PROPOSAL NO. 2: APPROVAL OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION

              Our Board of Directors is committed to ensuring that our corporate governance policies and procedures meet or exceed the requirements of applicable laws, regulations and rules, as well as the listing standards of Nasdaq, and therefore, is continually evaluating such policies and procedures. As previously announced, Mr. Eliot Stark resigned frompart of this process, we completed a comprehensive review of our articles of incorporation and bylaws, and worked with management and external advisors to develop recommendations for amendments to these documents. This review highlighted changes that were necessary to reflect current market practices and changes in corporate governance best practices since the Corporation’sRestated Articles of Incorporation were implemented in 1996.

              After due consideration, the Board of Directors has unanimously approved and recommends that shareholders vote to approve to amend and restate the Corporation's current Restated Articles of Incorporation (the"Articles") to contain certain amendments described herein (collectively, the"Amendments"). The proposed Amendments achieve several purposes: (i) to help the Corporation retain and recruit strong leadership on the Board of Directors, (ii) to ensure that potential suitors for the Corporation engage the Board of Directors in June 2008. Atany change of control discussions to ensure a fair price to shareholders in the event of such interests, (iii) to consolidate the Articles into a single document to simplify and streamline review, facilitate use and avoid confusion, and (iv) to revise, amend or delete obsolete provisions or sections of the Articles. After careful consideration, and consultation with our legal advisors, our Board determined that time,the Amendments are consistent with corporate governance best practices and that amending and restating the articles would be in the best interests of the Corporation and its shareholders. Therefore, the Board determinedis recommending that shareholders approve the proposed Amended and Restated Articles of Incorporation.

              The proposed Amendments to the Articles are described below and a form of Amended and Restated Articles of Incorporation (the"Amended and Restated Articles") is attached to this Proxy Statement as Appendix A. If the proposed Amended and Restated Articles are approved at the annual meeting, we will file the Amended and Restated Articles with the Corporations Division, Corporations, Securities and Commercial Licensing Bureau of the Michigan Department of Licensing and Regulatory Affairs (the"Corporation Division"), promptly following the meeting.

THIS SUMMARY OF PROPOSED CHANGES TO THE ARTICLES IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO APPENDIX A. PLEASE READ THIS SECTION OF THE PROXY STATEMENT, TOGETHER WITH THE EXHIBIT ATTACHED HERETO, CAREFULLY BEFORE VOTING ON THIS PROPOSAL.

The Corporation's existing Restated Articles of Incorporation consist of eight (8) documents:

(1)

Restated Articles of Incorporation filed in January 1996 (the"1996 Articles");



(2)

Certificate of Amendment filed in May 1996, which increased the authorized stock and added the following articles: VII Board of Directors, VIII Notification of Shareholder Proposals, IX Amendment of Articles VII, VIII or IX and X Board Evaluation of Certain Offers (the"1996 Amendment");



(3)

Certificate of Amendment filed in April 1998 changing the name of the corporation to North Country Financial Corporation (the"1998 Name Change Amendment");

(4)

Certificate of Amendment filed in August 1998 to increase the authorized stock of the corporation (the"1998 Stock Amendment");



(5)

Certificate of Amendment filed in July 2000 which sets forth provisions creating a series of preferred stock as Series B Junior Participating Preferred Stock (the"Series B Amendment");



(6)

Certificate of Amendment filed in December 2004 to change the name of the corporation to Mackinac Financial Corporation and to effect a reverse stock split (the"2004 Amendment");



(7)

Certificate of Amendment filed in March 2009 to delete the provisions of the Series B Amendment in their entirety (the"2009 Amendment"); and



(8)

Certificate of Designations filed in April 2009 which sets forth provisions creating a series of preferred stock as Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the"Series A Amendment").

Following is a summary of the recommended Amendments to the Articles:

PURPOSE

              The 1996 Amendment contains a description of the corporate purpose that does not fully reflect the Corporation's present business. The purpose of the business has been amended to fillinclude activities associated with the vacancyengagement in, or acquisition of interests in companies that engage in, banking activities as defined by the Board of Governors of the Federal Reserve System. This amendment more fully describes the current business of the Corporation.

REGISTERED OFFICE AND RESIDENT AGENT

              The resident agent has been changed to Ernie R. Krueger, the Corporation's Executive Vice President and instead reducedChief Financial Officer.

AUTHORIZED STOCK AND RELATIVE RIGHTS

              The Amended and Restated Articles maintains the sizetotal number of shares of all classes of capital stock which the Corporation shall have the authority to issue at 18,500,000 shares consisting of (i) 500,000 shares of preferred stock, no par value per share and (ii) 18,000,000 shares of common stock, no par value per share. As of April 21, 2014, there were                                     shares of common stock issued and outstanding, and 189,348 shares of common stock were reserved for issuance under the Corporation's various stock option and purchase plans. As of April 21, 2014, there were no shares of preferred stock issued and outstanding of the 11,000 shares of preferred stock that were previously designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the"Series A Preferred"). The Amended and Restated Articles make clear our previously designated Series A Preferred (which have been redeemed by the Corporation) have been cancelled and no series of preferred shares are currently designated or outstanding.

              The existing authorized preferred stock is subject to the right of the Board of Directors to fix the relative voting, dividend rates, conversion or redemption prices, maturity dates, liquidation and other terms, rights, preferences and limitations of such shares at the time of issuance. No further authorization for issuance of common shares or preferred shares by shareholder vote is required under the Corporation's Articles and none would be required prior to the issuance of the additional common or preferred shares by the Corporation, except as may be required by any federal or state law, regulation or stock exchange rules.

Shareholders have no preemptive rights under the existing Articles to acquire any shares issued by the Corporation, and would not acquire any such rights with respect to any additional shares that may be issued if the proposed Amended and Restated Articles are adopted.

SHAREHOLDER ACTION BY WRITTEN CONSENT

              The Amended and Restated Articles also contain a provision allowing for the right of shareholder action through less than unanimous written consent. This provision would provide that any action required or permitted by the Michigan Business Corporation Act (the"Act") to be taken at an annual or special meeting of shareholders may be taken without a meeting, without prior notice, and without a vote, if such action is authorized by the Board of Directors and consents in writing, setting forth the action so taken, are signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all shares entitled to vote on the action were present and voted. Currently, shareholders may act without a meeting only by unanimous written consent, which is the standard under Michigan law.

              The amendment to this provision would allow, with authorization from tenthe Board of Directors, shareholders to nineeffect change with less than unanimous agreement without being forced to wait for a shareholders' meeting to do so. After careful consideration, the Board of Directors has determined that it is appropriate to provide additional rights for shareholders to act by written consent, and approved the amendment to be included in the Amended and Restated Articles for shareholder consideration. Accordingly, if the Amended and Restated Articles are approved by shareholders at the Annual Meeting, thereafter any action required or permitted to be taken at any meeting of shareholders may be taken by the written consent of shareholders having at least the minimum number of votes that would be necessary to take the action at a meeting at which all shareholders entitled to vote are present and voting.

              In order to protect the rights of all shareholders and enhance the transparency of the written consent process, the shareholders' ability to act by less than unanimous written consent would be subject to certain parameters, including:

•

The proposed action shall have been approved by the Board of Directors of the Corporation before the consent of shareholders is executed.



•

Any corporate action to be taken by written consent shall not be effective until, and the shareholders of the Corporation shall be able to give or revoke written consents for, at least 20 days from the date of commencement of a solicitation of consents, other than corporate action by written consent taken pursuant to solicitations of not more than 10 persons.



•

Consents to corporate action shall be valid for a maximum of 60 days after the date of the earliest dated consent delivered to the Corporation in the manner provided in Section 407 of the Act.



•

Consents may be revoked by written notice (i) to the Corporation, (ii) to the shareholder(s) soliciting consents or revocations in opposition to action by consent proposed by the Corporation, or (iii) to a proxy solicitor or other agent designated by the Corporation or the soliciting shareholder.

              The amendments would have no effect on shareholders' rights under Michigan law to act without a meeting by unanimous written consent.

BOARD OF DIRECTORS

              The proposal being submitted to shareholders consists of several amendments to this article which in summary would accomplish the following: (a) lengthen the notice period for nominations to the Corporation's Board of Directors by shareholders to be consistent with the notice period for shareholder proposals, and (b) set forth procedures that shareholders must follow in order to nominate an individual to the Board of Directors. The purpose of the increased amount of time for the advance notice requirements is to afford the Board of Directors a meaningful opportunity to consider the qualifications of any proposed nominee and, to the extent deemed necessary or desirable by the Board of Directors, to inform shareholders about such qualifications. This provision, it is believed, will further the objective of the Board of Directors to identify candidates who have the character, education, training, experience and proven accomplishments which give promise of significant contribution to the responsible and profitable conduct of the Corporation's business. While the amendment does not give the Board of Directors any power to approve or disapprove of a shareholder nomination, it will preclude a shareholder nomination from the floor if the proper procedures have not been followed.

              Proposed Article VIII provides that a shareholder intending to nominate a director for election at an annual meeting of the Corporation must give written notice of such intention to the Corporation not less than 120 days, nor more than 180 days, prior to the anniversary date of the immediately preceding annual meeting (or, if the date of the annual meeting is changed by more than 20 days from such anniversary, within 10 days after the date the Corporation mails or otherwise gives notice of the date of the meeting). With respect to an election to be held at a special meeting of shareholders called for the purpose of electing directors, the shareholder intending to nominate a director would be required to give written notice of that intention to the Corporation not earlier than the close of business on the 120^th day prior to such special meeting and not later than the close of business on the later of the 90^th day prior to such special meeting or within 10 days following the date on which notice of the special meeting was first sent to the shareholders by the Corporation. The proposed amendment to this article regarding nominations of directors also provides requirements for the information that must be disclosed with regard to the proposed nominee as well as the shareholder making the nomination.

              The proposed Amended and Restated Articles also amend the voting requirement related to the removal of directors. The Amendments provide that directors may be removed from office upon the affirmative vote of the holders of a majority of the outstanding shares of the capital stock entitled to vote generally in the election of directors only for cause. The prior articles provided that directors may be removed at any time, with or without cause, by the affirmative vote of (i) 80% of the Board of Directors and (ii) a majority of the Continuing Directors or the affirmative vote of the holders of at least 80% of the outstanding shares of capital stock entitled to vote generally in the election of directors. This change is consistent with Michigan law which allows shareholders to terminate Board members for cause by way of a majority vote.

              The Amended and Restated Articles retain the concept of a classified Board of Directors. The Board of Directors has carefully considered the advantages and disadvantages of maintaining the staggered election terms under the current Articles, and has determined that a classified board, which the Corporation already has, mitigates against abrupt changes in control of the Corporation by requiring at least two annual meetings to elect a majority of the directors. In addition, although continuity and stability in board composition have not been problems in the past, a classified board serves to ensure consistency in leadership and policy since approximately two-thirds of the members of the Board of Directors at all times are likely to have had prior experience as directors of the Corporation. Your Board of Directors believes that it is in the best interests of the Corporation and its shareholders to continue a classified Board and thereby promote stability of management and the consistent implementation and advancement of the Corporation's traditional corporate objectives and policies. The Board of Directors believes that this will

enhance the Corporation's present ability to attract competent and qualified officers and employees for itself and its subsidiary banks to carry out its long-term plans for expansion and growth.

              The changes that would be affected by the proposed Amendments in terms of the removal of directors and nominations to the Board of Directors are believed to be consistent with preserving the continuity and stability described in the preceding paragraph. These provisions would preclude a third party from removing incumbent directors and simultaneously gaining control of our board by filling the vacancies created by removal with its own nominees. The Board of Directors feels that these proposed provisions are sufficient to discourage a third party from initiating a proxy contest, making a tender offer or otherwise attempting to gain control of the Corporation.

LIMITED LIABILITY OF DIRECTORS AND INDEMNIFICATION

              The Corporation's current Articles contain a provision limiting the personal liability of a director to the Corporation or its shareholders for monetary damages for a breach of fiduciary duty as a director, except for a breach of the director's duty of loyalty, for acts or omissions not in good faith that involve intentional misconduct or a knowing violation of law, for any transaction from which the director derived an improper personal benefit, or for damages resulting from a violation of the Act. The proposed limited liability provision has been slightly altered to remove specific exceptions contained in the current Articles (which are based on Michigan law) and simply to state that personal liability of a director will be limited to the full extent authorized or permitted by the Act for acts or omissions in that person's capacity as a director, as it now exists or may hereafter be amended. This change will accommodate future changes in the Act which would affect the Corporation's ability to limit the liability of its directors without the need to amend the Articles accordingly.

              In addition to the proposed limits on liability, the Board of Directors is requesting shareholder approval to amend and restate the Articles to add an indemnification provision. This provision would indemnify directors and executive officers to the fullest extent permitted by law in connection with any actual or threatened civil, criminal, administrative or investigative action, suit or proceeding in which the director or executive officer is a witness or which is brought against him or her in his or her capacity as a director, officer, employee, agent of fiduciary of the Corporation. The proposed amendment also provides that the Corporation may purchase and maintain insurance to protect itself, its officers, directors and others against any liabilities that may be asserted.

              To provide protection from liability and expenses that may deter persons from serving as directors, and to keep pace with similar protections offered by most public companies in an effort to attract and retain the most highly-qualified individuals, the Board of Directors recommends amending the limited liability provisions as set forth in the proposed Amended and Restated Articles, as well as adding a provision to indemnify directors and officers to the fullest extent permitted by law. As part of their fiduciary duties, boards of directors are charged with overseeing and managing a corporation's risks, and in order to fulfill these responsibilities, the Board of Directors may be required to make critical decisions based on estimated or projected facts and information that is subject to change as a result of unforeseen events or circumstances. Although the reduction,decisions made are based on the collective experience and knowledge of the board members, it may later be proven not to have been the best course to have taken, resulting in the risk of investigations, claims, actions, suits or proceedings that seek to impose liability on the board. The purpose of the amendments to the articles proposed herein is to encourage qualified individuals to serve on the board of directors by reducing their exposure to personal liability for decisions made and actions taken in good faith and on behalf of the Corporation and to indemnify board members, officers and other persons against liability asserted against him or her in respect of service to the Corporation.

              The amendments will not eliminate the directors' and officers' liability for breaches of their duty of loyalty to the Corporation and its shareholders, for acts or omissions not in good faith which involve intentional misconduct or a knowing violation of law, or for any transaction from which the director derived an improper personal benefit. The amendments are intended to provide the Corporation's directors and officers with the maximum protection afforded under Michigan law.

AMENDMENT

              The Articles currently provide that the affirmative vote of at least 80% of the outstanding shares of voting stock of the Corporation, voting as a single class, shall be required to amend or repeal the following Articles: Board of Directors, Notification of Shareholder Proposals and Amendment to Articles VII, VIII or IX or to adopt any provision inconsistent therewith, unless such amendment or repeal or inconsistent provision has been recommended for approval by at least 80% of all directors then holding office and by a majority of the Continuing Directors (as defined in Article VII). The Board of Directors has unanimously approved, and recommends approval by the shareholders of, an amendment to extend these requirements to the following provisions: Article VI Shareholder Action by Written Consent, Article VII Board of Directors, Article VIII Limited Liability of Directors, Article IX Indemnification and Article X Amendment.

              Under the Act, amendments to the articles require the approval of the holders of a majority of the outstanding stock entitled to vote thereon, but the law also permits a corporation to include provisions in its articles which require a greater vote than the vote otherwise required by law for any corporate action. The requirement of an increased shareholder vote is designed to prevent a person holding or controlling a majority, but less than eighty percent, of the shares of the Corporation from avoiding the requirements of the proposed amendments by simply amending or repealing them or adopting inconsistent provisions. The increased shareholder vote renders it more difficult to remove management or for a person seeking to effect a merger or otherwise gain control of the Corporation.

              The Board of Directors has unanimously approved the recommendation of this provision, and therefore, the amendment does not require the affirmative vote of at least 80% of the outstanding shares of voting stock for approval.

Other Changes to Provisions of the Articles

              The Amended and Restated Articles also contain the following provision, which is substantially similar to the corresponding terms of the current Articles:

COMPROMISE, ARRANGEMENT OR PLAN OF REORGANIZATION

              The proposed Amended and Restated Articles provide that when any compromise or arrangement or plan of reorganization is proposed between the Corporation and its creditors or shareholders, a court of equity jurisdiction may order a meeting of the creditors or shareholders, and further, if³/4 in value of the creditors or shareholders to be affected by the proposed compromise or arrangement agree to a compromise or arrangement, the compromise or arrangement or a reorganization of the Corporation, if sanctioned by the court to which the application was made, shall be binding on all of the creditors or shareholders, as well as on the Corporation.

              Certain provisions have also been removed or deleted from the Amended and Restated Articles. The provisions for notification by a shareholder set forth in the current Articles have been moved to the Business at Annual Meetings section of the Third Amended and Restated Bylaws. The Board determined

that these provisions were more appropriately situated with all other annual meeting matters in the bylaws, as they relate solely to notice requirements for business to be brought at such meetings.

              The Articles currently contain a provision that provides that the Board currentlyof Directors shall not approve, adopt or recommend any offer to make a tender or exchange offer for any capital stock of the Corporation, to merge or consolidate the Corporation with any other entity or to purchase or otherwise acquire all or substantially all of the assets or business of the Corporation unless and until the Board of Directors has three staggered classesfirst evaluated the offer and determined it to be in the best interests of the Corporation and its shareholders. This article has been deleted in its entirety to avoid any conflict between this Article and the Board's fiduciary duties under Michigan law.

              The proposed Amended and Restated Articles also make changes to the numbering of Articles and Sections to reflect the amendments and to conform cross-references and section titles, as well as other immaterial typographical and drafting changes throughout.

              If the proposal to amend and restate the Articles is approved by our shareholders, the Amended and Restated Articles will become effective when filed with and accepted by the Corporation Division.

              A complete copy of the proposed Amended and Restated Articles is attached hereto as Appendix A. Copies of the 1996 Articles, 1996 Amendment, 1998 Name Change Amendment, 1998 Stock Amendment, Series B Amendment, 2004 Amendment, 2009 Amendment and the Series A Amendment will be furnished to any shareholder upon request to Ernie R. Krueger, EVP/CFO Mackinac Financial Corporation, 130 South Cedar Street, Manistique, MI 49854.

              If a quorum is present, the approval of this proposal requires the affirmative vote of a majority of the outstanding shares entitled to vote. Abstentions, broker non-votes, and the failure to return a signed proxy will have no effect on the outcome of the vote on this matter.

PROPOSAL NO. 3: NON-BINDING, ADVISORY VOTE ON COMPENSATION OF
THE NAMED EXECUTIVE OFFICERS

              The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the"Dodd-Frank Act") enables our shareholders to vote to approve, on a non-binding basis, the compensation of the Corporation's named executive officers. At the Corporation's 2013 annual meeting, shareholders were asked to recommend how often they should be given the opportunity to cast this advisory vote. Consistent with the Board's recommendation, shareholders voted to hold the advisory vote on an annual basis until the next required vote on the frequency of shareholder votes on executive compensation. Accordingly, we are asking you to approve the compensation of the Corporation's named executive officers as described under "Compensation of Directors and Executive Officers" and the tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure) in this proxy statement. At last year's annual meeting, we held our first shareholder advisory vote on the compensation of our named executive officers, and shareholders voted in support of our executive compensation strategy.

              The Corporation seeks to align the interests of our named executive officers with the interests of our shareholders. Therefore, our compensation programs are designed to reward our named executive officers for the achievement of strategic and operational goals and the achievement of increased shareholder value, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking. We believe that our compensation policies and procedures are competitive and focused on performance and are aligned with the long-term interest of our shareholders.

              The proposal described below, commonly known as a "Say-on-Pay" proposal, gives you as a shareholder the opportunity to express your views regarding the compensation of the named executive officers by voting to approve or not approve such compensation as described in this proxy statement. This vote is advisory and will not be binding upon the Corporation, the board of directors, comprisedor the human resources/compensation committee. However, the Corporation, the Board of three, twoDirectors, and fourthe Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements. The vote on this resolution is not intended to address any specific element of compensation, but rather relates to the overall compensation of our named executive officers, as described in this proxy statement in accordance with the compensation disclosure rules of the Securities and Exchange Commission (the"SEC").

              The board of directors respectively.believes our compensation policies and procedures achieve this objective, and therefore recommend shareholders vote "FOR" the proposal through the following resolution:

              "RESOLVED, that the compensation paid to the Corporation's named executive officers, as disclosed in the Corporation's Proxy Statement for the 2014 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation tables and any related material disclosed in the Proxy Statement, is hereby APPROVED."

              If a quorum is present, the proposal will be approved if the number of shares of common stock voted in favor of the matter exceed the number of shares of common stock voted against the matter. Abstentions, broker non-votes, and the failure to return a signed proxy will have no effect on the outcome of the vote on this matter.

PROPOSAL 4: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS

              The Audit Committee has selected Plante & Moran, PLLC (Executive Officers"Plante"), as independent auditors for the Corporation, for the fiscal year ending December 31, 2014. The services provided to us and our subsidiaries by Plante for 2013 and 2012 are described below, under the caption "Relationship with Independent Certified Public Accountants."

              We are asking shareholders to ratify the selection of Plante as our independent auditors. Although ratification is not legally required, the Board is submitting the selection of Plante to our shareholders for ratification as a matter of good corporate governance. Representatives of Plante are expected to be present at the Annual Meeting to respond to appropriate questions and to make such statements as they may desire.

              The affirmative vote of the holders of the majority of the shares represented in person or by proxy and entitled to vote on this item will be required for approval. Shares not voted (because of abstention, broker non-vote, or otherwise) will have no effect on the ratification.

              If our shareholders do not ratify the appointment, the appointment will be reconsidered by the Audit Committee and the Board. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interest of the Corporation and our shareholders.

PROPOSAL 5: ADJOURNMENT OF ANNUAL MEETING, IF NECESSARY, TO SOLICIT
ADDITIONAL PROXIES IN FAVOR OF PROPOSAL 2

              At the annual meeting of shareholders and any adjournment or postponement thereof, our shareholders may be asked to consider and vote upon a proposal to adjourn the annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal 2, to approve the Amended and Restated Articles of Incorporation. If shareholders approve this proposal, the Chairman of the annual meeting may adjourn the meeting to allow additional time to solicit additional proxies, including proxies from our shareholders who have previously voted against any other proposals.

              We will only present this Proposal for a vote at the meeting if there are insufficient votes in favor of Proposal 2.

              The affirmative vote of the holders of the majority of the shares represented in person or by proxy and entitled to vote on this item will be required for approval of the adjournment of the annual meeting. Shares not voted (because of abstention, broker non-vote, or otherwise) will have no effect on the outcome of votes on this matter.

EXECUTIVE OFFICERS

The Executive Officers of the Corporation serve at the pleasure of the Board of Directors. Set forth below are the current Executive Officers of the Corporation and a brief explanation of their principal employment during at least the last five years. Additional information concerning employment agreements of Executive Officers of the Corporation is included elsewhere in this proxy statement under the heading “Executive"Executive Compensation.”

Paul D. Tobias –Age 5863 – Chairman of the Board and Chief Executive Officer of the Corporation and Chairman of the Board of the Bank. Mr. Tobias was appointed to his present positions with the Corporation and the Bank on December 16, 2004. Mr. Tobias also served as Chief Executive Officer of the Bank from July 2005 untilin November 2006. From January 2000 to December 2004, Mr. Tobias served as Chairman and Chief Executive Officer of Mackinac Holdings, Inc. and Managing Member of Mackinac Partners, LLC (a financial and operational advisory company serving global and middle market companies), neither of which are affiliated with