Exhibit 10.0


 


EMPLOYMENT AGREEMENT


 


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


 


1.                                       Employment. CNB and
Parent Corporation (collectively the “Employer”) hereby employ Goldsmith, and
Goldsmith hereby accepts employment, under the terms and conditions hereafter
set forth. The Employment Agreement dated as of the 15th of July, 2002 by and
between Goldsmith, CNB and Parent Corporation, as amended, is terminated
effective upon the Start Date of the term of this Employment Agreement.


 


2.                                       Duties. Goldsmith
shall be employed as the Chairman of the Board of Directors and Chief Executive
Officer of CNB and Chief Executive Officer and President of the Parent
Corporation and his powers and duties shall be consistent with such offices and
positions. As Chief Executive Officer of Employer, Goldsmith shall supervise, control
and be responsible for all aspects of the business and affairs of Employer and
its subsidiaries.


 


3.                                       Place of
Service. Substantially all of Goldsmith’s duties shall be
performed in Los Angeles and Beverly Hills, California, and unless mutually
agreed upon by Goldsmith and Employer, Goldsmith shall be headquartered in
Beverly Hills, California.


 


4.                                       Term. Subject
to the provisions for termination as hereinafter provided, the term of this
Agreement shall commence as of July 15, 2006 (the “Start Date”) and shall
terminate four (4) years thereafter.


 


5.                                       Annual Base
Compensation. Employer shall pay Goldsmith as annual base
compensation (the “Annual Base Compensation”), payable in equal semimonthly
payments, the sum of Nine Hundred Seventy-Eight Thousand Five Hundred Twenty-Eight
Dollars ($978,528) during the term of this Agreement. To the extent in any year
that Annual Base Compensation and other compensation paid by Employer to
Goldsmith exceeds One Million Dollars ($1,000,000) and is not currently deductible
by the Employer under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”), to the extent in compliance with Sections 162(m) and 409A
of the Code, Goldsmith will elect to defer such excess amounts under a deferred
compensation plan or arrangement of the Employer or Parent Corporation that
complies with Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”); provided that Goldsmith may not elect to receive any such
payment in any year before it may be deducted by the Employer under Section
162(m) of the Code or, if later, the year following termination of his
employment with the Employer.


 


6.                                       Bonus
Compensation.


 


(a)                                  Goldsmith shall participate in
the Parent Corporation’s Amended and Restated 1999 Variable Bonus Plan and/or
any other cash bonus or incentive compensation plan of Employer established for
corporate executive officers of Employer, including corporate officers who are
members of the Executive Committee and the Strategy and Planning 


 

















 


Committee, in each case as determined by the Compensation, Nominating
and Governance Committee of the Parent Corporation (or, in the absence of a
Compensation, Nominating and Governance Committee, the Board of Directors or
another committee of directors designated by the Board of Directors as responsible
for matters relating to executive compensation) (such body, whether a committee
or the entire board, is hereinafter referred to as the “Committee”). The
aggregate amount of annual bonus or incentive compensation (the “Annual Bonus”)
paid to Goldsmith pursuant to all such bonus plans for any year (including the
fiscal year ending December 31, 2006 and the fiscal year during which his
employment is terminated) shall not be less than the Target Bonus Amount for
that fiscal year if plan goals for the year are achieved, scaled up ratably to
two hundred percent (200%) of the Target Bonus Amount for such fiscal year if
one hundred thirty percent (130%) of plan goals are achieved and scaled down
ratably to thirty-five percent (35%) of the Target Bonus Amount for such fiscal
year if eighty five percent (85%) of plan goals are achieved.


 


(b)                                 For each fiscal year during the
term of this Agreement, the “Target Bonus Amount” shall be equal to the product
of the Target Bonus Percentage for that fiscal year and Goldsmith’s Annual Base
Compensation as of December 31 of the year for which the bonus is being paid,
as calculated below. The “Target Bonus Percentage” for each such fiscal year
shall be as specified below:


 


	
  Fiscal year ended 

  December 31,

  	
   

  	
  Target Bonus

  Percentage

  	
   

  	
  Target Bonus

  Amount

  	
   

  
	
  2006

  	
   

  	
  125

  	
  %

  	
  $

  	
  1,223,160.00

  	
   

  
	
  2007

  	
   

  	
  137

  	
  %

  	
  1,340,583.36

  	
   

  
	
  2008

  	
   

  	
  143

  	
  %

  	
  1,399,295.04

  	
   

  
	
  2009

  	
   

  	
  149

  	
  %

  	
  1,458,006.72

  	
   

  
	
  2010

  	
   

  	
  155

  	
  %

  	
  1,516,718.40

  	
   

  
							



 


(c)                                  In determining the Annual Bonus
payable to Goldsmith for any year in which he was not employed by Employer for
the entire year, the Annual Bonus for the portion of such fiscal year preceding
the termination of his employment shall be an amount equal to (i) the amount
which the Annual Bonus would have been had the plan goals achieved through the
month ending immediately following the date of termination of his employment
been the plan goals for the entire fiscal year, the fiscal year had ended at
the end of such month and Goldsmith’s Annual Base Compensation had been the
Annual Base Compensation payable to him as of the following December 31 had his
employment continued through the following December 31, (ii) multiplied by a
fraction, the numerator of which is the number of months in the fiscal year
through the end of the month immediately following the date of termination of
Goldsmith’s employment and the denominator of which is 12.


 


(d)                                 Unless Goldsmith elects to defer
receipt thereof, each Annual Bonus shall be paid no later than the end of the
third month of the fiscal year following the fiscal year for which the bonus is
being paid; provided, however, that if the employment of
Goldsmith is terminated prior to the end of the fiscal year for which the bonus
is being paid, the Annual Bonus for the partial year preceding the termination
of his employment shall be paid no later than the end of the third month
following the termination of his employment and any amounts payable under any
subparagraphs of Paragraph 10 as an Annual Bonus applicable to any portion of a



 


2

















 


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


 


7.                                       Stock
Awards.


 


(a)                                  Annual Stock Awards. In each fiscal year during the
employment term, beginning in 2007, upon the earlier to occur of (i) the date
the Employer generally grants annual stock awards to other corporate officers
who are members of the Employer’s Executive Committee and Strategy and Planning
Committee, and (ii) March 15, the Employer shall grant to Goldsmith an annual
stock award (an “Annual Stock Award”) having an aggregate Deemed Value, on the
grant date, of $2,410,000 for March 2007 and of $2,350,000 for each March
thereafter during the term of this Agreement. One-half of the Deemed Value of
each Annual Stock Award shall be payable in the form of non-qualified stock
options and the other half shall be payable in the form of restricted stock or
restricted stock units, as determined by the Committee on each grant date in accordance
with this Agreement.


 


(b)                                 Performance Stock Options.


 


(i)                                     On July 14, 2006, the Employer shall
grant to Goldsmith non-qualified stock options with a Deemed Value of $500,000
(the “Initial Options”), and no later than July 31 of each subsequent fiscal
year during the term of this Agreement, beginning in July 2007, if the Parent
Corporation’s TSR for the three years ending on the immediately preceding June
30 is sufficient to place Parent Corporation in at least the twenty-fifth (25th)
percentile of Peer Banks ranked by TSR, the Employer shall grant to Goldsmith
stock options having the Deemed Value corresponding to the Parent Corporation’s
TSR percentile for each fiscal year specified below:


 


	
  Three year period

  Ended June 30,

  	
   

  	
  TSR

  Percentile

  	
   

  	
  Deemed Value

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2007

  	
   

  	
  Below 25

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
  25 to below 50

  	
   

  	
  250,000

  	
   

  
	
   

  	
   

  	
  50 to below 75

  	
   

  	
  500,000

  	
   

  
	
   

  	
   

  	
  75 to below 90

  	
   

  	
  750,000

  	
   

  
	
   

  	
   

  	
  90 and above

  	
   

  	
  900,000

  	
   

  
	
  2008

  	
   

  	
  Below 25

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
  25 to below 50

  	
   

  	
  300,000

  	
   

  
	
   

  	
   

  	
  50 to below 75

  	
   

  	
  600,000

  	
   

  
	
   

  	
   

  	
  75 to below 90

  	
   

  	
  850,000

  	
   

  
	
   

  	
   

  	
  90 and above

  	
   

  	
  1,000,000

  	
   

  
	
  2009

  	
   

  	
  Below 25

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
  25 to below 50

  	
   

  	
  350,000

  	
   

  
	
   

  	
   

  	
  50 to below 75

  	
   

  	
  700,000

  	
   

  
	
   

  	
   

  	
  75 to below 90

  	
   

  	
  950,000

  	
   

  
	
   

  	
   

  	
  90 and above

  	
   

  	
  1,100,000

  	
   

  



 


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 the Company falls between the 25th
and 75th percentile in terms of size of market capitalization.


 


(iii)                               “Performance Stock Options”
means stock options granted pursuant to this subparagraph 7(b).


 


(iv)                              “TSR” shall be determined for a
company, including the Parent Corporation and each of the Peer Banks, as
follows:


 


	
   

  	
  (Price End –
  Price Begin) + Dividends

  	
   

  
	
  Price Begin

  



 


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


 


(c)                                  Valuation Methodologies. As used herein, the “Deemed
Value” of any stock options shall be as determined by the Committee on the
grant date in accordance with the City National Valuation Methodology for
Option Awards in effect on such grant date and the “Deemed Value” of any
restricted stock or restricted stock unit award shall be the Fair Market Value
(as defined in the Current Plan) of the Parent Corporation’s common stock,
$1.00 par value per share, on the grant date. The City National Valuation
Methodology for Option Awards in effect as of the date hereof is attached
hereto as Appendix B. The City National Valuation Methodology for Option
Awards may be changed from time to time by the Committee, in its sole
discretion, provided that no such change will apply to stock options granted to
Goldsmith unless such change generally applies to stock options granted to
other corporate officers who are members of the Employer’s Executive Committee
and Strategy and Planning Committee.


 


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 forfeit to the
Parent Corporation, except:  (1) any
forfeiture restrictions on shares of restricted stock or restricted stock units
included the Initial Awards (as defined in subparagraph 7(f)) will lapse on the
terms specified in subparagraph 7(f), and (2) forfeiture restrictions on all
other shares of restricted stock and all other restricted stock units shall
immediately lapse on the terms specified in Goldsmith’s restricted stock award
and restricted stock unit award agreements and the Current Plan, as each may be
amended and revised from time to time on terms consistent with other shares of
restricted stock and restricted stock units then being issued by the Committee
to other corporate officers who are members of Employer’s Executive Committee
and Strategy and Planning Committee. As of the date hereof, such terms would
permit the immediate lapse of forfeiture restrictions only on the earlier of
(i) subject to the discretion of the Committee, the occurrence of a Change of
Control Event (as such term is defined in the Current Plan), or (ii) the date
Goldsmith’s employment is terminated by reason of subparagraphs 10(c)
(disability) or 10(d) (death). Further, grants of restricted stock and restricted
stock units made prior to the date hereof for which forfeiture restrictions
have not yet lapsed at the time of Goldsmith’s retirement at age sixty-two (62)
will immediately lapse upon retirement after Goldsmith has attained age
sixty-two (62). All grants of restricted stock and restricted stock units after
the date hereof for which forfeiture restrictions have not yet 


 


6

















 


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


 


(f)                                    Vesting of Initial Awards.


 


(i)                                     “Initial Awards” means the
Initial Options and those other Annual Stock Awards and Performance Stock Options
awarded to Goldsmith from the date of this Agreement until the aggregate Deemed
Value of all such Initial Options, Annual Stock Awards and Performance Stock
Options, at the time each is granted, equals $4,200,000. Initial Awards shall
not include any Annual Stock Awards or Performance Stock Options, or other
stock options, shares of restricted stock and restricted stock units, awarded to
Goldsmith either before the date of this Agreement (other than the Initial
Options) or after the Deemed Value of the Annual Stock Awards and Performance
Stock Options, at the time each is granted, equals $4,200,000.


 


(ii)                                  All Initial Awards which, at the
time of termination of Goldsmith’s employment with the Employer, are not vested
or for which forfeiture restrictions have not lapsed, shall immediately vest,
and forfeiture restrictions shall immediately lapse, (A) if Goldsmith’s
employment is terminated (I) on account of retirement after Goldsmith has
attained age sixty-two (62), (II) pursuant to subparagraphs 10(b) (without good
cause or by Goldsmith for good reason), 10(c) (disability) or 10(d) (death)
hereof, or (III) pursuant to Sections 5(a) and 6(b) and (c) (death or
disability), 5(c) and 6(a) (Good Reason), or 6(a) (without Cause) of the
Amended Employment Agreement (as defined in subparagraph 10(e)) after a Change
of Control (as defined in Section 2 of the Amended Employment Agreement); or (B)
upon the occurrence of a Change of Control Event as defined in the Current
Plan, subject in the case of this clause (B) to any provisions of the Current
Plan and its stock option agreements regarding acceleration or termination of
stock options upon a Change of Control Event.


 


8.                                       Fringe
Benefits and Reimbursement of Expenses. Employer shall provide Goldsmith with
such medical and other health, dental, accidental life and disability
insurance, and he shall be entitled to all employee and fringe benefits and
reimbursement of expenses and to participate in all benefit plans (including
stock plans) as are consistent with his position and duties and those
previously provided to the Chief Executive Officer of Employer; provided,
however, that future stock awards and stock option grants to Goldsmith
shall be on the terms specified in Paragraph 7 of this Agreement. Goldsmith
shall also be entitled to receive a supplemental retirement benefit as set
forth in Appendix A to this Agreement.


 


9.                                       Extent of
Service. Goldsmith shall devote his time, attention and energies
to the business of Employer and shall not, during the term of this Agreement,
be engaged in any other activity which will materially interfere with the
performance of his duties hereunder. Time expended by Goldsmith on
philanthropic activities, as a general partner of Sunbar Properties, as a
passive investor in real estate ventures and other investments, or in managing
the existing properties of Goldsmith Entertainment Corporation shall be deemed
not to interfere with the performance of his duties hereunder.


 


7

















 


10.                                 Termination
of Employment.


 


(a)                                  Termination by Employer for Good
Cause. Employer
may terminate the employment of Goldsmith for “good cause” by written notice to
Goldsmith. For purposes of this Agreement, “good cause” shall mean only (i)
conviction of a crime directly related to his employment hereunder, (ii)
conviction of a felony involving moral turpitude, (iii) willful and gross
mismanagement of the business and affairs of Employer, or (iv) willful and
material breach of any material provision of this Agreement. In the event the
employment of Goldsmith is terminated pursuant to this subparagraph 10(a),
Employer shall have no further liability to Goldsmith other than for
compensation accrued through the date of termination but not yet paid.


 


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


 


(b)                                 Termination by Employer Without
Good Cause or by Goldsmith for Good Reason. Employer may terminate the employment of Goldsmith without
“good cause” (as defined in subparagraph 10(a) above) at any time during the
term hereof by giving written notice to Goldsmith specifying therein the
effective date of termination. Upon such notice being given, Goldsmith’s stock
options, restricted stock and restricted stock units shall be treated as
provided in Paragraph 7. In the event the employment of Goldsmith is terminated
pursuant to this subparagraph 10(b) without good cause, Employer shall be
obligated to pay to Goldsmith (which shall be in lieu of any other amounts
which would be payable to Goldsmith on account of such termination pursuant to
any separation pay plan or policy of Employer) (i) the Annual Base Compensation
and Annual Bonus he would have been paid had he remained in the employ of the
Employer hereunder, and had the term hereof extended, for a period of three
years from the effective date of termination, provided that (x) the Annual
Bonus for any fiscal year ending after the date of termination (including the
fiscal year during which the termination of employment occurs and any portion
of a fiscal year for which he is entitled to an Annual Bonus under this
subparagraph) shall be computed by multiplying Goldsmith’s Annual Base Compensation
(in 


 


8

















 


case of an Annual Bonus for a partial year,
the amount which the Annual Base Compensation would have been as of the following
December 31 had his employment continued through such December 31) by (in lieu
of percentages of Annual Base Compensation set forth in subparagraphs 6(a) and
(b)) the highest percentage of Annual Base Compensation previously used in determining
any prior Annual Bonus paid or payable to Goldsmith, (y) the Annual Bonus
applicable to any portion of a fiscal year of less than twelve months shall be
an amount determined as provided in the preceding subclause (x) multiplied by a
fraction, the numerator of which is the number of months of the fiscal year
with respect to which Goldsmith is entitled to the Annual Bonus pursuant to
this subparagraph (with each partial month being deemed a whole month) and the
denominator of which is 12, and (z) subparagraph 6(c) shall be disregarded and
have no force or effect, and (ii) all other employee benefits (including
service credit in calculating his supplemental retirement benefit) he would
have received hereunder had he remained in the employ of the Employer for such
three-year period (and, if required, the term hereof would have been
appropriately extended), including reimbursement of Goldsmith for all expenses
and costs incurred by him during such three-year period in obtaining and
maintaining medical and health insurance (through COBRA or otherwise) for him,
his spouse and dependents for such three-year period which is equivalent to
that provided to him by Employer at the time of termination of his employment. Notwithstanding
the foregoing clause (ii) of the immediately preceding sentence, if long-term
disability insurance coverage is an employee benefit which Goldsmith would have
received had he remained in the employ of Employer, Employer’s obligation to
provide Goldsmith with comparable long-term disability insurance coverage for
such three-year period shall be subject to Goldsmith being insurable at the
effective date of termination of his employment; and to the extent any such
employee benefits by their terms cannot be provided to Goldsmith if he is not
an employee of the Employer, the Employer shall reimburse Goldsmith for the
reasonable cost of comparable benefits he obtains on his own. Goldsmith shall
have no duty to mitigate damages, and Employer shall have no right to offset
any compensation paid to Goldsmith for services rendered as an employee of a
third party or independent contractor after the termination of his employment
against any amounts which are payable under this Agreement or the Amended
Employment Agreement.


 


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


 


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


 


(i)                                     there is a material breach of
this Agreement by Employer;


 


9

















 


(ii)                                  within thirty (30) days following
the material breach Goldsmith provides Employer with written notice specifying
in reasonable detail the basis for his belief that there has been a material
breach of this Agreement; and


 


(iii)                               within thirty (30) days of
receipt of the notice Employer has not cured the material breach or, if the
nature of the material breach is such that more than thirty (30) days are
reasonably required to cure the material breach, then the Employer has not
commenced performance of a cure within the thirty (30) day period or has not thereafter
diligently prosecuted such performance to completion.


 


(c)                                  Termination by Disability. Employer may terminate the
employment of Goldsmith during the term hereof or the term of the Amended
Employment Agreement (as hereinafter defined) by written notice to Goldsmith if
Goldsmith shall become incapable of fulfilling his obligations hereunder
because of injury or physical or mental illness which shall exist or may
reasonably be anticipated to exist for a period of twelve (12) consecutive
months or for an aggregate of twelve (12) months during any twenty-four (24)
month period. In the event the employment of Goldsmith is terminated by
Employer pursuant to this subparagraph 10(c) because of injury or physical or
mental illness, Employer shall be obligated to pay Goldsmith (or his personal
representatives) from and after the termination of his employment the same
amounts and provide him with the same benefits for the same periods it would
have paid or provided him had his employment been terminated without cause
pursuant to subparagraph 10(b) as of the date his employment is terminated
pursuant to this subparagraph 10(c). If the employment of Goldsmith is
terminated pursuant to this subparagraph 10(c), Goldsmith’s stock options,
restricted stock and restricted stock units will be treated as provided in
Paragraph 7.


 


(d)                                 Termination by Death. Except for compensation
accrued but not paid at the date of death and as provided in this subparagraph
10(d), the death of Goldsmith during the term of this Agreement shall terminate
this Agreement and the Amended Employment Agreement (as hereinafter defined). In
the event of the death of Goldsmith during the term hereof or the term of the
Amended Employment Agreement (as hereinafter defined), Employer shall be
obligated to pay to whomever he shall have designated in writing to Employer,
or if no designation has been made by him, to Goldsmith’s wife, if she is then
living, or if she is not then living, to his estate, the same amounts and
provide the same benefits Employer would have paid or provided Goldsmith
pursuant to subparagraph 10(b) had his employment been terminated without cause
on the date of his death. If the employment of Goldsmith is terminated pursuant
to this subparagraph 10(d), Goldsmith’s stock options, restricted stock and
restricted stock units will be treated as provided in Paragraph 7.


 


(e)                                  Change of Control. Attached to this Agreement as Annex
A is a copy of an Employment Agreement dated as of March 31, 1997 between
Parent Corporation and Goldsmith (the “Amended Employment Agreement”). Upon the
Effective Date (as defined in the Amended Employment Agreement) during the term
of Goldsmith’s employment with Employer, the Amended Employment Agreement shall
become effective with (notwithstanding the provisions of the Amended Employment
Agreement to the contrary) the following modifications:  (i) the “Change of Control Period” as defined
in the Amended Employment Agreement shall not terminate prior to the end of the
term of this Agreement; (ii) the term thereof (referred to therein as the “Employment
Period”) shall be the greater of three years, as 


 


10

















 


provided therein, or the then remaining term
of this Agreement; (iii) Paragraphs 3 and 5 and subparagraph 10(g) of this
Agreement shall remain in full force and effect; (iv) clause (B) of Section
4(a)(i) and all of Section 4(b)(i) (except for the last sentence thereof) of
the Amended Employment Agreement shall be of no force or effect, all direct or
indirect references in the Amended Employment Agreement to Annual Base Salary
or base salary (including, without limitation, references to Section 4(b) in
clause (ii) of Section 5(c) of the Amended Employment Agreement) shall be
deemed to refer to the Annual Base Compensation described and determined and
computed in accordance with Paragraph 5 hereof and the reference in clause
(iii) of Section 5(c) of the Amended Employment Agreement shall be deemed a
reference to Paragraph 3 hereof; and (v) termination of employment on account
of the death or disability of Goldsmith as provided in subparagraphs 10(c) and
10(d) hereof, respectively, shall remain in full force and effect and the provisions
of the Amended Employment Agreement dealing with termination of employment on
account of Goldsmith’s death or disability and the effects thereof shall be of
no force or effect. In all other respects the terms of the Amended Employment
Agreement will thereafter govern the employment of Goldsmith, and subparagraphs
10(a), 10(b) and 10(f) hereof shall be of no further force or effect (except to
the extent subparagraph 10(b) is incorporated into subparagraph 10(c) and 10(d)
for determining amounts payable or benefits to be provided pursuant to
subparagraph 10(c) and 10(d)).


 


(f)                                    Termination Upon Expiration. At least six (6) months prior
to the end of the term hereof, a person designated by the Board of Directors of
Parent Corporation shall meet with Goldsmith for purposes of negotiating an
extension of the term of this Agreement. If by the ninetieth (90th) day prior to
the end of the term hereof Employer and Goldsmith have not agreed in writing to
an extension of the term hereof or renewal of this Agreement and during such
negotiations Employer offered Goldsmith an extension of this Agreement with a
term of at least three years and compensation at least equivalent to the
eightieth percentile for chief executive officers of Employer’s peer group,
Goldsmith’s employment shall terminate as of the end of the term hereof and
Employer shall be obligated to pay and provide Goldsmith with, from and after
the expiration of the term hereof, (i) the Annual Base Compensation for a
period of twelve (12) months from the end of the term of this Agreement, (ii)
the Annual Bonus he would have been paid hereunder if the term of this Agreement
was extended for twelve months, provided that (x) the Annual Bonus shall be
computed by multiplying Goldsmith’s Annual Base Compensation by (in lieu of the
Target Bonus Amounts set forth in Paragraph 6) the highest percentage of Annual
Base Compensation previously used in determining any prior Annual Bonus paid to
Goldsmith, (y) the Annual Bonus applicable to any portion of a fiscal year of
less than twelve months shall be an amount determined as provided in the
preceding subclause (x) multiplied by a fraction, the numerator of which is the
number of months of the fiscal year with respect to which Goldsmith is entitled
to the Annual Bonus pursuant to this subparagraph (with each partial month
being deemed a whole month) and the denominator of which is 12, and (z)
subparagraph 6(c) shall be disregarded and have no force or effect, and (iii)
all other employee benefits he would have received hereunder if the term of
this Agreement and Goldsmith’s employment had been extended twelve months,
including reimbursement of Goldsmith for all expenses and costs incurred by him
during such twelve (12) month period in obtaining and maintaining medical and
health insurance (through COBRA or otherwise) for him, his spouse and
dependents for such twelve (12) month period which is equivalent to that
provided to him by Employer at the time of termination of his employment. If by
the ninetieth (90th) day prior to the end of the term hereof Employer and
Goldsmith have not agreed in writing to an extension of the term hereof or a 


 


11

















 


renewal of this Agreement and during such
negotiations the Employer did not offer Goldsmith an extension of the term
hereof of at least three years and compensation at least equivalent to the
eightieth percentile for chief executive officers of Employee’s peer group, Goldsmith’s
employment shall terminate as of the end of the term hereof and Employer shall
pay Goldsmith, from and after the expiration of the term hereof, the same
amounts and provide him with the same benefits for the same period it would
have paid and provided him pursuant to subparagraph 10(b) had his employment
been terminated without cause immediately prior to the end of the term hereof,
including, without limitation, the vesting of stock options and the lapsing of
forfeiture restrictions on restricted stock awards and restricted stock units to
the extent specified in Paragraph 7. For purposes of this subparagraph 10(f),
the “Employer’s peer group” shall consist of ten banks comparable to CNB as to
size and performance and as agreed to by Employer and Goldsmith and the compensation
which shall be employed in determining whether the compensation offered
Goldsmith was at least equivalent to the eightieth percentile for chief
executive officers of Employer’s peer group compensation shall mean the total
compensation (all forms of pay disclosed in the proxy statements). If Goldsmith
and Employer shall be unable to agree by the ninetieth (90th) day prior to the
end of the term hereof as to the identity of the banks constituting the “Employer’s
peer group”, the ten companies constituting Employer’s peer group shall be
determined by Semler Brossy Consulting Group or any similar firm agreed to by
Employer and Goldsmith.


 


(g)                                 Office Space and Secretarial
Support. From
and after the expiration of the term of this Agreement or the Amended
Employment Agreement or if Goldsmith’s employment is terminated other than
pursuant to subparagraph 10(a) (or Section 5(a) of the Amended Employment
Agreement if it is then in effect) for cause or other than pursuant to
subparagraph 10(d) on account of his death, Employer shall provide Goldsmith
(at no cost or expense to Goldsmith) for a period of three years with an office
in his current office site in Beverly Hills, California or nearby of size,
furnishings and other appointments and exclusive personal secretarial support
comparable to that provided Goldsmith at any time during the one hundred twenty
(120) day period prior to the expiration of the term or termination of his
employment.


 


(h)                                 Section 409A. Notwithstanding
the foregoing provisions of this Agreement, to the extent required in order to
comply with Section 409A of the Code, cash amounts that would otherwise be
payable under this Agreement (including the supplemental retirement benefit set forth in Appendix A
to this Agreement) during the six-month
period immediately following the Date of Termination shall instead be paid,
with interest on any delayed payment at the applicable federal rate provided
for in Section 7872(f)(2)(A) of the Code, on the first business day after the
date that is six months following the Executive’s “separation from service”
within the meaning of Section 409A.


 


11.                                 Entire
Agreement; Modification; Waiver. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter contained
therein and supersedes all prior and contemporaneous agreements,
representations and understandings of the parties. No supplement, modification
or amendment of this Agreement shall be binding unless executed in writing by
both parties. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provisions, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall
be binding unless executed in writing by the party making the waiver.


 


12

















 


12.                                 Separability
Clause. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision hereof.


 


13.                                 Benefit. Except as
herein and otherwise specifically provided, this Agreement shall be binding
upon and inure to the benefit of the parties, their personal representatives,
heirs, administrators, executors, successors, and permitted assigns.


 


14.                                 Notices. Any
notice, request, or other communication required to be given pursuant to the
provisions of this Agreement shall be in writing and shall be deemed to be duly
given if delivered in person or mailed by registered or certified United States
mail, postage prepaid, and mailed to the parties at the following addresses:


 


	
   

  	
  EMPLOYER

  	
   

  	
  RUSSELL
  GOLDSMITH

  
	
   

  	
  City National
  Bank

  	
   

  	
  Mr. Russell
  Goldsmith

  
	
   

  	
  400 No. Roxbury
  Drive

  	
   

  	
  400 N. Roxbury
  Drive

  
	
   

  	
  Beverly Hills,
  CA 90210

  	
   

  	
  Beverly Hills,
  CA 90210

  
	
   

  	
  Attn: Michael B.
  Cahill

  	
   

  	
   

  
	
   

  	
   General
  Counsel

  	
   

  	
  with copy to:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Adam D. Chinn

  
	
   

  	
   

  	
   

  	
  Wachtell, Lipton, Rosen & Katz

  
	
   

  	
   

  	
   

  	
  51 West 52nd
  Street

  
	
   

  	
   

  	
   

  	
  New York, New
  York 10019-6150

  



 


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


 


15.                                 Confidentiality. Goldsmith
covenants and agrees with Employer that Goldsmith shall not, during or after
the term of this Agreement, disclose to anyone any confidential information
concerning the business or operations of Employer which Goldsmith may acquire
in the course of or incident to the performance of his duties hereunder,
including, without limitation, processes, customer lists, business or trade
secrets, or methods or techniques used by Employer in its business or
operations.


 


16.                                 Construction. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of California.


 


17.                                 Captions. The
paragraph headings and captions contained herein are for reference purposes and
convenience only and shall not in any way affect the meaning or interpretation
of this Agreement.


 


18.                                 Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.


 


19.                                 Amendments. This
Agreement shall not be modified, amended, or in any way altered except by an
instrument in writing and signed by both of the parties hereto.


 


13

















 


20.                                 Mandatory
Arbitration. At the request of Goldsmith or Employer, any dispute,
claim, controversy of any kind (whether in contract or tort, statutory or
common law, legal or equitable) now existing or hereafter arising out of,
pertaining to or in connection with this Agreement and/or any renewals,
extensions, or amendments thereto, shall be resolved through final and binding
arbitration conducted by a single arbitrator at a location determined by the
arbitrator in Los Angeles or Beverly Hills, California, and administered by the
American Arbitration Association (“AAA”) in accordance with the Federal
Arbitration Act, 9 U.S.C. §1, et seq., and the then existing Commercial
Arbitration Rules of the AAA. Judgment upon any award rendered by the
arbitrator may be entered in any State or Federal courts having jurisdiction
thereof.


 


21.                                 Section 409A. If any compensation or
benefits provided by this Agreement may result in the application of Section
409A of the Code, the Company shall, in consultation with the Executive, modify
the Agreement in the least restrictive manner necessary in order to exclude
such compensation from the definition of “deferred compensation” within the
meaning of such Section 409A or in order to comply with the provisions of
Section 409A, other applicable provisions(s) of the Code and/or any rules,
regulations or other regulatory guidance issued under such statutory provisions
and without any diminution in the value of the payments to the Executive.


 


14

















 


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


 


	
   

  	
  CITY NATIONAL
  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Russell
  Goldsmith

  	
   

  	
  By:

  	
  /s/ Michael B.
  Cahill

  
	
  RUSSELL
  GOLDSMITH

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CITY NATIONAL
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael B.
  Cahill

  



 


15

















 


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 


 


2

















 


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


 


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


 


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


 


ARTICLE IV


 


PRE-RETIREMENT SPOUSAL DEATH BENEFIT


 


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


 


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


 


3

















 


SCHEDULE 1


 


Supplemental Retirement Benefit

for Russell Goldsmith


 


Actuarial Reduction Factors


 


Early Retirement Reduction
Factors


 




	
  Years of Age Prior to

  Normal Retirement Date

  	
   

  	
  Reduction Factor

  	
   

  
	
  1

  	
   

  	
  93

  	
  %

  
	
  2

  	
   

  	
  86

  	
  %

  
	
  3

  	
   

  	
  79

  	
  %

  
	
  4

  	
   

  	
  72

  	
  %

  
	
  5

  	
   

  	
  65

  	
  %

  
	
  6

  	
   

  	
  58

  	
  %

  
	
  7

  	
   

  	
  51

  	
  %

  
	
  8

  	
   

  	
  48

  	
  %

  
	
  9

  	
   

  	
  45

  	
  %

  






 


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


 




	
  Spouse Years of Age Younger

  	
   

  	
  Reduction Factor

  	
   

  
	
  0

  	
   

  	
  85.75

  	
  %

  
	
  1

  	
   

  	
  84.97

  	
  %

  
	
  2

  	
   

  	
  84.26

  	
  %

  
	
  3

  	
   

  	
  83.45

  	
  %

  
	
  4

  	
   

  	
  82.71

  	
  %

  
	
  5

  	
   

  	
  82.04

  	
  %

  
	
  6

  	
   

  	
  81.32

  	
  %

  
	
  7

  	
   

  	
  80.56

  	
  %

  
	
  8

  	
   

  	
  79.87

  	
  %

  
	
  9

  	
   

  	
  79.19

  	
  %

  
	
  10

  	
   

  	
  78.53

  	
  %

  






 


4

















 


Actuarial Equivalence


 


Mortality


 


	
  Prior to Normal
  Retirement Age:

  	
   

  	
  1983 Group Annuity
  Mortality for males or females

  
	
  After Normal Retirement
  Age:

  	
   

  	
  1983 Group Annuity
  Mortality for males or females

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

  
	
   

  	
   

  	
   

  
	
  Prior to Normal
  Retirement Date:

  	
   

  	
  6.0% per annum

  
	
  After Normal Retirement
  Date:

  	
   

  	
  6.0% per annum

  
					



 


5

















 


APPENDIX B TO EMPLOYMENT AGREEMENT

FOR RUSSELL GOLDSMITH


 


CITY NATIONAL VALUATION METHODOLOGY FOR
OPTION AWARDS


 


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


 


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


 


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


 


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


 


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


 






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


 


6

















 


ANNEX A


EMPLOYMENT AGREEMENT


 


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


 


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


 


                NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:


 


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


 


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


 


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


 


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


 


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


 


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


2

















 


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


 


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


 


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


 


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


 


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


 


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


 


3

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


4

















 


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


 


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


 


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


 


                (i)            the assignment to the Executive of
any duties inconsistent in any respect with the Executive’s position (including
status, offices, titles and reporting requirement), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;


 


                (ii)           any failure by the Company to comply
with any of the provisions of Section 4(b) of this Agreement, other than
in isolated, insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;


 


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


 


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


 


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


 


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


 


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


 


5

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


6

















 


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


 


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


 


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


 


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


 


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


 


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


 


7

















 


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


 


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


 


                9.             CERTAIN ADDITIONAL PAYMENTS BY THE
COMPANY.


 


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


 


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


 


8

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


9

















 


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


 


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


 


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


 


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


 


                (c)           The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, “Company”
shall mean the Company as hereinbefore defined and any successor to its
business and /or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.


 


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


 


10

















 


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


 


	
  IF TO THE EXECUTIVE:

  	
   

  	
  Russell Goldsmith

  400 North Roxbury Drive

  Beverly Hills, CA 90210

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  IF TO THE COMPANY:

  	
   

  	
  City National Bank

  400 North Roxbury Drive

  Beverly Hills, CA 90210

  Attention: General Counsel

  	
   

  



 


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


 


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


 


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


 


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


 


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


 


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


 


 


	
   

  	
  /s/ RUSSELL GOLDSMITH

  
	
   

  	
  Russell Goldsmith

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITY NATIONAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ RICHARD H. SHEEHAN, JR.

  
	
   

  	
   

  	
  Richard H. Sheehan, Jr.

  SVP and General Counsel

  



 


11