Exhibit 10.0

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT is made as of the 30th day of June, 2006 by and
between RUSSELL GOLDSMITH (“Goldsmith”), on the one hand, and CITY NATIONAL
BANK, a National Bank (“CNB”), and CITY NATIONAL CORPORATION (“Parent
Corporation”), on the other hand.

 

1.                                       EMPLOYMENT. CNB AND PARENT CORPORATION
(COLLECTIVELY THE “EMPLOYER”) HEREBY EMPLOY GOLDSMITH, AND GOLDSMITH HEREBY
ACCEPTS EMPLOYMENT, UNDER THE TERMS AND CONDITIONS HEREAFTER SET FORTH. THE
EMPLOYMENT AGREEMENT DATED AS OF THE 15TH OF JULY, 2002 BY AND BETWEEN
GOLDSMITH, CNB AND PARENT CORPORATION, AS AMENDED, IS TERMINATED EFFECTIVE UPON
THE START DATE OF THE TERM OF THIS EMPLOYMENT AGREEMENT.

 

2.                                       DUTIES. GOLDSMITH SHALL BE EMPLOYED AS
THE CHAIRMAN OF THE BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER OF CNB AND
CHIEF EXECUTIVE OFFICER AND PRESIDENT OF THE PARENT CORPORATION AND HIS POWERS
AND DUTIES SHALL BE CONSISTENT WITH SUCH OFFICES AND POSITIONS. AS CHIEF
EXECUTIVE OFFICER OF EMPLOYER, GOLDSMITH SHALL SUPERVISE, CONTROL AND BE
RESPONSIBLE FOR ALL ASPECTS OF THE BUSINESS AND AFFAIRS OF EMPLOYER AND ITS
SUBSIDIARIES.

 

3.                                       PLACE OF SERVICE. SUBSTANTIALLY ALL OF
GOLDSMITH’S DUTIES SHALL BE PERFORMED IN LOS ANGELES AND BEVERLY HILLS,
CALIFORNIA, AND UNLESS MUTUALLY AGREED UPON BY GOLDSMITH AND EMPLOYER, GOLDSMITH
SHALL BE HEADQUARTERED IN BEVERLY HILLS, CALIFORNIA.

 

4.                                       TERM. SUBJECT TO THE PROVISIONS FOR
TERMINATION AS HEREINAFTER PROVIDED, THE TERM OF THIS AGREEMENT SHALL COMMENCE
AS OF JULY 15, 2006 (THE “START DATE”) AND SHALL TERMINATE FOUR (4) YEARS
THEREAFTER.

 

5.                                       ANNUAL BASE COMPENSATION. EMPLOYER
SHALL PAY GOLDSMITH AS ANNUAL BASE COMPENSATION (THE “ANNUAL BASE
COMPENSATION”), PAYABLE IN EQUAL SEMIMONTHLY PAYMENTS, THE SUM OF NINE HUNDRED
SEVENTY-EIGHT THOUSAND FIVE HUNDRED TWENTY-EIGHT DOLLARS ($978,528) DURING THE
TERM OF THIS AGREEMENT. TO THE EXTENT IN ANY YEAR THAT ANNUAL BASE COMPENSATION
AND OTHER COMPENSATION PAID BY EMPLOYER TO GOLDSMITH EXCEEDS ONE MILLION DOLLARS
($1,000,000) AND IS NOT CURRENTLY DEDUCTIBLE BY THE EMPLOYER UNDER SECTION
162(M) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), TO THE
EXTENT IN COMPLIANCE WITH SECTIONS 162(M) AND 409A OF THE CODE, GOLDSMITH WILL
ELECT TO DEFER SUCH EXCESS AMOUNTS UNDER A DEFERRED COMPENSATION PLAN OR
ARRANGEMENT OF THE EMPLOYER OR PARENT CORPORATION THAT COMPLIES WITH SECTION
409A OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”); PROVIDED
THAT GOLDSMITH MAY NOT ELECT TO RECEIVE ANY SUCH PAYMENT IN ANY YEAR BEFORE IT
MAY BE DEDUCTED BY THE EMPLOYER UNDER SECTION 162(M) OF THE CODE OR, IF LATER,
THE YEAR FOLLOWING TERMINATION OF HIS EMPLOYMENT WITH THE EMPLOYER.

 

6.                                       BONUS COMPENSATION.

 

(A)                                  GOLDSMITH SHALL PARTICIPATE IN THE PARENT
CORPORATION’S AMENDED AND RESTATED 1999 VARIABLE BONUS PLAN AND/OR ANY OTHER
CASH BONUS OR INCENTIVE COMPENSATION PLAN OF EMPLOYER ESTABLISHED FOR CORPORATE
EXECUTIVE OFFICERS OF EMPLOYER, INCLUDING CORPORATE OFFICERS WHO ARE MEMBERS OF
THE EXECUTIVE COMMITTEE AND THE STRATEGY AND PLANNING

 

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COMMITTEE, IN EACH CASE AS DETERMINED BY THE COMPENSATION, NOMINATING AND
GOVERNANCE COMMITTEE OF THE PARENT CORPORATION (OR, IN THE ABSENCE OF A
COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE, THE BOARD OF DIRECTORS OR
ANOTHER COMMITTEE OF DIRECTORS DESIGNATED BY THE BOARD OF DIRECTORS AS
RESPONSIBLE FOR MATTERS RELATING TO EXECUTIVE COMPENSATION) (SUCH BODY, WHETHER
A COMMITTEE OR THE ENTIRE BOARD, IS HEREINAFTER REFERRED TO AS THE “COMMITTEE”).
THE AGGREGATE AMOUNT OF ANNUAL BONUS OR INCENTIVE COMPENSATION (THE “ANNUAL
BONUS”) PAID TO GOLDSMITH PURSUANT TO ALL SUCH BONUS PLANS FOR ANY YEAR
(INCLUDING THE FISCAL YEAR ENDING DECEMBER 31, 2006 AND THE FISCAL YEAR DURING
WHICH HIS EMPLOYMENT IS TERMINATED) SHALL NOT BE LESS THAN THE TARGET BONUS
AMOUNT FOR THAT FISCAL YEAR IF PLAN GOALS FOR THE YEAR ARE ACHIEVED, SCALED UP
RATABLY TO TWO HUNDRED PERCENT (200%) OF THE TARGET BONUS AMOUNT FOR SUCH FISCAL
YEAR IF ONE HUNDRED THIRTY PERCENT (130%) OF PLAN GOALS ARE ACHIEVED AND SCALED
DOWN RATABLY TO THIRTY-FIVE PERCENT (35%) OF THE TARGET BONUS AMOUNT FOR SUCH
FISCAL YEAR IF EIGHTY FIVE PERCENT (85%) OF PLAN GOALS ARE ACHIEVED.

 

(B)                                 FOR EACH FISCAL YEAR DURING THE TERM OF THIS
AGREEMENT, THE “TARGET BONUS AMOUNT” SHALL BE EQUAL TO THE PRODUCT OF THE TARGET
BONUS PERCENTAGE FOR THAT FISCAL YEAR AND GOLDSMITH’S ANNUAL BASE COMPENSATION
AS OF DECEMBER 31 OF THE YEAR FOR WHICH THE BONUS IS BEING PAID, AS CALCULATED
BELOW. THE “TARGET BONUS PERCENTAGE” FOR EACH SUCH FISCAL YEAR SHALL BE AS
SPECIFIED BELOW:

 

Fiscal year ended 
December 31,

 

Target Bonus
Percentage

 

Target Bonus
Amount

 

2006

 

125

%

$

1,223,160.00

 

2007

 

137

%

1,340,583.36

 

2008

 

143

%

1,399,295.04

 

2009

 

149

%

1,458,006.72

 

2010

 

155

%

1,516,718.40

 

 

(C)                                  IN DETERMINING THE ANNUAL BONUS PAYABLE TO
GOLDSMITH FOR ANY YEAR IN WHICH HE WAS NOT EMPLOYED BY EMPLOYER FOR THE ENTIRE
YEAR, THE ANNUAL BONUS FOR THE PORTION OF SUCH FISCAL YEAR PRECEDING THE
TERMINATION OF HIS EMPLOYMENT SHALL BE AN AMOUNT EQUAL TO (I) THE AMOUNT WHICH
THE ANNUAL BONUS WOULD HAVE BEEN HAD THE PLAN GOALS ACHIEVED THROUGH THE MONTH
ENDING IMMEDIATELY FOLLOWING THE DATE OF TERMINATION OF HIS EMPLOYMENT BEEN THE
PLAN GOALS FOR THE ENTIRE FISCAL YEAR, THE FISCAL YEAR HAD ENDED AT THE END OF
SUCH MONTH AND GOLDSMITH’S ANNUAL BASE COMPENSATION HAD BEEN THE ANNUAL BASE
COMPENSATION PAYABLE TO HIM AS OF THE FOLLOWING DECEMBER 31 HAD HIS EMPLOYMENT
CONTINUED THROUGH THE FOLLOWING DECEMBER 31, (II) MULTIPLIED BY A FRACTION, THE
NUMERATOR OF WHICH IS THE NUMBER OF MONTHS IN THE FISCAL YEAR THROUGH THE END OF
THE MONTH IMMEDIATELY FOLLOWING THE DATE OF TERMINATION OF GOLDSMITH’S
EMPLOYMENT AND THE DENOMINATOR OF WHICH IS 12.

 

(D)                                 UNLESS GOLDSMITH ELECTS TO DEFER RECEIPT
THEREOF, EACH ANNUAL BONUS SHALL BE PAID NO LATER THAN THE END OF THE THIRD
MONTH OF THE FISCAL YEAR FOLLOWING THE FISCAL YEAR FOR WHICH THE BONUS IS BEING
PAID; PROVIDED, HOWEVER, THAT IF THE EMPLOYMENT OF GOLDSMITH IS TERMINATED PRIOR
TO THE END OF THE FISCAL YEAR FOR WHICH THE BONUS IS BEING PAID, THE ANNUAL
BONUS FOR THE PARTIAL YEAR PRECEDING THE TERMINATION OF HIS EMPLOYMENT SHALL BE
PAID NO LATER THAN THE END OF THE THIRD MONTH FOLLOWING THE TERMINATION OF HIS
EMPLOYMENT AND ANY AMOUNTS PAYABLE UNDER ANY SUBPARAGRAPHS OF PARAGRAPH 10 AS AN
ANNUAL BONUS APPLICABLE TO ANY PORTION OF A

 

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FISCAL YEAR OF LESS THAN TWELVE MONTHS SHALL BE PAID NO LATER THAN THE END OF
THE THIRD MONTH FOLLOWING THE END OF THE PERIOD FOR WHICH SUCH AMOUNT IS
PAYABLE.

 

7.                                       STOCK AWARDS.

 

(A)                                  ANNUAL STOCK AWARDS. IN EACH FISCAL YEAR
DURING THE EMPLOYMENT TERM, BEGINNING IN 2007, UPON THE EARLIER TO OCCUR OF (I)
THE DATE THE EMPLOYER GENERALLY GRANTS ANNUAL STOCK AWARDS TO OTHER CORPORATE
OFFICERS WHO ARE MEMBERS OF THE EMPLOYER’S EXECUTIVE COMMITTEE AND STRATEGY AND
PLANNING COMMITTEE, AND (II) MARCH 15, THE EMPLOYER SHALL GRANT TO GOLDSMITH AN
ANNUAL STOCK AWARD (AN “ANNUAL STOCK AWARD”) HAVING AN AGGREGATE DEEMED VALUE,
ON THE GRANT DATE, OF $2,410,000 FOR MARCH 2007 AND OF $2,350,000 FOR EACH MARCH
THEREAFTER DURING THE TERM OF THIS AGREEMENT. ONE-HALF OF THE DEEMED VALUE OF
EACH ANNUAL STOCK AWARD SHALL BE PAYABLE IN THE FORM OF NON-QUALIFIED STOCK
OPTIONS AND THE OTHER HALF SHALL BE PAYABLE IN THE FORM OF RESTRICTED STOCK OR
RESTRICTED STOCK UNITS, AS DETERMINED BY THE COMMITTEE ON EACH GRANT DATE IN
ACCORDANCE WITH THIS AGREEMENT.

 

(B)                                 PERFORMANCE STOCK OPTIONS.

 

(I)                                     ON JULY 14, 2006, THE EMPLOYER SHALL
GRANT TO GOLDSMITH NON-QUALIFIED STOCK OPTIONS WITH A DEEMED VALUE OF $500,000
(THE “INITIAL OPTIONS”), AND NO LATER THAN JULY 31 OF EACH SUBSEQUENT FISCAL
YEAR DURING THE TERM OF THIS AGREEMENT, BEGINNING IN JULY 2007, IF THE PARENT
CORPORATION’S TSR FOR THE THREE YEARS ENDING ON THE IMMEDIATELY PRECEDING JUNE
30 IS SUFFICIENT TO PLACE PARENT CORPORATION IN AT LEAST THE TWENTY-FIFTH (25TH)
PERCENTILE OF PEER BANKS RANKED BY TSR, THE EMPLOYER SHALL GRANT TO GOLDSMITH
STOCK OPTIONS HAVING THE DEEMED VALUE CORRESPONDING TO THE PARENT CORPORATION’S
TSR PERCENTILE FOR EACH FISCAL YEAR SPECIFIED BELOW:

 

Three year period
Ended June 30,

 

TSR
Percentile

 

Deemed Value

 

 

 

 

 

 

 

2007

 

Below 25

 

$

0

 

 

 

25 to below 50

 

250,000

 

 

 

50 to below 75

 

500,000

 

 

 

75 to below 90

 

750,000

 

 

 

90 and above

 

900,000

 

2008

 

Below 25

 

$

0

 

 

 

25 to below 50

 

300,000

 

 

 

50 to below 75

 

600,000

 

 

 

75 to below 90

 

850,000

 

 

 

90 and above

 

1,000,000

 

2009

 

Below 25

 

$

0

 

 

 

25 to below 50

 

350,000

 

 

 

50 to below 75

 

700,000

 

 

 

75 to below 90

 

950,000

 

 

 

90 and above

 

1,100,000

 

 

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Three year period
Ended June 30,

 

TSR
Percentile

 

Deemed Value

 

 

 

 

 

 

 

 

2010

 

Below 25

 

$

0

 

 

 

25 to below 50

 

400,000

 

 

 

50 to below 75

 

800,000

 

 

 

75 to below 90

 

1,050,000

 

 

 

90 and above

 

1,200,000

 

 

(II)                                  “PEER BANKS” MEANS, FOR EACH THREE YEAR
MEASUREMENT PERIOD, THE COMPONENT COMPANIES INCLUDED IN THE SNL MID CAP BANK
INDEX DURING THE ENTIRE MEASUREMENT PERIOD, OR IF THE SNL MID CAP BANK INDEX IS
NO LONGER MAINTAINED OR IS NO LONGER APPROPRIATE, IN THE REASONABLE JUDGMENT OF
THE COMMITTEE, THE PEER BANKS SHALL INSTEAD BE THE COMPANIES INCLUDED IN ANY
OTHER REASONABLY COMPARABLE INDEX PREPARED BY A THIRD PARTY OR THE COMMITTEE OF
PUBLICLY-TRADED FINANCIAL COMPANIES WITH MARKET CAPITALIZATIONS IN THE $1.0
BILLION TO $5.0 BILLION RANGE, OR SUCH OTHER RANGE OF MARKET CAPITALIZATIONS
SUCH THAT THE COMPANY FALLS BETWEEN THE 25TH AND 75TH PERCENTILE IN TERMS OF
SIZE OF MARKET CAPITALIZATION.

 

(III)                               “PERFORMANCE STOCK OPTIONS” MEANS STOCK
OPTIONS GRANTED PURSUANT TO THIS SUBPARAGRAPH 7(B).

 

(IV)                              “TSR” SHALL BE DETERMINED FOR A COMPANY,
INCLUDING THE PARENT CORPORATION AND EACH OF THE PEER BANKS, AS FOLLOWS:

 

 

(Price End – Price Begin) + Dividends

 

Price Begin

 

with “Price Begin” equal to the company’s closing price per share of common
stock on its principal exchange or trading market on the first trading day in
the three year measurement period (adjusted to give effect to stock splits and
stock dividends during the measurement period), “Price End” equal to the
company’s closing price per share of common stock on its principal exchange or
trading market on the final trading day in the three year measurement period,
and “Dividends” equal to the aggregate cash dividends per share of common stock
paid during the three year measurement period.

 

(C)                                  VALUATION METHODOLOGIES. AS USED HEREIN,
THE “DEEMED VALUE” OF ANY STOCK OPTIONS SHALL BE AS DETERMINED BY THE COMMITTEE
ON THE GRANT DATE IN ACCORDANCE WITH THE CITY NATIONAL VALUATION METHODOLOGY FOR
OPTION AWARDS IN EFFECT ON SUCH GRANT DATE AND THE “DEEMED VALUE” OF ANY
RESTRICTED STOCK OR RESTRICTED STOCK UNIT AWARD SHALL BE THE FAIR MARKET VALUE
(AS DEFINED IN THE CURRENT PLAN) OF THE PARENT CORPORATION’S COMMON STOCK, $1.00
PAR VALUE PER SHARE, ON THE GRANT DATE. THE CITY NATIONAL VALUATION METHODOLOGY
FOR OPTION AWARDS IN EFFECT AS OF THE DATE HEREOF IS ATTACHED HERETO AS APPENDIX
B. THE CITY NATIONAL VALUATION METHODOLOGY FOR OPTION AWARDS MAY BE CHANGED FROM
TIME TO TIME BY THE COMMITTEE, IN ITS SOLE DISCRETION, PROVIDED THAT NO SUCH
CHANGE WILL APPLY TO STOCK OPTIONS GRANTED TO GOLDSMITH UNLESS SUCH CHANGE
GENERALLY APPLIES TO STOCK OPTIONS GRANTED TO OTHER CORPORATE OFFICERS WHO ARE
MEMBERS OF THE EMPLOYER’S EXECUTIVE COMMITTEE AND STRATEGY AND PLANNING
COMMITTEE.

 

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(D)                                 STOCK OPTION TERMS. STOCK OPTIONS INCLUDED
IN AN ANNUAL STOCK AWARD OR PERFORMANCE STOCK OPTIONS SHALL BE ISSUED IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT AND THE PARENT CORPORATION’S AMENDED
AND RESTATED 2002 OMNIBUS PLAN, AS AMENDED, OR SUCH OTHER STOCK PLAN OF THE
PARENT CORPORATION AS MAY THEN BE IN EFFECT AND PURSUANT TO WHICH GOLDSMITH IS
THEN ELIGIBLE TO RECEIVE STOCK AWARDS (SUCH PLAN BEING THE “CURRENT PLAN”),
SHALL, SUBJECT TO THE OTHER TERMS OF THIS AGREEMENT:

 

(I)                                     VEST TWENTY-FIVE PERCENT (25%) EACH
YEAR, COMMENCING ON THE FIRST ANNIVERSARY OF THE GRANT; PROVIDED THAT THE
INITIAL OPTIONS SHALL VEST TWENTY-FIVE PERCENT (25%) EACH JULY 14, COMMENCING ON
JULY 14, 2007;

 

(II)                                  HAVE AN EXERCISE PRICE EQUAL TO THE FAIR
MARKET VALUE (AS DEFINED IN THE CURRENT PLAN) ON THE GRANT DATE;

 

(III)                               BE NON-QUALIFIED STOCK OPTIONS;

 

(IV)                              NOT BE ENTITLED TO ANY DIVIDEND EQUIVALENTS
(AS DEFINED IN THE CURRENT PLAN); AND

 

(V)                                 EXPIRE TEN (10) YEARS FOLLOWING THE GRANT
DATE, AND

 

shall otherwise be issued on terms and conditions consistent with stock options
then being issued by the Committee to other corporate officers who are members
of Employer’s Executive Committee and Strategy and Planning Committee.

 

All stock options which are granted to Goldsmith on or after July 24, 2002, and
which are vested at the time of termination of Goldsmith’s employment with the
Employer, will remain outstanding until the expiration of their terms, (i) if
Goldsmith’s employment is terminated (A) on account of retirement after
Goldsmith has attained age sixty-two (62), (B) pursuant to subparagraphs 10(b)
(without good cause), 10(c) (disability) or 10(d) (death) hereof, or (C)
pursuant to Sections 5(a) and 6(b) and (c) (death or disability), 5(c) and 6(a)
(Good Reason), or 6(a) (without Cause) of the Amended Employment Agreement (as
defined in subparagraph 10(e)) after a Change of Control (as defined in Section
2 of the Amended Employment Agreement); or (ii) upon the occurrence of a Change
of Control Event as defined in the Current Plan, subject in the case of this
clause (ii) to any provisions of the Current Plan and its stock option
agreements regarding acceleration or termination of stock options upon a Change
of Control Event.

 

All stock options which are granted to Goldsmith and are not vested at the time
of termination of Goldsmith’s employment with the Employer will expire upon
termination of Goldsmith’s employment except:  (1) any stock options included
the Initial Awards (as defined in subparagraph 7(f)) will vest on the terms
specified in subparagraph 7(f), and (2) all other stock options shall
immediately vest on the terms specified in Goldsmith’s stock option award
agreements and the Current Plan, as each may be amended and revised from time to
time on terms consistent with other stock options then being issued by the
Committee to other corporate officers who are members of Employer’s Executive
Committee and Strategy and Planning Committee. As of the date hereof, such terms
would permit immediate vesting only on the earlier of (i) the occurrence of a
Change of Control Event (as such term is defined in the Current

 

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Plan) subject in the case of this clause (i) to any provisions of the Current
Plan and its stock option agreements regarding acceleration or termination of
stock options upon a Change of Control Event, or (ii) the date Goldsmith’s
employment is terminated by reason of subparagraphs 10(c) (disability) or 10(d)
(death). Further, stock option grants made prior to the date hereof which have
not vested at the time of Goldsmith’s retirement at age sixty-two (62) will
immediately vest in full upon Goldsmith’s retirement at age sixty-two (62). All
stock option grants after the date hereof that are not vested at the time of
termination due to retirement at age sixty-two (62) will expire.

 

(E)                                  RESTRICTED STOCK TERMS. RESTRICTED STOCK
AND RESTRICTED STOCK UNIT AWARDS INCLUDED IN AN ANNUAL STOCK AWARD SHALL BE
ISSUED IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT AND THE CURRENT PLAN,
SHALL:

 

(I)                                     BE SUBJECT TO FORFEITURE RESTRICTIONS
THAT LAPSE TWENTY-FIVE PERCENT (25%) EACH YEAR, COMMENCING ON THE SECOND
ANNIVERSARY OF THE GRANT;

 

(II)                                  BE IN THE FORM OF RESTRICTED STOCK AWARDS
OR RESTRICTED STOCK UNITS TREATED AS “SHARE AWARDS” (EACH WITHIN THE MEANING OF
THE CURRENT PLAN), AT THE DISCRETION OF THE COMMITTEE; AND

 

(III)                               IF RESTRICTED STOCK, BE ENTITLED TO DIVIDEND
EQUIVALENTS (AS DEFINED IN THE CURRENT PLAN) OR IF RESTRICTED STOCK UNITS, BE
ENTITLED TO DIVIDEND EQUIVALENT UNITS, AND

 

shall otherwise be issued on terms and conditions consistent with restricted
stock and restricted stock unit awards then being issued by the Committee to
other corporate officers who are members of Employer’s Executive Committee and
Strategy and Planning Committee.

 

Upon the termination of Goldsmith’s employment with Employer, all restricted
stock and restricted stock units granted to Goldsmith for which forfeiture
restrictions have not yet lapsed will, for no consideration, be forfeit to the
Parent Corporation, except:  (1) any forfeiture restrictions on shares of
restricted stock or restricted stock units included the Initial Awards (as
defined in subparagraph 7(f)) will lapse on the terms specified in subparagraph
7(f), and (2) forfeiture restrictions on all other shares of restricted stock
and all other restricted stock units shall immediately lapse on the terms
specified in Goldsmith’s restricted stock award and restricted stock unit award
agreements and the Current Plan, as each may be amended and revised from time to
time on terms consistent with other shares of restricted stock and restricted
stock units then being issued by the Committee to other corporate officers who
are members of Employer’s Executive Committee and Strategy and Planning
Committee. As of the date hereof, such terms would permit the immediate lapse of
forfeiture restrictions only on the earlier of (i) subject to the discretion of
the Committee, the occurrence of a Change of Control Event (as such term is
defined in the Current Plan), or (ii) the date Goldsmith’s employment is
terminated by reason of subparagraphs 10(c) (disability) or 10(d) (death).
Further, grants of restricted stock and restricted stock units made prior to the
date hereof for which forfeiture restrictions have not yet lapsed at the time of
Goldsmith’s retirement at age sixty-two (62) will immediately lapse upon
retirement after Goldsmith has attained age sixty-two (62). All grants of
restricted stock and restricted stock units after the date hereof for which
forfeiture restrictions have not yet

 

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lapsed at the time of termination due to retirement at age sixty-two (62) will,
for no consideration, be forfeit to the Parent Corporation.

 

(F)                                    VESTING OF INITIAL AWARDS.

 

(I)                                     “INITIAL AWARDS” MEANS THE INITIAL
OPTIONS AND THOSE OTHER ANNUAL STOCK AWARDS AND PERFORMANCE STOCK OPTIONS
AWARDED TO GOLDSMITH FROM THE DATE OF THIS AGREEMENT UNTIL THE AGGREGATE DEEMED
VALUE OF ALL SUCH INITIAL OPTIONS, ANNUAL STOCK AWARDS AND PERFORMANCE STOCK
OPTIONS, AT THE TIME EACH IS GRANTED, EQUALS $4,200,000. INITIAL AWARDS SHALL
NOT INCLUDE ANY ANNUAL STOCK AWARDS OR PERFORMANCE STOCK OPTIONS, OR OTHER STOCK
OPTIONS, SHARES OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS, AWARDED TO
GOLDSMITH EITHER BEFORE THE DATE OF THIS AGREEMENT (OTHER THAN THE INITIAL
OPTIONS) OR AFTER THE DEEMED VALUE OF THE ANNUAL STOCK AWARDS AND PERFORMANCE
STOCK OPTIONS, AT THE TIME EACH IS GRANTED, EQUALS $4,200,000.

 

(II)                                  ALL INITIAL AWARDS WHICH, AT THE TIME OF
TERMINATION OF GOLDSMITH’S EMPLOYMENT WITH THE EMPLOYER, ARE NOT VESTED OR FOR
WHICH FORFEITURE RESTRICTIONS HAVE NOT LAPSED, SHALL IMMEDIATELY VEST, AND
FORFEITURE RESTRICTIONS SHALL IMMEDIATELY LAPSE, (A) IF GOLDSMITH’S EMPLOYMENT
IS TERMINATED (I) ON ACCOUNT OF RETIREMENT AFTER GOLDSMITH HAS ATTAINED AGE
SIXTY-TWO (62), (II) PURSUANT TO SUBPARAGRAPHS 10(B) (WITHOUT GOOD CAUSE OR BY
GOLDSMITH FOR GOOD REASON), 10(C) (DISABILITY) OR 10(D) (DEATH) HEREOF, OR (III)
PURSUANT TO SECTIONS 5(A) AND 6(B) AND (C) (DEATH OR DISABILITY), 5(C) AND 6(A)
(GOOD REASON), OR 6(A) (WITHOUT CAUSE) OF THE AMENDED EMPLOYMENT AGREEMENT (AS
DEFINED IN SUBPARAGRAPH 10(E)) AFTER A CHANGE OF CONTROL (AS DEFINED IN SECTION
2 OF THE AMENDED EMPLOYMENT AGREEMENT); OR (B) UPON THE OCCURRENCE OF A CHANGE
OF CONTROL EVENT AS DEFINED IN THE CURRENT PLAN, SUBJECT IN THE CASE OF THIS
CLAUSE (B) TO ANY PROVISIONS OF THE CURRENT PLAN AND ITS STOCK OPTION AGREEMENTS
REGARDING ACCELERATION OR TERMINATION OF STOCK OPTIONS UPON A CHANGE OF CONTROL
EVENT.

 

8.                                       FRINGE BENEFITS AND REIMBURSEMENT OF
EXPENSES. EMPLOYER SHALL PROVIDE GOLDSMITH WITH SUCH MEDICAL AND OTHER HEALTH,
DENTAL, ACCIDENTAL LIFE AND DISABILITY INSURANCE, AND HE SHALL BE ENTITLED TO
ALL EMPLOYEE AND FRINGE BENEFITS AND REIMBURSEMENT OF EXPENSES AND TO
PARTICIPATE IN ALL BENEFIT PLANS (INCLUDING STOCK PLANS) AS ARE CONSISTENT WITH
HIS POSITION AND DUTIES AND THOSE PREVIOUSLY PROVIDED TO THE CHIEF EXECUTIVE
OFFICER OF EMPLOYER; PROVIDED, HOWEVER, THAT FUTURE STOCK AWARDS AND STOCK
OPTION GRANTS TO GOLDSMITH SHALL BE ON THE TERMS SPECIFIED IN PARAGRAPH 7 OF
THIS AGREEMENT. GOLDSMITH SHALL ALSO BE ENTITLED TO RECEIVE A SUPPLEMENTAL
RETIREMENT BENEFIT AS SET FORTH IN APPENDIX A TO THIS AGREEMENT.

 

9.                                       EXTENT OF SERVICE. GOLDSMITH SHALL
DEVOTE HIS TIME, ATTENTION AND ENERGIES TO THE BUSINESS OF EMPLOYER AND SHALL
NOT, DURING THE TERM OF THIS AGREEMENT, BE ENGAGED IN ANY OTHER ACTIVITY WHICH
WILL MATERIALLY INTERFERE WITH THE PERFORMANCE OF HIS DUTIES HEREUNDER. TIME
EXPENDED BY GOLDSMITH ON PHILANTHROPIC ACTIVITIES, AS A GENERAL PARTNER OF
SUNBAR PROPERTIES, AS A PASSIVE INVESTOR IN REAL ESTATE VENTURES AND OTHER
INVESTMENTS, OR IN MANAGING THE EXISTING PROPERTIES OF GOLDSMITH ENTERTAINMENT
CORPORATION SHALL BE DEEMED NOT TO INTERFERE WITH THE PERFORMANCE OF HIS DUTIES
HEREUNDER.

 

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10.                                 TERMINATION OF EMPLOYMENT.

 

(A)                                  TERMINATION BY EMPLOYER FOR GOOD CAUSE.
EMPLOYER MAY TERMINATE THE EMPLOYMENT OF GOLDSMITH FOR “GOOD CAUSE” BY WRITTEN
NOTICE TO GOLDSMITH. FOR PURPOSES OF THIS AGREEMENT, “GOOD CAUSE” SHALL MEAN
ONLY (I) CONVICTION OF A CRIME DIRECTLY RELATED TO HIS EMPLOYMENT HEREUNDER,
(II) CONVICTION OF A FELONY INVOLVING MORAL TURPITUDE, (III) WILLFUL AND GROSS
MISMANAGEMENT OF THE BUSINESS AND AFFAIRS OF EMPLOYER, OR (IV) WILLFUL AND
MATERIAL BREACH OF ANY MATERIAL PROVISION OF THIS AGREEMENT. IN THE EVENT THE
EMPLOYMENT OF GOLDSMITH IS TERMINATED PURSUANT TO THIS SUBPARAGRAPH 10(A),
EMPLOYER SHALL HAVE NO FURTHER LIABILITY TO GOLDSMITH OTHER THAN FOR
COMPENSATION ACCRUED THROUGH THE DATE OF TERMINATION BUT NOT YET PAID.

 

In the event Employer contends that it has good cause to terminate Goldsmith
pursuant to clause (iii) or (iv) of the second sentence of this subparagraph
10(a), Employer shall provide Goldsmith with written notice specifying in
reasonable detail the services or matters which it contends Goldsmith has not
been adequately performing, or the material provisions of this Agreement of
which Goldsmith is in violation and the acts constituting such violation, why
Employer has good cause to terminate this Agreement, and what Goldsmith should
do to adequately perform his obligations hereunder. If within thirty (30) days
of receipt of the notice Goldsmith performs the required services or modifies
his performance to correct the matters complained of, Goldsmith’s breach will be
deemed cured, and Goldsmith’s employment shall not be terminated. However, if
the nature of the service not performed by Goldsmith or the matters complained
of are such that more than thirty (30) days are reasonably required to perform
the required service or to correct the matters complained of, then his breach
will be deemed cured if he commences to perform such service or to correct such
matters within the thirty (30) day period and thereafter diligently prosecutes
such performance or correction to completion. If Goldsmith does not perform the
required services or modify his performance to correct the matter complained of
within the thirty (30) day period or the extension thereof, Employer shall have
the right to terminate this Agreement at the end of the thirty (30) day period
or extension thereof. It is understood that Goldsmith’s performance hereunder
shall not be deemed unsatisfactory solely on the basis of any economic
performance of Employer because this performance will depend in part on a
variety of factors over which Goldsmith has little control.

 

(B)                                 TERMINATION BY EMPLOYER WITHOUT GOOD CAUSE
OR BY GOLDSMITH FOR GOOD REASON. EMPLOYER MAY TERMINATE THE EMPLOYMENT OF
GOLDSMITH WITHOUT “GOOD CAUSE” (AS DEFINED IN SUBPARAGRAPH 10(A) ABOVE) AT ANY
TIME DURING THE TERM HEREOF BY GIVING WRITTEN NOTICE TO GOLDSMITH SPECIFYING
THEREIN THE EFFECTIVE DATE OF TERMINATION. UPON SUCH NOTICE BEING GIVEN,
GOLDSMITH’S STOCK OPTIONS, RESTRICTED STOCK AND RESTRICTED STOCK UNITS SHALL BE
TREATED AS PROVIDED IN PARAGRAPH 7. IN THE EVENT THE EMPLOYMENT OF GOLDSMITH IS
TERMINATED PURSUANT TO THIS SUBPARAGRAPH 10(B) WITHOUT GOOD CAUSE, EMPLOYER
SHALL BE OBLIGATED TO PAY TO GOLDSMITH (WHICH SHALL BE IN LIEU OF ANY OTHER
AMOUNTS WHICH WOULD BE PAYABLE TO GOLDSMITH ON ACCOUNT OF SUCH TERMINATION
PURSUANT TO ANY SEPARATION PAY PLAN OR POLICY OF EMPLOYER) (I) THE ANNUAL BASE
COMPENSATION AND ANNUAL BONUS HE WOULD HAVE BEEN PAID HAD HE REMAINED IN THE
EMPLOY OF THE EMPLOYER HEREUNDER, AND HAD THE TERM HEREOF EXTENDED, FOR A PERIOD
OF THREE YEARS FROM THE EFFECTIVE DATE OF TERMINATION, PROVIDED THAT (X) THE
ANNUAL BONUS FOR ANY FISCAL YEAR ENDING AFTER THE DATE OF TERMINATION (INCLUDING
THE FISCAL YEAR DURING WHICH THE TERMINATION OF EMPLOYMENT OCCURS AND ANY
PORTION OF A FISCAL YEAR FOR WHICH HE IS ENTITLED TO AN ANNUAL BONUS UNDER THIS
SUBPARAGRAPH) SHALL BE COMPUTED BY MULTIPLYING GOLDSMITH’S ANNUAL BASE
COMPENSATION (IN

 

8

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CASE OF AN ANNUAL BONUS FOR A PARTIAL YEAR, THE AMOUNT WHICH THE ANNUAL BASE
COMPENSATION WOULD HAVE BEEN AS OF THE FOLLOWING DECEMBER 31 HAD HIS EMPLOYMENT
CONTINUED THROUGH SUCH DECEMBER 31) BY (IN LIEU OF PERCENTAGES OF ANNUAL BASE
COMPENSATION SET FORTH IN SUBPARAGRAPHS 6(A) AND (B)) THE HIGHEST PERCENTAGE OF
ANNUAL BASE COMPENSATION PREVIOUSLY USED IN DETERMINING ANY PRIOR ANNUAL BONUS
PAID OR PAYABLE TO GOLDSMITH, (Y) THE ANNUAL BONUS APPLICABLE TO ANY PORTION OF
A FISCAL YEAR OF LESS THAN TWELVE MONTHS SHALL BE AN AMOUNT DETERMINED AS
PROVIDED IN THE PRECEDING SUBCLAUSE (X) MULTIPLIED BY A FRACTION, THE NUMERATOR
OF WHICH IS THE NUMBER OF MONTHS OF THE FISCAL YEAR WITH RESPECT TO WHICH
GOLDSMITH IS ENTITLED TO THE ANNUAL BONUS PURSUANT TO THIS SUBPARAGRAPH (WITH
EACH PARTIAL MONTH BEING DEEMED A WHOLE MONTH) AND THE DENOMINATOR OF WHICH IS
12, AND (Z) SUBPARAGRAPH 6(C) SHALL BE DISREGARDED AND HAVE NO FORCE OR EFFECT,
AND (II) ALL OTHER EMPLOYEE BENEFITS (INCLUDING SERVICE CREDIT IN CALCULATING
HIS SUPPLEMENTAL RETIREMENT BENEFIT) HE WOULD HAVE RECEIVED HEREUNDER HAD HE
REMAINED IN THE EMPLOY OF THE EMPLOYER FOR SUCH THREE-YEAR PERIOD (AND, IF
REQUIRED, THE TERM HEREOF WOULD HAVE BEEN APPROPRIATELY EXTENDED), INCLUDING
REIMBURSEMENT OF GOLDSMITH FOR ALL EXPENSES AND COSTS INCURRED BY HIM DURING
SUCH THREE-YEAR PERIOD IN OBTAINING AND MAINTAINING MEDICAL AND HEALTH INSURANCE
(THROUGH COBRA OR OTHERWISE) FOR HIM, HIS SPOUSE AND DEPENDENTS FOR SUCH
THREE-YEAR PERIOD WHICH IS EQUIVALENT TO THAT PROVIDED TO HIM BY EMPLOYER AT THE
TIME OF TERMINATION OF HIS EMPLOYMENT. NOTWITHSTANDING THE FOREGOING CLAUSE (II)
OF THE IMMEDIATELY PRECEDING SENTENCE, IF LONG-TERM DISABILITY INSURANCE
COVERAGE IS AN EMPLOYEE BENEFIT WHICH GOLDSMITH WOULD HAVE RECEIVED HAD HE
REMAINED IN THE EMPLOY OF EMPLOYER, EMPLOYER’S OBLIGATION TO PROVIDE GOLDSMITH
WITH COMPARABLE LONG-TERM DISABILITY INSURANCE COVERAGE FOR SUCH THREE-YEAR
PERIOD SHALL BE SUBJECT TO GOLDSMITH BEING INSURABLE AT THE EFFECTIVE DATE OF
TERMINATION OF HIS EMPLOYMENT; AND TO THE EXTENT ANY SUCH EMPLOYEE BENEFITS BY
THEIR TERMS CANNOT BE PROVIDED TO GOLDSMITH IF HE IS NOT AN EMPLOYEE OF THE
EMPLOYER, THE EMPLOYER SHALL REIMBURSE GOLDSMITH FOR THE REASONABLE COST OF
COMPARABLE BENEFITS HE OBTAINS ON HIS OWN. GOLDSMITH SHALL HAVE NO DUTY TO
MITIGATE DAMAGES, AND EMPLOYER SHALL HAVE NO RIGHT TO OFFSET ANY COMPENSATION
PAID TO GOLDSMITH FOR SERVICES RENDERED AS AN EMPLOYEE OF A THIRD PARTY OR
INDEPENDENT CONTRACTOR AFTER THE TERMINATION OF HIS EMPLOYMENT AGAINST ANY
AMOUNTS WHICH ARE PAYABLE UNDER THIS AGREEMENT OR THE AMENDED EMPLOYMENT
AGREEMENT.

 

If Goldsmith terminates employment at any time within six (6) months after,
without his consent, either (i) he is removed as Chief Executive Officer of
either CNB or Parent Corporation or as Chairman of the Board of Directors of
CNB, or any of these titles is removed from him, (ii) there is any material
reduction in his Annual Base Compensation, (iii) the Employer requires him to be
based at any office other than the corporate headquarters or moves the corporate
headquarters to any location which is more than 35 miles from the location where
it was based immediately prior thereto, or (iv) there is a Material Breach by
Employer (as defined below), such termination by Goldsmith shall for purposes of
this Agreement be treated in the same manner as a termination by the Employer of
his employment without good cause and shall be deemed to be a termination of
employment pursuant to this subparagraph 10(b).

 

A “Material Breach by Employer” shall be deemed to exist if:

 

(I)                                     THERE IS A MATERIAL BREACH OF THIS
AGREEMENT BY EMPLOYER;

 

9

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(II)                                  WITHIN THIRTY (30) DAYS FOLLOWING THE
MATERIAL BREACH GOLDSMITH PROVIDES EMPLOYER WITH WRITTEN NOTICE SPECIFYING IN
REASONABLE DETAIL THE BASIS FOR HIS BELIEF THAT THERE HAS BEEN A MATERIAL BREACH
OF THIS AGREEMENT; AND

 

(III)                               WITHIN THIRTY (30) DAYS OF RECEIPT OF THE
NOTICE EMPLOYER HAS NOT CURED THE MATERIAL BREACH OR, IF THE NATURE OF THE
MATERIAL BREACH IS SUCH THAT MORE THAN THIRTY (30) DAYS ARE REASONABLY REQUIRED
TO CURE THE MATERIAL BREACH, THEN THE EMPLOYER HAS NOT COMMENCED PERFORMANCE OF
A CURE WITHIN THE THIRTY (30) DAY PERIOD OR HAS NOT THEREAFTER DILIGENTLY
PROSECUTED SUCH PERFORMANCE TO COMPLETION.

 

(C)                                  TERMINATION BY DISABILITY. EMPLOYER MAY
TERMINATE THE EMPLOYMENT OF GOLDSMITH DURING THE TERM HEREOF OR THE TERM OF THE
AMENDED EMPLOYMENT AGREEMENT (AS HEREINAFTER DEFINED) BY WRITTEN NOTICE TO
GOLDSMITH IF GOLDSMITH SHALL BECOME INCAPABLE OF FULFILLING HIS OBLIGATIONS
HEREUNDER BECAUSE OF INJURY OR PHYSICAL OR MENTAL ILLNESS WHICH SHALL EXIST OR
MAY REASONABLY BE ANTICIPATED TO EXIST FOR A PERIOD OF TWELVE (12) CONSECUTIVE
MONTHS OR FOR AN AGGREGATE OF TWELVE (12) MONTHS DURING ANY TWENTY-FOUR (24)
MONTH PERIOD. IN THE EVENT THE EMPLOYMENT OF GOLDSMITH IS TERMINATED BY EMPLOYER
PURSUANT TO THIS SUBPARAGRAPH 10(C) BECAUSE OF INJURY OR PHYSICAL OR MENTAL
ILLNESS, EMPLOYER SHALL BE OBLIGATED TO PAY GOLDSMITH (OR HIS PERSONAL
REPRESENTATIVES) FROM AND AFTER THE TERMINATION OF HIS EMPLOYMENT THE SAME
AMOUNTS AND PROVIDE HIM WITH THE SAME BENEFITS FOR THE SAME PERIODS IT WOULD
HAVE PAID OR PROVIDED HIM HAD HIS EMPLOYMENT BEEN TERMINATED WITHOUT CAUSE
PURSUANT TO SUBPARAGRAPH 10(B) AS OF THE DATE HIS EMPLOYMENT IS TERMINATED
PURSUANT TO THIS SUBPARAGRAPH 10(C). IF THE EMPLOYMENT OF GOLDSMITH IS
TERMINATED PURSUANT TO THIS SUBPARAGRAPH 10(C), GOLDSMITH’S STOCK OPTIONS,
RESTRICTED STOCK AND RESTRICTED STOCK UNITS WILL BE TREATED AS PROVIDED IN
PARAGRAPH 7.

 

(D)                                 TERMINATION BY DEATH. EXCEPT FOR
COMPENSATION ACCRUED BUT NOT PAID AT THE DATE OF DEATH AND AS PROVIDED IN THIS
SUBPARAGRAPH 10(D), THE DEATH OF GOLDSMITH DURING THE TERM OF THIS AGREEMENT
SHALL TERMINATE THIS AGREEMENT AND THE AMENDED EMPLOYMENT AGREEMENT (AS
HEREINAFTER DEFINED). IN THE EVENT OF THE DEATH OF GOLDSMITH DURING THE TERM
HEREOF OR THE TERM OF THE AMENDED EMPLOYMENT AGREEMENT (AS HEREINAFTER DEFINED),
EMPLOYER SHALL BE OBLIGATED TO PAY TO WHOMEVER HE SHALL HAVE DESIGNATED IN
WRITING TO EMPLOYER, OR IF NO DESIGNATION HAS BEEN MADE BY HIM, TO GOLDSMITH’S
WIFE, IF SHE IS THEN LIVING, OR IF SHE IS NOT THEN LIVING, TO HIS ESTATE, THE
SAME AMOUNTS AND PROVIDE THE SAME BENEFITS EMPLOYER WOULD HAVE PAID OR PROVIDED
GOLDSMITH PURSUANT TO SUBPARAGRAPH 10(B) HAD HIS EMPLOYMENT BEEN TERMINATED
WITHOUT CAUSE ON THE DATE OF HIS DEATH. IF THE EMPLOYMENT OF GOLDSMITH IS
TERMINATED PURSUANT TO THIS SUBPARAGRAPH 10(D), GOLDSMITH’S STOCK OPTIONS,
RESTRICTED STOCK AND RESTRICTED STOCK UNITS WILL BE TREATED AS PROVIDED IN
PARAGRAPH 7.

 

(E)                                  CHANGE OF CONTROL. ATTACHED TO THIS
AGREEMENT AS ANNEX A IS A COPY OF AN EMPLOYMENT AGREEMENT DATED AS OF MARCH 31,
1997 BETWEEN PARENT CORPORATION AND GOLDSMITH (THE “AMENDED EMPLOYMENT
AGREEMENT”). UPON THE EFFECTIVE DATE (AS DEFINED IN THE AMENDED EMPLOYMENT
AGREEMENT) DURING THE TERM OF GOLDSMITH’S EMPLOYMENT WITH EMPLOYER, THE AMENDED
EMPLOYMENT AGREEMENT SHALL BECOME EFFECTIVE WITH (NOTWITHSTANDING THE PROVISIONS
OF THE AMENDED EMPLOYMENT AGREEMENT TO THE CONTRARY) THE FOLLOWING
MODIFICATIONS:  (I) THE “CHANGE OF CONTROL PERIOD” AS DEFINED IN THE AMENDED
EMPLOYMENT AGREEMENT SHALL NOT TERMINATE PRIOR TO THE END OF THE TERM OF THIS
AGREEMENT; (II) THE TERM THEREOF (REFERRED TO THEREIN AS THE “EMPLOYMENT
PERIOD”) SHALL BE THE GREATER OF THREE YEARS, AS

 

10

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PROVIDED THEREIN, OR THE THEN REMAINING TERM OF THIS AGREEMENT; (III) PARAGRAPHS
3 AND 5 AND SUBPARAGRAPH 10(G) OF THIS AGREEMENT SHALL REMAIN IN FULL FORCE AND
EFFECT; (IV) CLAUSE (B) OF SECTION 4(A)(I) AND ALL OF SECTION 4(B)(I) (EXCEPT
FOR THE LAST SENTENCE THEREOF) OF THE AMENDED EMPLOYMENT AGREEMENT SHALL BE OF
NO FORCE OR EFFECT, ALL DIRECT OR INDIRECT REFERENCES IN THE AMENDED EMPLOYMENT
AGREEMENT TO ANNUAL BASE SALARY OR BASE SALARY (INCLUDING, WITHOUT LIMITATION,
REFERENCES TO SECTION 4(B) IN CLAUSE (II) OF SECTION 5(C) OF THE AMENDED
EMPLOYMENT AGREEMENT) SHALL BE DEEMED TO REFER TO THE ANNUAL BASE COMPENSATION
DESCRIBED AND DETERMINED AND COMPUTED IN ACCORDANCE WITH PARAGRAPH 5 HEREOF AND
THE REFERENCE IN CLAUSE (III) OF SECTION 5(C) OF THE AMENDED EMPLOYMENT
AGREEMENT SHALL BE DEEMED A REFERENCE TO PARAGRAPH 3 HEREOF; AND (V) TERMINATION
OF EMPLOYMENT ON ACCOUNT OF THE DEATH OR DISABILITY OF GOLDSMITH AS PROVIDED IN
SUBPARAGRAPHS 10(C) AND 10(D) HEREOF, RESPECTIVELY, SHALL REMAIN IN FULL FORCE
AND EFFECT AND THE PROVISIONS OF THE AMENDED EMPLOYMENT AGREEMENT DEALING WITH
TERMINATION OF EMPLOYMENT ON ACCOUNT OF GOLDSMITH’S DEATH OR DISABILITY AND THE
EFFECTS THEREOF SHALL BE OF NO FORCE OR EFFECT. IN ALL OTHER RESPECTS THE TERMS
OF THE AMENDED EMPLOYMENT AGREEMENT WILL THEREAFTER GOVERN THE EMPLOYMENT OF
GOLDSMITH, AND SUBPARAGRAPHS 10(A), 10(B) AND 10(F) HEREOF SHALL BE OF NO
FURTHER FORCE OR EFFECT (EXCEPT TO THE EXTENT SUBPARAGRAPH 10(B) IS INCORPORATED
INTO SUBPARAGRAPH 10(C) AND 10(D) FOR DETERMINING AMOUNTS PAYABLE OR BENEFITS TO
BE PROVIDED PURSUANT TO SUBPARAGRAPH 10(C) AND 10(D)).

 

(F)                                    TERMINATION UPON EXPIRATION. AT LEAST SIX
(6) MONTHS PRIOR TO THE END OF THE TERM HEREOF, A PERSON DESIGNATED BY THE BOARD
OF DIRECTORS OF PARENT CORPORATION SHALL MEET WITH GOLDSMITH FOR PURPOSES OF
NEGOTIATING AN EXTENSION OF THE TERM OF THIS AGREEMENT. IF BY THE NINETIETH
(90TH) DAY PRIOR TO THE END OF THE TERM HEREOF EMPLOYER AND GOLDSMITH HAVE NOT
AGREED IN WRITING TO AN EXTENSION OF THE TERM HEREOF OR RENEWAL OF THIS
AGREEMENT AND DURING SUCH NEGOTIATIONS EMPLOYER OFFERED GOLDSMITH AN EXTENSION
OF THIS AGREEMENT WITH A TERM OF AT LEAST THREE YEARS AND COMPENSATION AT LEAST
EQUIVALENT TO THE EIGHTIETH PERCENTILE FOR CHIEF EXECUTIVE OFFICERS OF
EMPLOYER’S PEER GROUP, GOLDSMITH’S EMPLOYMENT SHALL TERMINATE AS OF THE END OF
THE TERM HEREOF AND EMPLOYER SHALL BE OBLIGATED TO PAY AND PROVIDE GOLDSMITH
WITH, FROM AND AFTER THE EXPIRATION OF THE TERM HEREOF, (I) THE ANNUAL BASE
COMPENSATION FOR A PERIOD OF TWELVE (12) MONTHS FROM THE END OF THE TERM OF THIS
AGREEMENT, (II) THE ANNUAL BONUS HE WOULD HAVE BEEN PAID HEREUNDER IF THE TERM
OF THIS AGREEMENT WAS EXTENDED FOR TWELVE MONTHS, PROVIDED THAT (X) THE ANNUAL
BONUS SHALL BE COMPUTED BY MULTIPLYING GOLDSMITH’S ANNUAL BASE COMPENSATION BY
(IN LIEU OF THE TARGET BONUS AMOUNTS SET FORTH IN PARAGRAPH 6) THE HIGHEST
PERCENTAGE OF ANNUAL BASE COMPENSATION PREVIOUSLY USED IN DETERMINING ANY PRIOR
ANNUAL BONUS PAID TO GOLDSMITH, (Y) THE ANNUAL BONUS APPLICABLE TO ANY PORTION
OF A FISCAL YEAR OF LESS THAN TWELVE MONTHS SHALL BE AN AMOUNT DETERMINED AS
PROVIDED IN THE PRECEDING SUBCLAUSE (X) MULTIPLIED BY A FRACTION, THE NUMERATOR
OF WHICH IS THE NUMBER OF MONTHS OF THE FISCAL YEAR WITH RESPECT TO WHICH
GOLDSMITH IS ENTITLED TO THE ANNUAL BONUS PURSUANT TO THIS SUBPARAGRAPH (WITH
EACH PARTIAL MONTH BEING DEEMED A WHOLE MONTH) AND THE DENOMINATOR OF WHICH IS
12, AND (Z) SUBPARAGRAPH 6(C) SHALL BE DISREGARDED AND HAVE NO FORCE OR EFFECT,
AND (III) ALL OTHER EMPLOYEE BENEFITS HE WOULD HAVE RECEIVED HEREUNDER IF THE
TERM OF THIS AGREEMENT AND GOLDSMITH’S EMPLOYMENT HAD BEEN EXTENDED TWELVE
MONTHS, INCLUDING REIMBURSEMENT OF GOLDSMITH FOR ALL EXPENSES AND COSTS INCURRED
BY HIM DURING SUCH TWELVE (12) MONTH PERIOD IN OBTAINING AND MAINTAINING MEDICAL
AND HEALTH INSURANCE (THROUGH COBRA OR OTHERWISE) FOR HIM, HIS SPOUSE AND
DEPENDENTS FOR SUCH TWELVE (12) MONTH PERIOD WHICH IS EQUIVALENT TO THAT
PROVIDED TO HIM BY EMPLOYER AT THE TIME OF TERMINATION OF HIS EMPLOYMENT. IF BY
THE NINETIETH (90TH) DAY PRIOR TO THE END OF THE TERM HEREOF EMPLOYER AND
GOLDSMITH HAVE NOT AGREED IN WRITING TO AN EXTENSION OF THE TERM HEREOF OR A

 

11

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RENEWAL OF THIS AGREEMENT AND DURING SUCH NEGOTIATIONS THE EMPLOYER DID NOT
OFFER GOLDSMITH AN EXTENSION OF THE TERM HEREOF OF AT LEAST THREE YEARS AND
COMPENSATION AT LEAST EQUIVALENT TO THE EIGHTIETH PERCENTILE FOR CHIEF EXECUTIVE
OFFICERS OF EMPLOYEE’S PEER GROUP, GOLDSMITH’S EMPLOYMENT SHALL TERMINATE AS OF
THE END OF THE TERM HEREOF AND EMPLOYER SHALL PAY GOLDSMITH, FROM AND AFTER THE
EXPIRATION OF THE TERM HEREOF, THE SAME AMOUNTS AND PROVIDE HIM WITH THE SAME
BENEFITS FOR THE SAME PERIOD IT WOULD HAVE PAID AND PROVIDED HIM PURSUANT TO
SUBPARAGRAPH 10(B) HAD HIS EMPLOYMENT BEEN TERMINATED WITHOUT CAUSE IMMEDIATELY
PRIOR TO THE END OF THE TERM HEREOF, INCLUDING, WITHOUT LIMITATION, THE VESTING
OF STOCK OPTIONS AND THE LAPSING OF FORFEITURE RESTRICTIONS ON RESTRICTED STOCK
AWARDS AND RESTRICTED STOCK UNITS TO THE EXTENT SPECIFIED IN PARAGRAPH 7. FOR
PURPOSES OF THIS SUBPARAGRAPH 10(F), THE “EMPLOYER’S PEER GROUP” SHALL CONSIST
OF TEN BANKS COMPARABLE TO CNB AS TO SIZE AND PERFORMANCE AND AS AGREED TO BY
EMPLOYER AND GOLDSMITH AND THE COMPENSATION WHICH SHALL BE EMPLOYED IN
DETERMINING WHETHER THE COMPENSATION OFFERED GOLDSMITH WAS AT LEAST EQUIVALENT
TO THE EIGHTIETH PERCENTILE FOR CHIEF EXECUTIVE OFFICERS OF EMPLOYER’S PEER
GROUP COMPENSATION SHALL MEAN THE TOTAL COMPENSATION (ALL FORMS OF PAY DISCLOSED
IN THE PROXY STATEMENTS). IF GOLDSMITH AND EMPLOYER SHALL BE UNABLE TO AGREE BY
THE NINETIETH (90TH) DAY PRIOR TO THE END OF THE TERM HEREOF AS TO THE IDENTITY
OF THE BANKS CONSTITUTING THE “EMPLOYER’S PEER GROUP”, THE TEN COMPANIES
CONSTITUTING EMPLOYER’S PEER GROUP SHALL BE DETERMINED BY SEMLER BROSSY
CONSULTING GROUP OR ANY SIMILAR FIRM AGREED TO BY EMPLOYER AND GOLDSMITH.

 

(G)                                 OFFICE SPACE AND SECRETARIAL SUPPORT. FROM
AND AFTER THE EXPIRATION OF THE TERM OF THIS AGREEMENT OR THE AMENDED EMPLOYMENT
AGREEMENT OR IF GOLDSMITH’S EMPLOYMENT IS TERMINATED OTHER THAN PURSUANT TO
SUBPARAGRAPH 10(A) (OR SECTION 5(A) OF THE AMENDED EMPLOYMENT AGREEMENT IF IT IS
THEN IN EFFECT) FOR CAUSE OR OTHER THAN PURSUANT TO SUBPARAGRAPH 10(D) ON
ACCOUNT OF HIS DEATH, EMPLOYER SHALL PROVIDE GOLDSMITH (AT NO COST OR EXPENSE TO
GOLDSMITH) FOR A PERIOD OF THREE YEARS WITH AN OFFICE IN HIS CURRENT OFFICE SITE
IN BEVERLY HILLS, CALIFORNIA OR NEARBY OF SIZE, FURNISHINGS AND OTHER
APPOINTMENTS AND EXCLUSIVE PERSONAL SECRETARIAL SUPPORT COMPARABLE TO THAT
PROVIDED GOLDSMITH AT ANY TIME DURING THE ONE HUNDRED TWENTY (120) DAY PERIOD
PRIOR TO THE EXPIRATION OF THE TERM OR TERMINATION OF HIS EMPLOYMENT.

 

(H)                                 SECTION 409A. NOTWITHSTANDING THE FOREGOING
PROVISIONS OF THIS AGREEMENT, TO THE EXTENT REQUIRED IN ORDER TO COMPLY WITH
SECTION 409A OF THE CODE, CASH AMOUNTS THAT WOULD OTHERWISE BE PAYABLE UNDER
THIS AGREEMENT (INCLUDING THE SUPPLEMENTAL RETIREMENT BENEFIT SET FORTH IN
APPENDIX A TO THIS AGREEMENT) DURING THE SIX-MONTH PERIOD IMMEDIATELY FOLLOWING
THE DATE OF TERMINATION SHALL INSTEAD BE PAID, WITH INTEREST ON ANY DELAYED
PAYMENT AT THE APPLICABLE FEDERAL RATE PROVIDED FOR IN SECTION 7872(F)(2)(A) OF
THE CODE, ON THE FIRST BUSINESS DAY AFTER THE DATE THAT IS SIX MONTHS FOLLOWING
THE EXECUTIVE’S “SEPARATION FROM SERVICE” WITHIN THE MEANING OF SECTION 409A.

 

11.                                 ENTIRE AGREEMENT; MODIFICATION; WAIVER. THIS
AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES PERTAINING TO THE
SUBJECT MATTER CONTAINED THEREIN AND SUPERSEDES ALL PRIOR AND CONTEMPORANEOUS
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS OF THE PARTIES. NO SUPPLEMENT,
MODIFICATION OR AMENDMENT OF THIS AGREEMENT SHALL BE BINDING UNLESS EXECUTED IN
WRITING BY BOTH PARTIES. NO WAIVER OF ANY OF THE PROVISIONS OF THIS AGREEMENT
SHALL BE DEEMED, OR SHALL CONSTITUTE, A WAIVER OF ANY OTHER PROVISIONS, WHETHER
OR NOT SIMILAR, NOR SHALL ANY WAIVER CONSTITUTE A CONTINUING WAIVER. NO WAIVER
SHALL BE BINDING UNLESS EXECUTED IN WRITING BY THE PARTY MAKING THE WAIVER.

 

12

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12.                                 SEPARABILITY CLAUSE. THE INVALIDITY OR
UNENFORCEABILITY OF ANY PROVISION HEREOF SHALL IN NO WAY AFFECT THE VALIDITY OR
ENFORCEABILITY OF ANY OTHER PROVISION HEREOF.

 

13.                                 BENEFIT. EXCEPT AS HEREIN AND OTHERWISE
SPECIFICALLY PROVIDED, THIS AGREEMENT SHALL BE BINDING UPON AND INURE TO THE
BENEFIT OF THE PARTIES, THEIR PERSONAL REPRESENTATIVES, HEIRS, ADMINISTRATORS,
EXECUTORS, SUCCESSORS, AND PERMITTED ASSIGNS.

 

14.                                 NOTICES. ANY NOTICE, REQUEST, OR OTHER
COMMUNICATION REQUIRED TO BE GIVEN PURSUANT TO THE PROVISIONS OF THIS AGREEMENT
SHALL BE IN WRITING AND SHALL BE DEEMED TO BE DULY GIVEN IF DELIVERED IN PERSON
OR MAILED BY REGISTERED OR CERTIFIED UNITED STATES MAIL, POSTAGE PREPAID, AND
MAILED TO THE PARTIES AT THE FOLLOWING ADDRESSES:

 

 

EMPLOYER

 

RUSSELL GOLDSMITH

 

City National Bank

 

Mr. Russell Goldsmith

 

400 No. Roxbury Drive

 

400 N. Roxbury Drive

 

Beverly Hills, CA 90210

 

Beverly Hills, CA 90210

 

Attn: Michael B. Cahill

 

 

 

 General Counsel

 

with copy to:

 

 

 

 

 

 

 

Adam D. Chinn

 

 

 

Wachtell, Lipton, Rosen & Katz

 

 

 

51 West 52nd Street

 

 

 

New York, New York 10019-6150

 

The parties hereto may change the above addresses from time to time by giving
notice thereof to each other in conformity with this Paragraph 14.

 

15.                                 CONFIDENTIALITY. GOLDSMITH COVENANTS AND
AGREES WITH EMPLOYER THAT GOLDSMITH SHALL NOT, DURING OR AFTER THE TERM OF THIS
AGREEMENT, DISCLOSE TO ANYONE ANY CONFIDENTIAL INFORMATION CONCERNING THE
BUSINESS OR OPERATIONS OF EMPLOYER WHICH GOLDSMITH MAY ACQUIRE IN THE COURSE OF
OR INCIDENT TO THE PERFORMANCE OF HIS DUTIES HEREUNDER, INCLUDING, WITHOUT
LIMITATION, PROCESSES, CUSTOMER LISTS, BUSINESS OR TRADE SECRETS, OR METHODS OR
TECHNIQUES USED BY EMPLOYER IN ITS BUSINESS OR OPERATIONS.

 

16.                                 CONSTRUCTION. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.

 

17.                                 CAPTIONS. THE PARAGRAPH HEADINGS AND
CAPTIONS CONTAINED HEREIN ARE FOR REFERENCE PURPOSES AND CONVENIENCE ONLY AND
SHALL NOT IN ANY WAY AFFECT THE MEANING OR INTERPRETATION OF THIS AGREEMENT.

 

18.                                 COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED
IN ONE OR MORE COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL
OF WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

19.                                 AMENDMENTS. THIS AGREEMENT SHALL NOT BE
MODIFIED, AMENDED, OR IN ANY WAY ALTERED EXCEPT BY AN INSTRUMENT IN WRITING AND
SIGNED BY BOTH OF THE PARTIES HERETO.

 

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20.                                 MANDATORY ARBITRATION. AT THE REQUEST OF
GOLDSMITH OR EMPLOYER, ANY DISPUTE, CLAIM, CONTROVERSY OF ANY KIND (WHETHER IN
CONTRACT OR TORT, STATUTORY OR COMMON LAW, LEGAL OR EQUITABLE) NOW EXISTING OR
HEREAFTER ARISING OUT OF, PERTAINING TO OR IN CONNECTION WITH THIS AGREEMENT
AND/OR ANY RENEWALS, EXTENSIONS, OR AMENDMENTS THERETO, SHALL BE RESOLVED
THROUGH FINAL AND BINDING ARBITRATION CONDUCTED BY A SINGLE ARBITRATOR AT A
LOCATION DETERMINED BY THE ARBITRATOR IN LOS ANGELES OR BEVERLY HILLS,
CALIFORNIA, AND ADMINISTERED BY THE AMERICAN ARBITRATION ASSOCIATION (“AAA”) IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT, 9 U.S.C. §1, ET SEQ., AND THE THEN
EXISTING COMMERCIAL ARBITRATION RULES OF THE AAA. JUDGMENT UPON ANY AWARD
RENDERED BY THE ARBITRATOR MAY BE ENTERED IN ANY STATE OR FEDERAL COURTS HAVING
JURISDICTION THEREOF.

 

21.                                 SECTION 409A. IF ANY COMPENSATION OR
BENEFITS PROVIDED BY THIS AGREEMENT MAY RESULT IN THE APPLICATION OF SECTION
409A OF THE CODE, THE COMPANY SHALL, IN CONSULTATION WITH THE EXECUTIVE, MODIFY
THE AGREEMENT IN THE LEAST RESTRICTIVE MANNER NECESSARY IN ORDER TO EXCLUDE SUCH
COMPENSATION FROM THE DEFINITION OF “DEFERRED COMPENSATION” WITHIN THE MEANING
OF SUCH SECTION 409A OR IN ORDER TO COMPLY WITH THE PROVISIONS OF SECTION 409A,
OTHER APPLICABLE PROVISIONS(S) OF THE CODE AND/OR ANY RULES, REGULATIONS OR
OTHER REGULATORY GUIDANCE ISSUED UNDER SUCH STATUTORY PROVISIONS AND WITHOUT ANY
DIMINUTION IN THE VALUE OF THE PAYMENTS TO THE EXECUTIVE.

 

14

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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first above written at Beverly Hills, California.

 

 

CITY NATIONAL BANK

 

 

 

 

/s/ Russell Goldsmith

 

By:

/s/ Michael B. Cahill

RUSSELL GOLDSMITH

 

 

 

 

 

 

CITY NATIONAL CORPORATION

 

 

 

 

 

By:

/s/ Michael B. Cahill

 

15

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APPENDIX A TO EMPLOYMENT AGREEMENT
FOR RUSSELL GOLDSMITH

 

SUPPLEMENTAL RETIREMENT BENEFIT

 

The purpose of this Appendix A to the Employment Agreement is to provide a
supplemental retirement benefit for Russell Goldsmith (“Goldsmith”), which shall
be in addition to any benefits which he may be entitled to receive under
qualified retirement plans of the Employer.

 

ARTICLE I

 

DEFINITIONS

 

All capitalized terms used herein which are defined in the Employment Agreement
shall have the meaning set forth therein. In addition, the following terms shall
have the meaning set forth below:

 

“Change of Control” shall have the meaning set forth in Annex A to the
Employment Agreement.

 

“Final Average Compensation” shall mean the average of the sum of the Annual
Base Compensation and Annual Bonus which Goldsmith earns during the highest
three out of his last five calendar years of employment with the Employer.

 

“Normal Retirement Date” shall mean the date on which Goldsmith attains age 62,
which will be February 14, 2012. Goldsmith was born on February 14, 1950.

 

“Surviving Spouse” shall mean Goldsmith’s spouse at the time of his termination
of employment with the Employer, if she remains alive after Goldsmith’s death.

 

“Years of Service” shall mean complete and partial years of service with the
Employer, measured from Goldsmith’s commencement date on October 15, 1995 to the
most recent anniversary of his commencement date.

 

ARTICLE II

 

ACCRUAL AND VESTING OF SUPPLEMENTAL RETIREMENT BENEFIT

 

2.1                                 Goldsmith shall accrue the right to receive
an annual supplemental retirement benefit in the form of a single life annuity
for his lifetime commencing at his Normal Retirement Date based on the following
formula:

 

1.5432% multiplied times Years of Service (up to a maximum of 25.2% after 16.33
Years of Service) multiplied times Final Average Compensation

 

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2.2                                 Under the formula set forth in Section 2.1,
if Goldsmith retires on his Normal Retirement Date, he will be entitled to
receive the maximum annual supplemental retirement benefit in the form of a
single life annuity equal to 25.2% multiplied times his Final Average
Compensation.

 

2.3                                 In the event of a Change of Control,
Goldsmith shall receive credit for five additional Years of Service, but there
will be no change in the maximum supplemental retirement benefit.

 

2.4                                 Goldsmith will have a fully vested right to
his accrued supplemental retirement benefit after eight Years of Service
(including his past service). There will be no partial vesting prior to
completion of eight Years of Service.

 

ARTICLE III

 

PAYMENT OF SUPPLEMENTAL RETIREMENT BENEFIT

 

3.1                                 Goldsmith’s accrued annual supplemental
retirement benefit shall be paid in equal monthly installments commencing on the
first day of the month following his termination of employment with the Employer
for any reason other than his death.

 

3.2                                 If Goldsmith is married when he terminates
employment with the Employer, the normal form of payment of his supplemental
retirement benefit will be an actuarially reduced 100% joint and survivor
annuity payable to Goldsmith during his lifetime and continuing thereafter
during the lifetime of his Surviving Spouse.

 

3.3                                 If Goldsmith is not married when he
terminates employment with the Employer, the normal form of payment of his
supplemental retirement benefit will be a single life annuity payable to
Goldsmith during his lifetime with payments terminating upon his death.

 

3.4                                 Goldsmith shall be entitled to elect an
optional form of payment of his supplemental retirement benefit, and to change
any such election, upon written notice filed with the Employer at any time up to
six months preceding his termination of employment, or in the event of a
separation or divorce from his spouse or the death of his spouse at any time up
to the date of his termination of employment. Any new election or change of
election which is made after the date provided herein shall have no force or
effect. No change in the form of payment will be permitted for any reason after
commencement of supplemental retirement benefit payments. The optional forms of
payment which Goldsmith may elect within the times specified above are a lump
sum payment to be paid on the first day of the month following his termination
of employment, a single life annuity payable during his lifetime with no
payments to his Surviving Spouse after his death, and any other optional form of
payment which the Employer may permit in its discretion.

 

3.5                                 There shall be an actuarial reduction in
Goldsmith’s supplemental retirement benefit in the event that he terminates
employment with the Employer prior to his Normal Retirement Date and an
actuarial increase in his supplemental retirement benefit in the event that he
terminates employment with the Employer after his Normal Retirement Date. In

 

2

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either event, the payment of his supplemental retirement benefit shall commence
on the first day of the month following his termination of employment.

 

3.6                                 If Goldsmith retires prior to his Normal
Retirement Date, and his supplemental retirement benefit is paid in the form of
a 100% joint and survivor annuity, there would be actuarial reductions for both
early retirement and the 100% joint and survivor annuity.

 

3.7                                 The actuarial reduction and actuarial
equivalence factors are set forth in Schedule 1 hereto.

 

ARTICLE IV

 

PRE-RETIREMENT SPOUSAL DEATH BENEFIT

 

4.1                                 If Goldsmith dies while he remains employed
with the Employer and has a Surviving Spouse, his Surviving Spouse will be
entitled to receive a benefit in the form of a single life annuity payable for
her lifetime which is the actuarial equivalent of the single life annuity for
his lifetime which Goldsmith would have been entitled to receive if he had
terminated employment with the Employer in the month before he died. This
benefit shall be payable to Goldsmith’s Surviving Spouse in equal monthly
payments commencing on the first day of the month following his death.

 

4.2                                 Goldsmith shall be entitled to elect, upon
written notice filed with the Employer at any time before his death, that his
Surviving Spouse shall receive a lump sum payment to be paid on the first day of
the month following his death which is the actuarial equivalent of the single
life annuity which would otherwise be paid to her pursuant to Section 4.1, using
the actuarial reduction and actuarial equivalence factors set forth in Schedule
1 hereto.

 

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SCHEDULE 1

 

Supplemental Retirement Benefit
for Russell Goldsmith

 

Actuarial Reduction Factors

 

Early Retirement Reduction Factors

 

Years of Age Prior to
Normal Retirement Date

 

Reduction Factor

 

1

 

93

%

2

 

86

%

3

 

79

%

4

 

72

%

5

 

65

%

6

 

58

%

7

 

51

%

8

 

48

%

9

 

45

%

 

100% Joint & Survivor Annuity Reduction Factors at Normal Retirement Date

 

Spouse Years of Age Younger

 

Reduction Factor

 

0

 

85.75

%

1

 

84.97

%

2

 

84.26

%

3

 

83.45

%

4

 

82.71

%

5

 

82.04

%

6

 

81.32

%

7

 

80.56

%

8

 

79.87

%

9

 

79.19

%

10

 

78.53

%

 

4

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Actuarial Equivalence

 

Mortality

 

Prior to Normal Retirement Age:

 

1983 Group Annuity Mortality for males or females

After Normal Retirement Age:

 

1983 Group Annuity Mortality for males or females

Interest:  To Calculate Lump Sum Payment or Actuarial Increase for Late
Retirement

 

 

 

Prior to Normal Retirement Date:

 

6.0% per annum

After Normal Retirement Date:

 

6.0% per annum

 

5

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APPENDIX B TO EMPLOYMENT AGREEMENT
FOR RUSSELL GOLDSMITH

 

CITY NATIONAL VALUATION METHODOLOGY FOR OPTION AWARDS

 

The City National Valuation Methodology for Option Awards is used to calculate
the “Deemed Value” of each stock option award on the grant date. As of the date
hereof, the City National Valuation Methodology uses the Black-Scholes Model to
value the options granted. The assumptions input into the model include expected
term, volatility, grant date, grant price, risk-free interest rate, and dividend
yield. Option awards are generally granted with an exercise price equal to the
market price of the Parent Corporation’s stock on the date of grant. The other
inputs have the following terms:

 

Expected Term:  The expected term of the option in years (i.e., the number of
years that the company estimates that options will be outstanding prior to
exercise or forfeiture) is based on the expected term analysis done by the
Parent Corporation for other corporate officers who are members of the
Employer’s Executive Committee and Strategy and Planning Committee
(“Executives”) (1). This analysis is currently based on guidance from
PriceWaterhouseCoopers. Based on a total of ten years of stock option grants
from any given year of grant and updated on a quarterly basis, the Parent
Corporation calculates the total options granted for each period less those
forfeited prior to vesting. For each year after vesting, the number of options
exercised is calculated and any remaining unexercised options are assumed to
have been exercised evenly over the remaining periods. The total of all options
exercised for each period is multiplied by the number of years after grant. The
sum of these totals is divided by the number of options granted for the average
number of years to exercise.

 

Volatility:  Expected volatility is based on the historical volatility of the
Parent Corporation’s stock price, over a period equal to the “expected term of
the option” (as calculated in the “expected term” analysis) on a monthly basis.
Historical volatility data is obtained from Bloomberg. The Parent Corporation
believes the most recent historical stock activity is most representative of
future activity.

 

Dividend Yield:  Dividend yield is an assumed dividend yield rate of the Parent
Corporation at the time of grant obtained from Bloomberg based on the expected
life calculated. Actual dividend payments will depend upon a number of factors,
including future financial results, and may differ substantially from the
assumption.

 

Risk-free interest rate:  Risk-free investment rate for the weighted average
life of the outstanding option is interpolated based on the U.S. Treasury Note
yield curve in effect at the time of grant. Data is obtained from Bloomberg.

 

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(1) For valuation purposes, the Parent Corporation has divided colleagues into
two groups that have different exercise and forfeiture behavior. Colleagues who
are past or current members of the Executive Committee comprise one group. All
remaining colleagues make up the other group.

 

6

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ANNEX A

EMPLOYMENT AGREEMENT

 

                AGREEMENT by and between City National Corporation, a Delaware
corporation (the “Company”) and Russell Goldsmith (the “Executive”), dated as of
the 31st day of March, 1997.

 

                The Board of Directors of the Company (the “Board”), has
determined that it is in the best interest of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.

 

                NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

                1.             CERTAIN DEFINITIONS. (a) The “Effective Date”
shall mean the first date during the Change of Control Period (as defined in
Section 1(b)) on which a Change of Control (as defined in Section 2) occurs.
Anything in this Agreement to the contrary notwithstanding, if a Change of
Control occurs and if the Executive’s employment with the Company is terminated
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to effect a
Change of Control or (ii) otherwise arose in connection with or anticipation of
a Change of Control, then for all purposes of this Agreement the “Effective
Date” shall mean the date immediately prior to the date of such termination of
employment.

 

                (b)           The “Change of Control Period” shall mean the
period commencing on the date hereof and ending on the second anniversary of the
date hereof; provided, however that commencing on the date one year after the
hereof, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the “Renewal Date”),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate two years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not be so extended.

 

                2.             CHANGE OF CONTROL. For the purpose of this
Agreement, a “Change of Control” shall mean:

 

                (a)           The acquisition by any individual, entity or group
(within the meaning of Section 13(d) (3) or 14(d) (2) or the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% of more of either (i) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (ii) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company,
(iv) any acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (c) of this Section 2, or (v) any
acquisition by the Goldsmith family or any trust or partnership for the benefit
of any member of the Goldsmith family; or

 

                (b)           Individuals who, as of the date hereof, constitute
the Board (the “Incumbent Board”) cease or any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the

 

 

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Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

 

                (c)           Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a “Business Combination”), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the
Company of all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or

 

                (d)           Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.

 

                3.             EMPLOYMENT PERIOD. The Company hereby agrees to
continue the Executive in its employ, and the executive hereby agrees to remain
in the employ of the Company subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending on the
third anniversary of such date (the “Employment Period”).

 

                4.             TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES.

 

                (i)            During the Employment Period, (A) the Executive’s
position (including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately preceding the
Effective Date and (B) the Executive’s services shall be performed at the
location where the Executive was employed immediately preceding the Effective
Date or any office or location less than 35 miles from such location.

 

                (ii)           During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive’s reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the

 

2

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performance of the Executive’s responsibilities as an employee of the Company in
accordance with this Agreement.

 

It is expressly understood and agreed that to the extent that any such
activities have been conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date shall not thereafter
be deemed to interfere with the performance of the Executive’s responsibilities
to the Company.

 

                (b)           COMPENSATION. (i)  BASE SALARY. During the
Employment Period, the Executive shall receive an annual base salary (“Annual
Base Salary”), which shall be paid at a monthly rate, at least equal to twelve
times the highest monthly base salary paid or payable, including any base salary
which has been earned but deferred, to the Executive by the Company and its
affiliated companies in respect of the twelve-month period immediately preceding
the month in which the Effective Date occurs. During the Employment Period, the
Annual Base Salary shall be reviewed no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date and
thereafter at least annually. Any increase in Annual Base Salary shall not serve
to limit or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase and the term
Annual Base Salary as utilized in this Agreement shall refer to Annual Base
Salary as so increased. As used in this Agreement, the term “affiliated
companies” shall include any company controlled by, controlling or under common
control with the Company.

 

                (ii)           ANNUAL BONUS. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the “Annual Bonus”) in cash at least equal
to the Executive’s highest bonus under the Company’s annual incentive plans for
the last three full fiscal years prior to the Effective Date (annualized in the
event that the Executive was not employed by the Company for the whole of such
fiscal year) (the “Recent Annual Bonus”). Each such Annual Bonus shall be paid
no later that the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.

 

                (iii)          INCENTIVE, SAVINGS AND RETIREMENT PLANS. During
the Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executive of the Company and its affiliated
companies, but in no event shall such plans, practice, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at any
time during the 120-day period immediately preceding the Effective Date or if
more favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.

 

                (iv)          WELFARE BENEFIT PLANS. During the employment
Period, the Executive and/or the Executive’s family, as the case may be, shall
be eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to the other peer executive of the Company
and its affiliated companies.

 

3

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                (v)           EXPENSES. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most favorable
policies, practices and procedures of the Company and its affiliated companies
in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.

 

                (vi)          FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without limitation,
tax and financial planning services, payment of club dues, and if applicable,
automobile allowance and/or use of an automobile and payment of related
expenses, in a accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for the Executive
at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and it’s
affiliated companies.

 

                (vii)         OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal secretarial
and other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as provided generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.

 

                (viii)        VACATION. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.

 

                5.             TERMINATION OF EMPLOYMENT. (a)  DEATH OR
DISABILITY. The Executive’s employment shall terminated automatically upon the
Executive’s death during the Employment Period. If the Company determines in
good faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth below), it
may give to the Executive written notice in accordance with Section 12(b) of
this Agreement of its intention to terminate the Executive’s employment. In such
event, the Executive’s employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Executive (the “Disability
Effective Date”), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive’s
duties. For purposes of this Agreement, “Disability” shall mean the absence of
the Executive from the Executive’s duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company of its insurers and acceptable to the Executive or the
Executive’s legal representative.

 

                (b)           CAUSE. The Company may terminate the Executive’s
employment during the Employment Period for Cause. For purposes of this
Agreement, “Cause” shall mean:

 

                (i)            the willful and continued failure of the
Executive to perform substantially the Executive’s duties with the Company or
one of its affiliated (other than any such failure resulting from incapacity due
to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has not
substantially performed the Executive’s duties, or

 

4

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                (ii)           the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
the Company.

 

For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.

 

                (c)           GOOD REASON. The Executive’s employment may be
terminated By the Executive for Good Reason. For purpose of this Agreement,
“Good Reason” shall mean:

 

                (i)            the assignment to the Executive of any duties
inconsistent in any respect with the Executive’s position (including status,
offices, titles and reporting requirement), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any other
action by the Company which results in a 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 thereof given by the
Executive;

 

                (ii)           any failure by the Company to comply with any of
the provisions of Section 4(b) of this Agreement, other than in 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
Executive;

 

                (iii)          the Company’s requiring the Executive to be based
at any office or location other than as provided in Section 4(a) (i) (B) hereof
or the Company’s requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Effective
Date;

 

                (iv)          any purported termination by the Company of the
Executive’s employment otherwise than as expressly permitted by this Agreement;
or

 

                (v)           any failure by the Company to comply with and
satisfy Section 11 (c) of this Agreement.

 

For purposes of this Section 5 (c), any good faith determination of “Good
Reason” made by the Executive shall be conclusive. Anything in the Agreement to
the Contrary notwithstanding, a termination by the Executive for any reason
during the 30-day period immediately following the first anniversary of the
Effective Date shall be deemed to be a termination for Good Reason for all
purposes of this Agreement.

 

                (d)           NOTICE OF TERMINATION. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in accordance with Section
12(b) of this Agreement. For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other than
the date of receipt of such notice, specifies that termination date (which date
shall be not more than thirty days

 

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after the giving of such notice). The failure by the Executive or the Company to
set forth in the notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s rights hereunder.

 

                (e)           DATE OF TERMINATION. “Date of Termination” means
(i) if the Executive’s employment is terminated by the Company for Cause, or by
the Executive for Good Reason, the date of receipt of the Notice of Termination
or any later date specified therein, as the case may be, (ii) if the Executive
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive’s employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.

 

                6.             OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the
Employment Period, the Company shall terminate the Executive’s employment other
than for Cause or Disability or the Executive shall terminate employment for
Good Reason:

 

                (i)            the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the aggregate of the
following amounts:

 

                A.            the sum of (1) the Executive’s Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the higher of (i) the Recent Annual Bonus and (ii) the Annual
Bonus paid or payable, including any bonus or portion thereof which has been
earned but deferred (and annualized for any fiscal year consisting of less than
twelve full months or during which the Executive was employed for less than
twelve full months), for the most recently completed fiscal year during the
Employment Period, if any (such higher amount being referred to as the “Highest
Annual Bonus”) and (y) a fraction, the numerator of which is the number of days
in the current fiscal year through the Date of Termination, and the denominator
of which is 365 and (3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2), and (3) shall be hereinafter referred to
as the “Accrued Obligations”); and

 

                B.            the amount equal to the product of (1) three and
(2) the sum of (x) the Executive’s Annual Base Salary and (y) the Highest Annual
Bonus; and

 

                C.            an amount equal to the contributions to the
Executive’s account in the Company’s Profit Sharing Plan which the Executive
would receive if the Executive’s employment continued for three years after the
Date of Termination assuming for this purpose that all such contributions are
fully vested, and, and assuming that the Company’s contribution to the Profit
Sharing Plan in each such year is in an amount equal to the greatest amount
contributed by the Company in any of the three years ending prior to the
Effective Date.

 

                (ii)           for three years after the Executive’s Date of
Termination, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive’s family at least equal to those
which would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 4 (b) (iv) of the Agreement if the
Executive’s employment has not been terminated or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and their families,
provided, however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare benefits under
another employer provided plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan during such
applicable period of eligibility.

 

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                (iii)          the Company shall, at its sole expense as
incurred, provide the Executive with out placement services the scope and
provider of which shall be selected by the Executive in his sole discretion; and

 

                (iv)          to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company and its affiliated companies (such other amounts and benefits shall
be hereinafter referred to as the “Other Benefits”).

 

                (b)           DEATH. If the Executive’s employment is terminated
by reason of the Executive’s death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive’s legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive’s estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6 (b) shall include, without limitation, and the
Executive’s estate and/or beneficiaries shall be entitled to receive, benefits
at least equal to the most favorable benefits provided by the Company and
affiliated companies to the estates and beneficiaries of peer executives of the
Company and such affiliated companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect with respect to other
peer executives and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive’s estate and/or the Executive’s beneficiaries, as in effect on the
date of Executive’s death with respect to other peer executive of the Company
and its affiliated companies and their beneficiaries.

 

                (c)           DISABILITY. If the Executive’s employment is
terminated by reason of the Executive’s Disability during the Employment Period,
this Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized in this
Section 6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive’s
family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.

 

                (d)           CAUSE; OTHER THAN FOR GOOD REASON. If the
Executive’s employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive (x) his Annual Base
Salary through the Date of Termination, (y) the amount of any compensation
previously deferred by the Executive, and (z) Other Benefits, in each case to
the extent theretofore unpaid. If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination for Good
Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment or
provision of Other Benefits. In such case, timely payment or provision of Other
Benefits. In such case, all Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination.

 

                7.             NON-EXCLUSIVITY OF RIGHTS. Nothing in this
Agreement shall prevent or limit the Executive’s continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 12 (f), shall anything herein limit or otherwise affect such
rights as the Executive may have

 

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under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.

 

                8.             FULL SETTLEMENT. The Company’s obligation to make
the payment provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Executive obtains other
employment. The Company agrees to pay as incurred, to the full extent permitted
by law, all legal fees and expenses which the Executive may reasonably incur as
a result of any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f) (2) (A)
of the Internal Revenue Code of 1986, as amended (the “Code”).

 

                9.             CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

 

                (a)           Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company to or for the benefit
of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 9) (a “Payment”)
would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax”), then the Executive
shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments. Notwithstanding the foregoing provisions of this Section 9 (a), if
it shall be determined that the Executive is entitled to a Gross-Up Payment, but
that the Payments do not exceed 110% of the greatest amount (the “Reduced
Amount”) that could be paid to the Executive such that the receipt of Payments
would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to
the Executive and the Payments, in the aggregate, shall be reduced to the
Reduced Amount.

 

                (b)           Subject to the provisions of Section 9 (c), all
determinations required to be made under this Section 9, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by KPMG Peat Marwick or such other certified public accounting firm as may be
designated by the Executive (the “Accounting Firm”) which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 9, shall be paid by the

 

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Company to the Executive within five days of the receipt of the Accounting
Firm’s determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9 (c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.

 

                (c)           The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:

 

                (i)            give the Company any information reasonably
requested by the Company relating to such claim,

 

                (ii)           take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company.

 

                (iii)          cooperate with the Company in good faith in order
effectively to contest such claim, and

 

                (iv)          permit the Company to participate in any
proceedings relating to such claim;

 

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9 (c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.

 

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                (d)           If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9 (c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject the Company’s complying with the requirements of Section 9 (c) promptly
pay to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 9 (c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

 

                10.           CONFIDENTIAL INFORMATION. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive’s employment by the Company or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representative of the
Executive in violation of this Agreement). After termination of the Executive’s
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall an asserted
violation of the provisions of this Section 10 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement.

 

                11.           SUCCESSORS. (a)  This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive’s legal representative.

 

                (b)           This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.

 

                (c)           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 assume
expressly 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. As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and /or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

 

                12.           MISCELLANEOUS. (a)  This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective successors
and legal representatives.

 

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                (b)           All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

 

IF TO THE EXECUTIVE:

 

Russell Goldsmith
400 North Roxbury Drive
Beverly Hills, CA 90210

 

 

 

 

 

IF TO THE COMPANY:

 

City National Bank
400 North Roxbury Drive
Beverly Hills, CA 90210
Attention: General Counsel

 

 

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

 

                (c)           The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

 

                (d)           The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.

 

                (e)           The Executive’s or the Company’s failure to insist
upon strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 5 (c) (l)-(v)of this Agreement, shall not be deemed
to be a waiver of such provision or right or any other provision or right of the
Agreement.

 

                (f)            The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement between
the Executive and the Company, the employment of the Executive by the Company is
“at will” and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive’s employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement. From and after
the Effective Date this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof.

 

                IN WITNESS WHEREOF, the Executive has hereunto set the
Executive’s hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.

 

 

 

/s/ RUSSELL GOLDSMITH

 

Russell Goldsmith

 

 

 

 

 

CITY NATIONAL CORPORATION

 

 

 

By

/s/ RICHARD H. SHEEHAN, JR.

 

 

Richard H. Sheehan, Jr.

SVP and General Counsel

 

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