SUI Group Holdings Ltd 10-Q for FY2025 Q2
SUI Group Holdings Ltd. (SUIG)
About this 10-Q
SUI Group Holdings Ltd filed this 10-Q on August 14, 2025, covering the quarter ended June 30, 2025 (FY2025 Q2).
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM
__________________________
(Mark One) | |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended |
or | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from _______________________ to ___________________ |
Commission File Number
__________________________
(Exact name of registrant as specified in its charter) |
__________________________
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
(
(Registrant’s telephone number, including area code)
__________________________
N/A
(Former name, former address and former fiscal year, if changed since last report)
__________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
|
| The (Nasdaq Capital Market) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
|
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of August 14, 2025, Mill City Ventures III, Ltd. had
MILL CITY VENTURES III, LTD.
Index to Form 10-Q
for the Quarter Ended June 30, 2025
| 2 |
| Table of Contents |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MILL CITY VENTURES III, LTD.
CONDENSED BALANCE SHEETS
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| June 30, 2025 (unaudited) |
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| December 31, 2024 |
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ASSETS |
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Investments, at fair value (cost: $ |
| $ |
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Cash and cash equivalents |
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Prepaid expenses |
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Interest and dividend receivables |
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Deferred taxes |
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Total Assets |
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LIABILITIES |
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Accounts payable |
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Accrued payroll liabilities |
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Accrued income tax |
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Total Liabilities |
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Commitments and Contingencies |
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SHAREHOLDERS EQUITY (NET ASSETS) |
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Common stock, par value $ |
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Additional paid-in capital |
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Additional paid-in capital - stock options |
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Accumulated deficit |
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Accumulated undistributed investment gain (loss) |
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Accumulated undistributed net realized gains on investment transactions |
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Net unrealized appreciation (depreciation) in value of investments |
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Total Shareholders' Equity (Net Assets) |
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Total Liabilities and Shareholders' Equity |
| $ |
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| $ |
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Net Asset Value Per Common Share |
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| $ |
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See accompanying Notes to Financial Statements
| 3 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
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| Three Months Ended |
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| Six Months Ended |
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| June 30, 2025 |
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| June 30, 2024 |
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| June 30, 2025 |
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| June 30, 2024 |
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Investment Income |
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Interest income |
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Total Investment Income |
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Operating Expenses |
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Professional fees |
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Payroll |
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Insurance |
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Occupancy |
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Director's fees |
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Interest expense |
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Other general and administrative |
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Total Operating Expenses |
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Net Investment Gain |
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Realized and Unrealized Gain on Investments |
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Net realized gain (loss) on investments |
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Net change in unrealized appreciation (depreciation) on investments |
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Net Realized and Unrealized Gain on Investments |
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Net Increase in Net Assets Resulting from Operations Before Taxes |
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Provision for Income Taxes |
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Net Increase in Net Assets Resulting from Operations |
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Net Increase in Net Assets Resulting from Operations per share: |
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Basic |
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Diluted |
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| $ |
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| $ |
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Weighted-average number of common shares outstanding - basic |
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Weighted-average number of common shares outstanding - diluted |
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See accompanying Notes to Financial Statements
| 4 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
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Three Months Ended June 30, 2025 |
| Common Shares |
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| Par Value |
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| Additional Paid In Capital |
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| Accumulated Deficit |
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| Accumulated Undistributed Net Investment Gain |
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| Accumulated Undistributed Net Realized Gain (Loss) on Investments Transactions |
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| Net Unrealized Appreciation (Depreciation) in Value of Investments |
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| Total Shareholders' Equity |
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Balance as of March 31, 2025 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ |
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| $ |
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Undistributed net investment gain |
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Undistributed net realized loss on investment transactions |
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Appreciation in value of investments |
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Balance as of June 30, 2025 |
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| $ |
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| $ |
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| $ |
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Three Months Ended June 30, 2024 |
| Common Shares |
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| Par Value |
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| Additional Paid In Capital |
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| Accumulated Deficit |
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| Accumulated Undistributed Net Investment Gain (Loss) |
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| Accumulated Undistributed Net Realized Gain on Investments Transactions |
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| Net Unrealized Depreciation in Value of Investments |
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| Total Shareholders' Equity |
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Balance as of March 31, 2024 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ |
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Undistributed net investment gain |
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Undistributed net realized gain on investment transactions |
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Depreciation in value of investments |
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Balance as of June 30, 2024 |
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| $ | ( | ) |
| $ |
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Six Months Ended June 30, 2025 |
| Common Shares |
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| Par Value |
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| Additional Paid In Capital |
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| Accumulated Deficit |
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| Accumulated Undistributed Net Investment Gain (Loss) |
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| Accumulated Undistributed Net Realized Gain on Investments Transactions |
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| Net Unrealized Appreciation (Depreciation) in value of Investments |
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| Total Shareholders' Equity |
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Balance as of December 31, 2024 |
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| $ |
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| $ | ( | ) |
| $ |
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Repurchase of common shares |
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Undistributed net investment gain |
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Undistributed net realized gain on investment transactions |
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Appreciation in value of investments |
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Balance as of June 30, 2025 |
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Six Months Ended June 30, 2024 |
| Common Shares |
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| Par Value |
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| Additional Paid In Capital |
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| Accumulated Deficit |
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| Accumulated Undistributed Net Investment Gain (Loss) |
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| Accumulated Undistributed Net Realized Gain on Investments Transactions |
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| Net Unrealized Depreciation in value of Investments |
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| Total Shareholders' Equity |
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Balance as of December 31, 2023 |
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| $ |
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| $ | ( | ) |
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Undistributed net investment gain |
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Undistributed net realized gain on investment transactions |
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Depreciation in value of investments |
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Balance as of June 30, 2024 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ |
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See accompanying Notes to Financial Statements
| 5 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
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| Six Months Ended |
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| June 30, 2025 |
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| June 30, 2024 |
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Cash flows from operating activities: |
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Net increase in net assets resulting from operations |
| $ |
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| $ |
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Adjustments to reconcile net increase in net assets resulting |
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from operations to net cash provided (used) in operating activities: |
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Net change in unrealized appreciation (depreciation) on investments |
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Net realized gain on investments |
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Purchases of investments |
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Proceeds from sales of investments |
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Deferred income taxes |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other assets |
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Interest and dividends receivable |
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Accounts payable and other liabilities |
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Net cash provided by (used in) operating activities |
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Cash flows from financing activities: |
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Payments for repurchase of common stock |
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Net cash used by financing activities |
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Net increase (decrease) in cash |
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Cash, beginning of period |
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Cash, end of period |
| $ |
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| $ |
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See accompanying Notes to Financial Statements
| 6 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
CONDENSED SCHEDULE OF INVESTMENTS (UNAUDITED)
JUNE 30, 2025
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Investment / Industry |
| Cost |
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| Fair Value |
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| Percentage of Net Assets |
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Short-Term Non-banking Loans |
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Consumer - 18% secured loans |
| $ |
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| $ |
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Consumer - 24% secured loans |
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| % | |||
Real Estate - 15% secured loans |
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Alatus Development Corp |
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Real Estate - 24% secured loans |
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Coventry Holdings LLC |
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| % | |||
Total Short-Term Non-Banking Loans |
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| % | |||
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Commercial Business Loans |
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Business Services - 20% secured loans |
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Mustang Funding, LLC |
| $ |
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| $ |
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| % | |||
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Common Stock |
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Financial |
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| % | |||
Information Technology |
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| % | |||
Technology |
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| % | |||
Total Common Stock |
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| % | |||
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Other Equity |
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Financial |
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| % | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments |
| $ |
|
| $ |
|
|
| % | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash and cash equivalents |
|
|
|
|
|
|
|
| % | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments and Cash |
| $ |
|
| $ |
|
|
| % | |||
| 7 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2024
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
| |||
Investment / Industry |
| Cost |
|
| Fair Value |
|
| Percentage of Net Assets |
| |||
|
|
|
|
|
|
|
|
|
| |||
Short-Term Non-banking Loans |
|
|
|
|
|
|
|
|
| |||
Business Services - 15% secured loans |
|
|
|
|
|
|
|
|
| |||
Mustang Litigation Funding |
| $ |
|
| $ |
|
|
| % | |||
Consumer - 18% secured loans |
|
|
|
|
|
|
|
| % | |||
Real Estate - 15% secured loans |
|
|
|
|
|
|
|
|
|
|
|
|
Alatus Development Corp |
|
|
|
|
|
|
|
| % | |||
Real Estate - 24% secured loans |
|
|
|
|
|
|
|
|
|
|
|
|
Coventry Holdings LLC |
|
|
|
|
|
|
|
| % | |||
Total Short-Term Non-Banking Loans |
|
|
|
|
|
|
|
| % | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
Consumer |
|
|
|
|
|
|
|
| % | |||
Financial |
|
|
|
|
|
|
|
| % | |||
Information Technology |
|
|
|
|
|
|
|
| % | |||
Total Common Stock |
|
|
|
|
|
|
|
| % | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Financial |
|
|
|
|
|
|
|
| % | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments |
| $ |
|
| $ |
|
|
| % | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash and cash equivalents |
|
|
|
|
|
|
|
| % | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments and Cash |
| $ |
|
| $ |
|
|
| % | |||
| 8 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
NOTE 1 – ORGANIZATION
In this report, we generally refer to Mill City Ventures III, Ltd. in the first person “we.” On occasion, we refer to our company in the third person as “Mill City Ventures” or the “Company.” We follow accounting and reporting guidance in Accounting Standards (“ASC”) Topic 946 “Financial Services – Investment Companies”.
We were incorporated in Minnesota in January 2006. Until December 13, 2012, we were a development-stage company that focused on promoting and placing a proprietary poker game online and into casinos and entertainment facilities nationwide. In 2013, we elected to become a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). We operated as a BDC until we withdrew our BDC election at the end of December 2019. Since that time, we have remained a public reporting company filing periodic reports with the SEC. We engage in the business of providing short-term specialty finance solutions, typically in the form of short-term loans, primarily to small businesses, both private and public, and high-net-worth individuals. To avoid regulation under the 1940 Act, we generally seek to structure our investments so they do not constitute “securities” for purposes of federal securities laws, and we monitor our investments as a whole to ensure that no more than 40% of our total assets consist of “investment securities” as defined under the 1940 Act.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management and our independent board members to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. For more information, see the “Valuation of portfolio investments” caption below, and “Note 4 – Fair Value of Financial Instruments” below. The Company presents its financial statements as an investment company following accounting and reporting guidance in ASC 946.
Cash deposits: We maintain our cash balances in financial institutions and with regulated financial investment brokers. Cash on deposit in excess of FDIC and similar coverage is subject to the usual banking risk of funds in excess of those limits.
Valuation of portfolio investments: We carry our investments in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), issued by the Financial Accounting Standards Board (“FASB”), which defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. Fair value is generally based on quoted market prices provided by independent pricing services, broker or dealer quotations, or alternative price sources. In the absence of quoted market prices, broker or dealer quotations, or alternative price sources, investments are measured at fair value as determined by our Board of Directors, based on, among other things, the input of our executive management, the Audit Committee of our Board of Directors, and any independent third-party valuation experts that may be engaged by management to assist in the valuation of our portfolio investments, but in all cases consistent with our written valuation policies and procedures.
Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material. In addition, such investments are generally less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.
Accounting guidance establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Observable inputs must be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability based upon the best information available. Assets and liabilities measured at fair value are to be categorized into one of the three hierarchy levels based on the relative observability of inputs used in the valuation. The three levels are defined as follows:
· | Level 1: Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities. |
· | Level 2: Observable inputs based on quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in inactive markets. |
· | Level 3: Unobservable inputs that reflect an entity’s own assumptions about what inputs a market participant would use in pricing the asset or liability based on the best information available in the circumstances. |
| 9 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
Our valuation policy and procedures: Under our valuation policies and procedures, we evaluate the source of inputs, including any markets in which our investments are trading, and then apply the resulting information in determining fair value. For our Level 1 investment assets, our valuation policy generally requires us to use a market approach, considering the last quoted closing price of a security we own that is listed on a securities exchange, and in a case where a security we own is listed on an over-the-counter market, to average the last quoted bid and ask price on the most active market on which the security is quoted. In the case of traded debt securities the prices for which are not readily available, we may value those securities using a discounted cash flows approach, at their weighted-average yield to maturity.
The estimated fair value of our Level 3 investment assets is determined on a quarterly basis by our Board of Directors. In general, we value our Level 3 equity investments at cost unless circumstances warrant a different approach. Examples of these circumstances includes a situation in which a portfolio company has engaged in a subsequent financing of more than a de minimis size involving sophisticated investors (in which case we may use the price involved in that financing as a determinative input absent other known factors), or when a portfolio company is engaged in the process of a transaction that we determine is reasonably likely to occur (in which case we may use the price involved in the pending transaction as a determinative input absent other known factors). Other facts and circumstances that may serve as an input supporting a change in the valuation of our Level 3 equity investments include (i) a third-party valuation conducted by an independent and qualified professional, (ii) changes in the performance of long-term financial prospects of the portfolio company, (iii) a subsequent financing that changes the distribution rights associated with the equity security we hold, or (iv) sale transactions involving comparable companies, but only if further supported by a third-party valuation conducted by an independent and qualified professional.
When valuing preferred equity investments, we generally view intrinsic value as a key input. Intrinsic value means the value of any conversion feature (if the preferred investment is convertible) or the value of any liquidation or other preference. Discounts to intrinsic value may be applied in cases where the issuer’s financial condition is impaired or, in cases where intrinsic value relating to a conversion is determined to be a key input, to account for resale restrictions applicable to the securities issuable upon conversion.
When valuing warrants, our valuation policy and procedures indicate that value will generally be the difference between the closing price of the underlying equity security and the exercise price, after applying an appropriate discount for restriction, if applicable, in situations where the underlying security is marketable. If the underlying security is not marketable, then intrinsic value will be considered consistent with the principles described above. Generally, “out-of-the-money” warrants will be valued at cost or zero.
For non-traded (Level 3) debt instruments with a residual maturity less than or equal to 60 days, we will generally value such instruments based on a discounted cash flows approach, considering the straight-line amortized face value of the debt unless justification for impairment exists. For level 3 non-banking loans with a maturity in excess of 60 days, fair value is determined based on the initial purchase price and adjusted as necessary to reflect any changes in the financial strength of the creditor and changes in interest rates in the high-yield credit markets.
On a quarterly basis, our management provides members of our Board of Directors with recommendations, if any, to change any existing valuations of our portfolio investments or hierarchy levels for purposes of determining the fair value of such investments based upon the foregoing. In such a case, the Board of Directors would then discuss these materials and, consistent with the policies and approaches outlined above, makes final determinations respecting the valuation and hierarchy levels of our portfolio investments.
We made no changes to our valuation policy and procedures during the reporting period.
Income taxes:
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amount and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event we were to determine we would be able to realize our deferred income tax assets in the future in excess of their recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.
| 10 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
We file income tax returns in the U.S. Federal jurisdiction and various state jurisdictions. We do not believe there will be any material changes in our unrecognized tax positions over the next 12 months. Our evaluation was performed for the tax years ended December 31, 2021 through 2024, which are the tax years that remain subject to examination by major tax jurisdictions as of June 30, 2025.
Revenue recognition: Realized gains or losses on the sale of investments are calculated using the specific investment method.
Interest income, adjusted for amortization of premiums and accretion of discounts, is recorded on an accrual basis. Discounts from and premiums to par value on securities purchased are accreted or amortized, as applicable, into interest income over the life of the related security using the effective-yield method. The amortized cost of investments represents the original cost, adjusted for the accretion of discounts and amortization of premiums, if any. Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more, or when there is reasonable doubt that principal or interest will be collected in full. Loan origination fees are recognized when loans are issued. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past-due principal and interest is paid and, in management’s judgment, are likely to remain current. We may make exceptions to the policy described above if a loan has sufficient collateral value and is in the process of collection.
Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.
Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal or stated value of the investment on the respective interest- or dividend-payment dates rather than being paid in cash, and generally becomes due at maturity or upon being repurchased by the issuer. PIK interest or dividends is recorded as interest or dividend income, as applicable. If at any point we believe that PIK interest or dividends is not expected be realized, the PIK-generating investment will be placed on non-accrual status. Accrued PIK interest or dividends are generally reversed through interest or dividend income, respectively, when an investment is placed on non-accrual status.
Allocation of net gains and losses: All income, gains, losses, deductions and credits for any investment are allocated in a manner proportionate to the shares owned.
Stock-based compensation: The Company’s stock-based compensation consists of stock options issued to certain employees and directors of the Company. The Company recognizes compensation expense based on an estimated grant date fair value using the Black Sholes option-pricing method. If the factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future. The Company recognizes stock-based compensation expense for these options on a straight-line basis over the requisite service period. The Company has elected to account for forfeitures as they occur.
Management and service fees:
We do not incur expenses related to management and service fees. Our executive management team manages our investments as part of their employment responsibilities.
Segments:
The Company has a single reportable segment based on the nature of its operations. The nature of business and the accounting policies of the segment are the same as described throughout Notes 1 and 2. The Company’s Chief Operating Decision Maker (“CODM”) is its executive team. The CODM assesses the reportable segment’s performance and allocates resources for the reportable segment based on the net income and total assets which are the same amounts in all material respects as those reported on the Statement of Operations and Balance Sheet.
| 11 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
NOTE 3 – INVESTMENTS
The following table shows the composition of our investment portfolio by major class, at amortized cost and fair value, as of June 30, 2025 (together with the corresponding percentage of the fair value of our total portfolio of investments):
|
| As of June 30, 2025 |
| |||||||||||||
|
| Investments at Amortized Cost |
|
| Percentage of Amortized Cost |
|
| Investments at Fair Value |
|
| Percentage of Fair Value |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Short-term Non-banking Loans |
| $ |
|
|
| % |
| $ |
|
|
| % | ||||
Commercial Business Loans |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other Equity |
|
|
|
|
|
|
|
|
|
|
| — |
| |||
Total |
| $ |
|
|
| % |
| $ |
|
|
| % | ||||
The following table shows the composition of our investment portfolio by major class, at amortized cost and fair value, as of December 31, 2024 (together with the corresponding percentage of the fair value of our total portfolio of investments):
|
| As of December 31, 2024 |
| |||||||||||||
|
| Investments at Amortized Cost |
|
| Percentage of Amortized Cost |
|
| Investments at Fair Value |
|
| Percentage of Fair Value |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Short-term Non-banking Loans |
| $ |
|
|
| % |
| $ |
|
|
| % | ||||
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other Equity |
|
|
|
|
|
|
|
|
|
|
| — |
| |||
Total |
| $ |
|
|
| % |
| $ |
|
|
| % | ||||
The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of June 30, 2025:
|
| As of June 30, 2025 |
| |||||
|
| Investments at Fair Value |
|
| Percentage of Fair Value |
| ||
|
|
|
|
| ||||
Business Services |
| $ |
|
|
| % | ||
Consumer |
|
|
|
|
|
| ||
Financial |
|
|
|
|
|
| ||
Information Technology |
|
|
|
|
| — |
| |
Real Estate |
|
|
|
|
|
| ||
Technology |
|
|
|
|
|
| ||
Total |
| $ |
|
|
| % | ||
The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of December 31, 2024:
|
| As of December 31, 2024 |
| |||||
|
| Investments at Fair Value |
|
| Percentage of Fair Value |
| ||
|
|
|
|
| ||||
Business Services |
| $ |
|
|
| % | ||
Consumer |
|
|
|
|
|
| ||
Financial |
|
|
|
|
|
| ||
Information Technology |
|
|
|
|
| — |
| |
Real Estate |
|
|
|
|
|
| ||
Total |
| $ |
|
|
| % | ||
| 12 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
NOTE 4 – FAIR VALUE OF FINANCIAL INSTRUMENTS
Level 3 valuation information: Due to the inherent uncertainty in the valuation process, the estimate of the fair value of our investment portfolio as of June 30, 2025 may differ materially from values that would have been used had a readily available market for those investments existed.
The following table presents the fair value measurements of our portfolio investments by major class, as of June 30, 2025, according to the fair value hierarchy:
|
| As of June 30, 2025 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
|
|
|
|
|
|
| ||||||||||
Short-term Non-banking Loans |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Commercial Business Loans |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other Equity |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The following table presents the fair value measurements of our portfolio investments by major class, as of December 31, 2024, according to the fair value hierarchy:
|
| As of December 31, 2024 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
|
|
|
|
|
|
| ||||||||||
Short-term Non-banking Loans |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other Equity |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the six months ended June 30, 2025:
|
| For the six months ended June 30, 2025 |
| |||||||||||||
|
| ST Non-banking Loans |
|
| Commercial Business Loans |
|
| Common Stock |
|
| Other Equity |
| ||||
|
|
|
|
|
|
| ||||||||||
Balance as of January 1, 2025 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Net change in unrealized appreciation |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Purchases and other adjustments to cost |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sales and redemptions |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
| ||
Transfers between investment classifications |
|
| ( | ) |
|
|
|
|
|
|
|
|
| |||
Balance as of June 30, 2025 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The net change in unrealized appreciation for the six months ended June 30, 2025 attributable to Level 3 portfolio investments still held as of June 30, 2025 was $
The following table lists our Level 3 investments held as of June 30, 2025 and the unobservable inputs used to determine their valuation:
Security Type |
| 6/30/25 FMV |
|
| Valuation Technique |
| Unobservable Inputs |
| Range |
| ||
ST Non-banking Loans |
| $ |
|
| discounted cash flow |
| determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness |
| % | |||
Commercial Business Loan |
|
|
|
| discounted cash flow |
| determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness |
|
| % | ||
Other Equity |
|
|
|
| last secured funding known by company |
|
|
|
|
|
| |
|
| $ |
|
|
|
|
|
|
|
|
| |
| 13 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the period ended December 31, 2024:
|
| For the year ended December 31, 2024 |
| |||||||||||||
|
| ST Non-banking Loans |
|
| Preferred Stock |
|
| Common Stock |
|
| Other Equity |
| ||||
|
|
|
|
|
|
| ||||||||||
Balance as of January 1, 2024 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Net change in unrealized depreciation |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Purchases and other adjustments to cost |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sales and redemptions |
|
| ( | ) |
|
|
|
|
|
|
|
|
| |||
Realized gain (loss) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
| ||
Conversion from preferred to common stock |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Transfers between level 3 and level 1 |
|
| ( | ) |
|
|
|
|
|
|
|
|
| |||
Balance as of December 31, 2024 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The net change in unrealized depreciation for the year ended December 31, 2024 attributable to Level 3 portfolio investments still held as of December 31, 2024 was $
The following table lists our Level 3 investments held as of December 31, 2024 and the unobservable inputs used to determine their valuation:
Security Type |
| 12/31/24 FMV |
|
| Valuation Technique |
| Unobservable Inputs |
| Range | ||
ST Non-banking Loans |
| $ |
|
| discounted cash flow |
| determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness |
| % | ||
Other Equity |
|
|
|
| last secured funding known by company |
| economic changes since last funding |
|
| ||
Common Stock |
|
|
|
| last funding secured by company |
| economic changes since last funding |
|
| ||
|
| $ |
|
|
|
|
|
|
| ||
NOTE 5 – RELATED-PARTY TRANSACTIONS
We maintain a conflicts of interest and related-party transactions policy requiring (i) certain disclosures be made to our Board of Directors in relation to situations where officers, directors, significant shareholders, or any of their affiliates may enter into transactions with us, and (ii) certain disclosures appear in the reports we prepare and file with the SEC. In this regard, during the period covered by this report we entered into, or remained a party to, the following related-party transactions:
| · | We held a promissory note with two shareholders in the principal amount of $ |
|
|
|
| · | As disclosed in Note 7, a component of our now terminated loan agreement was with a director of our Company. |
NOTE 6 – INCOME TAXES
Presently, we are a C-Corporation for tax purposes and have booked an income tax provision for the periods described below. Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate.
| 14 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
As of June 30, 2025 and December 31, 2024, we have a deferred tax asset of $
As of June 30, 2025 and December 31, 2024 we had accrued taxes of $
NOTE 7 – LINE OF CREDIT
We had a Loan and Security Agreement (the “Loan Agreement”) with a third party and director (collectively, the Lenders). Under the Loan Agreement, the Lenders made available to us a $
In January 2024, we terminated the Loan Agreement. Any applicable fees related to early termination of the Agreement were waived.
NOTE 8 – STOCK-BASED COMPENSATION
Our 2022 Stock Incentive Plan (the “Plan”) authorized the issuance of incentives relating to
The following table summarizes the activity for all stock options outstanding for the six months ended June 30, 2025:
|
| Shares |
|
| Weighted Average Exercise Price |
| ||
Options outstanding at beginning of year |
|
|
|
| $ |
| ||
Granted |
|
| — |
|
|
| — |
|
Exercised |
|
| — |
|
|
| — |
|
Forfeited |
|
| — |
|
|
| — |
|
Options outstanding at end of period |
|
|
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Options exercisable at June 30, 2025: |
|
|
|
| $ |
| ||
The following table summarizes additional information about stock options outstanding and exercisable at June 30, 2025:
Options Outstanding |
|
| Options Exercisable |
| ||||||||||||||||||||||
Options Outstanding |
|
| Weighted Average Remaining Contractual Life |
|
| Weighted Average Exercise Price |
|
| Aggregate Intrinsic Value |
|
| Options Exercisable |
|
| Weighted Average Exercise Price |
|
| Aggregate Intrinsic Value |
| |||||||
|
|
|
|
|
| $ |
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||||
| 15 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
The Company recognized stock-based compensation expense for stock options of $
NOTE 9 – SHAREHOLDERS’ EQUITY
At June 30, 2025, we had
During the first quarter we repurchased
In connection with the 2022 public offering, we issued a five-year warrant to the underwriter. The warrant allows the underwriter to purchase up to
NOTE 10 – PER-SHARE INFORMATION
Basic net gain per common share is computed by dividing net increase in net assets resulting from operations by the weighted-average number of common shares outstanding during the period. Diluted net gain per common share is computed by dividing net increase in net assets resulting from operations by the weighted-average number of dilutive common shares outstanding during the period calculated using the Treasury Stock method. The Treasury Stock method assumes that the proceeds received upon exercise of stock options are used to repurchase stock at the average market price during the period, thereby increasing the number of shares to be added in computing diluted earnings per share. For the three and six month periods ended June 30, 2025,
|
| For the Three Months Ended June 30, |
| |||||||||||||
|
| 2025 |
|
| 2024 |
| ||||||||||
|
| Basic |
|
| Diluted |
|
| Basic |
|
| Diluted |
| ||||
Numerator: Net increase in net assets resulting from operations |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Denominator: Weighted-average number of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic and diluted net gain (loss) per common share |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Six Months Ended June 30, | ||||||||||||||
|
| 2025 |
|
| 2024 | |||||||||||
|
| Basic |
|
| Diluted |
|
| Basic |
|
| Diluted |
| ||||
Numerator: Net increase (decrease) in net assets resulting from operations |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Denominator: Weighted-average number of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic and diluted net gain (loss) per common share |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
| 16 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
NOTE 11 – FINANCIAL HIGHLIGHTS
The following is a schedule of financial highlights for the six months ended June 30, 2025 through 2021:
|
| Six Months Ended June 30, |
| |||||||||||||||||
|
| 2025 |
|
| 2024 |
|
| 2023 |
|
| 2022 |
|
| 2021 |
| |||||
Per Share Data (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net asset value at beginning of period |
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net investment income (loss) |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| ||||
Net realized and unrealized gains (losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
(Provision for) benefit from income taxes |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Issuance of stock options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Repurchase of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other changes in equity |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net asset value at end of period |
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio / Supplemental Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share market value of investments at end of period |
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Shares outstanding at end of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Average weighted shares outstanding for the period - basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Average weighted shares outstanding for the period - diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net assets at end of period |
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Average net assets (2) |
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total investment return |
|
| % |
|
| % |
|
| ( | )% |
|
| % |
|
| % | ||||
Portfolio turnover rate (3) |
|
| % |
|
| % |
|
| % |
|
| % |
|
| % | |||||
Ratio of operating expenses to average net assets (3) |
|
| ( | )% |
|
| ( | )% |
|
| ( | )% |
|
| ( | )% |
|
| ( | )% |
Ratio of net investment income (loss) to average net assets (3) |
|
| % |
|
| % |
|
| ( | )% |
|
| % |
|
| % | ||||
Ratio of realized gains (losses) to average net assets (3) |
|
| % |
|
| % |
|
| ( | )% |
|
| % |
|
| % | ||||
(1) | Per-share data was derived using the ending number of shares outstanding for the period. |
(2) | Based on the monthly average of net assets as of the beginning and end of each period presented. |
(3) | Ratios are annualized. |
NOTE 12 – SUBSEQUENT EVENTS
Private Placement and SUI Strategy
Securities Purchase Agreements and SUI Strategy
On July 31, 2025, we completed a
The securities offered and sold in the private placement, including the shares of common stock, the pre-funded warrants, the Placement Agent Warrants, Lead Investor Warrants, Foundation Investor Warrants, Management Warrants, and the Advisor Warrants (all as such warrants are defined in the disclosure below), and all of the shares of common stock issuable upon the exercise of all such warrants, were offered and sold in reliance upon the exemption from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) thereof and/or Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws. The offer and sale of all of the above-described securities were not registered under the Securities Act, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.
| 17 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
Simultaneously with the closing of the private placement, we adopted a new treasury policy and strategy under which the principal holding in our treasury reserve on the balance sheet will be allocated to the native cryptocurrency of the Sui blockchain commonly referred to as “SUI.” The Sui Foundation is an independent organization dedicated to the advancement and adoption of the Sui network. The Board of Directors approved our treasury policy on July 27, 2025, authorizing the long-term accumulation of SUI. We believe our position as a public company with an official Sui Foundation relationship provides us institutional-grade exposure to the SUI blockchain, and that Sui is well positioned for large-scale adoption with the speed and efficiency institutions require for crypto at scale, plus the technical architecture capable of supporting AI workloads while maintaining security and decentralization. Our approach involves acquiring SUI directly—both through market purchases and direct purchases from the Sui Foundation. This treasury initiative seeks to enhance our capital allocation strategy and does not affect our core commercial short-term non-bank lending and specialty finance business, which remains fully operational and a central part of our business.
Warrants
At the closing of the private placement, we issued five-year warrants to purchase our common stock as follows:
| (i) | warrants (the “Lead Investor Warrants”) to Karatage Opportunities (“Karatage”), to |
|
|
|
| (ii) | warrants (the “Foundation Investor Warrants”) to the Sui Foundation (the “Foundation Investor”), to |
|
|
|
| (iii) | warrants (the “Management Warrants”) to certain members of the management of the Company to |
|
|
|
| (iv) | warrants (the “Advisor Warrants”) to certain advisors of the Company |
All of the above-described warrants, other than the Advisor Warrants, will vest over a 24-month period starting six months from the Issue Date (as defined therein) in four equal installments (being 25% every six months), and in the case of the Management Warrants, subject to the relevant holder still being employed by the Company at each respective vesting date. In the event that a member of the management team is terminated by the Company other than for cause or resigns for good reason (as defined in the individual’s employment agreement), the vesting of all of such individual’s Management Warrants will immediately accelerate and be fully vested as of the date of such termination. The Advisor Warrants are fully exercisable beginning as of January 31, 2026.
Placement Agency Agreement
On July 27, 2025, and in connection with the private placement, we entered into a Placement Agency Agreement with A.G.P., pursuant to which A.G.P. agreed to serve as our exclusive placement agent in connection with the private placement. Under the terms of the Placement Agency Agreement, we paid A.G.P. a cash fee of $
Registration Rights Agreement
On July 27, 2025, and in connection with the private placement, we entered into a Registration Rights Agreement with the investors and A.G.P. pursuant to which we agreed to file a registration statement, within 10 days of the closing (i.e., on or before August 10, 2025), providing for the resale by the investors of the common shares and shares of common stock issuable upon exercise of the pre-funded warrants, and the shares of common stock issuable upon exercise of the Lead Investor Warrant, Foundation Investor Warrant, Management Warrants and the Placement Agent Warrants, and to have such registration statement declared effective within 30 days of its filing date (or 60 days, if the SEC conducts a full review), and to maintain the effectiveness of such registration statement until all securities registered pursuant thereto (i) shall have been sold, either thereunder or pursuant to Rule 144, or (ii) starting from the third anniversary of the Registration Rights Agreement, may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 under the Securities Act, and without the requirement for our Company to be in compliance with the current public information requirement Rule 144.
| 18 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
Strategic Advisor Agreement
On July 27, 2025, we entered into a Strategic Advisor Agreement (the “Strategic Advisor Agreement”) with Karatage to expand and diversify our business operations through the integration of cryptocurrency and digital asset strategies in both our product offerings and as part of our treasury management strategy. Pursuant to the Strategic Advisor Agreement, Karatage will provide us with technical advisory services regarding the digital asset ecosystem, including SUI and related technologies, developments in the digital asset and crypto gaming industries, the selection of third-party vendors with respect to asset management and related digital asset services, and other strategic advice regarding our digital assets treasury operations.
We will pay Karatage a tiered asset-based fee ranging from
The Strategic Advisor Agreement will, unless earlier terminated in accordance with its terms, continue in effect for a period of ten years beginning on July 27, 2025, after which time the Strategic Advisor Agreement will automatically renew for a successive period of five years each, subject to the mutual agreement between the parties. Either the Company or Karatage may terminate the Strategic Advisor Agreement for cause immediately upon written notice if the other party: (i) materially breaches the Strategic Advisor Agreement; and (ii) fails to cure such breach within 30 days after receiving written notice of the breach. If the Strategic Advisor Agreement is terminated by the Company for cause or by Karatage other than for cause, Karatage will cease providing such technical advisory services and the Company will pay Karatage any fees due and payable under the Strategic Advisor Agreement up to the date of termination, provided that if the Strategic Advisor Agreement is terminated by the Company for any other reason or by the Advisor for cause, Karatage will cease providing such technical advisory services and the Company will pay Karatage any fees that would be due and payable under the Strategic Advisor Agreement for the remainder of the term of the agreement, as if the Strategic Advisor Agreement had not been terminated.
Asset Management Agreement
On July 27, 2025, we entered into an Asset Management Agreement (the “Asset Management Agreement”) with Galaxy Digital Capital Management LP (the “Asset Manager”). The Asset Manager will provide discretionary investment management services with respect to, among other assets (including without limitation certain subsequently raised funds), our proceeds from the private placement (the “Account Assets”), and will have exclusive right to manage
We will pay the Asset Manager a tiered asset-based fee (the “Asset-based Fee”) ranging from
The Asset Management Agreement will, unless terminated earlier in accordance with its terms, remain in effect for five years, after which time it will automatically renew for one-year terms, subject to mutual agreement between the Company and the Asset Manager. Beginning on the second anniversary of the Asset Management Agreement, such agreement may be terminated by us upon at least 90 days prior written notice to the Asset Manager at the good faith discretion of our Chief Investment Officer (“CIO”) or our Board of Directors if the Asset Manager has underperformed according to such CIO’s internal objective metrics, as agreed with the Asset Manager. Additionally, the Asset Management Agreement may be terminated at any time for cause by us or the Asset Manager upon at least 30 days prior written notice to the other party. Additionally, the Asset Management Agreement may be terminated immediately by us if we determine in good faith after consultation with counsel, reasonably acceptable to the Asset Manager, that the Asset Management Agreement is prohibited or otherwise required to be terminated by applicable law.
Digital Asset Purchase and Sale Agreement
On July 27, 2025, we also entered into a Digital Asset Purchase and Sale Agreement (the “Digital Asset Purchase and Sale Agreement”) with the Foundation Investor, pursuant to which we agreed to purchase and the Foundation Investor agreed to sell and transfer certain SUI tokens as set forth in one or more confirmations. The USD price per SUI token purchased pursuant to the Digital Asset Purchase and Sale Agreement will be equal to the product of (i) 0.85 multiplied by (ii) the 24-hour time weighted-average price on the closing date (as defined in the securities purchase agreements entered into in the private placement), as reasonably calculated by the Company. Pursuant to the terms of the Digital Asset Purchase and Sale Agreement, the SUI tokens purchased will be subject to transfer restrictions for a period of two years following purchase. Notwithstanding the foregoing, the transfer restrictions will not apply to the extent necessary to enable us to comply, or to be in compliance with, the provisions of the U.S. Investment Company Act of 1940, as amended. The Digital Asset Purchase and Sale Agreement also provides us with certain preemptive rights to purchase additional SUI tokens through July 31, 2027.
| 19 |
| Table of Contents |
MILL CITY VENTURES III, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
Executive Employment Agreements
On July 31, 2025, we entered into new executive employments with Douglas M. Polinsky, our Chief Executive Officer, and Joseph A. Geraci II, our Chief Financial Officer. Each new employment agreement has a three-year term (subject to certain early-termination rights). Each employment agreement provides the executive with a base annual salary of $
Each employment agreement contains a non-solicitation covenant effective during the term of the agreement and one year thereafter, as well as customary confidentiality covenants relating to the confidentiality of the Company information. In the event that an executive is terminated for cause, as defined in the employment agreements, or in the event that an executive’s services are terminated due to death or disability, the terminated executive will be entitled to receive only his base annual salary through the date of termination. In the event of other non-cause terminations, or in the event the executive resigns for good reason, as defined in the employment agreements, the Company will be obligated to pay the terminated executive’s base annual salary through the remainder of the employment term.
Change in Directors
On July 27, 2025, Mr. Lyle Berman resigned his position as a director on our Board of Directors. On the same day, the Board approved, subject to the closing of the private placement (which occurred on July 31, 2025), to set the size of the Board of Directors to five members, and appoint Messrs. Marius Barnett and Dana Wagner to serve as directors. Mr. Barnett is expected to serve as Chairman of the Board, and Mr. Wagner is expected to serve as a member of the Audit Committee of the Board. The Board believes that Messrs. Wagner and Barnett are qualified to serve as directors due to their extensive experience with SUI and cryptocurrency technology. Messrs. Wagner and Barnett are also regarded as leaders in financial investments and treasury strategies.
As compensation for his services on the Board, Mr. Wagner will receive an annual director fee of $
Amended and Restated Bylaws
On July 27, 2025, the Board of Directors amended and restated our Company’s bylaws, effective immediately. The principal changes to the bylaws are to:
| · | permit the Board to take action without a meeting by less than unanimous written consent; |
|
|
|
| · | establish the rights of shareholders to nominate directors for election at shareholder meetings pursuant to a written agreement, approved by the Board, as well as to include supporting materials in the Company’s proxy statement; and |
|
|
|
| · | provide for the ability of the Board to increase or decrease the size of the Board. |
Common Stock Purchase Agreement
On August 1, 2025, we entered into a Common Stock Purchase Agreement
Any purchases and sales under the Purchase Agreement will be at a per-share purchase price equal 95% of the volume-weighted average price for the applicable period, as calculated pursuant to the Purchase Agreement.
Any proceeds from sales of common stock under the Purchase Agreement will be used in the manner set forth in the prospectus included in the related registration statement (and any post-effective amendment thereto), and any prospectus supplement thereto, filed pursuant to the registration rights agreement.
| 20 |
| Table of Contents |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. In addition, unless expressly stated otherwise, the comparisons presented in this MD&A refer to the same period in the prior year. Our MD&A is presented in seven sections:
| · | Overview |
| · | Portfolio and Investment Activity |
| · | Results of Operations |
| · | Financial Condition |
| · | Critical Accounting Estimates |
| · | Off-Balance Sheet Arrangements |
| · | Forward Looking Statements |
OVERVIEW
Mill City Ventures III, Ltd. was incorporated in the State of Minnesota on January 10, 2006. In this report, we generally refer to Mill City Ventures III, Ltd. in the first person “we.” On occasion, we refer to our company in the third person as “Mill City Ventures” or the “company.”
We are engaged in the business of providing short-term non-bank lending and specialty finance solutions to companies and individuals, generally on a secured basis. The loans we provide typically have maturities that are nine months or shorter, highly illiquid, and ordinarily involve a pledge of collateral or, in the case of loans made to companies, personal guarantees by the principals of the borrower. Our loans may be made for real estate acquisitions, renovation and sale, or other projects relating to real estate, title loans, inventory needs, inventory financing, solve for short-term liquidity needs, or for other similar purposes. We intend to remain opportunistic, however, and may occasionally engage in transactions that involve our acquisition of other rights (such as stock, warrants or other equity-linked investments) or that are structured differently or uniquely. Our business objective is to generate revenues from the interest and fees we charge, and capital appreciation from any related investments we make.
Our principal sources of income are interest and fees associated with our loans such as origination fees, closing fees or exit fees. In connection with the short-term non-bank specialty finance loans we provide, we may receive reimbursement of legal costs associated with loan documentation. We occasionally derive income from dividends paid on equity securities we hold from time to time, or from the sale of our equity securities. Our statement of operations also reflect increases and decreases in the carrying value of our assets and investments (i.e., unrealized appreciation and depreciation). Our principal expenses relate to operating expenses, the largest components of which are generally professional fees, payroll, occupancy, and insurance expenses.
Our MD&A should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, as well as our reports on Forms 10-Q and 8-K and other publicly available information. All amounts herein are unaudited. In addition, the following discussion of our results of operations and financial condition should be read in the context of this overview.
PORTFOLIO AND INVESTMENT ACTIVITY
During the six months ended June 30, 2025, we made $4,428,530 of investment purchases and had $504,116 of redemptions and repayments, resulting in net investments at amortized cost of $17,641,707 as of June 30, 2025.
During the six months ended June 30, 2024, we made $973,438 of investment purchases and had $5,461,479 of redemptions and repayments, resulting in net investments at amortized cost of $14,460,679 as of June 30, 2024.
Our portfolio composition by major class, based on fair value at June 30, 2025, was as follows:
|
| Investments at Fair Value |
|
| Percentage of Fair Value |
| ||
|
|
|
|
| ||||
Short-term Non-banking Loans |
| $ | 6,685,295 |
|
|
| 37.4 | % |
Commercial Business Loans |
|
| 10,314,787 |
|
|
| 57.8 |
|
Common Stock |
|
| 854,879 |
|
|
| 4.8 |
|
Other Equity |
|
| — |
|
|
| — |
|
Total |
| $ | 17,854,961 |
|
|
| 100.0 | % |
| 21 |
| Table of Contents |
RESULTS OF OPERATIONS
Our operating results for the three and six months ended June 30, 2025 and June 30, 2024 were as follows:
:
|
| For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
| ||||||||||
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
Investment Income: |
| $ | 948,034 |
|
| $ | 888,629 |
|
| $ | 1,726,061 |
|
| $ | 1,721,296 |
|
Operating Expenses: |
|
| (316,183 | ) |
|
| (398,059 | ) |
|
| (695,966 | ) |
|
| (759,146 | ) |
Net Investment Gain |
| $ | 631,851 |
|
| $ | 490,570 |
|
| $ | 1,030,095 |
|
| $ | 962,150 |
|
Investment Income
We generate revenue primarily in the form of interest income derived from the short-term non-banking loans we provide, together with fees we charge in connection with those loans, such as commitment, origination, structuring, diligence, or consulting fees. Any such fees will be recognized as earned. In some cases, the interest payable to us on the short-term loans we provide may accrue or be paid in the form of additional debt. The principal amount of the debt instruments, together with any accrued but unpaid interest thereon, will generally become due at the maturity date of those debt instruments. On occasion, we may also generate revenue from dividends and capital gains on equity investments we make, if any, or on warrants or other equity interests that we may acquire.
For the three and six months ended June 30, 2025, our total investment income was $948,034 and $1,726,061, respectively. For the three and six months ended June 30, 2024 our total investment income was $888,629 and $1,721,296, respectively. Our loan portfolio generates interest income, with an average rate on the loans of 20%.
Professional Fees
For the three and six months ended June 30, 2025, we had $98,764 and $241,420 professional fees expense, respectively. For the three and six months ended June 30, 2024, we had $174,098 and $312,469 professional fees expense, respectively. The decrease is due to the decrease in loan activity during the current year.
Payroll and Directors Fees
For the three and six months ended June 30, 2025, we had $160,230 and $323,499 of payroll expense, respectively, and we had $30,000 and $60,000 of directors fees, respectively. For the three and six months ended June 30, 2024, we had $145,859 and $296,925 of payroll expense, respectively, and we had $30,000 and $60,000 of directors fees, respectively.
Interest Expense
For the three and six months ended June 30, 2025, we had $0 and $0 of interest expense, respectively. For the three and six months ended June 30, 2024, we had $0 and $320 of interest expense, respectively. The decrease is due to the termination of the line of credit agreement in January 2024.
Net Realized Gain (Loss) from Investments
For the three and six months ended June 30, 2025, we had $500,017 and $504,116, respectively, of sales of investments resulting in $31 of realized losses and $205 of realized gains, respectively. For the three and six months ended June 30, 2024, we had $5,152,682 and $5,461,479, respectively, of sales of investments resulting in $346,745 and $371,240 of realized gains, respectively.
Net Change in Unrealized Appreciation (Depreciation) on Investments
For the three and six months ended June 30, 2025, our investments had $314,515 and $476,781 of unrealized appreciation, respectively. For the three and six months ended June 30, 2024, our investments had $289,641 and $237,890 of unrealized depreciation, respectively.
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Changes in Net Assets from Operations
For the three and six months ended June 30, 2025, we recorded a net increase in net assets from operations of $677,035 and $1,128,781, respectively. Based on the weighted-average number of shares of common stock outstanding for the three and six months ended June 30, 2025, our per-share net increase in net assets from operations was $0.11 and $0.18, respectively. For the three and six months ended June 30, 2024, we recorded a net increase in net assets from operations of $412,936 and $795,039, respectively. Based on the weighted-average number of shares of common stock outstanding for the three and six months ended June 30, 2024, our per-share net increase in net assets from operations was $0.06 and $0.12, respectively.
Cash Flows for the Six Months Ended June 30, 2025 and 2024
The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and repayments of portfolio investments, among other factors. For the six months ended June 30, 2025, net cash used in operating activities was $3,898,665. Cash flows used in operating activities for the six months ended June 30, 2025 were primarily related to purchasing of investments totaling $4,428,530. Cash flows used in our financing activities for the six months ended June 30, 2025 were due to the repurchase and retirement of 322,482 of our common shares for $630,436. For the six months ended June 30, 2024, net cash provided in operating activities was $5,048,587. Cash flows provided in operating activities for the six months ended June 30, 2024 were primarily related to the funding of our short-term loans and purchases of investments aggregating $973,438, offset mostly by redemptions and repayments of short-term loans and investments totaling $5,461,479.
FINANCIAL CONDITION
As of June 30, 2025, we had cash of $1,497,009, a decrease of $4,529,101 from December 31, 2024. The primary use of our existing funds and any funds raised in the future is expected to be for our investments in portfolio companies or for other general corporate purposes, including paying for operating expenses or debt service to the extent we borrow or issue senior securities. Pending investment in portfolio companies, our investments may consist of cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment, which we refer to collectively as “temporary investments.”
Private Placement of Securities and SUI Strategy
On July 31, 2025, we closed on a private placement offer and sale of 75,881,625 shares of our common stock at an offering price of $5.42 per share, and pre-funded warrants to purchase up to 7,144,205 shares of our common stock at an offering price of $5.4199 per share, exercisable at a per-share price of $0.0001.
On July 27, 2025, and in connection with the private placement, we entered into a Placement Agency Agreement with A.G.P., pursuant to which A.G.P. agreed to serve as our exclusive placement agent in connection with the private placement. Pursuant to the Placement Agency Agreement, we paid A.G.P. a cash placement agent fee of $18,000,000. We also issued to A.G.P. warrants (the “Placement Agent Warrants”) to purchase up to 3,113,469 shares of our common stock (equal to 3.75% of the securities sold in the private placement). The Placement Agent Warrants will become exercisable six months following the issuance date and will be exercisable for a period of five years following the issuance date, at an exercise price of $5.962 per share. In addition, we agreed to reimburse A.G.P. for accountable expenses in an amount of $200,000 for its legal fees in connection with the private placement, as well as non-accountable expenses incurred by A.G.P. for up to $25,000 in connection with the private placement.
At the closing of the private placement, we also issued five-year warrants to purchase our common stock as follows:
| (i) | warrants (the “Lead Investor Warrants”) to Karatage Opportunities (“Karatage”), to purchase 3,113,469 shares of common stock at various exercise prices as follows: (i) 1,245,387 common shares at an exercise price of $5.42 per share; (ii) 1,245,387 common shares at an exercise price of $5.962 per share; (iii) 415,129 common shares at an exercise price of $6.504 per share; and (iv) 207,565 common shares at an exercise price of $7.046 per share; |
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| (ii) | warrants (the “Foundation Investor Warrants”) to the Sui Foundation (the “Foundation Investor”), to purchase 3,113,469 shares of common stock at various exercise prices as follows: (i) 1,245,388 common shares at an exercise price of $5.42 per share; (ii) 1,245,387 common shares at an exercise price of $5.962 per share; (iii) 415,129 common shares at an exercise price of $6.504 per share; and (iv) 207,565 common shares at an exercise price of $7.046 per share; |
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| (iii) | warrants (the “Management Warrants”) to certain members of the management of the Company to purchase 1,245,388 shares of common stock at various exercise prices as follows: (i) 622,694 common shares at an exercise price of $5.42 per share; (ii) 415,130 common shares at an exercise price of $6.504 per share; and (iii) 207,564 common shares at an exercise price of $7.046 per share; and |
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| (iv) | warrants (the “Advisor Warrants”) to certain advisors of the Company to purchase 207,565 shares of common stock at an exercise price of $5.962 per share. |
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All of the above-described warrants, other than that Advisor Warrants, will vest over a 24-month period starting six months from the issue date (as defined therein) in four equal installments (being 25% every six months), and in the case of the Management Warrants, subject to the relevant holder still being employed by the Company at each respective vesting date. In the event that a member of the management team is terminated by the Company other than for cause or resigns for good reason (as defined in the individual’s employment agreement), the vesting of all of such individual’s Management Warrants will immediately accelerate and be fully vested as of the date of such termination. The Advisor Warrants are fully exercisable beginning as of January 31, 2026.
On July 27, 2025, and in connection with the private placement, we entered into a Registration Rights Agreement with the investors and A.G.P. pursuant to which we agreed to file a registration statement, within 10 days of the closing (i.e., on or before August 10, 2025), providing for the resale by the investors of the common shares and shares of common stock issuable upon exercise of the pre-funded warrants, and the shares of common stock issuable upon exercise of the Lead Investor Warrant, Foundation Investor Warrant, Management Warrants and the Placement Agent Warrants, and to have such registration statement declared effective within 30 days of its filing date (or 60 days, if the SEC conducts a full review), and to maintain the effectiveness of such registration statement until all securities registered pursuant thereto (i) shall have been sold, either thereunder or pursuant to Rule 144, or (ii) starting from the third anniversary of the registration rights agreement, may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 under the Securities Act, and without the requirement for our Company to be in compliance with the current public information requirement Rule 144.
Common Stock Purchase Agreement
On August 1, 2025, we entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with A.G.P./Alliance Global Partners (the “Investor”), pursuant to which we have the right, but not the obligation, to direct the Investor to purchase the lesser of (i) $500,000,000 or (ii) a number of shares not to exceed 19.99% of our shares of common stock outstanding on August 1, 2025, unless our shareholders shall have approved the issuance of common stock in excess of such percentage, upon satisfaction of certain terms and conditions contained in the Purchase Agreement, including but not limited to an effective resale registration statement filed with the SEC. In this regard, we also entered into a Registration Rights Agreement with the Investor on August 1, 2025, pursuant to which we agreed to file a resale registration statement registering the resale of shares of common stock that may be purchased by the Investor pursuant to the Purchase Agreement.
Any purchases and sales under the Purchase Agreement will be at a per-share purchase price equal 95% of the volume-weighted average price for the applicable period, as calculated pursuant to the Purchase Agreement.
Any proceeds from sales of common stock under the Purchase Agreement will be used in the manner set forth in the prospectus included in the related registration statement (and any post-effective amendment thereto), and any prospectus supplement thereto, filed pursuant to the registration rights agreement.
CRITICAL ACCOUNTING ESTIMATES
Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods.
In preparing the financial statements, management will make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. In preparing the financial statements, management also will utilize available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results will almost certainly differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. As our expected operating results occur, we will describe additional critical accounting policies in the notes to our financial statements. Our most critical accounting policies relate to the valuation of our portfolio investments, and revenue recognition. For more information, refer to our Annual Report on Form 10-K for the year ended December 31, 2024.
OFF-BALANCE-SHEET ARRANGEMENTS
During the six months ended June 30, 2025, we did not engage in any off-balance sheet arrangements as described in Item 303(a)(4) of Regulation S-K.
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FORWARD-LOOKING STATEMENTS
Some of the statements made in this section of our report are forward-looking statements based on our management’s current expectations for our company. These expectations involve assumptions and are subject to substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance, and can ordinarily be identified by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Important assumptions include our ability to identify and consummate new investments, achieve certain margins and levels of profitability, the availability of any needed additional capital, and the ability to maintain compliance with regulations applicable to us. Some of the forward-looking statements contained in this report relate to, and are based our current assumptions regarding, the following:
| · | our future operating results; |
| · | the success of our investments; |
| · | our relationships with third parties; |
| · | the dependence of our success on the general economy and its impact on the industries in which we invest; |
| · | the ability of our portfolio companies to achieve their objectives; |
| · | our expected financings and investments; |
| · | our regulatory structure and tax treatment; |
| · | the adequacy of our cash resources and working capital; and |
| · | the timing of cash flows, if any, we receive from our investments. |
The foregoing list is not exhaustive. For a more complete summary of the risks and uncertainties facing our company and its business and relating to our forward-looking statements, please refer to our Annual Report on Form 10-K filed on April 17, 2023 (related to our year ended December 31, 2024) and in particular the section thereof entitled “Risk Factors.” Because of the significant uncertainties inherent in forward-looking statements pertaining to our company, the inclusion of those statements should not be regarded as a representation or warranty by us or any other person that our objectives, plans, expectations or projections that are contained in this filing will be achieved in any specified time frame, if ever. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this filing. The forward-looking statements made in this report relate only to events as of the date on which the statements are made, and are excluded from the safe harbor protection provided by Section 21E of the Securities Exchange Act of 1934.
ITEM 4. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met.
As of June 30, 2025, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were not effective as of June 30, 2025 due to the material weakness in our internal control over financial reporting identified and disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2024. In order to remediate this matter, we have retained the assistance of an accounting firm to assist in the accounting and reporting of transactions as needed, and have implemented other remedial disclosure procedures. We will consider the material weakness to be fully remediated once the applicable controls operate for a sufficient period of time and our management has concluded, through testing, that these controls are operating effectively.
There were no significant changes in our internal controls over financial reporting that occurred during the fiscal quarter covered by this report that materially affected, or were reasonably likely to materially affect such controls.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
Exhibit No. |
| Description |
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| Executive Employment Agreement with Douglas M. Polinsky, dated July 31, 2025 | |
| Executive Employment Agreement with Joseph A. Geraci II, dated July 31, 2025 | |
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101.INS * |
| Inline XBRL Instance Document |
101.SCH * |
| Inline XBRL Taxonomy Extension Schema Document |
101.CAL * |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF * |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB * |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE * |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 * |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MILL CITY VENTURES III, LTD. |
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Date: August 14, 2025 | By: | /s/ Douglas M. Polinsky |
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| Douglas M. Polinsky Chief Executive Officer |
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Date: August 14, 2025 | By: | /s/ Joseph A. Geraci, II |
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| Joseph A. Geraci, II Chief Financial Officer |
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EXHIBIT 3.1
BYLAWS
OF
MILL CITY VENTURES III, LTD
(Amended and Restated as of July 27, 2025)
SHAREHOLDERS
Section 1.01. Place of Meetings and Annual Meeting
Meetings of the shareholders shall be held at the principal executive office of the corporation or at such other place or places as the Board may from time to time designate. The Board may determine that shareholders not physically present in person or by proxy at a shareholder meeting may, by means of remote communication, participate in a shareholder meeting held at a designated place. The Board also may determine that a meeting of the shareholders shall not be held at a physical place, but instead solely by means of remote communication. Participation by remote communication constitutes presence at the meeting. The regular annual meeting of the shareholders shall be held on such day each year as shall be designated by the Board, and at such time as the Board may from time to time designate, for the election of Directors and for the transaction of such other business as may lawfully come before such meeting.
Section 1.02. Special Meetings
Special meetings of the shareholders may be called for any purpose or purposes, at any time, by the Chief Executive Officer; by the Chief Financial Officer; by the Board or any two or more members thereof; or by one or more shareholders holding not less than 10% of the voting power of all shares of the corporation entitled to vote, who shall demand such special meeting by written notice given to the Chief Executive Officer or the Chief Financial Officer and specifying the purpose or purposes of such meeting. The business transacted at a special meeting of shareholders is limited to the purpose or purposes stated in the notice of the meeting.
Section 1.03. Meetings Held Upon Shareholder Demand
Within 30 days of receipt of a demand by the Chief Executive Officer or the Chief Financial Officer from any shareholder or shareholders entitled to call a meeting of the shareholders, it shall be the duty of the Board to cause a special or regular meeting of shareholders, as the case may be, to be duly called and held no later than 90 days after receipt of such shareholder’s or shareholders’ demand. If the Board fails to cause such a meeting to be called and held as required by this Section, the shareholder or shareholders making the demand may call the meeting by giving notice as provided in Section 1.04 at the expense of the corporation.
Section 1.04. Notices of Meetings
Except as otherwise specified in Section 1.03 or required by law, written notice of the time and place of every meeting of shareholders, and in the case of a special meeting the purpose or purposes of the meeting, shall be given at least 10 days and not more than 60 days previous thereto, to each shareholder of record entitled to vote at the meeting. Notice may be given to a shareholder by means of electronic communication if the requirements of Minnesota Statutes Section 302A.436, Subdivision 5, as amended from time to time, are met. Notice to a shareholder is also effectively given if the notice is addressed to the shareholder or a group of shareholders in a manner permitted by the rules and regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including any interpretations relating thereto issued by the Staff of the Securities and Exchange Commission, provided that the corporation has first received the written or implied consent required by those rules and regulations.
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Section 1.05. Quorum
A quorum at any meeting of shareholders shall consist of shareholders representing, either in person or by proxy, one-third of the outstanding shares of the corporation entitled to vote at such meeting, except as otherwise specially provided by law. If a quorum is not present at any such meeting, such meeting may be adjourned by the chairperson of the meeting or the Chair of the Board from time to time until a quorum is present.
Section 1.06. Adjournments
Any meeting of the shareholders may be adjourned for any reasonable purpose from time to time to another date, time and place solely by (a) the chairperson of such meeting or (b) the Chair of the Board. If any meeting of the shareholders is so adjourned, no notice as to such adjourned meeting need be given if the date, time and place at which the meeting will be reconvened are announced at the time of adjournment and the adjourned meeting is held not more than 120 days after the date fixed for the original meeting. For the avoidance of doubt, any previously scheduled meeting of the shareholders (other than a special meeting held in accordance with Section 1.03 of these Bylaws) may be rescheduled, postponed or cancelled by resolution of the Board upon public notice given on or prior to the date previously scheduled for such meeting of shareholders.
Section 1.07. Proposals Regarding Business Other Than Director Nominations
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| (a) | The business transacted at any special meeting of shareholders is limited to the purpose or purposes stated in the notice of the meeting given pursuant to Section 1.04. The proposal of business (other than the nomination and election of Directors, which is subject to Sections 2.09 and 2.10) to be considered by the shareholders at an annual meeting of shareholders may be made (i) pursuant to the corporation’s notice of meeting, (ii) by or at the direction of the Board, or (iii) by any shareholder of the corporation who complies with this Section 1.07. |
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| (b) | For business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a shareholder’s notice must be received by the Secretary not less than 90 days prior to the first anniversary of the preceding year’s annual meeting. If, however, the date of the annual meeting is more than 30 days before or 60 days after such anniversary date, notice by a shareholder is timely only if so received not less than 90 days before the annual meeting or, if later, within 10 days after the first public announcement of the date of the annual meeting. Except to the extent otherwise required by law, the adjournment of an annual meeting will not commence a new time period for the giving of a shareholder’s notice as required above. |
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| (c) | A shareholder’s notice to the corporation must set forth, as to each matter the shareholder proposes to bring before an annual meeting: |
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| i. | a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting; |
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| ii. | any material interest in such business of the shareholder and of any beneficial owners on whose behalf the proposal is made; |
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| iii. | the name and address of such shareholder, as they appear on the corporation’s books, and of any such beneficial owner; |
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| iv. | (A) the class or series (if any) and number of shares of the corporation that are beneficially owned by such shareholder or any such beneficial owner, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the corporation or with a value derived in whole or in part from the value of any class or series of shares of the corporation, whether or not such instrument or right is subject to settlement in the underlying class or series of capital stock of the corporation or otherwise (a “Derivative Instrument”) owned beneficially by such shareholder or any such beneficial owner and any other opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the corporation, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such shareholder or any such beneficial owner has a right to vote any shares of the corporation, (D) any short interest of such shareholder or any such beneficial owner in any security of the corporation (for purposes of these Bylaws, a person shall be deemed to have a “short interest” in a security if such person has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (E) any rights to dividends on the shares of the corporation owned beneficially by such shareholder or any such beneficial owner that are separated or separable from the underlying shares of the corporation, (F) any proportionate interest in shares of the corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such shareholder or any such beneficial owner is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, and (G) any performance-related fees (other than an asset-based fee) that such shareholder or any such beneficial owner is entitled to based on any increase or decrease in the value of shares of the corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such shareholder’s or any such beneficial owner’s immediate family sharing the same household (which information called for by this Section 1.07(c)(iv) shall be supplemented by such shareholder not later than 10 days after the record date for the meeting to update and disclose such information as of the record date); and |
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| v. | a representation that the shareholder is a holder of record of shares entitled to vote at the meeting, will continue to be a holder of record of shares entitled to vote at the meeting through the date of the meeting, and intends to appear in person or by proxy at the meeting to make the proposal. |
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| (d) | The presiding officer at such meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the procedures described in this Section 1.07 and, if the presiding officer so determines, any such business not properly brought before the meeting shall not be transacted. |
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| (e) | “Public announcement” means disclosure (i) when made in a press release reported or released by any national news service, (ii) when contained in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act, or (iii) when given as the notice of the meeting pursuant to Section 1.04. |
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| (f) | With respect to this Section 1.07, a shareholder must also comply with all applicable requirements of Minnesota law and the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.07. |
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| (g) | Notwithstanding anything to the contrary in this Section 1.07, this Section 1.07 does not apply to any shareholder proposal made pursuant to Rule 14a-8 promulgated under the Exchange Act. The requirements, procedures, and notice deadlines of Rule 14a-8 shall govern any proposal made pursuant thereto. |
Section 1.08. Conduct of Meetings
The Board shall be entitled to make such rules and regulations for the conduct of meetings of shareholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board, if any, the chairperson of the meeting or the Chair of the Board shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairperson or Chair of the Board, as applicable, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in the meeting to shareholders of record of the corporation, their duly authorized and constituted proxies and such other persons as the chairperson of the meeting or Chair of the Board, as applicable, shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants, regulation of the opening and closing of the polls for balloting and matters which are to be voted on by ballot, and restricting the use of cell phones, audio or video recording devices and similar devices at the meeting. Unless and to the extent determined by the Board, the Chair of the Board or the chair of the meeting, meetings of shareholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 1.09. Proxies
A shareholder may cast or authorize the casting of a vote (a) by filing a written appointment of a proxy, signed by the shareholder, with an officer of the corporation at or before the meeting at which the appointment is to be effective, or (b) by telephonic transmission or authenticated electronic communication, whether or not accompanied by written instructions of the shareholder, of an appointment of a proxy with the corporation or the corporation’s duly authorized agent at or before the meeting at which the appointment is to be effective. The telephonic transmission or authenticated electronic communication must set forth or be submitted with information from which it can be determined that the appointment was authorized by the shareholder. Any copy, facsimile telecommunication, or other reproduction of the original of either the writing or transmission may be used in lieu of the original, provided that it is a complete and legible reproduction of the entire original. Any shareholder directly or indirectly soliciting proxies from other shareholders must use a proxy card color other than white, which shall be reserved for the exclusive use by the Board.
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BOARD OF DIRECTORS
Section 2.01. Regular Meetings
Regular meetings of the Board may be established by the Board. They may be held without notice at the principal executive office of the corporation, or at such other place or places as the Board may from time to time designate.
Section 2.02. Special Meetings
Special meetings of the Board may be called at any time by any member of the Board, the Chief Executive Officer, the Chief Financial Officer, or the Secretary of the corporation, to be held at the principal executive office of the corporation or at such other place or places as the Directors may from time to time designate. Notices of all special meetings of the Board shall be given to each Director by at least 24 hours’ service of the same by letter, by telephone, by electronic communication or personally, provided that when notice is mailed, at least three days’ notice shall be given.
Section 2.03. Quorum
A majority of the Directors currently holding office shall be necessary at all meetings to constitute a quorum for the transaction of business, except as otherwise provided herein, but a majority of the Directors present (although less than a quorum) may adjourn any meeting, which may be held on a subsequent date without further notice, provided that a quorum be present at such deferred meeting. If a quorum is present when a meeting is convened, the Directors present may continue to transact business until adjournment, even though the withdrawal of a number of Directors originally present leaves less than the number otherwise required for a quorum.
Section 2.04. Waiver of Notice; Previously Scheduled Meetings
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| (a) | A Director may waive notice of the date, time and place of a meeting of the Board. A waiver of notice by a Director entitled to notice is effective whether given before, at or after the meeting, and whether given in writing, orally, by authenticated electronic communication, or by attendance. Attendance by a Director at a meeting is a waiver of notice of that meeting, unless the Director objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and thereafter does not participate in the meeting. |
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| (b) | If the day or date, time and place of a Board meeting have been announced at a previous meeting of the Board, no additional notice is required. Notice of an adjourned meeting need not be given other than by announcement at the meeting at which adjournment is taken of the date, time and place at which the meeting will be reconvened. |
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Section 2.05. Action in Writing
Any action required or permitted to be taken at a meeting of the Board may be taken without a meeting if authorized by a writing or writings signed, or consented to by authenticated electronic communication, by all of the Directors. For so long as the Articles of Incorporation of the corporation permit, any action required or permitted to be taken at a meeting of the Board, other than an action requiring shareholder approval, may be taken without a meeting if authorized by a writing or writings signed, or consented to by authenticated electronic communication, by that number of Directors that would be required to take the same action at a meeting of the Board at which all Directors were present. Any such action taken in a writing or writing shall be effective when signed, or consented to by authenticated electronic communication, by the required number of Directors or at such other time as is set forth therein.
Section 2.06. Electronic Communications
Any action which may be taken at a meeting of the Board may be taken by means of conference telephone, or if authorized by the Board, by any other means of remote communication, by means of which all persons participating in the meeting can hear each other, with the same effect as though all such persons were present in person at such meeting. Participation in a meeting by any such means constitutes presence in person at the meeting.
Section 2.07. Absent Directors
A Director may give advance written consent or opposition to a proposal to be acted on at a Board meeting. If the Director is not present at the meeting, consent or opposition to a proposal does not constitute presence for purposes of determining the existence of a quorum, but consent or opposition shall be counted as a vote in favor of or against the proposal and shall be entered in the minutes or other record of action at the meeting, if the proposal acted on at the meeting is substantially the same or has substantially the same effect as the proposal to which the Director has consented or objected.
Section 2.08. Committees
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| (b) | A committee shall consist of one or more natural persons, who need not be Directors, appointed by affirmative vote of a majority of the Directors present at a duly held Board meeting. |
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| (c) | Sections 2.01 through 2.07 apply to committees and members of committees to the same extent as those sections apply to the Board and Directors. |
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| (d) | Minutes, if any, of committee meetings shall be made available upon request to members of the committee and to any Director. |
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| (e) | Unless otherwise provided in the resolution of the Board establishing the committee, a committee may create one or more subcommittees, each consisting of one or more members of the committee, and may delegate to a subcommittee any or all of the authority of the committee. In these Bylaws, unless the language or context clearly indicates that a different meaning is intended, any reference to a committee is deemed to include a subcommittee, and any reference to a committee member is deemed to include a subcommittee member. |
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| (f) | The Board may establish a committee composed of one or more independent Directors or other independent persons to consider legal rights or remedies of the corporation and whether those rights and remedies should be pursued. |
Section 2.09. Director Nominations
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| (a) | Only persons who are nominated in accordance with the procedures set forth in this Section 2.09 or Section 2.10 are eligible for election as Directors at an annual meeting of shareholders, unless otherwise provided in the Articles of Incorporation, or unless the corporation has entered into a written agreement, approved by the Board, respecting rights to appoint or nominate persons to serve as Directors (in which case such agreement shall exclusively control both the process by which persons shall be appointed or nominated as Directors, as the case may be, and the rights of the shareholder (or other appointing or nominating person) to include any language or statement supporting their nominee or nominees in the corporation’s proxy statement). Nominations of persons for election to the Board of Directors at an annual meeting of shareholders may be made (i) by or at the direction of the Board of Directors (or an authorized committee thereof) or (ii) by any shareholder entitled to vote for the election of Directors and who complies with the procedures set forth in this Section 2.09 or Section 2.10. |
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| (b) | Nominations by shareholders, other than with respect to nominations by shareholders pursuant to Section 2.10, must be made pursuant to timely notice in writing to the Secretary of the corporation in accordance with this Section 2.09. In addition to such shareholder complying in all respects with the requirements of Section 14 of the Exchange Act and all other applicable provisions of state or federal law, rule or regulation (for the avoidance of doubt, including, without limitation, Rule 14a-19 promulgated under the Exchange Act (“Rule 14a-19”)), to be timely, a shareholder’s notice of nominations to be made at an annual meeting must be received by the Secretary not less than 90 days prior to the first anniversary of the preceding year’s annual meeting. If, however, the date of the annual meeting is more than 30 days before or 60 days after such anniversary date, notice by a shareholder is timely only if so received not less than 90 days before the annual meeting or, if later, within 10 days after the first public announcement of the date of the annual meeting. Except to the extent otherwise required by law, the adjournment of an annual meeting will not commence a new time period for the giving of a shareholder’s notice as described above. |
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| (c) | A shareholder’s notice to the corporation of nominations for an annual meeting of shareholders must set forth: |
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| i. | as to each person whom the shareholder proposes to nominate for election or re-election as a Director: (A) the person’s name, (B) all information relating to the person that would be required to be disclosed in solicitations subject to Rule 14a-12(c) under the Exchange Act or that is required pursuant to any other provision of Regulation 14A or any other applicable rule or regulation under the Exchange Act, and (C) the person’s written consent to be named in any proxy materials as a nominee and to serve as a Director if elected; and |
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| ii. | as to the shareholder giving the notice: (A) the name and address of such shareholder, as they appear on the corporation’s books, and of any beneficial owners on whose behalf the nomination is made, (B) the information called for by Section 1.07(c)(iv) hereof with respect to such shareholder and any such beneficial owner, and (C) a representation that the shareholder is a holder of record of shares of the corporation entitled to vote for the election of Directors, will continue to be a holder of record of shares entitled to vote for the election of Directors through the date of the meeting, and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice. |
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| (d) | A shareholder who has delivered a notice of nomination pursuant to this Section 2.09 shall promptly certify to the corporation in writing that it has complied and will comply with the requirements of Rule 14a-19 and deliver no later than five business days prior to the meeting reasonable evidence that it has complied with such requirements. |
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| (e) | The presiding officer at such meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed in this Section 2.09 and, if the presiding officer so determines, the defective nomination shall be disregarded. For the avoidance of doubt, unless otherwise required by law, if any shareholder (i) provides notice pursuant to Rule 14a-19 and (ii) subsequently (A) notifies the corporation that such shareholder no longer intends to solicit proxies in support of director nominees other than the corporation’s director nominees in accordance with Rule 14a-19, (B) fails to comply with the requirements of Rule 14a-19 or (C) fails to provide reasonable evidence sufficient to satisfy the corporation that such requirements have been met, then such shareholder’s nomination(s) shall be deemed null and void and the corporation shall disregard any proxies or votes solicited for any nominee proposed by such shareholder. |
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| (f) | With respect to this Section 2.09, a shareholder must also comply with all applicable requirements of Minnesota law and the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.09. |
Section 2.10. Proxy Access for Director Nominations
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| (a) | Proxy Access Eligibility. Whenever the Board solicits proxies with respect to the election of Directors at an annual meeting of shareholders, subject to the provisions of this Section 2.10, the corporation shall include in its proxy statement for such annual meeting, in addition to any persons nominated for election by the Board or any committee thereof, the name, together with the Required Information (as defined below), of any person nominated for election (the “Shareholder Nominee”) to the Board by a shareholder or group of no more than 20 shareholders that satisfies the requirements of this Section 2.10 (the “Eligible Shareholder”) and that expressly elects, at the time of providing the notice required by this Section 2.10 (the “Notice of Proxy Access Nomination”), to have such nominee included in the corporation’s proxy materials pursuant to this Section 2.10. For purposes of this Section 2.10, the “Required Information” that the corporation will include in its proxy statement is (i) the information provided to the Secretary of the corporation concerning the Shareholder Nominee and the Eligible Shareholder that is required to be disclosed in the corporation’s proxy statement pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder, and (ii) if the Eligible Shareholder so elects, a Supporting Statement (as defined below). The Required Information must be provided with the Notice of Proxy Access Nomination. |
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| (b) | Maximum Number of Shareholder Nominees. The maximum number of Shareholder Nominees nominated by all Eligible Shareholders that will be included in the corporation’s proxy materials with respect to an annual meeting of shareholders shall not exceed the greater of (i) two or (ii) 20% of the number of Directors in office as of the last day on which a Notice of Proxy Access Nomination may be delivered pursuant to and in accordance with this Section 2.10 (the “Final Proxy Access Nomination Date”) or, if such amount is not a whole number, the closest whole number below 20%. In the event that one or more vacancies for any reason occurs on the Board after the Final Proxy Access Nomination Date, but before the date of the annual meeting, and the Board resolves to reduce the size of the Board in connection therewith, the maximum number of Shareholder Nominees included in the corporation’s proxy materials shall be calculated based on the number of Directors in office as so reduced. For purposes of determining when the maximum number of Shareholder Nominees provided for in this Section 2.10 has been reached, each of the following persons shall be counted as one of the Shareholder Nominees: |
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| i. | any individual nominated by an Eligible Shareholder for inclusion in the corporation’s proxy materials pursuant to this Section 2.10 and whose nomination is subsequently withdrawn; |
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| ii. | any individual nominated by an Eligible Shareholder for inclusion in the corporation’s proxy materials pursuant to this Section 2.10 and whom the Board decides to nominate for election to the Board; and |
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| iii. | any Director in office, as of the Final Proxy Access Nomination Date, who was included in the corporation’s proxy materials as a Shareholder Nominee for either of the two preceding annual meetings of shareholders (including any individual counted as a Shareholder Nominee pursuant to the immediately preceding clause (ii)) and whom the Board decides to nominate for re-election to the Board. |
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| Any Eligible Shareholder submitting more than one Shareholder Nominee for inclusion in the corporation’s proxy materials pursuant to this Section 2.10 shall rank such Shareholder Nominees based on the order in which the Eligible Shareholder desires such Shareholder Nominees to be selected for inclusion in the corporation’s proxy materials. In the event that the number of Shareholder Nominees submitted by Eligible Shareholders pursuant to this Section 2.10 exceeds the maximum number of Shareholder Nominees provided for in this Section 2.10, the highest ranking Shareholder Nominee who meets the requirements of this Section 2.10 from each Eligible Shareholder will be selected for inclusion in the corporation’s proxy materials until the maximum number is reached, going in order of the amount (largest to smallest) of shares of common stock of the corporation each Eligible Shareholder disclosed as owned in its Notice of Proxy Access Nomination. If the maximum number is not reached after the highest ranking Shareholder Nominee who meets the requirements of this Section 2.10 from each Eligible Shareholder has been selected, then the next highest ranking Shareholder Nominee who meets the requirements of this Section 2.10 from each Eligible Shareholder will be selected for inclusion in the corporation’s proxy materials, and this process will continue as many times as necessary, following the same order each time, until the maximum number is reached. |
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| (c) | Required Shares and Minimum Holding Period. In order to make a nomination pursuant to this Section 2.10, an Eligible Shareholder must have owned (as defined below) at least 3% of the corporation’s outstanding common stock (the “Required Shares”) continuously for at least three years (the “Minimum Holding Period”) as of both the date the Notice of Proxy Access Nomination is delivered to the Secretary of the corporation in accordance with this Section 2.10 and the record date for determining the shareholders entitled to receive notice of the annual meeting, and must continue to own the Required Shares through the date of the annual meeting. For purposes of this Section 2.10, an Eligible Shareholder shall be deemed to “own” only those outstanding shares of common stock of the corporation as to which the shareholder possesses both: |
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| i. | the full voting and investment rights pertaining to the shares, and |
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| ii. | the full economic interest in (including the opportunity for profit from and risk of loss on) such shares, provided that the number of shares calculated in accordance with the immediately preceding clauses (i) and (ii) shall not include any shares: |
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| (A) | sold by such shareholder or any of its affiliates in any transaction that has not been settled or closed, |
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| (B) | borrowed by such shareholder or any of its affiliates for any purposes or purchased by such shareholder or any of its affiliates pursuant to an agreement to resell, or |
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| (C) | subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar instrument or agreement entered into by such shareholder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of shares of outstanding common stock of the corporation, if, in any such case, such instrument or agreement has, or is intended to have, the purpose or effect of: |
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| (1) | reducing in any manner, to any extent or at any time in the future, such shareholder’s or its affiliates’ full right to vote or direct the voting of any such shares, and/or |
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| (2) | hedging, offsetting or altering to any degree any gain or loss realized or realizable from maintaining the full economic ownership of such shares by such shareholder or affiliate. |
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| A shareholder shall “own” shares held in the name of a nominee or other intermediary so long as the shareholder retains the right to instruct how the shares are voted with respect to the election of Directors and possesses the full economic interest in the shares. A person’s ownership of shares shall be deemed to continue during any period in which (i) the shareholder has loaned such shares, provided that the person has the power to recall such loaned shared on 3 business days’ notice or (ii) the shareholder has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement which is revocable at any time by the shareholder. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings. Whether outstanding shares of the common stock of the corporation are “owned” for these purposes shall be determined by the Board or any committee thereof. For purposes of this Section 2.10, the term “affiliate” or “affiliates” shall have the meaning ascribed thereto under the General Rules and Regulations under the Exchange Act. | |
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| (d) | Requirements for a Group. |
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| i. | Whenever the Eligible Shareholder consists of a group of shareholders: |
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| (A) | a group of funds under common management and control shall be treated as one shareholder; |
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| (B) | each provision in this Section 2.10 that requires the Eligible Shareholder to provide any written statements, representations, undertakings, agreements or other instruments or to meet any other conditions shall be deemed to require each shareholder that is a member of such group to provide such statements, representations, undertakings, agreements or other instruments and to meet such other conditions (except that the members of such group may aggregate their shareholdings in order to meet the 3% ownership requirement of the “Required Shares” definition); |
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| (C) | a breach of any obligation, agreement or representation under this Section 2.10 by any member of such group shall be deemed a breach by the Eligible Shareholder; and |
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| (D) | the Notice of Proxy Access Nomination must designate one member of the group for purposes of receiving communications, notices and inquiries from the corporation and otherwise authorize such member to act on behalf of all members of the group with respect to all matters relating to the nomination under this Section 2.10 (including withdrawal of the nomination). |
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| (e) | Deadline for Notice of Proxy Access Nomination. Nominations by shareholders pursuant to this Section 2.10, must be made pursuant to timely notice to the Secretary of the corporation in accordance with this Section 2.10. To be timely, a Notice of Proxy Access Nomination must be received by the Secretary not less than 120 days and not more than 150 days prior to the first anniversary of the date that the corporation distributed its proxy statement to shareholders for the preceding year’s annual meeting. If, however, the date of the annual meeting is more than 30 days before or 60 days after the first anniversary date of the preceding year’s annual meeting, the Notice of Proxy Access Nomination shall be timely only if received not less than 90 days and not more than 120 days prior to the annual meeting, or if later, within 10 days after the first public announcement of the date of the annual meeting. In no event shall the adjournment of an annual meeting, or the public announcement of such an adjournment, commence a new time period (or extend any time period) for the giving of a Notice of Proxy Access Nomination pursuant to this Section 2.10. |
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| (f) | Requirements for Notice of Proxy Access Nomination. To be in proper form for purposes of this Section 2.10, the Notice of Proxy Access Nomination must include or be accompanied by the following: |
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| i. | the information and representations that would be required to be set forth in a shareholder’s notice of a nomination pursuant to Section 2.09(c) (including the written consent of each Shareholder Nominee to be named in the proxy statement as a nominee and to serve as a Director if elected); |
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| ii. | one or more written statements from the record holder of the Required Shares (and from each intermediary through which the Required Shares are or have been held during the Minimum Holding Period) verifying that, as of a date within seven calendar days prior to the date the Notice of Proxy Access Nomination is delivered to or mailed and received by the Secretary of the corporation, the Eligible Shareholder owns, and has owned continuously for the Minimum Holding Period, the Required Shares, and the Eligible Shareholder’s agreement to provide one or more written statements from the record holder and such intermediaries verifying the Eligible Shareholder’s continuous ownership of the Required Shares through the record date for determining the shareholders entitled to receive notice of the annual meeting, which statements must be provided within five business days after the record date; |
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| iii. | a copy of the Schedule 14N that has been filed with the Securities and Exchange Commission as required by Rule 14a-18 under the Exchange Act; |
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| iv. | a representation that the Eligible Shareholder: |
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| (A) | will continue to hold the Required Shares through the date of the annual meeting, |
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| (B) | acquired the Required Shares in the ordinary course of business and not with the intent to change or influence control at the corporation, and does not presently have such intent, |
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| (C) | has not nominated and will not nominate for election to the Board at the annual meeting any person other than the Shareholder Nominee(s) it is nominating pursuant to this Section 2.10, |
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| (D) | has not engaged and will not engage in, and has not and will not be a “participant” in another person’s, “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act in support of the election of any individual as a Director at the annual meeting other than its Shareholder Nominee(s) or a nominee of the Board, |
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| (E) | has not distributed and will not distribute to any shareholder of the corporation any form of proxy for the annual meeting other than the form distributed by the corporation, |
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| (F) | has complied and will comply with all laws and regulations applicable to solicitations and the use, if any, of soliciting material in connection with the annual meeting, |
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| (G) | will file with the Securities and Exchange Commission any solicitation or other communication with the corporation’s shareholders relating to the meeting at which the Shareholder Nominee will be nominated, regardless of whether any such filing is required under Regulation 14A of the Exchange Act or whether any exemption from filing is available for such solicitation or other communication under Regulation 14A of the Exchange Act, and |
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| (H) | has provided and will provide facts, statements and other information in all communications with the corporation and its shareholders that are or will be true and correct in all material respects and do not and will not omit to state a material fact necessary in order to make such information, in light of the circumstances under which it was or will be made or provided, not misleading, |
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| v. | an undertaking that the Eligible Shareholder agrees to: |
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| (A) | assume all liability stemming from any legal or regulatory violation arising out of communications with the shareholders of the corporation by the Eligible Shareholder, its affiliates and associates or their respective agents and representatives, either before or after providing a Notice of Proxy Access Nomination pursuant to this Section 2.10, or out of the facts, statements or other information that the Eligible Shareholder or its Shareholder Nominee(s) provided to the corporation in connection with the inclusion of such Shareholder Nominee(s) in the corporation’s proxy materials, and |
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| (B) | indemnify and hold harmless the corporation and each of its Directors, officers and employees individually against any liability, loss or damages in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the corporation or any of its Directors, officers or employees arising out of any nomination submitted by the Eligible Shareholder pursuant to this Section 2.10, and |
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| vi. | a written representation and agreement from each Shareholder Nominee that such Shareholder Nominee: |
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| (A) | is not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such Shareholder Nominee, if elected as a Director of the corporation, will act or vote on any issue or question that has not been disclosed to the corporation, |
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| (B) | is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a Shareholder Nominee that has not been disclosed to the corporation, and is not and will not become a party to any agreement, arrangement or understanding with any person other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a Director, |
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| (C) | has read and will comply with the corporation’s code of ethics, corporate governance guidelines, stock ownership guidelines, securities trading policy, information security policy and any other policies or guidelines of the corporation applicable to Directors, and |
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| (D) | will make such other acknowledgments, enter into such agreements and provide such information as the Board requires of all Directors, including promptly submitting all completed and signed questionnaires required of the corporation’s Directors. |
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| (g) | Additional Information that May be Required. In addition to the information required pursuant to Section 2.10(f) or any other provision of these Bylaws, the corporation also may require each Shareholder Nominee to furnish any other information that: (i) may reasonably be requested by the corporation to determine whether the Shareholder Nominee would be independent under the rules and listing standards of the principal United States securities exchanges upon which the common stock of the corporation is listed or traded, any applicable rules of the Securities and Exchange Commission or any publicly disclosed standards used by the Board in determining and disclosing the independence of the corporation’s Directors; (ii) could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such Shareholder Nominee; and/or (iii) may reasonably be required to determine the eligibility of such Shareholder Nominee to serve as a Director of the corporation. |
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| (h) | Supporting Statement. The Eligible Shareholder may, at its option, provide to the Secretary of the corporation, at the time the Notice of Proxy Access Nomination is provided, a written statement, not to exceed 500 words, in support of the Shareholder Nominee(s)’ candidacy (a “Supporting Statement”). Only one Supporting Statement may be submitted by an Eligible Shareholder (including any group of shareholders together constituting an Eligible Shareholder) in support of its Shareholder Nominee(s). Notwithstanding anything to the contrary contained in this Section 2.10, the corporation may omit from its proxy materials any information or Supporting Statement (or portion thereof) that it believes would violate any applicable law or regulation. |
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| (i) | Eligible Shareholder and Shareholder Nominee Duty to Update. In the event that any information or communications provided by an Eligible Shareholder or a Shareholder Nominee to the corporation or its shareholders ceases to be true and correct in all material respects or omits a material fact necessary to make such information, in light of the circumstances under which it was made or provided, not misleading, such Eligible Shareholder or Shareholder Nominee, as the case may be, shall promptly notify the Secretary of the corporation of any defect in such previously provided information and of the information that is required to correct any such defect. In addition, any person providing any information pursuant to this Section 2.10 shall further update and supplement such information, if necessary, so that all such information shall be true and correct as of the record date for determining the shareholders entitled to receive notice of the annual meeting and as of the date that is 10 business days prior to such annual meeting or any adjournment or postponement thereof, and such update and supplement (or a written certification that no such updates or supplements are necessary and that the information previously provided remains true and correct as of the applicable date) shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the corporation not later than five business days after the record date for determining the shareholders entitled to receive notice of such annual meeting (in the case of the update and supplement required to be made as of the record date), and not later than seven business days prior to the date of the annual meeting or any adjournment or postponement thereof (in the case of the update and supplement required to be made as of 10 business days prior to the meeting). |
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| (j) | Resubmission of Shareholder Nominee. Any Shareholder Nominee who is included in the corporation’s proxy materials for a particular annual meeting of shareholders but either (i) withdraws from or becomes ineligible or unavailable for election at the annual meeting, or (ii) does not receive at least 25% of the votes cast in favor of such Shareholder Nominee’s election, will be ineligible to be a Shareholder Nominee pursuant to this Section 2.10 for the next two annual meetings of Shareholders. |
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| (k) | Exclusivity. This Section 2.10 provides the exclusive method for a shareholder to include nominees for election to the Board in the corporation’s proxy materials (including, without limitation, any proxy card or written ballot), other than with respect to Rule 14a-19 to the extent applicable with respect to form of proxies, and other than as otherwise set forth in a written agreement, approved by the Board, respecting the rights of a shareholder (or other nominating person) to include nominees for election to the Board in the corporation’s proxy materials and make or participate in the making of a statement supporting such nominees. |
Section 2.11. Chair of the Board
The Board may elect or appoint from its members a Chair of the Board who shall preside at all meetings of shareholders and of the Board, may make reports to the Board and shareholders, and shall have such other authority and perform such other duties as the Board may from time to time determine.
Section 2.12. Size of the Board
The number of Directors comprising the Board may be either increased or decreased by resolution of the shareholders at an annual meeting or at a special meeting called for that purpose. The number of Directors comprising the Board may also be increased or decreased by resolution adopted by the affirmative vote of a majority of the Board. Any newly created directorships established by the Board shall be filled by a majority vote of the Directors serving at the time of such increase.
OFFICERS
Section 3.01. Number and Designation
The corporation shall have one or more natural persons exercising the functions of the offices of Chief Executive Officer and Chief Financial Officer. The Board and, to the extent permitted by law, the Chief Executive Officer may elect or appoint such other officers or agents as deemed necessary for the operation and management of the corporation, with such powers, rights, duties and responsibilities as may be determined by the Board or the Chief Executive Officer, including, without limitation, a President, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, and one or more Assistant Treasurers. Any of the offices or functions of those offices may be held by the same person.
Section 3.02. Chief Executive Officer
Unless otherwise determined by the Board of Directors, the Chief Executive Officer shall have general active management of the business of the corporation, shall see that all orders and resolutions of the Board are carried into effect, and shall perform such other duties as the Board may from time to time determine.
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Section 3.03. President
Unless otherwise determined by the Board of Directors, the Chief Executive Officer shall be the President of the corporation. If a person other than the Chief Executive Officer is designated as President, the President shall perform such duties as the Board or the Chief Executive Officer may from time to time determine.
Section 3.04. Chief Financial Officer
Unless otherwise determined by the Board of Directors, the Chief Financial Officer shall keep accurate financial records for the corporation, shall render to the Chief Executive Officer and the Board, whenever requested, an account of the financial condition of the corporation, and shall perform such other duties as the Board or the Chief Executive Officer may from time to time determine. Unless otherwise determined by the Board of Directors, the Chief Financial Officer shall be the Treasurer of the corporation. If a person other than the Chief Financial Officer is designated as Treasurer, the Treasurer shall perform such duties as the Board or the Chief Executive Officer may from time to time determine.
Section 3.05. Vice Presidents
Any one or more of the Vice Presidents may be designated by the Board or, to the extent permitted by law, the Chief Executive Officer as an Executive Vice President or Senior Vice President, and each Vice President shall have such authority and perform such duties as the Board or the Chief Executive Officer may from time to time determine.
Section 3.06. Secretary
Unless otherwise determined by the Board of Directors, the Secretary shall issue notices for all meetings, except as otherwise provided for herein, and the Secretary shall keep minutes of all meetings, have charge of the seal (if any) and the corporate books, and make such reports and perform the other duties incident to that office, and shall have such other authority and perform such other duties as the Board or the Chief Executive Officer may from time to time determine. In the event these Bylaws or applicable require the Secretary of the corporation to perform any act, and no Secretary has been appointed by the Board or there is a vacancy in such office, the duties of the Secretary shall be undertaken by the Chief Executive Officer or President acting in the capacity of Acting Secretary.
Section 3.07. Term of Office
The officers of the corporation shall hold office until their respective successors are elected or appointed or until their earlier resignation, death or removal. Any officer elected or appointed by the Board may be removed at any time, with or without cause, by the Board or, to the extent permitted by law, by the Chief Executive Officer.
Section 3.08. Vacancies
Vacancies in any office or designation arising from any cause may be filled by the Directors or, to the extent permitted by law, the Chief Executive Officer.
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Section 3.09. Delegation; Execution of Instruments
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| (a) | Unless prohibited by the Board, an officer may, without the approval of the Board, delegate some or all of the duties and powers of his or her office to other persons. |
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| (b) | All contracts, deeds, mortgages, notes, checks, conveyances, releases of mortgages and other instruments shall be signed on behalf of the corporation by the Chief Executive Officer, the President, the Chief Financial Officer, or any Vice President, or by such other person or persons pursuant to delegated authority or as may be designated or authorized from time to time by the Board or by the Chief Executive Officer. |
INDEMNIFICATION
Section 4.01. Generally
The corporation shall indemnify its present and former officers, Directors, and committee members for such expenses and liabilities, in such manner, under such circumstances, and to the fullest extent, as required or permitted by Section 302A.521 of the Minnesota Statutes, as amended from time to time, or as required or permitted by other provisions of law.
SHARES
Section 5.01. Certificated and Uncertificated Shares
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| (a) | The shares of the corporation shall be either certificated shares or uncertificated shares. Each holder of duly issued certificated shares is entitled to a certificate of shares. |
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| (b) | The corporation may determine that some or all of any or all classes and series of the shares of the corporation will be uncertificated shares. Any such determination shall not apply to shares represented by a certificate until the certificate is surrendered to the corporation. |
Section 5.02. Execution of Share Certificates
The certificates of certificated shares of the corporation shall bear the corporate seal (if any) and shall be signed by the Chair of the Board, the Chief Executive Officer, or the President; and by the Secretary or an Assistant Secretary (or any other executive officer of the corporation designated by the Board); but when a certificate is signed by a transfer agent or a registrar the signature of any such corporate officer and the corporate seal upon such certificate may be facsimiles engraved or printed.
Section 5.03. Lost, Stolen or Destroyed Share Certificates
In the event of a certificate of shares being lost, stolen, or destroyed, a new certificate of the same tenor and for the same number of shares as the one lost, stolen or destroyed may be issued pursuant to the standards prescribed from time to time by the Board or Chief Executive Officer.
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AMENDMENTS
Section 6.01. Amendments
These Bylaws may be altered, amended, added to, or repealed by the affirmative vote of a majority of the members of the Board at any regular meeting of the Board, or at any special meeting of the Board called for that purpose, subject to the power of the shareholders to change or repeal such Bylaws and subject to any other limitations on such authority of the Board set forth in the Minnesota Business Corporation Act.
CERTIFIED as adopted by the Board of Directors
on July 27, 2025:
/s/ Douglas M. Polinsky
Douglas M. Polinsky
Chairman of the Board
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EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (“Agreement”) is made and entered into as of July 31, 2025, between Mill City Ventures III, Ltd. (the “Company”) and Douglas M. Polinsky, individually (the “Executive”).
RECITALS
WHEREAS, the Company desires to assure itself of the Executive’s employment during the period specified herein to maintain and grow the Company’s business ventures and reputation in the industry;
WHEREAS, the Company further desires to ensure that confidential information or information that may give the Company competitive advantages be held in strict confidence. The marketplace in which the Company does business is extremely competitive. In addition, the Company regards it to be vital to its interest that its employees, its customers, its venders and its prospective customers, be free from recruitment, inducement and solicitation from Executive (other than in the course of Company business) and that the Company be protected against competition of the Executive;
WHEREAS, the Company and the Executive are currently parties to a certain Executive Employment Agreement dated as of January 1, 2025 (the “Prior Agreement”);
WHEREAS, the Company and the Executive wish to revise certain terms and conditions of the Prior Agreement, as reflected herein;
WHEREAS, the negotiations between the Company and the Executive have been conducted on a good faith, arm’s-length basis by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) and the Executive;
WHEREAS, the Executive is prepared to enter into this Agreement and give the Company the assurance it desires; and
WHEREAS, based upon such negotiations and as a result thereof, the Company and the Executive have determined to continue the Executive’s employment relationship and to document the revised terms thereof.
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AGREEMENT
NOW, THEREFORE, in consideration of the covenants and agreements set forth herein, the parties agree as follows:
1. Term. The Executive’s employment hereunder shall be effective as of July 31, 2025 (the “Effective Date”) and shall continue until the three-year anniversary of the Effective Date (“Term End Date”), unless terminated earlier pursuant to Section 11 below. The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”
2. Employment. The Company hereby employs the Executive, and the Executive hereby accepts employment and shall serve as a Chief Executive Officer (“CEO”) of the Company reporting to the Company’s Board of Directors (the “Board”). The Executive admits and acknowledges that prior to accepting the offer of employment from the Company as reflected in the Prior Agreement, the Executive was advised that the employment involved agreeing to both a Restrictive Covenant agreement and a Confidential Information agreement and that terms of the Restrictive Covenant agreement and Confidential Information agreement were conveyed to and known by the Executive at the time the Executive accepted the Company’s offer of employment. The Executive thus acknowledges that the employment and increase in salary associated with employment under the Prior Agreement constituted fair and adequate consideration for the Restrictive Covenant agreement and Confidential Information provisions. In addition, the Executive agrees, during the term hereof, to discharge faithfully, diligently and to the best of the Executive’s ability the responsibilities of a CEO of the Company as set forth in this Agreement or as defined from time to time by the Board of Directors of Company.
3. Duties. During the Employment Term, the Executive shall be responsible for Company operations and those relationships with the Company established by the Board of Directors, and such other duties and responsibilities as are established by the Board of Directors.
4. Extent of Services. The Executive shall devote substantially all of his business work related time and attention associated with his role with the Company to the performance of the Executive’s duties hereunder and will not engage in any other business, profession, or occupation for compensation or otherwise which conflicts or interferes with the performance of such duties either directly or indirectly, without the prior written consent of the Board of Directors. Notwithstanding the foregoing, the Executive will be permitted to: (a) act or serve as a director, trustee, committee member, or principal of any type of business, civic, or charitable organization; and (b) purchase or own publicly traded securities of any corporation; and (c) provide occasional business consulting services; provided, that none of the foregoing shall interfere materially with the Executive’s performance of his responsibilities to the Company hereunder.
5. Compensation. The Company shall pay the Executive compensation as set forth on the attached Schedule A (“Salary”), which shall be paid in monthly installments, less withholdings required by state and federal law and other agreed-to withholdings, pursuant to customary payroll practices and applicable wage payment laws, but no less frequently than monthly. The Salary indicated in Schedule A may not be decreased without the Executive’s prior written consent. The Executive shall also be eligible to receive a lump sum cash bonus pursuant to the terms indicated in Schedule A.
6. Clawback Provisions. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based or other compensation paid to the Executive under this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation, or stock exchange listing requirement will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation, or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).
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7. Employment Benefits. During the term of the Executive’s employment hereunder, the Executive shall be entitled to the following benefits to the extent that the Company offers and continues to offer them:
(a) Health and dental insurance and 401K plan as available and offered by the Company from time to time. The Company shall match the Executive’s contributions to the Company’s 401K plan to the maximum extent permitted by law and shall pay the full costs of Executive’s health and dental insurance.
(b) Reimbursement for business-related out-of-pocket expenses up to a maximum of $15,000 annually, that are reasonably incurred and approved pursuant to Company’s standard business expense approval process. All reimbursable expenses shall be appropriately documented in reasonable detail by the Executive upon submission of any request for reimbursement, and in a format and manner consistent with the Company’s expense reporting policy.
(c) Up to three weeks of paid time off (“PTO”) and other executive level benefits as provided by the Company from time to time, and in addition the following paid holidays: New Years Day, Fourth of July, Thanksgiving Day as well as the day after Thanksgiving, Memorial Day, Labor Day and Christmas. Any of these holidays that land on a Saturday, the paid day off will be the preceding Friday and any such holiday landing on a Sunday, the paid day off will be the following Monday.
(d) The Executive shall be eligible to participate in the Company’s equity incentive programs, as adopted from time to time, pursuant to their terms.
8. Restrictive Covenants. For the purpose of this Section 8 only, the definition of the “Company” as identified above is expanded to include the Company and any entity that owns any portion of the Company or any company owned, in whole or in part, by Company. During the term of this Agreement and for a period of one (1) year thereafter, the Executive shall not indirectly or directly, in any capacity, including but not limited to, as an owner, partner, shareholder, director, officer, manager, employee, agent, adviser or consultant:
(a) induce or attempt to induce any employee of the Company to leave the employ of the Company, or any affiliated company, or any consultant, vendor, or other independent contractor for the Company to change or terminate any relationship between that person or entity and the Company or employee any such employee for themselves or for any other person or company they are associated with directly or indirectly;
(b) assign or otherwise transfer, whether or not for consideration, any customer or employee lists, internal memoranda, bills, receipts, confidential information, or any other form of business records or documents, or any tangible materials concerning the Company; or
(c) assist or support, or encourage, or attempt to assist or encourage, any other person or entity in carrying out, directly or indirectly, any activity that would be prohibited by the above provisions of this Section 8 if such activity were carried out by the Executive, directly or indirectly, or induce any employee of the Company to carry out, directly or indirectly, any such activity.
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9. Duty Not to Disclose Confidential Information.
(a) Disclosure or Use of Confidential Information. The Executive agrees that the Executive will not use, directly or indirectly, the Company’s Confidential Information for the benefit of any person, entity or organization other than the Company or allow such to occur or disclose such Confidential Information without the written authorization of the Board of Directors, either during or after the term of this Agreement, for as long as such information retains the characteristics of Confidential Information as deemed by the Company, or except as expressly permitted by this Agreement or as required by applicable law, subpoena or other legal process. The Executive will be solely responsible for causing the compliance of, and any breach of, the confidentiality obligations set forth in this Agreement by the Executive’s agents or other representatives. In the event that the Executive is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, the Executive will notify the Company promptly of the request or requirement so that the Company may seek an appropriate protective order or waive compliance with the provisions of this Section. If, in the absence of a protective order or a duly given waiver by the Company, the Executive is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt or otherwise be in violation of applicable law, the Executive may disclose such Confidential Information to the tribunal; provided, however, that the Executive will use his reasonable efforts to obtain, at the written request of the Company, an order for filing under seal or other assurance that confidential treatment will be accorded to the Confidential Information required to be disclosed.
(b) Trade Secrets. Any trade secrets of the Company will be entitled to all of the protections and benefits under applicable state trade secret law and any other applicable law. If any information that the Company deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret for purposes of this Agreement, such information will, nevertheless, be considered Confidential Information for purposes of this Agreement.
(c) Confidential Information Defined. For purposes of this Agreement, the term “Confidential Information” means oral or written knowledge and information not generally known whether presently existing or developed in the future, including trade secrets, about the Company’s methods, processes, technology, intellectual property, expansion, planned expansion, expected markets, market projections, Company projections and revenue, suppliers and venders’ margins, products and services, costs and shipping prices, payment and credit information, customer profiles and analysis, prospect tracking recording, financial information, budget and financial plans, costing, pricing, billing information, tax data, sales and marketing information, business strategies and plans, technical information including software, research, product development information; personnel information such as salaries, phone numbers, titles, benefits, bonuses, employment histories, shareholder information and stock data; and any discoveries, inventions, ideas, methods, products, equipment, developments, improvements or programs including but not limited to information relating to such matters as research and development, inventions, designs, formulas, pricing, margins, suppliers, studies, plans, specifications or components pertaining to or used in connection with any and all, products and services contemplated, under development or developed (in whole or in part) by the Company’s processes, techniques, composition of materials, applications for particular technologies, materials or designs, business relationships and expansions, including projected or anticipated expansions, of the Company (including proposed relationships with suppliers, distributors, licensees and licensors), vendor names, customer lists, management systems, financial data, financial statements and sales and marketing and expansion plans. All information which Executive acquires or becomes acquainted with during employment with Company whether developed by Executive or by others, which the Executive has a reasonable basis to believe to be Confidential Information of the Company or which is treated by the Company as being confidential, will be presumed to be Confidential Information. The term “Confidential Information” does not include information which (i) is or becomes generally available to the public other than as a result of a disclosure by the Executive or his agents or other representatives, or (ii) relates to any business pursuit that the Company has abandoned or that the Board of Directors of the Company has determined to wind down.
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(d) The Executive expressly undertakes to retain in confidence all confidential and proprietary information including, but not limited to, information identified above provided to the Executive by the Company, the Company’s agents, or customers, or any other information that the Executive may have or may acquire or become acquainted with during the term of his employment with the Company, whether developed by the Executive or with the assistance of others. The Executive further expressly agrees that he or she shall not during the term of his employment or at any time thereafter divulge or furnish or make accessible to anyone or use in any way, other than for benefit of the Company, in the ordinary course of business of the Company, any and all confidential information transmitted to the Executive by the Company, the Company’s agents or clients or any other information the Executive may have or has acquired or become acquainted with, during the term of his or her employment with the Company whether developed by him or her or with the assistance of others.
(e) Executive further shall make no attempts nor assist any other parties in attempting to download, transfer, print or otherwise transfer, or print, or copy any of the Company’s confidential information or trade secrets or reverse compile, disassemble, or otherwise reverse engineer the Company’s confidential information or trade secrets provided by the Company or the Company’s clients, nor shall the Executive knowingly permit others to do so.
(f) Executive acknowledges that Executive has been notified in accordance with the federal Defend Trade Secrets Act (18 U.S. Code § 1839) that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(g) Notwithstanding anything to the contrary in this Agreement, no provision of this Agreement prohibits Executive from (i) communicating with Executive’s attorneys; (ii) making any statement or disclosure required or that may not be prohibited by law; and (iii) reporting possible violations of law or regulation to any governmental agency or regulatory body or making other disclosures that are protected under any law or regulation, including, without limitation, filing a charge or complaint with, or participating, cooperating, or testifying in any action, investigation, or proceeding with, or providing information to, any governmental agency, legislative body, or any self-regulatory organization, including, but not limited to, any law enforcement agency, the US and applicable state attorney generals, the Equal Employment Opportunity Commission, or any other state or local commission on human rights, and making other disclosures under the whistleblower provisions of federal or state law or regulation. Additionally, notwithstanding any other provision of this Agreement, no provision of this Agreement limits Executive’s rights, if any, under the National Labor Relations Act, which guarantees employees the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for collective bargaining or other mutual aid or protection, as well as the right to refrain from any or all such activities.
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10. Relief. In agreeing to the restrictive covenant agreement and confidential information provision described in Section 8 and 9 above, respectively, the Executive acknowledges that the Company would not enter into employment with the Executive but for the Restrictive Covenant and Confidential Information provisions and that such provisions and this Agreement are material terms of this Agreement, and further agrees that in the event of a violation of the Restrictive Covenant and Confidential Information provisions set forth herein, such will be deemed a breach of this Agreement and the Company shall be entitled to obtain injunctive or other equitable relief against the Executive including damages if available and ascertainable. In the event that any court of competent jurisdiction determines that the any of the Restrictive Covenant and Confidential Information provisions of this Agreement are determined to be unenforceable for any reason, then such court is hereby authorized by the parties hereto to amend such provision to the extent required for such provision to be enforceable.
11. Termination of Employment. Anything herein contained to the contrary notwithstanding, the Company and the Executive shall have the following rights with respect to termination of the Executive’s employment under this Agreement:
(a) Death or Disability of Executive. If the Executive dies during the Employment Period, then the Executive’s employment hereunder shall automatically terminate thereupon. Additionally, the Company may terminate Executive’s employment hereunder due to Executive’s Disability. In the event of termination of employment due to Executive’s death or Disability, any unpaid Salary accrued to the date of the Executive’s death or Disability shall be paid to the Executive’s legal representative. The Company shall have no further obligation to the Executive or his legal representative under this Agreement. The Executive’s obligations under the restrictive covenant provisions of Section 8, the confidentiality provisions of Section 9, and the provisions of Section 13 shall each survive termination of this Agreement for any reason.
(i) For purposes of this Agreement, “Disability” shall mean a physical or mental impairment of Executive that prohibits or would prohibit Executive, with or without reasonable accommodation, from performing the material duties of his employment under this Agreement for more than ninety (90) days in the aggregate during any 12-month period, excluding absences resulting from ordinary transitory illnesses or injury or vacation or holidays; provided however, in the event that the Company temporarily replaces the Executive, or transfers the Executive’s duties or responsibilities to another individual on account of the Executive’s inability to perform such duties due to a mental or physical incapacity which is, or is reasonably expected to become, a Disability, then the Executive’s employment shall not be deemed terminated by the Company. Any question as to the existence of the Executive’s Disability as to which the Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Executive and the Company. If the Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Executive shall be final and conclusive for all purposes of this Agreement.
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(b) Termination by the Company for Due Cause. The Company may terminate the Executive’s employment immediately under this Agreement for Due Cause as defined in Section 11(c) below. If the Company terminates the Executive’s employment for Due Cause, then in such case the Executive shall be entitled to payment of his accrued and unpaid Salary under Section 5 above to the date of such termination and neither the Company nor the Executive shall have any further obligation to the other under this Agreement, except for the restrictive covenants in Section 8, the confidentiality provisions in Section 9, and the provisions of Section 13, each of which shall survive this Agreement in such event.
(c) Definition of Due Cause. As used in this Agreement, the term “Due Cause” shall mean: (a) the continued failure by the Executive to perform or substantially perform the Executive’s duties hereunder or to comply with Company policies, other than by reason of Disability as determined by Company; (b) the Executive’s repeated and material failure to comply with any valid and legal directive of Company’s Board of Directors; (c) the knowing engagement by the Executive in conduct injurious to the Company or its reputation, (d) the Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes at a minimum a misdemeanor involving moral turpitude; (e) the Executive’s habitual alcohol or controlled substance abuse; (f) the Executive’s embezzlement, misappropriation, or fraud, whether or not related to the Executive’s employment with the Company; (g) the Executive’s material breach of any material obligation under this Agreement; (h) any material failure by the Executive to comply with the Company’s written policies or rules, as they may be in effect from time to time during the Employment Term, after written warning thereof provided by the Board; or (i) violation by the Executive of the terms of the restrictive covenant provisions of Section 8 or the confidentiality provisions of Section 9. In the event of any act or event which the Company believes constitutes Due Cause under this Section, the Executive shall be given written notice by the Company that it intends to terminate the Executive’s employment for Due Cause, which written notice shall specify the act or event upon the basis of which the Company intends so to terminate the Executive’s employment, and the Executive shall thereupon have ten days to cure any acts or omissions constituting Due Cause (but only under clauses a, b, g, h, or i above).
(d) Mutual Agreement. Executive and Company can mutually agree in writing to the termination of this Agreement and Executives employment, in which event any unpaid Salary accrued to the date of Executive last day of employment, along with any amounts still owed and payable pursuant to such mutual agreement, shall be paid to Executive and the Company shall have no further obligation to the Executive or his or her legal representative under this Agreement.
(e) Termination by the Company Without Due Cause. The Company may terminate Executive’s employment without Due Cause, at any time, with or without prior notice, in its sole and complete discretion, by providing written notice of such termination and its effective date to Executive. In the event the Company terminates Executive’s employment without Due Cause, Executive shall be entitled to payment of his accrued and unpaid Salary under Section 5 above to the date of such termination and neither the Company nor the Executive shall have any further obligation to the other under this Agreement, except as provided in Section 11(g) below (Severance Pay) and for the restrictive covenants in Section 8, the confidentiality provisions in Section 9, and the provisions of Section 13, each of which shall survive this Agreement in such event. Termination of Executive’s employment without Due Cause by the Company shall not include termination of Executive’s employment due to Executive’s death or Disability or automatically upon the Term End Date (or any extension thereof).
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(f) Resignation by Executive for Good Reason. Executive may resign Executive’s employment hereunder for Good Reason by written notice of such resignation in compliance with the terms of this Section 11(f). For the purpose of this Agreement, “Good Reason” means (i) a material and substantial diminution in Executive’s duties, authority, or responsibilities that would be inconsistent with Executive’s position (other than while Executive is temporarily physically or mentally incapacitated or as required by applicable law), (ii) a material failure by the Company to pay Executive’s compensation as provided for herein; (iii) a change in the location of Executive’s principal place of performance by more than 100 miles; or (iv) other material breach by the Company of a material provision of this Agreement or any other agreement between the Company and Executive; provided, however, that such event shall constitute Good Reason only if (x) Executive has provided the Company with written notice reasonably detailing the event giving rise to Good Reason within thirty (30) days after the initial occurrence thereof or, if later, within thirty (30) days after the date upon which Executive first becomes aware of such event, (y) the Company fails to cure such event within thirty (30) days after delivery to it of such written notice; and (z) Executive actually terminates Executive’s employment for such uncured Good Reason event, on at least ten (10) days’ prior written notice, within thirty (30) days following the expiration of such thirty (30) day period referred to in clause (y) above. Notwithstanding the foregoing, during the Employment Period, in the event that the Company reasonably believes that Executive may have engaged in conduct that could constitute Due Cause hereunder, the Company may, in its sole and absolute discretion, suspend Executive from performing or alter Executive’s duties hereunder for a period of up to sixty (60) days, and in such event such suspension shall not constitute an event pursuant to which Executive may terminate this Agreement with Good Reason; provided, however, that no such suspension shall alter the Company’s obligations under this Agreement (including, without limitation, its obligations to provide Executive compensation and benefits) during such period of suspension. Executive’s date of termination in the event Executive resigns Executive’s employment for Good Reason shall be the effective date of Executive’s notice of resignation for Good Reason, except that Company may waive all or any part of the above-referenced 10-day notice period or of the 30-day cure period, in which event Executive’s date of termination shall be the last day of such notice or cure period that has not been waived or, if the entire notice or cure period has been waived, the date that Executive provided notice of the event giving rise to Good Reason or of Executive’s resignation for Good Reason. In the event the Executive terminates Executive’s employment for Good Reason, Executive shall be entitled to payment of his accrued and unpaid Salary under Section 5 above to the date of such termination and neither the Company nor the Executive shall have any further obligation to the other under this Agreement, except as provided in Section 11(g) (Severance Pay) and for the restrictive covenants in Section 8, the confidentiality provisions in Section 9, and the provisions of Section 13, each of which shall survive this Agreement in such event.
(g) Severance Pay. In the event that, prior to the Term End Date, Executive’s employment is terminated by the Company without Due Cause pursuant to Section 11(e) above or by Executive for Good Reason pursuant to Section 11(f) above, in addition to the payments provided for in those sections, subject to the terms of this Section 11(g) (including its subsections), Executive shall be entitled to receive payment of an amount equal to Executive’s Salary immediately prior to the date of Executive’s termination of employment (the “Termination Date”)for the period of time from the day after the Termination Date through the Term End Date (the “Severance Pay”). The Severance Pay shall be paid in the form of salary continuation pursuant to the terms and conditions of Section 5 above commencing no later than sixty (60) days following the Termination Date on the first regularly scheduled payroll date of the Company that is processed after the effective date of the Separation Agreement (defined in Section 11(g)(i) below), except that, if the Separation Agreement may be executed and/or revoked in a calendar year following the calendar year in which the Termination Date occurs, the Severance Pay shall commence on the first regularly scheduled payroll date of the Company in the calendar year in which the consideration or, if applicable, release revocation period ends to the extent necessary to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”). The first such payment shall include payment of the Severance Pay for the period beginning the day after the Termination Date and ending on the last day of the payroll period to which such first payment corresponds.
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(h) Separation Agreement. Notwithstanding any other provision of this Agreement, payment of the Severance Pay is conditioned on (i) Executive’s continued compliance in all material respects with Executive’s continuing obligations to the Company, including, without limitation, the terms of this Agreement that survive termination of Executive’s employment with the Company, and (ii) Executive signing (without revoking if such right is provided under applicable law) a separation agreement and general release in a form of that provided to Executive by the Company on or about the Termination Date (the “Separation Agreement”). Executive must so execute the Separation Agreement within sixty (60) days following the Termination Date (or such shorter time as may be set forth in the Separation Agreement)s.
(i) Resignation of All Other Positions. On termination of the Executive’s employment hereunder for any reason, the Executive agrees to resign, effective on the Termination Date from all positions that the Executive holds as an officer or member of the Board (or a committee thereof) of the Company or any of its affiliates.
12. Entire Agreement; Modification; Waiver. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties regarding the subject matter hereof, including the Prior Agreement. There are no warranties, representations or agreements among the parties in connection with the subject matter hereof, except as set forth or referred to herein. No supplement, modification, waiver or termination of this Agreement or any of its provisions shall be binding unless executed in writing by the parties to be bound. No waiver of any of the provisions of this Agreement shall constitute a waiver of any other provision, and no such waiver shall constitute a continuing waiver unless otherwise expressly provided.
13. Cooperation. The parties agree that certain matters in which the Executive will be involved during the Employment Term may necessitate the Executive’s cooperation in the future. Accordingly, following the termination of the Executive’s employment for any reason, to the extent reasonably requested by the Board, the Executive shall cooperate with the Company in connection with matters arising out of the Executive’s service to the Company’s business; provided that, the Company shall make reasonable efforts to minimize disruption of the Executive’s other activities. The Company shall reimburse the Executive for reasonable expenses.
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14. Proprietary Rights and Work Product. The Executive acknowledges and agrees that all right, title, and interest in and to all writings, works of authorship, technology, inventions, discoveries, processes, techniques, methods, ideas, concepts, research, proposals, materials, and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived, or reduced to practice by the Executive individually or jointly with others during the period of his employment by the Company and relate in any way to the business or contemplated business, products, activities, research, expansion or development of the Company or result from any work performed by the Executive for the Company (in each case, regardless of when or where prepared or whose equipment or other resources is used in preparing the same), all rights and claims related to the foregoing, and all printed, physical and electronic copies, and other tangible embodiments thereof (collectively, “Work Product”), as well as any and all rights in and to any US and foreign: (a) patents, patent disclosures and inventions (whether patentable or not); (b) trademarks, service marks, trade dress, trade names, logos, corporate names, and domain names, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing; (c) copyrights and copyrightable works (including computer programs) and rights in data and databases; (d) trade secrets, know-how, and other confidential information; and (e) all other intellectual property rights, in each case whether registered or unregistered and including all registrations and applications for, and renewals and extensions of, such rights, all improvements thereto and all similar or equivalent rights or forms of protection in any part of the world (collectively, “Intellectual Property Rights”), shall be the sole and exclusive property of the Company. Notwithstanding the foregoing, the Company hereby provides notice that Work Product shall not include, and there shall be no obligation hereunder for Executive to assign any intellectual property for which no equipment, supplies, facility, or trade secrets of the Company was used and which was developed entirely on Executive’s own time, unless (i) the intellectual property relates (a) to the business of the Company; or (b) to the Company’s actual or demonstrably anticipated research or development, or (ii) the intellectual property results from any work performed by Executive for the Company. Executive agrees this constitutes any required notice of non-assignability, including under applicable state laws (including Minn. Stat. Ann. § 181.78. To the extent there are any differences between this Section and any specific state law, the state law shall control.
15. Contract Formation; Governing Law, Jurisdiction, and Venue. The Parties agree this Agreement was formed in the State of Minnesota. All of the terms, conditions, and other provisions of this Agreement shall be interpreted and governed by reference to the laws of the State of Minnesota, without giving effect to choice of law principles thereof, and any dispute arising here from and the remedies available shall be determined in accordance with such laws, and any litigation or other proceeding shall be venued in the Fourth Judicial District Court for the State of Minnesota in Minneapolis, Minnesota. Reasonable attorneys’ fees under the circumstances, costs, and disbursements shall be awarded to the prevailing party in any action brought under this Agreement.
16. Severability. If any provision of this Agreement or the application of such provision to any person or circumstance shall be held invalid, the remainder of this Agreement or the application of such provision to persons or circumstances other than those to which it is held invalid shall not be affected thereby.
17. Indebtedness. If, during the course of the Executive’s employment under this Agreement, the Executive becomes indebted to the Company for any reason, the Executive agrees that it will provide to the Company written permission after the debt arises that provides that the Company may, if it so elects, set off any sum due to the Company from the Executive and collect from the Executive any remaining balance.
18. Counterparts. This Agreement may be executed in any number of counterparts, any one of which shall be deemed to be an original, but all of which shall constitute but one and the same instrument.
19. Not Assignable. Rights under this Agreement are not assignable, except that the Company may assign this Agreement to any parent, subsidiary, other affiliated corporation or upon a sale of all or a part of the Company’s business to the bona fide buyer thereof.
20. Headings. Section headings used in this Agreement are for convenience only and shall not affect the construction of this Agreement.
(Signatures continue next page)
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IN WITNESS WHEREOF, the parties have executed this Executive Employment Agreement as of the date first above written.
| THE EXECUTIVE |
| THE COMPANY |
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| MILL CITY VENTURES III, LTD. |
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| /s/ Douglas M. Polinsky |
| By: | /s/ Howard P. Liszt |
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| Douglas M. Polinsky |
| Its: | Chair of Compensation Committee |
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Signature Page of Executive Employment Agreement
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Schedule A
During the Employment Term, the Executive’s personal compensation plan is outlined below:
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| · | Base gross salary is $450,000 per year |
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| · | Bonuses up to 100% of the Executives base gross salary, the amount and payment of which shall be at the discretion of the Compensation Committee |
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EXHIBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (“Agreement”) is made and entered into as of July 31, 2025, between Mill City Ventures III, Ltd. (the “Company”) and Joseph A. Geraci, individually (the “Executive”).
RECITALS
WHEREAS, the Company desires to assure itself of the Executive’s employment during the period specified herein to maintain and grow the Company’s business ventures and reputation in the industry;
WHEREAS, the Company further desires to ensure that confidential information or information that may give the Company competitive advantages be held in strict confidence. The marketplace in which the Company does business is extremely competitive. In addition, the Company regards it to be vital to its interest that its employees, its customers, its venders and its prospective customers, be free from recruitment, inducement and solicitation from Executive (other than in the course of Company business) and that the Company be protected against competition of the Executive;
WHEREAS, the Company and the Executive are currently parties to a certain Executive Employment Agreement dated as of January 1, 2025 (the “Prior Agreement”);
WHEREAS, the Company and the Executive wish to revise certain terms and conditions of the Prior Agreement, as reflected herein;
WHEREAS, the negotiations between the Company and the Executive have been conducted on a good faith, arm’s-length basis by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) and the Executive;
WHEREAS, the Executive is prepared to enter into this Agreement and give the Company the assurance it desires; and
WHEREAS, based upon such negotiations and as a result thereof, the Company and the Executive have determined to continue the Executive’s employment relationship and to document the revised terms thereof.
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AGREEMENT
NOW, THEREFORE, in consideration of the covenants and agreements set forth herein, the parties agree as follows:
1. Term. The Executive’s employment hereunder shall be effective as of July 31, 2025 (the “Effective Date”) and shall continue until the three-year anniversary of the Effective Date (“Term End Date”), unless terminated earlier pursuant to Section 11 below. The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”
2. Employment. The Company hereby employs the Executive, and the Executive hereby accepts employment and shall serve as a Chief Financial Officer (“CFO”) of the Company reporting to the Company’s Board of Directors (the “Board”) or the Chief Executive Officer (“CEO”). The Executive admits and acknowledges that prior to accepting the offer of employment from the Company as reflected in the Prior Agreement, the Executive was advised that the employment involved agreeing to both a Restrictive Covenant agreement and a Confidential Information agreement and that terms of the Restrictive Covenant agreement and Confidential Information agreement were conveyed to and known by the Executive at the time the Executive accepted the Company’s offer of employment. The Executive thus acknowledges that the employment and increase in salary associated with employment under the Prior Agreement constituted fair and adequate consideration for the Restrictive Covenant agreement and Confidential Information provisions. In addition, the Executive agrees, during the term hereof, to discharge faithfully, diligently and to the best of the Executive’s ability the responsibilities of a CFO of the Company as set forth in this Agreement or as defined from time to time by the Board or the CEO.
3. Duties. During the Employment Term, the Executive shall be responsible for Company operations and those relationships with the Company established by the Board or the CEO, and such other duties and responsibilities as are established by the Board or the CEO.
4. Extent of Services. The Executive shall devote substantially all of his business work related time and attention associated with his role with the Company to the performance of the Executive’s duties hereunder and will not engage in any other business, profession, or occupation for compensation or otherwise which conflicts or interferes with the performance of such duties either directly or indirectly, without the prior written consent of the Board of Directors. Notwithstanding the foregoing, the Executive will be permitted to: (a) act or serve as a director, trustee, committee member, or principal of any type of business, civic, or charitable organization; and (b) purchase or own publicly traded securities of any corporation; and (c) provide occasional business consulting services; provided, that none of the foregoing shall interfere materially with the Executive’s performance of his responsibilities to the Company hereunder.
5. Compensation. The Company shall pay the Executive compensation as set forth on the attached Schedule A (“Salary”), which shall be paid in monthly installments, less withholdings required by state and federal law and other agreed-to withholdings, pursuant to customary payroll practices and applicable wage payment laws, but no less frequently than monthly. The Salary indicated in Schedule A may not be decreased without the Executive’s prior written consent. The Executive shall also be eligible to receive a lump sum cash bonus pursuant to the terms indicated in Schedule A.
6. Clawback Provisions. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based or other compensation paid to the Executive under this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation, or stock exchange listing requirement will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation, or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).
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7. Employment Benefits. During the term of the Executive’s employment hereunder, the Executive shall be entitled to the following benefits to the extent that the Company offers and continues to offer them:
(a) Health and dental insurance and 401K plan as available and offered by the Company from time to time. The Company shall match the Executive’s contributions to the Company’s 401K plan to the maximum extent permitted by law and shall pay the full costs of Executive’s health and dental insurance.
(b) Reimbursement for business-related out-of-pocket expenses up to a maximum of $15,000 annually, that are reasonably incurred and approved pursuant to Company’s standard business expense approval process. All reimbursable expenses shall be appropriately documented in reasonable detail by the Executive upon submission of any request for reimbursement, and in a format and manner consistent with the Company’s expense reporting policy.
(c) Up to three weeks of paid time off (“PTO”) and other executive level benefits as provided by the Company from time to time, and in addition the following paid holidays: New Years Day, Fourth of July, Thanksgiving Day as well as the day after Thanksgiving, Memorial Day, Labor Day and Christmas. Any of these holidays that land on a Saturday, the paid day off will be the preceding Friday and any such holiday landing on a Sunday, the paid day off will be the following Monday.
(d) The Executive shall be eligible to participate in the Company’s equity incentive programs, as adopted from time to time, pursuant to their terms.
8. Restrictive Covenants. For the purpose of this Section 8 only, the definition of the “Company” as identified above is expanded to include the Company and any entity that owns any portion of the Company or any company owned, in whole or in part, by Company. During the term of this Agreement and for a period of one (1) year thereafter, the Executive shall not indirectly or directly, in any capacity, including but not limited to, as an owner, partner, shareholder, director, officer, manager, employee, agent, adviser or consultant:
(a) induce or attempt to induce any employee of the Company to leave the employ of the Company, or any affiliated company, or any consultant, vendor, or other independent contractor for the Company to change or terminate any relationship between that person or entity and the Company or employee any such employee for themselves or for any other person or company they are associated with directly or indirectly;
(b) assign or otherwise transfer, whether or not for consideration, any customer or employee lists, internal memoranda, bills, receipts, confidential information, or any other form of business records or documents, or any tangible materials concerning the Company; or
(c) assist or support, or encourage, or attempt to assist or encourage, any other person or entity in carrying out, directly or indirectly, any activity that would be prohibited by the above provisions of this Section 8 if such activity were carried out by the Executive, directly or indirectly, or induce any employee of the Company to carry out, directly or indirectly, any such activity.
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9. Duty Not to Disclose Confidential Information.
(a) Disclosure or Use of Confidential Information. The Executive agrees that the Executive will not use, directly or indirectly, the Company’s Confidential Information for the benefit of any person, entity or organization other than the Company or allow such to occur or disclose such Confidential Information without the written authorization of the Board of Directors, either during or after the term of this Agreement, for as long as such information retains the characteristics of Confidential Information as deemed by the Company, or except as expressly permitted by this Agreement or as required by applicable law, subpoena or other legal process. The Executive will be solely responsible for causing the compliance of, and any breach of, the confidentiality obligations set forth in this Agreement by the Executive’s agents or other representatives. In the event that the Executive is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, the Executive will notify the Company promptly of the request or requirement so that the Company may seek an appropriate protective order or waive compliance with the provisions of this Section. If, in the absence of a protective order or a duly given waiver by the Company, the Executive is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt or otherwise be in violation of applicable law, the Executive may disclose such Confidential Information to the tribunal; provided, however, that the Executive will use his reasonable efforts to obtain, at the written request of the Company, an order for filing under seal or other assurance that confidential treatment will be accorded to the Confidential Information required to be disclosed.
(b) Trade Secrets. Any trade secrets of the Company will be entitled to all of the protections and benefits under applicable state trade secret law and any other applicable law. If any information that the Company deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret for purposes of this Agreement, such information will, nevertheless, be considered Confidential Information for purposes of this Agreement.
(c) Confidential Information Defined. For purposes of this Agreement, the term “Confidential Information” means oral or written knowledge and information not generally known whether presently existing or developed in the future, including trade secrets, about the Company’s methods, processes, technology, intellectual property, expansion, planned expansion, expected markets, market projections, Company projections and revenue, suppliers and venders’ margins, products and services, costs and shipping prices, payment and credit information, customer profiles and analysis, prospect tracking recording, financial information, budget and financial plans, costing, pricing, billing information, tax data, sales and marketing information, business strategies and plans, technical information including software, research, product development information; personnel information such as salaries, phone numbers, titles, benefits, bonuses, employment histories, shareholder information and stock data; and any discoveries, inventions, ideas, methods, products, equipment, developments, improvements or programs including but not limited to information relating to such matters as research and development, inventions, designs, formulas, pricing, margins, suppliers, studies, plans, specifications or components pertaining to or used in connection with any and all, products and services contemplated, under development or developed (in whole or in part) by the Company’s processes, techniques, composition of materials, applications for particular technologies, materials or designs, business relationships and expansions, including projected or anticipated expansions, of the Company (including proposed relationships with suppliers, distributors, licensees and licensors), vendor names, customer lists, management systems, financial data, financial statements and sales and marketing and expansion plans. All information which Executive acquires or becomes acquainted with during employment with Company whether developed by Executive or by others, which the Executive has a reasonable basis to believe to be Confidential Information of the Company or which is treated by the Company as being confidential, will be presumed to be Confidential Information. The term “Confidential Information” does not include information which (i) is or becomes generally available to the public other than as a result of a disclosure by the Executive or his agents or other representatives, or (ii) relates to any business pursuit that the Company has abandoned or that the Board of Directors of the Company has determined to wind down.
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(d) The Executive expressly undertakes to retain in confidence all confidential and proprietary information including, but not limited to, information identified above provided to the Executive by the Company, the Company’s agents, or customers, or any other information that the Executive may have or may acquire or become acquainted with during the term of his employment with the Company, whether developed by the Executive or with the assistance of others. The Executive further expressly agrees that he or she shall not during the term of his employment or at any time thereafter divulge or furnish or make accessible to anyone or use in any way, other than for benefit of the Company, in the ordinary course of business of the Company, any and all confidential information transmitted to the Executive by the Company, the Company’s agents or clients or any other information the Executive may have or has acquired or become acquainted with, during the term of his or her employment with the Company whether developed by him or her or with the assistance of others.
(e) Executive further shall make no attempts nor assist any other parties in attempting to download, transfer, print or otherwise transfer, or print, or copy any of the Company’s confidential information or trade secrets or reverse compile, disassemble, or otherwise reverse engineer the Company’s confidential information or trade secrets provided by the Company or the Company’s clients, nor shall the Executive knowingly permit others to do so.
(f) Executive acknowledges that Executive has been notified in accordance with the federal Defend Trade Secrets Act (18 U.S. Code § 1839) that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(g) Notwithstanding anything to the contrary in this Agreement, no provision of this Agreement prohibits Executive from (i) communicating with Executive’s attorneys; (ii) making any statement or disclosure required or that may not be prohibited by law; and (iii) reporting possible violations of law or regulation to any governmental agency or regulatory body or making other disclosures that are protected under any law or regulation, including, without limitation, filing a charge or complaint with, or participating, cooperating, or testifying in any action, investigation, or proceeding with, or providing information to, any governmental agency, legislative body, or any self-regulatory organization, including, but not limited to, any law enforcement agency, the US and applicable state attorney generals, the Equal Employment Opportunity Commission, or any other state or local commission on human rights, and making other disclosures under the whistleblower provisions of federal or state law or regulation. Additionally, notwithstanding any other provision of this Agreement, no provision of this Agreement limits Executive’s rights, if any, under the National Labor Relations Act, which guarantees employees the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for collective bargaining or other mutual aid or protection, as well as the right to refrain from any or all such activities.
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10. Relief. In agreeing to the restrictive covenant agreement and confidential information provision described in Section 8 and 9 above, respectively, the Executive acknowledges that the Company would not enter into employment with the Executive but for the Restrictive Covenant and Confidential Information provisions and that such provisions and this Agreement are material terms of this Agreement, and further agrees that in the event of a violation of the Restrictive Covenant and Confidential Information provisions set forth herein, such will be deemed a breach of this Agreement and the Company shall be entitled to obtain injunctive or other equitable relief against the Executive including damages if available and ascertainable. In the event that any court of competent jurisdiction determines that the any of the Restrictive Covenant and Confidential Information provisions of this Agreement are determined to be unenforceable for any reason, then such court is hereby authorized by the parties hereto to amend such provision to the extent required for such provision to be enforceable.
11. Termination of Employment. Anything herein contained to the contrary notwithstanding, the Company and the Executive shall have the following rights with respect to termination of the Executive’s employment under this Agreement:
(a) Death or Disability of Executive. If the Executive dies during the Employment Period, then the Executive’s employment hereunder shall automatically terminate thereupon. Additionally, the Company may terminate Executive’s employment hereunder due to Executive’s Disability. In the event of termination of employment due to Executive’s death or Disability, any unpaid Salary accrued to the date of the Executive’s death or Disability shall be paid to the Executive’s legal representative. The Company shall have no further obligation to the Executive or his legal representative under this Agreement. The Executive’s obligations under the restrictive covenant provisions of Section 8, the confidentiality provisions of Section 9, and the provisions of Section 13 shall each survive termination of this Agreement for any reason.
(i) For purposes of this Agreement, “Disability” shall mean a physical or mental impairment of Executive that prohibits or would prohibit Executive, with or without reasonable accommodation, from performing the material duties of his employment under this Agreement for more than ninety (90) days in the aggregate during any 12-month period, excluding absences resulting from ordinary transitory illnesses or injury or vacation or holidays; provided however, in the event that the Company temporarily replaces the Executive, or transfers the Executive’s duties or responsibilities to another individual on account of the Executive’s inability to perform such duties due to a mental or physical incapacity which is, or is reasonably expected to become, a Disability, then the Executive’s employment shall not be deemed terminated by the Company. Any question as to the existence of the Executive’s Disability as to which the Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Executive and the Company. If the Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Executive shall be final and conclusive for all purposes of this Agreement.
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(b) Termination by the Company for Due Cause. The Company may terminate the Executive’s employment immediately under this Agreement for Due Cause as defined in Section 11(c) below. If the Company terminates the Executive’s employment for Due Cause, then in such case the Executive shall be entitled to payment of his accrued and unpaid Salary under Section 5 above to the date of such termination and neither the Company nor the Executive shall have any further obligation to the other under this Agreement, except for the restrictive covenants in Section 8, the confidentiality provisions in Section 8, and the provisions of Section 13, each of which shall survive this Agreement in such event.
(c) Definition of Due Cause. As used in this Agreement, the term “Due Cause” shall mean: (a) the continued failure by the Executive to perform or substantially perform the Executive’s duties hereunder or to comply with Company policies, other than by reason of Disability as determined by Company; (b) the Executive’s repeated and material failure to comply with any valid and legal directive of Company’s Board of Directors; (c) the knowing engagement by the Executive in conduct injurious to the Company or its reputation, (d) the Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes at a minimum a misdemeanor involving moral turpitude; (e) the Executive’s habitual alcohol or controlled substance abuse; (f) the Executive’s embezzlement, misappropriation, or fraud, whether or not related to the Executive’s employment with the Company; (g) the Executive’s material breach of any material obligation under this Agreement; (h) any material failure by the Executive to comply with the Company’s written policies or rules, as they may be in effect from time to time during the Employment Term, after written warning thereof provided by the Board; or (i) violation by the Executive of the terms of the restrictive covenant provisions of Section 8 or the confidentiality provisions of Section 9. In the event of any act or event which the Company believes constitutes Due Cause under this Section, the Executive shall be given written notice by the Company that it intends to terminate the Executive’s employment for Due Cause, which written notice shall specify the act or event upon the basis of which the Company intends so to terminate the Executive’s employment, and the Executive shall thereupon have ten days to cure any acts or omissions constituting Due Cause (but only under clauses a, b, g, h, or i above).
(d) Mutual Agreement. Executive and Company can mutually agree in writing to the termination of this Agreement and Executives employment, in which event any unpaid Salary accrued to the date of Executive last day of employment, along with any amounts still owed and payable pursuant to such mutual agreement, shall be paid to Executive and the Company shall have no further obligation to the Executive or his or her legal representative under this Agreement.
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(e) Termination by the Company Without Due Cause. The Company may terminate Executive’s employment without Due Cause, at any time, with or without prior notice, in its sole and complete discretion, by providing written notice of such termination and its effective date to Executive. In the event the Company terminates Executive’s employment without Due Cause, Executive shall be entitled to payment of his accrued and unpaid Salary under Section 5 above to the date of such termination and neither the Company nor the Executive shall have any further obligation to the other under this Agreement, except as provided in Section 11(g) below (Severance Pay) and for the restrictive covenants in Section 8, the confidentiality provisions in Section 9, and the provisions of Section 13, each of which shall survive this Agreement in such event. Termination of Executive’s employment without Due Cause by the Company shall not include termination of Executive’s employment due to Executive’s death or Disability or automatically upon the Term End Date (or any extension thereof).
(f) Resignation by Executive for Good Reason. Executive may resign Executive’s employment hereunder for Good Reason by written notice of such resignation in compliance with the terms of this Section 11(f). For the purpose of this Agreement, “Good Reason” means (i) a material and substantial diminution in Executive’s duties, authority, or responsibilities that would be inconsistent with Executive’s position (other than while Executive is temporarily physically or mentally incapacitated or as required by applicable law), (ii) a material failure by the Company to pay Executive’s compensation as provided for herein; (iii) a change in the location of Executive’s principal place of performance by more than 100 miles; or (iv) other material breach by the Company of a material provision of this Agreement or any other agreement between the Company and Executive; provided, however, that such event shall constitute Good Reason only if (x) Executive has provided the Company with written notice reasonably detailing the event giving rise to Good Reason within thirty (30) days after the initial occurrence thereof or, if later, within thirty (30) days after the date upon which Executive first becomes aware of such event, (y) the Company fails to cure such event within thirty (30) days after delivery to it of such written notice; and (z) Executive actually terminates Executive’s employment for such uncured Good Reason event, on at least ten (10) days’ prior written notice, within thirty (30) days following the expiration of such thirty (30) day period referred to in clause (y) above. Notwithstanding the foregoing, during the Employment Period, in the event that the Company reasonably believes that Executive may have engaged in conduct that could constitute Due Cause hereunder, the Company may, in its sole and absolute discretion, suspend Executive from performing or alter Executive’s duties hereunder for a period of up to sixty (60) days, and in such event such suspension shall not constitute an event pursuant to which Executive may terminate this Agreement with Good Reason; provided, however, that no such suspension shall alter the Company’s obligations under this Agreement (including, without limitation, its obligations to provide Executive compensation and benefits) during such period of suspension. Executive’s date of termination in the event Executive resigns Executive’s employment for Good Reason shall be the effective date of Executive’s notice of resignation for Good Reason, except that Company may waive all or any part of the above-referenced 10-day notice period or of the 30-day cure period, in which event Executive’s date of termination shall be the last day of such notice or cure period that has not been waived or, if the entire notice or cure period has been waived, the date that Executive provided notice of the event giving rise to Good Reason or of Executive’s resignation for Good Reason. In the event the Executive terminates Executive’s employment for Good Reason, Executive shall be entitled to payment of his accrued and unpaid Salary under Section 5 above to the date of such termination and neither the Company nor the Executive shall have any further obligation to the other under this Agreement, except as provided in Section 11(g) (Severance Pay) and for the restrictive covenants in Section 8, the confidentiality provisions in Section 9, and the provisions of Section 13, each of which shall survive this Agreement in such event.
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(g) Severance Pay. In the event that, prior to the Term End Date, Executive’s employment is terminated by the Company without Due Cause pursuant to Section 11(e) above or by Executive for Good Reason pursuant to Section 11(f) above, in addition to the payments provided for in those sections, subject to the terms of this Section 11(g) (including its subsections), Executive shall be entitled to receive payment of an amount equal to Executive’s Salary immediately prior to the date of Executive’s termination of employment (the “Termination Date”) for the period of time from the day after the Termination Date through the Term End Date (the “Severance Pay”). The Severance Pay shall be paid in the form of salary continuation pursuant to the terms and conditions of Section 5 above commencing no later than sixty (60) days following the Termination Date on the first regularly scheduled payroll date of the Company that is processed after the effective date of the Separation Agreement (defined in Section 11(g)(i) below), except that, if the Separation Agreement may be executed and/or revoked in a calendar year following the calendar year in which the Termination Date occurs, the Severance Pay shall commence on the first regularly scheduled payroll date of the Company in the calendar year in which the consideration or, if applicable, release revocation period ends to the extent necessary to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”). The first such payment shall include payment of the Severance Pay for the period beginning the day after the Termination Date and ending on the last day of the payroll period to which such first payment corresponds.
(h) Separation Agreement. Notwithstanding any other provision of this Agreement, payment of the Severance Pay is conditioned on (i) Executive’s continued compliance in all material respects with Executive’s continuing obligations to the Company, including, without limitation, the terms of this Agreement that survive termination of Executive’s employment with the Company, and (ii) Executive signing (without revoking if such right is provided under applicable law) a separation agreement and general release in a form of that provided to Executive by the Company on or about the Termination Date (the “Separation Agreement”). Executive must so execute the Separation Agreement within sixty (60) days following the Termination Date (or such shorter time as may be set forth in the Separation Agreement)s.
(i) Resignation of All Other Positions. On termination of the Executive’s employment hereunder for any reason, the Executive agrees to resign, effective on the Termination Date from all positions that the Executive holds as an officer or member of the Board (or a committee thereof) of the Company or any of its affiliates.
12. Entire Agreement; Modification; Waiver. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties regarding the subject matter hereof, including the Prior Agreement. There are no warranties, representations or agreements among the parties in connection with the subject matter hereof, except as set forth or referred to herein. No supplement, modification, waiver or termination of this Agreement or any of its provisions shall be binding unless executed in writing by the parties to be bound. No waiver of any of the provisions of this Agreement shall constitute a waiver of any other provision, and no such waiver shall constitute a continuing waiver unless otherwise expressly provided.
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13. Cooperation. The parties agree that certain matters in which the Executive will be involved during the Employment Term may necessitate the Executive’s cooperation in the future. Accordingly, following the termination of the Executive’s employment for any reason, to the extent reasonably requested by the Board, the Executive shall cooperate with the Company in connection with matters arising out of the Executive’s service to the Company’s business; provided that, the Company shall make reasonable efforts to minimize disruption of the Executive’s other activities. The Company shall reimburse the Executive for reasonable expenses.
14. Proprietary Rights and Work Product. The Executive acknowledges and agrees that all right, title, and interest in and to all writings, works of authorship, technology, inventions, discoveries, processes, techniques, methods, ideas, concepts, research, proposals, materials, and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived, or reduced to practice by the Executive individually or jointly with others during the period of his employment by the Company and relate in any way to the business or contemplated business, products, activities, research, expansion or development of the Company or result from any work performed by the Executive for the Company (in each case, regardless of when or where prepared or whose equipment or other resources is used in preparing the same), all rights and claims related to the foregoing, and all printed, physical and electronic copies, and other tangible embodiments thereof (collectively, “Work Product”), as well as any and all rights in and to any US and foreign: (a) patents, patent disclosures and inventions (whether patentable or not); (b) trademarks, service marks, trade dress, trade names, logos, corporate names, and domain names, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing; (c) copyrights and copyrightable works (including computer programs) and rights in data and databases; (d) trade secrets, know-how, and other confidential information; and (e) all other intellectual property rights, in each case whether registered or unregistered and including all registrations and applications for, and renewals and extensions of, such rights, all improvements thereto and all similar or equivalent rights or forms of protection in any part of the world (collectively, “Intellectual Property Rights”), shall be the sole and exclusive property of the Company. Notwithstanding the foregoing, the Company hereby provides notice that Work Product shall not include, and there shall be no obligation hereunder for Executive to assign any intellectual property for which no equipment, supplies, facility, or trade secrets of the Company was used and which was developed entirely on Executive’s own time, unless (i) the intellectual property relates (a) to the business of the Company; or (b) to the Company’s actual or demonstrably anticipated research or development, or (ii) the intellectual property results from any work performed by Executive for the Company. Executive agrees this constitutes any required notice of non-assignability, including under applicable state laws (including Minn. Stat. Ann. § 181.78. To the extent there are any differences between this Section and any specific state law, the state law shall control.
15. Contract Formation; Governing Law, Jurisdiction, and Venue. The Parties agree this Agreement was formed in the State of Minnesota. All of the terms, conditions, and other provisions of this Agreement shall be interpreted and governed by reference to the laws of the State of Minnesota, without giving effect to choice of law principles thereof, and any dispute arising herefrom and the remedies available shall be determined in accordance with such laws, and any litigation or other proceeding shall be venued in the Fourth Judicial District Court for the State of Minnesota in Minneapolis, Minnesota. Reasonable attorneys’ fees under the circumstances, costs, and disbursements shall be awarded to the prevailing party in any action brought under this Agreement.
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16. Severability. If any provision of this Agreement or the application of such provision to any person or circumstance shall be held invalid, the remainder of this Agreement or the application of such provision to persons or circumstances other than those to which it is held invalid shall not be affected thereby.
17. Indebtedness. If, during the course of the Executive’s employment under this Agreement, the Executive becomes indebted to the Company for any reason, the Executive agrees that it will provide to the Company written permission after the debt arises that provides that the Company may, if it so elects, set off any sum due to the Company from the Executive and collect from the Executive any remaining balance.
18. Counterparts. This Agreement may be executed in any number of counterparts, any one of which shall be deemed to be an original, but all of which shall constitute but one and the same instrument.
19. Not Assignable. Rights under this Agreement are not assignable, except that the Company may assign this Agreement to any parent, subsidiary, other affiliated corporation or upon a sale of all or a part of the Company’s business to the bona fide buyer thereof.
20. Headings. Section headings used in this Agreement are for convenience only and shall not affect the construction of this Agreement.
(Signatures continue next page)
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IN WITNESS WHEREOF, the parties have executed this Executive Employment Agreement as of the date first above written.
| THE EXECUTIVE |
| THE COMPANY |
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| MILL CITY VENTURES III, LTD. |
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| /s/ Joseph A. Geraci, II |
| By: | /s/ Howard P. Liszt |
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| Joseph A. Geraci |
| Its: | Chair of Compensation Committee |
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Signature Page of Executive Employment Agreement
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Schedule A
During the Employment Term, the Executive’s personal compensation plan is outlined below:
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| · | Base gross salary is $450,000 per year |
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| · | Bonuses up to 100% of the Executives base gross salary, the amount and payment of which shall be at the discretion of the Compensation Committee |
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EXHIBIT 31.1
SECTION 302 CERTIFICATION
I, Douglas M. Polinsky, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Mill City Ventures III, Ltd.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 14, 2025 | /s/ Douglas M. Polinsky |
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| Chief Executive Officer |
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EXHIBIT 31.2
SECTION 302 CERTIFICATION
I, Joseph A. Geraci, II, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Mill City Ventures III, Ltd.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 14, 2025 | /s/ Joseph A. Geraci, II |
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| Chief Financial Officer |
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EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Mill City Ventures III, Ltd. (the “Company”) on Form 10-Q for the period ended June 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas M. Polinsky, Chief Executive Officer of the Company, and I, Joseph A. Geraci, II, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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| /s/ Douglas M. Polinsky |
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| Douglas M. Polinsky |
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| Chief Executive Officer |
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| August 14, 2025 |
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| /s/ Joseph A. Geraci, II |
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| Joseph A. Geraci, II |
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| Chief Financial Officer |
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| August 14, 2025 |
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