EX-10.3



 Exhibit 10.3 

SETTLEMENT AGREEMENT 

This Settlement Agreement (the “Agreement”) is entered into as of May 5, 2016 by and among Stephen R. Theroux (the
“Executive”), Bar Harbor Bankshares, a bank holding company (“Buyer”), Bar Harbor Bank & Trust, a wholly-owned subsidiary of Buyer (“Buyer Bank”), Lake Sunapee Bank Group a bank holding
company (“Seller”), and Lake Sunapee, FSB, a wholly-owned subsidiary of Seller (“Seller Bank”). 

WITNESSETH: 

WHEREAS, concurrently with the execution of this Agreement, Buyer and Seller are entering into an Agreement and Plan of Merger, dated
as of May 5, 2016 (the “Merger Agreement”), and all capitalized terms not defined herein shall have the meaning set forth in the Merger Agreement; and 

WHEREAS, Buyer, Buyer Bank, Seller, Seller Bank, and the Executive desire to enter into this Agreement, which shall supersede the
Amended and Restated Employment Agreement between New Hampshire Thrift Bancshares, Inc., Seller’s former name, and the Executive, dated June 1, 2012, and the Amended and Restated Employment Agreement between Lake Sunapee Bank, FSB and the
Executive, dated June 1, 2012 (collectively, the “Employment Agreements”), effective immediately prior to the Effective Time of the Merger, and in lieu of any rights and payments under the Employment Agreements, the Executive
shall be entitled to the rights and payments set forth herein and shall terminate employment with Seller and Seller Bank (which for the avoidance of doubt, the parties agree shall be the rights and payments to which the Executive is entitled in the
event of the Executive’s termination of employment following a “Change of Control,” except in the case of Termination for Cause or as the result of his death or Disability (as such terms are defined in the Employment Agreements) as
contemplated by Section 5 of the Employment Agreements). 
 NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Executive, Buyer, Buyer Bank, Seller, and Seller Bank agree as follows: 

1. Settlement Amount. 

1.1 Employment Agreements Amount. On the later of the Closing Date, or the earliest payment date permitted under Section 2,
provided the Executive has remained employed with the Seller and Seller Bank to and including the Closing Date and has executed the release attached as Exhibit A hereto at least eight days prior to the Closing Date (and any revocation period
has elapsed), Seller shall, or shall cause an affiliate to, pay to the Executive a lump sum cash amount equal to the total of $960,407, less applicable tax withholdings (the “Employment Agreements Amount”), in full satisfaction of
the payment obligations of Seller and Seller Bank under the Employment Agreements. The Employment Agreements Amount shall be subject to further reduction pursuant to Section 1.2 hereof as may be needed. 







 For the avoidance of doubt, the payment of the Employment Agreements Amount under this Agreement
shall not release Buyer, Buyer Bank, Seller, or Seller Bank, as applicable, from any of the following obligations: (a) obligations to pay to the Executive accrued but unpaid wages, and make payments for accrued but unused vacation, earned up to
the Effective Time of the Merger to the extent required by applicable law, including any benefits that become vested as a result of the Merger; (b) the payment of any of the Executive’s vested benefits under the tax-qualified and
non-qualified plans of Seller or Seller Bank; (c) the payment of the Merger Consideration with respect to the Executive’s common stock of Seller as contemplated by Section 2.01 of the Merger Agreement; (d) obligations regarding
vested benefits under a supplemental executive retirement plan; (e) the payment of the Executive’s vested benefits under any salary continuation agreement between the Executive and the Seller or Seller Bank; or (f) rights to
indemnification under applicable corporate law, the organizational documents of Seller or Seller Bank, as an insured under any director’s and officer’s liability insurance policy new or previously in force, or pursuant to Section 5.12
of the Merger Agreement. 
 1.2 Section 280G Cut Back. Notwithstanding anything in this Agreement to the contrary, if the
Employment Agreements Amount provided for in this Agreement, together with any other payments which the Executive has the right to receive from Buyer, Buyer Bank, Seller, Seller Bank, or any corporation which is a member of an “affiliated
group” (as defined in Code Section 1504(a), without regard to Code Section 1504(b)) of which Buyer, Buyer Bank, Seller, or Seller Bank is a member, would constitute an “excess parachute payment” (as defined in Code
Section 280G(b)(2)), payments pursuant to this Agreement shall be reduced to the extent necessary to ensure that no portion of such payments will be subject to the excise tax imposed by Code Section 4999. It is hereby understood that the
Employment Agreements Amount as determined under this Section 1.2 will be subject to further adjustment upon the consummation of the Merger. Any determination required under this Section 1.2 shall be made by Seller and Buyer
and their respective tax advisors, whose determination shall be conclusive and binding upon the Executive, Seller, and Seller Bank, and it is hereby understood that such determination will follow the same methodology for calculating the Code
Section 280G limitation in order to avoid an “excess parachute payment” as provided in Seller Bank Disclosure Schedule 3.18(f) to the Merger Agreement. 

1.3 Section 280G Waiver. Executive acknowledges and specifically waives his rights under Section 6 of the Amended and Restated
Employment Agreement between New Hampshire Thrift Bancshares, Inc. and Executive, dated June 1, 2012, including, but not limited to, any right to indemnification for any excise tax imposed under Code Section 4999. 

1.4 Welfare Benefits. Buyer agrees to provide the Executive with continued health, dental, accident, long-term disability and life
insurance coverage at Buyer’s expense for a period of three (3) years following his date of termination, with the coverage equivalent to the coverage the Executive would have been entitled had he continued in employment with Seller during
such period; provided that, if providing such continued group health coverage to the Executive would cause Buyer’s group health plan to fail to comply with relevant nondiscrimination requirements, Buyer will, in lieu of providing such coverage,
distribute cash payments to the Executive at the same times and in the same forms as the premium payments, in amounts sufficient to cover the cost of a comparable health benefit. 

1.5 No Further Adjustment. The parties hereby agree that the Employment Agreements Amount as determined in the manner provided under
Section 1.1 and Section 1.2 hereof is final and binding on all parties and shall not otherwise be subject to further adjustment. 







 1.6 Restrictive Covenants. 

(a) Restrictive Covenants. In addition to the Employment Agreements Amount, Byer shall pay, or cause Buyer Bank to pay a total
aggregate amount of $300,000, less any applicable tax withholdings, in equal monthly installments over the two-year period following the Closing Date in exchange for Executive’s adherence to the restrictive covenants contained in this
Section 1.6. 
 (b) Non-Competition. The Executive hereby covenants and agrees that for a period of two years following Closing
Date, he shall not, without the written consent of the Buyer, become an officer, employee, consultant, director or trustee of any savings bank, savings and loan association, savings and loan holding company, bank or bank holding company, credit
union or any direct or indirect subsidiary or affiliate of any such entity, that entails working within any county in which the Buyer, Buyer Bank, Seller or Seller Bank maintains an office as of the Closing Date. 

(c) Confidentiality. Unless he obtains the prior written consent of the Buyer, the Executive shall keep confidential and shall refrain
from using for the benefit of himself, or any person or entity other than the Buyer or any entity which is a subsidiary of the Buyer or of which the Buyer is a subsidiary, any material document or information obtained from the Buyer, Buyer Bank,
Seller, or Seller Bank concerning their properties, operations or business (unless such document or information is readily ascertainable from public or published information or trade sources or has otherwise been made available to the public through
no fault of his own) until the same becomes so ascertainable or available; provided, however, that nothing in this Section 1.6 shall prevent the Executive, with or without the Buyer’s consent, from participating in or
disclosing documents or information in connection with any judicial or administrative investigation, inquiry or proceeding to the extent that such participation or disclosure is required under applicable law. 

(d) Non-Solicitation. Further, the Executive hereby covenants and agrees that, for a period of two years following the Closing Date, he
shall not, without the written consent of the Seller, either directly or indirectly: 
 (i) solicit, offer employment to, or take any other
action intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing any officer or employee of the Buyer, Buyer Bank, Seller, or Seller Bank, or any of their respective subsidiaries or affiliates to
terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any savings bank, savings and loan association, bank, bank holding company, savings and loan holding
company, or other institution engaged in the business of accepting deposits, making loans or doing business within the counties specified in this Section 1.6; 







 (ii) provide any information, advice or recommendation with respect to any such officer or
employee of any savings bank, savings and loan company, bank, bank holding company, savings and loan holding company, or other institution engaged in the business of accepting deposits, making loans providing wealth management services or doing
business within the counties specified in this Section 1.6; that is intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing any officer or employee of the Buyer, Buyer Bank, Seller,
or Seller Bank, or any of their respective subsidiaries or affiliates to terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any savings bank, savings
and loan association, bank, bank holding company, savings and loan holding company, or other institution engaged in the business of accepting deposits, making loans or doing business within the county specified in this Section 1.6; 

(iii) solicit, provide any information, advice or recommendation or take any other action intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any customer of the Buyer, Buyer Bank, Seller, or Seller Bank, or any of their respective subsidiaries to terminate an existing business or commercial relationship with any of them. 

The Executive agrees that the relevant public policy and legal aspects of covenants not to compete have been discussed with him and that every
effort has been made to limit the restrictions placed upon the Executive to those that are reasonable and necessary to protect Buyer’s legitimate interests. The Executive hereby acknowledges that, based upon his education, experience, and
training, the non-compete and non-solicitation provisions of this Section 1.6 will not prevent him from earning a livelihood and supporting and his family during the relevant time-period. The existence of a claim, charge, or cause of
action by the Executive against Buyer, Buyer Bank, Seller, or Seller Bank, or any of their affiliates shall not constitute a defense to the enforcement by Buyer or Buyer Bank of the foregoing restrictive covenants, but such claim, charge, or cause
of action shall be litigated separately. If any restriction set forth in this Section 1.6 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, the court is hereby expressly authorized to modify this Agreement or to interpret this Agreement to extend only over the maximum period of time, range of activities, or geographic areas as to which it
may be enforceable. 
 1.7 Complete Satisfaction. In consideration of the payment of the Employment Agreements Amount and the other
provisions of this Agreement, the Executive, Buyer, Buyer Bank, Seller, and Seller Bank hereby agree that effective immediately following the Effective Time of the Merger, the Executive agrees that the full payment of the Employment Agreements
Amount, as determined in accordance Section 1.1 and Section 1.2, shall be in complete satisfaction of all rights to payments due to Executive under the Employment Agreements. 

2. Code Section 409A Compliance. The intent of the parties is that payments under this Agreement either be exempt from or comply
with Code Section 409A and the Treasury Regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. Notwithstanding any other provision of
this Agreement, if the Employment Agreements Amount is determined to 







 
constitute “nonqualified deferred compensation” within the meaning of Section 409A and the Executive is determined to be a “specified employee” as defined in
Section 409A(a)(2)(b)(i), then the Employment Agreements Amount shall not be paid until the first payroll date to occur following the six-month anniversary of the Executive’s termination of employment with Seller and Seller Bank. None of
Buyer, Buyer Bank, Seller, or Seller Bank make any representations or warranties that the payments provided under this Agreement comply with, or are exempt from, Section 409A, and in no event shall any of Buyer, Buyer Bank, Seller, or Seller
Bank be liable for any portion of any taxes, penalties, interest, or other expenses that may be incurred by Executive on account of non-compliance with Section 409A. To the extent required by Section 409A, each reimbursement or in-kind
benefit provided under the Agreement shall be provided in accordance with the following: (i) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other calendar year, (ii) any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the
expense was incurred, and (iii) any right to reimbursements or in-kind benefits under the Agreement shall not be subject to liquidation or exchange for another benefit. 

3. General. 
 3.1
Heirs, Successors, and Assigns. The terms of this Agreement shall be binding upon the parties hereto and their respective heirs, successors, assigns and legal representatives. 

3.2 Final Agreement. This Agreement represents the entire understanding of the parties with respect to the subject matter hereof and
supersedes all prior understandings, written or oral, except as set forth in a separate written employment agreement by and between Buyer, Buyer Bank and the Executive. The terms of this Agreement may be changed, modified, or discharged only by an
instrument in writing signed by each of the parties hereto. 
 3.3 Withholdings. Seller, Seller Bank, Buyer, and Buyer Bank may
withhold from any amounts payable under this Agreement such federal, state, or local taxes as may be required to be withheld pursuant to applicable law or regulation. 

3.4 Governing Law. This Agreement shall be construed, enforced, and interpreted in accordance with and governed by the laws of the State
of New Hampshire, without reference to its principles of conflicts of law, except to the extent that federal law shall be deemed to preempt such state laws. 

3.5 Regulatory Limitations. Notwithstanding any other provision of this Agreement, neither Buyer, Buyer Bank, Seller, nor Seller Bank
shall be obligated to make, and Executive shall have no right to receive, any payment under this Agreement which would violate any law, regulation, or regulatory order applicable to Buyer, Buyer Bank, Seller, or Seller Bank, as applicable, at the
time such payment is due, including, without limitation, Section 1828(k)(1) of Title 12 of the United States Code and any regulation or order thereunder of the Federal Deposit Insurance Corporation. 







 3.6 Voluntary Action and Waiver. The Executive acknowledges that by his free and voluntary
act of signing below, the Executive agrees to all of the terms of this Agreement and intends to be legally bound thereby. The Executive acknowledges that he has been advised to consult with an attorney prior to executing this Agreement. 

3.7 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument. 
 4. Effectiveness. Notwithstanding anything to the contrary contained
herein, this Agreement shall be subject to consummation of the Merger in accordance with the terms of the Merger Agreement, as the same may be amended by the parties thereto in accordance with its terms. In the event the Merger Agreement is
terminated for any reason or the Merger does not occur, this Agreement shall be deemed null and void. 
 [SIGNATURE PAGE FOLLOWS] 








 IN WITNESS WHEREOF, Buyer, Buyer Bank, Seller, and Seller Bank have each caused
this Agreement to be executed by their duly authorized officers, and the Executive has signed this Agreement, effective as of the date first above written. 

 

	
	EXECUTIVE:
	
	 /s/ Stephen R. Theroux

	Stephen R. Theroux


 
			
	
	 LAKE SUNAPEE BANK GROUP

		
	By:	 	 /s/ Stephen W. Ensign

	Name:	 	Stephen W. Ensign
	Title:	 	Chairman of the Board
	
	 LAKE SUNAPEE BANK, FSB

		
	By:	 	 /s/ Stephen W. Ensign

	Name:	 	Stephen W. Ensign
	Title:	 	Chairman of the Board
	
	 BAR HARBOR BANKSHARES

		
	By:	 	 /s/ Curtis C. Simard

	Name:	 	Curtis C. Simard
	Title:	 	President and Chief Executive Officer
	
	 BAR HARBOR BANK & TRUST

		
	By:	 	 /s/ Curtis C. Simard

	Name:	 	Curtis C. Simard
	Title:	 	President and Chief Executive Officer


 [SIGNATURE PAGE TO THE THEROUX SETTLEMENT AGREEMENT] 







 EXHIBIT A 

RELEASE OF CLAIMS 
 I, Stephen R. Theroux,
of [City], [County], New Hampshire, (hereinafter, the “Employee”), in consideration of the Employment Agreements Amount as described below, on behalf of himself and his heirs and assigns, hereby irrevocably and unconditionally releases and
forever discharges, individually and collectively, Bar Harbor Bankshares, a bank holding company (“Buyer”), Bar Harbor Bank & Trust, a wholly-owned subsidiary of Buyer (“Buyer Bank”), Lake Sunapee Bank
Group, a bank holding company (“Seller”), and Lake Sunapee, FSB, a wholly-owned subsidiary of Seller (“Seller Bank”), their affiliated companies, and each of their respective officers, directors, employees,
shareholders, representatives, parent companies, subsidiaries, predecessors, successors, assigns, attorneys and all persons acting by, through or in concert with them (collectively, the “Released Parties”), of and from any and all charges,
claims, complaints, demands, liabilities, causes of action, losses, costs or expenses of any kind whatsoever (including related attorneys’ fees and costs), known or unknown, suspected or unsuspected, that Employee may now have or has ever had
against the Released Parties by reason of any act, omission, transaction, or event occurring up to and including the date of the signing of this Agreement. 

This waiver, release and discharge includes without limitation, claims related to any wrongful or unlawful discharge, discipline or retaliation, whether
express or implied, any promotions or demotions, compensation, the Seller or Seller Bank’s benefit plan(s) and the management thereof, defamation, slander, libel, invasion of privacy, misrepresentation, fraud, infliction of emotional distress,
stress, breach of any covenant of good faith and fair dealing, and any other claims relating to the Employee’s employment with the Seller or Seller Bank and the termination thereof. This waiver, release and discharge further applies but is not
limited to any claims based on Title VII of the Civil Rights Act of 1964, the Post Civil War Civil Rights Act (41 U.S.C. ss. 1981—88), the Civil Rights Act of 1991, the Equal Pay Act, the Age Discrimination Employment Act, the Older
Workers’ Benefit Protection Act, the Rehabilitation Act of 1973, the Americans with Disabilities Act, the Vietnam Era Veterans’ Readjustment Act, the Fair Labor Standards Act, the Workers Adjustment and Retraining Notification Act,
Executive Order 11246, the Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act, the New Hampshire Protective Legislation Law, the New Hampshire Unemployment Compensation Law, the New Hampshire Uniform Trade Secrets Act,
the New Hampshire Whistleblowers’ Protection Act, the New Hampshire Minimum Wage Act, the New Hampshire Safety and Health of Employees Law, and the New Hampshire Law Against Discrimination (all as they may be amended), and any other applicable
federal, state or local laws, ordinances and regulations including those relating to discrimination to the extent permitted by law; provided, however, that, notwithstanding anything in this Release of Claims to the contrary, this Release of Claims
does not apply to any of the items described in the second paragraph of Section 1.1 of the Settlement Agreement between the Buyer, Buyer Bank, Seller, and Seller Bank and the Employee, dated May 5, 2016. Employee expressly waives all
claims, including those which he does not know or suspect to exist in his favor as of the date of this Agreement against the Released Parties. As used herein, the Employee understand the word “claims” to include all actions, claims, and
grievances, whether actual or potential, known or unknown, and specifically but not exclusively 







 
including all claims against the Seller or Seller Bank or otherwise arising from Employee’s employment with the Seller Bank, the termination thereof or any other conduct occurring on or
prior to the date the Employee signs this Release of Claims. All such claims are forever barred by this Release of Claims whether they arise in contract or tort or under a statute or any other law. 

EMPLOYMENT AGREEMENTS AMOUNT. In return for Employee’s execution of and adherence to this Release of Claims, the Seller Bank shall pay the
Employee the Employment Agreements Amount, as set forth in the Settlement Agreement between the Buyer, Buyer Bank, Seller, and Seller Bank and the Employee, dated May 5, 2016, in the total amount of
                    ($                ), subject to reduction under
Section 1.2 of the Settlement Agreement. Payment of the Employment Agreements Amount shall be made in a lump sum, subject to usual and customary deductions required by law and Seller Bank policy. 

CONFIDENTIAL TERMS. Employee and the Buyer, Buyer Bank, Seller, and Seller Bank agree that each will keep the contents of this Release of Claims
(including its existence and the terms and provisions hereof) and the negotiations leading to it completely confidential, that neither will hereafter publish or disclose any information concerning such matters to anyone, and that each shall take
every reasonable precaution to prevent the direct or indirect disclosure of such information to third parties, provided that the foregoing provisions shall not be construed to prevent Employee from disclosing such matters to his accountant or to
prevent the Buyer, Buyer Bank, Seller, and Seller Bank from disclosing such matters to its accountants, and provided further that Employee may also make such disclosures as are finally compelled by law provided Employee gives the Buyer, Buyer Bank,
Seller, and Seller Bank immediate notice of such legal process in order that the Buyer, Buyer Bank, Seller, and Seller Bank shall have the opportunity to object to the disclosure of such information. 

INJUNCTIVE RELIEF. Employee acknowledges and recognizes that a violation of this Release of Claims and its covenants will cause irreparable damage to
the Buyer, Buyer Bank, Seller, and Seller Bank and the Buyer, Buyer Bank, Seller, and Seller Bank will have no adequate remedy at law for such violation. Accordingly, Employee agrees that the Buyer, Buyer Bank, Seller, and Seller Bank will be
entitled, as a matter of right, to an injunction from any court of competent jurisdiction restraining any further violation of this Release of Claims or the terms and conditions provided herein. This right to injunctive relief will be cumulative and
in addition to whatever remedies the parties may otherwise have at law. 
 CONSIDERATION AND REVOCATION PERIOD. I acknowledge that I am hereby
advised to consult with an attorney before signing this Release of Claims. I further understand that I may consider this Release of Claims for up to forty-five (45) days before deciding whether to sign it. In addition, I acknowledge that at the
commencement of the forty-five (45) day period referenced herein, I was provided with the class, unit or group of individuals considered for the Release of Claims program, the employees eligible and selected for the Release of Claims program,
the job title and ages of all individuals selected for the program and the ages of all individuals in the same job classification or organizational unit who are not selected for the program. A copy of the lists and information referenced herein are
attached as Addendum A. If I signed this Release of Claims before the expiration of that forty-five (45) day period, I 







 
acknowledge that such decision was entirely voluntary. I understand that if I do not sign and return this Release of Claims to the Seller Bank by the end of that forty-five (45) day period,
the Employment Agreements Amount described above will expire. I understand that for a period of seven (7) days after I execute this Release of Claims, I have the right to revoke it by a written notice to be received by the Seller Bank by the
end of that period. I also understand that this Release of Claims shall not be effective or enforceable until the expiration of that seven (7) day period. I further represent and agree that I have carefully read and fully understand all of the
provisions of this Release of Claims and that I am voluntarily agreeing to those provisions. I acknowledge that I have not been induced to sign this Release of Claims by any representatives of any released party other than the Employment Agreements
Amount as stated above. 
 Employee understands and agrees that Employee has carefully read and fully understands all of the provisions of this Agreement
and knowingly and voluntarily agrees to all of the terms set forth in this Release of Claims. Employee knowingly and voluntarily intends to be legally bound by the same. 

Signed as a sealed instrument this             , 20    . 

 

	
	  

	Stephen R. Theroux


 THE STATE OF NEW HAMPSHIRE 

 

			
	[            ], ss.	  	                    , 20        

 Before me, the undersigned notary public, personally appeared STEPHEN R. THEROUX, personally known, to be the
person whose name is signed on the preceding document, and acknowledged to me that he signed it voluntarily for its stated purpose. 
  

					
		  	  
	  	
			
		  	                                      
          , Notary Public	  	








 ADDENDUM A 

 

	1.	The class, unit, or group of individuals considered or eligible for the Release of Claims program, are the executive employees of the Seller Bank. 


 

	2.	All persons who are being offered consideration under a waiver Agreement must sign the Agreement and return it to the Company within 45-days after receiving it. Once the employee has signed the waiver Agreement he or
she has seven days to revoke the Agreement. 

  

	3.	Set forth below is a listing of the ages and job titles of all employees who were selected for this release program, as well as a listing of the ages and job titles of all employees who were not selected for this
release program. 

  

			
	EMPLOYEES SELECTED FOR THE RELEASE PROGRAM
		
	 JOB TITLE
	  	 AGE


  

			
	EMPLOYEES NOT SELECTED FOR THE RELEASE PROGRAM
		
	 JOB TITLE
	  	 AGE