Exhibit 10.49


 


AMENDED AND RESTATED EMPLOYMENT
AGREEMENT


 


THIS AMENDED
AND RESTATED EMPLOYMENT AGREEMENT is made as of the 22nd day of December, 2008
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 and supersedes the Employment Agreement dated
as of June 30, 2006 by and between Goldsmith, CNB and Parent Corporation.


 


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.


 


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 December 22,
2008 (the “Start Date”) and shall terminate July 15, 2010.


 


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.


 


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 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 March 15
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 March 15 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 fiscal year of less than
twelve months shall be paid no later than March 15 following the end of
the period for which such amount is payable.


 


7.                                       Stock
Awards.


 


(a)                                  Annual Stock
Awards.  In each fiscal year
beginning in 2007 and continuing during the employment term, 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 granted or 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


 


2

















 


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 granted 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
granted or 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

  	
   

  



 


3

















 


	
  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 Employer 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 dividend 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.


 


4

















 


(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


 


5

















 


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 forfeited 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); provided, however, that with respect to any such
restricted stock units that constitute a “deferred compensation plan” within
the meaning of Section 409A of the Code, the settlement of such restricted
stock units shall be


 


6

















 


delayed until the earlier of (A) the first day of the seventh
month following the termination of Goldsmith’s employment if Goldsmith is a
“specified employee” within the meaning of Section 409A of the Code and (C) Goldsmith’s
death.  All grants of restricted stock
and restricted stock units after the date hereof for which forfeiture
restrictions have not yet lapsed at the time of termination due to retirement
at age sixty-two (62) will, for no consideration, be forfeited 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 June 30, 3006 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


 


7

















 


Goldsmith Entertainment Corporation shall be deemed not to interfere
with the performance of his duties hereunder.


 


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) in
a lump sum within 30 days of the effective date of termination, 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


 


8

















 


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 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)   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 , (iii) in a lump sum
within 30 days of the effective date of termination, an amount equal to the
contributions to Goldsmith’s account in the Employer’s Profit Sharing Plan
which Goldsmith would receive if Goldsmith’s employment continued for three
years after the effective date of termination assuming for this purpose that (A) all
such contributions are fully vested, (B) the Executive’s compensation is
Goldsmith’s compensation for the year immediately preceding the year in which
the effective date of termination occurs, and, (C) 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 of termination and (iv) for three years
following the effective date of termination (the “Benefits Period”), Employer
shall provide Goldsmith, his spouse and eligible dependents with medical,
prescription, vision and dental insurance coverage (the “Health Care
Benefits”), life insurance and long-term disability coverage no less favorable
to those which Goldsmith and his spouse and eligible dependents were receiving
immediately prior to the effective date of termination; provided,
however, that the Health Care Benefits
shall be provided during the Benefits Period in such a manner that such
benefits are excluded from Goldsmith’s income for federal income tax
purposes.  Notwithstanding the foregoing
clause (iii) 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.  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


 


9

















 


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;


 


(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.


 


10
















 


(e)                                  Change
of Control.  Attached to this
Agreement as Annex A is a copy of an Employment Agreement dated as
December 22, 2008 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 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) in a lump sum within 30 days of the
effective date of termination, the Annual Base Compensation for a period of
twelve (12) months from the end of the term of this Agreement, (ii) in a lump
sum within 30 days of the effective date of termination, 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 


 


11

















 


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) for one year following the effective date of
termination, Employer shall provide Goldsmith, his spouse and eligible
dependents with the Health Care Benefits, life insurance and long-term
disability benefits no less favorable to those which Goldsmith and his spouse
and eligible dependents were receiving immediately prior to the effective date
of termination; provided, however, that the
Health Care Benefits shall be provided during the Benefits Period in such a
manner that such benefits are excluded from Goldsmith’s income for federal
income tax purposes.  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 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, the same amounts and provide
him with the same benefits at the same time 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, in each case, at such time(s) and in such form(s) as such amounts
and benefits would be paid or provided to Goldsmith pursuant to subparagraph
10(b) and Paragraph 7, as applicable, had his employment been terminated
without cause immediately prior to the end of the term hereof.  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, in the event that Goldsmith is a “specified
employee” within the meaning of Section 409A of the Code (as determined in accordance
with the methodology established by the Company as in effect on the effective
date of termination), amounts that constitute “nonqualified deferred 


 


12

















 


compensation” within the
meaning of Section 409A of the Code that would otherwise be payable during the
six-month period immediately following the effective date of termination (including
the supplemental retirement benefit set forth in Appendix A to this
Agreement) 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; provided
that no such interest shall accrue with respect to any equity awards not
settled during such six month period or with respect to any severance pay that
would have been paid in installments under Section 10 of the Employment
Agreement dated June 30, 2006 between Goldsmith CNB and Parent Corporation.


 


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.  Notwithstanding the foregoing, this Agreement
shall not supersede and shall be subject to the Waiver and Amendment Agreement
letter dated as of November 14, 2008 by and between the Employer and Goldsmith.


 


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:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jeannemarie
  O’Brien

  
	
   

  	
   

  	
  Jeremy L.
  Goldstein

  
	
   

  	
   

  	
  Wachtell,
  Lipton, Rosen & Katz

  
	
   

  	
   

  	
  51 West 52nd
  Street

  
	
   

  	
   

  	
  New York,
  New York 10019-6150

  



 


13

















 


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.


 


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.  The Agreement is intended to
comply with the requirements of Section 409A of the Code or an exemption or
exclusion therefrom and, with respect to amounts that are subject to Section
409A of the Code, shall in all respects be administered in accordance with
Section 409A of the Code.  Each payment
under this Agreement shall be treated as a separate payment for purposes of
Section 409A of the Code.  In no event
may Goldsmith, directly or indirectly, designate the calendar year of any
payment to be made under this Agreement. 
If Goldsmith dies following the effective date of termination and prior
to the payment of the any amounts delayed on account of Section 409A of the
Code, such amounts shall be paid to the personal representative of Goldsmith’s
estate within 30 days after the date of Goldsmith’s death.  All reimbursements and in-kind benefits
provided under this Agreement that constitute deferred compensation within the
meaning of Section 409A of the Code shall be made or provided in accordance
with the requirements of Section 409A of the Code, including, without
limitation, 


 


14

















 


that (i) in no event shall
reimbursements by Employer under this Agreement be made later than the end of
the calendar year next following the calendar year in which the applicable fees
and expenses were incurred, provided, that Goldsmith shall have submitted an
invoice for such fees and expenses at least 10 days before the end of the
calendar year next following the calendar year in which such fees and expenses
were incurred; (ii) the amount of in-kind benefits that Employer is obligated
to pay or provide in any given calendar year shall not affect the in-kind
benefits that Employer is obligated to pay or provide in any other calendar
year; (iii) Goldsmith’s right to have Employer pay or provide such
reimbursements and in-kind benefits may not be liquidated or exchanged for any
other benefit; and (iv) in no event shall Employer’s obligations to make such
reimbursements or to provide such in-kind benefits apply later than Goldsmith’s
remaining lifetime (or if longer, through the 20th anniversary of the Start
Date).  Notwithstanding the foregoing, in
no event shall the effective date of termination occur until Goldsmith
experiences a “separation from service” within the meaning of Section 409A of
the Code, and the date on which such separation from service takes place shall
be the “effective date of termination.” 
“Separation from Service” shall mean a “separation from service” within
the meaning of Section 409A of the Code, as determined by the Committee in
accordance with Section 1.409A-1(h) of the Treasury Regulations.  For purposes of determining whether a
Separation from Service has occurred, Goldsmith shall be considered to have
separated from service as an employee when the facts and circumstances indicate
that Goldsmith and the Employer reasonably anticipate that either (i) no
further services will be performed for the Employer (including any affiliates)
after a certain date, or (ii) that the level of bona fide services Goldsmith
will perform for the Employer (including any affiliates) after such date
(whether as an employee or as an independent contractor) will permanently
decrease to no more than 20% of the average level of bona fide services
performed by Goldsmith (whether as an employee or an independent contractor)
over the immediately preceding 36-month period (or the full period of services
to the Employer if Goldsmith has been providing services to the Employer less
than 36 months). Within the time period permitted by the applicable treasury
regulations (or such later time as may be permitted under Section 409A or any
IRS or Department of Treasury rules or other guidance issued thereunder),
Employer may, in consultation with Goldsmith, 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 Goldsmith. 
CNB and Parent Corporation are not providing any tax advice to
Goldsmith.


 


15

















 


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 Cahill

  
	
   

  	
   

  	
   

  	
   

  
	
  RUSSELL
  GOLDSMITH

  	
   

  	
   

  	
  MICHAEL B.
  CAHILL

  
	
   

  	
   

  	
   

  	
  Executive
  Vice President and General

  
	
   

  	
   

  	
   

  	
  Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CITY
  NATIONAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Michael Cahill

  
	
   

  	
   

  	
   

  	
  MICHAEL B.
  CAHILL

  
	
   

  	
   

  	
   

  	
  Executive
  Vice President and General

  
	
   

  	
   

  	
   

  	
  Counsel

  



 


16

















 


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


 


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


 


2

















 


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.


 


ARTICLE V


 


SECTION 409A


 


5.1                                 The
Agreement is intended to comply with the requirements of Section 409A of the
Code or an exemption or exclusion therefrom and, with respect to amounts that
are subject to Section 409A of the Code, shall in all respects be administered
in accordance with Section 409A of the Code except for amounts payable under
this Agreement that are “grandfathered” amounts within the meaning of Section
409A of the Code.  “Grandfathered”
amounts are amounts that were earned and vested by Goldsmith within the meaning
of Section 409A prior to December 31, 2004. 
No modification to this Agreement as set forth in Section 5.2 shall apply
to any “grandfathered” amounts and the payments of any “grandfathered” amounts
to Goldsmith under this Agreement shall be made without regard to such
modifications.


 


5.2                                 Any
election of an optional form of benefit under this Agreement shall comply with
the requirements of Section 409A of the Code, which shall generally include the
following: (a) the election shall not take effect until at least 12 months
after the date on which the election is made; (b) the new benefit commencement
date shall be at least five years after the benefit commencement date that
otherwise would have applied; and (c) the election must be made at least 12
months prior to the benefit commencement date that would otherwise have
applied.  Each payment under this
Agreement shall be treated as a separate payment for purposes of Section 409A
of the Code to the extent permitted thereunder. 
In no event may Goldsmith, directly or indirectly, designate the
calendar year of any payment to be made under this 


 


3

















 


Agreement.  Notwithstanding the foregoing provisions of
this Agreement, in the event that Goldsmith is a “specified employee” within
the meaning of Section 409A of the Code (as determined in accordance with the
methodology established by the Company as in effect on the date of
termination), amounts that constitute “nonqualified deferred compensation”
within the meaning of Section 409A of the Code that would otherwise be payable
during the six-month period immediately following the effective 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 Goldsmith’s
“separation from service” within the meaning of Section 409A.  If Goldsmith dies following the date of
termination and prior to the payment of the any amounts delayed on account of
Section 409A of the Code, such amounts shall be paid to the personal
representative of Goldsmith’s estate on the first day of the month following
his death.  In no event shall the
effective date of termination occur until Goldsmith experiences a “separation
from service” within the meaning of Section 409A of the Code, and the date on which
such separation from service takes place shall be the effective date of
termination for purposes of this Agreement. 
“Separation from Service” shall mean a “separation from service” within
the meaning of Section 409A of the Code, as determined by the Committee in
accordance with Section 1.409A-1(h) of the Treasury Regulations.  For purposes of determining whether a
Separation from Service has occurred, Goldsmith shall be considered to have
separated from service as an employee when the facts and circumstances indicate
that Goldsmith and the Employer reasonably anticipate that either (i) no
further services will be performed for the Employer (including any affiliates)
after a certain date, or (ii) that the level of bona fide services Goldsmith
will perform for the Employer (including any affiliates) after such date
(whether as an employee or as an independent contractor) will permanently
decrease to no more than 20% of the average level of bona fide services
performed by Goldsmith (whether as an employee or an independent contractor)
over the immediately preceding 36-month period (or the full period of services
to the Employer if Goldsmith has been providing services to the Employer less
than 36 months).   Within the time period
permitted by the applicable treasury regulations (or such later time as may be
permitted under Section 409A or any IRS or Department of Treasury rules or
other guidance issued thereunder), Employer may, in consultation with
Goldsmith, 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
Goldsmith.


 


5.3                                 Pursuant
to the limited transition relief made available in accordance with Notice
2007-86 and subsequent guidance, Goldsmith may make an election in writing
filed with the Employer to receive payments of the supplemental retirement
benefit and/or the pre-retirement spousal death benefit in a lump sum or other
optional form of payment without being subject to the requirements under
Section 409A described in the first sentence of Section 5.2.  Any such election for amounts subject to
Section 409A shall become effective on January 1, 2009 and shall not apply with
respect to amounts that would otherwise be payable in 2008.


 


4
















 


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

  	
  %

  



 


5

















 


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

  	
  %

  



 


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

  



 


6

















 


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 shall be granted with an exercise price not less than the
fair market value of the Parent Corporation’s stock (within the meaning of the
applicable stock option plan) 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.


 






(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.


 


7

















 


ANNEX A

EMPLOYMENT AGREEMENT


 


AGREEMENT
by and between City National Corporation, a Delaware corporation (the “Company”)
and Russell Goldsmith (the “Executive”), dated as of December 22, 2008.


 


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 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 30% or 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 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, 30% 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


 


2

















 


(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 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”)
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.  The Annual Base Salary shall be paid at such
intervals as the Company pays executive salaries generally.  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


 


3

















 


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
than two and a half months 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.


 


(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.


 


4

















 


(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


 


5

















 


which
the Board or Chief Executive Officer believes that the Executive has not
substantially performed the Executive’s duties, or


 


(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.


 


6

















 


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 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. 
Notwithstanding the foregoing, in no event shall the Date of Termination
occur until the Executive experiences a “separation from service” within the
meaning of Section 409A of the Code, and the date on which such separation
from service takes place shall be the “Date of Termination.”  “Separation from Service” shall mean a “separation
from service” within the meaning of Section 409A of the Code, as
determined by the Company in accordance with Section 1.409A-1(h) of
the Treasury Regulations.  For purposes of determining whether a
Separation from Service has occurred, the Executive shall be considered to have
separated from service as an employee when the facts and circumstances indicate
that the Executive and the Company reasonably anticipate that either (i) no
further services will be performed for the Company (including any affiliates)
after a certain date, or (ii) that the level of bona fide services the
Executive will perform for the Company (including any affiliates) after such
date (whether as an employee or as an independent contractor) will permanently
decrease to no more than 20% of the average level of bona fide services
performed by the Executive (whether as an employee or an independent
contractor) over the immediately preceding 36-month period (or the full period
of services to the Company if the Executive has been providing services to the
Company less than 36 months).


 


6.                                       OBLIGATIONS OF THE COMPANY UPON TERMINATION.  (a) 
GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY.  If, during the


 


7
















 


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 (the “Pro
Rata Bonus”) and (3) any accrued vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1)  and (3) shall be hereinafter referred to as
the “Accrued Obligations”); provided, that notwithstanding the foregoing, if
the Executive has made an irrevocable election under any deferred compensation
arrangement subject to Section 409A of the Code to defer any portion of the
Annual Base Salary described in clause (1) above, then for all purposes of this
Section 6 (including, without limitation, Sections 6(b) through 6(d)), such
deferral election, and the terms of the applicable arrangement shall apply to
the same portion of the amount described in such clause (1), and such portion
shall not be considered as part of the “Accrued Obligations” but shall instead
be an “Other Benefit” (as defined below); 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 (1) all such contributions are fully vested, (2) the
Executive’s compensation is that required by Sections 4(b)(i) and 4(b)(ii),
and, (3) 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 “Benefits Period”), the Company shall continue medical,
prescription, vision and dental insurance benefits (“Health Care Benefits”) and
life insurance 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 


 


8

















 


described herein shall be
secondary to those provided under such other plan during such applicable period
of eligibility; provided, however,
that the Health Care Benefits shall be provided during the Benefits Period in
such a manner that such benefits are excluded from the Executive’s income for
federal income tax purposes.


 


(iii)                               the
Company shall, at its sole expense as incurred, provide the Executive with
reasonable outplacement services the scope and provider of which shall be
selected by the Executive in his sole discretion, provided that such
outplacement benefits shall end not later than the last day of the second
calendar year that begins after the Date of Termination; 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”).


 


Notwithstanding the foregoing
provisions of this Section 6, in the event that the Executive is a “specified
employee” within the meaning of Section 409A of the Code (as determined in
accordance with the methodology established by the Company as in effect on the
Date of Termination) (a “Specified Employee”), amounts that constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the
Code that would otherwise be payable or provided under Section 6 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 (“Interest”) determined as of
the Date of Termination, or provided on the first business day after the date
that is six months following the Executive’s Date of Termination (the “Delayed
Payment Date”) ; provided that no such interest shall accrue with respect to
any equity awards not settled during such six month period.


 


(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 (subject to the proviso set forth in Section 6(a)(1)(A) to the
extent applicable), the Pro Rata Bonus and the timely payment or provision of
Other Benefits.  Accrued Obligations and
the Pro Rata Bonus 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.


 


9

















 


(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 (subject to the proviso set forth in
Section 6(a)(1)(A) to the extent applicable), the Pro Rata Bonus and the timely
payment or provision of Other Benefits. 
Accrued Obligations and Pro Rata Bonus shall be paid to the Executive in
a lump sum in cash within 30 days of the Date of Termination; provided that in
the event that the Executive is a Specified Employee, the Pro Rata Bonus shall
be paid, with Interest, on the Delayed Payment Date.  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 timely delivery of the 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 (subject to the proviso set forth
in Section 6(a)(1)(A) to the extent applicable), the Pro Rata Bonus 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 and the
Pro Rata Bonus shall be paid to the Executive in a lump sum in cash within 30
days of the Date of Termination; provided that in the event that the Executive
is a Specified Employee, the Pro Rata Bonus shall be paid, with Interest, on
the Delayed Payment Date.


 


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 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 


 


10

















 


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 (within
10 days following the Company’s receipt of an invoice from the Executive), at
any time from the Change of Control through the Executive’s remaining lifetime
(or, if longer, through the 20th anniversary of the Change of Control), 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 determined as of the date such legal fees and expenses were
incurred.  In order to comply with
Section 409A of the Code, in no event shall the payments by the Company under
this Section 8 be made later than the end of the calendar year next following
the calendar year in which such fees and expenses were incurred, provided, that the Executive shall have submitted an invoice
for such fees and expenses at least 10 days before the end of the calendar year
next following the calendar year in which such fees and expenses were
incurred.  The amount of such legal fees
and expenses that the Company is obligated to pay in any given calendar year
shall not affect the legal fees and expenses that the Company is obligated to
pay in any other calendar year, and the Executive’s right to have the Company
pay such legal fees and expenses may not be liquidated or exchanged for any
other benefit.


 


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 would be subject to
the Excise Tax, then the Executive shall be entitled to receive an additional
payment (the “Gross-Up Payment”) in an amount such that, after payment by the
Executive of all taxes (and 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, but excluding any income taxes, interest and penalties
imposed pursuant to Section 409A of the Code, 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
the Gross-Up Payment, but that the Parachute Value of all Payments does not
exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made
to the Executive and the amounts payable under this Agreement shall be reduced
so that the Parachute Value of all Payments, in the aggregate, equals the Safe
Harbor Amount.  The reduction of the
amounts payable hereunder, if applicable, shall be made by reducing the
payments and benefits under the following sections in the following order: (i)
Section 6(a)(i)(B) and (ii) Section 6(a)(i)(C). 
For purposes of reducing the Payments to the Safe Harbor Amount, only
amounts payable under this Agreement (and no other Payments) shall be
reduced.  If the reduction of the amount
payable under this Agreement would not result in a reduction of the Parachute
Value of all Payments to the Safe Harbor Amount, no amounts payable under the
Agreement shall be reduced pursuant to this Section 9(a) and the Executive
shall be entitled to the Gross-Up Payment. 
The Company’s obligation to make Gross-Up Payments under this Section 9
shall not be conditioned upon the Executive’s termination of employment.


 


11

















 


(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, the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by Ernst & Young LLP, or such other
nationally recognized certified public accounting firm as may be designated by
the Executive (the “Accounting Firm”). 
The Accounting Firm 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 may
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 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 that will not have been made by the Company should have been made (the
“Underpayment”), consistent with the calculations required to be made
hereunder.  In the event 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 10
business days after the Executive is informed in writing of such claim.  The Executive 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
the Executive 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 the Company 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;


 


12

















 


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) 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 discretion,
may pursue or forgo any and all administrative appeals, proceedings, hearings
and conferences with the applicable taxing authority in respect of such claim
and may, at its sole discretion, either pay the tax claimed to the appropriate
taxing authority on behalf of the Executive and direct the Executive to sue for
a refund or to 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 pays such claim and directs
the Executive to sue for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties) imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and provided, further, 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 the 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.


 


(d)                                 If,
after the receipt by the Executive of a Gross-Up Payment or payment by the
Company of an amount on the Executive’s behalf pursuant to Section 9(c), the
Executive becomes entitled to receive any refund with respect to the Excise Tax
to which such Gross-Up Payment relates or with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of
Section 9(c), if applicable) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto).  If, after payment
by the Company of an amount on the Executive’s behalf 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 the amount of such payment shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.


 


(e)                                  Any
Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by
the Company to the Executive within five days of the receipt of the Accounting
Firm’s determination; provided that,
the Gross-Up Payment shall in all events be paid no later than the end of the
Executive’s taxable year next following the Executive’s taxable year in which
the Excise Tax (and any income or other related taxes or interest or penalties
thereon) on a Payment are remitted to the Internal Revenue Service or any other
applicable taxing authority or, in the case of amounts relating to a claim
described in Section 9(c) that does not result in the remittance of any federal,
state, local and foreign income, excise, social security and other taxes, the
calendar year in which the claim is finally settled or otherwise resolved.  Notwithstanding any other provision of this
Section 9, the Company may, in its sole discretion, withhold and pay over 


 


13

















 


to the Internal Revenue Service
or any other applicable taxing authority, for the benefit of the Executive, all
or any portion of any Gross-Up Payment, and the Executive hereby consents to
such withholding.


 


(f)                                    Definitions.  The following terms shall have the following
meanings for purposes of this Section 9.


 


(i)                                     “Excise
Tax” shall mean the excise tax imposed by Section 4999 of the Code, together
with any interest or penalties imposed with respect to such excise tax.


 


(ii)                                  “Parachute
Value” of a Payment shall mean the present value as of the date of the change
of control for purposes of Section 280G of the Code of the portion of such
Payment that constitutes a “parachute payment” under Section 280G(b)(2), as
determined by the Accounting Firm for purposes of determining whether and to
what extent the Excise Tax will apply to such Payment.


 


(iii)                               A
“Payment” shall mean any payment or distribution in the nature of compensation
(within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of
the Executive, whether paid or payable pursuant to this Agreement or otherwise.


 


(iv)                              The
“Safe Harbor Amount” means 2.99 times the Executive’s “base amount,” within the
meaning of Section 280G(b)(3) of the Code.


 


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 


 


14

















 


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.


 


(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 


 


15

















 


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.  From and
after the date hereof, this Agreement shall supersede the Employment 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.  Notwithstanding the
foregoing, this Agreement shall not supersede and shall be subject to the
Waiver and Amendment Agreement letter dated as of November 14, 2008 by and
between the Employer and Goldsmith.


 


(g)                                 The
Agreement is intended to comply with the requirements of Section 409A of the
Code or an exemption or exclusion therefrom and, with respect to amounts that
are subject to Section 409A of the Code, shall in all respects be administered
in accordance with Section 409A of the Code. 
Each payment under this Agreement shall be treated as a separate payment
for purposes of Section 409A of the Code. 
In no event may the Executive, directly or indirectly, designate the
calendar year of any payment to be made under this Agreement.  If the Executive dies following the Date of
Termination and prior to the payment of the any amounts delayed on account of
Section 409A of the Code, such amounts shall be paid to the personal
representative of the Executive’s estate within 30 days after the date of the
Executive’s death.  All reimbursements
and in-kind benefits provided under this Agreement that constitute deferred
compensation within the meaning of Section 409A of the Code shall be made or
provided in accordance with the requirements of Section 409A of the Code, including,
without limitation, that (i) in no event shall reimbursements by the Company
under this Agreement be made later than the end of the calendar year next
following the calendar year in which the applicable fees and expenses were
incurred, provided, that the Executive shall have submitted an invoice for such
fees and expenses at least 10 days before the end of the calendar year next
following the calendar year in which such fees and expenses were incurred; (ii)
the amount of in-kind benefits that the Company is obligated to pay or provide
in any given calendar year shall not affect the in-kind benefits that the
Company is obligated to pay or provide in any other calendar year; (iii) the
Executive’s right to have the Company pay or provide such reimbursements and
in-kind benefits may not be liquidated or exchanged for any other benefit; and
(iv) in no event shall the Company’s obligations to make such reimbursements or
to provide such in-kind benefits apply later than the Executive’s remaining
lifetime (or if longer, through the 20th anniversary of the Effective
Date).  Prior to the Effective Date but
within the time period permitted by the applicable Treasury Regulations (or
such later time as may be permitted under Section 409A or any IRS or Department
of Treasury rules or other guidance issued thereunder), the Company may, in
consultation with the Executive, modify the Agreement, in the least restrictive
manner necessary and without any diminution in the value of the payments to the
Executive, in order to cause the provisions of the Agreement to comply with the
requirements of Section 409A of the Code, so as to avoid the imposition of taxes
and penalties on the Executive pursuant to Section 409A of the Code.


 


16

















 


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.


 


 


	
   

  	
   

  
	
   

  	
  Russell
  Goldsmith

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITY
  NATIONAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Michael B.
  Cahill

  
	
   

  	
   

  	
  Executive
  Vice President and General 

  Counsel

  



 


17