**Exhibit 10(at)**

 

**EMPLOYMENT CONTINUITY AGREEMENT**

 

This Agreementmade as of this 9’’ day of May, 2000, by and between MAINE PUBLIC SERVICECOMPANY, a Maine corporation with its principal place of business in PresqueIsle, Maine (the “Company”) and Calvin D. Deschene of Presque Isle, Maine,(“Director”).

 

WHEREAS, theDirector has been employed by the Company and its energy marketing subsidiary,Energy Atlantic, LLC (EA), in a management capacity for over 13 years, and isnow the Director of EA; and

 

WHEREAS, theDirector’s knowledge of EA’s affairs and his experience are critical to theprotection and enhancement of the best interests of the Company, its employees,ratepayers and stockholders; and

 

WHEREAS, in thecurrent competitive energy market the continuing operation of EA cannot beassured; and

 

WHEREAS, theCompany desires to assure itself of the continued employment of the Directorand the benefit of his independent judgment in the operation of EA,particularly in light of the uncertainties concerning EA’s future as anaffiliated energy marketer;

 

NOW, THEREFORE, inconsideration of the mutual promises and undertakings herein contained and forother good and valuable consideration, the receipt and adequacy of which isacknowledged by each of the parties, the Director and the Company agree asfollows:

 

1.             Term of theAgreement and Renewal. The term of this Agreement shall be for a periodbeginning May 9, 2000, and ending December 31, 2001. On January 1, 2002, and onJanuary 1 of each period of three (3) years thereafter (in each case such dateto be a “Renewal Date”) this Agreement automatically shall be renewed for anadditional three (3) year term, unless at least one (1) year prior to any suchRenewal Date, either party shall have given written notice to the other thatsuch renewal shall not take place. Such notice may be given by the Company onlyupon the affirmative vote of the Compensation Committee of the Board ofDirectors.

 

2.             Rights UponInvoluntary Termination of Employment. If (i) within twenty-four (24)months after the occurrence of a Change in Control Event, the Companyterminates the Director’s employment for any reason other than Good Cause asdefined in Paragraph 4, or if the Director voluntarily terminates employmentfor Good Reason as defined in Paragraph 3, or (ii) at any time during the termof this Agreement, or any extension thereof, EA shall effectively cease doingbusiness (regardless of any formal dissolution or winding up of EA) and theOfficer is not offered a position with the Company at a base salary and a levelof employee benefits substantially the same as EA provided to him immediatelyprior to its cessation of operations, the Company shall provide the Directorwith the following:

 

(a)           Within thirty (30) daysof such termination, a lump sum cash payment in an amount equal to the sum of:

 

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(i)                one hundredpercent (100%) of the Director’s annual base salary in effect upon the date ofthe Change in Control Event or when EA ceased doing business, whicheverapplies, and

 

(ii)               one hundred percent(100%) of the award the Director would have received for the year in which suchtermination occurs, pursuant to the EA Incentive Compensation Plan, assumingthat his employment had not terminated and that for such year all applicableperformance goals will be met. In the event any portion of this award dependson goals that cannot be determined until the close of the Plan Year, thenpayment of that amount shall be made within 30 days after the goal has beendetermined.

 

(b)              The continuation ofthe Director’s participation and the participation of his dependents (to theextent they were participating prior to his termination of employment) in EA’shealth, life, disability and other employee benefit plans, programs andarrangements (excluding the Pension Plan and the Non-Union Retirement SavingsPlan) for a period of twenty-four (24) months after such termination as if hewere 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 Director (andhis dependents) 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 Director shall have the right to have assigned to him, forthe cash surrender value thereof, any assignable insurance owned by EA on thelife of the Director. For purposes of this Paragraph 2(b), any employee benefitdetermined with reference to the Director’s compensation or earnings shall bebased on his annual base salary unless otherwise provided under the terms ofthe applicable employee benefit plan, program or arrangement.

 

(c)             The Company shall paythe Director an amount equal to the award he would have been entitled toreceive under EA’s Incentive Compensation Plan, if his employment had notterminated, based on the base salary he had earned as of his termination date,and assuming that for such year all applicable performance goals will be met.Such payment shall be made within ninety (90) days after his employmentterminates, except that if any portion of the amount depends on goals thatcannot be determined until the close of the Plan Year, then payment of thatamount shall be made within 30 days after this goal has been determined.

 

3.               Termination forGood Reason. For purposes of this Agreement, termination by the Director ofhis employment for “Good Reason,” except upon the Director’s express writtenconsent otherwise, shall mean:

 

(a)           the assignment ofduties to the Director which:

 

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(i)              are materiallydifferent from his duties immediately prior to the change in Control Event, or

 

(ii)             result in his havingsignificantly less authority or responsibility than he had prior to the Changein Control Event; or

 

(b)             the Director’sremoval from, or any failure to re-elect him to, any position he heldimmediately prior to the Change in Control Event with EA; or,

 

(c)             a reduction of theDirector’s annual base salary in effect on the date of the Change in ControlEvent or as the same may be increased from time to time thereafter; or

 

(d)             the Company’stransferring or assigning the Director to a place of employment more thantwenty-five (25) miles from Presque Isle, Maine, except for required businesstravel to an extent substantially consistent with his business travelobligations immediately prior to the Change in Control Event; or

 

(e)             the Company’s failureto provide the Director with substantially the same health, life and otheremployee benefit plans, programs and arrangements (specifically including EA’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 Event or as the same may beincreased thereafter; or

 

(f)              the Company’sfailure to provide the Director with substantially the same support staff asprovided to him immediately prior to the Change in Control Event; or

 

(g)             the Company’s failureto increase the Director’s salary, employee benefits or perquisites ofemployment in a manner or amount commensurate with increases provided to theCompany’s other executive officers; or

 

(h)             the Company’s failureto obtain from any successor a satisfactory agreement to assume and perform theterms of this Agreement.

 

4.               Termination byReason of Death or for Good Cause. Notwithstanding any provision of this Agreement to the contrary, nobenefits are payable hereunder upon the Director’s death prior to hisinvoluntary termination of employment pursuant to Paragraph 2 or voluntarytermination of employment for Good Reason pursuant to Paragraph 3. The Companyretains the right to terminate the Director for “Good Cause,” in which event heshall not be entitled to receive any payment or benefits pursuant to thisAgreement. “Good Cause” shall mean:

 

(a)           the Director’sconviction, by a court of competent jurisdiction, of a crime adverselyreflecting on his honesty, trustworthiness or fitness to carry out theresponsibilities of his position with the Company in other respects; or

 

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(b)             a willful breach byhim of any material duty or obligation imposed upon him under the terms of hisemployment, as those terms existed immediately prior to any Change in ControlEvent, and his failure to cure such breach within thirty (30) days afterreceiving notice thereof from the Company.

 

5.               “Change inControl Event.” Each of the following events shall constitute a “Change inControl Event” for purposes of this Agreement:

 

(a)             Any person acquiresbeneficial ownership of Company securities and is or thereby becomes a beneficialowner of securities entitling such person to exercise twenty-five percent (25%)or more of the combined voting power of the Company’s then outstanding stock.

 

For purposes ofthis Agreement, “beneficial ownership” shall be determined in accordance withRegulation 13D under the Securities Exchange Act of 1934, or any similarsuccessor regulation or rule; and the term “person” shall include any naturalperson, corporation, partnership, trust or association, or any group orcombination thereof, whose ownership of Company securities would be required tobe reported under such Regulation 13D, or any similar successor regulation orrule.

 

(b)           The Company ceases tobe a reporting company pursuant to Section 13(a) of the Securities Exchange Actof 1934 or any similar successor provision.

 

(c)           The number of theCompany’s Outside Directors, as defined herein, is decreased by more than fiftypercent (50%) in any twenty-five (25) month period or the number of theCompany’s directors is increased such that the Outside Directors constituteless than a majority of the Board.

 

(d)           Within any twenty-five(25) month period, individuals who were Outside Directors at the beginning ofsuch period, together with any other Outside Directors first elected asdirectors of the Company pursuant to nominations approved or ratified by atleast two-thirds (2/3) of the Outside Directors in office immediately prior tosuch respective elections, cease to constitute a majority of the board ofdirectors of the Company.

 

(e)           The Company is subjectto a change in control which would require reporting in response to Item 1 ofForm 8-K under Regulation 13a- 11 promulgated under the Securities Exchange Actof 1934, as amended, or any similar successor statute or rule, whether or notthe Company is a reporting company under such Act.

 

(f)           The Company’sstockholders approve:

 

(i)            any consolidation ormerger of the Company in which the Company is not the continuing or survivingcorporation or pursuant to which shares of Company common stock would beconverted into cash, securities or other property,

 

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other than amerger or consolidation of the Company in which the holders of the Company’scommon stock immediately prior to the merger or consolidation havesubstantially the same proportionate ownership and voting control of thesurviving corporation immediately after the merger or consolidation; or

 

(ii)             any sale, lease,exchange, liquidation or other transfer (in one transaction or a series oftransactions) of all or substantially all of the assets of the Company.

 

Notwithstandingsubparagraphs (i) and (ii) above, the term “Change in Control Event” shall notinclude a consolidation, merger, or other reorganization if upon consummationof such transaction all of the outstanding voting stock of the Company isowned, directly or indirectly, by a holding company, and the holders of theCompany’s common stock immediately prior to the transaction have substantiallythe same proportionate ownership and voting control of the holding company.

 

(g)           50% or more of eitherthe Company’s interests in or the assets of EA are sold, leased, exchanged orotherwise transferred to any person who is not an affiliate of the Companyunder 35-A M.R.S.A. § 707, regardless of whether any Change of Control Eventoccurs with respect to the Company.

 

6.             Outside Directors.For purposes of this Agreement, an “Outside Director” as of a given date shallmean a member of the Company’s board of directors who has been a director ofthe Company throughout the six (6) months prior to such date and who has notbeen an employee of the Company at any time during such six (6) month period.

 

7.             Notices. Anyand all notices required or permitted to be given hereunder shall be in writingand shall be deemed to have been given when deposited in the United Statesmails, certified or registered mail, postage prepaid and addressed as follows:

 

Tothe Director:                    CalvinD. Deschene

27 Hillside Street

Presque Isle, ME04769-2425

 

Tothe Company:                 MainePublic Service Company

P. 0. Box 1209

Presque Isle,Maine 04769-1209

 

Eitherparty may change by notice to the other the address to which notices to it areto be addressed.

 

8.             Applicable Law,Taxes, Binding Agreement, Severability, Construction.

 

(a)          This Agreement shall begoverned by and construed in accordance with the laws of the State of Maine,except as to any matter which is preempted by federal law.

 

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(b)             Notwithstandinganything to the contrary herein contained, the Company may withhold from anyamounts payable under this Agreement all federal, state or other taxes orassessments which may be required by applicable statute or regulation to bewithheld.

 

(c)             This Agreement shallbe binding upon and inure to the benefit of the Director his heirs, assigns,executors and legal representatives; and the Company, its successors andassigns.

 

(d)             If any provision ofthis Agreement shall be held invalid or unenforceable by a court of competentjurisdiction, the remainder of this Agreement shall not be affected thereby.

 

(e)             The Outside Directorsshall have the authority to construe and interpret this Agreement on behalf ofthe Company, and any such determination by the Outside Directors shall beconclusive on the Company.

 

9.               Limitation onAmount to be Paid. If payment of any amount under this Agreement wouldcause the Director to be subject to an excise tax pursuant to Section 4999 ofthe Internal Revenue Code (as amended from time to time) or the regulationsthereunder, then such amount shall not be paid to the extent necessary to avoidthe imposition of such tax. The preceding sentence shall apply only if theaggregate amount payable to the Director or for his benefit under theAgreement, after payment of such excise tax, would be less than the aggregateamount payable in accordance with the preceding sentence.

 

10.           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.

 

11.           Assignment.Except as required bylaw, the right to receive payments hereunder shall not besubject to alienation, assignment, garnishment, attachment, execution or levyof any kind, and any attempt to cause such payments to be so subject shall notbe recognized by the Company.

 

12.           Execution of FurtherDocuments.  In the event theDirector receives payments or benefits pursuant to the terms hereof and theCompany’s independent counsel deems it necessary for the Company to receive arelease or other acknowledgment, the Director agrees to execute any suchdocument, as may be reasonably required as a condition of his receipt of suchpayment or benefits.

 

13.           Amendment andWaiver. The Agreement may be amended only in writing, by the partieshereto, and no condition or provision of the Agreement may be waived except inwriting. Waiver by either party at any time of the other party’s breach of, orfailure to comply with, any condition or provision of this Agreement to beperformed by such other party shall not be deemed a waiver of any otherprovision or condition at the same time or of any provision or condition at anyprior or subsequent time, unless specifically stated therein.

 

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14.        Arbitration. In recognitionof the mutual benefits of arbitration, the parties hereby agree thatarbitration as provided for herein shall be the exclusive remedy for resolvingany claim or dispute arising under this Agreement, and hereby mutually waiveany and all other remedies at law or in equity for determining any such claimor dispute.

 

(a)        Any arbitration under thisAgreement, and any related judicial proceeding, shall be initiated and shallproceed pursuant 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 claimarises. Any claim for which such demand is not made within one year after theclaim arises shall be barred and discharged absolutely.

 

(b)        Any arbitration under thisAgreement shall be before a single arbitrator, and an award in such arbitrationmay include only damages which the arbitrator determines to be due underexpress provisions of this Agreement. The arbitrator shall have no authority toaward any other damages, including without limitation, consequential andexemplary damages. Any award in arbitration shall be subject to enforcement andappeal pursuant to the Act.

 

(c)       The parties shall shareequally all costs and fees charged by the Association or the arbitrator.

 

15.      No Additional Effect.Except as expressly provided herein, nothing contained herein shall beconstrued to provide the Director with any specific period of employment, rightto be retained in the service of the Company or EA or other rights, nor shallthis Agreement be construed to otherwise limit the rights of the Company todischarge or take other action with respect to the Officer.

 

IN WITNESS WHEREOF, theparties have executed this Agreement as of the day and year first abovewritten. 

 
| Witness:               |                                  | MAINE PUBLIC SERVICE  COMPANY     |
|------------------------|---------------------------------------|-----------------------------------|
|                   |                                  |
|                   |                                  |
| /s/ Paul R. Cariani    |                                  | By                                | /s/ Nathan L. Grass |   |
|                   | Its Chairman,  Executive Compensation |                              |
|                   | Committee                             |                              |
|                   |                                  |
| /s/ Stephen A. Johnson |                                  | /s/ Calvin D. Deschene            |   |
|                   |                                  | Director  Calvin D. Deschene |
|                        |                                       |                                   |  |  |  |

 

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