Document:

Exhibit
10.3

COMFORT SYSTEMS
USA, INC.

2006 STOCK OPTIONS/SAR PLAN FOR NON-EMPLOYEE DIRECTORS

1.                                      Purpose; Term

The purpose of this 2006 Stock
Options/SAR Plan for Non-Employee Directors (the “Plan”) is to advance the
interests of Comfort Systems USA, Inc. (the “Company”) by increasing the
proprietary interest in the Company of non-employee members of the Company’s
Board of Directors by providing a portion of their compensation in options to
acquire shares (“Shares”) of the Company’s common stock (“Common Stock”) and
rights to receive any excess in value of shares of Common Stock over the
exercise price (“Stock Appreciation Rights” or “SARs” and together with
options, the “Awards”). No Awards may be granted under the Plan more than ten
years after the effective date of the Plan, but Awards granted prior to that
date may continue in accordance with their terms.

2.                                      Administration and Definitions

The Plan shall be administered by
the Committee. Except to the extent action by the Committee is required under
Section 162(m) of the Code in the case of Awards intended to qualify for
performance-based compensation exception thereto, the Board may in any
instance perform any of the functions of the Committee hereunder. The Committee
shall select the participants to receive Awards (“Participants”) and shall
determine the terms and conditions of the Awards. The Committee shall have
authority, not inconsistent with the express provisions of the Plan:
(a) to administer the issuance of Awards granted in accordance with the
formula set forth in this Plan to such Participants as are eligible to receive
Awards; (b) to prescribe the form or forms of instruments evidencing
Awards and any other instruments required under the Plan and to change such
forms from time to time; (c) to adopt, amend and rescind rules and
regulations for the administration of the Plan; and (d) to interpret the
Plan and to decide any questions and settle all controversies and disputes that
may arise in connection with the Plan. Such determinations of the Committee
shall be conclusive and shall bind all parties. Notwithstanding anything else,
transactions under this Plan, to the extent they would otherwise be subject to
Section 16 of the Securities Exchange Act of 1934, are intended to comply
with all applicable conditions of Rule 16b-3 or its successors under
Section 16 of the Securities Exchange Act of 1934 (“Rule 16b-3”). To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee. In the case of an Award intended to be
eligible for the performance-based compensation exception under
Section 162(m), the Plan and such Award shall be construed to the maximum
extent permitted by law in a manner consistent with qualifying the Award for
such exception.

Consistent with the above
requirements, the Committee may delegate (consistent with such of its duties,
powers and responsibilities as it may determine (and in the event of

 

 

any such delegation, references herein to the Committee
shall include the person or persons so delegated to the extent of such
delegation).

As used herein, “Committee” means
one or more committees each comprised of not less than two members of the Board
of Directors (the “Board”) appointed by the Board to administer the Plan or a
specified portion thereof. Unless otherwise determined by the Board, if a
Committee is authorized to grant Awards to a Reporting Person or a Covered
Employee, each member shall be a “non-employee director” within the meaning of
Rule 16b-3 under the Exchange Act or, respectively, an “outside director”
within the meaning of Section 162(m) of the Code, respectively. “Covered
Employee” means a “covered employee” within the meaning of Section 162(m)
of the Code. “Reporting Person” means a person subject to Section 16 of
the Exchange Act.

3.                                      Effective Date

The Plan shall be effective on
the date it is approved by the stockholders.

4.                                      Shares Subject to the Plan

(a)                                  Number of Shares.  Subject to
the other terms of the Plan, no more than 500,000 shares of Common Stock in the
aggregate may be delivered under or in satisfaction of Awards. Each share of
Common Stock subject to an Award shall be counted against the limit as one
(1) share. However, SARs to be settled in shares of Common Stock shall be
counted in full against this limit, regardless of the number of shares of
Common Stock issued upon settlement of the SAR.

(b)                                 No Fractional Shares to be
Delivered.  Shares delivered under the Plan may be
authorized but unissued common stock, or previously issued common stock that we
acquire and hold in our treasury. No fractional Shares shall be delivered under
the Plan.

(c)                                  Reversion to the Plan.  For the
avoidance of doubt, if an outstanding Award for any reason expires or is
terminated or canceled without having been exercised or settled in full, or if
shares of Common Stock acquired pursuant to an Award subject to forfeiture or
repurchase are forfeited or repurchased by the Company for an amount not
greater than the Participant’s purchase price, the shares of Common Stock
allocable to the terminated portion of such Award or such forfeited or
repurchased shares of Stock shall again be available for issuance under the
Plan. Shares of Common Stock shall not be deemed to have been issued pursuant
to the Plan (a) with respect to any portion of an Award that is settled in
cash or other property (other than shares of Stock) or (b) to the extent
such shares are withheld or reacquired by the Company in satisfaction of tax
withholding obligations. Upon payment in shares of Stock pursuant to the
exercise of an SAR, the number of shares available for issuance under the Plan
shall be reduced as provided in Section 4(a).

 

 

5.                                      Eligibility

Directors eligible to receive
Awards under the Plan (“Non-Employee Directors”) shall be those directors who
are not present or former employees of the Company or of any subsidiary or
other affiliate of the Company.

6.                                      Terms and Conditions of Awards

(a)                                  Individual Award Limits.  On the
date of each annual meeting, each Non-Employee Director who has served since at
least the previous annual meeting and is continuing in office and each newly
elected Non-Employee Director shall be awarded an Award covering 10,000 Shares
(which shall be the maximum number of shares of Common Stock subject to Awards
that may be granted to any Participant under the Plan in the aggregate in any
calendar year). For purposes of this paragraph, each Non-Employee Director
elected to office by the Board since the then last annual meeting shall be
treated as a newly elected Non-Employee Director.

(b)                                 Exercise Price.  The
exercise price of each Award shall be 100% of the Fair Market Value per Share
at the time the Award is granted. In no event, however, shall the exercise
price be less, in the case of an original issue of authorized stock, than par
value per share. For all purposes hereunder, “Fair Market Value” means,
(i) with respect to Common Stock, (A) for so long as such Stock is
readily tradeable on an established securities market (within the meaning of
Section 409A), the closing price on the trading day of the grant, and
(B) otherwise, the fair market value of such Stock determined by the
Committee by a reasonable application of a reasonable valuation method (within the
meaning of Section 409A); and, (ii) with respect to any other
property, the fair market value of such property as determined by the Committee
in good faith in the manner established by the Committee from time to time.

(c)                                  Grant of Options and SARs.  Subject to
the provisions of the Plan, the Committee may grant options and SARs. The
Committee shall determine at the time of grant or thereafter whether SARs are
settled in cash, Common Stock or other securities of the Company or other
property, and may define the manner of determining the excess in value of the
shares of Common Stock. Each option and SAR shall be exercisable at such times
and subject to such terms and conditions as the Committee may specify in the
applicable grant or thereafter. The Committee may impose such conditions with
respect to the grant and exercise of an option or SARs, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable.

(d)                                 Duration.  The latest
date on which an Award may be exercised (the “Final Exercise Date”) shall be
the date which is ten years from the date the Award was granted.

(e)                                  Exercise.

(i)                                     Each Award shall become exercisable to the full
extent of all Shares covered thereby one year after the date of the grant.

 

 

(ii)                                  Any exercise of an Award shall be in writing,
signed by the proper person and delivered or mailed to the Company, accompanied
by (i) any documentation required by the Committee and (ii) payment
in full for the number of Shares for which the Award is exercised.

(iii)                               The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes (including
any FICA or similar taxes) required by law to be withheld in respect of Awards
under the Plan no later than the date of the event creating the tax liability.
The Company and its affiliates may, to the extent permitted by law, deduct any
such tax (including any FICA or similar tax) obligations from any payment of
any kind due to the Participant hereunder or otherwise. In the Committee’s
discretion, the minimum tax (including any FICA or similar taxes) obligations
required by law to be withheld in respect of Awards may be paid in whole or in
part in shares of Stock, including shares retained from the Award creating the
obligation, valued at their Fair Market Value on the date of retention or
delivery.

(iv)                              If an Award is exercised by the executor or
administrator of a deceased director, or by the person or persons to whom the
Award has been transferred by the director’s will or the applicable laws of
descent and distribution, the Company shall be under no obligation to deliver
Shares pursuant to such exercise until the Company is satisfied as to the
authority of the person or persons exercising the Award.

(f)                                    Payment.  No shares
shall be delivered pursuant to any exercise of an option until payment in full
of the exercise price therefor is received by the Company. Such payment may be
made in whole or in part in cash or, to the extent legally permissible and
expressly permitted by the Committee at or after the grant of the option, by
delivery of other property such as shares of Common Stock that have been owned
by the optionee for at least six months (or such other period as the Committee
may determine), valued at their Fair Market Value on the date of delivery or
such other lawful consideration, including a payment commitment of a financial
or brokerage institution, as the Committee may determine; or any combination of
the foregoing permitted forms of payment.

(g)                                 No Rights As Stockholder.  An Award
holder shall not have the rights of a shareholder with regard to awards under
the Plan except as to Stock actually received by him or her under the Plan.

(h)                                 Documentation and Legal
Conditions on Delivery of Stock.  Each Award shall be evidenced by a writing
delivered to the Participant or agreement executed by the Participant
specifying the terms and conditions thereof and containing such other terms and
conditions not inconsistent with the provisions of the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or to comply with
applicable tax and regulatory laws and accounting principles. The Company will
not be obligated to deliver any shares of Stock pursuant to the Plan or to
remove any restriction from shares of Stock previously delivered under the Plan
until: the Company’s counsel has approved all

 

 

legal matters in connection with the issuance and
delivery of such shares; if the outstanding Stock is at the time of delivery
listed on any stock exchange or national market system, the shares to be
delivered have been listed or authorized to be listed on such exchange or
system upon official notice of issuance; and all conditions of the Award have
been satisfied or waived. If the sale of Stock has not been registered under
the Securities Act of 1933, as amended, the Company may require, as a condition
to exercise of the Award, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such Act. The Company
may require that certificates evidencing Stock issued under the Plan bear an
appropriate legend reflecting any restriction on transfer applicable to such
Stock.

(i)                                     Nontransferability.  No Award
may be transferred other than by will or the laws of descent and distribution
and may be exercised, during the life of the Participant, only by the
Participant, except that the Committee may permit certain transfers to the
Participant’s family members or to certain entities controlled by the
Participant or his or her family members.

(j)                                     Termination of Service.  Unless the
Committee expressly provides otherwise, the following rules shall apply
affiliates. Immediately upon the cessation of the Participant’s service
relationship with the Company and its affiliates an Award requiring exercise
will cease to be exercisable and all Awards to the extent not already fully
vested will be forfeited, except that:

(i)                                     All Awards held by a Participant immediately prior
to his or her death, to the extent then exercisable, will remain exercisable by
such Participant’s executor or administrator or the person or persons to whom
the Award is transferred by will or the applicable laws of descent and
distribution, in each case for the lesser of (i) the one year period
ending with the first anniversary of the Participant’s death or (ii) the
period ending on the latest date on which such Award could have been exercised
without regard to this subsection (g), and shall thereupon terminate; and

(ii)                                  all Awards held by the Participant immediately
prior to the cessation of the Participant’s employment or other service
relationship for reasons other than death and except as provided in
(iii) below, to the extent then exercisable, will remain exercisable for
the lesser of (1) a period of six months or (2) the period ending on
the latest date on which such Award could have been exercised without regard to
this subsection (g), and shall thereupon terminate.

(iii)                               Unless the Committee expressly provides otherwise,
a Participant’s “service relationship with the Company and its affiliates” will
be deemed to have ceased when the service relationship in respect of which the
Award was granted terminates (whether or not the Participant continues in the
service of the Company or its affiliates in some other capacity).

(k)                                  Amendment of Award.  Except as
otherwise expressly provided in the Plan, the Committee may amend, modify, or
terminate any outstanding Award, including

 

 

substituting therefor another Award of the same or a
different type, changing the date of exercise or realization. Any such action
shall require the Participant’s consent unless the Committee determines that
the action would not materially and adversely affect the Participant.

7.                                      Effect, Termination, Amendment and Governing Law

The Board of Directors may amend,
suspend, or terminate the Plan or any portion thereof at any time, subject to
such stockholder approval as the Board determines to be necessary or advisable.
Further, under all circumstances, the Committee may, but shall not be required
to, make non-substantive administrative changes to the Plan as to conform with
or take advantage of governmental requirements, statutes or regulations. Except
as provided in Section 6(k), no such amendment, modification or
termination will adversely affect the rights of any Participant (without his or
her consent) under any Award previously granted and no such amendment will,
without the approval of the stockholders of the Company, effectuate a change
for which stockholder approval is required in order for the Plan to qualify or
to continue to qualify under Rule 16b-3 or for Awards intended to be
eligible for the performance-based exception under Section 162(m) to
continue such eligibility. Except as otherwise provided by the express terms of
an Award Agreement, the provisions of the Plan and of Awards under the Plan
shall be governed by and interpreted in accordance with the laws of the State
of Delaware.

8.                                      Application of Code Section 409A

Awards under the Plan are
intended either to be exempt from the rules of Section 409A of the Code or
to satisfy those rules, and shall be construed accordingly. Granted Awards may
be modified at any time, in the Committee’s discretion, so as to increase the
likelihood of exemption from or compliance with the rules of Section 409A
of the Code.

9.                                      Option or SAR Repricing

Without the affirmative vote of
holders of a majority of the shares of Common Stock cast in person or by proxy
at a meeting of the stockholders of the Company at which a quorum representing
a majority of all outstanding shares of Common Stock is present or represented
by proxy, neither the Board nor the Committee shall approve either (a) the
cancellation of outstanding Options or SARs and the grant in substitution
therefor of new Options or SARs having a lower exercise price or (b) the
amendment of outstanding Options or SARs to reduce the exercise price thereof.
This paragraph shall not be construed to apply to: (i) the substitution or
assumption of an Award by reason of or pursuant to a corporate transaction, to
the extent such substitution or assumption would not be treated as a grant of a
new stock right or a change in the form of payment for purposes of
Section 409A of the Code within the meaning of Prop. Treas. Reg.
Section 1.409A-1(b)(5)(iii)(D)(3), Notice 2005-1, A-4(d) and any
subsequent Section 409A guidance (whether administrative or regulatory);
or (ii) adjustments made pursuant to Section 10(b).

 

 

10.                               Effect of Certain Transactions

(a)                                  Assumptions or Substitutions.  Except as
otherwise expressly provided in an Award Agreement:

(i)                                     In the event of a Corporate Transaction in which
there is an acquiring or surviving entity, the Committee may, unless the
Committee determines that doing so is inappropriate or unfeasible, provide for
the continuation or assumption of some or all outstanding Awards, or for the
grant of new awards in substitution therefor, by the acquiror or survivor or an
entity controlling, controlled by or under common control with the acquiror or
survivor, in each case on such terms and subject to such conditions (including
vesting or other restrictions) as the Committee determines are appropriate.
Unless the Committee determines otherwise, the continuation or assumption shall
be done on terms and conditions consistent with Section 409A of the Code.

(ii)                                  In the event of a Corporate Transaction (whether
or not there is an acquiring or surviving entity), the Committee may provide
(unless the Committee determines otherwise, on terms and conditions consistent
with Section 409A of the Code) for treating as satisfied any vesting
condition on any such Award.

(iii)                               Except as otherwise expressly provided in an Award
agreement, each Award (unless assumed pursuant to the
Section 10(a)(i) above), will terminate upon consummation of the
Corporate Transaction.

(iv)                              If the Corporate Transaction is one in which
holders of Stock will receive upon consummation a payment (whether cash,
non-cash or a combination of the foregoing), the Committee may provide for
payment (a “cash-out”), with respect to some or all Awards, equal in the case
of each affected Award to the excess, if any, of (A) the Fair Market Value
of one share of Common Stock times the number of shares of Common Stock subject
to the Award, over (B) the aggregate exercise price, if any, under the Award,
in each case on such payment terms (which need not be the same as the terms of
payment to holders of Common Stock) and other terms, and subject to such
conditions, as the Committee determines.

For this purpose, “Corporate
Transaction” means any of the following: any sale of all or substantially all
of the assets of the Company, change in the ownership of the capital stock of
the Company, reorganization, recapitalization, merger (whether or not the
Company is the surviving entity), consolidation, exchange of capital stock of
the Company or other restructuring involving the Company, provided, that, in each case, to the
extent any amount constituting “nonqualified deferred compensation” subject to
Section 409A of the Code would become payable under an Award by reason of
a Corporate Transaction, it shall become payable only if the event or
circumstances constituting the Corporate Transaction would also constitute a
change in the ownership or effective control of the Company, or a

 

 

change in the ownership of a substantial portion of the
Company’s assets, within the meaning of subsection (a)(2)(A)(v) of
Section 409A of the Code.

(b)                                 Changes In, Distributions With
Respect To And Redemptions Of The Stock

(i)                                     In the event of any stock dividend or other
similar distribution of stock or other securities of the Company, stock split
or combination of shares (including a reverse stock split), recapitalization,
conversion, reorganization, consolidation, split-up, spin-off, combination,
merger, exchange of stock, redemption or repurchase of all or part of the
shares of any class of stock or any change in the capital structure of the
Company or an affiliate or other transaction or event, the Committee may, as
appropriate in order to prevent enlargement or dilution of benefits intended to
be made available under the Plan, make adjustments to the maximum number of
shares that may be delivered and may also make appropriate adjustments to the
number and kind of shares of stock or securities subject to Awards then
outstanding or subsequently granted, any exercise prices relating to Awards and
any other provision of Awards affected by such change.

(ii)                                  The Committee may also make adjustments of the
type described in Section 10(a) and 10(b)(i) above to take into
account distributions to stockholders other than stock dividends or normal cash
dividends, material changes in accounting practices or principles,
extraordinary dividends, mergers, consolidations, acquisitions, dispositions or
similar transactions involving Stock, or any other event, if the Committee
determines that adjustments are appropriate to avoid distortion in the
operation of the Plan and to preserve the value of Awards made hereunder,
having due regard for the continued exemption of the Awards from (or
satisfaction by the Awards of the rules of) Section 409A of the Code,
where applicable and, in the case of Awards intended to qualify for the
performance-based compensation exception Section 162(m) of the Code,
having due regard continued qualification for that exception.

(iii)                               References in the Plan to shares of Common Stock
will be construed to include any stock or securities resulting from an
adjustment pursuant to this Section 10.EXHIBIT 10(a)

RESIGNATION
AND SEVERANCE AGREEMENT

This Agreement is
made and entered into as of August 17, 2006, by and between James Nicholas
Bayne, a resident of Presque Isle, Maine (“Bayne”), and Maine & Maritimes
Corporation, a Maine corporation, with its principal place of business in
Presque Isle, Maine (the “Company”).  The
term Company shall also include all direct and indirect wholly owned subsidiaries
of the Company and all other entities in which the Company or any of its direct
or indirect subsidiaries has an ownership interest.  The Company and Bayne shall be referred to
collectively herein as the “Parties”.

WHEREAS, Bayne is
presently employed as the President and CEO of the Company, as well as serving
as a member of its Board of Directors, holding the following subsidiary or
affiliate positions (a) Chief Executive Officer and Director of Maine Public
Service Company, (b) Chairman of the Board of Directors of The Maricor Group
and its subsidiary, The Maricor Group Canada, Ltd., and Director of its
subsidiary, The Maricor Group New England, Inc., (c) President, CEO and a
Director of Maricor Technologies, Inc., together with any other positions he
may hold with the Company and its affiliates hereinafter collectively referred
to as his “Position;” and

WHEREAS, Bayne
wishes to resign his Position with the Company, and the Company is willing to
accept Bayne’s resignation; and

WHEREAS, the
Parties wish to set forth the terms and conditions of Bayne’s resignation,
including the terms of his separation; and

WHEREAS, the
Parties to this Agreement desire to fully finalize and compromise, settle and
resolve and release all claims, disputes, grievances and causes of

 

action of any kind
whatsoever, which the Company may have against Bayne, or Bayne may have against
the Company, including but not limited to all claims arising out of Bayne’s
employment with the Company; and

WHEREAS, the
Parties wish to assure that Bayne is fully indemnified and held harmless to the
fullest extent possible for any and all of Bayne’s activities while employed by
the Company; and

WHEREAS, the
entering into this Agreement is not an admission of any liability or wrongdoing
on the part of any party;

NOW THEREFORE, in
consideration of the payments and mutual promises and covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties agree as follows:

1.             Bayne hereby agrees to resign his
Position and any other office he may have with the Company, effective immediately
by signing the resignation form attached as Exhibit A.

2.             In consideration of
Bayne’s promises, covenants, agreements, and releases set forth herein,
including but not limited to Bayne’s post-termination obligations set forth in
Paragraphs 4, 5 and 7, the Company agrees to:

A.  Pay to Bayne
Fifty Thousand Dollars ($50,000.00) within ten (10) days of the execution of
this Agreement, less all applicable federal and state withholding.

B.  Pay to Bayne
three equal payments of Fifty Eight Thousand Three Hundred Thirty-Four Dollars
($58,334.00) on January 10, 2007, April 10, 2007 and July 10, 2007, less all
applicable federal and state withholding.

 

3.             Benefit
Continuation.  The Company shall pay
the following benefits to Bayne commencing on August 17, 2006:

A.            The costs under COBRA for Bayne’s present family health
insurance coverage for twelve (12) months from August 17, 2006, unless Bayne
has earlier become employed by a new employer who provides family health
insurance with coverage benefits at least equal to those provided by the
Company;

B.            All
accrued, but unused, vacation time for the present calendar year;

C.            Nine
Thousand Dollars ($9,000.00), which may be used by Bayne for any purpose, such
as housing relocation costs or personal attorney’s fees.  At Bayne’s direction, the Company will pay any
or all of such $9,000.00 directly to the third party provider of any such
services or to Bayne;

D.            Payment
or reimbursement of actual expenses associated with Bayne providing reasonable
transitionary services to the Company in the support of or to address any
business or regulatory issues.

E.             Continuance,
conversion or replacement of life insurance for a period of twelve (12) months
by the Company in the amount of $225,000;

F.             Reimbursement
to Bayne for all reasonable travel and other expenses incurred by Bayne through
August 17, 2006, in accordance with the terms of the Company’s policies with
respect to expense reimbursement.

4.             Nondisclosure.  Bayne agrees not to discuss, disclose,
publicize or otherwise communicate or reveal the terms, conditions, contents or
the existence of this Agreement, with or to any person or entity, except
members of his

 

immediate family, his personal attorney and/or his financial advisor
(each of whom shall be informed by him of this confidentiality provision and
shall be required by him to keep this information confidential, except when
otherwise expressly required by law.) 
The Company agrees not to discuss, disclose, publicize or otherwise
communicate or reveal the terms, conditions, contents or the existence of this
Agreement, with or to any person or entity, except the senior management of the
Company, including the Board of Directors and the necessary personnel in the
Human Resources department and, as necessary, with any legal, tax or accounting
advisors (each of whom shall be informed by the Company of this confidentiality
provision and shall be required to keep this information confidential, except
when otherwise required by law.)  The
Parties recognize that certain disclosures may be required for compliance
purposes by the Securities Exchange Commission and/or the American Stock
Exchange.

5.             Resignation announcement,
reference letter and non-disparagement; Cooperation.

A.            The Company agrees to provide to the
public an announcement in the form attached hereto as Exhibit B, announcing Bayne’s
resignation.  The Company agrees not to
make any statement inconsistent with such announcement.

B.            The Company will provide Bayne with
a reference letter for future employment in the form attached hereto as Exhibit C. 
The Company and its representatives agree not to make any statement
inconsistent with the contents of the reference letter.

C.            Bayne
agrees not to write, say, express, communicate or relate

 

anything derogatory, disparaging or defamatory about the Company or any
of the Releasees (as defined in Paragraph 9 below), or their business practices
and activities, to any third person or entity, except as may be expressly
required by law; provided that, Bayne shall not be restricted from making any
statements which are considered normal business statements should Bayne work
for a company or in a sector of industry that is in part or in whole engaged in
the same or related business activities as the Company.

D.            For
up to one year following the date of this Agreement, Bayne agrees to provide
reasonable transition services to the Company, totaling up to 50 hours, for no
additional consideration (except as set forth in Section 3(d) above).  Such services may include, without
limitation, answering questions posed by the officers, directors or other
agents of the Company, reviewing documents pertaining to the Company and its
affairs and, at time mutually convenient to the Company and Bayne, traveling at
the Company’s request.  Bayne agrees to
provide services exceeding 50 hours at a rate of $250 per hour.

E.            The
Company and its directors agree not to say, write, express, communicate or
relate anything derogatory, disparaging or defamatory about Bayne to any third
person or entity, except as may be expressly required by law.

6.             Confidential Information.

The Parties agree that in
the performance of his services as Director, CEO and President, Bayne gained
access to confidential and proprietary information, which is owned or
controlled by the Company or in possession of the Company, including but not
limited to trade secrets and other confidential proprietary

 

business, technical, personnel and financial
information.  Bayne agrees that he will
keep such information confidential and that he will not directly or indirectly utilize
such information for his own purposes or disclose, divulge or reveal any
confidential information to any entity or person outside of the Company;
provided that any such information that is disclosed by a party other than
Bayne and not in derogation of any confidentiality obligation of such disclosing
party or by Bayne other than in violation of this Agreement or his duties to
the Company, shall be deemed to be public information and not subject to this
restriction.

7.             Surrender of Company Property.

Bayne agrees that at the termination of his
employment, he will immediately deliver to the Company all property belonging
to the Company, including any documents and materials of any nature pertaining
to Bayne’s work with the Company, and will not take with him any documents or
materials of any description containing or pertaining to any confidential
information as set forth in Paragraph 5 above. 
It is understood that Bayne is free to use information that is in the
public domain, but not in the public domain as a result of a breach of this
Agreement.

8              Directors and
Officers Insurance.

The Company shall provide directors and officers
insurance continuance for Bayne.  Such
insurance shall be provided on a basis at least as favorable as the Company
maintains for other officers of the Company or any successor or assign of the
Company.  The Company shall also
indemnify and hold Bayne harmless from any costs or losses resulting from any
claim or action which may be brought

 

at any time against Bayne or the Company based upon any of Bayne’s
actions as an employee of the Company, including but not limited to all of his
actions as President and Chief Executive Officer.  This indemnification and hold harmless shall
apply to the fullest extent permitted under law.

Bayne will not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment.  The Parties’ respective obligations in this
Agreement shall be absolute and unconditional and shall not be affected by any
circumstances, including without limitation, any right of setoff, counterclaim,
recoupment, defense or other right which the other party hereto may have.

9              Release of
Claims.

In consideration of Bayne’s promises, covenants and
agreements, the Company for itself and for any of its predecessors, successors
and assigns and/or parent companies, subsidiaries, affiliates, divisions,
hereby expressly releases, acquits and forever discharges Bayne and all his
heirs, assigns and executors of and from any and all claims, demands,
complaints, liabilities, causes of action, controversies, damages, charges,
injuries, losses and deaths, whether at law or in equity, of any kind or nature
whatsoever, whether asserted or unasserted, whether known or unknown, whether
disclosed or undisclosed and whether suspected or unsuspected, which they now
have, ever had, or hereafter claims to have had against Bayne, from the
beginning of time to the date he executes this Agreement, including but not
limited to (1) any and all claims, charges or causes of action of

 

any kind whatsoever resulting from, arising out of or connected
directly or indirectly with Bayne’s employment with the Company or the
termination of that employment, as provided for in this Agreement, and (2) any
and all claims of whatever kind whatsoever, resulting from, arising out of or
connected directly or indirectly with any relationship between Bayne and the
Company.  This release is binding upon
the Company’s successors and assigns.

Bayne, for himself, his heirs, executors,
administrators, agents, successors in interest, assigns, and legal
representatives, hereby expressly releases, acquits and forever discharges the
Company, and its parent companies, subsidiaries, affiliates, divisions,
successors and related companies, and each and all of their current or former
agents, officers, directors, shareholders, members, employees, representatives,
attorneys, successors, predecessors, assigns and insurers, and all persons
acting by, through, under or in concert with any of them (referred to
collectively as the “Releasees”), of and from any and all claims, demands,
complaints, liabilities, causes of action, damages, attorney’s fees, charges,
agreements, promises, obligations, rights, remedies, suits, injuries, debts, and
expenses, whether at law or in equity, of any kind or nature whatsoever,
whether asserted or unasserted, whether known or unknown, whether disclosed or
undisclosed, and whether suspected or unsuspected, which he now has, ever had,
or hereafter claims to have or have had against the Releasees, and each or any
of them, as of or prior to the date he executes this Agreement, including but
not limited to (1) any claims, losses, injuries or damages of any kind
whatsoever resulting from, arising out of or connected directly or indirectly
with his

 

employment with the Company, or the termination of that employment, or
any other relationship between him and the Company or any of the Releasees; (2)
any and all claims or rights under the Americans with Disabilities Act, Title
VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991,
the Rehabilitation Act, the Maine Human Rights Act, the Employee Retirement
Income Security Act, the Age Discrimination in Employment Act, the Older
Workers Benefit Protection Act of 1990, or any other federal, state or local
laws, regulations or ordinances prohibiting discrimination or retaliation, the
Maine Whistleblower law; (3) any and all claims arising under any federal,
state or local laws concerning aviation, products licensing rights, or any
other aspect of any safety laws regarding the flying or airplanes including any
OSHA regulations applicable to such activities; (4) any and all claims growing
out of any legal restrictions on the Company’s right to terminate its
employees; and (5) any other claims under federal, state or local laws or
common law, including but not limited to, any claims for breach of contract
expressed or implied, breach of implied covenant, breach of oral or written
promise, wrongful termination, wrongful discharge and violation of public
policy, affliction of emotional distress, loss of consortium, personal injury
arising out of or in the course of work, defamation or other injury resulting
from any oral or written statement, inference with contractual relations,
interference with professional business or economic advantage, and
misrepresentation and violations of employment contracts expressed or
implied.  This Release is binding upon
Bayne’s heirs, successors and assigns, and administrator or executor of his
estate.

 

The Parties expressly acknowledge and agree that the release contained herein
is given in exchange for valuable consideration.

10.           Effect
of Prior Agreements.

This Agreement will supercede any prior employment
agreement between Bayne and the Company (or any of its affiliates or parents),
and any such prior employment agreement will be deemed terminated without any
remaining obligations of either thereunder; provided that all of Bayne’s rights
in the Company’s 401(k) plan and the Company’s defined benefit pension plan
shall be retained.

11.           Modification/Waiver.

This Agreement may not be modified or amended except
in writing and signed by the Parties.  
No term or condition of this Agreement will be deemed to have been
waived except when waived in writing by the party charged with waiver.  A waiver will operate only as to the specific
term or condition waived and will not constitute a waiver for the future or
have any impact on anything other than that which is specifically waived.

 

12.           Product
of Negotiation; Further Assurances.

The Parties acknowledge and agree that this Agreement
and its reduction to final written form was the result of good faith
negotiations between the Parties, each of whom was represented by counsel, and
that any statute or rule of construction that ambiguities are to be resolved
against the drafting party, shall not be employed in the interpretation of this
Agreement.  The Parties hereto agree that
for no additional consideration they shall execute such other documents from
time to time as may be necessary or desirable to more fully implement the
purposes of this Agreement.

13.           Arbitration.

A.            Any
controversy, dispute or claim arising out of or relating to this Agreement or
the breach hereof, which cannot be settled by mutual agreement, will be finally
settled by arbitration in accordance with the Federal Arbitration Act (of if
not applicable, the applicable state arbitration law) as follows:  Any party who is aggrieved will deliver a
written notice to the other party setting forth the specific points in
dispute.  Any points remaining in dispute
twenty (20) days after the giving of such written notice, may be submitted by
either party, upon ten (10) days prior written notice to the other party for
arbitration in Portland, Maine, to the American Arbitration Association (or if
by mutual agreement, to some other party for selection of an arbitrator),
before a single arbitrator appointed in accordance with the arbitration rules
of the American Arbitration Association, National Rules for the Resolution of
Employment Disputes, modified only as expressly provided herein.  The arbitrator may enter a default decision
against any party who fails to participate in the arbitration proceedings.

 

B.            The
decision of the arbitrator on the points in dispute will be final and binding,
and judgment on the award may be entered in any court having jurisdiction
thereof.

C.            The
arbitrator will be authorized to apportion his/her fees and expenses as the
arbitrator deems appropriate.  In the
absence of such apportionment, the fees and expenses of the arbitrator will be
borne equally by each party and each party will bear the fees and expenses of
its or his own attorney.

D.            Notwithstanding
the arbitration of disputes under this Agreement, nothing herein shall limit
the right of the Company to seek and obtain temporary and preliminary
injunctive relief in the event of a breach or threatened breach of this
Agreement by Bayne, provided that following the entry of any temporary or
preliminary injunction the litigation shall then be stayed pending the outcome
of the arbitration.

14.           Severability.

All provisions of this Agreement are intended to be
severable.  In the event any provision or
restriction contained herein is held to be invalid or unenforceable in any
respect, in whole or in part, such finding will in no way affect the validity
or enforceability of any other provision of this Agreement.  The Parties hereto further agree that any
such invalid or unenforceable provision will be deemed modified so that it will
be enforced to the greatest extent permissible under law.

 

15.           Governing
Law.

This Agreement has been executed and delivered in the
State of Maine, and its validity, interpretation, performance and enforcement
will be governed by the internal laws of that State.

 

IN WITNESS WHEREOF the undersigned have executed this Agreement as of
August 17, 2006.

	
  

  	
   

  	
  JAMES NICHOLAS BAYNE

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Susan Brown

  	
   

  	
  /s/ J. Nicholas Bayne

  	
   

  
	
  Witness

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MAINE & MARITIMES

  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Patrick
  Cannon

  	
   

  	
  By:

  	
  /s/ Richard
  Daigle

  	
   

  
	
  Witness

  	
   

  	
   

  	
  Its:

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