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Exhibit 99.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this 3rd day of
January 2003, by and between BAR HARBOR BANKSHARES , a Maine
corporation with its headquarters located in Bar Harbor, Maine
(hereinafter "the Company"), and JOSEPH M .
MURPHY , a resident of Mount Desert, Maine (hereinafter "the
President").
In consideration of the mutual promises, covenants, and agreements
made herein, receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound hereby,
agree as follows:
1. EMPLOYMENT. The Company hereby
employs the President, and the President hereby accepts employment
by the Company as the President and Chief Executive Officer of Bar
Harbor Bankshares, on the terms and conditions specified
herein.
2. TERM. The President’s
employment shall be for a term of two (2) years commencing on the
date of this agreement and ending January 3, 2005, unless
sooner terminated. The Company agrees to notify the President not
less than one hundred and eighty days (180) prior to January 3,
2005, if it does not intend to extend the President’s
employment.
In the absence of notice of intent not to extend this Agreement by
the Company, the Agreement shall be deemed automatically extended
in additional one-year terms. After the initial extension, the
Company agrees to a like notice period and subsequent extensions of
this Agreement until and unless the Company and the President shall
mutually agree to modify the terms of this Agreement. During any
extension of this Agreement, as provided herein, all other
provisions of this Agreement shall remain in effect.
Upon expiration of this Agreement, pursuant to a notice of
intention not to extend, the President’s employment by the
Company shall cease and no severance payments such as those set
forth in Section 6 shall be due provided, however, that the
obligations set forth in Sections 7, 8, and 9 shall survive
termination of this Agreement and shall remain fully
enforceable.
Either the Board or the President may terminate the
President’s employment at any time for any reason, subject to
the provisions of Section 6 of this Agreement.
3. RESPONSIBILITIES and OTHER
ACTIVITIES. The President shall be employed as President
and Chief Executive Officer of Bar Harbor Bankshares, and shall
undertake the overall management, responsibilities, and duties
related to this position as defined by the Board of Directors of
the Company and summarized in the job description attached as
Exhibit A. The President shall faithfully perform the duties of his
position as described herein, devote substantially all of his
business time and energies to the business and affairs of the
Company and shall use his best efforts, skills and abilities to
promote the Company’s interests. The President may not engage
in any business activities or render any services of a business,
commercial, or professional nature (whether or not for
compensation) that would affect adversely the President’s
performance of his responsibilities and duties hereunder or
conflict with the business of the Company for the benefit of any
person or entity, unless the President receives the prior written
consent of the Company.
4. COMPENSATION. The Company shall pay
the President a base salary of not less than Eighteen Thousand
three hundred thirty three Dollars and thirty-three cents
($18,333.33) per month (an annualized rate of not less than Two
Hundred Twenty Thousand Dollars ($220,000.00) per annum) payable in
accordance with the Company’s standard payroll practices.
This base salary shall be reviewed annually beginning as of the
first week of January 2004 and thereafter annually by the
Compensation Committee of the Company’s Board of Directors
and adjusted at the Company’s sole discretion. The President
shall also participate in a performance compensation plan, to be
developed during 2003 by mutual agreement between the President and
the Company, which shall be effective in calendar year 2003. Other
such plans may be agreed upon by the parties in subsequent calendar
years in concert with the Company’s evolving goals and
objectives.
5. BENEFITS.
(a) The President shall be eligible to participate in such medical,
dental, disability, retirement, life insurance and other employee
benefits on the same basis as may be provided to other similarly
situated employees of the Company. The President shall be entitled
to participate in a Supplemental Executive Retirement Plan (SERP),
the terms of which shall be negotiated and finalized by March 31,
2003. This benefit shall be the subject of a separate contract that
shall be incorporated by reference into this Agreement and shall
not be changed, altered or terminated except by mutual agreement of
the contracting parties. As to all other benefits to which the
President may be entitled in parity with all other employees, such
benefits may be created, changed, or terminated from time to time
in the Company’s sole discretion. In addition, the President
shall be entitled to reasonable paid vacations consistent with the
Company’s vacation policy.
(b) The Company shall reimburse the President for all reasonable,
ordinary, and necessary expenses incurred by the President in the
performance of his duties hereunder in accordance with the
Company’s policies.
6. TERMINATION.
(a) Termination by the Company . The Company may elect to
terminate this Agreement and the President from his employment at
any time for any reason by giving the President thirty (30)
days’ prior written notice of termination, subject to payment
by the Company of the base salary described below.
In the event of termination pursuant to this Section 6(a) the
President shall be entitled to receive any earned but unpaid base
salary through the notice period plus severance pay equal to two
year’s base compensation, (which the parties agree shall be
deemed to include any unused vacation time) payable either in
monthly installments or a lump sum at the discretion of the
Company.
The rights and benefits the President may have under employee
benefit plans and programs of the Company in existence as of the
effective date of such termination, if any, shall be determined in
accordance with the terms of such plans and programs. Except as
provided in this Section 6 and in Sections 7, 8, and 9, all
obligations of the parties hereunder shall cease upon
termination.
(b) Resignation. The President may voluntarily resign his
employment at any time for any reason by giving the Company not
less than thirty (30) days’ prior written notice of
termination. In such event, the President shall be entitled only to
his earned but unpaid base salary accrued up to his last day of
work together with any unused but accrued vacation time subject to
Company policy limitations. The rights and benefits the President
may have under employee benefit plans and programs of the Company
in existence as of the effective date of such termination, if any,
shall be determined in accordance with the terms of such plans and
programs. The Company may then establish at its discretion a last
day of work but the President shall still be entitled to full pay
and benefits through the 30 day notice period notwithstanding that
he may actually work less than 30 days at the election of the
Company . Except in this Section 6 and in Sections 7, 8 and
9, all obligations of the parties under this Agreement shall cease
immediately upon the President’s last day of work.
(c) Good Reason . In the case of "Good Reason" as defined
herein, the President may consider that his employment has been
constructively terminated by the Company. For purposes of this
Agreement, "Good Reason" shall mean:
(i) The assignment to the President of duties inconsistent
with the President’s position (including status, offices,
titles, and reporting requirements) authority, duties, or
responsibilities as described in Section 3 of this Agreement, or
any other action by the Company which results in a substantial and
material diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
there of given by the President.
(ii) Any failure by the Company to comply with any of the
provisions of Section 4 of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of
notice thereof given by the President.
(iii) Any purported termination by the Company of the
President’s employment otherwise than as expressly permitted
by the Agreement; or
(iv) Any failure by the Company (or successor Company) to comply
with the Change of Control provisions of Section 10 of this
Agreement.
(d) Termination Due to Death . In the event of the death of
the President during this Agreement, the estate or other legal
representatives of the President shall be entitled to any amount of
earned but unpaid base salary accrued through the pay period in
which death occurs plus any accrued but untaken vacation benefits,
such payment to be paid promptly following death. The estate or
other legal representatives of the President also shall be entitled
to receive incentive compensation payments, if any, that the
President would have earned if his employment had continued through
the then current fiscal year of the Company, which amount shall be
reduced to account for the percentage of the fiscal year not worked
by the President because of such death. Rights and benefits that
the President, or the President’s estate or other legal
representatives, may have under employee benefit plans and programs
of the Company upon the President’s death, if any, shall be
determined in accordance with the terms and provisions of such
plans and programs.
(e) Termination Due to Disability .
(i) The President’s employment hereunder may be terminated by
the Company in the event the President is totally or partially
disabled as determined by a Board Certified Medical Doctor for a
cumulative period of ninety (90) days during any twelve (12) month
period. During such ninety-day period, the President shall be paid
his compensation in accordance with the terms of the short-term
sick leave program then provided by the Company and/or through the
standard group Long-Term Disability program offered to officers and
employees of the Company and its subsidiaries. For purposes of this
Agreement, "disability" shall be defined and benefits shall be paid
in accordance with the terms of the long-term disability policy
then available to all employees and executives of the Company.
(ii) Upon termination of the President’s employment due to
disability pursuant to Section 6(e)(i) hereof, the President shall
be entitled to continued benefits in accordance with the normal
policies and practices, if any, in effect as of the date of such
termination for officers and employees of the Company; provided
further, that the President shall be entitled to receive incentive
payments, if any, the President would have earned if his employment
had continued through the then current fiscal year of the Company,
which amount shall be reduced to account for the percentage of the
fiscal year not worked by the President because of such disability.
Any continued rights and benefits the President, or the
President’s legal representatives, may have under employee
benefit plans and programs of the Company upon the
President’s termination due to disability, if any, shall be
determined in accordance with the terms and provisions of such
plans and programs. Except as provided in Section 6 and in Sections
7, 8, and 9, all obligations of the parties under this Agreement
shall cease immediately upon termination.
(f) Cause
The Company may terminate the employment of the President and
immediately remove the President from his employment for "cause".
For purposes of this Section, "cause" shall include, but not be
limited to, the following:
(i) Any admission of, or a plea of guilty or no contest to, any
charge of embezzlement, theft or fraudulent act or any crime which
by three quarters vote of the Board of Directors would reasonably
be expected to be materially detrimental to the business,
operations, reputation or financial condition of the Company;
(ii) Willful misconduct of President in connection with the
performance of any of his duties, including, without limitation,
misappropriation of funds or property of the Company or any of its
subsidiaries and/or affiliates or securing or attempting to secure
personally any profit in connection with any transaction entered
into on behalf of the Company or any of its subsidiaries and/or
affiliates as determined by a three quarters vote of the Board of
Directors;
(iii) Conduct by the President that would result in material injury
to the reputation of the Company or its affiliates if the President
were retained in his position with the Company such as, but not
limited to substance abuse, sexual harassment behaviors or violent
or abusive behaviors exhibited in the workplace, as determined by a
three quarters vote of the Board of Directors;
(iv) The entry of any legal or regulatory order, which has the
effect of precluding the President from performing his duties
hereunder for more than 30 consecutive days;
(v) Active disloyalty, such as aiding a competitor as determined by
a three quarters vote of the Board of Directors;
(vi) Any other breach by or default of the President of the terms
of this Employment Agreement as determined by a three quarters vote
of the Board of Directors;
(vii) The inability of the Company to obtain at reasonable cost a
bond covering the activities of the President; or
(viii) The willful and continued failure of the President to
perform substantially the President’s duties with the Company
or one of its affiliates (other than such failure resulting from
incapacity due to physical or mental illness) after a written
demand for substantial performance improvement is delivered the
President by the Board of Directors which specifically identifies
the manner in which the Board believes that the President has not
substantially performed the President’s duties as determined
by a three quarters vote of the Board of Directors.
For purposes of this provision, no act or failure to act, on the
part of the President shall be considered "willful" unless it is
done, or omitted to be done, by the President in bad faith or
without reasonable belief that the President’s action or
omission was in the best interes
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