EX-10.3



 Exhibit 10.3 

SETTLEMENT AGREEMENT 

This Settlement Agreement (the “Agreement”) is entered into as of May 5, 2016 by and among William J. McIver (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
Change of Control Agreement by and among New Hampshire Thrift Bancshares (Seller’s former name), Seller Bank and the Executive, dated February 14, 2013 (the “Change of Control Agreement”), effective immediately prior to
the Effective Time of the Merger, and in lieu of any rights and payments under the Change of Control Agreement, the Executive shall be entitled to the rights and payments set forth herein. 

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 Change of Control Agreement Amount. On the Closing Date, provided the Executive has remained employed with the Seller and Seller
Bank to and including the Closing Date, Seller shall, or shall cause an affiliate to, pay to the Executive a lump-sum cash amount equal to the total of $845,000, in full satisfaction of the payment obligations of Seller and Seller Bank under the
Change of Control Agreement, less applicable tax withholdings (the total of such sum, the “Change of Control Agreement Amount”) with such amount to be further reduced pursuant to Section 1.2 hereof as may be needed. 

For the avoidance of doubt, the payment of the Change of Control Agreement 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; (b) the payment of any of the Executive’s vested benefits under the tax-qualified and non-qualified plans of Seller or Seller Bank, including any benefits that become vested as a result of the Merger;
(c) obligations regarding accelerated vesting of equity awards, if any, under any equity awards granted by Seller to the Executive and outstanding immediately prior to the Effective Time; (d) the payment of any of the Executive’s
vested benefits under any salary continuation agreement between the Executive and the Seller or Seller Bank; (e) obligations regarding vested benefits under a supplemental executive retirement plan; (f) any change in control protection or
change in control 







 
rights in any bank-owned life insurance policy held by Seller Bank on the life of the Executive; (g) 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; or (h) 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 Change of Control Agreement 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 Change of Control Agreement 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 No Further Adjustment. The parties hereby agree that the Change of Control Agreement 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. 

1.4 Employment with Buyer. Buyer and Buyer Bank agree to employ the Executive following the Closing Date, and the Executive hereby
agrees to such continued employment, the terms of which shall be memorialized in an employment agreement effective as of the Closing Date. 

1.5 Complete Satisfaction. In consideration of the payment of the Change of Control Agreement Amount, the employment by Buyer and/or
Buyer Bank following the Closing Date 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 Change of Control Agreement 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 Change of Control
Agreement. 
 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. To that end, Executive,
Buyer, Seller, and Seller Bank agree that the payment described in Section 1 is intended to be excepted from compliance with Code Section 409A as a short-term deferral 







 
pursuant to Treasury Regulation Section 1.409A-1(b)(4). 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. 
 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. 







 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/ William J. McIver

	William J. McIver


 
			
	
	 LAKE SUNAPEE BANK GROUP

		
	By:	 	 /s/ Stephen R. Theroux

	Name	 	: Stephen R. Theroux
	Title:	 	President and Chief Executive Officer
		 	
	
	 LAKE SUNAPEE BANK, FSB

		
	By:	 	 /s/ Stephen R. Theroux

	Name:	 	Stephen R. Theroux
	Title:	 	President and Chief Executive Officer
	
	 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 MCIVER SETTLEMENT AGREEMENT]