Exhibit 10(ao)


 


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 Kurt A.
Tornquist (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 Senior Vice President, Chief Financial
Officer and Treasurer; 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
thenoutstanding 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:

  	
   

  	
  Kurt A. Tornquist

  
	
   

  	
   

  	
  28 Fort Hill Street

  
	
   

  	
   

  	
  Fort Fairfield, ME 04742-1129

  
	
   

  	
   

  	
  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 shall 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 rights of the Company to
discharge or take other action with respect to the Executive. The Executive
hereby 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/ Kurt A. Tornquist

  	
   

  
	
   

  	
  Name: