FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this "Amendment") is
executed and delivered as of September 28, 2004, by and between North Country
Financial Corporation, a Michigan corporation registered as a bank holding
company ("North Country"), and NCFC Recapitalization, LLC, a Michigan limited
liability company ("NCFC Recapitalization"), individually and on behalf of the
"Investors" that subscribe for shares of North Country common stock and become a
party to the Agreement as contemplated in Section 2.1 of the Agreement.
Capitalized terms used in this Amendment and not otherwise defined have the
respective meanings in the Agreement.
WITNESSETH:
WHEREAS, the parties hereto executed and delivered a Stock Purchase
Agreement dated as of August 10, 2004 (the "Original Agreement"); and
WHEREAS, the parties hereto desire to amend the Original Agreement as
set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. The preamble of the Original Agreement is hereby amended to delete
"(the Agreement")" and Schedule 1 of the Agreement is hereby amended to add a
definition of "Agreement' as follows:
"Agreement" means the Stock Purchase Agreement dated as of
August 10, 2004 by and between the parties hereto, as amended by the
First Amendment, and as the same may be further amended from time to
time pursuant to its terms.
2. Section 3.1(b)(iii)(F) of the Original Agreement is hereby amended
to read in its entirety as follows:
(F) take any action (including any action by its Board of Directors (or
any committee thereof) to adjust in any way either the number of shares
of North Country covered by any outstanding North Country Stock
Options, or the exercise price of any of the options, whether pursuant
to the terms of such Plans or otherwise (except only as contemplated by
Section 29 of Part I of Schedule 3).
3. Section 3.2(b) of the Original Agreement is hereby amended to add
the following to the end of the Section:
NCFC Recapitalization shall use its Best Efforts to provide to North
Country as soon as reasonably practicable the names of the new
directors, their backgrounds and other
information required to be furnished by North Country to its
shareholders in compliance with Rule 14f-1 under the Securities
Exchange Act, if applicable.
4. The Original Agreement is hereby amended to add a new Section 3.8
which reads in its entirety as follows:
3.8 Reverse Stock Split. North Country shall take all required
action so that the issued and outstanding shares of North Country
common stock shall be changed into a fewer number of shares on a 1 for
20 basis, effective not later than immediately prior to the Closing.
The changes described in this Section 3.8 are referred to as the
"Reverse Stock Split". No fractional shares shall be issued as a result
of the Reverse Stock Split. Instead, in the event that the number of
shares into which the shares held by a particular shareholder are to be
changed would result in a fractional share, the number of shares shall
instead be rounded upwards to the next whole share. Effective at the
time that the Reverse Stock Split shall become effective under
applicable law, all certificates evidencing shares of North Country
common stock shall automatically, and for all purposes, represent the
number of shares into which the shares shall have been changed pursuant
to the Reverse Stock Split. After the Reverse Stock Split shall become
effective, not more than 350,958 shares of common stock of North
Country will be issued and outstanding (subject to adjustment to
account for fractional shares as contemplated by this Section 3.8 and
the issuance of shares of North Country common stock upon the exercise
prior to the Closing of outstanding North Country Stock Options).
5. Section 4.5 is hereby amended to add a new subsection (i) which
reads in its entirety as follows:
(i) In the event and effective the time that the Pre-Closing
Outstanding Shares are reduced as the result of the Reverse Stock Split
contemplated by Section 3.8 of this Agreement, then the number
"39,775,195" appearing in two places in Section 4.5(b) shall be changed
to 1,988,762 (subject to adjustment for fractional shares described
below). In the event that for any reason the Pre-Closing Outstanding
Shares shall exceed 350,958, the minimum number of shares to be issued
shall be increased to the number (rounded upward to the nearest whole
share) equal to (a) the Pre-Closing Outstanding Shares divided by 0.15
less (b) the Pre-Closing Outstanding Shares.
6. Section 4.6(i) of the Original Agreement is hereby amended to change
the reference therein to Section 4.5(g) to Section 4.5(f).
7. Section 4.7 of the Original Agreement is hereby amended to change
the reference therein to Article 8 to Article 7.
8. Section 5.1(g) is hereby amended to add the following sentences to
the end of the Section:
When the Reverse Stock Split is approved by the shareholders
of North Country as contemplated by Section 3.4(a), the Reverse Stock
Split shall have been duly authorized,and the Reverse Stock Split shall
become effective at the time that an appropriate amendment to the
Articles of Incorporation of North Country is filed with the Michigan
Department of Labor & Economic Growth as provided under the Michigan
Business
Corporation Act. When the Reverse Stock Split becomes effective prior
to the Closing as contemplated by Section 3.8, 350,958 shares of common
stock of North Country will be issued and outstanding (subject to
adjustment to account for fractional shares as contemplated by Section
3.8 and the issuance of shares of North Country common stock pursuant
to the exercise prior to the Closing of North Country Stock Options)
and no shares of common stock will be held in treasury."
9. The definition of "Pre-Closing Equity Adjustments" in Schedule 1 is
hereby amended to change paragraph (a) of the definition to read as follows:
(a) Reduce stockholders' equity by the full amount of the
following, whether or not then due, accrued or incurred:
(i) the full amount by which all costs and expenses
of North Country and its Subsidiaries with respect to the
transactions contemplated by this Agreement, including
investment banking, legal and accounting fees and expenses,
exceed $75,000; and
(ii) the full amount of the settlement or other
resolution of the Identified Claims and any other litigation
or claims, including all attorneys fees and any contingent
or deferred amounts; and
(iii) $100,000, representing a portion of additional
expenses incurred by NCFC Recapitalization and the Placement
Agents in connection with the transactions contemplated by
this Agreement.
10. The definition of "Pre-Closing Outstanding Shares" in Schedule 1 is
hereby amended to add the following sentence to the end of the definition:
Based on the representation and warranty contained in Section 5.1(g),
the Pre-Closing Outstanding Shares as of the time the Reverse Stock
Split shall become effective will be 350,958 shares (subject to
adjustment for fractional shares as described in Section 3.8 and the
issuance of shares of North Country common stock pursuant to the
exercise prior to the Closing of North County Stock Options).
11. The definition of "Shareholder Approval Items" in Schedule 1 is
hereby amended to read in its entirety as follows:
"Shareholder Approval Items" means and includes approval of
(a) the issuance of the North Country Shares to the Investors as
contemplated by this Agreement, (b) an amendment to the Articles of
Incorporation of North Country to make the Reverse Stock Split
contemplated by Section 3.8 effective, (c) an amendment to the Articles
of Incorporation of North Country to change its name to "Mackinac
Financial Corporation", (d) the amendment of North Country's 2000 Stock
Incentive Plan to increase the authorized number of shares of common
stock of North Country under the plan, to permit the awards to be made
as contemplated in certain of the Employment Agreements to be priced at
a per share price equal to the price per share in the Offering (see
Section 15 of
Part 1 of Schedule 3), to permit such options to continue to vest and
be exercisable notwithstanding termination of the Employment
Agreements, and otherwise to permit such options to be awarded under
the Plan, and (e) any other action by the shareholders of North Country
required under applicable law or the NASDAQ Rules, or reasonably
requested by NCFC Recapitalization, in connection with this Agreement
or any of the transactions contemplated by this Agreement.
12. The "Total Number of Shares" section of Schedule 2 is hereby
amended to read in its entirety as follows:
Not less than 39,775,195 shares of common stock of North Country except
that if the Reverse Stock Split contemplated by Section 3.8 becomes
effective the number of shares shall not be less than 1,988,762 shares
(subject to adjustment as contemplated by Section 4.5). The precise
number of shares of North Country to be issued will be determined by
Section 4.5.
Minimum Closing Date Equity of $3 million. See Schedule 3.
13. The "Amendments to North Country Stock Option Plans" section of
Schedule 2 is hereby amended to read in its entirety as follows:
The North Country Stock Option Plans to be amended to increase the
number of shares that may be subject to awards made at or after the
Closing under the plans to 12.5% of the total number of shares to be
outstanding after the Closing Date. The number of shares to be subject
to each plan shall be determined prior to Closing by NCFC
Recapitalization, provided that there shall be reserved under each plan
a sufficient number of shares to be available for issuance upon the
exercise of outstanding North Country Stock Options under the plan. The
2000 Stock Incentive Plan will be further amended to permit the options
to be awarded as contemplated under certain of the Employment
Agreements (see Schedule 5) to be priced at the per share price in the
Offering, to continue to vest and be exercisable notwithstanding
termination of the Employment Agreements as contemplated in the
Employment Agreements and otherwise to permit such options to be
awarded under the Plan.
14. The "Expenses" section of Schedule 2 is hereby amended to delete
the third sentence.
15. Section 9 of Part I of Schedule 3 is hereby amended to read in its
entirety as follows:
9. Effective upon the Closing, the Board of Directors of North
Country shall have been duly reconstituted as specified by NCFC
Recapitalization (including that all directors other than Xx. Xxxx and
Xx. Xxxxxxxx shall have duly resigned and new directors designated by
NCFC Recapitalization shall have been duly appointed) and North Country
shall have taken all required action to duly reconstitute the Boards of
Directors of its Subsidiaries as specified by NCFC Recapitalization.
Xx. Xxxx and Xx. Xxxxxxxx, two (2) current directors of North Country,
shall continue as directors of North
Country following the Closing. North Country shall have taken all
required action so that the new directors shall take office as
directors effective at the Closing.
16. Part I of Schedule 3 is hereby amended to add new Sections 28 and
29 which read in their entirety as follows:
28. The Reverse Stock Split contemplated by Section 3.8 shall
have become effective.
29. All required actions shall have been taken so that the
numbers of shares of common stock of North Country subject to
outstanding North Country Stock Options shall have been duly adjusted
downward (divided by 20), and the exercise prices shall have been duly
adjusted upwards (multiplied by 20), proportionately in view of the
Reverse Stock Split.
17. As amended by this Amendment, the Original Agreement shall remain
in full force and effect.
18. This Amendment may be executed in multiple counterparts, each of
which shall be deemed an original and all of which shall constitute one
agreement.
19. Facsimile signatures to this Amendment shall be considered
originals hereof, with any party executing this Amendment by facsimile signature
agreeing to provide promptly to the other parties an original signature
evidencing the same.
20. This Amendment shall be construed and enforced in accordance with
and governed by the laws of the State of Michigan (without regard to conflicts
of law principles).
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
NORTH COUNTRY FINANCIAL CORPORATION
By: /s/ C. Xxxxx Xxxx
--------------------------------
Name: C. Xxxxx Xxxx
Title: President and Chief Executive Officer
NCFC RECAPITALIZATION, LLC
By: /s/ Xxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxx
Title: A Member
and
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
Title: A Member
