SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
NORTH COUNTRY FINANCIAL CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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[X] No fee required.
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1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify
the filing for which the offsetting fee was paid
previously. Identify the previous filing by
registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
<PAGE>
NORTH COUNTRY FINANCIAL CORPORATION
3530 North Country Drive
Traverse City, Michigan 49684
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 18, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of North Country Financial Corporation
(the "Corporation"), a Michigan corporation, will be
held on April 18, 2000, at 6:00 p.m. at the Grand
Traverse Resort and Spa, 100 Grand Traverse Village
Boulevard, Acme, Michigan 49610, for the following
purposes:
1. To elect four (4) directors, each to hold
office for a three-year term.
2. To approve the Corporation's 2000 Stock
Incentive Plan.
3. To transact such other business as may
properly come before the meeting or any
adjournment thereof.
The board of directors has fixed February 25,
2000, as the record date for the determination of
shareholders entitled to notice of and to vote at the
meeting or any adjournment thereof.
By order of the Board of Directors
Ronald G. Ford
Chairman and Chief Executive Officer
Your vote is important. Even if you plan to
attend the meeting, please date and sign the enclosed
proxy form, indicate your choice with respect to the
matters to be voted upon, and return it promptly in the
enclosed envelope. Note that if the stock is held in
more than one name, all parties must sign the proxy
form.
Dated: March 8, 2000
<PAGE>
NORTH COUNTRY FINANCIAL CORPORATION
3530 North Country Drive
Traverse City, Michigan 49684
PROXY STATEMENT
This proxy statement and the enclosed proxy are
furnished in connection with the solicitation of
proxies by the board of directors of North Country
Financial Corporation (the "Corporation"), a Michigan
corporation, to be voted at the annual meeting of
shareholders of the Corporation to be held on Tuesday,
April 18, 2000, at 6:00 p.m., at the Grand Traverse
Resort and Spa, 100 Grand Traverse Village Boulevard,
Acme, Michigan 49610, or at any adjournment or
adjournments thereof, for the purposes set forth in the
accompanying notice and in this proxy statement.
This proxy statement has been mailed on or about
March 8, 2000, to all holders of record of common stock
of the Corporation as of the record date. The board of
directors of the Corporation has fixed the close of
business on February 25, 2000, as the record date for
the determination of shareholders entitled to notice of
and to vote at the meeting and any adjournment thereof.
As of February 25, 2000, 6,995,070 shares of common
stock were outstanding. Each outstanding share will
entitle the holder thereof to one vote on each separate
matter presented for vote at the meeting.
If a proxy in the enclosed form is properly
executed and returned to the Corporation, the shares
represented by the proxy will be voted at the meeting
and any adjournment thereof. If a shareholder
specifies a choice, the proxy will be voted as
specified. If no choice is specified, the shares
represented by the proxy will be voted for the election
of all of the nominees named in the proxy statement and
for the other proposal set forth in this proxy
statement, and in accordance with the judgment of the
persons named as proxies with respect to any other
matter which may come before the meeting. A proxy may
be revoked before exercise by notifying the Chairman of
the Board in writing or in open meeting, by submitting
a proxy of a later date or attending the meeting and
voting in person. All shareholders are encouraged to
date and sign the enclosed proxy form, indicate your
choice with respect to the matters to be voted upon,
and return it to the Corporation.
Votes cast at the meeting and submitted by proxy
are counted by the inspectors of the meeting, who are
appointed by the Corporation. A plurality of the votes
cast at the meeting is required to elect the nominees
as directors of the Corporation. As such, the four
individuals who receive the largest number of votes
cast at the meeting will be elected as directors. The
other proposal will be approved if it receives a
majority of the vote cast. Shares not voted at the
meeting, whether by broker nonvote, or otherwise, will
not be treated as votes cast at the meeting and will
have no effect on the outcome of the voting. An
abstention will be treated as a vote cast. An
abstention will have no effect on the voting for
directors but will have the effect of a vote against
the other proposal.
<PAGE>
ELECTION OF DIRECTORS
The bylaws of the Corporation provide for a board
of directors consisting of a minimum of five (5) and a
maximum of fifteen (15) members. The restated articles
of incorporation of the Corporation and the bylaws also
provide for the division of the board of directors into
three (3) classes of nearly equal size with staggered
three-year terms of office. Four persons have been
nominated for election to the board, each to serve a
three-year term expiring at the 2003 annual meeting of
shareholders.
Unless otherwise directed by a shareholder's
proxy, the persons named as proxy holders in the
accompanying proxy will vote for the nominees named
below. In the event any of such nominees shall become
unavailable, which is not anticipated, the board of
directors in its discretion may reduce the number of
directors or designate substitute nominees, in which
event the enclosed proxy will be voted for such
substitute nominees. Proxies cannot be voted for a
greater number of persons than the number of nominees
named.
The board of directors recommends a vote FOR the
election of all the persons nominated by the board.
<PAGE>
The following information has been furnished to
the Corporation by the respective directors and
director nominees. Each of those persons has been
engaged in the occupations stated below for more than
five years.
Nominees for Election as Directors for Terms Expiring in 2003
Director of
Age Corporation Since
Paul W. Arsenault 43 1999
President, Concepts Consulting, Inc.
(financial consultant)
Bernard A. Bouschor 51 1996
Tribal Chairman, Sault Ste.
Marie Tribe of Chippewa Indians
C. Ronald Dufina 55 1992
Owner, Balsam Shop, Inc., Ramas, Inc.,
HRD, Inc., Island Leasing, Inc., and
Mackinac Island Hospitality, Inc.
(companies involved in tourism)
Wesley W. Hoffman 44 1999
Attorney, Wesley W. Hoffman & Associates, P.C.
Directors Whose Terms Expire in 2002
Michael C. Henricksen 57 1988
Co-Owner, Satellite Services, Inc.
(service company)
John P. Miller 61 1976
Retired, Peoples Store Co., Inc.
(retail clothing)
Ronald G. Ford 52 1987
Chairman and Chief Executive Officer of
the Corporation
Directors Whose Terms Expire in 2001
Stanley J. Gerou II 51 1989
President, Gerou Excavating, Inc.
Thomas G. King. 47 1987
President, Top of Lake Investment Company
John Lindroth 44 1987
President, Superior State Agency, Inc.
(insurance agency)
Sherry L. Littlejohn 40 1998
President and Chief Operating Officer of
the Corporation
<PAGE>
The board of directors has an audit committee
comprised of John Lindroth (chairman), Paul Arsenault,
John Miller and C. Ronald Dufina. Six meetings of the
committee were held during 1999. The committee's
primary function is to assist the board in fulfilling
its oversight responsibilities by reviewing the
financial information that will be provided to
shareholders and others, the systems of internal
controls that management and the board have established
and the audit process. The primary responsibilities of
the audit committee are to:
* provide assistance to the board in fulfilling its
statutory and fiduciary responsibilities for
examinations of the Corporation and its subsidiaries.
* monitor accounting and financial reporting
policies.
* determine that there are adequate administrative,
operating and internal accounting controls and that the
Corporation is operating in accordance with prescribed
procedures and codes of conduct.
* serve as an independent and objective party in
review of financial information as presented by
management for distribution to shareholders of the
Corporation and the public.
The compensation committee is comprised of Wesley
Hoffman (chairman), Stanley Gerou, Thomas King and
Michael Henricksen. Four meetings of this committee
were held in 1999. This committee is responsible for
recommending annually to the board the salary of the
Chairman and CEO. This committee additionally reviews
with management the annual projected salary ranges and
recommends those for board approval. This committee
also annually reviews the written personnel policy and
audits the employee benefit package annually.
The nominating committee of the board, comprised
of Stanley Gerou (chairman), Bernard Bouschor and John
Lindroth, held two meetings during the year.
The board also has an executive committee
comprised of Ronald G. Ford (chairman), Michael C.
Henricksen, Thomas G. King, Sherry L. Littlejohn, John
Lindroth and John Miller. This committee handles
strategic planning for the Corporation and its
subsidiaries.
The board of directors held a total of six
meetings during 1999. No director attended less than
75 percent of the aggregate number of meetings of the
board and the committees on which he served, other than
Mr. Bouschor. There are no family relationships
between or among any of the directors, nominees, or
executive officers of the Corporation.
Remuneration of Directors
The directors of the Corporation each receive a
fee of $500 for attendance at meetings of the board,
except for the Chairman who receives $1,000 per
meeting. The directors of the Corporation also serve
on the board of directors of North Country Bank and
Trust ("Bank"), for which they are paid an annual fee
of $1,200 and a fee of $1,000 per meeting (except for
Mr. Ronald G. Ford, the Bank board chairman, who
receives $1,400 per meeting) for attendance at Bank
board meetings.
<PAGE>
The Corporation has established a deferred
compensation plan for its directors pursuant to which
each director who participates in the plan may elect to
have his or her director fees credited quarterly to
either (a) a current stock purchase account, (b) a
deferred cash investment account, or (c) a deferred
stock account. Fees credited to a current stock
purchase account are converted to shares of the
Corporation's common stock at market value on the
credit date and distributed to the director in lieu of
cash payment of fees. Fees credited to a deferred cash
investment account are deferred for tax purposes and
are credited quarterly with an appreciation factor that
may not exceed the prime rate of interest charged by
the Bank. Fees credited to a deferred stock account
are also deferred for tax purposes. At the credit
date, the fees are converted into "Corporation stock
units" determined by dividing the amount of the fees
credited for the quarter by the fair market value of a
share of the Corporation's common stock on the credit
date. Upon termination of a director's service with
the Corporation, the amount credited to his or her
deferred cash investment account or deferred stock
account is paid out in a lump sum, or if termination
occurs because of retirement, the distribution may be
spread over 5 to 10 years.
The Corporation's 1997 Directors' Stock Option
Plan provides for the grant of options to eligible
directors (i.e., nonemployee directors of the Bank)
each year following each annual meeting beginning in
1998 based on the Bank's return on equity ("ROE") for
the prior year ranging from no shares if the ROE was
less than 13% to 1,200 shares if the Bank's ROE was
greater than 15%. The term of each option is ten (10)
years, subject to earlier termination in certain
events, and the option price is 100% of fair market
value on the date of grant. Based on the earnings of
the Bank for 1998, each of the nonemployee directors of
the Corporation was granted an option on April 20,
1999, to purchase 1,200 shares of common stock at an
exercise price of $20.00 per share. Based on the
earnings of the Bank for 1999, each of the nonemployee
directors will, on April 19, 2000, be granted an option
to purchase 1,200 shares of common stock.
APPROVAL OF 2000 STOCK INCENTIVE PLAN
The complete text of the 2000 Stock Incentive Plan
is set forth in Appendix A. The following summary of
the material features of the 2000 Stock Incentive Plan
is qualified in its entirety by reference to Appendix
A.
The Board of Directors approved the 2000 Stock
Incentive Plan on February 16, 2000, subject to
approval by the Corporation's shareholders. The
purpose of the plan is to attract and retain certain
selected officers, key employees, non-employee
directors and consultants whose skills and talents are
important to the Corporation's operations and reward
them for making major contributions to the success of
the Corporation. The aggregate number of shares of
common stock subject to the plan is 500,000, all of
which may be granted as incentive stock options. In
addition, no one person may receive options over more
than 50,000 shares of common stock in any one calendar
year.
The plan permits the Corporation to grant
nonqualified stock options and incentive stock options
("ISOs"), as defined in Sections 422 of the Internal
Revenue Code of 1986, as amended. No options may be
granted under the plan after February 15, 2010.
<PAGE>
The compensation committee administers the Plan.
The compensation committee has full and exclusive power
to interpret the plan and to adopt rules, regulations
and guidelines for carrying out the plan as it may deem
necessary or proper.
Under the plan, current and prospective employees
and non-employee directors who provide services to the
Corporation and its subsidiaries and partnerships and
other business ventures in which the Corporation has a
significant equity interest are eligible to participate
if they hold, or will hold, positions of responsibility
and if their performance can have a significant effect
on the success of the Corporation. As of February 1,
2000, approximately 60 individuals are eligible to
participate in the plan. It is impossible for the
Corporation now to determine the grants that will be
made under this new plan. The following table provides
information on options that have been granted to named
executive officers, to all current executive officers
as a group, all non-executive directors as a group and
all other employees during 1999 pursuant to the
Corporation's existing stock option plans.
NEW PLAN BENEFITS TABLE
Number of Seucurites
Name Underlying Options Granted
Ronald G. Ford 40,000
Sherry L. Littlejohn 40,000
All current executive officers as a group 80,000
All non-executive directors as a group 10,800
All other employees as a group 150,000
The plan may be amended by the approval of the
board of directors, but certain amendments adversely
affecting the rights of a participant under any
existing option grant may not be made without obtaining
the participant's written consent, and amendments
increasing the number of shares of common stock which
may be granted under the plan may not be made without
obtaining shareholder approval.
The exercise price for options granted under the
plan may be no less than 100% of the fair market value
of the common stock on the date of grant of the option
(or 110% in the case of ISOs granted to participants
who are 10% shareholders of the Corporation). Options
will be exercisable during the period specified in each
award agreement and will generally be exercisable in
installments pursuant to a vesting schedule to be
designated by the compensation committee. No option
will remain exercisable later than ten years after the
date of grant (or five years from the date of grant in
the case of ISOs granted to 10% shareholders of the
Corporation). The last sale price of the common stock
as reported to the Corporation was $18.00 on February
28, 2000.
The federal income tax consequences of
nonqualified stock options and ISOs granted under the
plan are generally as follows:
Nonqualified Stock Options. The grant of a
nonqualified option will have no federal income tax
consequences to the Corporation or to a participant. A
participant will recognize taxable ordinary income at
the time of exercise of the option in an amount equal
to the excess of
<PAGE>
the fair market value of the shares
acquired at the time of exercise over the option price,
and the Corporation will ordinarily be entitled to a
deduction for such amount.
The holders of shares acquired upon exercise of a
nonqualified option will, upon a subsequent disposition
of such shares, generally recognize a short-term or
long-term capital gain or loss, depending upon the
holding period of the shares, equal to the difference
between the amount realized on the sale and the basis
in such shares (the sum of the option price and the
amount taxed as ordinary income at the time of
exercise).
ISOs. Neither the grant nor exercise of an ISO
will generally have any federal income tax consequences
for a participant. The amount by which the fair market
value of the shares acquired upon the exercise of any
ISO exceeds the option price at the date of exercise,
however, is an item of "tax preference" for purposes of
computing the alternative minimum tax on individuals.
If a participant has held the shares acquired on the
exercise of an ISO for at least two years from the date
of the grant of the option and at least one year from
the date of exercise, the participant will recognize
taxable long-term capital gain or loss upon a
subsequent disposition of the shares. In such
circumstances, no deduction would be allowed to the
Corporation for federal income tax purposes in
connection with the grant or exercise of the option or
the transfer of shares acquired upon such exercise.
If, however, the participant disposes of his or
her shares within the holding periods described above,
(i) the participant will recognize ordinary income in
an amount equal to the difference between the fair
market value of such shares on the date of exercise and
the option price, provided that, if the amount realized
from such sale of exchange is less than the fair market
value on the exercise date, then the ordinary income
will be limited to the excess of the amount realized
upon the sale or exchange or shares over the option
price; (ii) the Corporation will be entitled to a
deduction from such year in the amount of the ordinary
income so recognized; and (iii) the participant will
recognize capital gain or loss, as the case many be, in
an amount equal to the difference between the amount
realized upon such sale or exchange of shares and the
sum of the option price plus the amount of ordinary
income, if any, recognized upon such disposition.
The Board of Directors recommends a vote FOR
approval of the 2000 Stock Incentive Plan. The Plan
will be approved if it receives a majority of the votes
cast.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation
received by the Corporation's Chief Executive Officer
and the Corporation's other executive officers whose
annual compensation exceeded $100,000, for any of the
three years ended December 31, 1999:
Long-Term
Annual Compensation Compensation
Name and Principal Other Options All Other
Position Year Salary(1) Bonus(1) Annual(2) Granted(#) Compensation(3)
Ronald G. Ford 1999 $230,000 $69,000 $15,300 40,000 $10,000
Chairman and 1998 $230,000 $69,000 $12,600 60,000 $ 8,000
CEO 1997 $180,000 $45,000 $15,950 72,000 $ 8,000
Sherry L. 1999 $150,000 $45,000 $10,700 40,000 $ 9,500
Littlejohn 1998 $150,000 $45,000 $4,500 45,000 $ 7,538
President and 1997 $116,000 $44,000 - 34,665 $ 6,940
COO
(1) Includes amounts deferred by employees under the
Corporation's retirement plans.
(2) Represents director fees paid. Perquisites and
other personal benefits (valued on the basis of
incremental cost to Corporation) did not exceed
the lesser of $50,000 or 10% of the salary and
bonus for any of the named executive officers.
(3) The amounts disclosed in this column for 1999
include the amounts contributed by the Corporation
to the Corporation's defined contribution
retirement plans.
Employment Contracts
Mr. Ford's employment contract is for a term of
three years with an automatic annual one year extension
unless notice of termination is given six months before
the end of the current year. This contract provides
that Mr. Ford's duties, responsibilities and
administrative authority, absent written agreement to
the contrary, shall be as Chief Executive Officer of
the Corporation and the Bank. If Mr. Ford's employment
is terminated following a change in control of the
Corporation for reasons other than his death,
disability, normal retirement, for cause or by Mr. Ford
without good reason, the contract provides that he will
be paid 20 quarterly payments each equal to 25% of the
average of his aggregate annual base salary for the
three immediately preceding years. If any payment to
Mr. Ford under the Employment Contract is subject to an
excise tax under Section 4999 of the Internal Revenue
Code ("IRC"), Mr. Ford will receive additional payments
so that the amount he receives equals the amount he
would receive under the contract if an excise tax was
not imposed.
Mr. Ford also has a consulting agreement with the
Company. Pursuant to the consulting agreement, for up
to 10 years following his termination of employment
other than for death or disability Mr. Ford will
provide such consulting services as may be reasonably
requested by the Corporation. The Corporation will pay
Mr. Ford $7,000 per month for these services and will
continue to provide medical and dental benefits to him
and his spouse and dependents in accordance with the
most favorable practices of the Corporation as in
effect from time to time that are applicable to full-
time executives. Mr. Ford will also have the right to
purchase for book value the automobile then being
provided to him by the Corporation. Mr. Ford further
agreed during the term of the agreement and two years
thereafter not to compete with the Corporation,
<PAGE>
solicit employees of the Corporation to work elsewhere or
solicit customers of the Corporation. Mr. Ford also
agreed not to disclose confidential information of the
Corporation. The agreement terminates upon the death
or disability of Mr. Ford, provided the health and
medical benefits continue for the entire 10 year
period. The Corporation may terminate the agreement
for cause (as defined), and Mr. Ford may terminate the
agreement at his option. Mr. Ford's restrictive
covenants will remain in effect following any
termination of the agreement.
The Corporation has entered into an individual
Management Continuity Agreement with Ms. Littlejohn.
This agreement provides severance benefits if the
executive's employment is terminated within thirty-six
(36) months after a change in control or within six (6)
months before a change in control if the Corporation
terminates her employment in contemplation of a change
in control and to avoid the agreement. For the
purposes of this agreement, a "change in control" is
any occurrence reportable as such in a proxy statement
under applicable rules of the Securities and Exchange
Commission, and would include, without limitation, the
acquisition of beneficial ownership of 25% of the
Company's voting securities by any person or an
extraordinary change in the composition of the Board of
Directors. Severance benefits will not be payable if
the Corporation terminates the employment for cause, if
employment terminates due to the executive's death or
disability, or if the executive resigns without good
reason. Ms. Littlejohn may resign with "good reason"
after a change in control and retain benefits if the
Corporation reduces her salary or bonus, assigns duties
inconsistent with her prior position, or shifts her job
location more than 40 miles. The agreement is for self-
renewing terms of three (3) years unless the
Corporation takes action to terminate further
extensions. The agreement is automatically extended
for a three (3) year term from the date of a change in
control. The agreement provides a severance benefit of
a lump-sum payment equal to three (3) years' salary and
bonus and continuation of benefits coverage for three
(3) years and provides for additional payments to make
her whole, on an after-tax basis, for any excise taxes
imposed by Section 4999 of the IRC.
Option Grants In Last Fiscal Year
In 1997, the Corporation adopted a Stock
Compensation Plan. Senior officers and other key
employees of the Corporation and its subsidiaries are
eligible to participate in the plan. The plan permits
the grant of stock awards covering up to 600,000 shares
of the Corporation's common stock, less shares covered
by options granted under the 1997 Directors' Stock
Option Plan. Under the plan, a committee consisting of
non-employee directors may award incentive or
nonqualified stock options, restricted stock,
performance shares or other stock based awards.
The following table provides information on
options granted in 1999 to the executives listed in the
Summary Compensation Table and the potential realizable
value of the options.
<PAGE>
Potential
% of total Realizable
Options Value at
Granted to Assumed Annual
Employees Exercise Rates of Stock
Options in Fiscal Price Expiration Price Appreciation
Granted(1) Year (Per Share) Date for Option Term (2)
5% 10%
Ronald G. Ford 40,000 17% $20.00 08/18/09 $503,116 $1,274,994
Sherry L.
Littlejohn 40,000 17% $20.00 08/18/09 $503,116 $1,274,994
(1) These options vest in five equal annual increments
commencing one year after date of grant.
(2) Amounts reflect certain assumed rates of
appreciation set forth in the SEC's executive
compensation disclosure rules. Actual gains, if
any, on stock option exercise depend on future
performance of the Corporation's Common Stock,
overall stock market conditions and whether and
the extent to which the options actually vest.
Aggregate Stock Option Exercises In 1999 And Year-End
Option Values
The following table provides information on the
exercise of stock options during 1999 by the executives
listed in the Summary Compensation Table and the value
of unexercised options at December 31, 1999.
<TABLE>
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised in-the-Money Options
on Value Options at 12/31/99 at 12/31/99(1)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Ronald G. Ford 0 $ 0 88,800 / 83,200 $144,000 / $216,000
Sherry L. 0 $ 0 58,866 / 60,799 $ 69,330 / $103,995
Littlejohn
</TABLE>
(1) Values are based on the difference between the
last reported sale price of the Corporation's common
stock prior to December 31, 1999 ($20.00), and the
exercise prices of the options.
Committee Report on Executive Compensation
Decisions on the compensation of the Corporation's
executive officers are made by the board's compensation
committee comprised of nonemployee directors. In 1999,
this committee consisted of Chairman C. Ronald Dufina,
Bernard Bouschor and John Miller. This committee
report addresses the Corporation's compensation
policies and programs for the year ended December 31, 1999.
<PAGE>
Base Salary - Excluding consideration of other
relevant factors, which may include individual
performance, experience, expertise and tenure, the
board intends to maintain the base salaries of the
Corporation's executive officers and senior managers
within peer group levels.
Annually, the committee recommends a base wage for
the Chairman and Chief Executive Officer for
consideration by the entire board of directors. The
committee's recommendation is based upon compensation
levels established by the Corporation's peers and
evaluations by consultants.
The base salary of the President is determined in
a similar manner by the Corporation's Chairman and
Chief Executive Officer and the Bank's board of
directors. The base salaries of all other executive
officers are established by the Corporation's Chairman
and Chief Executive Officer.
Annual Cash Incentive - To provide performance
incentives and to compensate for the reduction in base
salary, the strategy provides for annual cash awards
that are payable if the Corporation and the Bank meet
or exceed annual performance objectives established by
the board of directors.
Long-Term Incentives - To align the interests of
its executive officers and senior managers with the
Corporation's shareholders, the board's compensation
strategy provides for a 401(k) matching contribution
and equity- based compensation under the Corporation's
stock compensation plan. Each of the Corporation's
compensation plans has been adopted by the board of
directors, and the equity-based compensation plans have
been approved by the Corporation's shareholders.
C. Ronald Dufina, Bernard A. Bouschor, John P. Miller
INDEBTEDNESS OF AND TRANSACTIONS WITH MANAGEMENT
Certain of the directors and officers of the
Corporation have had and are expected to have in the
future, transactions with the subsidiary bank of the
Corporation, or have been directors or officers of
corporations, or members of partnerships, which have
had and are expected to have in the future,
transactions with the subsidiary bank. In the opinion
of management, all such transactions with officers and
directors and with such corporations and partnerships
are made in the ordinary course of business and
substantially on the same terms, including interest
rates and collateral, as those prevailing at the same
time for comparable transactions with other customers,
and these transactions do not involve more than normal
risk of collectibility or present other unfavorable
features.
Mr. Hoffman is the sole shareholder of Wesley W.
Hoffman & Associates, S.C., which provides legal
services to the Corporation. In 1999, the Corporation
paid approximately $87,000 to Mr. Hoffman's firm for
legal services.
The Corporation leases a branch office and ATM
machine from Mr. Dufina. The lease agreement is for a
three year period ending February 28, 2003. The lease
payments in 2000 will be approximately $20,000 and will
increase after the first year based on changes in the
CPI index.
<PAGE>
Mr. Arsenault is the owner of a consulting firm
that provides financial consulting services to small
business entities. In 1999, Mr. Arsenault's firm
earned approximately $48,000 in consulting fees
relating to services for the Corporation and its
subsidiaries.
Mr. Lindroth is the owner of the insurance agency
that the Corporation uses for purchasing property,
casualty and automobile insurance. In 1999, Mr.
Lindroth's agency earned less than $30,000 in
commissions for insurance sold to the Corporation and
its subsidiaries.
BENEFICIAL OWNERSHIP OF COMMON STOCK
As of February 1, 2000, no person was known by
management to be the beneficial owner of more than 5%
of the outstanding common stock of the Corporation,
except as follows:
Amount and Nature
Name and Address of of Beneficial Approximate Percent of
Beneficial Owner Ownership Class
Ernest D. King 515,792 7.4%
Vides E. King
P.O. Box 216
Naubinway, MI 49762
The information in the following table sets forth
the beneficial ownership of the Corporation's common
stock by each of the Corporation's directors, each of
the executive officers listed in the Summary
Compensation Table and by all directors and executive
officers of the Corporation as a group. Except as
noted, beneficial ownership is direct and the person
indicated has sole voting and investment power.
Indicated options are exercisable within 60 days of
February 1, 2000.
Amount and Nature of
Beneficial Ownership(1) Percent of Class
Paul Arsenault 8,187(2) *
Bernard A. Bouschor 259,964(3) 3.7%
C. Ronald Dufina 21,451(4) *
Ronald G. Ford 108,688(5) 1.5%
Stanley Gerou. 116,717(6) 1.7%
Michael Henricksen 141,822(7) 2.0%
Wesley W. Hoffman 9,580(8) *
Thomas G. King 36,092(9) *
John Lindroth 62,130(10) *
Sherry L. Littlejohn 68,659(11) *
John P. Miller 117,242(12) 1.7%
All directors and 948,341 13.2%
executive officers
as a group (11 persons)
<PAGE>
* Less than 1.0%
(1) Includes options for 1,200 shares for Messrs.
Arsenault, Bouschor, Dufina, Gerou, Hoffman, King
and Miller, 88,800 shares for Mr. Ford, 6,600
shares for Mr. Henricksen, 13,350 shares for Mr.
Lindroth, 58,866 shares for Ms. Littlejohn and
176,016 shares for all directors and executive
officers as a group.
(2) Includes 6,679 shares held in joint tenancy with
family members as to which Mr. Arsenault may be
deemed to have shared voting and dispositive
power.
(3) Includes 258,456 shares held by the Sault Ste.
Marie Tribe of Chippewa Indians as to which Mr.
Bouschor may be deemed to share voting and
dispositive power.
(4) Includes 6,676 shares held by Mr. Dufina's spouse
as to which Mr. Dufina disclaims beneficial
ownership.
(5) Includes 293 shares held by Mr. Ford's spouse and
her children as to which Mr. Ford disclaims
beneficial ownership.
(6) Includes 93,846 shares owned jointly with Mr.
Gerou's spouse and 2,191 shares held by a
partnership as to which Mr. Gerou may be deemed to
have shared voting and dispositive power.
Includes 580 shares held by Mr. Gerou's spouse and
children as to which Mr. Gerou disclaims
beneficial ownership.
(7) Includes 125,196 shares held jointly with Mr.
Henricksen's spouse, 7,835 shares held jointly
with his spouse and children and 2,191 shares held
in a partnership as to which Mr. Henricksen may be
deemed to have shared voting and dispositive
power.
(8) Includes 6,380 shares held jointly with Mr.
Hoffman's spouse as to which Mr. Hoffman may be
deemed to have shared voting and dispositive
power.
(9) Includes 21,363 shares held jointly with Mr.
King's spouse and 2,794 held jointly with Mr.
King's children as to which Mr. King may be deemed
to have shared voting and dispositive power.
Includes 10,066 shares held by Mr. King's spouse
and family members as to which Mr. King disclaims
beneficial ownership.
(10) Includes 39,499 shares held jointly with Mr.
Lindroth's spouse or by Mr. Lindroth's children as
to which Mr. Lindroth may be deemed to have shared
voting and dispositive power.
(11) Includes 200 shares held jointly with children as
to which Ms. Littlejohn may be deemed to have
shared voting and dispositive power.
(12) Includes 111,318 shares held jointly with family
members as to which Mr. Miller may be deemed to
have shared voting and dispositive power.
Includes 1,669 shares held by Mr. Miller's spouse
as to which Mr. Miller disclaims beneficial
ownership.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on a review of Forms 3, 4 and 5
furnished to the Corporation pursuant to Section 16 of
the Securities Exchange Act of 1934, as amended, except
as noted below, all of such forms were filed on a
timely basis by reporting persons. Messrs. Gerou and
Henricksen each filed one late Form 4 with respect to
one transaction. Messrs. Bouschor and Miller each
filed one late Form 5 with respect to their respective
stock option and deferred stock units awarded in 1999.
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the
yearly percentage change in the cumulative total
shareholder return on the Corporation's common stock
with that of the cumulative total return on the NASDAQ
Bank Stocks Index and the NASDAQ Market Index for the
five year period ended December 31, 1999. The
following information is based on an investment of
$100, on December 31, 1994 in the Corporation's common
stock, the NASDAQ Bank Stocks Index, and the NASDAQ
Market Index, with dividends reinvested. Prior to this
year, there has been only limited trading in the
Corporation's common stock, there have been no market
makers for such shares, and the Corporation's common
stock has not traded on any stock exchange or on the
NASDAQ market. Accordingly, the returns reflected in
the following graph and table are based on sale prices
of the Corporation's stock of which management is
aware. There may have been sales at higher or lower
prices of which management is not aware.
[Graphic Chart]
1994 1995 1996 1997 1998 1999
North Country Financial Corporation 100 146.56 192.35 356.80 506.37 444.34
NASDAQ Bank Stocks Index 100 149.00 196.73 329.39 327.11 314.42
NASDAQ Market Index 100 129.71 161.18 197.16 278.08 490.46
Source: Media General Financial Services, Richmond, Virginia.
The Corporation's common stock is expected to
commence trading on The Nasdaq Stock Market National
Market System on or about the date of the annual
meeting.
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements of the Corporation for
the year ended December 31, 1999, have been examined by
Wipfli Ullrich Bertelson LLP, independent public
accountants. A representative of Wipfli Ullrich
Bertelson LLP, is expected to be at the meeting and
will have an opportunity to make a statement and will
be available to answer appropriate questions. Wipfli
Ullrich Bertelson LLP has been appointed by the board
of directors as the independent public accountants of
the Corporation and its subsidiaries for the year
ending December 31, 2000.
SHAREHOLDER PROPOSALS
A shareholder proposal must be received by the
Corporation no later than November 8, 2000 to be
considered for inclusion in the proxy materials for the
2001 Annual Meeting of Shareholders. A shareholder
proposal must be received 30 days prior to the meeting
and comply with the other requirements in the
Corporation's Bylaws and articles of incorporation in
order to be considered at the meeting.
OTHER MATTERS
The board of directors is not aware of any matter
to be presented for action at the meeting, other than
the matters set forth herein. If any other business
should come before the meeting, the proxy will be voted
in respect thereof in accordance with the best judgment
of the persons authorized therein, and discretionary
authority to do so is included in the proxy.
The cost of soliciting proxies will be borne by
the Corporation. If requested, the Corporation will
reimburse banks, brokerage houses and other custodians,
nominees and certain fiduciaries for their reasonable
expenses incurred in mailing proxy materials to their
principals. In addition to solicitation by mail,
officers and other employees of the Corporation and its
subsidiaries may solicit proxies by telephone,
facsimile or in person, without compensation other than
their regular compensation.
The Annual Report of the Corporation for 1999 is
included with this proxy statement. Copies of the
report will also be available for all shareholders
attending the annual meeting.
THE ANNUAL REPORT ON FORM 10-K TO THE SECURITIES
AND EXCHANGE COMMISSION WILL BE PROVIDED FREE TO
SHAREHOLDERS UPON WRITTEN REQUEST. WRITE MS. SHERRY
LITTLEJOHN, NORTH COUNTRY FINANCIAL CORPORATION, 3530
NORTH COUNTRY DRIVE, TRAVERSE CITY, MICHIGAN 49684.
Shareholders are urged to sign and return the
enclosed proxy in the enclosed envelope. A prompt
response will be helpful and appreciated.
BY ORDER OF THE BOARD OF DIRECTORS
Ronald G. Ford
Chairman and Chief Executive Officer
March 8, 2000
<PAGE>
Appendix A
NORTH COUNTRY FINANCIAL CORPORATION
2000 STOCK INCENTIVE PLAN
1. Objectives. The North Country Financial
Corporation 2000 Stock Incentive Plan is designed to
attract and retain certain selected key employees and
non-employee directors whose skills and talents are
important to the Company's operations, and reward them
for making major contributions to the success of the
Company. These objectives are accomplished by making
awards under the Plan, thereby providing Participants
with a proprietary interest in the growth and
performance of the Company.
2. Definitions.
(a) "Award" shall mean the grant of a Stock
Option to a Participant pursuant to such terms,
conditions, performance requirements, and
limitations as the Committee may establish in
order to fulfill the objectives of the Plan.
(b) "Award Agreement" shall mean an
agreement between North Country Financial
Corporation and a Participant that sets forth the
terms, conditions, performance requirements, and
limitations applicable to an Award.
(c) "Board" shall mean the Board of
Directors of North Country Financial Corporation.
(d) "Cause" shall mean termination of a
Participant's employment with the Company for (i)
any failure of the Participant to substantially
perform his duties with the Company (other than by
reason of illness) which occurs after the Company
has delivered to the Participant a demand
for performance which specifically identifies the
manner in which the Company believes the
Participant has failed to perform his duties, and
the Participant fails to resume performance of his
duties on a continuous basis within 14 days after
receiving such demand, (ii) the commission by the
Participant of any act of dishonesty or disloyalty
involving the Company or its business, or (iii)
the conviction of the Participant of a felony or
misdemeanor which, in the reasonable judgment of
the Committee, is substantially related to the
employee's position with the Company or
substantially impairs the Participant's ability to
perform his duties with the Company.
(e) "Change in Control" shall mean any of
the following:
(i) The acquisition by any individual,
entity or "group" (within the meaning of
Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of thirty-three
percent (33%) or more of either (A) the then
outstanding shares of common stock of the
Company (the "Outstanding Company Common
Stock") or (B) the combined voting power of
the then outstanding voting securities of the
Company entitled to
<PAGE>
vote generally in the
election of directors (the "Outstanding
Company Voting Securities"); provided,
however, that the following acquisitions of
common stock shall not constitute a Change in
Control: (A) any acquisition directly from
the Company (excluding an acquisition by
virtue of the exercise of a conversion
privilege or by one person or a group of
persons acting in concert), (B) any
acquisition by the Company, (C) any
acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the
Company or any corporation controlled by the
Company or (D) any acquisition by any
corporation pursuant to a reorganization,
merger, statutory share exchange or
consolidation which would not be a Change in
Control under paragraph (iii) of this Section
2(e); or
(ii) During any period of two
consecutive years, individuals who at the
beginning of such period constitute the
entire Board shall cease for any reason to
constitute a majority thereof unless the
election, or the nomination for election by
the Company's stockholders, of each new
director was approved by a vote of at least
two-thirds of the directors then still in
office who were directors at the beginning of
the period.
(iii) Consummation of a reorganization,
merger, statutory share exchange or
consolidation, unless, following such
reorganization, merger, statutory share
exchange or consolidation, (A) more than two
thirds (2/3) of, respectively, the then
outstanding shares of common stock of the
corporation resulting from such
reorganization, merger, statutory share
exchange or consolidation and the combined
voting power of the then outstanding voting
securities of such corporation entitled to
vote generally in the election of directors
is then beneficially owned, directly or
indirectly, by all or substantially all of
the individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such reorganization,
merger, statutory share exchange or
consolidation in substantially the same
proportions as their ownership, immediately
prior to such reorganization, merger,
statutory share exchange or consolidation,
(B) no person (excluding the Company, any
employee benefit plan (or related trust) of
the Company or such corporation resulting
from such reorganization, merger, statutory
share exchange or consolidation and any
person beneficially owning, immediately prior
to such reorganization, merger, statutory
share exchange or consolidation, directly or
indirectly, thirty-three percent (33%) or
more of the Outstanding Company Common Stock
or Outstanding Voting Securities, as the case
may be) beneficially owns, directly or
indirectly, thirty-three percent (33%) or
more of, respectively, the then outstanding
shares of common stock of the corporation
resulting from such reorganization, merger,
statutory share exchange or consolidation or
the combined voting power of the then
outstanding voting securities of such
corporation, entitled to vote generally in
the election of directors and (C) at least a
majority of the members of the Board of the
corporation resulting from such
reorganization, merger, statutory share
exchange or consolidation were members of the
Board at the time of the execution of the
initial agreement providing for such
reorganization, merger or consolidation; or
<PAGE>
(iv) Consummation of (A) a complete
liquidation or dissolution of the Company or
(B) the sale or other disposition of all or
substantially all of the assets of the
Company, other than to a corporation, with
respect to which following such sale or other
disposition, (1) more than two thirds (2/3)
of, respectively, the then outstanding shares
of common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation
entitled to vote generally in the election of
directors is then beneficially owned,
directly or indirectly, by all or
substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or
other disposition in substantially the same
proportion as their ownership, immediately
prior to such sale or other disposition, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the
case may be, (2) no person (excluding the
Company and any employee benefit plan (or
related trust) of the Company or such
corporation and any person beneficially
owning, immediately prior to such sale or
other disposition, directly or indirectly,
thirty-three percent (33%) or more of the
Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the
case may be) beneficially owns, directly or
indirectly, thirty-three percent (33%) or
more of, respectively, the then outstanding
shares of common stock of such corporation or
the combined voting power of the then
outstanding voting securities of such
corporation entitled to vote generally in the
election of directors and (C) at least a
majority of the members of the board of
directors of such corporation were members of
the Board at the time of the execution of the
initial agreement or action of the Board
providing for such sale or other disposition
of assets of the Company.
(f) "Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.
(g) "Committee" shall mean the Compensation
Committee of the Board of Directors of North
Country Financial Corporation which shall be
comprised of at least two non-employee directors.
(h) "Common Stock" shall mean the authorized
and issued or unissued no par value common stock
of North Country Financial Corporation.
(i) "Company" shall mean North Country
Financial Corporation and/or a subsidiary
including subsidiaries of subsidiaries and
partnerships and other business ventures in which
North Country Financial Corporation has a
significant equity interest, as determined in the
sole discretion of the Committee.
(j) "Fair Market Value" shall mean the
closing sale price of the Common Stock on the
Nasdaq National Market as reported in the Midwest
Edition of the Wall Street Journal for the date in
question, provided that, if no sales of Common
Stock were made on said exchange on that date,
"Fair Market Value" shall mean the closing sale
price of Common Stock as reported for the most
recent preceding day on which sales of Common
Stock were made on such exchange, or, failing any
such sales, such other price as the
<PAGE>
Committee may
determine in conformity with pertinent law and
regulations of the Treasury Department.
(k) "Participant" shall mean a current or
prospective employee or non-employee director of
the Company to whom an Award has been made under
the Plan.
(l) "Plan" shall mean the North Country
Financial Corporation 2000 Stock Incentive Plan.
(m) "Retirement" shall mean, in the case of
an employee, termination of employment with the
Company at the earlier of (i) after attaining age
65 or (ii) after attaining age 55 with ten years
of service with the Company or any predecessor in
interest to the Company. In the case of a non-
employee director, "Retirement" shall mean
termination of service on the board of directors
of the Company after at least three years of
service on the Company's Board.
(n) "Stock Option" shall mean a grant of a
right to purchase a specified number of shares of
Common Stock, the purchase price of which shall be
not less than 100% of Fair Market Value on the
date of grant. A stock option may be in the form
of a nonqualified stock option or an incentive
stock option ("ISO"). A nonqualified stock option
is an option that does not meet the criteria of an
ISO. An ISO, in addition to being subject to
applicable terms, conditions and limitations
established by the Committee, complies with
Section 422 of the Code which, among other
limitations, provides that the aggregate Fair
Market Value (determined at the time the option is
granted) of Common Stock for which ISOs are
exercisable for the first time by a Participant
during any calendar year shall not exceed
$100,000; that ISOs shall be priced at not less
than 100% of the Fair Market Value on the date of
the grant (110% in the case of a Participant who
is a 10% shareholder of the Company within the
meaning of Section 422 of the Code); and that ISOs
shall be exercisable for a period of not more than
ten years (five years in the case of a Participant
who is a 10% shareholder of the Company).
3. Eligibility. Current and prospective
employees and non-employee directors who provide
services to the Company are eligible for an Award under
the Plan if they hold, or will hold, positions of
responsibility and if their performance, in the
judgment of the Committee or the management of the
Company (if such responsibility is delegated pursuant
to Section 6 hereof), can have a significant effect on
the success of the Company.
4. Common Stock Available for Awards. Subject to
adjustment as provided in Section 14 hereof, the number
of shares that may be issued under the Plan for Awards
during the term of the Plan is 500,000 shares of Common
Stock, all of which may be in the form of incentive
stock options. Any shares subject to an Award which
are used in settlement of tax withholding obligations
shall be deemed not to have been issued for purposes of
determining the maximum number of shares available for
issuance under the Plan. Likewise, if any Stock Option
is exercised by tendering shares, either actually or by
attestation, to the Company as full or partial payment
for such exercise under this Plan, only the number of
shares issued net of the shares tendered shall be
deemed issued for purposes of determining the maximum
number of shares available for issuance under the Plan.
No individual shall be eligible to receive Awards
aggregating more than 50,000 shares of Common Stock
reserved under the Plan in any one
<PAGE>
calendar year, subject to adjustment as provided in Section 14
hereof. North Country Financial Corporation shall take whatever
actions are necessary to file required documents with
the U.S. Securities and Exchange Commission and any
other appropriate governmental authorities and stock
exchanges to make shares of Common Stock available for
issuance pursuant to Awards.
5. Administration. The Plan shall be
administered by the Committee, which shall have full
and exclusive power to interpret the Plan, to determine
which current and prospective employees and non-
employee directors are Participants, to grant waivers
of Award restrictions, to determine the provisions of
Award Agreements and to adopt such rules, regulations
and guidelines for carrying out the Plan as it may deem
necessary or proper.
6. Delegation of Authority. Except to the extent
prohibited by applicable law or the applicable rules of
a stock exchange, the Committee may delegate to the
chief executive officer and to other senior officers of
the Company its duties under the Plan pursuant to such
conditions or limitations as the Committee may
establish. Any such delegation may be revoked by the
Committee at any time.
7. Awards. The Committee shall set forth in the
related Award Agreement the terms, conditions,
performance requirements, and limitations applicable to
each Award including, but not limited to, vesting
requirements, conditions under which acceleration of
vesting will occur and achievement of specific business
objectives.
8. Stock Option Exercise. The price at which
shares of Common Stock may be purchased under a Stock
Option shall be paid in full at the time of the
exercise in cash or, if permitted by the Committee, by
means of tendering shares of Common Stock, which have
been held by the Participant for more than six months
and have not been used within the prior six-month
period to exercise an option, either directly or by
attestation, valued at Fair Market Value on the date of
exercise, or any combination thereof.
9. Tax Withholding. The Company shall have the
right to deduct applicable taxes from any Award payment
and withhold, at the time of delivery or vesting of
shares under the Plan, an appropriate number of shares
for payment of taxes required by law or to take such
other action as may be necessary in the opinion of the
Company to satisfy all obligations for withholding of
such taxes. The Company may defer making delivery with
respect to Common Stock obtained pursuant to an Award
hereunder until arrangements satisfactory to it have
been made with respect to any such withholding
obligation. If Common Stock is used to satisfy tax
withholding, such stock shall be valued based on the
Fair Market Value when the tax withholding is required
to be made.
10. Amendment or Termination of the Plan. The
Board may, at any time, amend or terminate the Plan;
provided, however, that
(a) subject to Section 14 hereof, no amendment
or termination may, in the absence of
written consent to the change by the
affected Participant (or, if the Participant
is not then living, the affected
beneficiary), adversely affect the rights of
any Participant or beneficiary under any
Award granted under the Plan prior to the
date such amendment is adopted by the Board;
and
<PAGE>
(b) without further approval of the shareholders
of the Company, no amendment shall increase
the number of shares of Common Stock which
may be issued pursuant to Awards hereunder,
except for increases resulting from Section
14 hereof.
12. Termination of Employment. If the employment
of a Participant terminates, or a non-employee director
no longer serves on the Board, other than pursuant to
paragraphs (a) through (c) of this Section 12, all
unvested Awards shall immediately terminate and all
vested but unexercised, deferred or unpaid Awards shall
terminate 90 days after such termination of employment
or service, unless the Award Agreement provides
otherwise, and during such 90-day period shall be
exercisable only to the extent provided in the Award
Agreement. Notwithstanding the foregoing, if a
Participant's employment is terminated for Cause, to
the extent the Award is not effectively exercised or
has not vested prior to such termination, it shall
lapse or be forfeited to the Company immediately upon
termination. In all events, an Award will not be
exercisable after the end of its term as set forth in
the Award Agreement.
(a) Retirement. When a Participant's
employment or service terminates as a result of
Retirement, or early retirement with the consent
of the Committee, the Committee (in the form of an
Award Agreement or otherwise) may permit Awards to
continue in effect beyond the date of Retirement,
or early retirement, and/or the exercisability and
vesting of any Award may be accelerated.
(b) Resignation in the Best Interests of the
Company. When a Participant resigns from the
Company or the Board and, in the judgment of the
Committee, the acceleration and/or continuation of
outstanding Awards would be in the best interests
of the Company, the Committee may (i) authorize,
where appropriate, the acceleration and/or
continuation of all or any part of Awards granted
prior to such termination and (ii) permit the
exercise, vesting and payment of such Awards for
such period as may be set forth in the applicable
Award Agreement.
(c) Death or Disability of a Participant.
(i) In the event of a
Participant's death, the Participant's estate
or beneficiaries shall have a period
specified in the Award Agreement within which
to receive or exercise any outstanding Award
held by the Participant under such terms, and
to the extent, as may be specified in the
applicable Award Agreement. Rights to any
such outstanding Awards shall pass by will or
the laws of descent and distribution in the
following order: (a) to beneficiaries so
designated by the Participant; if none, then
(b) to a legal representative of the
Participant; if none, then (c) to the persons
entitled thereto as determined by a court of
competent jurisdiction. Subject to
subparagraph (iii) below, Awards so passing
shall be exercised or paid out at such times
and in such manner as if the Participant were
living.
(ii) In the event a Participant is
deemed by the Company to be disabled within
the meaning of the Company's group long-term
disability plan, or if the Company does not
have such a plan, Section 22(e)(3) of the
Code, the Award shall be exercisable for the
period, and to the extent, specified in the
Award
<PAGE>
Agreement. Awards and rights to any
such Awards may be paid to or exercised by
the Participant, if legally competent, or a
legally designated guardian or representative
if the Participant is legally incompetent by
virtue of such disability.
(iii) After the death or
disability of a Participant, the Committee
may in its sole discretion at any time (1)
terminate restrictions in Award Agreements
and (2) accelerate any or all installments
and rights.
(iv) In the event of uncertainty
as to interpretation of or controversies
concerning this paragraph (c) of Section 12,
the Committee's determinations shall be
binding and conclusive.
(d) No Employment Rights. The Plan shall
not confer upon any Participant any right with
respect to continuation of employment by the
Company or service on the Board, nor shall it
interfere in any way with the right of the Company
to terminate any Participant's employment or
service on the Board at any time.
13. Nonassignability. Except as provided in
subsection (c) of Section 12 and this Section 13, no
Award under the Plan shall be assignable or
transferable, or payable to or exercisable by anyone
other than the Participant to whom it was granted.
Notwithstanding the foregoing, the Committee (in the
form of an Award Agreement or otherwise) may permit
Awards, other than incentive stock options within the
meaning of Section 422 of the Code, to be transferred
to members of the Participant's immediate family, to
trusts for the benefit of the Participant and/or such
immediate family members, and to partnerships or other
entities in which the Participant and/or such immediate
family members own all the equity interests. For
purposes of the preceding sentence, "immediate family"
shall mean a Participant's spouse, issue, and spouses
of his issue.
14. Adjustments. In the event of any change in
the outstanding Common Stock of the Company by reason
of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, merger,
or similar event, the Committee may adjust
proportionally (a) the number of shares of Common Stock
(i) reserved under the Plan, (ii) available for ISOs,
(iii) for which Awards may be granted to an individual
Participant, and (iv) covered by outstanding Awards
denominated in stock; (b) the stock prices related to
outstanding Awards; and (c) the appropriate Fair Market
Value and other price determinations for such Awards.
In the event of any other change affecting the Common
Stock or any distribution (other than normal cash
dividends) to holders of Common Stock, such adjustments
as may be deemed equitable by the Committee, including
adjustments to avoid fractional shares, shall be made
to give proper effect to such event. In the event of a
corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or
liquidation, the Committee shall be authorized to issue
or assume Stock Options, whether or not in a
transaction to which Section 424(a) of the Code
applies, by means of substitution of new Stock Options
for previously issued Stock Options or an assumption of
previously issued Stock Options.
15. Notice. Any notice to the Company required
by any of the provisions of the Plan shall be addressed
to the president of the Company in writing, and shall
become effective when it is received by his office.
<PAGE>
16. Governing Law. The Plan and all
determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Michigan,
without giving effect to principles of conflicts of
laws, and construed accordingly.
17. Effective and Termination Dates. The
effective date of the Plan is February 16, 2000. The
Plan shall terminate on February 15, 2010 subject to
earlier termination by the Board pursuant to Section
11, after which no Awards may be made under the Plan,
but any such termination shall not affect Awards then
outstanding or the authority of the Committee to
continue to administer the Plan.
18. Other Benefit and Compensation Programs.
Payments and other benefits received by a Participant
pursuant to an Award shall not be deemed a part of such
Participant's regular, recurring compensation for
purposes of the termination, indemnity or severance pay
law of any country and shall not be included in, nor
have any effect on, the determination of benefits under
any other employee benefit plan, contract or similar
arrangement, unless the Committee expressly determines
otherwise.
<PAGE>
REVOCABLE PROXY
NORTH COUNTRY FINANCIAL CORPORATION
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints Ronald G. Ford and
Sherry Littlejohn, or either of them, with power of
substitution in each, proxies to vote, as designated
hereon, all of the undersigned's shares of Common Stock
of NORTH COUNTRY FINANCIAL CORPORATION, at the Annual
Meeting of Shareholders to be held at the Grand
Traverse Resort and Spa, 100 Grand Traverse Village
Boulevard, Acme, Michigan 49610, on April 18, 2000, at
6:00 p.m., and any and all adjournments thereof:
Please be sure to sign and date this Proxy in the box
below.
Date [ ]
_________________________________________________________________________
Stockholder sign above Co-holder (if any) sign above
1. Election of Directors
(except as marked to the contrary below):
For Withhold For All Except
[ ] [ ] [ ]
Paul Arsenault Bernard Bouschor C. Ronald Dufina Wesley W. Hoffman
INSTRUCTION: To withhold authority to vote for any
individual nominee, mark "For All Except" and write
that nominee's name in the space provided below.
2. Approval of 2000 Stock Incentive Plan
For Against Abstain
[ ] [ ] [ ]
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF.
The Board of Directors recommends a vote "FOR" the
nominees listed above and "FOR" the other proposal.
Properly executed proxies will be voted as marked
and, if not marked, will be voted "FOR" all of the
nominees and "FOR" the other proposal.
<PAGE>
YOUR VOTE IS IMPORTANT.
Whether or not you plan to attend, you can be sure
your shares are represented at the meeting by promptly
returning your completed proxy in the enclosed postage-
paid envelope which is addressed to our tabulation
service at:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016-3572
Detach above card, sign, date and mail in postage paid envelope provided.
NORTH COUNTRY FINANCIAL CORPORATION
3530 North Country Drive
Traverse City, Michigan 49684
Please date, sign exactly as your name appears
hereon, and mail promptly in the enclosed envelope
which requires no postage if mailed in the United
States. When signing as attorney, executor,
administrator, trustee, guardian, etc., give full title
as such. If shares are hold jointly both owners must
sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
