Exhibit
4.2


 


FORM OF
WARRANT TO PURCHASE COMMON STOCK


 


THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT OR SUCH LAWS.  THIS INSTRUMENT
IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A
SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF THESE SECURITIES AND THE
INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER.  THE SECURITIES REPRESENTED BY THIS INSTRUMENT
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID
AGREEMENT.  ANY SALE OR OTHER TRANSFER
NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.


 


WARRANT

to purchase


 


1,128,668


 


Shares of
Common Stock


 


of City
National Corporation


 


Issue Date:  November 21, 2008


 


1.                                       Definitions.  Unless the context otherwise
requires, when used herein the following terms shall have the meanings
indicated.


 


“Affiliate” has the
meaning ascribed to it in the Purchase Agreement.


 


“Appraisal Procedure” means
a procedure whereby two independent appraisers, one chosen by the Company and
one by the Original Warrantholder, shall mutually agree upon the determinations
then the subject of appraisal.  Each
party shall deliver a notice to the other appointing its appraiser within 15 days
after the Appraisal Procedure is invoked. 
If within 30 days after appointment of the two appraisers they are
unable to agree upon the amount in question, a third independent appraiser
shall be chosen within 10 days thereafter by the mutual consent of such first
two appraisers.  The decision of the
third appraiser so appointed and chosen shall be given within 30 days after the
selection of such third appraiser.  If
three appraisers shall be appointed and the determination of one appraiser is
disparate from the middle determination by more than twice the amount by which
the other determination is disparate from the middle determination, then the determination
of such appraiser shall be excluded, the remaining two determinations shall be
averaged and such average shall be binding and conclusive upon the Company and
the Original Warrantholder; otherwise, the average of all three determinations


 

















 


shall be binding upon the Company and the Original
Warrantholder.  The costs of conducting
any Appraisal Procedure shall be borne by the Company.


 


“Board of Directors” means
the board of directors of the Company, including any duly authorized committee
thereof.


 


“Business Combination” means
a merger, consolidation, statutory share exchange or similar transaction that requires
the approval of the Company’s stockholders.


 


“business day” means any
day except Saturday, Sunday and any day on which banking institutions in the
State of New York generally are authorized or required by law or other governmental
actions to close.


 


“Capital Stock” means (A) with
respect to any Person that is a corporation or company, any and all shares,
interests, participations or other equivalents (however designated) of capital
or capital stock of such Person and (B) with respect to any Person that is
not a corporation or company, any and all partnership or other equity interests
of such Person.


 


“Charter” means, with
respect to any Person, its certificate or articles of incorporation, articles
of association, or similar organizational document.


 


“Common Stock” has the
meaning ascribed to it in the Purchase Agreement.


 


“Company” means the
Person whose name, corporate or other organizational form and jurisdiction of
organization is set forth in Item 1 of Schedule A hereto.


 


“conversion” has the meaning
set forth in Section 13(B).


 


“convertible securities” has
the meaning set forth in Section 13(B).


 


“CPP” has the meaning
ascribed to it in the Purchase Agreement.


 


“Exchange Act” means the
Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.


 


“Exercise Price” means
the amount set forth in Item 2 of Schedule A hereto.


 


“Expiration Time” has the
meaning set forth in Section 3.


 


“Fair Market Value” means,
with respect to any security or other property, the fair market value of such
security or other property as determined by the Board of Directors, acting in
good faith or, with respect to Section 14, as determined by the Original
Warrantholder acting in good faith.  For
so long as the Original Warrantholder holds this Warrant or any portion
thereof, it may object in writing to the Board of Director’s calculation of
fair market value within 10 days of receipt of written notice thereof.  If the Original Warrantholder and the Company
are unable to agree on fair market value during the 10-day period following the
delivery of the Original Warrantholder’s objection, the Appraisal Procedure may
be invoked by either party to


 


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determine Fair Market Value by delivering written
notification thereof not later than the 30th day after delivery of
the Original Warrantholder’s objection.


 


“Governmental Entities” has
the meaning ascribed to it in the Purchase Agreement.


 


“Initial Number” has the
meaning set forth in Section 13(B).


 


“Issue Date “ means the date set forth in Item 3 of
Schedule A hereto.


 


“Market Price” means,
with respect to a particular security, on any given day, the last reported sale
price regular way or, in case no such reported sale takes place on such day,
the average of the last closing bid and ask prices regular way, in either case
on the principal national securities exchange on which the applicable
securities are listed or admitted to trading, or if not listed or admitted to trading
on any national securities exchange, the average of the closing bid and ask
prices as furnished by two members of the Financial Industry Regulatory
Authority, Inc. selected from time to time by the Company for that
purpose.  “Market Price” shall be determined
without reference to after hours or extended hours trading.  If such security is not listed and traded in
a manner that the quotations referred to above are available for the period
required hereunder, the Market Price per share of Common Stock shall be deemed
to be (i) in the event that any portion of the Warrant is held by the
Original Warrantholder, the fair market value per share of such security as
determined in good faith by the Original Warrantholder or (ii) in all
other circumstances, the fair market value per share of such security as
determined in good faith by the Board of Directors in reliance on an opinion of
a nationally recognized independent investment banking corporation retained by
the Company for this purpose and certified in a resolution to the
Warrantholder.  For the purposes of
determining the Market Price of the Common Stock on the “trading day” preceding,
on or following the occurrence of an event, (i) that trading day shall be
deemed to commence immediately after the regular scheduled closing time of
trading on the New York Stock Exchange or, if trading is closed at an earlier
time, such earlier time and (ii) that trading day shall end at the next
regular scheduled closing time, or if trading is closed at an earlier time, such
earlier time (for the avoidance of doubt, and as an example, if the Market
Price is to be determined as of the last trading day preceding a specified
event and the closing time of trading on a particular day is 4:00 p.m. and
the specified event occurs at 5:00 p.m. on that day, the Market Price
would be determined by reference to such 4:00 p.m. closing price).


 


“Ordinary Cash Dividends” means
a regular quarterly cash dividend on shares of Common Stock out of surplus or
net profits legally available therefor (determined in accordance with generally
accepted accounting principles in effect from time to time), provided that Ordinary Cash Dividends
shall not include any cash dividends paid subsequent to the Issue Date to the
extent the aggregate per share dividends paid on the outstanding Common Stock
in any quarter exceed the amount set forth in Item 4 of Schedule A hereto, as
adjusted for any stock split, stock dividend, reverse stock split,
reclassification or similar transaction.


 


“Original Warrantholder” means
the United States Department of the Treasury. 
Any actions specified to be taken by the Original Warrantholder
hereunder may only be taken by such Person and not by any other Warrantholder.


 


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“Permitted Transactions” has
the meaning set forth in Section 13(B).


 


“Person” has the meaning
given to it in Section 3(a)(9) of the Exchange Act and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act.


 


“Per Share Fair Market Value” has
the meaning set forth in Section 13(C).


 


“Preferred Shares” means the perpetual preferred stock issued to
the Original Warrantholder on the Issue Date pursuant to the Purchase
Agreement.


 


“Pro Rata Repurchases” means
any purchase of shares of Common Stock by the Company or any Affiliate thereof
pursuant to (A) any tender offer or exchange offer subject to Section 13(e) or
14(e) of the Exchange Act or Regulation 14E promulgated thereunder or (B) any
other offer available to substantially all holders of Common Stock, in the case
of both (A) or (B), whether for cash, shares of Capital Stock of the
Company, other securities of the Company, evidences of indebtedness of the
Company or any other Person or any other property (including, without limitation,
shares of Capital Stock, other securities or evidences of indebtedness of a subsidiary),
or any combination thereof, effected while this Warrant is outstanding.  The “Effective
Date” of a Pro Rata Repurchase shall mean the date of acceptance of
shares for purchase or exchange by the Company under any tender or exchange
offer which is a Pro Rata Repurchase or the date of purchase with respect to
any Pro Rata Repurchase that is not a tender or exchange offer.


 


“Purchase Agreement” means
the Securities Purchase Agreement – Standard Terms incorporated into the Letter
Agreement, dated as of the date set forth in Item 5 of Schedule A hereto, as
amended from time to time, between the Company and the United States Department
of the Treasury (the “Letter Agreement”), including
all annexes and schedules thereto.


 


“Qualified Equity Offering” has
the meaning ascribed to it in the Purchase Agreement.


 


“Regulatory Approvals” with
respect to the Warrantholder, means, to the extent applicable and required to
permit the Warrantholder to exercise this Warrant for shares of Common Stock
and to own such Common Stock without the Warrantholder being in violation of
applicable law, rule or regulation, the receipt of any necessary approvals
and authorizations of, filings and registrations with, notifications to, or
expiration or termination of any applicable waiting period under, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder.


 


“SEC”  means
the U.S. Securities and Exchange Commission.


 


“Securities Act” means
the Securities Act of 1933, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.


 


“Shares”  has
the meaning set forth in Section 2.


 


“trading
day”  means (A) if the shares of Common Stock
are not traded on any national or regional securities exchange or association
or over-the-counter market, a business day or (B) if the shares of Common
Stock are traded on any national or regional securities exchange or


 


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association or over-the-counter market, a business
day on which such relevant exchange or quotation system is scheduled to be open
for business and on which the shares of Common Stock (i) are not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market for any period or periods aggregating one half hour or
longer; and (ii) have traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of the shares of Common Stock.


 


“U.S. GAAP”  means
United States generally accepted accounting principles.


 


“Warrantholder” has the
meaning set forth in Section 2.


 


“Warrant” means this
Warrant, issued pursuant to the Purchase Agreement.


 


2.                                       Number of Shares; Exercise Price.  This
certifies that, for value received, the United States Department of the
Treasury or its permitted assigns (the “Warrantholder”) is entitled, upon the terms and
subject to the conditions hereinafter set forth, to acquire from the Company,
in whole or in part, after the receipt of all applicable Regulatory Approvals,
if any, up to an aggregate of the number of fully paid and nonassessable shares
of Common Stock set forth in Item 6 of Schedule A hereto, at a purchase price
per share of Common Stock equal to the Exercise Price.  The number of shares of Common Stock (the “Shares”) and the Exercise Price are subject to adjustment as provided
herein, and all references to “Common Stock,” “Shares” and “Exercise Price”
herein shall be deemed to include any such adjustment or series of adjustments.


 


3.                                       Exercise of Warrant; Term. 
Subject to Section 2, to the extent permitted by applicable laws
and regulations, the right to purchase the Shares represented by this Warrant is
exercisable, in whole or in part by the Warrantholder, at any time or from time
to time after the execution and delivery of this Warrant by the Company on the
date hereof, but in no event later than 5:00 p.m., New York City time on
the tenth anniversary of the Issue Date (the “Expiration
Time”), by (A) the
surrender of this Warrant and Notice of Exercise annexed hereto, duly completed
and executed on behalf of the Warrantholder, at the principal executive office
of the Company located at the address set forth in Item 7 of Schedule A hereto
(or such other office or agency of the Company in the United States as it may
designate by notice in writing to the Warrantholder at the address of the
Warrantholder appearing on the books of the Company), and (B) payment of
the Exercise Price for the Shares thereby purchased:


 


(i)                                     by having the Company withhold, from the
shares of Common Stock that would otherwise be delivered to the Warrantholder
upon such exercise, shares of Common stock issuable upon exercise of the Warrant
equal in value to the aggregate Exercise Price as to which this Warrant is so
exercised based on the Market Price of the Common Stock on the trading day on
which this Warrant is exercised and the Notice of Exercise is delivered to the
Company pursuant to this Section 3, or


 


(ii)                                  with the consent of both the Company and the
Warrantholder, by tendering in cash, by certified or cashier’s check payable to
the order of the Company, or by wire transfer of immediately available funds to
an account designated by the Company.


 


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If the Warrantholder does not exercise this Warrant in its
entirety, the Warrantholder will be entitled to receive from the Company within
a reasonable time, and in any event not exceeding three business days, a new
warrant in substantially identical form for the purchase of that number of
Shares equal to the difference between the number of Shares subject to this
Warrant and the number of Shares as to which this Warrant is so exercised.  Notwithstanding anything in this Warrant to
the contrary, the Warrantholder hereby acknowledges and agrees that its
exercise of this Warrant for Shares is subject to the condition that the
Warrantholder will have first received any applicable Regulatory Approvals.


 


4.                                       Issuance of Shares; Authorization; Listing. 
Certificates for Shares issued upon exercise of this Warrant will be
issued in such name or names as the Warrantholder may designate and will be
delivered to such named Person or Persons within a reasonable time, not to
exceed three business days after the date on which this Warrant has been duly
exercised in accordance with the terms of this Warrant.  The Company hereby represents and warrants
that any Shares issued upon the exercise of this Warrant in accordance with the
provisions of Section 3 will be duly and validly authorized and issued,
fully paid and nonassessable and free from all taxes, liens and charges (other
than liens or charges created by the Warrantholder, income and franchise taxes incurred
in connection with the exercise of the Warrant or taxes in respect of any
transfer occurring contemporaneously therewith).  The Company agrees that the Shares so issued
will be deemed to have been issued to the Warrantholder as of the close of business
on the date on which this Warrant and payment of the Exercise Price are
delivered to the Company in accordance with the terms of this Warrant,
notwithstanding that the stock transfer books of the Company may then be closed
or certificates representing such Shares may not be actually delivered on such
date.  The Company will at all times
reserve and keep available, out of its authorized but unissued Common Stock,
solely for the purpose of providing for the exercise of this Warrant, the
aggregate number of shares of Common Stock then issuable upon exercise of this
Warrant at any time.  The Company will (A) procure,
at its sole expense, the listing of the Shares issuable upon exercise of this
Warrant at any time, subject to issuance or notice of issuance, on all
principal stock exchanges on which the Common Stock is then listed or traded
and (B) maintain such listings of such Shares at all times after
issuance.  The Company will use
reasonable best efforts to ensure that the Shares may be issued without violation
of any applicable law or regulation or of any requirement of any securities
exchange on which the Shares are listed or traded.


 


5.                                       No Fractional Shares or Scrip.  No
fractional Shares or scrip representing fractional Shares shall be issued upon
any exercise of this Warrant.  In lieu of
any fractional Share to which the Warrantholder would otherwise be entitled,
the Warrantholder shall be entitled to receive a cash payment equal to the
Market Price of the Common Stock on the last trading day preceding the date of
exercise less the pro-rated Exercise Price for such fractional share.


 


6.                                       No Rights as Stockholders; Transfer Books.  This
Warrant does not entitle the Warrantholder to any voting rights or other rights
as a stockholder of the Company prior to the date of exercise hereof.  The Company will at no time close its
transfer books against transfer of this Warrant in any manner which interferes
with the timely exercise of this Warrant.


 


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7.                                       Charges, Taxes and Expenses. 
Issuance of certificates for Shares to the Warrantholder upon the
exercise of this Warrant shall be made without charge to the Warrantholder for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by
the Company.


 


8.                                       Transfer/Assignment.


 


(A)                              Subject to compliance with clause (B) of
this Section 8, this Warrant and all rights hereunder are transferable, in
whole or in part, upon the books of the Company by the registered holder hereof
in person or by duly authorized attorney, and a new warrant shall be made and delivered
by the Company, of the same tenor and date as this Warrant but registered in
the name of one or more transferees, upon surrender of this Warrant, duly
endorsed, to the office or agency of the Company described in Section 3.  All expenses (other than stock transfer
taxes) and other charges payable in connection with the preparation, execution
and delivery of the new warrants pursuant to this Section 8 shall be paid
by the Company.


 


(B)                                The transfer of the Warrant and the Shares
issued upon exercise of the Warrant are subject to the restrictions set forth
in Section 4.4 of the Purchase Agreement. 
If and for so long as required by the Purchase Agreement, this Warrant
shall contain the legends as set forth in Sections 4.2(a) and 4.2(b) of
the Purchase Agreement.


 


9.                                       Exchange and Registry of Warrant.  This
Warrant is exchangeable, upon the surrender hereof by the Warrantholder to the
Company, for a new warrant or warrants of like tenor and representing the right
to purchase the same aggregate number of Shares.  The Company shall maintain a registry showing
the name and address of the Warrantholder as the registered holder of this Warrant.  This Warrant may be surrendered for exchange
or exercise in accordance with its terms, at the office of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry.


 


10.                                 Loss, Theft, Destruction or Mutilation of
Warrant.  Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and in the case of any such loss, theft or destruction, upon
receipt of a bond, indemnity or security reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company shall make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and representing the right to purchase the same aggregate number of Shares as
provided for in such lost, stolen, destroyed or mutilated Warrant.


 


11.                                 Saturdays, Sundays, Holidays, etc.  If
the last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a business day, then such action
may be taken or such right may be exercised on the next succeeding day that is
a business day.


 


12.                                 Rule 144 Information.  The
Company covenants that it will use its reasonable best efforts to timely file
all reports and other documents required to be filed by it under the Securities
Act and the Exchange Act and the rules and regulations promulgated by the
SEC thereunder (or, if the Company is not required to file such reports, it
will, upon the request of any


 


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Warrantholder,
make publicly available such information as necessary to permit sales pursuant
to Rule 144 under the Securities Act), and it will use reasonable best
efforts to take such further action as any Warrantholder may reasonably
request, in each case to the extent required from time to time to enable such
holder to, if permitted by the terms of this Warrant and the Purchase Agreement,
sell this Warrant without registration under the Securities Act within the
limitation of the exemptions provided by (A) Rule 144 under the
Securities Act, as such rule may be amended from time to time, or (B) any
successor rule or regulation hereafter adopted by the SEC.  Upon the written request of any Warrantholder,
the Company will deliver to such Warrantholder a written statement that it has
complied with such requirements.


 


13.                                 Adjustments and Other Rights.  The
Exercise Price and the number of Shares issuable upon exercise of this Warrant
shall be subject to adjustment from time to time as follows; provided, that if more than one subsection of this Section 13 is
applicable to a single event, the subsection shall be applied that produces the
largest adjustment and no single event shall cause an adjustment under more
than one subsection of this Section 13 so as to result in duplication:


 


(A)                              Stock Splits, Subdivisions, Reclassifications
or Combinations.  If the Company shall (i) declare and pay
a dividend or make a distribution on its Common Stock in shares of Common
Stock, (ii) subdivide or reclassify the outstanding shares of Common Stock
into a greater number of shares, or (iii) combine or reclassify the
outstanding shares of Common Stock into a smaller number of shares, the number
of Shares issuable upon exercise of this Warrant at the time of the record date
for such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that the
Warrantholder after such date shall be entitled to purchase the number of
shares of Common Stock which such holder would have owned or been entitled to
receive in respect of the shares of Common Stock subject to this Warrant after
such date had this Warrant been exercised immediately prior to such date.  In such event, the Exercise Price in effect
at the time of the record date for such dividend or distribution or the
effective date of such subdivision, combination or reclassification shall be adjusted
to the number obtained by dividing (x) the product of (1) the number
of Shares issuable upon the exercise of this Warrant before such adjustment and
(2) the Exercise Price in effect immediately prior to the record or
effective date, as the case may be, for the dividend, distribution,
subdivision, combination or reclassification giving rise to this adjustment by (y) the
new number of Shares issuable upon exercise of the Warrant determined pursuant
to the immediately preceding sentence.


 


(B)                                Certain Issuances of Common Shares or
Convertible Securities.  Until the earlier of (i) the date on
which the Original Warrantholder no longer holds this Warrant or any portion
thereof and (ii) the third anniversary of the Issue Date, if the Company
shall issue shares of Common Stock (or rights or warrants or other securities
exercisable or convertible into or exchangeable (collectively, a “conversion”) for shares of Common Stock) (collectively, “convertible securities”) (other than in Permitted
Transactions (as defined below) or a transaction to which subsection (A) of
this Section 13 is applicable) without consideration or at a consideration
per share (or having a conversion price per share) that is less than 90% of the
Market Price on the last trading day preceding the date of the agreement on
pricing such shares (or such convertible securities) then, in such event:


 


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(A)                              the
number of Shares issuable upon the exercise of this Warrant immediately prior
to the date of the agreement on pricing of such shares (or of such convertible
securities) (the “Initial Number”) shall be increased to the number
obtained by multiplying the Initial Number by a fraction (A) the numerator
of which shall be the sum of (x) the number of shares of Common Stock of
the Company outstanding on such date and (y) the number of additional
shares of Common Stock issued (or into which convertible securities may be
exercised or convert) and (B) the denominator of which shall be the sum of
(I) the number of shares of Common Stock outstanding on such date and (II) the
number of shares of Common Stock which the aggregate consideration receivable
by the Company for the total number of shares of Common Stock so issued (or
into which convertible securities may be exercised or convert) would purchase
at the Market Price on the last trading day preceding the date of the agreement
on pricing such shares (or such convertible securities); and


 


(B)                                the
Exercise Price payable upon exercise of the Warrant shall be adjusted by multiplying
such Exercise Price in effect immediately prior to the date of the agreement on
pricing of such shares (or of such convertible securities) by a fraction, the
numerator of which shall be the number of shares of Common Stock issuable upon
exercise of this Warrant prior to such date and the denominator of which shall
be the number of shares of Common Stock issuable upon exercise of this Warrant
immediately after the adjustment described in clause (A) above.


 


For purposes of the foregoing, the aggregate consideration receivable
by the Company in connection with the issuance of such shares of Common Stock
or convertible securities shall be deemed to be equal to the sum of the net
offering price (including the Fair Market Value of any non-cash consideration
and after deduction of any related expenses payable to third parties) of all
such securities plus the minimum aggregate amount, if any, payable upon
exercise or conversion of any such convertible securities into shares of Common
Stock; and “Permitted Transactions” shall mean issuances (i) as
consideration for or to fund the acquisition of businesses and/or related
assets, (ii) in connection with employee benefit plans and compensation
related arrangements in the ordinary course and consistent with past practice
approved by the Board of Directors, (iii) in connection with a public or
broadly marketed offering and sale of Common Stock or convertible securities
for cash conducted by the Company or its affiliates pursuant to registration
under the Securities Act or Rule 144A thereunder on a basis consistent
with capital raising transactions by comparable financial institutions and (iv) in
connection with the exercise of preemptive rights on terms existing as of the
Issue Date.  Any adjustment made pursuant
to this Section 13(B) shall become effective immediately upon the
date of such issuance.


 


(C)                                Other
Distributions.  In case the Company
shall fix a record date for the making of a distribution to all holders of
shares of its Common Stock of securities, evidences of indebtedness, assets,
cash, rights or warrants (excluding Ordinary Cash Dividends, dividends of its
Common Stock and other dividends or distributions referred to in Section 13(A)),
in each such case, the Exercise Price in effect prior to such record date shall
be reduced immediately thereafter to the price determined by multiplying the
Exercise Price in effect immediately prior to the reduction by the quotient of (x) the
Market Price of the Common Stock on the last trading day preceding the first
date on which the Common Stock trades regular way on the principal


 


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national
securities exchange on which the Common Stock is listed or admitted to trading
without the right to receive such distribution, minus the amount of cash and/or
the Fair Market Value of the securities, evidences of indebtedness, assets,
rights or warrants to be so distributed in respect of one share of Common Stock
(such amount and/or Fair Market Value, the “Per
Share Fair Market Value”) divided
by (y) such Market Price on such date specified in clause (x); such adjustment
shall be made successively whenever such a record date is fixed.  In such event, the number of Shares issuable
upon the exercise of this Warrant shall be increased to the number obtained by
dividing (x) the product of (1) the number of Shares issuable upon
the exercise of this Warrant before such adjustment, and (2) the Exercise
Price in effect immediately prior to the distribution giving rise to this adjustment
by (y) the new Exercise Price determined in accordance with the immediately
preceding sentence.  In the case of
adjustment for a cash dividend that is, or is coincident with, a regular
quarterly cash dividend, the Per Share Fair Market Value would be reduced by
the per share amount of the portion of the cash dividend that would constitute
an Ordinary Cash Dividend.  In the event
that such distribution is not so made, the Exercise Price and the number of
Shares issuable upon exercise of this Warrant then in effect shall be
readjusted, effective as of the date when the Board of Directors determines not
to distribute such shares, evidences of indebtedness, assets, rights, cash or
warrants, as the case may be, to the Exercise Price that would then be in effect
and the number of Shares that would then be issuable upon exercise of this Warrant
if such record date had not been fixed.


 


(D)                               Certain
Repurchases of Common Stock.  In case
the Company effects a Pro Rata Repurchase of Common Stock, then the Exercise
Price shall be reduced to the price determined by multiplying the Exercise
Price in effect immediately prior to the Effective Date of such Pro Rata
Repurchase by a fraction of which the numerator shall be (i) the product
of (x) the number of shares of Common Stock outstanding immediately before
such Pro Rata Repurchase and (y) the Market Price of a share of Common
Stock on the trading day immediately preceding the first public announcement by
the Company or any of its Affiliates of the intent to effect such Pro Rata
Repurchase, minus (ii) the aggregate purchase price of the Pro Rata
Repurchase, and of which the denominator shall be the product of (i) the
number of shares of Common Stock outstanding immediately prior to such Pro Rata
Repurchase minus the number of shares of Common Stock so repurchased and (ii) the
Market Price per share of Common Stock on the trading day immediately preceding
the first public announcement by the Company or any of its Affiliates of the
intent to effect such Pro Rata Repurchase. 
In such event, the number of shares of Common Stock issuable upon the
exercise of this Warrant shall be increased to the number obtained by dividing (x) the
product of (1) the number of Shares issuable upon the exercise of this
Warrant before such adjustment, and (2) the Exercise Price in effect
immediately prior to the Pro Rata Repurchase giving rise to this adjustment by (y) the
new Exercise Price determined in accordance with the immediately preceding
sentence.  For the avoidance of doubt, no
increase to the Exercise Price or decrease in the number of Shares issuable
upon exercise of this Warrant shall be made pursuant to this Section 13(D).


 


(E)                                 Business
Combinations.  In case of any
Business Combination or reclassification of Common Stock (other than a
reclassification of Common Stock referred to in Section 13(A)), the Warrantholder’s
right to receive Shares upon exercise of this Warrant shall be converted into
the right to exercise this Warrant to acquire the number of shares of stock or
other securities or property (including cash) which the Common Stock issuable
(at the time of such Business Combination or reclassification) upon exercise of
this Warrant immediately prior to such


 


10

















 


Business Combination or
reclassification would have been entitled to receive upon consummation of such
Business Combination or reclassification; and in any such case, if necessary,
the provisions set forth herein with respect to the rights and interests
thereafter of the Warrantholder shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to the Warrantholder’s right to
exercise this Warrant in exchange for any shares of stock or other securities
or property pursuant to this paragraph. 
In determining the kind and amount of stock, securities or the property
receivable upon exercise of this Warrant following the consummation of such
Business Combination, if the holders of Common Stock have the right to elect
the kind or amount of consideration receivable upon consummation of such
Business Combination, then the consideration that the Warrantholder shall be
entitled to receive upon exercise shall be deemed to be the types and amounts
of consideration received by the majority of all holders of the shares of
common stock that affirmatively make an election (or of all such holders if
none make an election).


 


(F)                                 Rounding
of Calculations; Minimum Adjustments. 
All calculations under this Section 13 shall be made to the nearest
one-tenth (1/10th) of a cent or to the nearest one-hundredth (1/100th) of a
share, as the case may be.  Any provision
of this Section 13 to the contrary notwithstanding, no adjustment in the
Exercise Price or the number of Shares into which this Warrant is exercisable
shall be made if the amount of such adjustment would be less than $0.01 or
one-tenth (1/10th) of a share of Common Stock, but any such amount shall be
carried forward and an adjustment with respect thereto shall be made at the
time of and together with any subsequent adjustment which, together with such
amount and any other amount or amounts so carried forward, shall aggregate
$0.01 or 1/10th of a share of Common Stock, or more.


 


(G)                                Timing
of Issuance of Additional Common Stock Upon Certain Adjustments.  In any case in which the provisions of this Section 13
shall require that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of such
event (i) issuing to the Warrantholder of this Warrant exercised after
such record date and before the occurrence of such event the additional shares
of Common Stock issuable upon such exercise by reason of the adjustment
required by such event over and above the shares of Common Stock issuable upon
such exercise before giving effect to such adjustment and (ii) paying to
such Warrantholder any amount of cash in lieu of a fractional share of Common
Stock; provided, however,
that the Company upon request shall deliver to such Warrantholder a due
bill or other appropriate instrument evidencing such Warrantholder’s right to
receive such additional shares, and such cash, upon the occurrence of the event
requiring such adjustment.


 


(H)                               Completion
of Qualified Equity Offering.  In the
event the Company (or any successor by Business Combination) completes one or
more Qualified Equity Offerings on or prior to December 31, 2009 that
result in the Company (or any such successor) receiving aggregate gross
proceeds of not less than 100% of the aggregate liquidation preference of the
Preferred Shares (and any preferred stock issued by any such successor to the
Original Warrantholder under the CPP), the number of shares of Common Stock
underlying the portion of this Warrant then held by the Original Warrantholder
shall be thereafter reduced by a number of shares of Common Stock equal to the
product of (i) 0.5 and (ii) the number of shares underlying


 


11

















 


the
Warrant on the Issue Date (adjusted to take into account all other theretofore
made adjustments pursuant to this Section 13).


 


(I)                                    Other Events.  For
so long as the Original Warrantholder holds this Warrant or any portion
thereof, if any event occurs as to which the provisions of this Section 13
are not strictly applicable or, if strictly applicable, would not, in the good
faith judgment of the Board of Directors of the Company, fairly and adequately
protect the purchase rights of the Warrants in accordance with the essential
intent and principles of such provisions, then the Board of Directors shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of the Board of Directors, to protect such purchase rights
as aforesaid.  The Exercise Price or the
number of Shares into which this Warrant is exercisable shall not be adjusted
in the event of a change in the par value of the Common Stock or a change in
the jurisdiction of incorporation of the Company.


 


(J)                                   Statement
Regarding Adjustments.  Whenever the
Exercise Price or the number of Shares into which this Warrant is exercisable
shall be adjusted as provided in Section 13, the Company shall forthwith
file at the principal office of the Company a statement showing in reasonable
detail the facts requiring such adjustment and the Exercise Price that shall be
in effect and the number of Shares into which this Warrant shall be exercisable
after such adjustment, and the Company shall also cause a copy of such
statement to be sent by mail, first class postage prepaid, to each
Warrantholder at the address appearing in the Company’s records.


 


(K)                               Notice
of Adjustment Event.  In the event
that the Company shall propose to take any action of the type described in this
Section 13 (but only if the action of the type described in this Section 13
would result in an adjustment in the Exercise Price or the number of Shares
into which this Warrant is exercisable or a change in the type of securities or
property to be delivered upon exercise of this Warrant), the Company shall give
notice to the Warrantholder, in the manner set forth in Section 13(J),
which notice shall specify the record date, if any, with respect to any such
action and the approximate date on which such action is to take place.  Such notice shall also set forth the facts
with respect thereto as shall be reasonably necessary to indicate the effect on
the Exercise Price and the number, kind or class of shares or other securities
or property which shall be deliverable upon exercise of this Warrant.  In the case of any action which would require
the fixing of a record date, such notice shall be given at least 10 days prior
to the date so fixed, and in case of all other action, such notice shall be
given at least 15 days prior to the taking of such proposed action.  Failure to give such notice, or any defect
therein, shall not affect the legality or validity of any such action.


 


(L)                                 Proceedings
Prior to Any Action Requiring Adjustment. 
As a condition precedent to the taking of any action which would require
an adjustment pursuant to this Section 13, the Company shall take any
action which may be necessary, including obtaining regulatory, New York Stock
Exchange, NASDAQ Stock Market or other applicable national securities exchange
or stockholder approvals or exemptions, in order that the Company may
thereafter validly and legally issue as fully paid and nonassessable all shares
of Common Stock that the Warrantholder is entitled to receive upon exercise of
this Warrant pursuant to this Section 13.


 


12
















 


(M)                            Adjustment
Rules.  Any adjustments pursuant to
this Section 13 shall be made successively whenever an event referred to
herein shall occur.  If an adjustment in
Exercise Price made hereunder would reduce the Exercise Price to an amount
below par value of the Common Stock, then such adjustment in Exercise Price
made hereunder shall reduce the Exercise Price to the par value of the Common
Stock.


 


14.                                 Exchange.  At any time following the date on which the
shares of Common Stock of the Company are no longer listed or admitted to
trading on a national securities exchange (other than in connection with any
Business Combination), the Original Warrantholder may cause the Company to
exchange all or a portion of this Warrant for an economic interest (to be
determined by the Original Warrantholder after consultation with the Company)
of the Company classified as permanent equity under U.S. GAAP having a value
equal to the Fair Market Value of the portion of the Warrant so exchanged.  The Original Warrantholder shall calculate
any Fair Market Value required to be calculated pursuant to this Section 14,
which shall not be subject to the Appraisal Procedure.


 


15.                                 No
Impairment.  The Company will not, by
amendment of its Charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company, but will at
all times in good faith assist in the carrying out of all the provisions of
this Warrant and in taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrantholder.


 


16.                                 Governing
Law.  This Warrant
will be governed by and construed in accordance with the federal law of the
United States if and to the extent such law is applicable, and otherwise in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State. 
Each of the Company and the Warrantholder agrees (a) to submit to
the exclusive jurisdiction and venue of the United States District Court for
the District of Columbia for any civil action, suit or proceeding arising out
of or relating to this Warrant or the transactions contemplated hereby, and (b) that
notice may be served upon the Company at the address in Section 20 below
and upon the Warrantholder at the address for the Warrantholder set forth in
the registry maintained by the Company pursuant to Section 9 hereof.  To the extent permitted by applicable law,
each of the Company and the Warrantholder hereby unconditionally waives trial
by jury in any civil legal action or proceeding relating to the Warrant or the
transactions contemplated hereby or thereby.


 


17.                                 Binding
Effect.  This Warrant shall be
binding upon any successors or assigns of the Company.


 


18.                                 Amendments.  This Warrant may be amended and the
observance of any term of this Warrant may be waived only with the written
consent of the Company and the Warrantholder.


 


19.                                 Prohibited
Actions.  The Company agrees that it
will not take any action which would entitle the Warrantholder to an adjustment
of the Exercise Price if the total number of shares of Common Stock issuable
after such action upon exercise of this Warrant, together with 


 


13

















 


all shares of Common
Stock then outstanding and all shares of Common Stock then issuable upon the
exercise of all outstanding options, warrants, conversion and other rights,
would exceed the total number of shares of Common Stock then authorized by its
Charter.


 


20.                                 Notices.  Any notice, request, instruction or other
document to be given hereunder by any party to the other will be in writing and
will be deemed to have been duly given (a) on the date of delivery if
delivered personally, or by facsimile, upon confirmation of receipt, or (b) on
the second business day following the date of dispatch if delivered by a
recognized next day courier service.  All
notices hereunder shall be delivered as set forth in Item 8 of Schedule A
hereto, or pursuant to such other instructions as may be designated in writing
by the party to receive such notice.


 


21.                                 Entire
Agreement.  This Warrant, the forms
attached hereto and Schedule A hereto (the terms of which are incorporated by
reference herein), and the Letter Agreement (including all documents
incorporated therein), contain the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements or undertakings with respect thereto.


 


[Remainder
of page intentionally left blank]


 


14

















 


[Form of Notice of Exercise]


 


	
   

  	
  Date:

  	
   

  	
   

  	
   

  



 


TO:                            City National Corporation


 


RE:                              Election to Purchase Common Stock


 


The undersigned, pursuant to the provisions set forth in the attached
Warrant, hereby agrees to subscribe for and purchase the number of shares of
the Common Stock set forth below covered by such Warrant.  The undersigned, in accordance with Section 3
of the Warrant, hereby agrees to pay the aggregate Exercise Price for such
shares of Common Stock in the manner set forth below.  A new warrant evidencing the remaining shares
of Common Stock covered by such Warrant, but not yet subscribed for and
purchased, if any, should be issued in the name set forth below.


 


	
  Number of
  Shares of Common Stock

  	
   

  	
   

  



 


 


Method of Payment of
Exercise Price (note if cashless exercise pursuant to Section 3(i) of
the Warrant or cash exercise pursuant to Section 3(ii) of the
Warrant, with consent of the Company and the Warrantholder)


	
   

  	
   

  	
   

  



 


	
  Aggregate
  Exercise Price:

  	
   

  	
   

  
	 
	
   

  	
   

  	 

	 
	
   

  	
  Holder:

  	
   

  	
   

  	 

	 
	
   

  	
  By:

  	
   

  	
   

  	 

	 
	
   

  	
  Name:

  	
   

  	
   

  	 

	 
	
   

  	
  Title:

  	
   

  	
   

  	 

							



 


15

















 


IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by a duly authorized officer.


 


Dated:  November 21, 2008


 


	
   

  	
  COMPANY:  CITY NATIONAL 

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael B. Cahill

  
	
   

  	
   

  	
  Name:  Michael B. Cahill

  
	
   

  	
   

  	
  Title:  Executive Vice President & 

  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jean A. Cooper

  
	
   

  	
   

  	
  Name:  Jean A. Cooper

  
	
   

  	
   

  	
  Title:  Senior Vice President and Senior 

  Counsel

  
				



 


 


[Signature Page to Warrant]


 


16

















 


SCHEDULE A


 


Item 1

Name:  City National Corporation                

Corporate or other organizational form: 
corporation              

Jurisdiction of organization:  Delaware


 


Item 2

Exercise Price:(1) 
$53.16


 


Item 3  

Issue Date:  November 21, 2008


 


Item 4

Amount of last
dividend declared prior to the Issue Date: 
$0.48


 


Item 5

Date of Letter
Agreement between the Company and the United States Department of the Treasury:  November 21, 2008


 


Item 6

Number of shares of
Common Stock:  1,128,668


 


Item 7
 Company’s address: 
 City National Corporation


 400 North Roxbury Drive


 Beverly Hills, California 90210


 


Item 8


	
  Notice information:     If to
  the Company:

  	
  City National Corporation

  
	
   

  	
  City National Plaza

  
	
   

  	
  555 South Flower Street, 18th Floor

  
	
   

  	
  Los Angeles, California 90071

  
	
   

  	
  Attention:  Michael Cahill

  
	
   

  	
  EVP, General Counsel & Corporate Secretary

  
	
   

  	
  Facsimile:  213-673-9518

  



 






(1)               Initial exercise price to be calculated based
on the average of closing prices of the Common Stock on the 20 trading days
ending on the last trading day prior to the date the Company’s application for
participation in the Capital Purchase Program was approved by the United States
Department of the Treasury.