EXHIBIT 10.26

 

2000 CITY NATIONAL BANK
DIRECTOR DEFERRED COMPENSATION PLAN

 

 

 

 

 

 

 

 

 

 

 

 

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2000 CITY NATIONAL BANK
DIRECTOR DEFERRED COMPENSATION PLAN

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I

1

 

 

 

1.1 -

Title

1

 

 

 

1.2 -

Definitions

1

 

 

 

ARTICLE II

6

 

 

 

2.1 -

Participation

6

 

 

 

ARTICLE III

7

 

 

 

3.1 -

Elections to Defer Compensation

7

 

 

 

3.2 -

Investment Elections

9

 

 

 

ARTICLE IV

10

 

 

 

4.1 -

Deferral Account

10

 

 

 

4.2 -

Rollovers

10

 

 

 

ARTICLE V

11

 

 

 

5.1 -

Deferral Account

11

 

 

 

ARTICLE VI

12

 

 

 

6.1 -

Distribution of Deferred Compensation

12

 

 

 

6.2 -

Nonscheduled In-Service Withdrawals

13

 

 

 

6.3 -

Hardship Withdrawals

14

 

 

 

6.4 -

Inability to Locate Participant

14

 

 

 

6.5 -

Change in Control

14

 

 

 

6.6 -

Death Benefit for Certain Participants

15

 

 

 

ARTICLE VII

16

 

 

 

7.1 -

Committee Action

16

 

 

 

7.2 -

Powers and Duties of the Committee

16

 

 

 

7.3 -

Construction and Interpretation

17

 

 

 

7.4 -

Information

17

 

 

 

7.5 -

Compensation, Expenses and Indemnity

17

 

 

 

7.6 -

Quarterly Statements

18

 

 

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7.7 -

Claims Procedure

18

 

 

 

ARTICLE VIII

20

 

 

 

8.1 -

Unsecured General Creditor

20

 

 

 

8.2 -

Restriction Against Assignment

20

 

 

 

8.3 -

Withholding

20

 

 

 

8.4 -

Amendment, Modification, Suspension or Termination

21

 

 

 

8.5 -

Governing Law

21

 

 

 

8.6 -

Receipt or Release

21

 

 

 

8.7 -

Payments on Behalf of Persons Under Incapacity

21

 

 

 

8.8 -

Headings, etc. Not Part of Agreement

21

 

 

 

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2000 CITY NATIONAL BANK
DIRECTOR DEFERRED COMPENSATION PLAN
(EFFECTIVE AS OF JANUARY 1, 2000)

 

                City National Bank (the “Bank”) hereby establishes the 2000 City
National Bank Director Deferred Compensation Plan (the “Plan”), effective as of
January 1, 2000, to provide a tax-deferred capital accumulation opportunity to
its outside directors through deferrals of directors’ fees.

 

ARTICLE I
TITLE AND DEFINITIONS

 

1.1 -    TITLE.

 

                This Plan shall be known as the 2000 City National Bank Director
Deferred Compensation Plan.

 

1.2 -    DEFINITIONS.

 

                Whenever the following words and phrases are used in this Plan,
with the first letter capitalized, they shall have the meanings specified below.

 

                “Account” shall mean a Participant’s Deferral Account.

 

                “Annual Retainer” shall mean the annual retainer fee to which a
Director is entitled for service as a member of the Board of Directors of the
Corporation and/or the annual retainer fee to which a Director is entitled for
service as a member of the board of directors of the Bank.

 

                “Bank” shall mean City National Bank and any successor
corporation.

 

                “Beneficiary” or “Beneficiaries” shall mean the person or
persons, including a trustee, personal representative or other fiduciary, last
designated in writing by a Participant in accordance with procedures established
by the Committee to receive the benefits specified hereunder (other than those
benefits set forth in Section 6.6) in the event of the Participant’s death. No
beneficiary designation shall become effective until it is filed with the
Committee, and no beneficiary designation of someone other than the
Participant’s spouse shall be effective unless such designation is consented to
by the Participant’s spouse on a form provided by and in accordance with
procedures established by the Committee. If there is no Beneficiary designation
in effect, or if there is no surviving designated Beneficiary, then the
Participant’s surviving spouse shall be the Beneficiary. If there is no
surviving spouse to receive any benefits payable in

 

 

 

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accordance with the preceding sentence, the duly appointed and currently acting
personal representative of the Participant’s estate (which shall include either
the Participant’s probate estate or living trust) shall be the Beneficiary. In
any case where there is no such personal representative of the Participant’s
estate duly appointed and acting in that capacity within 90 days after the
Participant’s death (or such extended period as the Committee determines is
reasonably necessary to allow such personal representative to be appointed, but
not to exceed 180 days after the Participant’s death), then Beneficiary shall
mean the person or persons who can verify by affidavit or court order to the
satisfaction of the Committee that they are legally entitled to receive the
benefits specified hereunder. In the event any amount is payable under the Plan
to a minor, payment shall not be made to the minor, but instead shall be paid
(a) to that person’s living parent(s) to act as custodian, (b) if that person’s
parents are then divorced, and one parent is the sole custodial parent, to such
custodial parent, or (c) if no parent of that person is then living, to a
custodian selected by the Committee to hold the funds for the minor under the
Uniform Transfers or Gifts to Minors Act in effect in the jurisdiction in which
the minor resides. If no parent is living and the Committee decides not to
select another custodian to hold the funds for the minor, then payment shall be
made to the duly appointed and currently acting guardian of the estate for the
minor or, if no guardian of the estate for the minor is duly appointed and
currently acting within 60 days after the date the amount becomes payable,
payment shall be deposited with the court having jurisdiction over the estate of
the minor.

 

                “Board of Directors” or “Board” shall mean the Board of
Directors of City National Bank.

 

                “Change in Control Event” shall mean:

 

(a)                                  The acquisition by an individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of 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% or more of either (i) the then outstanding shares of common
stock of the Corporation (the “Outstanding Corporation Common Stock”) or (ii)
the combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors (the
“Outstanding Corporation 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 Corporation, (ii) any
acquisition by the Corporation, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Corporation or any
corporation controlled by the Corporation, (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii)

 

 

 

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                                                and (iii) of subsection (c)
below, 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 for 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 Corporation’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 Corporation (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 Corporation Common Stock and Outstanding Corporation 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 Corporation or all or substantially all of the
Corporation’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 Corporation Common Stock and Outstanding
Corporation 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 Corporation 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

 

 

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                                                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
Corporation of a complete liquidation or dissolution of the Corporation.

 

                “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

                “Committee” shall mean the Corporation’s Benefits Committee.

 

                “Compensation” shall mean the Participant’s Annual Retainer and
Meeting Fees.

 

                “Corporation” shall mean City National Corporation.

 

                “Deferral Account” shall mean the bookkeeping account on the
Bank’s books that is maintained by the Committee for each Participant that is
credited with amounts equal to (a) the portion of the Participant’s Annual
Retainer and Meeting Fees that he or she elects to defer, (b) the Participant’s
Rollover Amount, if any, and (c) earnings or losses pursuant to Section 4.1.

 

                “Director” shall mean a member of the board of directors of the
Bank.

 

                “Disability” shall mean an incapacity which has rendered the
Participant unable to perform all of the material and substantial duties of a
Director because of illness or injury.

 

                “Earnings Rate” shall mean, for each Fund, an amount equal to
the net rate of gain or loss on the assets of such Fund during each business
day.

 

                “Effective Date” shall mean January 1, 2000.

 

                “Eligible Director” shall mean each Director who is not an
employee of the Corporation, the Bank, any subsidiary of the Corporation or the
Bank or any other entity affiliated with the Corporation or the Bank.

 

                “Fund” or “Funds” shall mean one or more of the investment funds
or portfolios selected by the Committee pursuant to Section 3.2(b).

 

                “Initial Election Period” for an Eligible Director shall mean
the later of: (a) the period beginning upon notification to the Participants of
this Plan and ending December 31, 1999; or (b)

 

 

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the thirty-day period following the Eligible Director’s election to the Board or
the board of directors of the Bank.

 

                “Meeting Fees” shall mean the amounts to which a Director is
entitled for attending meetings of (a) the Board of Directors of the
Corporation, (b) the board of directors of the Bank, (c) a committee of the
Board of Directors of the Corporation or (d) a committee of the board of
directors of the Bank.

 

                “Participant” shall mean (a) any Eligible Director who elects to
defer Compensation in accordance with Section 3.1 and complies with the
requirements of Section 2.1 and (b) any individual who was a participant in the
City National Corporation Director Deferred Compensation Plan and had a positive
account balance on December 31, 1999.

 

                “Payment Eligibility Date” shall mean the first day of the month
following the end of the calendar quarter in which a Participant ceases to
provide service to the Bank as an Eligible Director, incurs a Disability or
dies.

 

                “Plan” shall mean the 2000 City National Bank Director Deferred
Compensation Plan set forth herein, now in effect, or as amended from time to
time.

 

                “Plan Year” shall mean the 12 consecutive month period beginning
on January 1 and ending the following December 31.

 

                “Plan Year Subaccounts” shall mean subaccounts of a
Participant’s Deferral Account established to separately account for
Compensation deferred (and earnings or losses thereon) for each Plan Year in
which a Participant participates in the Plan and for any Rollover Amounts.

 

                “Prior Plan” shall mean the City National Corporation Director
Deferred Compensation Plan.

 

                “Rollover Amount” shall mean the amount determined in accordance
with Section 4.2.

 

 

 

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ARTICLE II
PARTICIPATION

 

2.1 -    PARTICIPATION.

 

                (a)           GENERALLY. An Eligible Director shall become a
Participant in the Plan by (i) electing to defer Compensation in accordance with
Section 3.1, (ii) if required by the Committee, filing a life insurance
application form along with his or her deferral election form, and (iii)
satisfying any medical underwriting requirement established by the Committee.

 

                (b)           PARTICIPANTS WITH SPLIT-DOLLAR LIFE INSURANCE
ARRANGEMENTS. Notwithstanding the foregoing, unless the Committee provides
otherwise, an Eligible Director who has entered into a Split-Dollar Life
Insurance Agreement with the Corporation must execute an “Agreement for Transfer
of Policy and Termination of Split-Dollar Life Insurance Agreement” in order to
defer Compensation under this Plan.

 

 

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ARTICLE III
DEFERRAL ELECTIONS

 

3.1 -    ELECTIONS TO DEFER COMPENSATION.

 

                (a)           INITIAL ELECTION PERIOD. Subject to Section 2.1,
each Eligible Director may elect to defer Compensation by filing with the
Committee an election that conforms to the requirements of this Section 3.1, on
a form provided and in a manner specified by the Committee, no later than the
last day of his or her Initial Election Period.

 

                (b)           GENERAL RULE. Subject to the minimum deferral
provisions of Section 3.1(c) below, the amount of Compensation which an Eligible
Director may elect to defer is as follows:

 

(i)                                     Any percentage or dollar amount of
Annual Retainer up to 100%; and/or

 

(ii)                                  Any percentage or dollar amount of Meeting
Fees up to 100%.

 

                (c)           MINIMUM DEFERRALS. For each Plan Year during which
an Eligible Director is a Participant, the minimum amount that may be elected
under Section 3.1(b) is $5,000. This $5,000 minimum deferral for any Plan Year
may be met by a combination of deferrals of Annual Retainer and/or Meeting Fees
for the Plan Year.

 

 

                (d)           EFFECT OF INITIAL ELECTION. An election to defer
Compensation during the Initial Election Period shall be effective with respect
to Compensation paid with respect to the Plan Year for which the election is
made.

 

                (e)           ELECTIONS OTHER THAN ELECTIONS DURING THE INITIAL
ELECTION PERIOD. Subject to the requirements of Section 2.1, any Eligible
Director may participate for any Plan Year by filing an election, on a form
provided and in a manner specified by the Committee, to defer Compensation as
described in paragraph (b) above. An election to defer Compensation for a Plan
Year must be filed on or before December 1 of the preceding Plan Year, or such
other date as the Committee establishes, which date shall be no later than
December 31 of the preceding Plan Year, and will be effective for Compensation
earned on or after January 1 of the Plan Year for which the election applies.

 

                (f)            DURATION OF DEFERRAL ELECTION. Any election made
under this Plan to defer Compensation shall apply only to Compensation payable
with respect to the Plan Year for which the election is made. For each
subsequent Plan Year, an Eligible Director may make a new election, subject to
the limitations set forth in this Section 3.1, to defer a percentage of his or
her Compensation.

 

 

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                (g)           IN-SERVICE DISTRIBUTIONS. At the time of making an
election to defer Compensation for a Plan Year pursuant to this Section 3.1, a
Participant may elect (in the manner specified by the Committee) to receive an
in-service distribution of the amount deferred under such election, together
with earnings or losses credited with respect to such amounts pursuant to
Article IV, in a lump sum payment or in annual installments over 2, 3, 4, or 5
years in any January that occurs after the second anniversary of the last day of
the Plan Year in which the amount deferred was earned. In addition, each
Participant who has a Rollover Amount credited to his or her Account under
Section 4.2 shall be permitted to elect, on or before December 31, 1999, to
receive an in-service distribution of such Rollover Amount, together with
earnings or losses, in January of 2003 or any later year. A Participant may
subsequently elect to defer the year of any such in-service distribution to any
subsequent date that is at least two years from the prior scheduled distribution
date by filing a written election with the Committee, on a form provided and in
a manner specified by the Committee, at least one year prior to the first day of
the previously elected in-service distribution year. The election to defer the
year of an in-service distribution may be made no more than twice. A Participant
may elect to change the form of an in-service distribution, provided that his or
her election is made on a form and in a manner specified by the Committee and
such election is received by the Committee at least one year prior to the date
distribution is to be made (or installment are to commence). If a Participant
fails to make a distribution election under this Section 3.1(g) for a Plan Year,
the Compensation deferred for that Plan Year shall be distributed as set forth
in Section 6.1(b).

 

                (h)           ELECTIONS FOR ALTERNATIVE FORM OF DISTRIBUTION. At
the time of making an election to defer Compensation for a Plan Year pursuant to
this Section 3.1, a Participant may elect (in the manner specified by the
Committee) an alternative form of benefit for distribution of the Compensation
deferred for that Plan Year pursuant to Section 6.1(b). Subject to the
provisions of Section 6.1(b), this election will apply to the Compensation
deferred for such Plan Year if (i) the Participant does not elect an in-service
distribution with respect to such deferred Compensation pursuant to Section
3.1(g), or (ii) the Participant elects an in-service distribution but ceases to
be an Eligible Director prior to commencement of such in-service distribution.

 

                (i)            EFFECT OF ELECTIONS. Each distribution election
under Section 3.1(g) and Section 3.1(h) shall apply only to the Compensation
deferred for the Plan Year for which the election is made. For each subsequent
Plan Year a Participant may make a separate election. Any election filed
pursuant to this Section 3.1 shall be irrevocable for any one Plan Year except
to the extent provided in subsection (g) hereof, Section 6.1, Section 6.2 and
Section 6.3.

 

 

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3.2 -    INVESTMENT ELECTIONS.

 

                (a)           At the time of making each deferral election
described in Section 3.1, the Participant shall designate, on a form provided
and in a manner specified by the Committee, which Fund or Funds the Compensation
deferred pursuant to such election will be deemed to be invested in for purposes
of determining the amount of earnings or losses to be credited or debited to his
or her Plan Year Subaccount that the Committee establishes pursuant to Section
4.1 to account for such deferred Compensation.

 

                (b)           In making the designation pursuant to this Section
3.2, the Participant must specify, in multiples of 10, the percentage of his or
her corresponding Plan Year Subaccount that shall be deemed to be invested in
one or more Funds. Effective as of the first business day of any month, a
Participant may change the designation made under this Section 3.2 with respect
to any or all of his or her Plan Year Subaccounts by filing an election, on a
form provided and in a manner specified by the Committee. If a Participant fails
to make an investment election for Compensation deferred in any Plan Year, the
Participant’s most recent investment election shall apply to the Plan Year
Subaccount established for such Plan Year and each Plan Year Subaccount
established with respect to any subsequent Plan Year Subaccount(s) until the
Participant files an election with the Committee in accordance with the
provisions of this Section 3.2 with respect to such Plan Year Subaccount(s).
Notwithstanding the foregoing, if a Participant has not previously elected a
Fund under this Section 3.2, he or she shall be deemed to have elected the money
market option, or such other Fund that the Committee designates as the default
fund for purposes of this Plan.

 

                (c)           The Committee shall select from time to time, in
its sole discretion, the Funds in which Compensation deferred under this Plan
will be deemed to be invested. The Earnings Rate of each Fund shall be used to
determine the amount of earnings or losses to be credited or debited to the
Participant’s Deferral Account under Article IV. The Bank reserves the right to
change the Funds, and to increase or decrease the number of Funds, available as
the Funds for purposes of this Plan.

 

                (d)           Notwithstanding the Participant’s ability to
designate the Funds in which the Plan Year Subaccounts of his or her Deferral
Account shall be deemed to be invested, the Bank shall have no obligation to
invest any funds in accordance with any Participant’s election. A Participant’s
Deferral Account shall merely be a bookkeeping entry on the Bank’s books, and no
Participant shall obtain any interest in any of the Funds.

 

 

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ARTICLE IV

ACCOUNTS

 

4.1 -    DEFERRAL ACCOUNT.

 

                The Committee shall establish and maintain a Deferral Account
for each Participant under the Plan. The Deferral Account shall be divided into
Plan Year Subaccounts to separately account for deferrals made for each Plan
Year. A Participant’s Plan Year Subaccounts shall be divided into separate
subaccounts (“investment subaccounts”), each of which corresponds to a Fund
elected by the Participant pursuant to Section 3.2(a). A Participant’s Plan Year
Subaccount for a Plan Year shall be credited as follows:

 

(a)                                  The Committee shall credit the investment
subaccounts of the Plan Year Subaccount of the Participant’s Deferral Account
with an amount equal to the Compensation deferred by the Participant for the
Plan Year for which the Plan Year Subaccount is established on the fifth
business day after the Compensation would have been paid, in accordance with the
Participant’s election under Section 3.2(a); that is, the portion of the
Participant’s deferred Compensation that the Participant has elected to be
deemed to be invested in a certain Fund shall be credited to the investment
subaccount corresponding to that Fund;

 

(b)                                 As of the close of each business day, each
investment subaccount of a Participant’s Plan Year Subaccount of the
Participant’s Deferral Account shall be credited with earnings or losses in an
amount determined by multiplying the balance credited to such investment
subaccount as of the beginning of the same business day by the Earnings Rate for
the corresponding Fund.

 

4.2 -    ROLLOVERS.

 

                If a Participant was a participant in the Prior Plan, and had a
positive account balance on December 31, 1999, that positive account balance,
determined as of that date, shall be transferred to the Participant’s Account
under this Plan, and shall be governed by the terms and conditions of this Plan
and shall be referred to as the “Rollover Amount.” The Participant’s Rollover
Amount shall be credited to a separate Plan Year Subaccount. The Participant may
make separate distribution and investment elections applicable to such Rollover
Amount in accordance with Articles III and VI of this Plan.

 

 

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ARTICLE V
VESTING

 

5.1 -    DEFERRAL ACCOUNT.

 

                A Participant’s Deferral Account shall be 100% vested at all
times.

 

 

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ARTICLE VI
DISTRIBUTIONS

 

6.1 -    DISTRIBUTION OF DEFERRED COMPENSATION.

 

                (a)           Distribution of the amount credited to each Plan
Year Subaccount of the Participant’s Deferral Account that is subject to an
in-service distribution election made by the Participant pursuant to Section
3.1(g) shall be made beginning in January of the year elected by the Participant
in the form elected by the Participant, provided that the Participant continues
to serve as an Eligible Director on January 1 of such year. Notwithstanding the
foregoing, if the amount credited to a Plan Year Subaccount as of the end of the
month immediately preceding the date that distributions are scheduled to
commence is $25,000 or less (or, if distributions from two or more Plan Year
Subaccounts are scheduled to commence in the same year for the same number of
annual installments, if the sum of the amounts credited to such Plan Year
Subaccounts is $25,000 or less), payment will be made in the form of a single
lump sum rather than annual installments. In the event the Participant’s service
as an Eligible Director is terminated for any reason prior to January 1 of a
year elected by the Participant for a Plan Year Subaccount pursuant to Section
3.1(g), the Participant’s in-service distribution election for such Plan Year
Subaccount shall no longer be effective and all of the amounts credited to such
Plan Year Subaccount shall be distributed as set forth in the following
subsections of this Section 6.1 in accordance with any applicable election by
the Participant. In the event the Participant terminates service as an Eligible
Director while receiving an in-service distribution from one or more Plan Year
Subaccounts in the form of annual installments, such payments will continue as
scheduled.

 

                (b)           When a Participant terminates service as an
Eligible Director for any reason including death, the amounts credited to his or
her Plan Year Subaccounts that are not then in pay status pursuant to in-service
distribution elections shall be distributed to the Participant (or his or her
Beneficiary) in 60 substantially equal quarterly installments beginning as soon
as practicable following his or her Payment Eligibility Date. Notwithstanding
the foregoing, a Participant may elect to receive distribution of one or more of
his or her Plan Year Subaccounts in a lump sum or in 20, 40 or 60 substantially
equal quarterly installments beginning as soon as practicable following the
Participant’s Payment Eligibility Date, provided that his or her election is
filed with the Committee either (i) at the time of making his or her deferral
election for the Plan Year for which the Plan Year Subaccount was established
(as described in Section 3.1(h)), or (ii) at least one year prior to his or her
termination of service as an Eligible Director on a form provided and in a
manner specified by the Committee. A Participant may change the form of
distribution, provided that his or her change election is made on a form and in
a manner specified by the Committee and such election is received by the
Committee at least one year prior to the date

 

 

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distribution is to be made (or installments are to commence). Notwithstanding
anything contained herein to the contrary, (i) in the event that the amount
credited to a Participant’s Deferral Account is less than $50,000 as of the end
of the month in which his or her service as an Eligible Director terminates,
such amount shall be paid in a cash lump sum payment as soon as practicable
following his or her Payment Eligibility Date, or (ii) in the event that the sum
of the amounts credited to the Participant’s Plan Year Subaccounts that are
subject to the same election as to date of commencement of distribution and
number of installments is less than $50,000 at the end of the month in which the
Participant’s service as an Eligible Director terminates, such amount shall be
paid in a cash lump sum payment as soon as practicable following his or her
Payment Eligibility Date.

 

                (c)           The Participant’s Plan Year Subaccounts shall
continue to be credited with earnings pursuant to Sections 4.1 and 4.2 of the
Plan until all amounts credited to his or her Plan Year Subaccounts under the
Plan have been distributed.

 

                (d)           In the event that a former Participant dies while
receiving installment payments under this Plan, any remaining installments shall
be paid to the Participant’s Beneficiary as such installments would have
otherwise been due to the Participant.

 

6.2 -    NONSCHEDULED IN-SERVICE WITHDRAWALS.

 

                At any time prior to his or her termination of service as an
Eligible Director, a Participant may elect to withdraw an amount not in excess
of the amounts credited to his or her Deferral Account, reduced by the
withdrawal penalty described below. The Participant may make such an election by
filing a written notice with the Committee on a form provided and in the manner
specified by the Committee. Within 90 days following the Committee’s receipt of
such notice, an amount equal to 90% of the amount that the Participant has
elected to withdraw from his or her Deferral Account shall be paid to the
Participant in a cash lump sum payment. Upon the payment of such withdrawal, (a)
an amount equal to 10% of the amount the Participant has elected to withdraw
from the Participant’s Deferred Compensation Account shall be forfeited, (b) the
Participant shall cease to participate in the Plan for the remainder of the Plan
Year in which the withdrawal occurs and shall be ineligible to participate
during the Plan Year immediately following the Plan Year in which the withdrawal
occurs, and (c) any deferral elections made by the Participant for such periods
shall terminate. A Participant may not make more than two withdrawals under this
Section 6.2. The amount of any such payments and forfeitures shall be deducted
from the amounts credited to the Participant’s Plan Year Subaccounts in such
order and in such proportions as the Committee may determine in its sole
discretion. The remaining

 

 

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amounts credited to a Participant’s Plan Year Subaccounts shall be distributed
in accordance with the Participant’s elections with respect to such Plan Year
Subaccounts.

 

6.3 -    HARDSHIP WITHDRAWALS.

 

                Upon written request of a Participant, the Committee may, in its
sole discretion, make a lump sum payment to a Participant and/or accelerate the
payment of installment payments due to the Participant in order to meet a severe
financial hardship to the Participant resulting from (a) a sudden and unexpected
illness or accident of the Participant or a dependent of the Participant, (b)
loss of the Participant’s property due to casualty or (c) other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant. However, no payment shall be made under
this Section 6.3 to the extent that a hardship is or may be relieved (a) through
reimbursement or compensation by insurance or otherwise, (b) by liquidation of
the Participant’s assets, to the extent the liquidation of such assets would not
itself cause severe financial hardship or (c) by cessation of deferrals under
the Plan effective for the next Plan Year. The amount of any hardship lump sum
payment and/or accelerated amount under this Section 6.3 shall not exceed the
lesser of (a) the amount required to meet the immediate financial need created
by such hardship or (b) the entire amounts credited to the Participant’s
Accounts. The amount of any such payments shall be deducted from the amounts
credited to the Participant’s Plan Year Subaccounts in such order and in such
proportions as the Committee may determine in its sole discretion. The remaining
amounts credited to a Participant’s Plan Year Subaccounts shall be distributed
in accordance with the Participant’s elections with respect to such Plan Year
Subaccounts.

 

6.4 -    INABILITY TO LOCATE PARTICIPANT.

 

                In the event that the Committee is unable to locate a
Participant or Beneficiary within two years following the Participant’s Payment
Eligibility Date, the amounts allocated to the Participant’s Deferral Account
shall be forfeited. If, after such forfeiture, the Participant or Beneficiary
later claims such benefits, such benefits shall be reinstated without interest
or earnings.

 

6.5 -    CHANGE IN CONTROL.

 

                In the event of a Change in Control, a Participant shall receive
the amounts allocated to his or her Deferral Account in a cash lump sum payment
as soon as practicable following the Change in Control.

 

 

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6.6 -    DEATH BENEFIT FOR CERTAIN PARTICIPANTS.

 

                (a)           For each Participant who is named in the list
attached hereto as Schedule 1, the Bank shall provide life insurance coverage in
the amount set forth next to his or her name in Schedule 1, beginning on the
date such Participant executes an “Agreement for Transfer of Policy and
Termination of Split-Dollar Life Insurance Agreement” and ending on December 31,
2009 (the “Coverage Period”). Such life insurance coverage shall remain in
effect throughout the Coverage Period even if the Participant ceases to serve as
an Eligible Director.

 

                (b)           The Bank shall provide such life insurance
coverage by maintaining a life insurance policy (the “Policy”) on the life of
each named Participant. Each such Participant shall be entitled to name a
beneficiary (which need not be his or her Beneficiary under this Plan) to
receive the portion of the death benefit under the Policy that is equal to the
amount set forth as his or her death benefit in Schedule 1 (his or her “Death
Benefit”). The Participant may make a beneficiary designation or change a
beneficiary designation in writing in accordance with procedures established by
the Committee. No beneficiary designation will become effective until it is
filed in accordance with the Committee’s procedures. If no beneficiary
designation is in effect, the Death Benefit shall be paid to the Participant’s
Beneficiary under this Plan. If the actual death benefit under the Policy
exceeds the Death Benefit, the excess death benefit under the Policy shall be
paid to the Bank.

 

                (c)           At the end of Coverage Period, the Bank shall
cease to provide the life insurance coverage described herein and the provisions
of this Section 6.6 shall terminate and have no further effect.

 

 

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ARTICLE VII
ADMINISTRATION

 

7.1 -    COMMITTEE ACTION.

 

                The Committee shall act at meetings by affirmative vote of a
majority of the members of the Committee. Any action permitted to be taken at a
meeting may be taken without a meeting if, prior to such action, a written
consent to the action is signed by all members of the Committee and such written
consent is filed with the minutes of the proceedings of the Committee. A member
of the Committee shall not vote or act upon any matter which relates solely to
himself or herself as a Participant. The Chairman or any other member or members
of the Committee designated by the Chairman may execute any certificate or other
written direction on behalf of the Committee.

 

7.2 -    POWERS AND DUTIES OF THE COMMITTEE.

 

                (a)           The Committee, on behalf of the Participants and
their Beneficiaries, shall enforce the Plan in accordance with its terms, shall
be charged with the general administration of the Plan, and shall have all
powers necessary to accomplish its purposes, including, but not by way of
limitation, the following:

 

(i)                                     To select the funds or portfolios to be
the Funds in accordance with Section 3.2(b) hereof;

 

(ii)                                  To construe and interpret the terms and
provisions of this Plan;

 

(iii)                               To compute and certify to the amount and
kind of benefits payable to Participants and their Beneficiaries;

 

(iv)                              To maintain all records that may be necessary
for the administration of the Plan;

 

(v)                                 To provide for the disclosure of all
information and the filing or provision of all reports and statements to
Participants, Beneficiaries or governmental agencies as shall be required by
law;

 

 

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(vi)                              To make and publish such rules for the
regulation of the Plan and procedures for the administration of the Plan as are
not inconsistent with the terms hereof; and

 

(vii)                           To appoint a plan administrator or any other
agent, and to delegate to them such powers and duties in connection with the
administration of the Plan as the Committee may from time to time prescribe.

 

7.3 -    CONSTRUCTION AND INTERPRETATION.

 

                The Committee shall have full discretion to construe and
interpret the terms and provisions of this Plan, which interpretation or
construction shall be final and binding on all parties, including but not
limited to the Bank and any Participant or Beneficiary. The Committee shall
administer such terms and provisions in a uniform and nondiscriminatory manner
and in full accordance with any and all laws applicable to the Plan.

 

7.4 -    INFORMATION.

 

                To enable the Committee to perform its functions, the Bank shall
supply full and timely information to the Committee on all matters relating to
the Compensation of all Participants, their death or other cause of termination,
and such other pertinent facts as the Committee may require.

 

7.5 -    COMPENSATION, EXPENSES AND INDEMNITY.

 

                (a)           The members of the Committee shall serve without
compensation for their services hereunder.

 

                (b)           The Committee is authorized at the expense of the
Bank to employ such legal counsel as it may deem advisable to assist in the
performance of its duties hereunder. Expenses and fees in connection with the
administration of the Plan shall be paid by the Bank.

 

                (c)           To the extent permitted by applicable state law,
the Bank shall indemnify and save harmless the Committee and each member
thereof, the Board of Directors and each member thereof, and delegates of the
Committee who are employees of the Bank against any and all expenses,
liabilities and claims, including legal fees to defend against such liabilities
and claims arising out of their discharge in good faith of responsibilities
under or incident to the Plan, other than expenses and liabilities arising out
of willful misconduct. This indemnity shall not preclude such further
indemnities as may be available under insurance purchased by the Corporation or
provided by the Bank under any bylaw, agreement or otherwise, as such
indemnities are permitted under state law.

 

 

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7.6 -    QUARTERLY STATEMENTS.

 

                Under procedures established by the Committee, a Participant
shall receive a statement with respect to such Participant’s Account as of the
last day of each calendar quarter.

 

7.7 -    CLAIMS PROCEDURE.

 

                (a)           CLAIM. A person who believes that he or she is
being denied a benefit to which he or she is entitled under this Plan
(hereinafter referred to as “Claimant”) may file a written request for such
benefit with the Committee, setting forth his or her claim. The request must be
addressed to the Committee at the Bank’s principal place of business.

 

                (b)           CLAIM DECISION. Upon receipt of a claim, the
Committee shall advise the Claimant that a reply will be forthcoming within
ninety (90) days and shall, in fact, deliver such reply within such period. The
Committee may, however, extend the reply period for an additional ninety (90)
days for special circumstances. If the claim is denied in whole or in part, the
Committee shall inform the Claimant in writing, using language calculated to be
understood by the Claimant, setting forth: (i) the specified reason or reasons
for such denial; (ii) the specific reference to pertinent provisions of this
Plan on which such denial is based; (iii) a description of any additional
material or information necessary for the Claimant to perfect his or her claim
and an explanation why such material or such information is necessary; (iv)
appropriate information as to the steps to be taken if the Claimant wishes to
submit the claim for review; and (v) the time limits for requesting a review
under subsection (c).

 

                (c)           REQUEST FOR REVIEW. Within sixty (60) days after
the receipt by the Claimant of the written opinion described above, the Claimant
may request in writing that the Committee review the determination. Such request
must be addressed to the Committee, at the Bank’s principal place of business.
The Claimant or his or her duly authorized representative may, but need not,
review the pertinent documents and submit issues and comments in writing for
consideration by the Committee. If the Claimant does not request a review within
such sixty (60) day period, he or she shall be barred and estopped from
challenging the original determination.

 

                (d)           REVIEW OF DECISION. Within sixty (60) days after
the Committee’s receipt of a request for review, after considering all materials
presented by the Claimant, the Committee will inform the Claimant in writing, in
a manner calculated to be understood by the Claimant, of its decision setting
forth the specific reasons for the decision and containing specific references
to the pertinent provisions of this Plan on which the decision is based. If
special circumstances require that the sixty (60) day time period be extended,
the Committee will so notify the Claimant

 

 

18

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and will render the decision as soon as possible, but no later than one hundred
twenty (120) days after receipt of the request for review.

 

 

19

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ARTICLE VIII
MISCELLANEOUS

 

8.1 -    UNSECURED GENERAL CREDITOR.

 

                Participants and their Beneficiaries, heirs, successors, and
assigns shall have no legal or equitable rights, claims, or interest in any
specific property or assets of the Bank. No assets of the Bank shall be held
under any trust, or held in any way as collateral security for the fulfilling of
the obligations of the Bank under this Plan, although the Bank may establish one
or more grantor trusts subject to Code Section 671 to facilitate the payment of
benefits hereunder. Any and all of the Bank’s assets shall be, and remain, the
general unpledged, unrestricted assets of the Bank. The Bank’s obligation under
the Plan shall be merely that of an unfunded and unsecured promise of the Bank
to pay money in the future, and the rights of the Participants and Beneficiaries
shall be no greater than those of unsecured general creditors. It is the
intention of the Bank that this Plan and any trust established to facilitate the
payment of benefits hereunder be unfunded for purposes of the Code and for
purposes of Title I of ERISA.

 

8.2 -    RESTRICTION AGAINST ASSIGNMENT.

 

                The Bank shall pay all amounts payable hereunder only to the
person or persons designated by the Plan and not to any other person or
corporation. No part of a Participant’s Account shall be liable for the debts,
contracts, or engagements of any Participant, his or her Beneficiary, or
successors in interest, nor shall a Participant’s Account be subject to
execution by levy, attachment, or garnishment or by any other legal or equitable
proceeding, nor shall any such person have any right to alienate, anticipate,
sell, transfer, commute, pledge, encumber, or assign any benefits or payments
hereunder in any manner whatsoever. If any Participant, Beneficiary or successor
in interest is adjudicated bankrupt or purports to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge any distribution or payment from
the Plan, voluntarily or involuntarily, the Committee, in its discretion, may
cancel such distribution or payment (or any part thereof) to or for the benefit
of such Participant, Beneficiary or successor in interest in such manner as the
Committee shall direct.

 

8.3 -    WITHHOLDING.

 

                There shall be deducted from each payment made under the Plan
any taxes which are required to be withheld by the Bank in respect to such
payment. The Bank shall have the right to reduce any payment by the amount of
cash sufficient to provide the amount of said taxes.

 

 

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8.4 -    AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION.

 

                The Bank may amend, modify, suspend or terminate the Plan in
whole or in part, except that no amendment, modification, suspension or
termination shall have any retroactive effect to reduce any amounts allocated to
a Participant’s Account. In the event that this Plan is terminated, the
distribution of the amounts credited to a Participant’s Deferral Account shall
not be accelerated but shall be paid at such time and in such manner determined
under the terms of the Plan immediately prior to termination as if the Plan had
not been terminated. (Neither the Policies themselves nor the death benefit
described in Section 6.6 shall be treated as allocated to Accounts.)

 

8.5 -    GOVERNING LAW.

 

                This Plan shall be construed, governed and administered in
accordance with the laws of the State of California.

 

8.6 -    RECEIPT OR RELEASE.

 

                Any payment to a Participant or the Participant’s Beneficiary in
accordance with the provisions of the Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Committee, the Corporation and the
Bank. The Committee may require such Participant or Beneficiary, as a condition
precedent to such payment, to execute a receipt and release to such effect.

 

8.7 -    PAYMENTS ON BEHALF OF PERSONS UNDER INCAPACITY.

 

                In the event that any amount becomes payable under the Plan to a
person who, in the sole judgment of the Committee, is considered by reason of
physical or mental condition to be unable to give a valid receipt therefore, the
Committee may direct that such payment be made to any person found by the
Committee, in its sole judgment, to have assumed the care of such person. Any
payment made pursuant to such determination shall constitute a full release and
discharge of the Committee, the Corporation and the Bank.

 

8.8 -    HEADINGS, ETC. NOT PART OF AGREEMENT.

 

                Headings and subheadings in this Plan are inserted for
convenience of reference only and are not to be considered in the construction
of the provisions hereof.

 

 

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                IN WITNESS WHEREOF, the Bank has executed this document this
28th day of February, 2001.

 

 

CITY NATIONAL BANK

 

 

 

 

By:

 /s/ KATE DWYER

 

 

Kate Dwyer

 

Its:

Executive Vice President
Human Resources Division

 

 

 

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