**Exhibit 10(ar)**

 

**Maine& Maritimes Corporation**

 

 

**EMPLOYEERETENTION AGREEMENT**

 

 

THISEMPLOYEE RETENTION AGREEMENT dated as of September 5, 2003 (this “Agreement”)is entered into between Maine & Maritimes Corporation, a Maine corporation(the “Company”), and Michael A. Thibodeau (the “Executive”) (the Company andExecutive are sometimes referred to as “Party” or collectively “Parties”).

 

**RECITALS**

 

WHEREAS,the Executive, has been employed by the Company in a management capacity and isnow its Vice President, Compliance and Risk Management; and

 

WHEREAS,the Board of Directors of the Company has determined this Agreement to be inthe best interests of the stockholders of the Company, in order to encouragethe attention and dedication of the Executive to his assigned duties with theCompany without distraction in connection with potentially disruptivecircumstances arising from the possibility of a Change in Control (as definedherein) or certain other events specified in this Agreement;

 

Now,THEREFORE, in consideration of the mutual promises and covenants containedherein and for other good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged by the Parties, the Company and theExecutive agree as follows:

 

Section 1.                                     **Certain Definitions**

 

Asused herein, the following terms have the indicated meanings:

 

(1)*           “Cause”*for termination bythe Company of the Executive’s employment shall mean (i) the willful andcontinued failure by the Executive to substantially perform his duties with theCompany after a written notice is delivered to the Executive by the Company,which notice specifically identifies the manner in which the Company believesthat the Executive has not substantially performed the Executive’s duties; or(ii) the willful engaging by the Executive in gross misconduct that isinjurious to the Company, monetarily or otherwise (including, withoutlimitation, the Executive’s conviction, by a court of competent jurisdiction,of a crime adversely reflecting on the Executive’s honesty, trustworthiness orfitness to carry out the responsibilities of his position with the Company). Anact, or failure to act, on the Executive’s part shall be deemed “willful” wheresuch act is done, or not done, by the Executive: (i) in the absence of goodfaith; or (ii) without a reasonable belief that the Executive’s act, or failureto act, was in the best interest of the Company.

 

(2)           For the purpose of this definition *(“Change inControl”)*only, the term “Company,” first defined above, shall alsobe defined to include Maine Public Service Company in addition to its parent,Maine & Maritime Corporation. *A “Change in Control”* shall be deemed to have occurred ifthe conditions set forth in any one of the following paragraphs shall have beensatisfied:

 

(a)           any“person” (as such term is used in Sections 13(d) and 14(d) of the SecuritiesExchange Act of 1934, as amended) (other than the Company, any trustee or otherfiduciary holding securities under any employee benefit plan of the Company, orany corporation owned directly or indirectly by the stockholders of the Companyin substantially the same proportion as their

 

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ownershipof stock of the Company) is or becomes the “beneficial owner” (as defined inRule 13d-3 under the Securities Exchange Act of 1934, as amended), directly orindirectly, of securities of the Company representing fifty percent or more ofthe combined voting power of the Company’s then outstanding voting securities;

 

(b)           achange in the composition of the Board of Directors of the Company, as a resultof which fewer than a majority of the directors are persons who either (A) aredirectors of the Company as of the date hereof or (B) were elected afternomination by a majority of the directors of the Company on the date hereof anddirectors so elected previously;

 

(c)                                  any merger or consolidation of the Company,approved by the stockholders of the Company, with any other corporation; *other than:*

 

(A)                              any such merger or consolidation that wouldresult in the voting securities of the Company outstanding immediately prior tothe merger or consolidation, continuing to represent (either by remainingoutstanding or by being converted into voting securities of the surviving orparent entity) more than fifty percent of the combined voting power of thevoting securities (entitled to vote generally for the election of directors) ofthe Company or such surviving or parent entity outstanding immediately aftersuch merger or consolidation, or subsequently at any time as contemplated by oras a result of, such merger or consolidation; or

 

(B)                                any such merger or consolidation where suchmerger or consolidation is effected to implement a recapitalization orreincorporation of the Company (or similar transaction) in which no “person”(as such term is used in Sections 13(d) and 14(d) of the Securities ExchangeAct of 1934, as amended) acquires fifty percent or more of the combined votingpower of the Company’s then-outstanding voting securities;

 

(d)           anymerger or consolidation of the Company in which the Company is not thecontinuing or surviving corporation or pursuant to which shares of theCompany’s stock, would be converted into cash, securities or other property; *other than*amerger or consolidation of the Company in which the stockholders of the Companyimmediately prior to the merger or consolidation have substantially the sameproportionate ownership and voting control of the surviving corporation orparent entity immediately after the merger or consolidation;

 

(e)           exceptas described below, the Company ceases to be a reporting company pursuant toSection 13 (a) of the Securities Exchange Act of 1934 as amended, or anysimilar successor provision;

 

(f)            thenumber of the Company’s Outside Directors, as defined below, is decreased bymore than fifty percent in any twenty-five month period or the number of theCompany’s directors increased in such a manner that the Outside Directorsconstitute less than a majority of the Board;

 

(g)           thestockholders of the Company approve a plan of complete liquidation of theCompany or an agreement for the sale, lease, exchange, liquidation, dispositionor other transfer (in one transaction or a series of transactions) by theCompany of all or substantially all of the Company’s assets (or any transactionhaving a similar effect).

 

(h)                                 further, *a “Change in Control”*shall *not*bedeemed to occur if the conditions set forth in the following sub-paragraphshall have been satisfied:

 

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(A)  amerger, consolidation or reorganization of the Company if, upon consummation ofsuch transaction all of the outstanding voting stock of the Company is owned,directly or indirectly, by a holding company, and the holders of the Company’scommon stock immediately prior to the transaction have substantially the sameproportionate ownership and voting control of the holding company.

 

(3)*           “Good Reason”*fortermination by the Executive of the Executive’s employment shall mean theoccurrence of any one of the following acts unless such act is corrected priorto the Termination Date specified in the Termination Notice given in respectthereof or, in the case of paragraph (d) below, such act is not objected to inwriting by the Executive within four months after notification by the Companyto the Executive of the Company’s intention to take the action contemplated bysuch paragraph (d):

 

(a)                                  the assignment of duties to the Executivewhich:

 

(i)                                     are materially different from his dutiesimmediately prior to the Change in Control, or

 

(ii)                                  result in his having significantly lessauthority or responsibility than he had prior to the Change in Control;

 

(b)                                 the Executive’s removal from, or any failureto re-elect him to, any position he held immediately prior to the Change inControl;

 

(c)                                  a reduction of the Executive’s annual basesalary in effect on the date of the Change in Control or as the same may beincreased from time to time thereafter;

 

(d)                                 the Company’s transferring or assigning theExecutive to a place of employment more than one hundred miles from PresqueIsle, Maine, except where: (1) such transfer or assignment is to a subsidiaryor affiliate entity location, consistent with the Executive’s duties; and (2)in connection with required business travel to an extent substantiallyconsistent with the Executive’s business travel obligations immediately priorto the Change in Control;

 

(e)                                  the Company’s failure to provide theExecutive with substantially the same health, life and other employee benefitplans, programs and arrangements (specifically including the Company’scompensation and incentive plans, as the same may be amended in the future),and substantially the same perquisites of employment, as provided to himimmediately prior to the Change in Control or as the same may be increasedthereafter;

 

(f)                                    the Company’s failure to provide theExecutive with substantially the same support staff as provided to himimmediately prior to the Change in Control; or

 

(g)                                 the Company’s failure to increase theExecutive’s salary, employee benefits or perquisites of employment in a manneror amount commensurate with increases provided to the Company’s other executiveofficers.

 

(4)*                                 **“Outside Directors”*an *“OutsideDirector”*as of a given date, shall mean a member of the Company’sboard of directors who has been a director of the Company throughout the sixmonth period prior to such date and who has not been an employee of the Companyat any time during such six month period.

 

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(5)*                                 **“Termination Date”*shall have the meaning stated in Section 2(2).

 

(6)*                                 **“Termination Notice”*shall have the meaning stated in Section 2(1).

 

Section 2.                                            **Termination Procedures**

 

(1)*           Termination Notice.*Anypurported termination of the Executive’s employment (other than by reason ofdeath, or at will termination) shall be communicated by a written notice of theterminating party (a “Termination Notice”) in accordance with Section *6 (2).*

 

(2)*           Termination Date.*“TerminationDate” shall mean the date as of which the Executive’s employment is toterminate as specified in the Termination Notice, which, in the case of atermination by the Company otherwise than for Cause, may be the same date ofthe Termination Notice and, in the case of a termination by the Executive,shall not be less than fourteen days nor more than sixty days, respectively,from the date the Termination Notice is given, unless otherwise agreed to bythe parties.

 

Section 3.                                            **Benefits Upon Certain Terminations**

 

(1)*           General.*If a Change ofControl occurs and, within one year following the occurrence of such Change ofControl (i) the Company terminates the Executive’s employment for any reasonother than for Cause, or (ii) the Executive terminates his employment for GoodReason, then in lieu of any further salary payments to the Executive forperiods subsequent to the Termination Date, the Company shall provide theExecutive with the following:

 

(a)           Within thirtybusiness days after the Termination Date, a lump sum cash payment equal to thesum of: (i) two hundred percent (200%) of the Executive’s annual base salary ineffect upon the Change in Control or the date of the Termination Notice,whichever is higher, and (ii) two hundred percent (200%) of the bonus award theExecutive would have received for the year in which such termination occurspursuant to the Company’s Incentive Compensation Plan, assuming that hisemployment had not terminated and that for such year all applicable performancegoals will be met. In the event any portion of this award depends on goals thatcannot be determined until the close of the plan year, then payment of thatamount shall be made within thirty days after the goal has been determined.

 

(b)           The continuation ofthe Executive’s participation and the participation of his dependants (to theextent they were participating on the date of the Termination Notice) in theCompany’s health, life, disability and other employee benefit plans, programsand arrangements (excluding the Pension Plan and the Non-Union RetirementSavings Plan) for a period of twenty-four (24) months after such termination asif he were still employed during such period; provided, however, if suchparticipation in any such plan, program or arrangement is specificallyprohibited by the terms thereof, the Company shall provide the Executive (andhis dependants) with benefits substantially similar to those which he wasentitled to receive under such plan, program or arrangement immediately priorto his termination of employment. Additionally, at the end of any period ofsuch coverage, the Executive shall have the right to have assigned to him, forthe cash surrender value thereof, any assignable insurance owned by the Companyon the life of the Executive. For purposes of this paragraph 3(b), any employeebenefit determined with reference to the Executive’s compensation or earningsshall be based on his annual base salary unless otherwise provided under theterms of the applicable employee benefit plan, program or arrangement.

 

(2)*                                 **Death, at will termination.*Notwithstanding any provision of thisAgreement to the contrary, no benefits are payable hereunder upon theExecutive’s death prior to: (1) the involuntary

 

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terminationof his employment with the Company for Cause or otherwise, or (2) the voluntarytermination by the Executive of the Executive’s employment with the Company forGood Reason. No benefits are payable hereunder upon the Company’s at willtermination of employment for reasons other than those set forth in thisAgreement.

 

Section 4.                                            **Term of Agreement**

 

ThisAgreement initially shall continue in effect until the third anniversary of thedate hereof.

 

Section 5.                                            **Successors**

 

Inaddition to any obligations imposed by law upon any successor to the Company,the Company will require any successor (whether direct or indirect, bypurchase, merger, consolidation or otherwise) to all or substantially all ofthe business and/or assets of the Company to expressly assume and agree toperform this Agreement in the same manner and to the same extent that theCompany would be required to perform it if no such succession had taken place.Failure of the Company to obtain such assumption and agreement prior to theeffectiveness of any such succession shall be a breach of this Agreement andshall entitle the Executive to compensation from the Company in the same amountand on the same terms as the Executive would be entitled to hereunder if theExecutive were to terminate the Executive’s employment for Good Reason, exceptthat, for purposes of implementing the foregoing, the date on which any suchsuccession becomes effective shall be deemed the Termination Date.

 

Section 6.                                          **Miscellaneous**

 

(1)*           Amendments.*This Agreementmay not be amended, modified or supplemented by the parties hereto in anymanner, except by an instrument in writing signed on behalf of each of theparties hereto.

 

(2)*                                 **Notices.*Anynotice, request, instruction or other document to be given hereunder by anyparty to the other shall be in writing and delivered personally or sent bycertified mail, postage prepaid, by facsimile (with receipt confirmed), or bycourier service and shall be effective upon receipt if addressed or sent asfollows:

 
| To the Company:   |   | Maine & Maritimes Corporation          |
|-------------------|--------|--------------------------------------------|
|              |   | P. 0. Box 789, Presque Isle, ME 04769-0789 |
|              |   | Fax:                                       | 207-760-2498 |   |
|              |   | Attention:                                 | J. Nick Bayne |   |
|              |   |                                       |
| To the Executive: |   | Michael  A. Thibodeau                      |
|              |   | 68  Pine Street                            |
|              |   | Presque  Isle, ME 04769-2937               |
|              |   | Fax:                                       | 207-760-2498 |   |
|                   |        |                                            |  |  |  |  |

 

orto such other address or person as may be designated in writing by a party, bya notice given to the others as aforesaid.

 

(3)*           No Additional Effect.*Exceptas expressly provided herein, nothing contained herein shal be construed toprovide the Executive with any specific period of employment, right to beretained in the service of the Company or other rights, nor shall thisAgreement be construed to otherwise limit the right: of the Company todischarge or take other action with respect to the Executive. The Executivehereb3 acknowledges that he or she remains an employee at will of the Companyand that any rights of the

 

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Executivearising under this Agreement arise only upon the circumstances specifically setforth in this Agreement.

 

(4)*           Construction.*The headingsin this Agreement are included only for convenience and shall not affect themeaning or interpretation of this Agreement. The words “herein” and “hereof’and other words of similar import refer to this Agreement as a whole and not toany particular part of this Agreement. The word “including” as used hereinshall not be construed so as to exclude any other thing not referred to ordescribed. The Outside Directors shall have the authority to construe andinterpret this Agreement on behalf of the Company, and any such determinationby the Outside Directors shall be the conclusive construction on behalf of theCompany.

 

(5)*           Entire Agreement, Assignability, etc.*This Agreement (i) constitutes the entire agreement, and supersedesall other prior agreements, including without limitation prior employeecontinuity agreements, and understandings, both written and oral, between theparties with respect to the subject matter hereof, (ii) is not intended toconfer upon any person other than the parties hereto any rights or remedieshereunder, except as otherwise expressly provided herein, and (iii) shall notbe assignable by operation of law or otherwise. No provisions of this Agreementare intended, nor will be interpreted, to provide or create any third partybeneficiary rights or any other rights of any kind in any person unlessspecifically provided otherwise herein, and, except as so provided, allprovisions hereof will be personal solely among the parties to this Agreement.

 

(6)*           Validity.*The invalidityor unenforceability of any provisions of this Agreement shall not affect thevalidity or enforceability of any other provisions of this Agreement, each ofwhich shall remain in full force and effect.

 

(7)*                                 **Governing Law.*This Agreement shall be governed by the laws of the State of Maine,regardless of the laws that otherwise might govern under applicable principlesof conflicts of laws thereof.

 

(8)*                                 **Counterparts.*This Agreement may be executed in counterparts, each of which shall bedeemed to be an original but both of which together shall constitute one andthe same instrument.

 

(9)*                                 **Funding.*ThisAgreement shall not be construed to create or require the Company to create atrust or to otherwise act to fund the amounts payable hereunder.

 

(10)*         Limitation on Amount to be Paid.*Ifpayment of any amount under this Agreement would cause the Executive to besubject to an excise tax pursuant to Section *4999*of the Internal RevenueCode (as amended from time to time) or the regulations thereunder, then such amountshall not be paid to the extent necessary to avoid the imposition of such tax.The preceding sentence shall apply only if the aggregate amount payable to theExecutive or for his or her benefit under this Agreement, after payment of suchexcise tax, would be less than the aggregate amount payable in accordance withthe preceding sentence.

 

(11)*                           **Arbitration.*The Parties agree to resolve all disputes arising under this Agreementin arbitration as follows:

 

(a)           Any arbitration under this Agreement,and any related judicial proceeding, shall be initiated and shall proceedpursuant to the provisions of the Maine Uniform Arbitration Act (the “Act”)and, to the extent consistent with the Act, the then prevailing rules of theAmerican Arbitration Association (the “Association”) for labor and employmentcontracts. To initiate arbitration hereunder, demand shall be given in writingto the Association and the other Party no later than one year after the

 

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claimarises. Any claim for which such demand is not made within one year after theclaim arises shall be barred and discharged.

 

(b)           Any arbitration under this Agreementshall be before a single arbitrator mutually acceptable to the Parties, and anaward in such arbitration may include only damages which the arbitratordetermines to be due under express provisions of this Agreement. The arbitratorshall have no authority to award any other damages including withoutlimitation, consequential and exemplary damages. Any award in arbitration shallbe subject to enforcement and appeal pursuant to the Act.

 

(c)                                  The Parties shall share equally all costs andfees charged by the Association or the arbitrator.

 

(12)*         Execution of Further Documents.*Inthe event the Executive receives payments or benefits pursuant to this Agreementand the Company’s legal counsel deems it necessary for the Company to receive arelease or other acknowledgement the Executive agrees to execute any suchdocument as may be reasonably required as a condition of his/her receipt ofsuch payment or benefits.

 

INWITNESS WHEREOF, the parties have duly executed this Agreement as of the datefirst above written.

 

 
|   | **MAINE & MARITIMES CORPORATION** |
|--------|---------------------------------------|
|   |                                  |
|   |                                  |
|   | **/s/ Nathan L. Grass**               |   |
|   | **By:**                               |
|   | **Title:**                            |
|   |                                  |
|   | **EXECUTIVE**                         |
|   |                                  |
|   |                                  |
|   | **/s/ Michael A. Thibodeau**          |   |
|   | **Name:**                             |

 

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