Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made this 27th day of September,
2016, by and between BAR HARBOR BANKSHARES, a Maine corporation with its
headquarters located in Bar Harbor, Maine (the “Company”), BAR HARBOR BANK &
TRUST, a wholly-owned subsidiary of the Company (the “Bank”) (together, the
“Employer”), and JOSEPHINE IANNELLI, residing at the address on file with the
Employer (the “Executive”).

W I T N E S S E T H:

WHEREAS, the Employer desires to employ the Executive, and the Executive desires
to accept such employment upon the terms and conditions set forth herein,
including, without limitation, the restrictive covenants in Sections 10 and 11
herein.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, the parties agree as
follows:

 

1. DEFINITIONS.

1.1. “Cause” shall mean: (i) the Executive is charged with or convicted of, or
pleads guilty, no contest or nolo contendere to, or enters into a pre-trial
diversion program in connection with, any crime or criminal offense involving
dishonesty, breach of trust, money laundering, or the illegal manufacture, sale
or distribution of, or trafficking in, controlled substances; (ii) the
Executive’s gross or willful misconduct, gross or willful negligence, or gross
insubordination in connection with the performance of her duties, functions or
responsibilities for the Employer; (iii) the Executive engages in or commits an
act of fraud, misappropriation, material dishonesty, theft, embezzlement,
conversion, self-dealing, obtaining funds or property under false pretenses, or
other material malfeasance against or in connection with the business of the
Company, the Bank, or any of their subsidiaries or affiliates; (iv) the
Executive breaches any fiduciary duty she owes to the Employer; (v) the
Executive materially violates any federal, state or local securities or banking
laws, rules or regulations, or any rules or regulations of any applicable
regulatory or self-regulatory organization, and such violation, if curable under
the circumstances (as determined by the Employer, in its reasonable discretion),
is not cured to the Employer’s reasonable satisfaction within thirty (30) days
after the Executive’s receipt of written notice of such breach (the “Cause Cure
Period”); (vi) the Executive’s material breach of the Company’s drug and alcohol
use, harassment and discrimination-free work environment, or workplace violence
policies, or any other similarly material written policy or rule of the
Employer, and such breach, if curable under the circumstances (as determined by
the Employer, in its reasonable discretion), is not cured to the Employer’s
reasonable satisfaction within the Cause Cure Period; and/or (vii) the
Executive’s material breach of Section 10 or Section 11 of this Agreement and

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such breach, if curable under the circumstances (as determined by the Employer,
in its reasonable discretion), is not cured to the Employer’s reasonable
satisfaction within the Cause Cure Period. For purposes of clauses (v), (vi) and
(vii) of this paragraph, if the Executive cures the specified violation or
breach during the Cause Cure Period, Cause shall be deemed not to have occurred,
provided that the Executive may cure a specific violation or breach for which
she is entitled to notice only one (1) time and, if the same violation breach
occurs again, the violation or breach shall constitute Cause.

1.2. “Change in Control” shall mean the occurrence of any one of the following
events:

 

  1.2.1. Any person, including a group (as such term is used in Section 13(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), becomes
the beneficial owner (as determined pursuant to Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company or the Bank
representing more than fifty percent (50%) of the combined voting power of the
Company’s or the Bank’s then outstanding securities, other than as a result of
an issuance of securities initiated by the Company or the Bank in the ordinary
course of its business; or

 

  1.2.2. The Company or the Bank is party to a Business Combination (as
hereinafter defined) unless, following consummation of the Business Combination,
more than fifty percent (50%) of the outstanding voting securities of the
resulting entity are beneficially owned, directly or indirectly, by the holders
of the Company’s or the Bank’s outstanding voting securities immediately prior
to the Business Combination in substantially the same proportions as those
existing immediately prior to the Business Combination; or

 

  1.2.3. The stockholders of the Company or the Bank approve a plan of complete
liquidation of the Company or the Bank or an agreement for the sale or
disposition by the Company or the Bank of all or substantially all of the
Company’s or the Bank’s assets to another person or entity that is not a
wholly-owned subsidiary of the Company or the Bank.

For purposes of this Section 1.2, a Business Combination means any cash tender
or exchange offer, merger or other business combination, sale of stock, or sale
of all or substantially all of the assets, or any combination of the foregoing
transactions.

For purposes of this Section 1.2, a Change in Control shall exclude any internal
corporate change, reorganization, or other such event, and a purchase of
securities or assets of the Company or the Bank by any employee benefit plan
maintained by the Company or the Bank, which occurred prior to or may occur
following the Effective Date of this Agreement.

 

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1.3. “Code” shall mean the Internal Revenue Code of 1986, as amended, together
with the rules and regulations promulgated thereunder.

1.4. “Confidential Information” shall mean any and all information and
compilations of information, in whatever form or medium (including any copies
thereof), relating to any part of the business of the Company, the Bank, or any
of their subsidiaries or affiliates, or the business of their customers,
provided to the Executive, or which the Executive obtained, compiled or had
access to, or had obtained or compiled on her behalf, which information or
compilations of information are not a matter of public record or generally known
or available to the public, including, without limitation, but subject to the
foregoing, the following:

 

  1.4.1. Financial information regarding the Company, the Bank, or any of their
subsidiaries or affiliates;

 

  1.4.2. Personnel data, including compensation arrangements relating to any
employees of the Company, the Bank, or any of their subsidiaries or affiliates
(excluding data regarding the Executive that is part of her personnel file);

 

  1.4.3. Internal plans, practices, and procedures of the Company, the Bank, or
any of their subsidiaries or affiliates;

 

  1.4.4. The names, personal identifying information, portfolio information,
investment strategies, requirements, lending, deposit or other account
information, or any similar information, of any customers, clients, or prospects
of the Company, the Bank, or any of their subsidiaries or affiliates;

 

  1.4.5. Business methods and marketing strategies of the Company, the Bank, or
any of their subsidiaries or affiliates;

 

  1.4.6. Any other information expressly identified to Executive as confidential
by the officers and directors of the Company, the Bank, or any of their
subsidiaries or affiliates; and

 

  1.4.7. The terms and conditions of this Agreement and any documents or
instruments executed in connection herewith that are not of public record.

 

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1.5. “Disability” shall mean a condition: (a) which causes the Executive to be
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which can be expected to last for a continuous period of not less than
twelve (12) months; or (b) which results in her receiving, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which can be expected to last for a continuous period of not
less than twelve (12) months, income replacement benefits for a period of not
less than three (3) months under an accident and health plan covering employees
of the Employer. Disability shall be deemed to exist only when the disability
has been certified to the Board of Directors of the Company by a licensed
physician approved by the Board of Directors of the Company.

1.6. “Effective Date” shall mean the close of business on October 27, 2016.

1.7. “Good Reason” shall mean the occurrence of one or more of the following
events without the consent of the Executive:

 

  1.7.1. A material diminution in the Executive’s Base Compensation;

 

  1.7.2. A material diminution or adverse change in the Executive’s authority,
duties, or responsibilities;

 

  1.7.3. A material diminution or adverse change in the authority, duties, or
responsibilities of the person to whom the Executive is required to report;

 

  1.7.4. A material diminution or adverse change in the budget over which the
Executive retains authority;

 

  1.7.5. A material change in the geographic location at which the Executive
must perform a substantial portion of her services, which for purposes of this
Agreement means a location that is more than one hundred (100) miles from
Bar Harbor, Maine;

 

  1.7.6. Any other action or inaction that constitutes a material breach by the
Employer of this Agreement or any other agreement under which the Executive
provides services to the Employer or the Employer provides compensation or
benefits to Executive; or

 

  1.7.7. If the Employer delivers a Notice of Termination for Cause to the
Executive pursuant to Section 7.1 and it is determined by an arbitrator pursuant
to Section 13.4 that grounds for termination for Cause did not in fact exist.

 

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1.8. “Notice of Termination” shall mean the written communication provided to
the other party in the event of the Executive’s termination of employment (i) by
the Employer for Cause or on account of the Executive’s Disability or (ii) by
the Executive for Good Reason. A Notice of Termination must indicate the
specific provisions in this Agreement upon which the applicable party relies as
the basis for the Executive’s termination of employment and must also set forth
in reasonable detail the facts and circumstances claimed to provide the basis
for such termination of employment under the provisions so indicated.

1.9. “Restrictive Period” shall mean the period commencing on the Effective Date
and terminating on the one (1) year anniversary of the Executive’s termination
of employment with the Company, the Bank, and all of their subsidiaries and
affiliates, regardless of reason and whether or not pursuant to this Agreement.

 

2. EMPLOYMENT.

As of the Effective Date, the Employer hereby employs the Executive, and the
Executive hereby accepts employment by the Employer, as the Chief Financial
Officer of the Company, the Bank, Bar Harbor Trust Services, and other
subsidiaries and affiliates of the Company and/or the Bank (the “Company
Group”), on the terms and conditions specified herein.

 

3. TERM OF EMPLOYMENT.

3.1. Term. The Executive’s employment shall be for a term of two (2) years
commencing on the Effective Date and ending on the second anniversary of the
Effective Date (the “Term”), unless terminated sooner pursuant to this
Agreement. The Employer agrees to notify the Executive not less than one hundred
and twenty (120) days prior to the second anniversary of the Effective Date if
it does not intend to extend the Executive’s employment.

3.2. Extension. In the absence of notice of intent not to extend this Agreement
by the Employer, the Agreement shall be deemed automatically extended for
additional one (1) year terms commencing on the applicable anniversary of the
Effective Date. After the initial extension of the Term, the Employer agrees to
a like notice period and subsequent extensions of this Agreement, unless and
until the Employer and the Executive shall mutually agree to modify the terms of
this Agreement. During any extension of this Agreement, as provided herein, all
other provisions of this Agreement shall remain in effect.

 

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3.3. Expiration. Upon expiration of this Agreement, pursuant to a notice of
intention not to extend in accordance with Section 3.1, the Executive’s
employment with the Employer shall cease, and this Agreement shall terminate
without further obligations to the Executive, except as provided under
Section 8.1.

 

4. RESPONSIBILITIES AND OTHER ACTIVITIES.

The Executive shall be employed as the Chief Financial Officer of the Company
Group as of the Effective Date. In such roles, the Executive shall undertake the
overall management, responsibilities, and duties related to these positions as
defined by the Board of Directors of the Company, the Bank, or the member(s) of
the Company Group, as applicable, and summarized in the job description attached
hereto as Exhibit C. The Executive shall faithfully perform the duties of her
positions as described herein; shall devote substantially all of her business
time and energies to the business and affairs of the Company Group; and shall
use her best efforts, skills, and abilities to promote the Company Group’s
interests. The Executive may not engage in any business activities or render any
services of a business, commercial, or professional nature (whether or not for
compensation) that would adversely affect the Executive’s performance of her
responsibilities and duties hereunder or conflict with the business of the
Company Group for the benefit of any person or entity, unless the Executive
receives the prior written consent of the Employer.

 

5. COMPENSATION.

5.1. Base Compensation. The Employer shall pay the Executive an annual base
salary of Three Hundred and Fifty Thousand Dollars ($350,000) (“Base
Compensation”). The Base Compensation shall be paid in substantially equal
installments in accordance with the Employer’s compensation policies and
procedures on the payroll dates established by the Employer for its senior
executive officers. The Base Compensation shall be reviewed annually by the
Compensation Committee of the Company’s Board of Directors and may be adjusted
in the Company’s sole discretion, provided that the Base Compensation may not be
adjusted downwards during the initial Term.

 

  5.2. Other Compensation.

 

  5.2.1. The Executive shall be a participant in the Company’s Annual Incentive
Plan, in the form attached hereto as Exhibit A as may be amended from time to
time in the Company’s sole discretion, with her participation in 2016 pro-rated
as of her hire date.

 

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  5.2.2. The Executive shall be a participant in the Company’s Long Term
Incentive Plan, in the form attached hereto as Exhibit B, as may be amended from
time to time in the Company’s sole discretion.

 

  5.2.3. The Executive shall be eligible to participate in any performance
compensation plans agreed upon by the parties during the Term of this Agreement
in concert with the Employer’s evolving goals and objectives.

 

6. OTHER BENEFITS.

6.1. Benefits. The Executive shall be eligible to participate in such medical,
dental, disability, retirement, life insurance, and other employee benefits on
the same basis as may be provided to other similarly-situated employees of the
Employer. As to all other benefits to which the Executive may be entitled in
parity with all other employees, such benefits may be created, changed, or
terminated from time to time in the Employer’s sole discretion.

6.2. Vacation. The Executive shall be entitled to reasonable paid vacations and
sick leave benefits consistent with the Employer’s vacation and sick leave
policies.

6.3. New Hire and Relocation. “The Employer will pay the Executive a signing
bonus in the total sum of $100,000, minus all applicable tax withholding and
other deductions, to cover the entire Executive’s moving and relocation
expenses. The signing bonus shall be paid out to the Executive on the Employer’s
first or second regular payroll date following the Executive’s execution and
delivery to the Employer of this Agreement and the Effective Date. The Executive
promises and agrees to, and shall, promptly reimburse the Employer for the full
amount of the signing bonus in the event the Executive voluntarily terminates or
resigns her employment with the Employer without Good Reason during the initial
Term of the Agreement. In addition, the Employer shall provide housing
assistance to the Executive in the form of the use of a condominium unit owned
by the Company in Ellsworth, Maine, for a period of up to six (6) months,
subject to renewal for up to six (6) additional months upon reasonable notice
from the Executive to the Employer (with the value of any such benefit imputed
to the Executive according to applicable tax requirements).

6.4. Additional Benefits. The Employer further agrees to provide the Executive
with a monthly car allowance, initially set at $833.00 (pro-rated for any
partial months), in accordance with the policies of the Employer for its
similarly situated executive employees (which amount and policies may be amended
by the Employer from time to time), for all costs associated with the purchase
or lease of a motor vehicle (including all lease, maintenance, insurance, gas
and other charges or expenses). The Employer shall also pay the cost of all dues
associated with the Executive’s membership to an area golf, yacht, or tennis
club as well as the cost of the

 

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reasonable travel expenses associated with the Executive’s spouse’s attendance
at business conferences with the Executive, with the value of such benefits
imputed to the Executive according to applicable tax requirements. Between the
Effective Date and the first day of the month next following thirty (30) days
from the Effective Date, the Employer shall also reimburse the Executive for her
share of costs for continuation coverage pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985 (“COBRA”), if any.

6.5. Reimbursements. The Employer shall reimburse the Executive for all ordinary
and necessary business expenses described in Code Section 62(a)(2)(A) which are
incurred by the Executive in the performance of her duties hereunder and which
are subject to reimbursement in accordance with the Employer’s expense
reimbursement policy, as in effect from time to time; provided, however, that:
(i) such expenses shall be reimbursed no later than the end of the calendar year
following the calendar year in which the expenses were incurred, with the
expectation that such amounts shall be reimbursed by the end of the calendar
month following the year in which the expenses were incurred; (ii) the amount of
such expenses eligible for reimbursement in one calendar year cannot affect the
amount of such expenses eligible for reimbursement in another calendar year; and
(iii) the right to reimbursement is not subject to liquidation or exchange for
another benefit.

 

7. TERMINATION.

This Agreement may terminate prior to the expiration of the Term in accordance
with this Section 7.

7.1. By the Employer For Cause. The Employer may elect to terminate this
Agreement and to terminate the Executive’s employment at any time for Cause.
Such termination shall be effective immediately upon Notice of Termination to
the Executive. If the Employer terminates the Executive’s employment for Cause
during the Term, this Agreement shall terminate without further obligations to
the Executive, except as provided under Section 8.2.

7.2. By the Employer Without Cause. The Employer may elect to terminate this
Agreement and to terminate the Executive’s employment at any time by giving the
Executive thirty (30) days’ prior written notice of her termination of
employment. The Executive’s termination of employment shall occur on the date
specified in such written notice. If the Employer terminates the Executive’s
employment without Cause during the Term, this Agreement shall terminate without
further obligations to the Executive, except as provided under Sections 8.3 and
8.5.

7.3. By the Executive without Good Reason. The Executive may elect to terminate
this Agreement and to voluntarily resign her employment at any time for any
reason by giving

 

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the Employer not less than thirty (30) days’ prior written notice of her
termination of employment. The Executive’s termination of employment shall occur
on the date specified in such written notice, unless the Employer elects, in its
sole discretion, to terminate the Executive’s employment as of a date prior
thereto. If the Executive terminates this Agreement pursuant to this Section 7.3
during the Term, this Agreement shall terminate without further obligations to
the Executive, except as provided under Section 8.2.

7.4. By the Executive for Good Reason. The Executive may elect to terminate this
Agreement and her employment for Good Reason within the two (2)-year period
following the initial existence of the condition or conditions constituting Good
Reason. Before the Executive may terminate this Agreement for Good Reason, the
Executive must provide the Employer with a Notice of Termination describing the
existence of the condition or conditions giving rise to Good Reason no later
than ninety (90) days after the date of the initial occurrence of such condition
or conditions, and the Employer must have failed to remedy such condition or
conditions within the thirty (30)-day period following such Notice of
Termination. If the Executive terminates this Agreement for Good Reason during
the Term, this Agreement shall terminate without further obligations to the
Executive, except as provided under Sections 8.3 and 8.5.

7.5. Death. The Executive’s employment shall terminate on account of the
Executive’s death. If the Executive’s employment is terminated on account of the
Executive’s death during the Term, this Agreement shall terminate without
further obligations to the Executive’s estate or other legal representatives
under this Agreement, except as provided under Section 8.4.

7.6. Disability. The Employer may elect to terminate this Agreement and to
terminate the Executive’s employment on account of the Executive’s Disability.
Such termination shall be effective immediately upon Notice of Termination to
the Executive. If the Executive’s employment is terminated on account of the
Executive’s Disability during the Term, this Agreement shall terminate without
further obligations to the Executive, except as provided under Section 8.4.

 

8. PAYMENTS TO EXECUTIVE UPON TERMINATION.

8.1. Generally. Regardless of the reason for any termination of this Agreement
and subject to this Section 8, the Executive (or the Executive’s estate or other
legal representatives if the Agreement terminates on account of the Executive’s
death) shall be entitled to receive (together, “Accrued Benefits”):

 

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  8.1.1. Payment of the Executive’s earned but unpaid Base Compensation
(including, without limitation, all items which constitute wages under
applicable law) as of the effective date of the Executive’s termination of
employment, with such payment to be made in accordance with the Employer’s
compensation policies and procedures but in no event later than the date
required by applicable law;

 

  8.1.2. Payment of the Executive’s earned but unused vacation time as of the
effective date of the Executive’s termination of employment, with such payment
to be made in accordance with the Employer’s vacation pay policy; and

 

  8.1.3. All rights and benefits (if any) to which the Executive is entitled due
to her termination of employment as required, independent of this Agreement, by
the terms of any employee benefit plans and programs of the Company or of the
Bank in existence as of the date of the Executive’s termination of employment,
such as The Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of
2009, the 2016 Executive Annual Incentive Program, the Long-Term Executive
Incentive Plan or any other Company or Bank incentive plan, with such rights and
benefits to be determined in accordance with the terms of such plans and
programs.

8.2. Termination by the Employer for Cause or by the Executive without Good
Reason. If the Employer terminates the Executive’s employment for Cause pursuant
to Section 7.1 or the Executive terminates her employment without Good Reason
pursuant to Section 7.3, the Executive shall be entitled to receive payment of
her Accrued Benefits.

8.3. Termination by the Employer without Cause or by the Executive for Good
Reason. If the Employer terminates the Executive’s employment without Cause
pursuant to Section 7.2 or the Executive terminates her employment for Good
Reason pursuant to Section 7.4, or if the Employer fails to renew this Agreement
following the initial Term, the Executive shall be entitled, subject to
Section 8.7, to receive:

 

  8.3.1. Payment of her Accrued Benefits;

 

  8.3.2.

A lump sum payment equal to either (i) two (2) times the Executive’s Base
Compensation as of the effective date of the Executive’s termination of
employment in the event the Employer terminates the Executive’s employment
without Cause pursuant to Section 7.2 or the Executive terminates her employment
for Good Reason pursuant to Section 7.4, or

 

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  (ii) two (2) times the Executive’s Base Compensation as of the effective date
of the Executive’s termination of employment in the event the Employer fails to
renew this Agreement following the initial Term, with any such payment to be
made as soon as reasonably practicable following the date as of which all
requirements for payment have been satisfied (including, but not limited to, the
execution and delivery of a Release, as described and defined in Section 8.7,
and the passage of any applicable revocation period); provided, however, that,
if payable, payment shall be made no later than the end of the “applicable 2
 1⁄2 month period” (as that phrase is used for purposes of the short-term
deferral exemption to Code Section 409A found in Treasury Regulation
Section 1.409A-1(b)(4); and

 

  8.3.3. A lump sum payment in an amount equal to the Employer’s share of
monthly premium contributions for medical, health, dental, and vision insurance
benefits for the Executive and her eligible dependents, if any, for a period of
eighteen (18) months, calculated based upon the Employer’s share of monthly
premium contributions for such benefits as of the date of the Executive’s
termination of employment. Any taxable cash payments under this Section 8.3.3
are intended to be separation pay that is exempt from Code Section 409A by
reason of the exemption for certain separation pay set forth in Treasury
Regulation Section 1.409A-1(b)(9)(iii).

If the Executive shall die prior to the receipt of all such payments under this
Section 8.3, the remainder of such payments shall be paid to her surviving
spouse or, if she has no surviving spouse, to her estate.

Notwithstanding the above, any amounts payable by reason of the Executive’s
termination of employment under this Agreement that are subject to Code
Section 409A that would, but for this paragraph, be payable during the six
(6) month period following the Executive’s termination of employment, shall not
be paid during such six (6) month period, but shall be paid on the first day of
the seventh (7th) month following the Executive’s termination of employment.

8.4. Termination due to Death or Disability. In the event of termination of this
Agreement on account of the Executive’s death or on account of the Executive’s
Disability pursuant to Section 7.6, the Executive or the Executive’s estate or
other legal representatives shall be entitled to receive payment of the
Executive’s Accrued Benefits.

8.5. Termination in Connection with a Change in Control. Notwithstanding the
other provisions of this Section 8, in the event that (a) the Employer
terminates the Executive’s employment without Cause (excluding termination on
account of death or Disability), or the

 

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Executive terminates her employment for Good Reason; and (b) such termination of
the Executive’s employment occurs in anticipation of or within the twelve
(12)-month period after a Change in Control, then the Employer shall pay,
subject to Section 8.7, the Executive the severance benefits described in this
Section 8.5 in lieu of the benefits described in Section 8.3. The Executive’s
termination of employment shall be deemed to be in anticipation of a Change in
Control for purposes of this Section 8.5 if it occurs within the six (6)-month
period prior to the occurrence of the Change in Control.

In addition to any Accrued Benefits owed, the severance benefits described in
this Section 8.5 shall include the following:

 

  8.5.1. A lump sum payment equal to two (2) times the Executive’s Base
Compensation as of the effective date of the Executive’s termination of
employment, with such payment to be made on the Employer’s first or second
regular payroll date following the date as of which all requirements for payment
have been satisfied (including, but not limited to, the execution and delivery
of a Release, as described and defined in Section 8.7, and the expiration of any
applicable revocation period); provided, however, that, if payable, payment
shall be made no later than the end of the “applicable 2  1⁄2 month period” (as
that phrase is used for purposes of the short-term deferral exemption to Code
Section 409A found in Treasury Regulation Section 1.409A-1(b)(4); and

 

  8.5.2. A lump sum payment in an amount equal to the Employer’s share of
monthly premium contributions for medical, health, dental, and vision insurance
benefits for the Executive and her eligible dependents, if any, for a period of
eighteen (18) months, calculated based upon the Employer’s share of monthly
premium contributions for such benefits as of the date of the Executive’s
termination of employment. Any taxable cash payments under this Section 8.3.3
are intended to be separation pay that is exempt from Code Section 409A by
reason of the exemption for certain separation pay set forth in Treasury
Regulation Section 1.409A-1(b)(9)(iii).

8.6. No Mitigation. The Executive shall not be required to mitigate the amount
of any severance benefits described in this Section 8 by seeking other
employment, other than as provided in Sections 8.3.3 and 8.5.2 hereof.

8.7. Release. Payment and provision of the benefits described in Sections 8.3.2,
8.3.3, 8.5.1, and 8.5.2 hereof (the “Severance Payments”) are subject to and
expressly conditioned upon the Executive’s execution and delivery to the
Employer of a separation agreement and

 

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general release in favor of the Employer in form and substance satisfactory to
the Employer (the “Release”), within thirty (30) days after the Executive’s
termination of employment, which (after the expiration of any and all revocation
periods and rights, if any) has, and not until it has, become fully effective
and irrevocable, satisfactory to the Employer in the reasonable exercise of its
discretion, releasing the Company, the Bank, their subsidiaries, their
affiliates, and their directors, officers, employees, agents, insurers and
certain others from any and all claims or potential claims arising from or
related to the Executive’s employment with the Employer or the termination of
that employment. In no event shall any Severance Payments be due or payable
unless and until such Release becomes effective and all statutory rights to
rescind, revoke or terminate the same have expired unexercised. Payment and
provision of the Severance Payments are also subject to and expressly
conditioned upon the Executive’s compliance with her obligations under Sections
10 and 11 of this Agreement. Anything in this Agreement to the contrary
notwithstanding, in the event the Executive is determined by a court or
arbitrator to have breached any of the provisions of Sections 10 or 11 of this
Agreement, then the Employer shall have no further obligation to pay or provide
the Severance Payments, and the Employer shall be entitled to obtain
reimbursement from the Executive, and the Executive shall be obligated to
reimburse the Company, for any Severance Payments previously paid to the
Executive, in addition to any and all other rights or remedies available to the
Employer under this Agreement or applicable law.

 

9. CODE SECTIONS 280G AND 4999.

Notwithstanding anything contained herein to the contrary, in the event it shall
be determined that any payment or distribution made at any time by the Company,
the Bank, or any corporation which is a member of an “affiliated group” (as
defined in Code Section 1504(a), without regard to Code Section 1504(b)) of
which the Company or the Bank is a member, to or for the benefit of the
Executive (whether paid or payable, or distributed or distributable, pursuant to
the terms of this Agreement or otherwise) (a “Payment”) would constitute an
“excess parachute payment” (as defined in Code Section 280G(b)(2)), such Payment
shall be reduced to the extent necessary to ensure that no portion of such
Payment will be non-deductible to the Employer by Code Section 280G or will be
subject to the excise tax imposed by Code Section 4999 (the “Reduced Payment”),
and the Executive shall have no further rights or claims with respect to an
amount in excess of the Reduced Payment. If a Payment is reduced pursuant to
this Section 9, the Employer shall reduce or eliminate the following portions of
the Payment in successive order to reach the Reduced Payment: (i) first, the
benefits portion of the Payment, (ii) then, the cash portion of the Payment, and
(iii) then, the equity portion of the Payment. Any determination required under
this Section 9 (including, without limitation, the amount of the Reduced Payment
and the assumptions to be utilized in arriving at such determination) shall be
made by the Employer and its tax advisors, whose determination shall be final,
conclusive and binding upon the Executive.

 

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10. CONFIDENTIALITY.

10.1. The Executive recognizes and acknowledges that certain assets of the
Company, the Bank, and their affiliates or subsidiaries constitute Confidential
Information.

10.2. The Executive shall not, without the prior written consent of the Company,
the Bank, or any of their subsidiaries or affiliates, use or disclose, or
negligently permit any unauthorized person to use, disclose, or gain access to,
any Confidential Information.

10.3. Upon termination of employment, the Executive hereby agrees to deliver
promptly to the Company, the Bank, or any of their subsidiaries or affiliates
all memoranda, notes, records, manuals, or other documents, including all copies
of such materials, containing Confidential Information, whether made or compiled
by the Executive or furnished to her from any source by virtue of the
Executive’s relationship with the Company, the Bank, or any of their
subsidiaries or affiliates.

10.4. Regardless of the reason for her cessation of employment, the Executive
will furnish such information as may be in the Executive’s possession and will
cooperate with the Company, the Bank, or any of their subsidiaries or affiliates
as may reasonably be requested in connection with any claims or legal actions in
which the Company, the Bank, or any of their subsidiaries or affiliates are or
may become a party. The Employer will reimburse the Executive for any reasonable
out-of-pocket expenses the Executive incurs in order to satisfy her obligations
under this Section 10.4.

 

11. NON-COMPETITION AND NON-SOLICITATION.

11.1. In consideration of the covenants of the Employer contained herein, the
Executive covenants and agrees with the Employer that, during the Restrictive
Period and within a one hundred and fifty (150) “air” mile radius from Bar
Harbor, Maine, the Executive shall not, without specific written approval of the
Employer, directly or indirectly, whether on behalf of or in conjunction with
any entity or person, and whether for the Executive’s own benefit or account or
for the benefit or account of any person or entity other than the Company, the
Bank or any of their subsidiaries or affiliates:

 

  11.1.1. Engage in any insurance, brokerage, trust, banking, or other financial
services as an owner, employee, independent contractor, consultant, director,
representative, agent, or in any other capacity;

 

  11.1.2.

Directly or indirectly request, advise or otherwise cause any past, present, or
future client or customer of the Company, the Bank, or any of their

 

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  subsidiaries or affiliates to withdraw, curtail, or cancel his or her or its
business with the Company, the Bank, or any of their subsidiaries or affiliates;

 

  11.1.3. Directly or indirectly cause, suggest, or induce others to call on any
past, present, or future client or customer of the Company, the Bank, or any of
their subsidiaries or affiliates, for the purpose of (i) selling or providing to
any such client or customer any products or services offered by (or that compete
with the products or services offered by) the Company, the Bank, or any of their
subsidiaries or affiliates, (ii) causing such client or customer to withdraw,
curtail, or cancel his or her or its business with the Company, the Bank, or any
of their subsidiaries or affiliates, or (iii) enticing, diverting, or taking
away any such client or customer from the Company, the Bank, or any of their
subsidiaries or affiliates; or

 

  11.1.4. Canvas, solicit, or accept any business on behalf of any other bank,
insurance agency, trust, or other financial services business, other than the
Company, the Bank, or any of their subsidiaries or affiliates, from any past or
present client or customer of the Company, the Bank, or any of their
subsidiaries or affiliates.

11.2. During the Restrictive Period, the Executive shall not, whether personally
or in association with others, and whether on behalf of or in conjunction with
any entity or person, directly or indirectly, by any means or device whatsoever,
(a) solicit, aid in the solicitation of, induce, encourage, persuade or recruit,
or attempt to solicit, induce, encourage, persuade or recruit, any person who is
an employee, consultant, agent, or independent contractor of the Company, the
Bank, or any of their subsidiaries or affiliates, to terminate or alter such
employment, retention or engagement or to apply for or accept employment or
retention with any other person or entity, (b) hire or employ or attempt to hire
or employ, or solicit for employment or any other engagement, or cause any other
person, firm, corporation or other entity to hire or employ or attempt to hire
or employ or solicit for employment or any other engagement, any person who is
an employee, consultant, agent, or independent contractor of the Company, the
Bank, or any of their subsidiaries or affiliates, or (c) solicit, encourage or
induce any person or entity known by her to have a contractual relationship with
the Company, the Bank, or any of their subsidiaries or affiliates to
discontinue, terminate, cancel or refrain from entering into or expanding such
contractual relationship.

11.3. Other Agreements. The Executive represents and warrants that neither the
Executive’s employment with the Employer nor the Executive’s performance of her
obligations hereunder will conflict with or violate the Executive’s obligations
under the terms of any

 

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agreement with a previous employer or other party, including agreements to
refrain from competing, directly or indirectly, with the business of such
previous employer or other party. Prior to the Effective Date hereof, the
Executive has provided to the Employer copies of all restrictive covenants
(e.g., non-solicitation and non-competition agreements) to which she is a party
in order to ensure her compliance with this Section 11.3.

 

12. REFORMATION AND INJUNCTIVE RELIEF.

12.1. Reformation. All the parties hereto acknowledge that the parties have
carefully considered the nature and scope of this Agreement. The activities,
period, and area covered by Sections 10 and 11 are expressly acknowledged and
agreed to be fair, reasonable, and necessary. To the extent that any covenant
contained in Sections 10 and 11 is held to be invalid, illegal, or unenforceable
because of the extent of activities, duration of such covenant, the geographic
area covered thereby, or otherwise, the parties agree that the court making such
determination shall reform such covenant to include as much of its nature and
scope as will render it enforceable and, in its reduced form, said covenant
shall be valid, legal, and enforceable to the fullest extent of the law.

12.2. Injunctive Relief. The Executive acknowledges and agrees that, upon any
breach by the Executive of her obligations under Sections 10 and 11 hereof, the
Employer will have no adequate remedy at law, and accordingly will be entitled
to specific performance and other appropriate injunctive and equitable relief,
notwithstanding Section 13 hereof. Nothing herein shall be construed as
prohibiting the Employer from pursuing any other remedies available to it,
including the recovery of damages from the Executive.

 

13. MEDIATION AND ARBITRATION.

13.1. Generally. If the Executive and the Employer have any dispute whatsoever
relating to the interpretation, validity, or performance of this Agreement, or
any other dispute arising out of this Agreement, every reasonable attempt will
be made to resolve any differences or dispute within thirty (30) days of an
issuance of written notice by either party to the other party. If a successful
resolution of any differences or dispute has not been achieved to the
satisfaction of both parties at the end of the thirty (30)-day period, the steps
outlined in the following Sections 13.2, 13.3, and 13.4 shall apply.

13.2. ADR. Except as otherwise expressly provided hereunder, the parties agree
that any and all disputes arising out of the Executive’s employment, or
cessation of employment, including but not limited to any dispute, controversy,
or claim arising under any federal, state, or local statute, law, ordinance, or
regulation or under this Agreement, shall be resolved exclusively by Alternative
Dispute Resolution described in this Agreement (“ADR”). The initiation of ADR

 

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shall first require mediation, and the parties agree to first try to settle any
dispute through mediation. Mediation shall be initiated by either party by the
serving of a written notice of intent to mediate (a “Mediation Notice”) by one
party upon the other. If no resolution has been mutually agreed through
mediation within ninety (90) days of service of a Mediation Notice, then and
only then may the dispute be submitted to arbitration. Arbitration shall be
initiated by the serving of a written notice of intent to arbitrate (an
“Arbitration Notice”) by one party upon the other.

13.3. Mediation. In the event that a party wishes to initiate ADR with respect
to a claim, a Mediation Notice must be served on the other party within six
(6) months from the date on which the claim arose. If the parties cannot
mutually agree on a mediator, then a mediator shall be selected in accordance
with the Employment Mediation Rules of the American Arbitration Association.

13.4. Arbitration. In the event that mediation is unsuccessful and arbitration
is initiated, it shall be conducted under the National Rules for the Resolution
of Employment Disputes of the American Arbitration Association, as modified by
this Agreement. There shall be a single arbitrator to be agreed upon by the
parties; provided that, if the parties are unable to agree upon a single
arbitrator, the Executive and the Employer shall each name an arbitrator, and
the two (2) arbitrators so named shall name a third (3rd) arbitrator. The
arbitration proceedings shall be heard by the arbitrator(s), and the decision of
the arbitrator, or of a majority of the panel if one has been selected, shall be
final and binding on the parties. The arbitration award shall be accompanied by
a written statement containing a summary of the issues in controversy, a
description of the award, and an explanation of the reasons for the award.
Judgment upon the arbitration award may be entered in any court of competent
jurisdiction. An Arbitration Notice must be served on the other party within one
(1) year from the date on which the claim arose, and failure to bring such a
claim within such one (1)-year period shall constitute a waiver of such claim
and an absolute bar to any further proceedings in any forum with respect to it.
All mediation and arbitration proceedings shall be conducted in Bangor, Maine,
unless the parties otherwise agree in writing. All arbitration proceedings shall
be confidential

13.5. Costs. The cost of any mediation proceeding under this Section 13 will be
paid entirely by the Employer. The cost of any arbitration proceeding shall be
shared equally by the parties to the dispute; provided, however, that if the
dispute is resolved in favor of the Executive, such cost shall be paid in full
by the Employer. Each party shall be responsible for its own cost of
representation and counsel.

 

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14. NOTICES.

All notices, requests, demands, waivers, and other communications required or
permitted to be given under this Agreement will be in writing and will be deemed
to have been duly given: (a) if delivered personally or sent by facsimile or
electronic mail, on the date received; (b) if delivered by overnight courier, on
the day after mailing; and (c) if mailed, five days after mailing with postage
prepaid. Any such notice will be sent as follows:

 

To the Employer:   

Bar Harbor Bankshares

ATTN: Human Resources Department

82 Main Street

P.O. Box 400

Bar Harbor, ME 04609

Fax: (207) 288-2811

Email: msawyer@bhbt.com

 

With copies to:

 

Richard Schaberg, Esq.

Hogan Lovells US LLP

555 Thirteenth Street NW

Washington, DC 20004

Fax: (202) 637-5671

Email: richard.schaberg@hoganlovells.com

 

Jonathan Shapiro, Esq.

Littler Mendelson, P.C.

One Monument Square

Suite 600

Portland, Maine 04101

Exhibit Ax: (207) 775-6407

Email: jonshapiro@littler.com

To the Executive:    At the address on file with the Employer

 

15. SUCCESSORS AND ASSIGNS.

15.1. The rights and obligations of the Executive hereunder are not assignable
or delegable, and any such assignment or delegation will be null and void,
provided, however, that in the event of her death any and all amounts due the
Executive hereunder shall be paid to her surviving spouse, or if she has no
surviving spouse, to her estate, including without limitation any amounts due
the Executive under Section 8 hereof.

15.2. This Agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors, beneficiaries, heirs, and
personal representatives.

15.3. The Employer shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or

 

18

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assets of the Employer to expressly assume and agree to perform its obligations
under this Agreement in the same manner and to the same extent that the Employer
would be required to perform them if no such succession had taken place. Each
such successor shall execute a written agreement evidencing its assumption of
the Employer’s obligations under this Agreement prior to the effective date of
any such purchase, merger, consolidation, or other transaction.

15.4. The failure of the Employer to obtain from each successor the written
agreement described in Section 15.3 shall be deemed to be a material breach of
the obligations of the Employer under this Agreement, and shall entitle the
Executive to incur a separation from service for Good Reason pursuant to
Section 7.4.

15.5. As used in this Section 15, the Employer shall include the Company, the
Bank, and any successor to all or substantially all of the business and/or
assets of any of them (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) which executes and delivers the written agreement
described in Section 15.3 or which otherwise becomes bound by all the terms and
provisions of this Agreement.

 

16. SURVIVAL.

Notwithstanding anything contained herein to the contrary, the provisions of
this Agreement which by their terms are to be performed subsequent to
termination, including, without limitation, Sections 8, 10, 11, 12, and 13 and
this Section 16, shall survive the termination of this Agreement and shall
remain fully enforceable.

 

17. NON-DUPLICATION.

In the event that the Executive shall perform services for the Company, the
Bank, and/or any of their direct or indirect subsidiaries, any compensation or
benefits provided to the Executive by such employer or pursuant to such
employer’s employee benefit plans shall be applied to offset the obligations of
the Employer hereunder, it being intended that the provisions of this Agreement
shall set forth the aggregate compensation and benefits payable to the Executive
for all services rendered to the Company, the Bank, and any of their direct or
indirect subsidiaries.

 

18. CODE SECTION 409A.

18.1. The Executive and the Employer acknowledge that each of the payments and
benefits promised to the Executive under this Agreement must either comply with
the requirements of Code Section 409A and the regulations thereunder or qualify
for an exception from compliance. To that end, the Executive and the Employer
agree that:

 

19

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  18.1.1. The Executive will be deemed to have a date of termination of
employment for purposes of determining the timing of any payments or benefits
hereunder that are classified as deferred compensation only upon a “separation
from service” within the meaning of Code Section 409A;

 

  18.1.2. The expense reimbursements described in Section 6.5 are intended to
satisfy the requirements for a “reimbursement plan” described in Treasury
Regulation Section 1.409A-3(i)(1)(iv)(A) and shall be administered to satisfy
such requirements;

 

  18.1.3. The payments described in Sections 8.1.1 and 8.1.2 are intended to be
excepted from compliance with Code Section 409A pursuant to Treasury Regulation
Section 1.409A-1(b)(3) as payment made pursuant to the Employer’s customary
payment timing arrangement;

 

  18.1.4. The benefits and payments described in Section 8.1.3 are expected to
comply with or be excepted from compliance with Code Section 409A on their own
terms; and

 

  18.1.5. The welfare benefits provided in kind under Section 8.5.2 are intended
to be excepted from compliance with Code Section 409A as welfare benefits
pursuant to Treasury Regulation Section 1.409A-1(a)(5) and/or as benefits not
includible in gross income.

18.2. With respect to payments under this Agreement, for purposes of Code
Section 409A, each severance payment (if there is more than one payment) will be
considered one of a series of separate payments. The Executive and the Employer
further agree that, to the extent not otherwise exempt, the termination benefits
described in this agreement are intended to be exempt from Code Section 409A
pursuant to Treasury Regulation Section 1.409A-1(b)(4) as short-term deferrals
or as payments pursuant to a separation pay plan pursuant to Treasury Regulation
Section 1.409A-1(b)(9)(iii). In the case of a payment that is not excepted from
compliance with Code Section 409A and that is not otherwise designated to be
paid immediately upon a permissible payment event within the meaning of Treasury
Regulation Section 1.409A-3(a), the payment shall not be made prior to, and
shall, if necessary, be deferred to and paid on the later of the date sixty
(60) days after the Executive’s earliest separation from service (within the
meaning of Treasury Regulation Section 1.409A-1(h)) and, if the Executive is a
specified employee (within the meaning of Treasury Regulation
Section 1.409A-1(i)) on the date of her separation from service, the first day
of the seventh month following the Executive’s separation from service.
Furthermore, this Agreement shall be construed and administered in such manner
as shall be necessary to effect compliance with Code Section 409A.

 

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19. COMPLIANCE WITH FDI ACT.

Notwithstanding anything contained herein to the contrary, any payments to the
Executive by the Employer, whether pursuant to this Agreement or otherwise, are
subject to and conditioned upon their compliance with Section 18(k) of the
Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and any regulations
promulgated thereunder.

 

20. GENERAL PROVISIONS.

20.1. Entire Agreement. This Agreement and the attachments hereto constitute the
entire understanding and agreement between the parties hereto with respect to
the Employer’s employment of the Executive, and supersedes and revokes any and
all prior agreements and understandings, whether oral or written, between the
parties relating to the subject matter of this Agreement.

20.2. Withholding. The Employer may withhold from any payments to be made
hereunder such amounts as it may be required or permitted to withhold under
applicable federal, state, or other law, and transmit such withheld amounts, as
appropriate, to the appropriate taxing authorities.

20.3. Governing Law. This Agreement shall be interpreted under, subject to, and
governed by the substantive laws of the State of Maine, without giving effect to
provisions thereof regarding conflict of laws.

20.4. Modification and Waiver. This Agreement may not be modified or amended,
except by an instrument in writing signed by the parties hereto. Notwithstanding
the preceding sentence, this Agreement shall be construed and administered in
such manner as shall be necessary to effect compliance with Code Section 409A
and shall be subject to amendment in the future, in such manner as the Employer,
in consultation with the Executive, may deem necessary or appropriate to effect
such compliance; provided, that any such amendment shall preserve for the
Executive the benefit originally afforded pursuant to this Agreement. No term or
condition of this Agreement shall be deemed to have been waived, except by
written instrument of the party charged with such waiver. A waiver shall operate
only as to the specific term or condition waived and will not constitute a
waiver of any other term or condition of this Agreement or as to any subsequent
occurrence of the term or condition.

20.5. Cooperation. Each of the parties agrees to execute all further instruments
and documents and to take all further action as the other party may reasonably
request in order to effectuate the terms and purposes of this Agreement.

 

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20.6. Captions. The captions appearing in this Agreement are for convenience of
reference only and in no way define, limit, or affect the scope or substance of
any section of this Agreement.

20.7. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect any other provision hereof, and this Agreement shall
be construed in all respects as if such invalid or unenforceable provision was
omitted. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall automatically be added as a part of this Agreement a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and enforceable.

20.8. Counterparts. This Agreement may be executed in any number of counterparts
with the same effect as if all Parties hereto had signed the same document. All
counterparts shall be construed together and shall constitute one
Agreement. This Agreement, to the extent signed and delivered by means of a
facsimile machine or PDF, shall be treated in all manner and respects as an
original signed agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof delivered
in person.

 

21. ACKNOWLEDGEMENT.

The Executive acknowledges that she has had a full and complete opportunity to
review the terms, enforceability, and implications of this Agreement; that she
has had a full and complete opportunity to present it to competent legal counsel
for review; and that the Employer has not made any representations and
warranties to the Executive concerning the terms, enforceability, and
implications of this Agreement other than as reflected in this Agreement.

[THE NEXT PAGE IS THE SIGNATURE PAGE.]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first written above.

 

Witness:    BAR HARBOR BANKSHARES  

/s/ Witness

   By:  

/s/ Curtis C. Simard

     Name:   Curtis C. Simard      Title:   President & CEO   Witness:    BAR
HARBOR BANK & TRUST      By:  

/s/ Curtis C. Simard

 

/s/ Witness

          Name:   Curtis C. Simard      Title:   President & CEO   Witness:   
EXECUTIVE  

/s/ Witness

  

/s/ Josephine Iannelli

     JOSEPHINE IANNELLI