On April 24, 2009, Mackinac Financial Corporation (the "Company") issued and sold to the United States Department of the Treasury (the "Treasury") under the Troubled Asset Relief Program Capital Purchase Program ("TARP CPP") (i) 11,000 shares of the Company's Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the "Series A Preferred Stock") and (ii) a warrant (the "Warrant") to purchase 379,310 shares of the Company's Common Stock, for an aggregate purchase price of $1,300,000.

On August 29, 2012, the Treasury sold all of the Company's Series A Preferred Stock to third-party investors in a public offering. Following the sale of the Series A Preferred Stock, the Company notified the Treasury that it would repurchase the Warrant for fair market value. The board of directors of the Company has determined that it would be in the best interest of the Company and its stockholders to repurchase the Warrant. Accordingly, on December 19, 2012, the Company entered into a Letter Agreement with the Treasury ("Warrant Repurchase Letter Agreement") pursuant to which the Company repurchased the Warrant for $1,300,000, in cash. A copy of the Warrant Repurchase Letter Agreement is attached hereto as Exhibit 10 and is incorporated herein by reference. As a result of the repurchase, the Warrant is no longer issued or outstanding and the Company's participation in the TARP CPP is completed. In addition, while the Series A Preferred Stock is still outstanding, as a result of the Treasury's sale of the Series A Preferred stock to third-party investors, the Company no longer has any securities outstanding to the Treasury. Any repurchase or redemption of the Series A Preferred Stock by the Company would require regulatory approval.

(d) Exhibits

Exhibit No.                           Description
10.1          Warrant Repurchase Letter Agreement dated December 19, 2012

99.1          Press release dated December 20, 2012.