**Exhibit 10(aq)**

 

**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 John P. Havrilla (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, Business Development and Unregulated Businesses; 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**

 

As used herein, the following terms have the indicated meanings:

 

(1)*                                 **“Cause”*fortermination by the Company of the Executive’s employment shall mean (i) thewillful and continued failure by the Executive to substantially perform hisduties with the Company after a written notice is delivered to the Executive bythe Company, which notice specifically identifies the manner in which theCompany believes that the Executive has not substantially performed theExecutive’s duties; or (ii) the willful engaging by the Executive in grossmisconduct that is injurious to the Company, monetarily or otherwise(including, without limitation, the Executive’s conviction, by a court ofcompetent jurisdiction, of a crime adversely reflecting on the Executive’shonesty, trustworthiness or fitness to carry out the responsibilities of hisposition with the Company). An act, or failure to act, on the Executive’s partshall be deemed “willful” where such act is done, or not done, by theExecutive: (i) in the absence of good faith; or (ii) without a reasonablebelief that the Executive’s act, or failure to act, was in the best interest ofthe 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 tohave occurred if the conditions set forth in any one of the followingparagraphs shall have been satisfied:

 

(a)                                  any “person” (as such term is used inSections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended)(other than the Company, any trustee or other fiduciary holding securitiesunder any employee benefit plan of the Company, or any corporation owneddirectly or indirectly by the stockholders of the Company in substantially thesame 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)                                 a change in the composition of the Board ofDirectors of the Company, as a result of which fewer than a majority of thedirectors are persons who either (A) are directors of the Company as of thedate hereof or (B) were elected after nomination by a majority of the directorsof the Company on the date hereof and directors 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)                                                    any merger or consolidation of the Company inwhich the Company is not the continuing or surviving corporation or pursuant towhich shares of the Company’s stock, would be converted into cash, securitiesor other property; *other than*a merger or consolidation ofthe Company in which the stockholders of the Company immediately prior to themerger or consolidation have substantially the same proportionate ownership andvoting control of the surviving corporation or parent entity immediately afterthe merger or consolidation;

 

(e)                                                     except as described below, the Company ceasesto be a reporting company pursuant to Section 13 (a) of the SecuritiesExchange Act of 1934 as amended, or any similar successor provision;

 

(f)                                                       the number of the Company’s OutsideDirectors, as defined below, is decreased by more than fifty percent in anytwenty-five month period or the number of the Company’s directors increased insuch a manner that the Outside Directors constitute less than a majority of theBoard;

 

(g)                                                    the stockholders of the Company approve aplan of complete liquidation of the Company or an agreement for the sale,lease, exchange, liquidation, disposition or other transfer (in one transactionor a series of transactions) by the Company of all or substantially all of theCompany’s assets (or any transaction having 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)                              a merger, consolidation or reorganization ofthe Company if, upon consummation of such transaction all of the outstandingvoting stock of the Company is owned, directly or indirectly, by a holdingcompany, and the holders of the Company’s common stock immediately prior to thetransaction have substantially the same proportionate ownership and votingcontrol of the holding company.

 

(3)*                                 **“Good Reason”*for termination by the Executive of the Executive’s employment shallmean the occurrence of any one of the following acts unless such act iscorrected prior to the Termination Date specified in the Termination Noticegiven in respect thereof or, in the case of paragraph (d) below, such act isnot objected to in writing by the Executive within four months afternotification by the Company to the Executive of the Company’s intention to takethe action contemplated by such 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 six monthperiod prior to such date and who has not been an employee of the Company atany 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.*Any purported termination of the Executive’s employment (other than byreason of death, or at will termination) shall be communicated by a writtennotice of the terminating party (a “Termination Notice”) in accordance withSection *6 (2).*

 

(2)*                                 **Termination Date.*“Termination Date” shall mean the date as of which the Executive’semployment is to terminate as specified in the Termination Notice, which, inthe case of a termination by the Company otherwise than for Cause, may be thesame date of the Termination Notice and, in the case of a termination by theExecutive, shall not be less than fourteen days nor more than sixty days,respectively, from the date the Termination Notice is given, unless otherwiseagreed to by the parties.

 

Section 3.                                            **Benefits Upon Certain Terminations**

 

(1)*                                 **General.*Ifa Change of Control occurs and, within one year following the occurrence ofsuch Change of Control (i) the Company terminates the Executive’s employmentfor any reason other than for Cause, or (ii) the Executive terminates hisemployment for Good Reason, then in lieu of any further salary payments to theExecutive for periods subsequent to the Termination Date, the Company shallprovide the Executive with the following:

 

(a)                                  Within thirty business days after theTermination Date, a lump sum cash payment equal to the sum of: (i) two hundredpercent (200%) of the Executive’s annual base salary in effect upon the Changein Control or the date of the Termination Notice, whichever is higher, and (ii)two hundred percent (200%) of the bonus award the Executive would have receivedfor the year in which such termination occurs pursuant to the Company’sIncentive Compensation Plan, assuming that his employment had not terminatedand that for such year all applicable performance goals will be met. In theevent any portion of this award depends on goals that cannot be determineduntil the close of the plan year, then payment of that amount shall be madewithin thirty days after the goal has been determined.

 

(b)                                 The continuation of the Executive’sparticipation and the participation of his dependants (to the extent they wereparticipating on the date of the Termination Notice) in the Company’s health,life, disability and other employee benefit plans, programs and arrangements(excluding the Pension Plan and the Non-Union Retirement Savings Plan) for aperiod of twenty-four (24) months after such termination as if he were stillemployed during such period; provided, however, if such participation in anysuch plan, program or arrangement is specifically prohibited by the termsthereof, the Company shall provide the Executive (and his dependants) withbenefits substantially similar to those which he was entitled to receive undersuch plan, program or arrangement immediately prior to his termination ofemployment. Additionally, at the end of any period of such coverage, theExecutive shall have the right to have assigned to him, for the cash surrendervalue thereof, any assignable insurance owned by the Company on the life of theExecutive. For purposes of this paragraph 3(b), any employee benefit determinedwith reference to the Executive’s compensation or earnings shall be based onhis annual base salary unless otherwise provided under the terms of theapplicable 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 the Executivewere to terminate the Executive’s employment for Good Reason, except that, forpurposes of implementing the foregoing, the date on which any such successionbecomes effective shall be deemed the Termination Date.

 

Section 6.                                          **Miscellaneous**

 

(1)*                                 **Amendments.*ThisAgreement may not be amended, modified or supplemented by the parties hereto inany manner, 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 as follows:

 
| 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: |   | John  P. Havrilla                          |
|              |   | P.O.  Box 783                              |
|              |   | Presque  Isle, ME 04769-                   |
|              |   | 0783Fax:                                   | 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.*Except as expressly provided herein, nothing contained herein shal beconstrued to provide the Executive with any specific period of employment,right to be retained in the service of the Company or other rights, nor shallthis Agreement 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 headings in this Agreement are included only for convenience andshall not affect the meaning or interpretation of this Agreement. The words“herein” and “hereof’ and other words of similar import refer to this Agreementas a whole and not to any particular part of this Agreement. The word“including” as used herein shall not be construed so as to exclude any otherthing not referred to or described. The Outside Directors shall have theauthority to construe and interpret this Agreement on behalf of the Company,and any such determination by the Outside Directors shall be the conclusiveconstruction on behalf of the Company.

 

(5)*                                 **Entire Agreement, Assignability, etc.*This Agreement (i) constitutes the entireagreement, and supersedes all other prior agreements, including withoutlimitation prior employee continuity agreements, and understandings, bothwritten and oral, between the parties with respect to the subject matterhereof, (ii) is not intended to confer upon any person other than the partieshereto any rights or remedies hereunder, except as otherwise expressly providedherein, and (iii) shall not be assignable by operation of law or otherwise. Noprovisions of this Agreement are intended, nor will be interpreted, to provideor create any third party beneficiary rights or any other rights of any kind inany person unless specifically provided otherwise herein, and, except as soprovided, all provisions hereof will be personal solely among the parties tothis Agreement.

 

(6)*                                 **Validity.*Theinvalidity or unenforceability of any provisions of this Agreement shall notaffect the validity or enforceability of any other provisions of thisAgreement, each of which 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.*If payment of any amount under this Agreementwould cause the Executive to be subject to an excise tax pursuant toSection *4999*of the Internal Revenue Code (as amended from time totime) or the regulations thereunder, then such amount shall not be paid to theextent necessary to avoid the imposition of such tax. The preceding sentenceshall apply only if the aggregate amount payable to the Executive or for his orher benefit under this Agreement, after payment of such excise tax, would beless than the aggregate amount payable in accordance with the precedingsentence.

 

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

 

(a)                                  Any arbitration under this Agreement, and anyrelated judicial proceeding, shall be initiated and shall proceed pursuant tothe provisions of the Maine Uniform Arbitration Act (the “Act”) and, to theextent consistent with the Act, the then prevailing rules of the AmericanArbitration Association (the “Association”) for labor and employment contracts.To initiate arbitration hereunder, demand shall be given in writing to theAssociation 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 Agreement shall bebefore a single arbitrator mutually acceptable to the Parties, and an award insuch arbitration may include only damages which the arbitrator determines to bedue under express provisions of this Agreement. The arbitrator shall have noauthority to award any other damages including without limitation,consequential and exemplary damages. Any award in arbitration shall be subjectto 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.*In the event the Executive receives paymentsor benefits pursuant to this Agreement and the Company’s legal counsel deems itnecessary for the Company to receive a release or other acknowledgement theExecutive agrees to execute any such document as may be reasonably required asa condition of his/her receipt of such 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/ John P.  Havrilla**             |   |
|   | **Name: JOHN P. HAVRILLA**            |

 

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