Exhibit 10(ar)


 


Maine
& Maritimes Corporation


 


 


EMPLOYEE
RETENTION AGREEMENT


 


 


THIS
EMPLOYEE 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 and
Executive are sometimes referred to as “Party” or collectively “Parties”).


 


RECITALS


 


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


 


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


 


Now,
THEREFORE, in consideration of the mutual promises and covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Parties, the Company and the
Executive agree as follows:


 


Section 1.                                     Certain Definitions


 


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


 


(1)           “Cause” for termination by
the Company of the Executive’s employment shall mean (i) the willful and
continued failure by the Executive to substantially perform his duties with the
Company after a written notice is delivered to the Executive by the Company,
which notice specifically identifies the manner in which the Company believes
that the Executive has not substantially performed the Executive’s duties; or
(ii) the willful engaging by the Executive in gross misconduct that is
injurious to the Company, monetarily or otherwise (including, without
limitation, the Executive’s conviction, by a court of competent jurisdiction,
of a crime adversely reflecting on the Executive’s honesty, trustworthiness or
fitness to carry out the responsibilities of his position with the Company). An
act, or failure to act, on the Executive’s part shall be deemed “willful” where
such act is done, or not done, by the Executive: (i) in the absence of good
faith; or (ii) without a reasonable belief that the Executive’s act, or failure
to act, was in the best interest of the Company.


 


(2)           For the purpose of this definition (“Change in
Control”) only, the term “Company,” first defined above, shall also
be 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 if
the conditions set forth in any one of the following paragraphs shall have been
satisfied:


 


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


 

















 


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


 


(b)           a
change in the composition of the Board of Directors of the Company, as a result
of which fewer than a majority of the directors are persons who either (A) are
directors of the Company as of the date hereof or (B) were elected after
nomination by a majority of the directors of 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 would
result in the voting securities of the Company outstanding immediately prior to
the merger or consolidation, continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving or
parent entity) more than fifty percent of the combined voting power of the
voting securities (entitled to vote generally for the election of directors) of
the Company or such surviving or parent entity outstanding immediately after
such merger or consolidation, or subsequently at any time as contemplated by or
as a result of, such merger or consolidation; or


 


(B)                                any such merger or consolidation where such
merger or consolidation is effected to implement a recapitalization or
reincorporation 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 Exchange
Act of 1934, as amended) acquires fifty percent or more of the combined voting
power of the Company’s then-outstanding voting securities;


 


(d)           any
merger or consolidation of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the
Company’s stock, would be converted into cash, securities or other property; other than a
merger or consolidation of the Company in which the stockholders of the Company
immediately prior to the merger or consolidation have substantially the same
proportionate ownership and voting control of the surviving corporation or
parent entity immediately after the merger or consolidation;


 


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


 


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


 


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


 


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


 

















 


(A)  a
merger, consolidation or reorganization of the Company if, upon consummation of
such 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’s
common stock immediately prior to the transaction have substantially the same
proportionate ownership and voting control of the holding company.


 


(3)           “Good Reason” for
termination by the Executive of the Executive’s employment shall mean the
occurrence of any one of the following acts unless such act is corrected prior
to the Termination Date specified in the Termination Notice given in respect
thereof or, in the case of paragraph (d) below, such act is not objected to in
writing by the Executive within four months after notification by the Company
to the Executive of the Company’s intention to take the action contemplated by
such paragraph (d):


 


(a)                                  the assignment of duties to the Executive
which:


 


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


 


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


 


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


 


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


 


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


 


(e)                                  the Company’s failure to provide the
Executive with substantially the same health, life and other employee benefit
plans, programs and arrangements (specifically including the Company’s
compensation and incentive plans, as the same may be amended in the future),
and substantially the same perquisites of employment, as provided to him
immediately prior to the Change in Control or as the same may be increased
thereafter;


 


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


 


(g)                                 the Company’s failure to increase the
Executive’s salary, employee benefits or perquisites of employment in a manner
or amount commensurate with increases provided to the Company’s other executive
officers.


 


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


 

















 


(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 by reason of
death, or at will termination) shall be communicated by a written notice of the
terminating party (a “Termination Notice”) in accordance with Section 6 (2).


 


(2)           Termination Date. “Termination
Date” shall mean the date as of which the Executive’s employment is to
terminate as specified in the Termination Notice, which, in the case of a
termination by the Company otherwise than for Cause, may be the same date of
the 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 by
the parties.


 


Section 3.                                            Benefits Upon Certain Terminations


 


(1)           General. If a Change of
Control occurs and, within one year following the occurrence of such Change of
Control (i) the Company terminates the Executive’s employment for any reason
other than for Cause, or (ii) the Executive terminates his employment for Good
Reason, then in lieu of any further salary payments to the Executive for
periods subsequent to the Termination Date, the Company shall provide the
Executive with the following:


 


(a)           Within thirty
business days after the Termination Date, a lump sum cash payment equal to the
sum of: (i) two hundred percent (200%) of the Executive’s annual base salary in
effect 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 the
Executive would have received for the year in which such termination occurs
pursuant to the Company’s Incentive Compensation Plan, assuming that his
employment had not terminated and that for such year all applicable performance
goals will be met. In the event any portion of this award depends on goals that
cannot be determined until the close of the plan year, then payment of that
amount shall be made within thirty days after the goal has been determined.


 


(b)           The continuation of
the Executive’s participation and the participation of his dependants (to the
extent they were participating 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 a period of twenty-four (24) months after such termination as
if he were still employed during such period; provided, however, if such
participation in any such plan, program or arrangement is specifically
prohibited by the terms thereof, the Company shall provide the Executive (and
his dependants) with benefits substantially similar to those which he was
entitled to receive under such plan, program or arrangement immediately prior
to his termination of employment. Additionally, at the end of any period of
such coverage, the Executive shall have the right to have assigned to him, for
the cash surrender value thereof, any assignable insurance owned by the Company
on the life of the Executive. For purposes of this paragraph 3(b), any employee
benefit determined with reference to the Executive’s compensation or earnings
shall be based on his annual base salary unless otherwise provided under the
terms of the applicable employee benefit plan, program or arrangement.


 


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


 

















 


termination
of his employment with the Company for Cause or otherwise, or (2) the voluntary
termination by the Executive of the Executive’s employment with the Company for
Good Reason. No benefits are payable hereunder upon the Company’s at will
termination of employment for reasons other than those set forth in this
Agreement.


 


Section 4.                                            Term of Agreement


 


This
Agreement initially shall continue in effect until the third anniversary of the
date hereof.


 


Section 5.                                            Successors


 


In
addition to any obligations imposed by law upon any successor to the Company,
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 this Agreement in the same manner and to the same extent that the
Company 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 the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as the Executive would be entitled to hereunder if the
Executive were to terminate the Executive’s employment for Good Reason, except
that, for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Termination Date.


 


Section 6.                                          Miscellaneous


 


(1)           Amendments. This Agreement
may not be amended, modified or supplemented by the parties hereto in any
manner, except by an instrument in writing signed on behalf of each of the
parties hereto.


 


(2)                                  Notices. Any
notice, request, instruction or other document to be given hereunder by any
party to the other shall be in writing and delivered personally or sent by
certified mail, postage prepaid, by facsimile (with receipt confirmed), or by
courier 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:

  	
   

  	
  Michael
  A. Thibodeau

  
	
   

  	
   

  	
  68
  Pine Street

  
	
   

  	
   

  	
  Presque
  Isle, ME 04769-2937

  
	
   

  	
   

  	
  Fax:

  	
  207-760-2498

  	
   

  
							



 


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


 


(3)           No Additional Effect. Except
as expressly provided herein, nothing contained herein shal be construed to
provide the Executive with any specific period of employment, right to be
retained in the service of the Company or other rights, nor shall this
Agreement be construed to otherwise limit the right: of the Company to
discharge or take other action with respect to the Executive. The Executive
hereb3 acknowledges that he or she remains an employee at will of the Company
and that any rights of the


 

















 


Executive
arising under this Agreement arise only upon the circumstances specifically set
forth in this Agreement.


 


(4)           Construction. The headings
in this Agreement are included only for convenience and shall not affect the
meaning 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 to
any particular part of this Agreement. The word “including” as used herein
shall not be construed so as to exclude any other thing not referred to or
described. The Outside Directors shall have the authority to construe and
interpret this Agreement on behalf of the Company, and any such determination
by the Outside Directors shall be the conclusive construction on behalf of the
Company.


 


(5)           Entire Agreement, Assignability, etc.
This Agreement (i) constitutes the entire agreement, and supersedes
all other prior agreements, including without limitation prior employee
continuity agreements, and understandings, both written and oral, between the
parties with respect to the subject matter hereof, (ii) is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder, except as otherwise expressly provided herein, and (iii) shall not
be assignable by operation of law or otherwise. No provisions of this Agreement
are intended, nor will be interpreted, to provide or create any third party
beneficiary rights or any other rights of any kind in any person unless
specifically provided otherwise herein, and, except as so provided, all
provisions hereof will be personal solely among the parties to this Agreement.


 


(6)           Validity. The invalidity
or unenforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provisions of this Agreement, 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 principles
of conflicts of laws thereof.


 


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


 


(9)                                  Funding. This
Agreement shall not be construed to create or require the Company to create a
trust or to otherwise act to fund the amounts payable hereunder.


 


(10)         Limitation on Amount to be Paid. If
payment of any amount under this Agreement would cause the Executive to be
subject to an excise tax pursuant to Section 4999 of the Internal Revenue
Code (as amended from time to time) or the regulations thereunder, then such amount
shall 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 the
Executive or for his or her benefit under this Agreement, after payment of such
excise tax, would be less than the aggregate amount payable in accordance with
the preceding sentence.


 


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


 


(a)           Any arbitration under this Agreement,
and any related judicial proceeding, shall be initiated and shall proceed
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 the
American Arbitration Association (the “Association”) for labor and employment
contracts. To initiate arbitration hereunder, demand shall be given in writing
to the Association and the other Party no later than one year after the


 

















 


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


 


(b)           Any arbitration under this Agreement
shall be before a single arbitrator mutually acceptable to the Parties, and an
award in such arbitration may include only damages which the arbitrator
determines to be due under express provisions of this Agreement. The arbitrator
shall have no authority to award any other damages including without
limitation, consequential and exemplary damages. Any award in arbitration shall
be subject to enforcement and appeal pursuant to the Act.


 


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


 


(12)         Execution of Further Documents. In
the event the Executive receives payments or benefits pursuant to this Agreement
and the Company’s legal counsel deems it necessary for the Company to receive a
release or other acknowledgement the Executive agrees to execute any such
document as may be reasonably required as a condition of his/her receipt of
such payment or benefits.


 


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


 


 


	
   

  	
  MAINE & MARITIMES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Nathan L. Grass

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Michael A. Thibodeau

  	
   

  
	
   

  	
  Name: