According to the docket dated January 5, 2005, on December 2, 2004, the Court entered the Order and Final Judgment by U.S. District Judge Gordon J. Quist.
In a press release dated June 23, 2004, North Country Financial Corporation reached with plaintiffs a Conditional Settlement of Class Action Securities Litigation. The Stipulation for Conditional Settlement of Class Action signed by counsel for all parties was filed with the Court on June 21, 2004. In general, the Stipulation specifies that (a) within thirty days after final approval of the settlement by the Court and the expiration of all appeals periods (i) the individual defendants shall cause to be paid to plaintiffs $500,000, and (ii) the Company shall pay to plaintiffs $50,000, and (b) a conditional payment shall be made to the plaintiffs by the Company of an additional $200,000 upon the occurrence of any of the following events (i) sale of control of the Company, (ii) sale of substantially all of the assets of the Company, or (iii) collection of a judgment or settlement of the Company's claims against any third party that exceeds $200,000. Completion of the settlement is conditional upon satisfaction of a number of matters set forth in the Stipulation, and further proceedings in the Court. At this time, there can be no assurance that all conditions set forth in the Stipulation will be satisfied. This conditional settlement does not include a shareholder's derivative action also pending in the Court, which by its nature does not involve claims against the Company.
According to the FORM 10-Q For the quarterly period ended March 31, 2004, in an Order dated September 29, 2003, the Court consolidated the actions and designated Charles D. Lanctot and John F. Stevens as "Lead Plaintiffs," and designated "Co-Lead Counsel" and "Liaison Counsel" for the class.On December 1, 2003, the plaintiffs filed their Corrected Consolidated Amended Class Action Complaint ("Amended Complaint"), which adds John F. Stevens as a plaintiff. On January 23, 2004, the Corporation and the other defendants filed their Joint Motion to Dismiss the Corrected Consolidated Amended Class Action Complaint, principally based on the ground that plaintiffs have not adequately plead that the Corporation, through its officers and directors, acted with the intent to defraud the investing public under the standard articulated in Helwig v. Vencor, Inc., 251 F.3d 540 (6th Cir. 2001), cert. dismissed, 536 U.S. 935, 122 S.Ct. 2616 (2002). During the pendency of the motion to dismiss, a stay of "all discovery and other proceedings" automatically is imposed under 15 U.S.C. Section 78u-4(b)(3)(B). Plaintiffs filed their Brief in Opposition to Defendants' Motion to Dismiss on March 8, 2004. Defendants filed a reply brief
in support of their Motion to Dismiss on March 23, 2004. The Court has scheduled an oral argument on the Motion to Dismiss for May 17, 2004.
The original complaint alleges that the Corporation and the individual defendants violated section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the SEC issued under the Exchange Act, by disseminating materially false and misleading statements and/or concealing material adverse facts concerning the financial condition and operations of the Company, with knowledge, or in reckless disregard, of the materially false and misleading character thereof. The complaint also alleges violations of Section 20 of the Exchange Act by the individual defendants, by reason of their control, at relevant times, of the Corporation. Among other things, the complaint is based upon allegations of deficiencies in the Company's policies and procedures for safe and sound operation, including its directorate and management personnel and practices, credit underwriting, credit administration, and policies regarding asset/liability management, liquidity, funds management and investments, and its compliance with all applicable laws and regulations, including Regulations O and U of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC) Rules and Regulations, and the Michigan Banking Code of 1999.