Document:

Exhibit 10.3

 

PERFORMANCE UNIT AWARD AGREEMENT

ADDENDUM

(EPS)

 

THIS ADDENDUM TO THE PERFORMANCE UNIT AWARD AGREEMENT provides the rules and procedures relating to the grant of the Performance Unit Award and the operation of the Performance Unit Account.

 

A.                                   Definitions.  Any capitalized terms used, but not defined, in this Addendum shall have the meaning set forth in the Performance Unit Award Agreement.  Whenever the following terms are used in the Performance Unit Award Agreement or in this Addendum, they shall have the meaning specified below, unless the context clearly indicates to the contrary:

 

1.                                      Cumulative Actual EPS means the sum of the Company’s actual diluted earnings per share for each of the 2012-2014 calendar years.

 

2.                                      Cumulative Target EPS means the sum of the Company’s budgeted diluted earnings per share for each of the 2012-2014 calendar years, as determined by the Committee by March 15 of the applicable calendar year.

 

3.                                      Fifth Year Performance means the percentage by which the Five-Year Cumulative Actual EPS exceeds the Five-Year Cumulative Target EPS (but in no event less than zero).

 

4.                                      Five-Year Cumulative Actual EPS means the sum of the Company’s actual diluted earnings per share for each of the 2012-2016 calendar years.

 

5.                                      Five-Year Cumulative Target EPS means the sum of the Company’s budgeted diluted earnings per share for each of the 2012-2016 calendar years, as determined by the Committee by March 15 of the applicable calendar year.

 

6.                                      Four-Year Cumulative Actual EPS means the sum of the Company’s actual diluted earnings per share for each of the 2012-2015 calendar years.

 

7.                                      Four-Year Cumulative Target EPS means the sum of the Company’s budgeted diluted earnings per share for each of the 2012-2015 calendar years, as determined by the Committee by March 15 of the applicable calendar year.

 

8.                                      Fourth Year Performance means the percentage by which the Four-Year Cumulative Actual EPS exceeds the Four-Year Cumulative Target EPS (but in no event less than zero).

 

9.                                      Disability means  Colleague shall become incapable of fulfilling his obligations 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.

 

10.                               Performance Unit Account means the memorandum account maintained by the Company on behalf of Colleague which is credited with Performance Units.  Each Performance Unit represents the right to receive a distribution of cash in an amount as provided in the Performance Unit Award Agreement and this Addendum.

 

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B.                                     Performance Unit Account.  As soon as practicable following the Award Date, the Company shall credit Colleague’s Performance Unit Account with the Performance Units.

 

C.                                     Lapse of Forfeiture Restrictions.  The Performance Unit Award is subject to forfeiture until the forfeiture restrictions lapse in accordance with Section 2(b) of the Performance Unit Award Agreement.

 

1.                                       2012-2014 Performance Units.  Notwithstanding the forfeiture provision in Section 2(b) of the Performance Unit Award Agreement, the forfeiture restrictions on the 2012-2014 Performance Units shall immediately lapse:

 

·                  upon Colleague’s termination of employment by the Company without good cause or by Colleague for good reason;

 

·                  upon Colleague’s voluntary termination of employment for any reason or by the Company without good cause on or after expiration of Colleague’s employment agreement;

 

·                  upon Colleague’s termination of employment by the Company without cause or by Colleague for good reason following a Change in Control; or

 

·                  provided the Performance Units have not been forfeited, upon Colleague’s death or Disability.

 

2.                                       2012-2015 Performance Units.  Notwithstanding the forfeiture provision in the Performance Unit Award Agreement, if any of the following occurs on or prior to March 14, 2017, the forfeiture restrictions on the 2012-2015 Performance Units shall immediately lapse:

 

·                  upon Colleague’s termination of employment by the Company without good cause or by Colleague for good reason;

 

·                  upon Colleague’s voluntary termination of employment for any reason or by the Company without good cause on or after expiration of the Colleague’s employment agreement;

 

·                  upon Colleague’s termination of employment by the Company without cause or by Colleague for good reason following a Change in Control;

 

·                  provided the Performance Units have not been forfeited, upon Colleague’s death or Disability; or

 

·                  provided the Performance Units have not been forfeited, on March 14, 2016 with respect to that portion of the 2012-2015 Performance Units that correspond to the Fourth Year Value .

 

D.                                    Valuation of Performance Units.  The value of the Performance Units (“Value”) shall be determined by the Committee as follows:

 

1.                                       2012-2014 Performance Units.

 

a.                                       Subject to subsection 1(c) and 3(a) of this Section D, if the Cumulative Actual EPS is 75% of the Cumulative Target EPS, the Value of the 2012-2014 Performance Units shall be equal to 60% of the 2012-2014 Performance Units and scaling up to 100% of the 2012-2014

 

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Performance Units if 100% or more of the Cumulative Target EPS is achieved.  In no event may the Value of the 2012-2014 Performance Units exceed 100% of the 2012-2014 Performance Units.

 

b.                                      If the Cumulative Actual EPS is less than 75% of the Cumulative Target EPS, the Value the 2012-2014 Performance Units shall be zero and no amount shall be payable in respect of the 2012-2014 Performance Units.

 

c.                                       If the level of achievement of the budgeted profit target used for purposes of determining achievement of the Colleague’s annual bonus for the fiscal year in which the Performance Unit Award is granted is not achieved at a level of at least 40% of target for such fiscal year, the Value the 2012-2014 Performance Units shall be zero and no amount shall be payable in respect of the 2012-2014 Performance Units.

 

2.                                       2012-2015 Performance Units.

 

a.                                       Subject to subsection 2(c) and 3(b) of this Section D, if the Fourth Year Performance is 7.5% or more, the Value of the 2012-2015 Performance Units shall be equal to 100% of the 2012-2015 Performance Units and scaling down to 33.33% of the 2012-2014 Performance Units if the Fourth Year Performance is equal to 5% (the value of the 2012-2015 Performance Units determined herein, the “Fourth Year Value”).  Unless the forfeiture restrictions on the 2012-2015 Performance Units have earlier lapsed pursuant to Section C(2), the forfeiture restrictions with respect to the 2012-2015 Performance Units underlying the Fourth Year Value shall lapse as of                     .  If the Fourth Year Performance is less than 5%, the Fourth Year Value shall be equal to zero.

 

b.                                      Subject to subsection 2(c) and 3(b) of this Section D, if the Fourth Year Value is less than $562,500 and the Fifth Year Performance exceeds the Fourth Year Performance, a calculation similar to that set forth in subsection (a) above based on the Five-Year Cumulative Actual EPS and the Five-Year Cumulative Target EPS will be applied and the Value of the remaining 2012-2015 Performance Units shall be equal to the difference between (i) the amount of such calculation and (ii) the Fourth Year Value (such difference, the “Fifth Year Value”).  If the Fifth Year Performance does not exceed the Fourth Year Performance, the Fifth Year Value shall be equal to zero.

 

c.                                       If the level of achievement of the budgeted profit target used for purposes of determining achievement of the Colleague’s annual bonus for the fiscal year in which the Performance Unit Award is granted is not achieved at a level of at least 40% of target for such fiscal year, the Value the 2012-2015 Performance Units shall be zero and no amount shall be payable in respect of the 2012-2015 Performance Units.  In no event may the sum of the Fourth Year Value and Fifth Year Value exceed                     .

 

d.                                      Sample Calculation:

 

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·                  Assume the Four-Year Cumulative Actual EPS is $10.60 and the Four-Year Cumulative Target EPS is $10.00.  The Fourth Year Performance is equal to 6%.  As such, the Fourth Year Value payable to Colleague would equal                     .  Because the Fourth Year Value is less than                     , Colleague would have the opportunity to earn the remaining                      based on the Fifth Year Performance.

 

·                  Assume the Five Year Cumulative Actual EPS is $10.70 and the Five Year Cumulative Target EPS is $10.00.  The Fifth Year Performance is equal to 7% which is greater than the Fourth Year Performance of 6%.  The Fifth Year Value payable to Colleague would be equal to          .

 

3.                                       Change in Control.

 

a.                                       2012-2014 Performance Units.  In the event a Change in Control occurs on or prior to December 31, 2014, the 2012-2014 Performance Units shall have a deemed Value of $1,500,000.  If a Change in Controls occurs after December 31, 2014, the Change in Control shall have no effect on the determination of Value of the 2012-2014 Performance Units and the Value shall be determined pursuant to Section D(1) above.

 

b.                                      2012-2015 Performance Units.  In the event a Change in Control occurs between January 1, 2015 and December 31, 2015, inclusive, the 2012-2015 Performance Units shall have a deemed Fourth Year Value of                      and a deemed Fifth Year Value equal to zero.  In the event a Change in Control occurs between January 1, 2016 and December 31, 2016, inclusive, and (i) the Fourth Year Value (as determined under Section D(2)(a) above) was equal to or greater than               , Colleague shall not be entitled to any further payment in respect of the 2012-2015 Performance Units or (ii) the Fourth Year Value (as determined under Section D(2)(a) above) was less than                     , the Fifth Year Value shall be equal to the difference between                      and the Fourth Year Value.  In the event a Change in Control occurs prior to January 1, 2015, the Value of the 2012-2015 Performance Units shall be deemed to be zero and no amount shall be payable in respect of the 2012-2015 Performance Units.  In the event a Change in Controls occurs after December 31, 2016, the Change in Control shall have no effect on the determination of Value of the 2012-2015 Performance Units and the Value shall be determined pursuant to Section D(2) above.

 

E.                                      Payment Date.

 

1.                                       2012-2014 Performance Units.  The Value of the 2012-2014 Performance Units as determined in Section D(1) above, if any, shall be distributed to Colleague (or, in the event of his death, Colleague’s Beneficiary) in cash in a lump sum payment on                    ; or earlier upon Colleague’s involuntary termination without cause or for good reason that occurs within twenty-four months following a Change in Control that also constitutes a change in control event pursuant to Treasury Regulations section 1.409A-3(i)(5)(v) (a “409A CIC”).  Any earlier payment upon Colleague’s involuntary termination without cause or for good reason shall be subject to Section F below.

 

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2.                                       2012-2015 Performance Units.

 

(a)                                  The Fourth Year Value of the 2012-2015 Performance Units as determined in Section D(2) above, if any, shall be distributed to Colleague (or, in the event of his death, Colleague’s Beneficiary) in cash in a lump sum payment on                  ; or earlier upon Colleague’s involuntary termination without cause or for good reason that occurs within twenty-four months following a 409A CIC.   Any earlier payment upon Colleague’s involuntary termination without cause or for good reason shall be subject to Section F below.

 

(b)                                 The Fifth Year Value of the 2012-2015 Performance Units as determined in Section D(2) above, if any, shall be distributed to Colleague (or, in the event of his death, Colleague’s Beneficiary) in cash in a lump sum payment on                  ; or earlier upon Colleague’s involuntary termination without cause or for good reason that occurs within twenty-four months following a 409A CIC.  Any earlier payment upon Colleague’s involuntary termination without cause or for good reason shall be subject to Section F below.

 

F.                                      Plan Construction.  It is the intent of the Company that the Performance Units shall comply with Section 409A, and the Performance Unit Award Agreement and this Addendum shall be interpreted in a manner which is consistent with the foregoing intent.  Any provisions of the Performance Unit Award Agreement and this Addendum which would not comply with the requirements of Section 409A and the Regulations adopted thereunder shall be deemed to be modified or eliminated in order to comply with these requirements.  Sections of Colleague’s employment agreement addressing the application of Section 409A of the Code are hereby incorporated by reference.  Notwithstanding anything in the Plan, the Performance Unit Award Agreement or the Addendum to the contrary, in the event of a 409A CIC, the Company may terminate the Performance Unit Awards granted hereunder in a manner consistent with Section 1.409A-3(j)(ix)(B) of the regulations under Section 409A.

 

G.                                     Unfunded Plan.  The liability of the Company to the Colleague under this Performance Unit Award Agreement shall be that of a debtor only pursuant to such contractual obligations as are created by the Plan, the Performance Unit Award Agreement and this Addendum, and no such obligation of the Company shall be deemed to be secured by any assets, pledges, or other encumbrances on any property of the Company.  The Company has not segregated or earmarked any of the Company’s assets for the benefit of Colleague or his beneficiary or estate, and the Plan does not, and shall not be construed to, require the Company to do so.  Colleague and his beneficiary or estate shall have only an unsecured, contractual right against the Company with respect to any Performance Unit and such right shall not be deemed superior to the right of any other creditor.

 

5Exhibit 10.4

 

RESTRICTED STOCK UNIT AWARD AGREEMENT

(CASH ONLY)

UNDER THE

CITY NATIONAL CORPORATION

2008 OMNIBUS PLAN

 

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (CASH ONLY) is made as of  between CITY NATIONAL CORPORATION, a Delaware corporation (the “Company”), and employee of the Company or a subsidiary of the Company (“Colleague”), with reference to the following:

 

A.                                    On April 23, 2008 the shareholders of the Company adopted the City National Corporation 2008 Omnibus Plan, as amended from time to time thereafter (the “Plan”), pursuant to which the Compensation, Nominating & Governance Committee of the Board of Directors (the “Committee”) may award selected officers and other Company or Company subsidiary employees restricted shares, restricted units, including restricted stock units payable solely in cash, or other deferred Awards of the Company’s common stock (the “Common Stock”).

 

B.                                    The Committee has determined to grant to Colleague an award of restricted stock units payable in cash only and dividend equivalent units pursuant to the terms and conditions of this Agreement.

 

1.                                      Grant of Restricted Stock Unit Award.

 

(a)                                 Details of Award.  Pursuant to the Plan, the Company hereby grants a Restricted Stock Unit Award (as defined in the Addendum to this Agreement) with the following terms:

 

(i)                                     Number of Restricted Stock Units to be issued: units awarded (the “Restricted Stock Units”);

 

(ii)                                  The date of the Award  (the “Award Date”); and

 

(iii)                               The consideration, if any, for the Restricted Stock Units:  Colleague’s Employment with the Company.

 

(b)                                 Restricted Stock Unit Account.  The Restricted Stock Unit Award will be credited to Colleague’s Restricted Stock Unit Account as of the Award Date and upon satisfaction of the conditions of this Agreement.

 

2.                                      Restricted Stock Units.  Colleague hereby accepts the Restricted Stock Units and agrees with respect thereto as follows:

 

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(a)                                 Forfeiture. In the event of termination of Colleague’s employment with the Company or employing subsidiary for any reason other than (i) death or (ii) Total Disability, or except as otherwise provided in the last sentence of subparagraph (b) of this Paragraph 2, Colleague shall, for no consideration, forfeit to the Company all Restricted Stock Units to the extent then subject to forfeiture.

 

(b)                                 Lapse of Forfeiture Restrictions.  All Restricted Stock Units are subject to forfeiture, as provided in subparagraph (a), until the forfeiture restrictions lapse in accordance with the following schedule provided that Colleague has been continuously employed by the Company from the Award Date through the lapse date:

 

	
 
    	
 
    	
Percentage of
    	
 
    	
 
    	
 
    
	
Time From
    	
 
    	
Restrictions Which
    	
 
    	
Total Percentage of
    	
 
    
	
Date of Award
    	
 
    	
Lapse (Vesting)
    	
 
    	
Restrictions Lapsed
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
After 1 year
    	
 
    	
0
    	
%
    	
0
    	
%
    
	
After 2 years
    	
 
    	
25
    	
%
    	
25
    	
%
    
	
After 3 years
    	
 
    	
25
    	
%
    	
50
    	
%
    
	
After 4 years
    	
 
    	
25
    	
%
    	
75
    	
%
    
	
After 5 years
    	
 
    	
25
    	
%
    	
100
    	
%
    

 

Notwithstanding the foregoing, the forfeiture restrictions shall lapse as to all of the Restricted Stock Units on the earlier of (i) subject to the discretion of the Committee, the occurrence of a Change in Control Event (as such term is defined in the Plan), or (ii) the date Colleague’s employment with the Company is terminated by reason of death or Total Disability. In the event Colleague’s employment is terminated for any other reason, the Committee or its delegate, as appropriate, may, in the Committee’s or such delegate’s sole discretion, approve the lapse of forfeiture restrictions as to any or all Restricted Stock Units still subject to such conditions, such lapse to be effective on the date of such approval or Colleague’s termination date, if later.

 

(c)                                  Restricted Stock Unit Accounts/Dividend Equivalent Unit Accounts.  A Colleague’s Restricted Stock Unit Account and Dividend Equivalent Unit Account shall be memorandum accounts on the books of the Company. The Restricted Stock Units credited to a Restricted Stock Unit Account and Dividend Equivalent Units credited to the Colleague’s Dividend Equivalent Unit Account shall be used solely as a method for the determination of the amount of cash to be eventually distributed to the Colleague in accordance with the Addendum to this Agreement. The Restricted Stock Units and the Dividend Equivalent Units shall not be treated as property or as a trust fund of any kind. The Colleague shall not be entitled to any voting or other stockholder rights with respect to Restricted Stock Units awarded or credited under the Plan. The number of Restricted Stock Units credited (and the amount of cash to which the Colleague is entitled under the Plan) shall be subject to adjustment in accordance with the terms of the Plan.

 

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(d)                                 Dividend Equivalents.  Colleague’s Dividend Equivalent Unit Account shall be credited with Dividend Equivalent Units in an amount equal to the dividend per Share for the applicable dividend payment date (which, in the case of any dividend distributable in property other than Shares, shall be the per Share value of such dividend, as determined by the Company for purposes of income tax reporting) times the number of Restricted Stock Units held by Colleague on the record date for the payment of such dividend.  Dividend Equivalent Units credited to Colleague’s Dividend Equivalent Unit Account shall vest and be paid at the same time as the underlying Restricted Stock Units for which such Dividend Equivalent Units were credited vest and are paid, and may be subject to forfeiture in the same manner as the underlying Restricted Stock Units for which such Dividend Equivalent Units were credited.

 

(e)                                  Nontransferability.  The Restricted Stock Units and the Dividend Equivalent Units and the rights and interests of the Colleague under this Agreement may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of prior to distribution.

 

3.                                      Withholding of Tax.  The receipt of cash upon distribution may result in income to you for federal or state tax purposes.  To the extent that you become subject to taxation, you shall deliver to the Company at the time of such receipt such amount of money or shares of unrestricted Common Stock, as the Company may require to meet its withholding obligation under applicable tax laws or regulations.  If you fail to do so, the Company is authorized to withhold from any cash remuneration then or thereafter payable to you for any tax required to be withheld by reason of such resulting compensation income.  Your delivery of Shares to meet the tax withholding obligation is subject to the Company’s Securities Trading Policy as may be in effect from time to time.  [You must have owned any Common Stock you deliver for at least six months.]  Any Common Stock you deliver or which is withheld by the Company will be valued on the date of which the amount of tax to be withheld is determined.  Any fractional shares of Common Stock resulting from withholding of taxes will be paid to you in cash. [See comment to Participant’s Addendum]

 

4.                                      Limitation on Transfer.  Other than upon death or pursuant to a DRO, the Restricted Stock Units and all rights granted under this Agreement are personal to Colleague and cannot be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to execution, attachment or similar processes.  [Isn’t this duplicative of 2(e)?]

 

5.                                      Plan and Addendum Incorporated/Availability.  Colleague acknowledges that the Company has made available a copy of the Plan and the Addendum to this Agreement, and agrees that this Award of Restricted Stock Units and Dividend Equivalent Units shall be subject to all of the terms and conditions set forth in the Plan and the Addendum, including future amendments thereto, if any, pursuant to the terms thereof, which Plan and Addendum are incorporated herein by reference as a part of this Agreement. In the event of any conflict between the Plan, the Addendum and this Agreement, the provisions of the Plan will prevail.  Colleague’s rights hereunder are subject to modification or termination in certain events, as provided in the Plan, including without limitation such rules

 

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and regulations as may from time to time be adopted or promulgated in accordance with paragraph 1.3 of the Plan.  Capitalized terms not defined in this Agreement shall have the meanings set forth in the Plan and the Addendum.

 

6.                                      Employment Relationship.  For purposes of this Agreement, Colleague shall be considered to be in the employment of the Company as long as Colleague remains a Colleague of either the Company, any successor corporation or a parent or subsidiary corporation (as defined in section 424 of the Internal Revenue Code) of the Company or any successor corporation.  Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee, or its delegate, as appropriate, and its determination shall be final.

 

7.                                      Committee’s Powers.  No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering any of the powers, rights or authority vested in the Committee or, to the extent delegated, in its delegate pursuant to the terms of the Plan or resolutions adopted in furtherance of the Plan, including, without limitation, the right to make certain determinations and elections with respect to the Restricted Stock Units and Dividend Equivalent Units.  All decisions of the Committee (as established pursuant to the Plan) with respect to any questions concerning the application, administration or interpretation of the Plan will be conclusive and binding on the Company and Colleague.

 

8.                                      Binding Effect.  This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Colleague.

 

9.                                      Dispute Resolution.  If a dispute arises between Colleague and Company in connection with the Restricted Stock Unit Award, including Dividend Equivalent Units, the dispute will be resolved by binding arbitration with the American Arbitration Association (AAA) in accordance with the AAA’s Commercial Arbitration Rules then in effect.

 

10.                               Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of California.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and Colleague has executed this Agreement, all as of the date first above written.

 

 

	
 
    	
 
    	
CITY NATIONAL CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Christopher J. Carey, Executive   Vice
    
	
 
    	
 
    	
President, Chief Financial Officer
    

 

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Colleague
    

 

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