle Bancorp Montana, Inc. 2011 Stock Incentive Plan for Directors, Officers and Employees, as amended, is amended as follows:

The Extended Effective Date of the Plan is the date that Amendment No. 3 to the Plan, approved contingently by the Board on February 20, 2020, is approved by the stockholders of the Company.

2.     The following definition of “Extended Effective Date” is inserted following Section 2.15 of the Plan and Sections 2.16 through 2.37, and all references thereto, are renumbered accordingly.

2.16 “Extended Effective Date” means the date that Amendment No. 3 to the Plan, approved contingently by the Board on February 20, 2020, is approved by the stockholders of the Company.

3. Term of the Plan. Unless the Plan shall have been earlier amended by the Board, awards may be granted until the close of the day preceding the tenth anniversary of the Extended Effective Date. Awards granted pursuant to the Plan prior to the end of its term shall not expire solely by reason of expiration of the term of the Plan.

4.     The first two sentences of Section 4, Stock Subject to the Plan, are amended to read as follows:

4. Stock Subject to the Plan. Subject to Section 8, the maximum aggregate number of shares of Restricted Stock which may be issued under the Plan on or after the Extended Effective Date is 293,571. The maximum aggregate number of shares of Stock which may be issued pursuant to or subject to Options granted under the Plan (either Incentive or Nonstatutory Options) on or after the Extended Effective Date is 246,427.

5.     Section 8.1, Adjustment for Corporate Actions, is amended to read as follows:

8.1Adjustment for Corporate Actions. All of the share numbers set forth in Section 4 reflect the capital structure of the Company as of the Extended Effective Date. Subject to Section 8.2, if subsequent to the Extended Effective Date the outstanding number of shares of Stock (or any other securities covered by the Plan by reason of the prior application of this Section 8.1) are increased, decreased, or exchanged for a different number or kind of shares or other securities, or if additional shares or new or different shares or other securities are distributed with respect to such outstanding Stock, through merger, consolidation, sale of all or substantially all the property of the Company, reorganization, combination, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar distribution of the Company’s equity securities without the receipt of consideration by the Company, an appropriate and proportionate adjustment will be made in (i) the maximum numbers and kinds of shares provided in Section 4, (ii) the numbers and kinds of shares or other securities subject to the then outstanding Awards, and (iii) the Exercise Price for each share or other unit of any other securities subject to then outstanding Awards (without change in the aggregate purchase price as to which such Awards remain exercisable).

Approved by the Board of Directors on February 20, 2020

Approved by the Shareholders on ____________________

2

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APPENDIX B

2020 NON-EMPLOYEE DIRECTOR AWARD PLAN

Section 1     Establishment and Purposes of the Plan.

(a)     Purpose. The purposes of this Eagle Bancorp Montana, Inc. (the “Company”)2020 Non-Employee Director Award Plan (the “Plan”) are to attract, retain and compensate for service as members of the Board of Directors of the Company, highly qualified individuals who are not current employees of the Company and to enable them to increase their ownership in the Company’s Common Stock. The Plan will be beneficial to the Company and its shareholders since it will allow these Directors to have a greater personal financial stake in the Company through the ownership of Common Stock, in addition to underscoring their common interest with shareholders in increasing the long-term value of the Common Stock.

(b)     Effective Date; Shareholder Approval. The Plan shall be effective April 23, 2020, subject to the approval by the Company’s shareholders at its 2020 Annual Meeting of Shareholders.

Section 2     Definitions.

As used herein, the following definitions shall apply:

“Affiliate” shall mean (i) any entity that, directly or through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, as determined by the Committee.

“Applicable Laws” means the requirements relating to the administration of equity plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Restricted Shares are, or will be, granted under the Plan.

“Board” means the Board of Directors of the Company.

“Change in Control” means the occurrence of any of the following events with respect to the Company:

(i)      the consummation of any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of Common Stock immediately prior to the merger own more than fifty percent (50%) of the outstanding common stock of the surviving corporation immediately after the merger; or

(ii)     the consummation of any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, other than to a subsidiary or affiliate; or

(iii)     any action pursuant to which any person (as such term is defined in Section 13(d) of the Exchange Act), corporation or other entity shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of shares of capital stock entitled to vote generally for the election of directors of the Company (“Voting Securities”) representing more than fifty (50%) percent of the combined voting power of the Company’s then outstanding Voting Securities (calculated as provided in Rule 13d-3(d) in the case of rights to acquire any such securities); or

(iv)     the individuals (x) who, as of the Effective Date, constitute the Board (the “Original Directors”) and (y) who thereafter are elected to the Board and whose election, or nomination for election, to the Board was approved by a vote of a majority of the Original Directors then still in office (such Directors being called “Additional Original Directors”) and (z) who thereafter are elected to the Board and whose election or nomination for election to the Board was approved by a vote of a majority of the Original Directors and Additional Original Directors then still in office, cease for any reason to constitute a majority of the members of the Board; or

(v)      the dissolution or liquidation of the Company.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means a committee designated by the Board and composed of not less than two “Non-Employee Directors” as defined in Rule 16b-3 under the Exchange Act, or any successor rule or definition adopted by the Securities and Exchange Commission.

“Common Stock” means the common stock, par value $0.01 per share, of the Company.

“Director” means a member of the Board.

“Disability” means any illness or other physical or mental condition of a Participant that renders the Participant incapable of performing his or her customary and usual duties for the Company (with or without a reasonable accommodation as required by law) and that in the judgment of the Committee is permanent and continuous in nature. The Committee may establish any process or procedure it deems appropriate for determining whether a Participant has a “Disability”.

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

“Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(i)      if the Common Stock is listed on any established stock exchange or a national market system the fair market value of a share of Common Stock shall be the closing sales price of a share of Common Stock as quoted on such exchange or system for such date (or the most recent trading day preceding such date if there were no trades on such date), as reported in such source as the Committee deems reliable;

(ii)     if the Common Stock is regularly quoted by a recognized securities dealer but is not listed in the manner contemplated by clause (i) above, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in such source as the Committee deems reliable; or

(iii)    if neither clause (i) above nor clause (ii) above applies, the fair market value of a share of Common Stock shall be determined in good faith by the Committee based on the reasonable application of a reasonable valuation method that complies with Code Section 409A and Code Section 422 if and to the extent required.

“Outside Director” means any Director who, on the date such person is to receive a grant of Restricted Shares hereunder is not a current employee of the Company or any of the Company’s subsidiaries.

“Participant” shall mean any Outside Director who holds a Restricted Stock Award granted or issued pursuant to the Plan.

“Plan” means this Eagle Bancorp Montana, Inc. 2020 Non-Employee Director Award Plan.

“Restricted Shares” means Shares subject to a Restricted Stock Award.

“Restricted Stock Agreement” means any written agreement, contract, or other instrument or document, including an electronic communication, evidencing the terms and conditions of a Restricted Stock Award.

“Restricted Stock Award” means a grant of Restricted Shares pursuant to Section 7 of the Plan.

“Share” means a share of Common Stock, as adjusted in accordance with Section 9 of the Plan.

Section 3     Share Limits.

(a)     Aggregate Share Limit Subject to the provisions of Section 9 of the Plan, the maximum aggregate number of Shares that may be issued as Restricted Shares under the Plan is 13,000 shares. The Shares may be authorized, but unissued, or treasury Shares. Restricted Shares that have been transferred back to the Company shall be available for future grants of Restricted Shares under the Plan.

(b)     Individual Share Limit. Subject to the provisions of Section 9 of the Plan, the maximum, aggregate number of Shares that may be issued as Restricted Shares to anyone Outside Director in any one calendar year under Section 7 of this Plan, shall not in total exceed $25,000

Section 4     Administration of the Plan.

(a)     Administration. The Plan shall be administered by the Committee. The Committee shall have the authority, in its discretion:

(i)      to determine the Fair Market Value of Common Stock;

(ii)     to approve forms of agreement for use under the Plan;

(iii)    to determine the number of Shares that may be issued as Restricted Shares and the terms and conditions of such Restricted Shares;

(iv)    to construe and interpret the terms of the Plan;

(v)     to prescribe, amend and rescind rules and regulations that it deems necessary for the proper operation and administration of the Plan;

(vi)    to waive or amend any terms, conditions, restrictions or limitations on an Award, to the extent permissible under applicable law;

(vii)   to instruct a corporate officer to execute on behalf of the Company any instrument required to effect the grant of a Restricted Stock Award granted by the Committee; and

(viii)   to make all other determinations deemed necessary or advisable for administering the Plan.

(b)     Effect of Committee’s Decision. The Committee’s decisions, determinations and interpretations shall be final and binding on all Participants and anyone else who may claim an interest in Restricted Shares.

(c)     No Liability. No member of the Committee shall be liable for any losses resulting from any action, interpretation or construction made in good faith with respect to the Plan, any Restricted Stock Agreement, or any Award granted under the Plan. The Company shall indemnify, to the fullest extent permitted by law, each person made or threatened to be made a party to any civil or criminal action or proceeding by reason of the fact that the person, or the executor or administrator of the person’s estate, is or was a member of the Committee or a delegate of the Committee.

Section 5     Eligibility.

The only persons who shall be eligible to receive Restricted Stock Awards under the Plan shall be persons who, on the date such Awards are granted, are Outside Directors.

Section 6     Term of the Plan.

The term of the Plan shall be ten (10) years but unless extended by the Committee and approved by the Board of Directors and Shareholders no Restricted Stock Award may be granted under the Plan after November 1, 2024, or the next following business day if November 1st is not a business day.

Section 7     Grants of Restricted Stock Awards.

On November 1^st of each year, beginning with November 1, 2020, or the next following business day if November 1^st is not a business day, each Outside Director shall automatically be granted a number of Restricted Shares, on the terms and conditions set forth in Section 8 below, having a Fair Market Value on the date of grant (determined without regard to the restrictions applicable thereto) equal to Five Thousand Dollars ($5,000); provided, however, that no fractional Shares shall be granted and such grant shall be rounded down accordingly as needed. Subject to the provisions of Section 6 permitting additional grants after five (5) years, no additional grants shall be awarded to any Outside Directors after the grant given on November 1, 2024, or the next following business day if November 1^st is not a business day. The Restricted Shares shall vest in accordance with the vesting criteria set forth in Section 8 and any such Shares that do not vest (and any dividends or other distributions related to such Shares) shall be forfeited and transferred back to the Company.

Section 8     Terms of Restricted Stock Awards.

Except as provided herein, Restricted Shares granted pursuant to Sections 7(a) and 7(b) of the Plan shall be subject to restrictions (“Restrictions”) prohibiting such Restricted Shares from being sold, transferred, assigned, pledged or otherwise encumbered or disposed of. The Restrictions with respect to each award of Restricted Shares shall lapse on the one-year anniversary date of the grant of such award; provided, however, that the Restrictions with respect to such Restricted Shares shall lapse immediately in the event that (i) the Participant is nominated for a new term as an Outside Director but is not elected by shareholders of the Company, or (ii) the Participant ceases to be a member of the Board due to death, Disability or mandatory retirement (if any). Notwithstanding the foregoing, the Restrictions with respect to all of a Participant’s Restricted Shares shall lapse immediately prior to a Change in Control provided that the Participant is a member of the Board immediately prior to such Change in Control.

The Company shall issue, in the name of each Participant to whom Restricted Shares have been granted, stock certificates (in tangible or electronic form) representing the total number of Restricted Shares granted to such Participant as soon as reasonably practicable after the grant. However, the Company or its transfer agent shall hold such certificates, properly endorsed for transfer, for the Participant’s benefit until such time as the Restriction Period applicable to such Restricted Shares lapses. Upon the expiration or termination of the Restricted Period, the restrictions applicable to the Restricted Shares shall lapse and a stock certificate for the number of Restricted Shares with respect to which the restrictions have lapsed shall be delivered, free of all such restrictions, to the Participant or his or her beneficiary or estate, as the case may be. Except as described in the above paragraph, in the event that a Participant ceases to be a member of the Board before the applicable Restriction Period has expired or under circumstances in which the Restriction Period does not otherwise lapse, the Restricted Shares granted to such Participant shall thereupon be forfeited and transferred back to the Company. During the Restriction Period, a Participant shall have the right to vote his or her Restricted Shares. At the end of the Restriction Period, the Participant shall have the right to receive any cash dividends, with respect to such Restricted Shares, that were paid during the Restriction Period. All distributions, if any, received by a Participant with respect to Restricted Shares as a result of any stock split, stock distribution, combination of shares, or other similar transaction shall be subject to the same restrictions as are applicable to the Restricted Shares to which such distributions relate.

Section 9     Adjustments Upon Changes in Capitalization.

Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Restricted Stock Award, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Restricted Stock Awards have yet been granted or which have been returned to the Plan upon cancellation or expiration of a Restricted Stock Award, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to a Restricted Stock Award.

Section 10     Grant Agreement.

Each grant of a Restricted Stock Award under the Plan may be evidenced by a Restricted Stock Agreement. Such document may contain such provisions as the Committee may in its discretion deem advisable, provided that such provisions are not inconsistent with any of the provisions of the Plan.

Section 11     Amendment and Termination of the Plan.

(a)     Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(b)     Shareholder Approval. The Company shall obtain shareholder approval of any Plan amendment to the extent necessary to comply with Applicable Laws.

(c)     Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant with respect to previously granted Awards, unless mutually agreed otherwise between the Participant and the Committee, which agreement must be in writing and signed by the Participant and the Company. After the termination of the Plan, any previously granted Awards shall remain in effect and shall continue to be governed by the terms of the Plan and the applicable Restricted Stock Agreement. Termination of the Plan shall not affect the Committee’s ability to exercise the powers granted to it hereunder with respect to Restricted Shares granted under the Plan prior to the date of such termination.

Section 12     Conditions Upon Issuance of Shares.

(a)     Legal Compliance. Grants of Restricted Shares under this Plan shall not be made unless the issuance and delivery of such Shares shall comply with Applicable Laws and shall not be made until a Form S-8 registration statement in respect of the Shares is filed with, and declared effective by, the Securities and Exchange Commission.

(b)     Investment Representations. As a condition to the issuance of Restricted Shares, the Company may require the Participant to represent and warrant at the time of any such issuance that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. Not in limitation of any of the foregoing, in any such case referred to in the preceding sentence the Committee may also require the Participant to execute and deliver documents containing such representations (including the investment representations described in this Section 12(b) of the Plan), warranties and agreements as the Committee or counsel to the Company shall deem necessary or advisable to comply with any exemption from registration under the Securities Act of 1933, as amended, any applicable State securities laws, and any other applicable law, regulation or rule.

(c)     Additional Conditions. The Committee shall have the authority to condition the grant of any Restricted Shares in such other manner that the Committee determines to be appropriate, provided that such condition is not inconsistent with the terms of the Plan.

Section 13     Inability to Obtain Authority.

The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

Section 14     Reservation of Shares.

The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

Section 15     Shareholder Approval.

The Plan shall be subject to approval by the shareholders of the Company. Such shareholder approval shall be obtained in the manner and to the degree required under Applicable Laws.

Section 16     Taxes.

Each Participant shall be solely responsible for calculation and payment of his or her tax liability in respect of the grant and/or vesting of any Restricted Stock Award pursuant to this Plan; provided, however, that the Committee may establish procedures for withholding or payment of any such tax liability if the Company should become subject to withholding or tax payment requirements under Applicable Law.

Section 17     Code Section 83(b) Elections

Neither the Company, any Affiliate, nor the Committee shall have any responsibility in connection with a Participant’s election, or attempt to elect, under Code section 83(b) to include the value of a Restricted Stock Award in the Participant’s gross income for the year of payment. Any Participant who makes a Code section 83(b) election with respect to any such Restricted Stock Award shall promptly notify the Committee of such election and provide the Committee with a copy thereof.

Section 18     No Right to Continue as a Director

Neither this Plan, nor the granting of a Restricted Stock Award under this Plan, nor any other action taken pursuant to this Plan shall constitute or be evidence of any agreement or understanding, express or implied, that the Company will retain a director for any period of time, or at any particular rate of compensation.

Section 19     Successors.

All obligations of the Company under the Plan with respect to Restricted Stock Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business, stock and/or assets of the Company.

Section 20     Governing Law.

This Plan shall be governed by the internal laws of the State of Delaware.