EXHIBIT 10.4
[CENTENNIAL BANK OF THE WEST
LETTERHEAD]
February 7, 2005
Mr. William R. Farr
3535 Wagon Trail Road
Greeley, Colorado 80634
Dear Bill:
This letter sets forth your new
employment arrangements with Centennial Bank of the West
(“Centennial”) for the period from the date this letter
is executed by both you and Centennial (the “Effective
Date”) to June 30, 2005, after which date you intend to
retire. This letter supersedes all previous employment letters,
agreements or arrangements you have had with Centennial or its
affiliates.
1. Duties . From the
Effective Date until June 30, 2005 (the “Term of
Employment”) you shall continue to be Centennial’s
President and Chief Executive Officer, and will have the duties
which are appropriate (including appropriate authority and
responsibilities) to that position.
No later than thirty (30) days prior
to the expiration of your Term of Employment, you and Centennial
shall enter into a new agreement which shall set forth any
post-retirement arrangements between you and Centennial.
2. Directorships . During the
Term of Employment, you will continue to serve as a Chairman of the
Board of Centennial as well as a director on the Board of Directors
of Centennial Bank Holdings, Inc. You shall not receive any fees
for your service as a director so long as you remain employed by
Centennial.
3. Salary and Benefits during
your Term of Employment .
(a) Base Salary . During the
Term of Employment, you will receive an annual base salary of
$265,000, to be paid in accordance with Centennial’s payroll
practices as in effect from time to time less applicable
withholding and salary deductions.
(b) Bonus . Subject to the
terms of this letter and Centennial’s annual bonus program as
in effect from time to time, you will be eligible to receive a
bonus for
the fiscal year ended December 31, 2005, as
shall be determined by the Board, pro rated for the period of your
Term of Employment.
(c) Reimbursement of Business
Expenses . During the Term of Employment, you will be
reimbursed by Centennial for all out-of-pocket business you incur
in the course of your duties in accordance with Centennial’s
policies as in effect from time to time.
(d) Employee Benefits .
During the Term of Employment you will be eligible to participate
in the employee benefit plans, programs, policies and arrangements
generally available to Centennial employees and to receive the
other perquisites provided to senior executive officers of
Centennial, in each case in accordance with the terms and
conditions of such plans, programs, policies, arrangements and
other perquisites as in effect from time to time; provided ,
however , that during the Term of Employment, you will be
entitled to receive four and a half weeks of paid vacation
time.
4. General Termination Provisions
during the Term of Employment . If either you or Centennial
terminates your employment under the provisions of this Section 4,
Centennial shall be liable to you for all payments (if any) as
described below:
(a) Termination by Centennial
. Centennial may terminate your employment under this Section 4
only upon the occurrence of one or more of the following events and
under the conditions described below.
(i) Disability . If, during
the Term of Employment, your employment terminates due to
Disability, Centennial shall pay you your base salary at the rate
then in effect through the then remaining Term of Employment. For
each year thereafter, Centennial shall pay to you until your death,
an amount equal to 50% of the base salary paid to you during the
twelve (12) month period prior to the date of such termination of
employment. All amounts payable under this Section 5(a) shall be
paid in semi-monthly installments, less applicable withholdings for
income taxes and employment taxes. In addition, to the extent not
theretofore paid or provided, Centennial shall pay or provide any
other accrued amounts or benefits required to be paid or provided
under any plan, program, policy or arrangement through the date of
termination of employment (such other amounts and benefits shall be
hereinafter referred to as the “Other
Benefits”).
(ii) Termination for Cause .
Centennial may terminate your employment for Cause and, upon such
termination, Centennial shall have no further obligation to make
payments under this letter, except for paying amounts that have
already become payable as of the date of such termination, but have
not yet been paid and paying or providing the Other
Benefits.
(b) Termination by You . You
may terminate your employment at any time during the Term of
Employment, upon sixty (60) days prior written notice. If you
terminate your employment other than for Good Reason, Centennial
shall have no further
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obligation to make payments under this letter,
except for paying amounts that have already become payable as of
the date of such termination, but have not yet been paid and paying
or providing the Other Benefits. You may terminate your employment
for Good Reason under the provisions of Section 5.
(c) Centennial’s obligation to
make any payments to you as described in this Section 4 is
contingent upon your execution of a Waiver and Release of Claims, a
form of which is attached to this letter as Annex A.
5. Special Termination
Provisions . If, during the Term of Employment, (a) Centennial
terminates your employment other than for Cause or due to
Disability or (b) you terminate your employment for Good Reason,
then Centennial shall pay to you in one lump sum within five (5)
days of such termination, an amount in cash equal to the balance of
any payments you would have been entitled to receive under the
remaining Term of Employment pursuant to Section 3(a).
Centennial’s obligation to make any payments to you as
described in this Section 5 is contingent upon your execution of a
Waiver and Release of Claims, a form of which is attached to this
letter as Annex A. Except as described in this Section 5, you shall
not be eligible to receive any other severance benefits under any
severance or termination plan, program, policy or arrangement
maintained by Centennial or its affiliates.
6. Excess Payments .
Notwithstanding any provision of this letter to the contrary, in
the event any payments or non-cash benefits that you are entitled
to receive (whether pursuant to the terms of this letter or
otherwise (the “Payments”)) would be subject to the
excise tax (the “Excise Tax”) under Section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”),
then the amounts payable to you under this letter shall be reduced,
but not below zero, to the maximum amount as will result in no
portion of the Payments being subject to such excise tax (the
“Safe Harbor Cap”). For purposes of reducing the
Payments to the Safe Harbor Cap, only amounts payable to you under
this letter (and no other Payments) shall be reduced, unless you
consent otherwise.
7. Covenants Not to Compete or
Solicit Centennial Clients and Employees; Confidential
Information .
(a) Non-Compete . During your
employment with Centennial, and for a two (2) year period after the
expiration of your Term of Employment or the date your employment
is terminated in accordance with Section 4 hereof or a one year
period after the date your employment is terminated in accordance
with Section 5 hereof (collectively, the “Restricted
Period”), you shall not directly or indirectly (without the
prior written consent of Centennial) associate (including as a
director, officer, employee, partner, consultant, agent or advisor)
with a Competitive Enterprise in a Restricted Territory and
in connection with your association engage, or directly or
indirectly manage or supervise personnel engaged, in any
activity:
(i) that is substantially related to
any activity that you were engaged in with Centennial during the 12
months prior to the date of termination of your
employment,
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(ii) that is substantially related
to any activity for which you had direct or indirect managerial or
supervisory responsibility with Centennial during the 12 months
prior to the date of termination of your employment, or
(iii) that calls for the application
of specialized knowledge or skills substantially related to those
used by you in your activities with Centennial during the 12 months
prior to the date of termination of your employment.
For purposes of this letter, “Competitive
Enterprise” means any business enterprise that either (A)
engages in any activity closely associated with commercial banking
or the operation of an institution, the deposits of which are
insured by the Federal Deposit Insurance Corporation, in a
Restricted Territory, or (B) holds a 25% or greater equity, voting
or profit participation interest in any enterprise that engages in
such a competitive activity, and “Restricted Territory”
means the geographic areas consisting of Boulder, Larimer and Weld
counties, Colorado.
For the purposes of this letter, you acknowledge
that you are part of the “executive and management
personnel” of Centennial within the meaning of C.R.S. §
8-2-113(2).
(b) Non-Solicitation . During
the Restricted Period, you shall not, in any manner, directly or
indirectly (without the prior written consent of Centennial): (i)
Solicit any Client to transact business with a Competitive
Enterprise in a Restricted Territory or to reduce or refrain from
doing any business with Centennial, (ii) transact business with any
Client that would cause you to be a Competitive Enterprise in a
Restricted Territory, (iii) interfere with or damage any
relationship between Centennial and a Client or (iv) Solicit anyone
who is then an employee of Centennial (or who was an employee of
Centennial within the prior 12 months) to resign from Centennial or
to apply for or accept employment with any other business or
enterprise.
For purposes of this letter, a
“Client” means any client or prospective client of
Centennial to whom you provided services, or for whom you
transacted business, or whose identity became known to you in
connection with your relationship with or employment by Centennial,
and “Solicit” means any direct or indirect
communication of any kind, regardless of who initiates it, that in
any way invites, advises, encourages or requests any person to take
or refrain from taking any action.
(c) Confidential Information
. You hereby acknowledge that, as an employee of Centennial, you
will be making use of, acquiring and adding to confidential
information of a special and unique nature and value relating to
Centennial and its strategic plans, operations, financial condition
and performance and such confidential information constitutes trade
secrets of Centennial. You further recognize and acknowledge that
all confidential information is the exclusive property of
Centennial, is material and confidential, and is critical to the
successful conduct of the business of Centennial. Accordingly, you
hereby covenant and agree that you will use confidential
information for the benefit of Centennial only and shall not at any
time, directly or indirectly, during the Term of Employment and
thereafter divulge, reveal or communicate any confidential
information to any person, firm, corporation or entity
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whatsoever, or use any confidential information
for your own benefit or for the benefit of others. Notwithstanding
the foregoing, you shall be authorized to disclose confidential
information (i) as may be required by law or legal process after
providing Centennial with prior written notice and an
opportu
