Document:

Exhibit 10(as)

 

Maine
Public Service Company

 

 

EMPLOYEE
RETENTION AGREEMENT

 

THIS EMPLOYEE RETENTION AGREEMENT dated as September 5, 2003 (this
“Agreement”) is entered into between Maine Public Service Company, a Maine
corporation (the “Company”), and Brent M. Boyles (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, Operations; 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)                                  A “Change in
Control” shall be deemed to have occurred if the conditions set
forth in any one of the following paragraphs shall have been satisfied:

 

(a)           any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) (other than the Company, any trustee or other
fiduciary holding securities under any employee benefit plan of the Company, or
any corporation owned directly or indirectly by the stockholders of the Company
in substantially the same proportion as their ownership of stock of the
Company) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended), directly or indirectly, of
securities of the

 

 

Company representing fifty percent or more of the combined voting power
of the Company’s then outstanding voting securities;

 

(b)           a
change in the composition of the Board of Directors of the Company, as a result
of which fewer than a majority of the directors are persons who either (A) are
directors of the Company as of the date hereof or (B) were elected after
nomination by a majority of the directors of the Company on the date hereof and
directors so elected previously;

 

(c)                                  any merger or
consolidation of the Company, approved by the stockholders of the Company, with
any other corporation; other than:

 

(A)          any such merger or consolidation that
would result in the voting securities of the Company outstanding immediately
prior to the merger or consolidation, continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or parent entity) more than fifty percent of the combined voting
power of the voting securities (entitled to vote generally for the election of
directors) of the Company or such surviving or parent entity outstanding
immediately after such merger or consolidation, or subsequently at any time as
contemplated by or as a result of, such merger or consolidation; or

 

(B)           any such merger or consolidation
where such merger or consolidation is effected to implement a recapitalization
or reincorporation of the Company (or similar transaction) in which no “person”
(as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) acquires fifty percent or more of the combined voting
power of the Company’s then-outstanding voting securities;

 

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

 

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

 

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

 

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

 

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

 

(A)                              a
merger, consolidation or reorganization of the Company if, upon consummation of
such transaction all of the outstanding voting stock of the Company is owned,

 

 

directly or indirectly, by a holding company, and the holders of the
Company’s common stock immediately prior to the transaction have substantially
the same proportionate ownership and voting control of the holding company.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(5)                                  “Termination
Date” shall have the meaning stated in Section 2(2).

 

 

(6)                                  “Termination
Notice” shall have the meaning stated in Section 2(1).

 

Section 2.                                            Termination
Procedures

 

(1)           Termination Notice. Any
purported termination of the Executive’s employment (other than by reason of
death or at will termination) shall be communicated by a written notice of the
terminating party (a “Termination Notice”) in accordance with Section 6
(2).

 

(2)           Termination Date. “Termination
Date” shall mean the date as of which the Executive’s employment is to
terminate as specified in the Termination Notice, which, in the case of a
termination by the Company otherwise than for Cause, may be the same date of
the Termination Notice and, in the case of a termination by the Executive,
shall not be less than fourteen days nor more than sixty days, respectively,
from the date the Termination Notice is given, unless otherwise agreed to by
the parties.

 

Section 3.                                          Benefits
Upon Certain Terminations

 

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

 

(a)           Within
thirty business days after the Termination Date, a lump sum cash payment equal
to: (i) the sum of 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 twentyfour (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.

 

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 Public Service Company

  
	
   

  	
   

  	
  P. 0. Box 789, Presque Isle, ME 04769-0789

  
	
   

  	
   

  	
  Fax:

  	
  207-760-2498

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  J. Nick Bayne

  	
   

  
	
   

  	
   

  	
   

  
	
  To the Executive:

  	
   

  	
  Brent M. Boyles

  
	
   

  	
   

  	
  P. 0. Box 1707

  
	
   

  	
   

  	
  Presque Isle, ME 04769-1707

  
	
   

  	
   

  	
  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 PUBLIC SERVICE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Nathan L. Grass

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Brent M. Boyles

  	
   

  
	
   

  	
  Name:Exhibit 10(at)

 

EMPLOYMENT CONTINUITY AGREEMENT

 

This Agreement
made as of this 9’’ day of May, 2000, by and between MAINE PUBLIC SERVICE
COMPANY, a Maine corporation with its principal place of business in Presque
Isle, Maine (the “Company”) and Calvin D. Deschene of Presque Isle, Maine,
(“Director”).

 

WHEREAS, the
Director has been employed by the Company and its energy marketing subsidiary,
Energy Atlantic, LLC (EA), in a management capacity for over 13 years, and is
now the Director of EA; and

 

WHEREAS, the
Director’s knowledge of EA’s affairs and his experience are critical to the
protection and enhancement of the best interests of the Company, its employees,
ratepayers and stockholders; and

 

WHEREAS, in the
current competitive energy market the continuing operation of EA cannot be
assured; and

 

WHEREAS, the
Company desires to assure itself of the continued employment of the Director
and the benefit of his independent judgment in the operation of EA,
particularly in light of the uncertainties concerning EA’s future as an
affiliated energy marketer;

 

NOW, THEREFORE, in
consideration of the mutual promises and undertakings herein contained and for
other good and valuable consideration, the receipt and adequacy of which is
acknowledged by each of the parties, the Director and the Company agree as
follows:

 

1.             Term of the
Agreement and Renewal. The term of this Agreement shall be for a period
beginning May 9, 2000, and ending December 31, 2001. On January 1, 2002, and on
January 1 of each period of three (3) years thereafter (in each case such date
to be a “Renewal Date”) this Agreement automatically shall be renewed for an
additional three (3) year term, unless at least one (1) year prior to any such
Renewal Date, either party shall have given written notice to the other that
such renewal shall not take place. Such notice may be given by the Company only
upon the affirmative vote of the Compensation Committee of the Board of
Directors.

 

2.             Rights Upon
Involuntary Termination of Employment. If (i) within twenty-four (24)
months after the occurrence of a Change in Control Event, the Company
terminates the Director’s employment for any reason other than Good Cause as
defined in Paragraph 4, or if the Director voluntarily terminates employment
for Good Reason as defined in Paragraph 3, or (ii) at any time during the term
of this Agreement, or any extension thereof, EA shall effectively cease doing
business (regardless of any formal dissolution or winding up of EA) and the
Officer is not offered a position with the Company at a base salary and a level
of employee benefits substantially the same as EA provided to him immediately
prior to its cessation of operations, the Company shall provide the Director
with the following:

 

(a)           Within thirty (30) days
of such termination, a lump sum cash payment in an amount equal to the sum of:

 

 

(i)                one hundred
percent (100%) of the Director’s annual base salary in effect upon the date of
the Change in Control Event or when EA ceased doing business, whichever
applies, and

 

(ii)               one hundred percent
(100%) of the award the Director would have received for the year in which such
termination occurs, pursuant to the EA 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 30 days after the goal has been
determined.

 

(b)              The continuation of
the Director’s participation and the participation of his dependents (to the
extent they were participating prior to his termination of employment) in EA’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 Director (and
his dependents) 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 Director shall have the right to have assigned to him, for
the cash surrender value thereof, any assignable insurance owned by EA on the
life of the Director. For purposes of this Paragraph 2(b), any employee benefit
determined with reference to the Director’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.

 

(c)             The Company shall pay
the Director an amount equal to the award he would have been entitled to
receive under EA’s Incentive Compensation Plan, if his employment had not
terminated, based on the base salary he had earned as of his termination date,
and assuming that for such year all applicable performance goals will be met.
Such payment shall be made within ninety (90) days after his employment
terminates, except that if any portion of the amount depends on goals that
cannot be determined until the close of the Plan Year, then payment of that
amount shall be made within 30 days after this goal has been determined.

 

3.               Termination for
Good Reason. For purposes of this Agreement, termination by the Director of
his employment for “Good Reason,” except upon the Director’s express written
consent otherwise, shall mean:

 

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

 

2

 

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

 

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

 

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

 

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

 

(d)             the Company’s
transferring or assigning the Director to a place of employment more than
twenty-five (25) miles from Presque Isle, Maine, except for required business
travel to an extent substantially consistent with his business travel
obligations immediately prior to the Change in Control Event; or

 

(e)             the Company’s failure
to provide the Director with substantially the same health, life and other
employee benefit plans, programs and arrangements (specifically including EA’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 Event or as the same may be
increased thereafter; or

 

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

 

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

 

(h)             the Company’s failure
to obtain from any successor a satisfactory agreement to assume and perform the
terms of this Agreement.

 

4.               Termination by
Reason of Death or for Good Cause. 
Notwithstanding any provision of this Agreement to the contrary, no
benefits are payable hereunder upon the Director’s death prior to his
involuntary termination of employment pursuant to Paragraph 2 or voluntary
termination of employment for Good Reason pursuant to Paragraph 3. The Company
retains the right to terminate the Director for “Good Cause,” in which event he
shall not be entitled to receive any payment or benefits pursuant to this
Agreement. “Good Cause” shall mean:

 

(a)           the Director’s
conviction, by a court of competent jurisdiction, of a crime adversely
reflecting on his honesty, trustworthiness or fitness to carry out the
responsibilities of his position with the Company in other respects; or

 

3

 

(b)             a willful breach by
him of any material duty or obligation imposed upon him under the terms of his
employment, as those terms existed immediately prior to any Change in Control
Event, and his failure to cure such breach within thirty (30) days after
receiving notice thereof from the Company.

 

5.               “Change in
Control Event.” Each of the following events shall constitute a “Change in
Control Event” for purposes of this Agreement:

 

(a)             Any person acquires
beneficial ownership of Company securities and is or thereby becomes a beneficial
owner of securities entitling such person to exercise twenty-five percent (25%)
or more of the combined voting power of the Company’s then outstanding stock.

 

For purposes of
this Agreement, “beneficial ownership” shall be determined in accordance with
Regulation 13D under the Securities Exchange Act of 1934, or any similar
successor regulation or rule; and the term “person” shall include any natural
person, corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Company securities would be required to
be reported under such Regulation 13D, or any similar successor regulation or
rule.

 

(b)           The Company ceases to
be a reporting company pursuant to Section 13(a) of the Securities Exchange Act
of 1934 or any similar successor provision.

 

(c)           The number of the
Company’s Outside Directors, as defined herein, is decreased by more than fifty
percent (50%) in any twenty-five (25) month period or the number of the
Company’s directors is increased such that the Outside Directors constitute
less than a majority of the Board.

 

(d)           Within any twenty-five
(25) month period, individuals who were Outside Directors at the beginning of
such period, together with any other Outside Directors first elected as
directors of the Company pursuant to nominations approved or ratified by at
least two-thirds (2/3) of the Outside Directors in office immediately prior to
such respective elections, cease to constitute a majority of the board of
directors of the Company.

 

(e)           The Company is subject
to a change in control which would require reporting in response to Item 1 of
Form 8-K under Regulation 13a- 11 promulgated under the Securities Exchange Act
of 1934, as amended, or any similar successor statute or rule, whether or not
the Company is a reporting company under such Act.

 

(f)           The Company’s
stockholders approve:

 

(i)            any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Company common stock would be
converted into cash, securities or other property,

 

4

 

other than a
merger or consolidation of the Company in which the holders of the Company’s
common stock immediately prior to the merger or consolidation have
substantially the same proportionate ownership and voting control of the
surviving corporation immediately after the merger or consolidation; or

 

(ii)             any sale, lease,
exchange, liquidation or other transfer (in one transaction or a series of
transactions) of all or substantially all of the assets of the Company.

 

Notwithstanding
subparagraphs (i) and (ii) above, the term “Change in Control Event” shall not
include a consolidation, merger, or other reorganization 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.

 

(g)           50% or more of either
the Company’s interests in or the assets of EA are sold, leased, exchanged or
otherwise transferred to any person who is not an affiliate of the Company
under 35-A M.R.S.A. § 707, regardless of whether any Change of Control Event
occurs with respect to the Company.

 

6.             Outside Directors.
For purposes of this Agreement, 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 (6) months prior to such date and who has not
been an employee of the Company at any time during such six (6) month period.

 

7.             Notices. Any
and all notices required or permitted to be given hereunder shall be in writing
and shall be deemed to have been given when deposited in the United States
mails, certified or registered mail, postage prepaid and addressed as follows:

 

To
the Director:                    Calvin
D. Deschene

27 Hillside Street

Presque Isle, ME
04769-2425

 

To
the Company:                 Maine
Public Service Company

P. 0. Box 1209

Presque Isle,
Maine 04769-1209

 

Either
party may change by notice to the other the address to which notices to it are
to be addressed.

 

8.             Applicable Law,
Taxes, Binding Agreement, Severability, Construction.

 

(a)          This Agreement shall be
governed by and construed in accordance with the laws of the State of Maine,
except as to any matter which is preempted by federal law.

 

5

 

(b)             Notwithstanding
anything to the contrary herein contained, the Company may withhold from any
amounts payable under this Agreement all federal, state or other taxes or
assessments which may be required by applicable statute or regulation to be
withheld.

 

(c)             This Agreement shall
be binding upon and inure to the benefit of the Director his heirs, assigns,
executors and legal representatives; and the Company, its successors and
assigns.

 

(d)             If any provision of
this Agreement shall be held invalid or unenforceable by a court of competent
jurisdiction, the remainder of this Agreement shall not be affected thereby.

 

(e)             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
conclusive on the Company.

 

9.               Limitation on
Amount to be Paid. If payment of any amount under this Agreement would
cause the Director 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 Director or for his benefit under the
Agreement, after payment of such excise tax, would be less than the aggregate
amount payable in accordance with the preceding sentence.

 

10.           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.

 

11.           Assignment.
Except as required bylaw, the right to receive payments hereunder shall not be
subject to alienation, assignment, garnishment, attachment, execution or levy
of any kind, and any attempt to cause such payments to be so subject shall not
be recognized by the Company.

 

12.           Execution of Further
Documents.  In the event the
Director receives payments or benefits pursuant to the terms hereof and the
Company’s independent counsel deems it necessary for the Company to receive a
release or other acknowledgment, the Director agrees to execute any such
document, as may be reasonably required as a condition of his receipt of such
payment or benefits.

 

13.           Amendment and
Waiver. The Agreement may be amended only in writing, by the parties
hereto, and no condition or provision of the Agreement may be waived except in
writing. Waiver by either party at any time of the other party’s breach of, or
failure to comply with, any condition or provision of this Agreement to be
performed by such other party shall not be deemed a waiver of any other
provision or condition at the same time or of any provision or condition at any
prior or subsequent time, unless specifically stated therein.

 

6

 

14.        Arbitration. In recognition
of the mutual benefits of arbitration, the parties hereby agree that
arbitration as provided for herein shall be the exclusive remedy for resolving
any claim or dispute arising under this Agreement, and hereby mutually waive
any and all other remedies at law or in equity for determining any such claim
or dispute.

 

(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 absolutely.

 

(b)        Any arbitration under this
Agreement shall be before a single arbitrator, 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.

 

15.      No Additional Effect.
Except as expressly provided herein, nothing contained herein shall be
construed to provide the Director with any specific period of employment, right
to be retained in the service of the Company or EA 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 Officer.

 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the day and year first above
written. 

 

	
  Witness:

  	
   

  	
  MAINE PUBLIC SERVICE
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Paul R. Cariani

  	
   

  	
  By

  	
  /s/ Nathan L. Grass

  	
   

  
	
   

  	
  Its Chairman,
  Executive Compensation

  	
   

  
	
   

  	
  Committee

  	
   

  
	
   

  	
   

  
	
  /s/ Stephen A. Johnson

  	
   

  	
  /s/ Calvin D. Deschene

  	
   

  
	
   

  	
   

  	
  Director  Calvin D. Deschene

  
						

 

7

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