Exhibit 10.9

CHANGE IN CONTROL, CONFIDENTIALITY

AND NONCOMPETITION AGREEMENT

 

 

 

THIS CHANGE IN CONTROL, CONFIDENTIALITY AND NONCOMPETITION AGREEMENT is made and
entered into this _____ day of December, 2008, by and between BAR HARBOR
BANKSHARES, a Maine corporation with its headquarters located in Bar Harbor,
Maine (hereinafter "the Company"), and GERALD SHENCAVITZ, a resident of Mount
Desert, Maine (hereinafter "the Executive").

 

W I T N E S S E T H:

 

WHEREAS, Bar Harbor Banking and Trust Company is a wholly-owned subsidiary of
Bar Harbor Bankshares; and

 

WHEREAS, the Executive is an employee of the Company; and

 

WHEREAS, the Company wishes to retain the services of the Executive; and

 

WHEREAS, the Executive and the Company entered into a change in control,
confidentiality and noncompetition agreement dated November 7, 2003; and

 

WHEREAS, the Executive and the Company wish to amend and restate such change in
control, confidentiality and noncompetition agreement so that the provisions of
this Agreement will supersede the change in control, confidentiality and
noncompetition agreement dated November 7, 2003.

 

NOW, THEREFORE, the parties hereto do hereby agree as follows:

 

1. DEFINITIONS.

 

1.1. Bank shall mean Bar Harbor Banking and Trust Company.

 

1.2. Base Compensation shall mean the annual base salary payable by the Company
to the Executive, excluding any bonuses, incentive compensation and other forms
of additional compensation.

 

1.3. Cause shall be deemed to exist only in the event the Executive is convicted
by a court of competent jurisdiction of a felony involving dishonesty or fraud
on the part of the Executive in his relationship with the Company or the Bank.

 

1.4. Change in Control shall mean the occurrence of any one of the following
events:

 

> > (a) 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 Bar Harbor
> > Bankshares representing more than fifty percent (50%) of the combined voting
> > power of Bar Harbor Bankshares' then outstanding securities, other than as a
> > result of an issuance of securities initiated by Bar Harbor Bankshares in
> > the ordinary course of its business; or
> > 
> > (b) Bar Harbor Bankshares 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 Bar Harbor Bankshares' outstanding voting securities immediately
> > prior to the Business Combination in substantially the same proportions as
> > those existing immediately prior to the Business Combination; or
> > 
> > (c) The stockholders of Bar Harbor Bankshares approve a plan of complete
> > liquidation of Bar Harbor Bankshares or an agreement for the sale or
> > disposition by Bar Harbor Bankshares of all or substantially all of Bar
> > Harbor Bankshares' assets to another person or entity that is not a wholly
> > owned subsidiary of Bar Harbor Bankshares.

For purposes of this Section 1.4, 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 1.4, a Change in Control shall exclude any internal
corporate change, reorganization or other such event, which occurred prior to or
may occur following the date of this Agreement.

 

1.5. Code shall mean the Internal Revenue Code of 1986, as amended, and as it
may be amended from time to time, together with the rules and regulations
promulgated under such code.

 

1.6. Company shall mean Bar Harbor Bankshares.

 

1.7. Date of Termination shall mean:

 

> > (a) If the Executive incurs a separation from service for Disability, thirty
> > (30) days after Notice of Termination for Disability is given by the Company
> > to the Executive and the Executive shall not have returned to the
> > performance of his duties on a full-time basis during such thirty (30) day
> > period;
> > 
> > (b) If the Executive's service is separated by the Company for Cause or by
> > the Executive for Good Reason, the date on which the Executive separates
> > from service with the Company; and
> > 
> > (c) If the Executive incurs a separation from service for any other reason,
> > the date on which the Executive separates from service with the Company.

Whether the Executive has incurred a separation from service is determined based
on whether the facts and circumstances indicate that the Company and the
Executive reasonably anticipated that no further services would be performed
after a certain date.

 

1.8. 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 months; or (b) which results in his 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 months, income replacement benefits for a period of not less than three
months under an accident and health plan covering employees of the Company.
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.

 

1.9. Good Reason shall mean one or more of the following events arising without
the consent of the Executive:

 

> > (a)   a material diminution in the Executive’s Base Compensation;
> > 
> > (b) a material diminution in the Executive’s authority, duties or
> > responsibilities;
> > 
> > (c) a material diminution in the authority, duties or responsibilities of
> > the person to whom the Executive is required to report;
> > 
> > (d) a material diminution in the budget over which the Executive retains
> > authority;
> > 
> > (e) a material change in the geographic location at which the Executive must
> > perform his services; or
> > 
> > (f) any other action or inaction that constitutes a material breach by the
> > Company of the Agreement or any other agreement under which the Executive
> > provides services.

In order for a separation from service to occur for Good Reason, the separation
from service must occur within two years following the initial existence of the
event constituting Good Reason.

 

1.10. Notice of Termination shall mean the notice provided pursuant to Section
3.

 

2. SEVERANCE BENEFITS.

 

In the event that: (a) the Company separates the Executive's service other than
as a result of Disability and other than for Cause, or the Executive separates
his service for Good Reason; and (b) the Executive's separation from service
occurs in anticipation of or after a Change in Control, then the Company shall
pay the Executive the severance benefits described in this Section 2. The
Executive's separation from service shall be deemed to be in anticipation of a
Change in Control if it occurs within the twelve (12) month period prior to the
occurrence of the Change in Control.

 

The severance benefits described in this Section 2 shall equal the following:

 

> > (a) The Executive shall receive a lump sum severance payment equal to 1.5
> > times the Executive's Base Compensation, determined as of the Date of
> > Termination. The lump sum severance payment shall be paid on the fifth
> > business day following the Executive’s Date of Termination.
> > 
> > (b) The Executive and his dependents shall continue to be eligible to
> > receive the same medical, health, dental and life insurance benefits which
> > the Executive is eligible to receive on the Date of Termination. The
> > Executive shall be required to make the same premium contributions that he
> > was required to make immediately prior to the Date of Termination. The
> > ability of the Executive and his dependents to receive such benefits shall
> > continue for the period during which the Executive would be entitled to
> > continue coverage under the Company’s group health plan pursuant to the
> > Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA").
> > 
> > (c) In the event of a Change in Control, all stock options granted but
> > unexercised under the Bar Harbor Bankshares and Subsidiaries Incentive Stock
> > Option Plan of 2000 or any other equity plan shall become 100% vested
> > immediately prior to such Change of Control. These grants will remain
> > subject to all of the other terms and conditions of the Bar Harbor
> > Bankshares and Subsidiaries Incentive Stock Option Plan of 2000 or any other
> > equity plan.

The Executive shall not be required to mitigate the amount of any severance
benefits described in this Section 2 by seeking other employment.

 

3. NOTICE OF TERMINATION.

 

Any separation of the Executive's service by the Company due to Disability or
for Cause, or by the Executive due to Good Reason, shall be communicated by
written Notice of Termination to the other party. A Notice of Termination must
indicate the specific provisions in this Agreement which are relied upon as the
basis for the separation of the Executive's service, and must also set forth in
reasonable detail the facts and circumstances claimed to provide the basis for
such separation from service under the provisions so indicated.

 

Notwithstanding the above, in order for the Executive to separate from service
with the Company for Good Reason, the Executive must provide the Notice of
Termination to the Company no later than ninety (90) days after the date of the
initial occurrence of the condition or conditions alleged to give rise to Good
Reason. In addition, the Executive must provide the Company a period of at least
thirty (30) days during which the Company can remedy the condition or conditions
alleged to give rise to Good Reason and not be required to pay the amounts
described in Section 2.

 

4. LOSS OF SEVERANCE BENEFITS.

 

If the Company shall separate the Executive's service due to Disability or for
Cause, or if the Executive shall separate his service other than for Good
Reason, or if the Executive shall die, then the Executive shall have no right to
receive any severance benefits under this Agreement.

 

5. NO OTHER BENEFITS PAYABLE.

 

(a) If the Executive is entitled to receive the severance benefits described in
Section 2 of this Agreement, he shall not be entitled to receive: (i) any
severance benefits under the terms of any general severance pay policy or plan
of the Company or the Bank; or (ii) any other compensation, benefits or payments
under the terms of any other plan of, or agreement with, the Company or the
Bank.

 

(b) Notwithstanding the above, the Executive shall be entitled to receive any
compensation, benefits or payments which are specifically authorized by the
terms of any plan of, or agreement with, the Company or the Bank to be paid in
addition to the severance benefits described in Section 2 of this Agreement.
Moreover, notwithstanding the above, the Executive shall be entitled to receive,
in addition to the severance benefits described in Section 2 of this Agreement,
any compensation, benefits or payments which the Executive is entitled to
receive under: (i) the Bar Harbor Bankshares Supplemental Executive Retirement
Plan or the Bar Harbor Bankshares Supplemental Executive Retirement Plan – Code
Section 409A; (ii) any incentive compensation plan maintained by the Company or
the Bank which provides for payment to a separated employee of incentive
compensation earned by the employee prior to his or her separation from service;
or (iii) any payroll plan or policy of the Company or the Bank which provides
for payment to a separated employee of any unpaid vacation, holiday or sick pay
accrued by the employee prior to his or her separation from service.

 

6. CERTAIN ADDITIONAL PAYMENTS BY THE EMPLOYER.

 

(a) Anything in this Agreement to the contrary notwithstanding and except as set
forth below, in the event it shall be determined that any payment or
distribution made at any time by the Company or 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, but determined without regard to any
additional payments required under this Section 6) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code, or any interest
or penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment"). The Gross-Up
Payment shall equal such an amount that, after payment by the Executive of all
taxes (including, without limitation, any federal, state or local income taxes,
Social Security taxes and Medicare taxes, and any interest or penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

 

Notwithstanding the foregoing provisions of this Section 6(a), if it shall be
determined that the Executive is entitled to a Gross-Up Payment, but that the
Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that
could be paid to the Executive such that the receipt of Payments would not give
rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive
and the Payments, in the aggregate, shall be reduced to the Reduced Amount.

 

(b) Subject to the provisions of Section 6(d), all determinations required to be
made under this Section 6 (including, without limitation, whether and when a
Gross-Up Payment is required, the amount of such Gross-Up Payment, and the
assumptions to be utilized in arriving at such determination) shall be made by
KPMG Peat Marwick or such other certified public accounting firm as may be
designated by the Executive (the "Accounting Firm"). The Accounting Firm shall
provide detailed supporting calculations both to the Company and to the
Executive within fifteen (15) business days after the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change in Control, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 6, shall be paid by the Company to the
Executive within five (5) business days after the Company’s receipt of the
Accounting Firm's determination, but in no event later than the end of the
calendar year following the calendar year in which the Executive remits the
Excise Tax to the appropriate taxing authority. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive.

 

(c) As a result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments which will not have been made by the
Company should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 6(d) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred. The Company shall thereafter remit such
Underpayment to the Executive promptly, but in no event later than the end of
the calendar year following the calendar year in which the Executive remits the
Excise Tax to the appropriate taxing authority.

 

(d) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as soon as practicable, but no later than ten (10)
business days after the Executive is informed in writing of such claim. The
notification shall apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the thirty (30) day period following the date
on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:

 

> > (i) give the Company any information reasonably requested by the Company
> > relating to such claim;
> > 
> > (ii) take such action in connection with contesting such claim as the
> > Company shall reasonably request in writing from time to time, including,
> > without limitation, accepting legal representation with respect to such
> > claim by an attorney reasonably selected by the Company;
> > 
> > (iii) cooperate with the Company in good faith in order effectively to
> > contest such claim; and
> > 
> > (iv) permit the Company to participate in any proceedings relating to such
> > claim;

 

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or other taxes (including interest and
penalties with respect thereto) imposed as a result of such representation and
the payment of any costs and expenses. Without limitation on the foregoing
provisions of this Section 6(d), the Company shall control all proceedings taken
in connection with such contest and, at its sole option, may pursue or forego
any and all administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim, and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner. The Executive agrees to prosecute
any such contest to a determination before any administrative tribunal, in a
court of initial jurisdiction, and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or other taxes (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided, that any extension of the statute
of limitations relating to the payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder, and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

 

(e) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 6(d), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 6(d)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon,
after taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 6(d), a determination is made
that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty (30) days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid, and the amount of such advance shall offset, to the
extent thereof, the amount of the Gross-Up Payment required to be paid.

 

7. SUCCESSORS.

 

(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
its obligations under this Agreement in the same manner and to the same extent
that the Company 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 Company's obligations under this Agreement prior to the
effective date of any such purchase, merger, consolidation or other transaction.

 

(b) The failure of the Company to obtain from each successor the written
agreement described in Section 7(a) shall be deemed to be a material breach of
the obligations of the Company under this Agreement, and shall entitle the
Executive to incur a separation from service for Good Reason pursuant to Section
1.09(f).

 

(c) As used in this Section 7, the Company 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 7(a) or which otherwise becomes bound by all the terms and provisions of
this Agreement.

 

8. CONFIDENTIAL INFORMATION, NON-COMPETITION OBLIGATIONS, AND NON-SOLICITATION.

 

(a) Confidential Information

 

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

 

For purposes hereof, the term "Confidential Information" means 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 or
compiled or had obtained or compiled on his behalf, which information or
compilations of information are not a matter of public record or generally known
to the public, including without limitation:

 

> > (i) financial information regarding the Company, the Bank, or any of their
> > subsidiaries or affiliates;
> > 
> > (ii) personnel data, including compensation arrangements relating to the
> > Executive or any other employees of the Company, the Bank, or any of their
> > subsidiaries or affiliates;
> > 
> > (iii) internal plans, practices, and procedures of the Company, the Bank or
> > any of their subsidiaries or affiliates;
> > 
> > (iv) the names, portfolio information, investment strategies, requirements,
> > lending or deposit information, or any similar information of any customers,
> > clients, or prospects of the Company, the Bank, or any of their subsidiaries
> > or affiliates;
> > 
> > (v) business methods and marketing strategies of the Company, the Bank, or
> > any of their subsidiaries or affiliates;
> > 
> > (vi) any other information expressly deemed confidential by the officers and
> > directors of the Company, the Bank, or any of their subsidiaries or
> > affiliates; and
> > 
> > (viii) the terms and conditions of the Agreement and any documents or
> > instruments executed in connection herewith that are not of public record.

 

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.

 

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 him from any source by virtue of the Executive's
relationship with the Company, the Bank, or any of their subsidiaries or
affiliates.

 

Regardless of the reason for his cessation of employment, the Executive will
furnish such information as may be in the Executive's possession and cooperate
with the Company, the Bank, or any of their affiliates or subsidiaries 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 Company will reimburse the Executive for any reasonable
out-of-pocket expenses the Executive incurs in order to satisfy his obligations
under this clause.

 

(b) Non-Competition Obligations

 

In consideration of the covenants of the Company contained herein, the Executive
covenants and agrees with the Company that, during the " Non-Compete Period" (as
hereinafter defined) and within a one hundred fifty (150) "air" mile radius from
Bar Harbor, Maine, the Executive shall not without specific written approval,
directly or indirectly:

 

> > (i) engage in any insurance, brokerage, trust, banking, or other financial
> > services as an owner, employee, consultant, representative, or in any other
> > capacity;
> > 
> > (ii) directly or indirectly request or advise any past, present, or future
> > customers of the Company, the Bank or any of their 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;
> > 
> > (iii) directly or indirectly cause, suggest, or induce others to call on any
> > past, present, or future customers of the Company, the Bank or any of their
> > affiliated entities; or
> > 
> > (iv) 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 affiliated entities, from any past or
> > present customer of the Company, the Bank or any of their affiliated
> > entities.

The "Non-Compete Period" shall commence on the date hereof and terminate one
year after the cessation of the Executive's employment with the Company and all
of its affiliates, regardless of reason, whether or not pursuant to this
Agreement.

 

(c) Non-Solicitation of Employees

 

While employed by the Company, and for one year following cessation of his
employment with the Company and all of its affiliates for any reason, the
Executive shall not, directly or indirectly, by any means or device whatsoever,
for himself or on behalf of, or in conjunction with, any other person,
partnership or corporation, solicit, entice, hire, or attempt to hire or employ
any employee of the Company, the Bank or any of their affiliated entities.

 

During this Agreement, the Executive shall not interview or negotiate employment
with, or accept employment from, a competitor in the market area described in
Section 8(b) above except with the written consent of the Company.

 

9. REFORMATION; INJUNCTIVE RELIEF.

 

(a) 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 Section 8 are expressly acknowledged and agreed to be fair,
reasonable and necessary. To the extent that any covenant contained in Section 8
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.

 

The invalidity or unenforceability of any provision of this Agreement, after
reformation as provided in this Section 9, 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 be added automatically 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.

 

(b) The Executive acknowledges and agrees that, upon any breach by the Executive
of his obligations under Section 8 hereof, the Company will have no adequate
remedy at law, and accordingly will be entitled to specific performance and
other appropriate injunctive and equitable relief, notwithstanding Section 10
hereof. Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies available to it, including the recovery of damages
from the Executive.

 

10. MEDIATION AND ARBITRATION.

 

If the Executive and the Company 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 following steps will be used:

 

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 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. Notwithstanding the
foregoing, nothing in this Agreement shall be deemed to preclude the Company
from seeking temporary or permanent injunctive relief and/or damages from a
court of competent jurisdiction pursuant to Section 9 of this Agreement with
respect to any breach of Section 8 of this Agreement.

 

(a) In the event that a party wishes to initiate ADR, a Mediation Notice must be
served on the other party within six 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.

 

(b) In the event that mediation is unsuccessful and arbitration is initiated, it
shall be conducted under the National Rules of the Resolution of Employment
Disputes of the American Arbitration Association. 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, each party shall name an arbitrator
and the two so named shall name a third arbitrator. The arbitration proceedings
shall be heard by the arbitrator(s) and the decision of the arbitrator, or the
majority of the panel if one has been selected, shall be final and binding on
the parties. 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 year from the date on which the claim arose, and failure to bring
such a claim within such one-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.

 

(c) The cost of any mediation proceeding under this Section 10 will be paid
entirely by the Company. The cost of any arbitration proceeding will 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
Company. Each party shall be responsible for its own cost of representation and
counsel.

 

11. POST-TERMINATION OBLIGATIONS.

 

All payments and benefits due to the Executive under this Agreement shall be
subject to the Executive's compliance with this Section 11 for one full year
following the Executive's Date of Termination. The Executive shall, upon
reasonable notice, furnish such information and assistance to the Company and
the Bank as may reasonably be required by the Company or the Bank in connection
with any litigation in which it or any of its subsidiaries or affiliates is, or
may become, a party.

 

12. GENERAL PROVISIONS.

 

(a) All notices required by this Agreement shall be in writing and shall be
sufficiently given if delivered personally or mailed by registered mail or
certified mail, return receipt requested, to the parties at their then current
addresses. All notices shall be deemed to have been given as of the date so
delivered or mailed.

 

(b) This Agreement and the plans and agreements described in Section 5(b)
contain the entire transaction between the parties, and there are no other
representations, warranties, conditions or agreements relating to the subject
matter thereof.

 

(c) The waiver by any party of any breach or default of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.

 

(d) This Agreement may not be changed orally but only by an agreement in writing
executed on behalf of the party against which enforcement of any waiver, change,
modification, consent or discharge is sought.

 

(e) This Agreement shall be binding upon and inure to the benefit of the Company
and the Executive and their respective successors, assigns, heirs and legal
representatives (including, but not limited to, any successor of the Company
described in Section 7).

 

(f) 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.

 

(g) This Agreement may be executed in one or more counterparts, all of which
taken together shall constitute one and the same instrument.

 

(h) This Agreement shall be construed pursuant to and in accordance with the
laws of the State of Maine. Actions brought by the Company under this Agreement
shall be subject to the exclusive jurisdiction of the state and federal courts
of Maine. Both parties consent to the personal jurisdiction of such courts for
such actions, and agree that they may be served with process in accordance with
Section 12(a).

 

(i) The Executive acknowledges that he has had a full and complete opportunity
to review the terms, enforceability and implications of this Agreement, and that
the Company has not made any representations or warranties to the Executive
concerning the terms, enforceability and implications of this Agreement other
than as are reflected in this Agreement.

 

(j) Any provision of this Agreement that is susceptible to more than one
interpretation shall be interpreted in a manner that is consistent with this
Agreement satisfying the requirements of Code Section 409A.

 

 

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

 

Witness:
                                                                        
COMPANY:
                                                                                       
BAR HARBOR BANKSHARES

 

_________________________                                     
By____________________________
                                                                                       
Its Chairperson

 

Witness:
                                                                        
EXECUTIVE:

 

___________________________                             
______________________________
                                                                                   
Gerald Shencavitz