FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 15, 2004
MACKINAC FINANCIAL CORPORATION
(previous filings under the name NORTH COUNTRY FINANCIAL CORPORATION)
(Exact name of registrant as specified in its charter)
MICHIGAN 0-20167 38-2062816 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) |
130 SOUTH CEDAR STREET, MANISTIQUE, MICHIGAN 49854
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (800) 200-7032
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
On December 15, 2004, North Country Financial Corporation (now known as
"Mackinac Financial Corporation") (the "Company", "we", "us") closed the
transactions contemplated by the Stock Purchase Agreement dated August 10, 2004,
as amended by the First Amendment to Stock Purchase Agreement dated September
28, 2004 (the "Stock Purchase Agreement"). At the closing (the "Closing"), we
completed several transactions, including: (i) the 1 for 20 reverse stock split
(the "Reverse Stock Split") approved by our shareholders on November 18, 2004 as
required by the Stock Purchase Agreement and more fully described in our current
report on Form 8-K filed with the Securities and Exchange Commission on October
4, 2004; (ii) the sale to selected investors (the "Investors") of approximately
$30,000,000 of our post Reverse Stock Split common stock, no par value (the
"Common Stock"), with the Investors purchasing 3,076,923 post Reverse Stock
Split shares of Common Stock at a per share price of $9.75 per share; and (iii)
the change of our name to Mackinac Financial Corporation. In connection with
Closing, we also: (i) repurchased at a discount all of our outstanding
subordinated debentures in the face amount of $12,450,000; (ii) entered into a
number of employment agreements with our present and future senior officers; and
(iii) initiated action to make changes to our senior management and board, all
as more fully described herein.
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
1. Employment Agreements
At the Closing, we entered into new employment agreements with Kelly W. George and Ernie R. Krueger, each of which will be effective upon the later of December 20, 2004 or our receipt of all consents and approvals from each of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Michigan Office of Financial and Insurance Services, any other federal or state banking authority, and any other regulatory authority required in order to be appointed as a senior officer (including any approval of their respective employment agreements) or serve on our board following the Closing (as to each the "Effective Time").
Below are summaries of each of the agreements. Several provisions exist in both of the agreements.
A. Common Provisions of the New Employment Agreements
The agreements have a term of thirty-six months. After the initial 36 months, each agreement will be automatically extended for additional 1 year periods unless written notice is given by one party to the other of his or its intention not to renew.
During the term of their employment, each of the below listed employees will be entitled to participate in any Company employee benefit plans that are made available to executive employees of the Company and the Company's wholly-owned subsidiary, North Country Bank and Trust (the "Bank") generally.
If any of the agreements are terminated, we are to make termination payments in an amount and in a lump sum or over time depending on the reason the agreement was terminated. The table below summarizes the termination payments under the agreement.
REASON FOR TERMINATION TERMINATION PAYMENTS
---------------------- --------------------
Death, contract is not extended after 36 months, Salary, benefits under employee benefit plans and
employment is terminated voluntarily by him or by expenses to be reimbursed through the date of
us for cause. termination of employment.
For disability or by us without cause. Salary and employee benefits for a period of 1
year following the effectiveness of the
termination. If the termination of employment
occurs during the initial 36 months of
employment, the payments and benefits will
continue for the longer of (i) the balance of the
initial 36 months, or (ii) one year following the
termination.
After a change in control (by the employee Receives 200% of annual salary. If the
for good reason or by the Company other termination occurs during the initial 36
than for cause). months, then there will be added to the
payment the amount, if any, by which the
present value of this payment exceeds 200% of
his then annual base salary.
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In the event that the payments made under one of the employment agreements, together with any amounts required to be included under the Internal Revenue Code of 1986, as amended (the "Code"), result in an "Excess Parachute Payment," as that term is defined in Section 280G of the Code, then the amount of the payments provided for in the agreement are to be reduced in an amount which eliminates any and all excise tax which would otherwise be imposed under Section 4999 of the Code.
Each of the employment agreements contain confidentiality provisions. The agreement with Mr. George also contains noncompetition provisions. In the event that Mr. George voluntarily terminates his employment or the Company terminates such employment without cause, the noncompetition provisions shall continue for the longer of 12 months, or the period during which he is receiving his salary.
B. Specific Terms for the New Employment Agreements
Kelly W. George
Mr. George's agreement provides that, as of the Effective Time, he will serve as the Senior Vice President and Chief Lending Officer of the Bank, with a salary of not less than $175,000. Additionally, if during his employment, all formal or informal enforcement actions to which the Bank is subject, including cease and desist orders, written agreements or memoranda of understanding by or with any federal or state banking agency ("Regulatory Restrictions") are lifted, he will receive a cash bonus equal to his then current base salary.
For the initial two years of his employment, unless he relocates his principal residence to within 25 miles of the Bank's main office, the Bank will pay or reimburse reasonable living expenses not to exceed $1,350 per month and actual use and maintenance costs of one automobile used for Bank business. In addition, the Bank will pay $450 per month toward the lease or use of such automobile.
Further, within thirty days of the Effective Time, he will be awarded options to purchase 20,000 post Reverse Stock Split shares under our 2000 Stock Incentive Plan. Twenty percent of the options will vest immediately and the remaining options will vest in increments over a four year period and upon Mr. George meeting certain performance criteria.
Ernie R. Krueger
Mr. Krueger's agreement provides that, as of the Effective Time, he will serve as the Vice President and Controller of the Company and the Bank, with a salary of not less than $135,000. He will also receive a bonus in the amount of $100,000; $50,000 of which will be paid at the Effective Time, and, provided he is still employed by the Company, the remainder of which will be paid on the first anniversary of the Effective Time.
Further, within thirty days of the Effective Time, he will be awarded options to purchase 5,000 post Reverse Stock Split shares under our 2000 Stock Incentive Plan. In addition, the Bank will pay $450 per month toward the lease or use of an automobile.
C. Amendments to Existing Employment Agreements
First Amendment to Employment Agreement with C. James Bess
In connection with Closing, we entered into a First Amendment to Employment Agreement with C. James Bess to amend his current Employment Agreement. The Amendment provides that, at the Effective Time, he will be the Bank's President and Chief Executive Officer and entitles him to a cash bonus of $360,000 if the Regulatory Restrictions are removed during his employment.
A copy of his Employment Agreement was filed by the Company as Appendix A to our Proxy Statement filed October 18, 2004.
Waiver Agreements
In connection with the Closing, each of Eliot R. Stark and Paul D. Tobias entered into identical Waiver Agreements. In accordance with the Waiver Agreements, each of Messrs. Stark and Tobias agree that their respective Employment Agreements do not become effective until the Effective Time.
A copy of the Employment Agreements between the Company and Messrs. Stark and Tobias are available in Appendix A of the Company's Proxy Statement filed October 18, 2004. A copy of the form of the Waiver Agreement entered into with Messrs. Tobias and Stark is attached hereto as Exhibit 10.1.
D. Stock Option Agreements
In connection with the Closing, we entered into Stock Option Agreements under our 2000 Stock Incentive Plan with each of Eliot R. Stark and Paul D. Tobias (the "Option Agreements"). With the exception of the number of options granted, the Option Agreements are identical and provide for a ten year option period (the "Option Period") with an exercise price of $9.75 per share, which is the purchase price of the Common Stock sold to the Investors at the Closing.
The Option Agreements provide that the options will continue to be exercisable through expiration of the Option Period despite termination of the agreement for reasons other than death or disability, in which case the options expire upon the first to occur of: (i) the expiration of the Option Period and (ii) the last day of the 36th month after the month in which the option holder's employment is terminated, or in the event of termination for cause, in which event all outstanding and unexercised options expire on the date of termination.
Mr. Tobias' Option Agreement grants him options to purchase 4.375% of our Common Stock outstanding after the Closing (approximately 149,970 of our post Reverse Stock Split shares) and Mr. Stark's Option Agreement grants him options to purchase 3.125% of our Common Stock outstanding after the Closing (approximately 107,121 of our post Reverse Stock Split shares).
Twenty percent of the options granted under the Option Agreements will vest immediately, and the remaining 80% of the options will vest in the future, if at all, in three approximately equal portions based upon the performance of our Common Stock.
The form of the Stock Option Agreement that has been entered into by Messrs. Tobias and Stark is attached hereto as Exhibit 10.2.
2. Indemnity Agreements
In connection with the Closing, we entered into identical Indemnity Agreements with each of C. James Bess, Eliot R. Stark and Paul D. Tobias, who will be appointed to our board effective at the Effective Time. In the near future, we will enter into identical agreements with each of Walter J. Aspatore, Dennis B. Bittner, Robert H. Orley and Randolph Paschke, all of whom will comprise the rest of the board.
Each of the above named new directors (the "Indemnitees") has agreed to be appointed to the Company's board of directors and to serve as a director of the Company as of and at the Effective Time.
Subject to the terms of the Indemnity Agreements, we will indemnify and hold harmless each of the Indemnitees against expenses incurred in connection with any legal proceeding, to the fullest extent permitted by law. Any expenses incurred by an Indemnitee regarding any proceeding may be advanced by us so long as the Indemnitee undertakes in writing to repay any such expense if it is ultimately determined that the Indemnitee is not entitled to indemnification.
An Indemnitee is not entitled to payments under his Indemnitee Agreement to
cover: (i) amounts for which he has already received payment from any source;
(ii) amounts (including, judgments, fines and penalties) payable in connection
with a proceeding pursuant to Section 16(b) of the Exchange Act; (iii) amounts
paid in settlement without our prior consent; (iv) where indemnification is
unlawful; and (v) amounts payable in connection with suits brought by the
Indemnitee and not approved in advance by a court or other tribunal.
The form of Indemnity Agreement that has been or will be entered into with each Indemnitee is attached as hereto as Exhibit 10.3.
3. Trust Preferred Securities.
In connection with the Closing, we repurchased all of our outstanding capital securities, having a face value of $12,450,000, for an aggregate purchase price of $6,500,000, which amount includes termination fees in the aggregate of $275,000.
These securities will be redeemed in accordance with the instruments under which they were issued.
ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
1. Amendment No. 2 to Rights Agreement
In connection with the Closing, we entered into Amendment No. 2 to Rights Agreement, which terminated all existing rights under the Rights Agreement dated June 21, 2000, as of December 14, 2004.
A copy of the Amendment No. 2 to Rights Agreement is attached hereto as Exhibit 4.1
2. Agreement with Joseph Petterson
At the Closing, we entered into an Agreement with Joseph Petterson which terminated his current Employment Agreement. However, Mr. Petterson will remain with the Company on an at-will basis.
Pursuant to that agreement, upon the removal of the Regulatory Restrictions, Mr. Petterson will receive a cash bonus equal to one year of his then base annual salary.
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES.
In connection with the Closing, we accepted Subscription Agreements from a limited number of accredited investors for the purchase of shares of our Common Stock in an aggregate amount of approximately $30 million in a private placement pursuant to the Stock Purchase Agreement and Rule 506 of Regulation D of the Securities Act of 1933 (the "Securities Act"). The Common Stock received by Investors at the Closing are restricted securities under the Securities Act, and a legend to that effect exists on the share certificates. The shares sold to the Investors will be listed on the NASDAQ SmallCap Market. The aggregate placement fees were $1,750,000.
Investors receiving Common Stock at the Closing also receive certain registration rights under the Registration Rights Agreement between each Investor and the Company. Pursuant to the terms of the Registration Rights Agreement, we will use our commercially reasonable best efforts to have a Registration Statement filed and effective by March 31, 2005 and to keep such statement in effect for two years at our cost.
The form of the Registration Rights Agreement attached hereto as Exhibit 10.4.
ITEM 3.03. MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS.
1. Rights Agreement
On December 14, 2004, as described in Item 1.02 above, we entered into the Amendment No. 2 to Rights Agreement, which effectively terminated the Rights Plan.
ITEM 5.01. CHANGE IN CONTROL OF THE COMPANY.
As previously discussed in Item 3.02 above, pursuant to the Subscription Agreements delivered at the Closing as contemplated by the Stock Purchase Agreement, the Investors purchased approximately 3,076,923 shares, or approximately 89.76% of the total shares of our Common Stock outstanding after the Closing, for an aggregate purchase price of approximately $ 30 million. Control of the Company, to the extent previously existing, resided with the holders of our Common Stock prior to the Closing.
In addition to the ownership change discussed above, action has been taken to reconstitute the board shortly after the Closing as more fully described in Item 5.02 below.
ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.
(b) On December 10, 2004, and as contemplated by the Stock Purchase Agreement, the Company received notice that certain officers and directors would be resigning from the Company. Subsequently, the below listed directors and principal officers executed resignations from their respective positions, dated as of December 15, 2004, but effective as of the Effective Time.
Name Position
---- --------
C. James Bess Chief Executive Officer(1)
Bernard A. Bouschor Director
Stanly J. Gerou, II Director
John D. Lindroth Director
Stephen H. Madigan Director
Spencer B. Shunk Director
Joseph E. Petterson Chief Financial Officer(2)
Jani L. Blake Executive Vice President and
Chief Operating Officer(3)
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(1)Has not resigned his position as the President or as a director of the Company.
(2)Has resigned his position as Chief Financial Officer, but will continue with the Company in his position as Executive Vice President.
(3)Will continue with the Company in the position of Senior Vice President.
(c) The individuals listed below have been appointed as principal officers of the Company, subject to federal regulatory approval.
Name Position Background
---- -------- ----------
Eliot R. Stark Executive Vice President From June 1995 to January 2001 -
and Chief Financial Officer Served as Executive Vice President
of Compuware Corporation.
From January 2001 to present -
Managing Director of Mackinac
Partners LLC.
Paul D. Tobias Chairman of the Board and From April 1995 to October of 1999 - Served
Chief Executive Officer as CEO of Munder Capital Management.
From January 2000 to present - Chairman and
CEO of Mackinac Partners LLC.
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Mr. Stark and Mr. Tobias each own a 50% interest in NCFC Recapitalization, LLC, which is a party to the Stock Purchase Agreement. In addition, each of Messrs. Tobias and Stark have subscribed for shares under the Stock Purchase Agreement. Mr. Tobias and Mr. Stark purchased $500,000 (approximately 51,282 shares) and $250,000 (approximately 25,641 shares) of our Common Stock, respectively, as a part of the offering of our Common Stock pursuant to the Stock Purchase Agreement.
(d) Appointment to the board of directors of the Company of the following individuals was approved by the current board of directors, and the following individuals will take office as directors as of and at their respective Effective Time, with the below noted terms of office. Certain of the directors executed Indemnification Agreements at the Closing as disclosed herein in Item 1.01.
Name of Appointee Principal Occupation Expiration of Term
----------------- -------------------- ------------------
Walter J. Aspatore Investment Banking, Amherst Partners Term expires in 2007.
C. James Bess President and Chief Executive Officer of the Term expires in 2005.
Bank.
Dennis B. Bittner Owner and President, Bittner Engineering Term expires in 2005.
Robert H. Orley Real Estate Developer, Vice President and
Secretary of Real Estate Interests Group, Inc. Term expires in 2006.
Randolph Paschke From May 1970 to August 2002 - worked in Tax Term expires in 2006.
Services at Arthur Anderson LLP. Served as a
partner in Arthur Anderson LLP from September
1982 until August 2002. Served as Managing
Partner - U.S. International Tax Trade
Services at Arthur Anderson LLP from
2001-2002. Served as Managing Partner -
Great Lakes
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International Tax Services at
Arthur Anderson LLP from 1999-2001.
From August 2002 to present - Chair,
Department of Accounting in the School of
Business Administration at Wayne State
University.
Eliot R. Stark From June 1995 to January 2001 - Served as Term expires in 2007.
Executive Vice President of Compuware
Corporation.
From January 2001 to present - Managing
Director of Mackinac Partners LLC.
Paul D. Tobias From April 1995 to October of 1999 - Served Term expires in 2007.
as CEO of Munder Capital Management.
From January 2000 to present - Chairman and
CEO of Mackinac Partners LLC.
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In addition to the interests of Mr. Stark and Mr. Tobias noted in Item 5.02(c) above, Messrs. Orley, Aspatore and Paschke purchased $250,000 (approximately 25,641 shares), $25,000 (approximately 5,128 shares) and $50,000 (approximately 10,256 shares) of our Common Stock as part of our offering of Common Stock Pursuant to the Stock Purchase Agreement.
ITEM 5.03. AMENDMENTS TO ARTICLES OF INCORPORATION.
Effective at 5:00 p.m. on December 15, 2004, we amended our Restated Articles of Incorporation to change the name of the Company to "Mackinac Financial Corporation" and effect the Reverse Stock Split.
A copy of the Amendment to Restated Articles of Incorporation is attached hereto as Exhibit 3.1.
ITEM 8.01. OTHER EVENTS.
1. Class Action Litigation
The Company has been involved in a consolidated securities class action entitled In re North Country Financial Corporation Securities Litigation. This action sought damages from the Company and certain of its former directors and officers. The allegations and procedural history of the action are discussed in Item 1 of Part II of our Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 15, 2004.
This action was dismissed with prejudice under an Order and Final Judgment entered by the Court on December 1, 2004 following a Hearing Concerning Final Approval of a Settlement held on that date by the Court. Under the terms of the Order and Final Judgment, we are currently obligated to pay to the plaintiff class $250,000. We
are obligated for our own costs and expenses, including attorneys' fees, in connection with this action. The individual defendants are required to pay, in the aggregate, $500,000, but such amount is covered by insurance. The Order and Final Judgment dismisses the action between the class members and the defendants in its entirety, but is subject to appeal until December 31, 2004.
2. Damon Derivative Action
In connection with the above described class action litigation and a shareholder derivative lawsuit captioned Virginia M. Damon Trust v. North Country Financial Corporation, et al, the allegations and procedural history of which are discussed in Item 1 of Part II of our Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 15, 2004, we entered into an Agreement and Claim Release with Sherry L. Littlejohn ("Littlejohn"), Ronald G. Ford ("Ford") and an insurance company. As this is a derivative action, there are no direct claims against us, but rather against certain named directors and officers. The cost of defense of the directors and officers is being paid by an insurance company, and not by us. However, we may have some limited obligation to repay the insurance company in the event that indemnity of the individual defendants is ultimately found to be improper. In that event, the individual named defendants will have a repayment obligation to us. We have incurred a $100,000 obligation to the insurance company for the cost of a court appointed investigation.
3. Employment Agreement Arbitration
We have been involved in an ongoing arbitration matter with our former chairman, chief executive officer and director, Ronald G. Ford. The allegations and procedural history of the action are discussed in Item 1 of Part II of our Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 15, 2004.
On December 7, 2004, we entered into a Release and Settlement Agreement with Ford. Pursuant to the Settlement Agreement, we agreed to pay Ford such deferred compensation as may become due him under our Executives' Deferred Compensation Plan and the accompanying Adoption Agreement. We also waived any claims we may have against him relating to compensation under certain of his employment, consulting or chairman agreements. We also repurchased a minority interest in one of our subsidiaries for $20,000.
Ford released claims under certain contracts at issue in the Arbitration relating to his employment relationship with us, except for a worker's compensation benefits relative to injuries allegedly sustained from a fall in a Florida restaurant.
The Company and Ford will seek dismissal of the Arbitration.
4. Press Release
On December 16, 2004, we issued a press release announcing the closing of the transactions contemplated in the Stock Purchase Agreement, a copy of which is attached hereto as Exhibit 99.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
The following exhibits are furnished herewith:
EXHIBIT PAGE NUMBER EXHIBIT DESCRIPTION NUMBER ------ ------------------- ------ 3.1 Amendment to Restated Articles of Incorporation _____ 4.1 Amendment No. 2 to Rights Agreement _____ 10.1 Form of Waiver Agreement _____ 10.2 Form of Stock Option Agreement _____ 10.3 Form of Indemnity Agreement _____ 10.4 Form of Registration Rights Agreement _____ 99 Press Release dated December 15, 2004 _____ |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.+
MACKINAC FINANCIAL CORPORATION
Date: December 15, 2004
By: /s/ Paul D. Tobias
----------------------------------
Paul D. Tobias
Chairman of the Board and
Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT PAGE NUMBER EXHIBIT DESCRIPTION NUMBER ------ ------------------- ------ 3.1 Amendment to Restated Articles of Incorporation _____ 4.1 Amendment No. 2 to Rights Agreement _____ 10.1 Form of Waiver Agreement _____ 10.2 Form of Stock Option Agreement _____ 10.3 Form of Indemnity Agreement _____ 10.4 Form of Registration Rights Agreement _____ 99 Press Release dated December 15, 2004 _____ |
EXHIBIT 3.1
UNITED STATES OF AMERICA
THE STATE OF MICHIGAN
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES
LANSING, MICHIGAN
This is to Certify that the annexed copy has been compared by me with the record on file in this Department and that the same is a true copy thereof.
This certificate is in due form, made by me as the proper officer, and is entitled to have full faith and credit given it in every court and office within the United States.
[SEAL]
Sent by Facsimile Transmission In testimony whereof, I have
111111 hereunto set my hand, in the
City of Lansing, this
14th day of December, 2004
/s/ Andrew L. Mitolf Jr., Director
Bureau of Commercial Services
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BCS/CD-515 (Rev. 12/03)
MICHIGAN DEPARTMENT OF LABOR & ECONOMIC GROWTH
BUREAU OF COMMERCIAL SERVICES
Date Received (FOR BUREAU USE ONLY)
DEC 12 2004
FILED
This document is effective on the date DEC 14 2004
filed, unless a subsequent effective date Administrator
within 90 days after received date is Bureau of Commercial Services.
stated in the document.
EFFECTIVE DATE: 12/15/04
5PM
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Name
David D. Joswick
Address
840 West Long Lake Road, Suite 200
City State Zip Code
Troy Michigan 48098
DOCUMENT WILL BE RETURNED TO THE NAME AND ADDRESS YOU ENTER ABOVE.
IF LEFT BLANK DOCUMENT WILL BE MAILED TO THE REGISTERED OFFICE.
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
FOR USE BY DOMESTIC PROFIT AND NONPROFIT CORPORATIONS
(Please read information and instructions on the last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), the undersigned corporation executes the following Certificate:
1. The present name of the corporation is: NORTH COUNTRY FINANCIAL CORPORATION
2. The identification number assigned by the Bureau is: 063316
3. Articles I and III of the Restated Articles of Incorporation are hereby amended as follows:
Article I is amended to read in its entirety as set forth on Exhibit A attached hereto.
Article III is amended by adding the provisions set forth on Exhibit B attached hereto.
4. The effective date of this Certificate of Amendment is 5.00 p.m., on DECEMBER 15, 2004.
5. (For profit and nonprofit corporations whose Articles state the corporation is organized on a stock or on a membership basis.)
The foregoing amendment to the Articles of incorporation was duly adopted on the 18th day of NOVEMBER 2004, by the shareholders if a profit corporation, or by the shareholders or members if a nonprofit corporation (check one of the following):
[X] at a meeting the necessary votes were cast in favor of the amendment.
[ ] by written consent of the shareholders or members having not less than the minimum number of votes required by statute in accordance with Section 407(1) and (2) of the Act if a nonprofit corporation, or Section 407(1) of the Act if a profit corporation. Written notice to shareholders or members who have not consented in writing has been given. (Note: Written consent by less than all of the shareholders or members is permitted only if such provision appears in the Articles of Incorporation.)
[ ] by written consent of all the shareholders or members entitled to vote in accordance with section 407(3) of the Act if a nonprofit corporation, or Section 407(2) of the Act if a Profit corporation.
[ ] by consent given by electronic transmission in accordance with Section 407(3)if a profit corporation.
[ ] By the board of a profit corporation pursuant to section 611(2).
Profit Corporations and Professional Service Corporations Nonprofit Corporations
Signed this 13th day of DECEMBER 2004. Signed this ______day of_______________.
By: C. James Bess By
-------------------------------------------- ------------------------------------
(Signature of an authorized officer or agent) (Signature of President, VicePresident,
Chairperson or ViceChairperson)
C. James Bess, President and Chief Executive Officer
(Type or Print Name) (Type or Print Name) (Type or Print Title)
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RECEIVED
DEC 14 2004
MI DEPT OF LABOR AND ECONOMIC GROWTH
BUREAU OF COMMERCIAL SERVICES
EXHIBIT A
Article I
The name of the corporation is Mackinac Financial Corporation.
EXHIBIT B
Effective at the time this Certificate of Amendment to the Restated
Articles of Incorporation shall become effective as provided in Section 4 of
this Certificate of Amendment (the "Effective Time"), the filing of this
Certificate of Amendment to the Restated Articles of Incorporation shall effect
a reverse stock split on the basis of one (1) new common share for each twenty
(20) issued and outstanding common shares, while maintaining the number of
authorized common shares and preferred shares, as set forth in this Article III
(the "Reverse Split").
Immediately as of the Effective Time, and without any action by the holders of outstanding common shares, but subject to the rounding of fractional shares described below, outstanding certificates representing the corporation's common shares shall represent for all purposes, and each common share issued and outstanding immediately before the Effective Time shall automatically be converted into, new common shares in the ratio of twenty (20) old common shares for one (1) new common share, all by virtue of the Reverse Split and without any action on the part of the holder of such common shares.
Notwithstanding any of the foregoing to the contrary, no fractional common shares shall be issued in connection with the Reverse Split. In lieu thereof, each holder of common shares as of the Effective Time who would otherwise have been entitled to receive a fractional new common share shall, upon surrender of such shareholder's certificate representing pre-split common shares, have the post-split common shares to which they are entitled rounded up to the nearest whole share. As of the Effective Time such fractional shares shall no longer represent equity interests in the corporation, and shall not be entitled to any voting, dividend or other shareholder rights; rather, they shall represent only the right to receive the common shares, if any, described in this paragraph.
EXHIBIT 4.1
AMENDMENT NO. 2 TO RIGHTS AGREEMENT
THIS AMENDMENT NO. 2 TO RIGHTS AGREEMENT, dated as of December ___, 2004 (this "AMENDMENT"), is between North Country Financial Corporation, a Michigan corporation (the "COMPANY"), and Registrar and Transfer Company, a New Jersey corporation (the "RIGHTS AGENT"), and amends the Rights Agreement, dated as of June 21, 2000, between the Company and the Rights Agent, as amended by Amendment No. 1 to Rights Agreement, dated as of August 9, 2004 (the "RIGHTS AGREEMENT").
RECITALS
In accordance with the provisions of Section 27 of the Rights Agreement, the members of the Board of Directors of the Company have approved this Amendment, and the Secretary of the Company has delivered to the Rights Agent a certificate to such effect and has directed the Rights Agent to execute this Amendment as provided in the Rights Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements set forth in the Rights Agreement and this Amendment, the parties hereby agree as follows:
AGREEMENTS
SECTION 1. AMENDMENT TO RIGHTS AGREEMENT. Effective as of the date of this Amendment, Section 1(j) of the Rights Agreement is amended in its entirety to read as follows:
"(j) "Final Expiration Date" shall mean December 14, 2004."
Accordingly, for purposes of Section 7(a) of the Rights Agreement, the Rights will no longer be exercisable as of the close of business on December 14, 2004.
SECTION 2. BINDING EFFECT. This Amendment shall be binding upon and inure to the benefit of the Company and the Rights Agent and their respective successors and permitted assigns.
SECTION 3. SUPERSEDING. From and after the date hereof, all references to the Rights Agreement shall mean the Rights Agreement, as amended by this Amendment.
SECTION 4. CONFIRMATION. Except as otherwise expressly set forth in this Amendment, the Rights Agreement is hereby ratified and confirmed and remains in full force and effect.
SECTION 5. COUNTERPARTS. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, all as of the day and year first above written.
ATTEST: NORTH COUNTRY FINANCIAL CORPORATION
By: ________________________________ By: _____________________________________
Name: __________________________ Name: C. James Bess
Title: President and Chief Executive
Title: _________________________ Officer
ATTEST: REGISTRAR AND TRANSFER COMPANY
By: ________________________________ By: _____________________________________
Name: __________________________ Name: William P. Tatler
Title: Vice President
Title: _________________________
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EXHIBIT 10.1
December __, 2004
North Country Financial Corporation
Board of Directors
Manistique, Michigan
Dear Board Members:
In connection with the proposed transactions contemplated pursuant to that certain Stock Purchase Agreement dated August 10, 2004, by and between the North Country Financial Corporation ("NCFC") and NCFC Recapitalization, LLC (the "Stock Purchase Agreement") and that certain Employment Agreement dated August 10, 2004, by and between NCFC and me (the "Employment Agreement"), I hereby acknowledge and agree that the Effective Date of the Employment Agreement will be the later of the (i) the Closing (as defined in the Stock Purchase Agreement) of the transactions provided for in the Stock Purchase Agreement, and (ii) the date NCFC receives Regulatory Approval to enter into the Employment Agreement.
I further acknowledge and agree that notwithstanding anything in the Employment Agreement to the contrary, a Change in Control shall not be deemed to have occurred upon the consummation of any of the transactions contemplated by the Stock Purchase Agreement, including, without limitation, the sale of shares to the Investors (as defined in the Stock Purchase Agreement), the management changes and the reconstitution of the Board of Directors, whether such transactions occur before, at, or after the Effective Date of the Employment Agreement.
Acknowledged and Agreed:
North Country Financial Corporation
By: ________________________________
Its:
EXHIBIT 10.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated December __, 2004 between NORTH COUNTRY FINANCIAL CORPORATION (the "Company") and _________ (the "Optionee").
RECITALS:
A. The Company and Optionee are parties to an Employment Agreement dated as of August 10, 2004, as amended (the "Employment Agreement"), providing for the employment of the Optionee by the Company, effective as of Closing under the Stock Purchase Agreement dated as of August 10, 2004, as amended (the "Stock Purchase Agreement") between the Company and NCFC Recapitalization, LLC.
B. The Employment Agreement provides for the Optionee to be awarded options to purchase from the Company that number of shares of the Company's Common Stock equal to _____% of the Option Pool (as defined in the Employment Agreement) (the "Option Shares") at a purchase price per share equal to the purchase price per share paid by investors upon consummation of the sale of the Company's shares of Common Stock pursuant to the Stock Purchase Agreement (the "Exercise Price"). Such options are to be issued under the Company's 2000 Stock Incentive Plan (the "Plan"), and in accordance with the terms of the Plan, the Employment Agreement and this Agreement.
C. The number of Option Shares and the Exercise Price can only be determined upon consummation of the transactions under the Stock Purchase Agreement, and at the time such determinations are made the number of Option Shares and Exercise Price will be inserted under the captions "Number of Option Shares" and "Exercise Price" on Schedule 1 to this Agreement.
D. The Directors of the Company have approved the Employment Agreement, including awarding the Optionee options to purchase the Option Shares in accordance with the Plan, the Employment Agreement and this Agreement.
IT IS HEREBY AGREED AS FOLLOWS:
1. Grant of Option; Effectiveness. Subject to the terms of the Plan and this Agreement, the Company hereby grants and awards to Optionee the right and option to purchase all or any of the Option Shares upon payment to the Company of the Exercise Price per share in any of the ways hereinafter provided.
2. Vesting. (a) The right and option to purchase 20% of the Option Shares shall vest and be exercisable beginning on the day following the Closing under the Stock Purchase Agreement and continuing through the balance of the Option Term (as hereinafter defined). The options for the remaining 80% of the Option Shares shall vest and be exercisable in increments as provided below as and when the Ten Day Trading Price (as hereinafter defined) for the Company's Common Stock shall equal or exceed one or more of the Target Prices during the Pricing Periods specified below:
TARGET PRICE PRICING PERIOD PERCENT OF OPTION SHARES VESTING
------------ -------------- --------------------------------
Exercise Price x 1.15 During the Option Term 27%
Exercise Price x 1.30 After the first year of the 27%
Option Term
Exercise Price x 1.45 After the second year of the 26%
Option Term
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For purposes of this Agreement, the "Ten Day Trading Price" shall mean the closing price for the Company's Common Stock on the Nasdaq SmallCap market for any 10 consecutive days on which the Nasdaq market system is open and available for trading. For purposes of making the foregoing determination, if for any reason no shares of the Company's Common Stock are traded on any day that the Nasdaq market is open and available for trading, the closing price for such date shall be the closing price on the first preceding day on which shares of the Company's Common Stock were traded.
(b) Notwithstanding the foregoing vesting schedule, but subject to
the terms of Section 3, all unvested options for Option Shares shall vest and
become immediately exercisable upon: (i) termination of the Employment Agreement
by the Company for any reason other than Cause (as defined in the Employment
Agreement); (ii) Optionee's Retirement (as defined in the Plan), or early
retirement or resignation with the consent of the Company as contemplated by
Section 10(a) and (b) of the Plan; (iii) the death or disability of the
Optionee; or (iv) a Change of Control (as defined in the Plan) of the Company.
3. Option Period. Subject to the terms of this Agreement (including
Section 2), the options may be exercised and Option Shares may be purchased at
any time and from time to time beginning on the first day after the Closing
under the Stock Purchase Agreement and ending on and prior to the tenth
anniversary of such Closing (the "Option Term"), subject to the following:
(a) If the Employment Agreement is terminated as a result of the death or disability of the Optionee, the options shall remain exercisable until the earlier of (i) the last day of the 36th month after the month the Employment Agreement is terminated, or (ii) the expiration of the Option Period; and
(b) Any unexercised options shall expire at the time the Employment Agreement is terminated for Cause (as defined in the Employment Agreement).
(c) Notwithstanding anything contained herein to the contrary, any unvested options shall expire at the time the Employment Agreement is voluntarily terminated by the Optionee.
4. Procedure for Exercise. Subject to conditions of this Agreement, the options may be exercised at any time and from time to time during the Option Period by delivering written notice to the Company, signed by Optionee, an Authorized Transferee, or post-death representative, specifying the number of Option Shares to be purchased.
5. Payment of Option Price. The purchase price for the Option Shares shall be paid in full either (a) in cash or (b) through the delivery of unencumbered shares of the Company's Common Stock having a Fair Market Value on the date of the exercise equal to the total exercise price, or (c) by a combination of (a) and (b) above, except that (i) any portion of the exercise price representing a fraction of a share shall be paid in cash, and (ii) no shares of Common Stock which have been held for less than six months may be delivered in payment of the Exercise Price.
6. Transferability of Options. Except as otherwise provided in this Section, the options shall not be sold, pledged, assigned, or transferred in any way, nor be assignable by operation of law or be subject to execution, levy, attachment or similar process. Except as provided in this Section, any attempted sale, pledge, assignment or other transfer contrary to the terms hereof, and any execution, levy, attachment or similar process, shall be null and void and without any effect. Notwithstanding the foregoing, the options shall, subject to the conditions set forth in this Section, be transferable by the Optionee by gift or other transfer that involves no payment of consideration to the Optionee to the Optionee's spouse and/or the descendents or to a trust created primarily for the benefit of the Optionee, the Optionee's spouse and/or the Optionee's descendents ("Authorized Transferee"). An Authorized Transferee shall have no right to transfer the options. An Authorized Transferee shall succeed to all rights and benefits (except the right to further transfer the Option) and be subject to all obligations, conditions and limitations of the Optionee. However, such rights and benefits (except the rights to further transfer the options) and obligations, conditions and limitations shall be determined as if the Optionee continued to hold the options, and the provisions of this Option Agreement dealing with termination of the Employment Agreement, Retirement, disability and death of an Optionee continue to refer to the Optionee regardless of whether the options are or are not transferred to an Authorized Transferee. In order to transfer options, the Optionee must first give prior written notice to the Company stating the name, address and tax identification or social security number of the proposed transferee and the relationship of the proposed transferee to the Optionee. The option may not be transferred if the transfer would constitute a violation of any applicable federal or state securities or other law or regulation.
7. Conformity with Plan and Employment Agreement. Except as otherwise provided herein, the options are subject to all applicable provisions of the Plan which is incorporated herein by reference. Any matters not addressed herein or in the Employment Agreement shall be governed by the terms of the Plan.
8. Adjustments. The Company shall make appropriate and proportionate adjustments to the number of Option Shares and the Exercise Price to reflect any stock dividend, stock split, or combination of shares, merger, consolidation, or other change in the capitalization of the Company, as provided in Section 13 of the Plan. In the event of any such adjustment, all new, substituted, or additional securities or other property to which Optionee is entitled under the options shall be included in the term "Option Shares."
9. Postponement of Delivery of Shares. The Company, in its discretion, may postpone the issuance or delivery of Option Shares upon any exercise of the options until completion of any then pending registration of such shares under the Securities Act of 1933, as amended ("Securities Act"), covering the resale of such securities by Optionee.
10. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any Option Shares until the Optionee becomes the holder of record of such shares.
11. Further Actions. The parties agree to execute such further instruments and to take such further actions as may be reasonably be required to carry out the intent of this Agreement.
12. Notice. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to the other party hereto at the address as such party may designate by written notice to the other party.
13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon and inure to the benefit of Optionee's personal representatives, successors and permitted assigns.
14. Governing Law. This Agreement and all documents contemplated hereby, and all remedies in connection therewith and all questions or transactions relating thereto, shall be construed in accordance with and governed by the laws of the State of Michigan.
NORTH COUNTRY FINANCIAL CORPORATION
By: ____________________________________
Its: ______________________________
EXHIBIT 10.3
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT ("Agreement") is made this ___ day of December 2004, effective as of the Effective Date, by and between North Country Financial Corporation, a Michigan corporation (the "Company"), and _______________________ (the "Indemnitee").
WITNESSETH:
WHEREAS, the Michigan Business Corporation Act, as amended (the "Act"), provides that the Company has the power to indemnify a directors who was or is a party or is threatened to be made a party to an action in certain circumstances; and
WHEREAS, in recognition of Indemnitee's reliance on such provision of the Act, to provide Indemnitee with specific contractual assurance that the protection promised by said provision will be available to him regardless of any amendment to or any change in the Act, and to induce Indemnitee to serve as a director, the Company wishes to provide in this Agreement for indemnification of Indemnitee and the advancing of expenses to Indemnitee to the fullest extent now or hereafter permitted by law.
NOW, THEREFORE, in consideration of the premises and mutual promises and undertaking hereinafter contained, the Company and Indemnitee hereby agree as follows:
1. Definitions. As used in this Agreement:
(a) The term "Effective Date" shall mean the date of Closing pursuant to that certain Stock Purchase Agreement dated August 10, 2004, as amended, by and between NCFC Recapitalization, LLC, a Michigan limited liability company, individually and on behalf of the investors that subscribe for shares of the Company's common stock, and the Company.
(b) The term "Expenses" includes, without limitation, attorneys fees, disbursements and retainers, accounting, expert and witness fees, travel and deposition costs, court costs, transcript costs, expenses of investigations, judicial or administrative proceedings and appeals, and all other disbursements and expenses customarily incurred in connection with prosecuting, defending or investigating any Proceeding, and any expenses of establishing a right to indemnification, pursuant to this Agreement or otherwise. The term "Expenses" does not include the amount of judgments, fines, penalties or ERISA excise taxes actually levied against Indemnitee or amounts paid in settlement by or on behalf of Indemnitee.
(c) The term "Proceeding" shall include any threatened, pending or completed action, suit, proceeding, arbitration or alternative dispute resolution mechanism, formal or informal, whether brought in the name of the Company or otherwise and whether of a civil, criminal or administrative or investigative nature, in which Indemnitee may be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director,
officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another enterprise, whether or not he is serving in such capacity at the time any liability or expense is incurred for which indemnification or reimbursement is to be provided under this Agreement.
2. Agreement to Serve. Indemnitee hereby agrees to be nominated for election to the board of directors of the Company and, if elected, after the Effective Date, to serve as a director of the Company.
3. Indemnification.
(a) Subject to the terms of this Agreement, the Company hereby agrees to indemnify and hold harmless Indemnitee against all Expenses incurred by him in connection with any Proceeding, to the fullest extent permitted by law. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Michigan corporation to indemnify a member of its board of directors, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of a Michigan corporation to indemnify a member of its board of directors, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties' rights and obligations hereunder.
(b) In the event of a Proceeding by or in the right of the Company, the Company shall indemnify Indemnitee and advance Expenses related to the cost of the Proceeding in accordance with Section 5 of this Agreement.
4. Conclusive Presumption Regarding Entitlement. Indemnitee shall be conclusively presumed to be entitled to indemnification pursuant to this Agreement unless a final and nonappealable determination has been made by a court of competent jurisdiction that Indemnitee is not entitled to indemnification. The termination of any Proceeding, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption or be used as evidence that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted hereunder or by applicable law.
5. Advances of Expenses. The Expenses incurred by Indemnitee in any Proceeding shall be paid promptly by the Company in advance of the final disposition of the Proceeding at the written request of Indemnitee accompanied by reasonable documentation of such expenses, such payment to be made within thirty (30) business days of each such request; provided, however, that Indemnitee shall undertake in writing to repay any such Expense payments if it is ultimately determined that Indemnitee is not entitled to indemnification for such Expenses.
6. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses incurred in connection with any Proceeding, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
7. Indemnification Procedure; Determination of Right to Indemnification.
(a) Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof in writing unless the Company shall have otherwise received notice of such Proceeding. The omission to so notify the Company will not relieve it from any liability which it may have to Indemnitee except to the extent that the Company is damaged by such omission.
(b) If a claim for indemnification or advances under this Agreement is not paid by the Company within thirty (30) days of receipt of written notice, the rights provided by this Agreement shall be enforceable by Indemnitee in any court of competent jurisdiction or Indemnitee may, at his sole option, seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association, which award shall be binding on the Company, nonappealable and enforceable in any court of competent jurisdiction. The burden of proving by clear and convincing evidence that indemnification or advances are not legally permissible shall be on the Company or the person challenging the indemnification or advances.
(c) The Expenses of Indemnitee incurred in connection with any proceeding concerning his right to indemnification or advances in whole or in part pursuant to this Agreement shall also be indemnified by the Company unless it is ultimately determined in such proceeding that Indemnitee had no right to indemnification or advances pursuant to this Agreement.
(d) With respect to any Proceeding for which indemnification is
requested, the Company will be entitled to participate therein at its own
expense and, except as otherwise provided below, to the extent that it may
wish, the Company may assume the defense thereof, with counsel
satisfactory to Indemnitee. After notice from the Company to Indemnitee of
its election to assume the defense of a Proceeding, the Company will not
be liable to Indemnitee for any attorneys' fees subsequently incurred by
Indemnitee in connection with the defense thereof, other than as provided
below. The Company shall not settle any Proceeding in any manner which
would impose any penalty or limitation on Indemnitee without Indemnitee's
written consent. Indemnitee shall have the right to employ his own counsel
in any Proceeding, but the fees and expenses of such counsel incurred
after notice from the Company of its assumption of the defense of the
Proceeding shall be at the expense of Indemnitee, unless (i) the
employment of counsel by Indemnitee has been authorized by the Company,
(ii) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and
Indemnitee in the conduct of the defense of a Proceeding, (iii) the Company shall not in fact have employed counsel to assume the defense of a Proceeding, or (iv) counsel employed by the Company shall not have been approved by Indemnitee, in each of which cases the fees and expanses of Indemnitee's counsel shall be advanced by the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which Indemnitee has concluded that there may be a conflict of interest between the Company and Indemnitee.
8. Limitations on Indemnification. No payments pursuant to this Agreement shall be made by the Company:
(a) To indemnify Indemnitee for any Expenses incurred in connection with any Proceeding to the extent Indemnitee has otherwise actually received payment (under any insurance policy, provision of the Company's Restated Articles of Incorporation, as amended, Bylaws or otherwise) of the amounts payable hereunder;
(b) To indemnify Indemnitee for any Expenses, judgments, fines or penalties sustained in any Proceeding for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, the rules and regulations promulgated thereunder and amendments thereto or similar provisions of any federal, state or local statutory law;
(c) To indemnify Indemnitee for any amounts paid in settlement of any Proceeding without its written consent;
(d) If a court of competent jurisdiction finally determines that such indemnification is unlawful; or
(e) In the case of a Proceeding instituted by Indemnitee (other than a proceeding concerning his right to indemnification or advances pursuant to this Agreement) unless and only to the extent that such indemnification or advances are approved by the court or other tribunal having jurisdiction over such Proceeding.
9. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the extent of the coverage provided for any director of the Company.
10. Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if: (a) delivered by hand delivery and receipted for by the party to whom said notice or other communication shall have been directed, on the date of such receipt, or (b) mailed by certified or registered mail with postage prepaid, on the third (3rd) business day after the date on which it is so mailed:
(i) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee subsequently shall provide in writing to the Company.
(ii) If to the Company to: 130 S. Cedar Street Manistique, Michigan 49854
11. Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of Indemnitee and his heirs, executors, administrators and assigns, whether or not Indemnitee has ceased to be a director, and the Company and its successors and assigns.
12. Separability. Each and every paragraph, sentence, term and provision of this Agreement is separate and distinct so that if any paragraph, sentence, term or provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of any other paragraph, sentence, term or provision hereof. To the extent required, any paragraph, sentence, term or provision of this Agreement may be modified by a court of competent jurisdiction to preserve its validity and to provide Indemnitee with the broadest possible indemnification permitted by law.
13. Interpretation; Governing Law. This Agreement shall be construed as a whole and in accordance with its fair meaning. Headings are for convenience only and shall not be used in construing meaning. This Agreement shall be governed and interpreted in accordance with the laws of the State of Michigan without regard to the conflicts of laws principles of such state.
14. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the court of the State of Michigan for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state courts of the State of Michigan.
15. Amendments. No amendment, waiver, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties.
16. Term of this Agreement. This Agreement shall continue in force if and so long as Indemnitee is serving as a director of the Company, or, if Indemnitee is no longer serving as a director of the Company, if and so long as any Proceeding is pending or might be commenced involving Indemnitee.
17. Counterparts. This Agreement may be executed in two or more counterparts, each of which counterpart shall be deemed an original, but all of which counterparts taken together shall be one and the same document.
18. Facsimile Signatures. Facsimile signatures to this Agreement shall be considered originals hereof, with any party executing this Agreement by facsimile signature agreeing to provide promptly to the other parties an original signature evidencing the same.
IN WITNESS WHEREOF, the parties have executed this Indemnity Agreement on the date first written above.
Address: _________________________________
By _______________________________________
Its ____________________________
EXHIBIT 10.4
FORM OF REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of December ____, 2004, between North Country Financial Corporation, a Michigan corporation (the "Company"), and each of the Persons who have executed this Agreement and are named in Annex A hereto (each, an "Investor" and, collectively, the "Investors").
Execution and delivery of this Agreement by the parties hereto are conditions to each Investor purchasing Shares (as defined below) from the Company under the Subscription Agreement (as defined below). Accordingly, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS. Unless the context otherwise requires, the terms defined in this Section 1 have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of such terms:
"Board" means the Board of Directors of the Company.
"Closing Date" has the meaning given in the Subscription Agreement; provided that if there is more than one Closing Date pursuant to the Subscription Agreement, this term shall refer to the latest such Closing Date.
"Common Stock" means the common stock, no par value of the Company.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" means the record owner of Registrable Securities.
"Person" means any natural person, corporation, trust, association, limited liability company, partnership, joint venture or other entity and any government, governmental agency, instrumentality or political subdivision.
"Register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.
"Registrable Securities" means the Shares and any shares of capital stock issued or issuable from time to time as a dividend or other distribution with respect to, or in exchange for or in replacement of, the Shares if and so long as: (i) they have not been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction; or (ii) they have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all transfer restrictions and restrictive legends with respect to such Shares are removed upon the consummation of such sale; or (iii) they could not be sold without registration by any Holder thereof pursuant to Rule 144 promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock sold and issued to the Investors pursuant to the Subscription Agreement.
"Subscription Agreement" means one or more Subscription Agreements of even date herewith between the Company and each Investor relating to the purchase and sale of the Shares.
SECTION 2. REQUIRED REGISTRATION.
(a) Subject to the receipt of all necessary information from the Investors, the Company shall use commercially reasonable efforts to prepare and file a registration statement on Form S-3 under the Securities Act covering the Registrable Securities (the "Registration Statement"), on or before the date that is ninety (90) days after the Closing Date (the "Filing Date"), and shall use its commercially reasonable efforts to cause such Registration Statement to become effective as soon as practicable after filing, and in any event no later than March 31, 2005 (the "Effectiveness Date"); provided, however, that if the Company receives notification from the SEC that the Registration Statement will receive no action or review from the SEC, then the Company will, subject to its rights under Section 2(d) below, cause the Registration Statement to become effective within five business days after such SEC notification. Notwithstanding the foregoing, if Form S-3 is not available for use by the Company, then the Company will file a Registration Statement on such form as is then available to effect a registration of the Registrable Securities, subject to the consent of the Holders of a majority of the Registrable Securities then outstanding, which consent will not be unreasonably withheld or delayed.
(b) The Company shall use its commercially reasonable efforts to maintain the effectiveness of the Registration Statement under the Securities Act until the earliest of: (i) the date that is two years after the Closing Date; and (ii) the date on which all of the Registrable Securities have been sold pursuant to the Registration Statement or no longer constitute Registrable Securities (the "Registration Period").
(c) Notwithstanding the foregoing, if the Company is engaged in any activity or transaction or preparations or negotiations for any activity or transaction that the Company desires to keep confidential for business reasons and the Company determines in good faith that the public disclosure requirements imposed on the Company under the Securities Act in connection with a registration hereunder would require disclosure of such activity, transaction, preparation or negotiations and that such disclosure would be seriously detrimental to the Company, the Company shall have the right, by written notice to the Holders: (i) to withdraw a registration statement after filing and after such notice, but prior to the effectiveness thereof; or (ii) suspend the effectiveness thereof for a period not to exceed 90 days; provided that such right may not be exercised more than once in any twelve-month period.
SECTION 3. PIGGY-BACK REGISTRATION.
(a) If, at any time prior to the expiration of the Registration Period a Registration Statement is not effective with respect to all of the Shares, each time the Company determines to file a registration statement under the Securities Act (other than pursuant to Section 2 hereof and other than a registration statement on Form S-4 or Form S-8 or a registration statement on Form S-1 covering solely an employee benefit plan) in connection with the proposed offer and sale for money of any of its securities, either for its own account or on behalf of any other security holder, it will give prompt written notice of its determination to all Holders of Registrable Securities. Upon the written request of a Holder of Registrable Securities given within 20 days after the receipt of such written notice, the Company will use commercially reasonable efforts to cause all such Registrable Securities, the Holders of which have so requested registration, to be included in such registration statement and registered under the Securities Act, all to the extent requisite to permit the sale or other disposition by the prospective seller or sellers of the Registrable Securities to be so registered.
(b) If the registration of which the Company gives written notice pursuant to Section 3(a) is for a public offering involving an underwriting, the Company will so advise the Holders as a part of its written notice. In such event, the right of any Holder to registration pursuant to this Section 3 is conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement with the underwriter or underwriters selected for such underwriting by the Company, along with the Company and the other holders distributing their securities through such underwriting; provided, that such underwriting agreement is in customary form and is reasonably acceptable to the Holders of a majority of the Registrable Securities requesting to be included in such registration.
(c) Notwithstanding any other provision of this Section 3, if the managing underwriter of an underwritten distribution advises the Company and the Holders of the Registrable Securities participating in such registration in writing that in its good faith judgment the number of shares of Registrable Securities and the other securities requested to be registered exceeds the number of shares of Registrable Securities and other securities which can be sold in such offering, then: (i) the number of shares of Registrable Securities and other securities so requested to be included in the offering will be reduced to that number of shares which in the good faith judgment of the managing underwriter can be sold in such offering (except for shares to be issued by the Company in an offering initiated by the Company, which will have priority over the shares of Registrable Securities); and (ii) subject to existing priority rights of the holders of such other securities, such reduced number of shares will be allocated among all participating Holders of Registrable Securities and the holders of other securities in proportion, as nearly as practicable, to the respective number of shares of Registrable Securities and other securities held by such Holders and other holders at the time of filing the registration statement in relation to the total number of shares of Common Stock outstanding on a fully diluted basis. All Registrable Securities which are excluded from the underwriting by reason of the underwriter's marketing limitation and all other Registrable Securities not originally requested to be so included will not be included in such registration and will be withheld from the market by the Holders thereof for a period, not to exceed 180 days, which
the managing underwriter reasonably determines is necessary to effect the underwritten public offering.
SECTION 4. REGISTRATION PROCEDURES. If and whenever the Company is required by the provisions of Section 2 or 3 hereof to effect the registration of Registrable Securities under the Securities Act, the Company will:
(a) In accordance with the Securities Act and all applicable rules and regulations thereunder, prepare and file with the Commission a registration statement with respect to such securities and use its commercially reasonable efforts to cause such registration statement to become effective, and use its commercially reasonable efforts to cause such registration statement to remain effective (including preparing and filing with the Commission such amendments and supplements to such registration statement and the prospectus contained therein as may be necessary to keep such registration statement effective) until the securities covered by such registration statement have been sold or as otherwise set forth in Section 2;
(b) If the offering is to be underwritten in whole or in part, enter into a customary written underwriting agreement in form and substance reasonably satisfactory to the managing underwriter of the public offering, the Company and the Holders of a majority of the Registrable Securities participating in such offering;
(c) Furnish to the Holders participating in such registration and to the underwriters of the securities being registered such number of copies of the registration statement and each amendment and supplement thereto, preliminary prospectus, final prospectus and such other documents as such underwriters and Holders may reasonably request in order to facilitate the public offering of such securities; provided, however, that the obligation of the Company to deliver copies of prospectuses or preliminary prospectuses to any Holder shall be subject to the receipt by the Company of reasonable assurances from such Holder that the Holder will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses or preliminary prospectuses;
(d) Use its commercially reasonable efforts to register or qualify the securities covered by such registration statement under such state securities or blue sky laws of such jurisdictions as such participating Holders and underwriters may reasonably request within ten days prior to the original filing of such registration statement, except that the Company will not for any purpose be required to execute a general consent to service of process or to qualify to do business as a foreign corporation in any jurisdiction where it is not so qualified;
(e) Notify the Holders participating in such registration, promptly after it receives notice thereof, of the date and time when such registration statement and each post-effective amendment thereto has become effective or a supplement to any prospectus forming a part of such registration statement has been filed;
(f) Notify such Holders promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information;
(g) Prepare and file with the Commission, promptly upon the request of any such Holders, any amendments or supplements to such registration statement or prospectus which, in the written opinion of counsel for such Holders, which opinion shall be reasonably acceptable to counsel for the Company, is required under the Securities Act or the rules and regulations of the Commission thereunder in connection with the distribution of the Registrable Securities by such Holders;
(h) Prepare and file promptly with the Commission, and promptly notify such Holders of the filing of, such amendments or supplements to such registration statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Securities Act, any event has occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
(i) Advise such Holders, promptly after it receives notice or obtains knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for that purpose and promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued; and
(j) At the request of any Holder of Registrable Securities covered by such registration statement, furnish to such Holder on the effective date of the registration statement or, if such registration includes an underwritten public offering, at the closing provided for in the underwriting agreement, an opinion dated such date of the counsel representing the Company for the purposes of such registration, addressed to the underwriters, if any, and to the Holder or Holders making such request, covering such matters with respect to the registration statement, the prospectus and each amendment or supplement thereto, proceedings under state and federal securities laws, other matters relating to the Company, the securities being registered and the offer and sale of such securities as are customarily the subject of opinions of issuer's counsel provided to underwriters in underwritten public offerings.
(k) Provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities not later than the Effectiveness Date.
SECTION 5. ACCURACY OF REGISTRATION STATEMENT. Subject to the Company's rights under Section 10, any Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) filed by the Company covering Registrable Securities will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. Subject to the limitations set forth in Section 10, the Company will prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to permit sales pursuant to the Registration Statement at all times during the Registration Period, and, during such period, will comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until the termination of the Registration Period, or if earlier, until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement.
SECTION 6. ADDITIONAL OBLIGATIONS OF THE COMPANY.
6.1 Review by Investors. The Company will permit Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP, to review the Registration Statement and all amendments and supplements thereto (as well as all requests for acceleration or effectiveness thereof) a reasonable period of time prior to their filing with the SEC, and will not file any document in a form to which such counsel reasonably objects, unless otherwise required by law in the opinion of the Company's counsel. The sections of any such Registration Statement including information with respect to the Investors, the Investors' beneficial ownership of securities of the Company or the Investors' intended method of disposition of Registrable Securities must conform to the information provided to the Company by each of the Investors.
6.2 Expenses. With respect to the registration effected pursuant to
Section 2 hereof, the Company will bear all fees, costs and expenses of and
incidental to such registration and the public offering in connection therewith;
provided, however, that the Company shall not be liable for any underwriting
discounts and commissions, which in all cases shall be borne by the Holders.
Such fees, costs and expenses of registration to be borne as provided in the
preceding sentence, include, without limitation, all registration, filing and
NASD fees, printing expenses, fees and disbursements of counsel and accountants
for the Company, all expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be offered are to be
registered or qualified and reasonable fees and disbursements (not to exceed
$50,000) of one firm of counsel for all selling security holders, selected by
the Holders of a majority of the Registrable Securities to be included in such
registration, and reasonably acceptable to the Company.
6.3 Due Diligence. The Company will make available for inspection by any Investor whose Registrable Securities are being sold pursuant to a Registration Statement and one firm of attorneys retained by the Investors (collectively, the "Inspectors"), all pertinent financial and other records, pertinent corporate documents and properties of the Company (collectively, the "Records"), as each Inspector reasonably deems necessary to enable the Inspector to exercise its due diligence responsibility. The Company will cause its officers, directors and employees to supply all information that any Inspector may reasonably request for purposes of performing such due diligence. Each Inspector will hold in confidence, and will not make any disclosure of, any Records or other information that the Company
determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless: (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement; (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court or government body of competent jurisdiction, or (iii) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement.
SECTION 7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Holder of Registrable Securities which are included in a registration statement pursuant to the provisions of this Agreement and each of such Holder's officers, directors, partners, legal counsel and accountants, and each Person who controls such Holder within the meaning of the Securities Act and any underwriter (as defined in the Securities Act) for such Holder, and any Person who controls such underwriter within the meaning of the Securities Act, from and against, and to reimburse such Holder, its officers, directors, partners, legal counsel, accountants and controlling Persons and each such underwriter and controlling Person of such underwriter with respect to, any and all claims, actions (actual or threatened), demands, losses, damages, liabilities, costs and expenses to which such Holder, its officers, directors, partners, legal counsel, accountants or controlling Persons or any such underwriter or controlling Person of such underwriter may become subject under the Securities Act or otherwise, insofar as such claims, actions, demands, losses, damages, liabilities, costs or expenses arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in such registration statement, any prospectus contained therein, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in light of the circumstances in which they were made; provided, however, that the Company will not be liable in any such case to the extent that any such claim, action, demand, loss, damage, liability, cost or expense is caused by an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with written information furnished by such Holder, such underwriter or such controlling Person specifically for use in the preparation thereof.
(b) Each Holder of shares of Registrable Securities that are included in a registration statement pursuant to the provisions of this Agreement agrees, severally and not jointly, to indemnify and hold harmless the Company, its officers, directors, legal counsel and accountants, any underwriter and each Person who controls the Company or any underwriter within the meaning of the Securities Act, from and against, and agrees to reimburse the Company, its officers, directors, legal counsel, accountants and controlling Persons, any underwriter with respect to, any and all claims, actions, demands, losses, damages, liabilities, costs or expenses to which the Company, its officers, directors, legal counsel, accountants, such controlling Persons, or any underwriter may become subject under the Securities Act or otherwise, insofar as such claims, actions, demands, losses, damages, liabilities, costs or expenses are caused by any untrue or alleged untrue statement of any material fact contained in such registration statement, any prospectus contained therein or any amendment or supplement
thereto, or are caused by the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case, to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in conformity with written information furnished by such Holder specifically for use in the preparation thereof. Notwithstanding the foregoing, no Holder of Registrable Securities will be obligated hereunder to pay more than the net proceeds realized by it upon its sale of Registrable Securities included in such registration statement.
(c) Promptly after receipt by a party indemnified pursuant to the
provisions of subsection (a) or (b) of this Section of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim therefor is to be
made against the indemnifying party pursuant to the provisions of subsection (a)
or (b), notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section and will not relieve the indemnifying party from liability under this
Section 6 unless such indemnifying party is prejudiced by such omission. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying parties similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party reasonably concludes that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties will have the right to select separate counsel (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party or parties). Upon the
permitted assumption by the indemnifying party of the defense of such action,
and approval by the indemnified party of counsel, the indemnifying party will
not be liable to the indemnified party under subsection (a) or (b) for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof (other than reasonable costs of investigation) unless:
(i) the indemnified party has employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence; (ii) the indemnifying party has employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time;
(iii) the indemnifying party and its counsel fail actively and vigorously to
pursue the defense of the action; or (iv) the indemnifying party authorizes the
employment of counsel for the indemnified party at the expense of the
indemnifying party. No indemnifying party will be liable to an indemnified party
for any settlement of any action or claim without the consent of the
indemnifying party, and no indemnifying party may unreasonably withhold its
consent to any such settlement. No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
indemnified party of a release from all liability with respect to such claim or
litigation.
(d) If the indemnification provided for in subsection (a) or (b) of this Section is held by a court of competent jurisdiction to be unavailable to a party to be indemnified with respect to any claims, actions, demands, losses, damages, liabilities, costs or expenses referred to therein, then each indemnifying party under any such subsection, in lieu of indemnifying such indemnified party thereunder, agrees to contribute to the amount paid or payable by such indemnified party as a result of such claims, actions, demands, losses, damages, liabilities, costs or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such claims, actions, demands, losses, damages, liabilities, costs or expenses, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party will be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, the amount any Holder of Registrable Securities will be obligated to contribute pursuant to this subsection will be limited to an amount equal to the per share public offering price (less any underwriting discount and commissions) multiplied by the number of shares of Registrable Securities sold by such Holder pursuant to the registration statement which gives rise to such obligation to contribute (less the aggregate amount of any damages which such Holder has otherwise been required to pay in respect of such claim, action, demand, loss, damage, liability, cost or expense or any substantially similar claim, action, demand, loss, damage, liability, cost or expense arising from the sale of such Registrable Securities). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution hereunder from any person who was not guilty of such fraudulent misrepresentation.
SECTION 8. REPORTING REQUIREMENTS UNDER EXCHANGE ACT. The Company will maintain the effectiveness of its registration under Section 12 of the Exchange Act and timely file (whether or not it is then required to do so) such information, documents and reports as the Commission may require or prescribe under Section 15(d) of the Exchange Act. The Company will, forthwith upon written request, furnish to any Holder of Registrable Securities a written statement by the Company that it has complied with such reporting requirements. In addition, the Company will take such other measures and file such other information, documents and reports, as may be required of it hereafter by the Commission as a condition to the availability of Rule 144 under the Securities Act (or any similar exemptive provision hereafter in effect).
SECTION 9. HOLDER INFORMATION. The rights of each Holder of Registrable Securities to participate in any registration to be effected pursuant to this Agreement is subject to such Holder furnishing the Company with such information with respect to such Holder and the distribution of such Registrable Securities as the Company may from time to time reasonably request and as may be required by law or by the Commission in connection therewith, and each Holder of Registrable Securities as to which any registration is to be effected pursuant to this Agreement shall furnish the Company with such information.
SECTION 10. SUSPENSION OF SALES. Upon receipt of written notice from the Company that a registration statement or prospectus contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading (a "Misstatement"), each Holder of Registrable Securities shall forthwith discontinue disposition of Registrable Securities until such Holder has received copies of the supplemented or amended prospectus that corrects such Misstatement, or until such Holder is advised in writing by the Company that the use of the prospectus may be resumed, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.
SECTION 11. FORMS. All references in this Agreement to particular forms of registration statements are intended to include, and will be deemed to include, references to all successor forms which are intended to replace, or to apply to similar transactions as, the forms herein referenced.
SECTION 12. MISCELLANEOUS.
12.1 Waivers and Amendments. With the written consent of the Holders of a majority of the Registrable Securities then outstanding, the obligations of the Company and the rights of the Holders under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and with the same consent the Company may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of any supplemental agreement or modifying in any manner the rights and obligations hereunder of the Holders and the Company; provided, however, that no such waiver or supplemental agreement may reduce the aforesaid proportion of Registrable Securities, the Holders of which are required to consent to any waiver or supplemental agreement, without the consent of the Holders of all the Registrable Securities; and provided further, and notwithstanding any provision herein to the contrary, that any such waiver amendment or supplement that applies only to a particular registration shall require only the written consent of the Holders of a majority of the Registrable Securities included in such registration. Upon the effectuation of each such waiver, consent or agreement of amendment or modification, the Company will give prompt written notice thereof to the Holders of the Registrable Securities who have not previously consented thereto in writing. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally or by course of dealing, but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, except to the extent provided in this Section 12.1. Specifically, but without limiting the generality of the foregoing, the failure of any Investor at any time or times to require performance of any provision hereof by the Company will not affect the right of any Investor at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, in any one or more instances, will be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.
12.2 Effect of Waiver or Amendment. Each Investor acknowledges that by operation of Section 12.1 the Holders of a majority of the Registrable Securities will, subject to the limitations contained in Section 12.1, have the right and power to diminish or eliminate certain rights of such Investor under this Agreement.
12.3 Rights of Investors Inter Se. Each Investor has the absolute right to exercise or refrain from exercising any right or rights which such Investor may have by reason of this Agreement or any Registrable Security, including, without limitation, the right to consent to the waiver of any obligation of the Company under this Agreement and to enter into an agreement with the Company for the purpose of modifying this Agreement or any agreement effecting any such modification, and such Investor will not incur any liability to any other Investor or Investors with respect to exercising or refraining from exercising any such right or rights.
12.4 Notices. All notices, requests, consents and other communications required or permitted hereunder will be in writing and will be delivered, or mailed first class postage prepaid, registered or certified mail,
(a) If to any Investor, addressed to such Investor at its address shown on Annex A hereto, or at such other address as such Investor may specify by written notice to the Company; or
(b) If to the Company, at 130 South Cedar Street, Manistique, Michigan 49854, or at such other address as the Company may specify by written notice to the Investors;
and each such notice, request, consent and other communication will for all purposes of this Agreement be treated as being effective or having been given when delivered, if delivered personally, or, if sent by mail, at the earlier of its actual receipt or three days after the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed and postage prepaid as aforesaid.
12.5 Severability. If any one or more of the provisions of this Agreement or of any agreement entered into pursuant to this Agreement is determined to be illegal or unenforceable, it is the intention of the parties hereto that all other provisions of this Agreement and of each other agreement entered into pursuant to this Agreement should be given effect separately from the provision or provisions determined to be illegal or unenforceable and not be affected thereby.
12.6 Parties in Interest. All the terms and provisions of this Agreement will be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, whether so expressed or not and, in particular, will inure to the benefit of and be enforceable by the Holder or Holders at the time of any registration of Registrable Securities. Subject to the immediately preceding sentence, this Agreement will not
run to the benefit of or be enforceable by any Person other than a party to this Agreement and its successors and assigns.
12.7 Headings. The headings of the sections, subsections and paragraphs of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement.
12.8 Entire Agreement. This Agreement constitutes the entire understanding of the parties hereto and supersedes all prior understanding among such parties.
12.9 Choice of Law. This Agreement and any and all matters related to or arising under this Agreement shall be governed by the internal laws of the State of Michigan, regardless of any provisions on choice of or conflicts of law.
12.10 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts will be deemed an original, will be construed together and will constitute one and the same instrument.
12.11 Assignment of Registration Rights. The rights of the Investors hereunder, including the right to have the Company register Registrable Securities pursuant to this Agreement, will be automatically assigned by the Investors to transferees or assignees of all or any portion of the Registrable Securities, but only if: (a) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (b) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being transferred or assigned; (c) after such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws; (d) at or before the time the Company received the written notice contemplated by clause (b) of this sentence, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (e) the transferee is an "accredited investor" or a "qualified institutional buyer," as each such term is defined, respectively, in Rule 501 of Regulation D and Rule 144A, both promulgated under the Securities Act.
(Signature page follows)
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed personally or by a duly authorized representative thereof as of the day and year first above written.
NORTH COUNTRY FINANCIAL CORPORATION ______________________________________
Printed Name of Investor
By: ___________________________________ By: _________________________________
Name: _____________________________ Name: ____________________________
Title: ____________________________ Title: ___________________________
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ANNEX A
[LIST OF INVESTORS]
Exhibit 99
NORTH COUNTRY FINANCIAL CORPORATION (NOW MACKINAC FINANCIAL CORPORATION) ANNOUNCES COMPLETION OF $30 MILLION RECAPITALIZATION
MANISTIQUE, MI -- (MARKET WIRE) -- December 16, 2004--Today North Country Financial Corporation announced the completion of a recapitalization, including a 20 for 1 reverse stock split, and changed its name to Mackinac Financial Corporation ("MFNC") (NASD Symbol MFNC). An investor group purchased $30 million of newly issued MFNC common stock at a price of $9.75 per share. The proceeds of the issue will be used to restore North Country Bank's capital position and allow the Bank (soon to be renamed Mackinac Bank) to fully serve its market area.
MFNC is also opening a loan production office in Oakland County, Michigan which will seek loan and deposit relationships with corporations and high net worth individuals.
Paul Tobias, Chairman and CEO of MFNC, and Eliot Stark, Chief Financial Officer, with the assistance of Keefe, Bruyette & Woods and Howe Barnes led the recapitalization effort. Austin & Associates acted as the corporation's financial advisor. Tobias said, "We are delighted to have had the opportunity to recapitalize this fine bank. The new investment will place the bank in a very strong capital position and allow us to grow throughout Michigan." Jim Bess, President and CEO of North Country Bank, said, "After a year of hard work we have succeeded in eliminating the serious problems that existed at North Country and we are proud that we have regained the confidence of the investment community. We now plan on regaining the confidence and business of the individuals and businesses in our market areas. We will be offering competitive products and services in all of our markets through our very talented team as only a true community bank can. We are also looking forward to our new entry into Oakland County."
Forward-Looking Statements
This release contains certain forward-looking statements. Words such as "anticipates," "believes," "estimates," "expects," "intends," "should," "will," and variations of such words and similar expressions are intended to identify forward-looking statements. These statements reflect management's current beliefs as to expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Factors that could cause a difference include among others: changes in the national and local economies or market conditions; changes in interest rates and banking regulations; the impact of competition from traditional or new sources; and the possibility that anticipated cost savings and revenue enhancements from mergers and acquisitions, bank consolidations, branch closings and other sources may not be fully realized at all or within specified time frames. These and other factors may cause decisions and actual results to differ materially from current expectations. Mackinac Financial Corporation undertakes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.
Contact:
Contact:
Investor Relations
(800) 200-7032
Website: http://www.northcountrybank.com